UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 1-3507
R O H M A N D H A A S C O M P A N Y
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-1028370
- ------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 INDEPENDENCE MALL WEST, PHILADELPHIA, PENNSYLVANIA 19106
- ------------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 592-3000
--------------
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X__ No _____
Common stock outstanding at July 31, 1996: 65,081,285 SHARES
-----------------
<PAGE>
ROHM AND HAAS COMPANY AND SUBSIDIARIES
FORM 10-Q
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following are incorporated herein by reference to pages 9 through 12
of the company's Quarterly Report to Stockholders for the second quarter
of 1996, a complete copy of which is attached as Exhibit 20.
1. Statements of Consolidated Earnings
2. Statements of Consolidated Cash Flows
3. Consolidated Balance Sheets
4. Notes to Consolidated Financial Statements
ITEM 2. -- MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The management discussion and analysis is incorporated herein by
reference to pages 2 through 5 of the company's Quarterly Report to
Stockholders for the second quarter of 1996, a complete copy of which is
attached as Exhibit 20.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A discussion of legal proceedings is incorporated herein by reference to
pages 5 and 12 of the company's Quarterly Report to Stockholders for the
second quarter of 1996, a complete copy of which is attached as Exhibit 20.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The company's 77th annual meeting of stockholders was held on
May 6, 1996, in Philadelphia, Pennsylvania.
(c) The following is a tabulation of the results of voting by security
holders:
Election of directors:
Nominees Votes For Votes Withheld
---------------------- --------- --------------
George B. Beitzel 65,535,137 393,913
Daniel B. Burke 65,522,369 406,681
Earl G. Graves 65,503,879 425,171
James A. Henderson 65,537,255 391,795
John H. McArthur 65,517,093 411,957
Paul F. Miller, Jr. 65,520,666 408,384
<PAGE>
Sandra O. Moose 65,524,095 404,955
John P. Mulroney 65,525,340 403,710
Gilbert S. Omenn 65,556,173 372,877
Ronaldo H. Schmitz 65,528,549 400,501
Alan Schriesheim 65,526,895 402,155
Marna C. Whittington 65,529,133 399,917
J. Lawrence Wilson 65,533,014 396,036
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit (12) -- Computation of Ratio of Earnings to Fixed Charges
for the company and subsidiaries.
Exhibit (20) -- Copy of the company's Quarterly Report to
Stockholders for the quarter ended June 30, 1996.
Exhibit (27) -- Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
<PAGE>
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.
DATE: August 8, 1996 ROHM AND HAAS COMPANY
-------------- (Registrant)
FRED W. SHAFFER
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
<PAGE>
EXHIBIT INDEX
(Pursuant to Part 232.102(d) of Regulation S-T)
Exhibit
No. Description
- ------- -----------------------------------------------------------
(12) Computation of Ratio of Earnings to Fixed Charges
(20) Copy of Quarterly Report to Stockholders
(27) Financial Data Schedule
EXHIBIT 12
ROHM AND HAAS COMPANY
AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(MILLIONS OF DOLLARS)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, --------------------------------------
1996 1995 1994 1993 1992 1991
------------ ------ ------ ------ ------ ------
Earnings before income
taxes $ 294 $ 441 $ 407 $ 194 $ 261 $ 240
Fixed charges 37 84 82 79 83 79
Capitalized interest
adjustment (2) (5) (2) (7) (3) (6)
Undistributed earnings
adjustment 8 (3) (2) 6 2 (2)
------------ ------ ------ ------ ------ ------
Earnings $ 337 $ 517 $ 485 $ 272 $ 343 $ 311
------------ ------ ------ ------ ------ ------
Ratio of earnings to
fixed charges 9.1 6.2 5.9 3.4 4.1 3.9
------------ ------ ------ ------ ------ ------
Note: Earnings consist of earnings before income taxes and fixed charges
after eliminating undistributed earnings (losses) of affiliates and
capitalized interest net of amortization of previously capitalized
interest. Fixed charges consist of interest expense, including
capitalized interest, and amortization of debt discount and expense
on all indebtedness, plus one-third of rent expense deemed to represent
an interest factor.
