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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, 1996 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, 1996, there were 11,334,948 outstanding shares
of capital stock, without par value.
No. of Pages 8
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<TABLE>
PART 1. ITEM 1. FINANCIAL STATEMENTS
PETROLITE CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
Jan. 31, 1996 Oct. 31, 1995
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ASSETS (Thousands of $)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 37,510 $ 33,662
Accounts receivable, less estimated doubtful
accounts of $1,300,000 and $1,121,000 respectively 62,542 63,352
Inventories-
Raw materials, parts and supplies 20,489 19,984
Finished goods 35,715 35,574
Reserve for adjustment to LIFO (18,512) (18,541)
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37,692 37,017
Contracts in process 2,063 13
Less progress billings (2,457) (321)
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Net inventories 37,298 36,709
Other current assets 12,048 12,115
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Total Current Assets 149,398 145,838
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Investment in affiliated companies 13,146 13,116
Patents and other intangibles 8,883 9,505
Other assets 13,642 12,752
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35,671 35,373
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Properties
Buildings 62,711 63,325
Machinery and equipment 151,401 152,346
Other fixed assets 45,326 51,180
Construction in progress 6,296 4,159
Accumulated depreciation (167,214) (166,369)
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98,520 104,641
Land 6,667 6,733
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105,187 111,374
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Total Assets $ 290,256 $ 292,585
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<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Notes payable $ 3,695 $ 4,594
Accounts payable 33,850 33,880
Accrued vacation pay 4,000 4,000
Estimated income taxes 4,501 3,378
Accrued reorganization costs 2,734 2,734
Other current liabilities 17,699 18,248
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Total Current Liabilities 66,479 66,834
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Other Liabilities
Long term debt 40,000 40,000
Retiree medical benefits 13,343 13,192
Minority interest in consolidated subsidiaries 1,462 1,404
Other liabilities 857 913
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55,662 55,509
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Deferred Income Taxes, net 10,777 10,778
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Total Liabilities 132,918 133,121
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Stockholders' Equity
Capital stock, without par value-
Authorized - 35,000,000 shares
Issued - 12,222,697 and 12,216,697, respectively 9,435 9,389
Less treasury stock, at cost (887,749 and 887,919
shares, respectively) (18,694) (18,694)
Reinvested earnings, beginning of year 170,943 177,404
Earnings for the period 3,283 6,231
Dividends (3,173) (12,691)
Cumulative translation adjustment (4,456) (2,175)
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Total Stockholders' Equity 157,338 159,464
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Total Liabilities and Stockholders' Equity $ 290,256 $ 292,585
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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)
1996 1995
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(In thousands, except per share data)
<S> <C> <C>
Net revenues $ 86,842 $ 92,323
Cost of product sold and other direct costs 52,130 56,046
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Gross profit 34,712 36,277
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Expenses:
Selling 21,094 19,160
Research 4,181 2,811
General and administrative 5,902 5,786
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31,177 27,757
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Earnings from operations 3,535 8,520
Equity in earnings of affiliates 1,106 243
Other income, net 259 747
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Earnings before income taxes 4,900 9,510
U.S. and foreign income taxes 1,617 3,281
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Net earnings $ 3,283 $ 6,229
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Earnings per share $ 0.29 $ 0.55
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Average shares outstanding 11,333 11,327
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Dividends per share $ 0.28 $ 0.28
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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)
1996 1995
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(Thousands of $)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings $ 3,283 $ 6,229
Adjustments to reconcile net earnings to net cash
provided by operations -
Depreciation and amortization 4,529 4,792
Gain on sale of fixed assets (506) (1,719)
Changes in assets and liabilities -
Accounts receivable 49 (3,781)
Inventories (1,055) (4,369)
Other current assets 2 (1,811)
Accounts payable and accrued liabilities 1,226 (1,316)
Other (1,438) 1,956
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Net cash provided by (used in) operating activities 6,090 (19)
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Cash flow from Investing Activities:
Capital expenditures, net (3,630) (3,726)
Proceeds from sale of airplane 5,250 -
Proceeds from sale of plant - 10,106
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Net cash provided by investing activities 1,620 6,380
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Cash Flows from Financing Activities:
(Payment of debt) additional borrowing, net (734) 1,779
Dividends paid (3,173) (3,172)
Sales of Common Stock 45 68
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Net cash used in financing activities (3,862) (1,325)
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Net increase in Cash and Equivalents 3,848 5,036
Cash and Equivalents at Beginning of Period 33,662 19,801
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Cash and Equivalents at End of Period $ 37,510 $ 24,837
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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 1995 Annual
Report incorporated by reference in the registrant's Form 10-K for
the year ended October 31, 1995, 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, 1996 and October 31, 1995, the
Statements of Earnings for the three months ended January 31, 1996
and 1995 and the Statements of Cash Flows for the three months
ended January 31, 1996 and 1995. Due to seasonal and other
factors, interim period results are not necessarily indicative of
results to be expected for the year.
