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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended January 31, 1995 Commission file number 0685
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PETROLITE CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 43-0617572
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
369 Marshall Avenue, St. Louis, Missouri 63119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 961-3500
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Former name, former address and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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On February 1, 1995, there were 11,328,778 outstanding shares
of capital stock, without par value.
No. of Pages 9
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<TABLE>
PART 1. ITEM 1. FINANCIAL STATEMENTS
PETROLITE CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
Jan. 31, 1995 Oct.31, 1994
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ASSETS (Thousands of $)
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<S> <C> <C>
Current Assets
Cash and cash equivalents $ 24,837 $ 19,801
Stock investments 763 763
Accounts receivable, less estimated doubtful
accounts of $1,121,000 and $1,306,000, respectively 72,514 68,733
Inventories-
Raw materials, parts and supplies 28,813 28,174
Finished goods 38,861 33,051
Reserve for adjustment to LIFO (19,016) (17,427)
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48,658 43,798
Contracts in process 434 1,026
Less progress billings (860) (961)
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Net inventories 48,232 43,863
Other current assets 14,368 12,557
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Total Current Assets 160,714 145,717
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Investment in affiliated companies 9,309 9,223
Patents and other intangibles 13,224 17,767
Other assets 15,563 15,169
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38,096 42,159
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Properties
Buildings 65,843 68,027
Machinery and equipment 206,937 223,500
Construction in progress 8,420 6,489
Accumulated depreciation (168,616) (178,437)
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112,584 119,579
Land 5,985 7,484
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118,569 127,063
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Total Assets $ 317,379 $ 314,939
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 7,866 $ 6,124
Accounts payable 40,548 42,114
Accrued vacation pay 3,910 3,910
Estimated income taxes 11,911 9,047
Accrued reorganization costs 5,183 8,667
Other current liabilities 10,381 9,586
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Total Current Liabilities 79,799 79,448
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Other Liabilities
Long term debt 40,000 40,000
Retiree medical benefits 12,826 12,513
Minority interest in consolidated subsidiaries 1,615 1,588
Other liabilities 2,590 2,707
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57,031 56,808
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Deferred Income Taxes, net 13,094 13,094
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Total Liabilities 149,924 149,350
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Stockholders' Equity
Capital stock, without par value-
Authorized - 35,000,000 shares
Issued - 12,216,697 and 12,201,597, respectively 9,271 9,248
Less treasury stock, at cost (887,919 and 890,518 shares,
respectively) (18,699) (18,744)
Reinvested earnings, beginning of year 177,404 181,101
Earnings for the period 6,229 9,044
Dividends (3,172) (12,741)
Cumulative translation adjustment (3,578) (2,319)
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Total Stockholders' Equity 167,455 165,589
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Total Liabilities and Stockholders' Equity $ 317,379 $ 314,939
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</TABLE>
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<TABLE>
PETROLITE CORPORATION
CONSOLIDATED STATEMENTS OF CURRENT AND ACCUMULATED EARNINGS
FOR THREE MONTHS ENDED JANUARY 31
<CAPTION>
(Unaudited)
1995 1994
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(In thousands, except per share data)
<S> <C> <C>
Net revenues $ 92,323 $ 91,796
Cost of product sold and other direct costs 56,046 53,695
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Gross profit 36,277 38,101
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Expenses:
Selling 19,160 20,809
Research 2,811 3,094
General and administrative 5,786 5,783
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27,757 29,686
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Earnings from operations 8,520 8,415
Equity in earnings of affiliates 243 86
Other income (expense), net 747 (139)
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Earnings before income taxes and effect of
change in accounting principle 9,510 8,362
U.S. and foreign income taxes 3,281 2,948
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Net earnings before effect of change
in accounting principle 6,229 5,414
Effect of change in accounting principle -- 2,037
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Net earnings $ 6,229 $ 7,451
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Earnings per share before effect of change