EXHIBIT 20
COPY OF QUARTERLY REPORT TO STOCKHOLDERS
<PAGE>
ROHM AND HAAS COMPANY
SECOND QUARTER 1996
ID: COVER GRAPHIC
<PAGE>
FINANCIAL HIGHLIGHTS (Millions of dollars, except earnings per share)
- --------------------------------------------------------------------------------
Second Quarter Six Months
----------------------- -----------------------
Percent Percent
1996 1995 Change 1996 1995 Change
----------------------- -----------------------
Net sales $1,054 $1,042 1 $2,048 $2,027 1
Net earnings 101 87 16 201 166 21
Net earnings per
common share $ 1.50 $ 1.26 19 $ 2.96 $ 2.39 24
- -------------------------------------------------------------------------------
SALES BY BUSINESS GROUP
Millions of dollars
- ---------------------------------------------------
Polymers, Resins and Monomers $499
[PIE CHART] Performance Chemicals $232
Plastics $177
Agricultural Chemicals $146
SALES BY CUSTOMER LOCATION
Millions of dollars
- ---------------------------------------------------
North America $572
[PIE CHART] Europe $277
Asia-Pacific $140
Latin America $ 65
<PAGE>
CHAIRMAN'S LETTER
The second quarter of 1996 was a good one for Rohm and Haas. Earnings
of $101 million were up 16 percent from the $87 million reported for the
second quarter of 1995.
An overall 5 percent gain in unit volume reflected solid growth that
began in mid-May and strengthened as the quarter progressed. The
Polymers and Resins and Plastics Additives businesses reported the
strongest improvement during the period. Agricultural Chemicals also
did well.
Revenue was up in three of four geographic regions. The most notable
improvement occurred in Latin America, due to improving economies in
Mexico and Brazil. Shipley Company saw a dip in sales in June, but
sales recovered the following month.
Other factors that helped the company's performance for the quarter
included earnings for the Ion Exchange Resins business; selling,
administrative and research costs that remained under excellent control;
a decline in raw material costs compared with the same quarter of a year
ago, and a $.15 per common share boost from a $10 million tax adjustment
related to sales outside of the United States.
RohMax began operation on July 2nd. This joint venture combines the
Petroleum Chemicals business of Rohm and Haas with a similar business
operated by Rohm GmbH. RohMax is projected to have annual sales of
approximately $225 million. On July 17th, the United States Court of
Appeals for the Third Circuit overturned a 1995 judgment against Rohm
and Haas in a case involving the cleanup of a waste site in Myerstown,
Pennsylvania. The earlier ruling assigned full responsibility for the
cleanup for contamination caused by the original owner. The July 1996
decision returns the case to the lower court so that responsibility for
the cleanup can be apportioned more fairly between Rohm and Haas and
SmithKline Beecham, the other party involved.
Mr. Jorge Montoya, Executive Vice President of The Procter & Gamble
Company and President for Latin America, joined our Board of Directors
effective August 1st. In addition, Mr. Carlos Estevez became Vice
President and Regional Director for Latin America on August 1st when he
succeeded Mr. Enriquez Martinez, who retired from Rohm and Haas at the
end of July after 27 years of service.
At its regular meeting in July, the Board of Directors voted to increase
the dividend per common share by 10 percent, from $.41 to $.45.
/s/ J. LAWRENCE WILSON
J. Lawrence Wilson
Chairman August 8, 1996
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
SECOND QUARTER 1996 VERSUS
SECOND QUARTER 1995
Second quarter 1996 earnings were $101 million, up 16% from last year's
results of $87 million. Earnings per common share of $1.50 rose 19%
from $1.26 per common share in 1995. Increasingly strong demand for
Polymers and Resins and Plastics Additives products in May and June
resulted in 5% volume growth for the quarter. Sales of $1,054 million
were 1% above the prior-year period due to higher volume, offset by a
21% weaker Japanese yen, 2% weaker European currencies and 1% lower
selling prices. Earnings increased as a result of increased sales, 8%
lower raw material prices, tight control of costs and a $10 million
($.15 per common share) retroactive tax credit on sales outside the
United States.
Polymers, Resins and Monomers (PRM) earnings were $52 million, up 27%
compared to the prior year. Sales grew 4% due to 6% higher volume.
Architectural and Industrial Coatings both reported double-digit volume
increases. Improving economies in the United States, Mexico and Brazil
also contributed to the higher volume, sales and earnings. Other
positive impacts on earnings included lower raw material prices and a
more profitable product mix.