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 1995 Annual
Report incorporated by reference in the registrant's Form 10-K for
the year ended October 31, 1995.
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The registrant's financial position at January 31, 1996
reflected a current ratio of 2.2:1, a low debt-to-equity ratio of
.3:1, and cash and securities of $37.5 million. The registrant
expects its strong financial position to continue.
Capital expenditures in fiscal 1996 are projected to
approximate $14 million, as compared to fiscal 1995 capital
expenditures of $12.6 million. Major capital projects for 1996
include the continued expansion and upgrade of the Bayport and
Kirkby manufacturing plants; additional investment in containers
that are more environmentally safe; additional investment in
distribution vehicles, including both contract treating and
delivery trucks; and expansion of the UNILIN alcohol capacity at
the Barnsdall, Oklahoma, manufacturing facility. Capital
expenditures (net) during the first quarter were $3.6 million.
THREE MONTHS ENDED JANUARY 31, 1996 COMPARED TO THREE MONTHS ENDED
JANUARY 31, 1995.
The registrant's net earnings for the first quarter totaled
$3.3 million, or $0.29 per share on revenues of $86.8 million.
This compares with $6.2 million, or $0.55 per share, a year ago and
$2.1 million, or $0.19 per share, last quarter. Comparative
performance was affected by two non-recurring items: First, this
quarter's results included a $1.0 million, or $0.06 per share,
expense for an exclusive license for corrosion-control technology
to broaden the registrant's product offering to the refinery
process market. Secondly, earnings a year ago included a non-
operating gain of $1.1 million, or $0.07 per share, from the sale
of the registrant's Clear Lake, Texas, plant. Absent these non-
recurring items, earnings would have totaled $4.0 million, or $0.35
per share, compared with $5.5 million, or $0.48 per share, a year
ago.
The registrant's North American energy chemical business
posted its strongest
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performance since the first quarter last year, despite continued
high raw material costs. Aggressive cost-control efforts helped
the oil field chemical operations stem the downward earnings trend
of recent quarters, while unseasonably cold weather over much of
the United States was a factor in generating higher refinery
process chemical sales for the industrial operations.
Earnings from overseas energy chemical operations declined
somewhat as generally improved sales were more than offset by
delayed ordering patterns and tight margins on sales to the Middle
East.
The registrant's polymers business posted increased earnings
on lower sales, which reflected softness in some domestic markets
and the continuing transfer of wax business to Bareco Products, a
marketing partnership with Pennzoil started in April of last year.
The registrant's equipment business recorded lower results,
reflecting a smaller backlog of orders.
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.
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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) There were no reports on Form 8-K filed during the
quarter ended January 31, 1996.
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 8, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JAN-31-1996
<CASH> 37,510
<SECURITIES> 0
<RECEIVABLES> 63,842
<ALLOWANCES> (1,300)
<INVENTORY> 37,298
<CURRENT-ASSETS> 149,398
<PP&E> 265,734
<DEPRECIATION> 167,214
<TOTAL-ASSETS> 290,256
<CURRENT-LIABILITIES> 66,478
<BONDS> 40,000
<COMMON> 9,435
0
0
<OTHER-SE> 166,597
<TOTAL-LIABILITY-AND-EQUITY> 290,256
<SALES> 86,842
<TOTAL-REVENUES> 89,278
<CGS> 52,130
<TOTAL-COSTS> 83,307
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 348
<INTEREST-EXPENSE> 773
<INCOME-PRETAX> 4,900
<INCOME-TAX> 1,617
<INCOME-CONTINUING> 3,283
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,283
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