in accounting principle $ .55 $ .48
Effect of change in accounting principle -- .18
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Earnings per share $ .55 $ .66
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Average shares outstanding 11,327 11,293
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Dividends per share $ .28 $ .28
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</TABLE>
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<TABLE>
PETROLITE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED JANUARY 31
<CAPTION>
(Unaudited)
1995 1994
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(Thousands of $)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 6,229 $ 7,451
Adjustments to reconcile net earnings to net cash
provided by operations -
Depreciation and amortization 4,792 5,036
Change in accounting principle - (2,037)
Gain on sale of fixed assets (1,719) (426)
Changes in assets and liabilities -
Accounts receivable (3,781) (3,326)
Inventories (4,369) (240)
Other current assets (1,811) 4,048
Accounts payable and accrued liabilities (1,316) (9,203)
Other 1,956 (784)
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Net cash provided by operating activities (19) 519
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Cash flow from Investing Activities:
Capital expenditures, net (3,726) (3,036)
Proceeds from sale of plant 10,106 -
Investment in business alliance - (675)
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Net cash provided by investing activities 6,380 (3,711)
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Cash Flows from Financing Activities:
Additional borrowing, net 1,779 3,661
Dividends paid (3,172) (3,162)
Sales of Common Stock 68 146
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Net cash used in financing activities (1,325) 645
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Net increase (Decrease) in Cash and Equivalents 5,036 (2,547)
Cash and Equivalents at Beginning of Period 19,801 8,036
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Cash and Equivalents at End of Period $ 24,837 $ 5,489
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</TABLE>
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PART 1. ITEM 1. (CONT.) NOTES TO FINANCIAL STATEMENTS
Financial Statement note disclosures, normally included in
financial statements prepared in conformity with generally accepted
accounting principles, have been omitted in this Form 10-Q pursuant
to the Rules and Regulations of the Securities and Exchange
Commission. However, in the opinion of Petrolite Corporation (the
"registrant"), the disclosures contained in this Form 10-Q are
adequate to make the information presented not misleading. See
"Notes to the Financial Statements" in the registrant's 1994 Annual
Report incorporated by reference in the registrant's Form 10-K for
the year ended October 31, 1994, for information relevant to the
financial statements contained herein, including information as to
significant accounting policies followed by the registrant.
In the opinion of the registrant, the accompanying unaudited
financial statements reflect all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the
Balance Sheets as of January 31, 1995 and October 31, 1994, the
Statements of Earnings for the three months ended January 31, 1995
and 1994 and the Statements of Cash Flows for the three months
ended January 31, 1995 and 1994. Due to seasonal and other
factors, interim period results are not necessarily indicative of
results to be expected for the year.
In the fourth quarter of fiscal 1994, the registrant recorded
a $20 million pretax charge for reorganization of its Specialty
Chemicals segment operations. Reorganization actions through
October 31, 1994 included the early retirement or voluntary
severance of employees, the decision to discontinue all chemical
manufacturing at Webster Groves, Missouri, and Clear Lake, Texas,
the decision to discontinue ethoxylation activities at Barcelona,
Venezuela, and the decision to discontinue production of
microcrystalline waxes at the registrant's Barnsdall, Oklahoma, and
Kilgore, Texas, facilities. At October 31, 1994, $6.8 million of
the severance
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accrual and $1.9 million of plant shutdown costs were recognized
as a liability on the registrant's balance sheet. During the first
quarter of fiscal 1995, $3.5 million of severance costs relating
to the elimination of 128 jobs as of October 31, 1994 and 22 jobs
during the first quarter, were charged against the reorganization
accrual leaving a remaining balance of $3.3 million of severance
costs and $1.9 million of plant shutdown costs as a liability on
the company's balance sheet at January 31, 1995.
PART 1. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Reference is made to Notes to Financial Statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations presented in the registrant's 1994 Annual
Report incorporated by reference in the registrant's Form 10-K for
the year ended October 31, 1994.
The registrant's financial position at January 31, 1995
reflected a current ratio of 2.0:1, a low debt-to-equity ratio of
.3:1, and cash and securities of $25.6 million. The registrant
expects its strong financial position to continue.