Performance Chemicals recorded earnings of $23 million, up $1 million
from last year's earnings of $22 million. Sales were up 1%, excluding
the sale of a small electronic chemicals subsidiary in 1995, due to a
higher-priced product mix. Shipley Company sales to the electronics
industry slowed in June. Ion Exchange Resins continued the profit
growth started in the first quarter, compared to losses in 1995.
Plastics reported earnings of $13 million, down 38% from $21 million
reported in the 1995 period. Volume increased 2% due to growth in North
America and Europe for additives used in PVC applications. Plastics
sales declined 3% because of pressure on selling prices and weaker
European currencies. The primary cause of the lower earnings was losses
from AtoHaas Europe compared to earnings in 1995 caused by lower volume,
falling selling prices and higher raw material costs for acrylic sheet
products.
Agricultural Chemicals earnings of $20 million were $1 million more than
the second quarter of 1995. Sales of $146 million were 3% higher than
1995, reflecting 9% volume growth and weaker currencies in Europe. The
volume gains were due to a significant increase of shipments of Dithane
in Europe. A less profitable product mix in North America and higher
selling, administrative and research costs to support new product
introductions dampened earnings growth.
Corporate expenses of $7 million in 1996 were down $9 million from last
year's second
2
<PAGE>
quarter, primarily due to a retroactive tax credit on sales outside of
the United States.
Net sales were $1,054 million, up 1% from 1995. The second quarter
gross profit margin was 34%, up from 33% last year. Volume growth and
8% lower raw material prices offset higher unit manufacturing costs and
1% lower selling prices.
Selling, administrative and research expenses only increased 1%,
reflecting excellent cost control. Affiliate losses were $5 million
compared to earnings of $4 million in the second quarter of 1995 due to
losses from AtoHaas Europe which has seen intense competition in the
acrylic sheet business. Other expense, net, was $3 million, compared to
income of $3 million in 1995. The prior-year period included a gain on
the sale of technology.
The effective tax rate for the quarter was 28% compared to 35% in 1995
due to a $10 million retroactive tax credit on sales outside of the
United States.
SIX MONTHS 1996 VERSUS
SIX MONTHS 1995
Earnings for the first six months were $201 million, 21% higher than
last year's earnings of $166 million. Earnings per common share were
$2.96, up 24% compared with the 1995 period. The 1995 results were
reduced by a $17 million after-tax charge for additional potential
liability related to the cleanup of the Whitmoyer waste site. Absent
this charge, earnings would have increased 10%. Sales increased 1% to
$2,048 million due to 1% higher volume and 1% higher selling prices.
Earnings were helped by 7% lower raw material prices, higher selling
prices and volume growth.
Polymers, Resins and Monomers earnings of $101 million were up 10% from
1995. Sales grew 3%, due to 2% higher volume and increased selling
prices. Architectural Coatings reported higher volume in North America
and Industrial Coatings had volume gains in all regions. Earnings
growth resulted from lower raw material prices, increased volume and
higher selling prices, partly offset by an increase in unit
manufacturing costs and higher selling, administrative and research
costs.
Performance Chemicals reported earnings of $51 million, $9 million
higher than last year's earnings. Sales were up 4%, excluding the sale
of a small electronic chemicals subsidiary in 1995, and volume increased
2%. Shipley Company's sales were up, but growth was not as strong in
June, reflecting the slowdown in the electronics industry. Ion Exchange
Resins reported earnings for the first half of the year due to increased
volume in all regions and operating costs which were below last year.
Plastics recorded earnings of $27 million, down from $40 million in
1995. Volume and sales declined 4% because of heavy competition and
lower selling prices. Plastics
3
<PAGE>
Additives reported flat volume and declining selling prices which
resulted in lower sales and earnings. AtoHaas Americas had lower volume
and higher manufacturing costs which were only partially offset by lower
raw material prices. Losses from AtoHaas Europe contributed
significantly to the earnings decline.
Agricultural Chemicals earnings were $40 million, down $1 million from
the first half of 1995. Sales were up 3%, due to 4% higher volume and a
lower-priced product mix. The volume gain is due to increased shipments
of Dithane in Europe and Latin America. The flat earnings reflect
higher selling, administrative and research expense to support
development and introduction of new products.
Corporate expenses of $18 million were $31 million lower than 1995. The
1995 period included an after-tax charge of $17 million for additional
potential liability related to the cleanup of the Whitmoyer waste site.
Other reasons for lower expense in 1996 included lower interest expense
and a $10 million retroactive tax credit on sales outside of the U.S.
The gross profit margin for the first six months was 35%, compared to
34% in the prior period. Margins improved due to 7% lower raw material
costs, 1% higher selling prices and a 1% increase in volume. Negative
impacts on margins included higher unit production costs and weakening
currencies in Europe and Japan.
Selling, administrative and research expenses were up 3%, compared to
1995, to support business growth for Shipley and Agricultural Chemicals.
Interest expense of $17 million was $3 million lower than last year
because of lower interest rates. Affiliate losses of $8 million reflect
a substantial decline from earnings of $5 million reported last year,
due to losses from AtoHaas Europe resulting from intense competition.
Other expense, net, was $3 million, compared to $36 million last year.
The prior year included a $26 million charge for additional potential
liability related to the Whitmoyer waste site.
The effective tax rate for the first six months was 32%, down from 35%
for the first 6 months of 1995 due to a $10 million retroactive tax
credit on sales outside of the United States.
LIQUIDITY, CAPITAL RESOURCES
AND OTHER FINANCIAL DATA
At the end of the quarter, cash and cash equivalents totaled $45
million, up $2 million from the 1995 year-end balance. Accounts
receivable were up $169 million during the first six months, reflecting
a normal seasonal pattern. In early 1996, the company collected $24
million of insurance
4
<PAGE>
recoveries related to environmental remediation cost claims.
The debt-to-equity ratio, calculated without the reduction to
stockholders' equity for the ESOP transaction, was 45% at the end of
June, compared with 36% at year-end 1995. The increase in the
debt-to-equity ratio is due to the company's stock repurchase program.
During the first 6 months the company purchased 2.1 million shares of
its common stock at a cost of $143 million.
Fixed asset additions during the first half of 1996 totaled $153
million. Spending for the full year is estimated to be in the range of
$375 million and includes expenditures for new emulsion facilities in
Thailand, Indonesia and Houston, Texas, and capacity expansion for
acrylic acid at Houston, Texas.
On July 2, 1996, the company completed the formation of RohMax, a 50-50
joint venture with Rohm GmbH for the research, manufacture and sale of
petroleum additives. RohMax is expected to have annual sales of
approximately $225 million.
On July 17, 1996, the United States Court of Appeals for the Third
Circuit ruled in the company's favor by reversing the 1995 judgment of
the Federal District Court regarding indemnification of SmithKline
Beecham for cleanup of contamination at the Whitmoyer waste site. As a
result of this ruling, the District Court will determine the equitable
apportioning of costs between the two companies for cleanup of
contamination that occurred prior to either company's ownership of the
site.
On July 22, 1996, the board of directors approved a 10% increase in the
quarterly dividend on common shares from 41 cents to 45 cents per share.
The board also declared a regular quarterly dividend of $.6875 per
preferred share. Both dividends are payable September 1, 1996, to
stockholders of record on August 9, 1996.
5
<PAGE>
ROHM AND HAAS COMPANY AND SUBSIDIARIES
SALES BY BUSINESS GROUP AND CUSTOMER LOCATION (Millions of dollars)
- ------------------------------------------------------------------------------
SECOND QUARTER 1996 AND 1995
- ------------------------------------------------------------------------------
Polymers,
Resins and Performance Agricultural
Monomers Chemicals Plastics Chemicals Total
------------- ------------- ------------- ------------- -------------
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
- ------- ------------- ------------- ------------- ------------- -------------
North
America $334 $320 $ 94 $ 91 $ 95 $ 97 $ 49 $ 50 $ 572 $ 558
- ------- ------------- ------------- ------------- ------------- -------------
Europe 88 87 69 71 64 66 56 50 277 274
- ------- ------------- ------------- ------------- ------------- -------------
Asia-
Pacific 52 49 62 70 10 13 16 17 140 149
- ------- ------------- ------------- ------------- ------------- -------------
Latin
America 25 24 7 6 8 6 25 25 65 61
- ------- ------------- ------------- ------------- ------------- -------------
Total $499 $480 $232 $238 $177 $182 $146 $142 $1,054 $1,042
- ------- ------------- ------------- ------------- ------------- -------------
- ------------------------------------------------------------------------------
FIRST SIX MONTHS 1996 AND 1995
- ------------------------------------------------------------------------------