Capital expenditures in fiscal 1995 are projected to be
approximately $23 million as compared to fiscal 1994 capital
expenditures of almost $22 million. Major projects for 1995
include the continued expansion and upgrade of the Bayport and
Kirkby chemical manufacturing plants, additional investment in
containers that are more environmentally safe, upgrading the Nisku,
Canada, blending and distribution facilities, and modification of
contract treating trucks. Capital expenditures during the first
quarter were $3.7 million.
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First quarter revenues totaled $92.3 million, compared with
$91.8 million the year before. The EuroChem Division posted
significant gains in revenues resulting from increased sales to oil
producers in the North Sea, the Middle East and Africa. Only sales
in the Former Soviet Union declined as economic conditions there
caused operational budgets to tighten. The Polymers Division
registered sales gains in almost every market segment, especially
in the graphic arts industry. The Petreco Division completed two
large contracts during the first quarter which significantly
increased its revenues this year over the prior period.
While the Tretolite Division's revenues were down on a year-
to-year basis, the recent gain of new business and the prospect of
additional business gains during this year is encouraging. The
political unrest and monetary destabilization in Mexico had a
negative impact on the sales of the International Division, as
several very large treatment programs were suspended. Meanwhile,
the oil field business in Venezuela and Canada continued to
improve. Unseasonably warm weather slowed sales of cold flow
improvers and some fuel performance additives for the Industrial
Chemicals Division. Overall, however, the division secured new
accounts that should add to its market share in both the fuel
performance and refinery fuel additives markets.
Net earnings in the first quarter increased to $6.2 million,
or $0.55 per share, from last year's $5.4 million, or $0.48 per
share, excluding a one-time, non-cash tax credit of $2.0 million,
or $0.18 per share. Included in first quarter earnings was a
pretax gain of $1.1 million from the sale of the Clear Lake
manufacturing plant in Texas.
The EuroChem Division posted strong gains in earnings in line
with its significant gains in revenues. The Petreco Division
nearly doubled its earnings of a year ago, and the division's
backlog of order remains strong for crude oil desalting and
dehydrating equipment and turbine
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full treating systems. The Polymers Division registered a
double-digit earnings improvement, despite higher raw material
costs. While performance of the Chemicals Group businesses
strengthened as a result of the reorganization last year, earnings
declined on a year-to-year comparison due to a decline in
revenues as previously mentioned and increases in raw material
prices.
PART II - OTHER INFORMATION
Part II. Item 1. Legal Proceedings
None
Part II. Item 2. Changes in Securities
None
Part II. Item 3. Defaults upon senior securities
None
Part 2, Item 4. Submission of Matters to a Vote of Security-Holders.
There were no matters submitted to a vote of security-holders
during the period covered by this report.
Part 2, Item 5. Other information
None
Part 2, Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27. Financial Data Schedule
(b) The Registrant filed a Current Report on Form 8-K dated
December 9, 1994 reporting information under Item 5.
The Registrant filed a Current Report on Form 8-K dated
February 7, 1995, reporting information under Item 5.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
PETROLITE CORPORATION
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(Registrant)
s/John M. Casper
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John M. Casper
Chief Financial Officer -
Authorized Officer and
Principal Financial Officer
DATE: March 15, 1995
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 24,837
<SECURITIES> 763
<RECEIVABLES> 73,635
<ALLOWANCES> 1,121
<INVENTORY> 48,232
<CURRENT-ASSETS> 160,714
<PP&E> 287,185
<DEPRECIATION> 168,616
<TOTAL-ASSETS> 317,379
<CURRENT-LIABILITIES> 79,799
<BONDS> 40,000
<COMMON> 9,271
0
0
<OTHER-SE> 176,883
<TOTAL-LIABILITY-AND-EQUITY> 317,379
<SALES> 92,323
<TOTAL-REVENUES> 94,853
<CGS> 56,046
<TOTAL-COSTS> 83,803
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (84)
<INTEREST-EXPENSE> 995
<INCOME-PRETAX> 9,510
<INCOME-TAX> 3,281
<INCOME-CONTINUING> 6,229
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,299
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
</TABLE>