North
America $628 $615 $190 $180 $183 $197 $ 87 $ 82 $1,088 $1,074
- ------- ------------- ------------- ------------- ------------- -------------
Europe 175 166 136 131 128 125 116 109 555 531
- ------- ------------- ------------- ------------- ------------- -------------
Asia-
Pacific 100 95 118 132 21 27 46 52 285 306
- ------- ------------- ------------- ------------- ------------- -------------
Latin
America 49 49 12 12 14 12 45 43 120 116
- ------- ------------- ------------- ------------- ------------- -------------
Total $952 $925 $456 $455 $346 $361 $294 $286 $2,048 $2,027
- ------- ------------- ------------- ------------- ------------- -------------
6
<PAGE>
PHYSICAL VOLUME CHANGE
CURRENT QUARTER RELATIVE TO YEAR-EARLIER QUARTER
- -----------------------------------------------------------------------
Percent CUSTOMER Percent
BUSINESS GROUP Change LOCATION Change
- -----------------------------------------------------------------------
Polymers, Resins and Monomers 6 North America 4
Performance Chemicals (4) Europe 5
Plastics 2 Asia-Pacific 5
Agricultural Chemicals 9 Latin America 10
- -----------------------------------------------------------------------
Worldwide 5 Worldwide 5
- -----------------------------------------------------------------------
CURRENT SIX MONTHS RELATIVE TO YEAR-EARLIER SIX MONTHS
- -----------------------------------------------------------------------
Percent CUSTOMER Percent
BUSINESS GROUP Change LOCATION Change
- -----------------------------------------------------------------------
Polymers, Resins and Monomers 2 North America --
Performance Chemicals (1) Europe 2
Plastics (4) Asia-Pacific 4
Agricultural Chemicals 4 Latin America 2
- -----------------------------------------------------------------------
Worldwide 1 Worldwide 1
- -----------------------------------------------------------------------
7
<PAGE>
NET EARNINGS BY BUSINESS GROUP AND CUSTOMER LOCATION
- -------------------------------------------------------------------------------
Quarter Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
1996 1995* 1996 1995*
--------------------------------------------
BUSINESS GROUP (Millions of dollars)
--------------------------------------------
Polymers, Resins and Monomers $ 52 $41 $101 $ 92
Performance Chemicals 23 22 51 42
Plastics 13 21 27 40
Agricultural Chemicals 20 19 40 41
Corporate (7) (16) (18) (49)
- --------------------------------------------------------- -------------------
Total $101 $87 $201 $166
- --------------------------------------------------------- -------------------
CUSTOMER LOCATION
North America $ 60 $55 $113 $107
Europe 26 33 63 67
Asia-Pacific 13 10 28 31
Latin America 9 5 15 10
Corporate (7) (16) (18) (49)
- --------------------------------------------------------- -------------------
Total $101 $87 $201 $166
- --------------------------------------------------------- -------------------
Corporate includes non-operating items such as interest income and expense,
corporate governance costs and the operations of certain developing
businesses.
*Corporate governance costs, previously allocated to the businesses and
regions, are reported in Corporate in 1996. Additionally, the operations
of certain developing businesses, previously reported in Performance
Chemicals and North America, are now reported in Corporate. Prior periods
have been restated to conform with current year presentation.
ANALYSIS OF CHANGE IN PER-SHARE EARNINGS
CURRENT PERIOD RELATIVE TO YEAR-EARLIER PERIOD
- ----------------------------------------------------------------------
$/Share
(after-tax)
-----------------------------
SECOND FIRST
GROSS PROFIT QUARTER SIX MONTHS
------------ --------------
Selling prices $(.06) $ .12
Physical volume and product mix .25 .29
Raw material costs .19 .37
Other manufacturing costs (.10) (.48)
Currency effect on gross profit (.07) (.03)
- ----------------------------------------------------- ---------------
Increase in gross profit .21 .27
- ----------------------------------------------------- ---------------
OTHER CAUSES
Selling, administrative and
research expenses* (.02) (.11)
Share of affiliate losses (.13) (.19)
Certain waste disposal site cleanup costs -- .25
Retroactive tax credit on sales outside
of the U.S. .15 .15
Reduction in outstanding shares of
common stock .04 .05
Other (.01) (.15)
- ----------------------------------------------------- ---------------
Increase from other causes .03 .30
- ----------------------------------------------------- ---------------
Increase in per-share earnings $ .24 $ .57
- ----------------------------------------------------- ---------------
*The amounts shown are on a U.S. dollar basis and include the impact
of currency movements as compared to the prior-year period.
8
<PAGE>
Rohm and Haas Company and Subsidiaries
STATEMENTS OF CONSOLIDATED EARNINGS (Subject to Year-end Audit)
- -------------------------------------------------------------------------------
Quarter Ended Six Months Ended
June 30, June 30,
------------------------ --------------------
1996 1995 1996 1995
-----------------------------------------------
CURRENT EARNINGS (Millions of dollars, except per share amounts)
-----------------------------------------------
Net sales $ 1,054 $ 1,042 $ 2,048 $ 2,027
Cost of goods sold 691 701 1,322 1,329
- -------------------------------------------------------- --------------------
Gross profit 363 341 726 698
Selling and administrative
expense 157 156 310 301
Research and development
expense 48 47 94 92
Interest expense 10 11 17 20
Share of affiliate net
earnings (losses) (5) 4 (8) 5
Other expense (income), net 3 (3) 3 36
- -------------------------------------------------------- --------------------
Earnings before income taxes 140 134 294 254
Income taxes 39 47 93 88
- -------------------------------------------------------- --------------------
NET EARNINGS $ 101 $ 87 $ 201 $ 166
Less preferred stock dividends 2 2 4 4
- -------------------------------------------------------- --------------------
NET EARNINGS APPLICABLE TO
COMMON SHAREHOLDERS $ 99 $ 85 $ 197 $ 162
- -------------------------------------------------------- --------------------
PER COMMON SHARE:
Net earnings $ 1.50 $ 1.26 $ 2.96 $ 2.39
Common dividends $ .41 $ .37 $ .82 $ .74
Average number of common shares
outstanding (000's) 65,990 67,613 66,542 67,646
- -------------------------------------------------------- --------------------
See notes to consolidated financial statements.
9
<PAGE>
Rohm and Haas Company and Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS (Subject to Year-end Audit)
- ------------------------------------------------------------------------
Six Months Ended June 30,
---------------------------
1996 1995
---------------------------
CASH FLOWS FROM OPERATING ACTIVITIES (Millions of dollars)
---------------------------
Net earnings $ 201 $ 166
Adjustments to reconcile net earnings
to cash provided by operating activities:
Depreciation 125 119
Deferred income taxes 20 19
Accounts receivable (169) (206)
Inventories 27 13
Accounts payable (33) (14)
Income taxes payable 10 6
Other working capital changes, net (36) (26)
Other, net 35 32
- ------------------------------------------------------------------------
Net cash provided by operating
activities 180 109
- ------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and equipment (153) (165)
Proceeds from the sale of facilities and
investments -- 24
- ------------------------------------------------------------------------
Net cash used by investing activities (153) (141)
- ------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Purchases of treasury shares (144) (13)
Proceeds from issuance of long-term debt 1 18
Repayments of long-term debt (21) (97)
Net change in short-term borrowings 198 67
Payment of dividends (57) (52)
Other, net (2) 21
- ------------------------------------------------------------------------
Net cash used by financing activities (25) (56)
- ------------------------------------------------------------------------
Effect of exchange rate changes on cash -- (1)
- ------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS $ 2 $ (89)
- ------------------------------------------------------------------------
See notes to consolidated financial statements.
10
<PAGE>
Rohm and Haas Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Subject to Year-end Audit)
- -----------------------------------------------------------------------------
JUNE 30, December 31, June 30,
1996 1995 1995
------------------------------------
ASSETS (Millions of dollars)
------------------------------------
Current assets:
Cash and cash equivalents $ 45 $ 43 $ 38
Receivables, net 925 756 885
Inventories (note d) 477 504 472
Prepaid expenses and other assets 116 118 157
- -----------------------------------------------------------------------------
Total current assets 1,563 1,421 1,552
- -----------------------------------------------------------------------------
Land, buildings and equipment 4,282 4,158 4,044
Less accumulated depreciation 2,223 2,110 2,054
- -----------------------------------------------------------------------------
Net land, buildings and equipment 2,059 2,048 1,990
- -----------------------------------------------------------------------------
Other assets 438 447 489
- -----------------------------------------------------------------------------
$4,060 $3,916 $4,031
- -----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 288 $ 90 $ 154
Accounts payable and accrued
liabilities 600 666 661
Accrued income taxes 82 72 81
- -----------------------------------------------------------------------------
Total current liabilities 970 828 896
- -----------------------------------------------------------------------------
Long-term debt 583 606 640
Other liabilities 723 701 741
Stockholders' equity:
$2.75 Cumulative convertible preferred
stock (note e) 132 133 133
Common stock: shares
issued -- 78,652,380 197 197 197
Additional paid-in capital 146 150 151
Retained earnings 1,933 1,789 1,720
- -----------------------------------------------------------------------------
2,408 2,269 2,201
Less: Treasury stock (note f) 477 344 333
Less: ESOP shares 147 151 154
Other equity adjustments -- 7 40
- -----------------------------------------------------------------------------
Total stockholders' equity 1,784 1,781 1,754
- -----------------------------------------------------------------------------
$4,060 $3,916 $4,031
- -----------------------------------------------------------------------------
See notes to consolidated financial statements.
11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
(A) These interim financial statements are unaudited, but, in the opinion
of management, all adjustments, which are of a normal recurring nature,
have been made to present fairly the company's financial position,
results of operations and cash flows. It is suggested that these
financial statements be read in conjunction with the financial
statements, accounting policies and the notes included in the company's
annual report for the year ended December 31, 1995.
(B) The company is a party in various government enforcement and private
actions associated with former waste disposal sites. The company is
also involved in potential corrective actions at some of its
manufacturing facilities. The amounts charged to earnings before tax
for environmental remediation were $15 million and $30 million for the
six months ended June 30, 1996 and 1995, respectively. The charge in
the 1995 period included additional accruals in the first quarter
related to the Whitmoyer waste site. At June 30, 1996, the reserves
for remediation were $161 million and probable insurance recoveries
were $48 million.
On July 17, 1996, the United States Court of Appeals for the Third
Circuit ruled in the company's favor by reversing the 1995 judgment of
the Federal District Court regarding indemnification of SmithKline
Beecham for cleanup of contamination at the Whitmoyer waste site. As a
result of this ruling, the District Court will determine the equitable
apportioning of costs between the two companies for cleanup of
contamination that occurred prior to either company's ownership of
the site.
In addition to accrued environmental liabilities, the company has
reasonably possible loss contingencies relating to environmental
matters of approximately $65 million. The company has also identified
other sites where future environmental remediation expenditures may be
required, but these expenditures are not reasonably estimable at this
time. The company believes that these matters, when ultimately
resolved, which may be over the next decade, will not have a material
adverse effect on the consolidated financial position of the company,
but could have a material adverse effect on consolidated results of
operations in any given year.
(C) The company and its subsidiaries are parties to litigation arising out
of the ordinary conduct of its business. Recognizing the amounts
reserved for such items and the uncertainty of the outcome, it is the
company's opinion that the resolution of all pending lawsuits and
claims will not have a material adverse effect, individually or in the
aggregate, upon the results of operations and the consolidated
financial position of the company.
(D) Inventories consist of:
(Millions of dollars)
JUNE 30, Dec. 31, June 30,
1996 1995 1995
--------- -------- ---------
Finished products and work in process $349 $376 $345
Raw materials and supplies 128 128 127
---- ---- ----
Total inventories $477 $504 $472
---- ---- ----
(E) The number of preferred shares issued and outstanding were:
June 30, 1996 2,644,403
December 31, 1995 2,656,153
June 30, 1995 2,668,855
(F) The number of common treasury shares were:
June 30, 1996 13,291,530
December 31, 1995 11,327,357
June 30, 1995 11,134,046
Dithane is a trademark of Rohm and Haas Company.
12
<PAGE>
[LOGO]
RESPONSIBLE CARE(R)
A PUBLIC COMMITMENT
[LOGO]
ROHM AND HAAS
<PAGE>
APPENDIX TO EXHIBIT 20
(Pursuant to Part 232.304(a) of Regulation S-T)
Graphic Description/Cross Reference
- ----------- -----------------------------------------------------------
Cover A flask with a globe inside and words "Second Quarter 1996"
Pie Charts Description included in introduction to Exhibit 20
(not incorporated by reference)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> ROHM AND HAAS COMPANY AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE (MILLIONS OF DOLLARS)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS AS OF JUNE 30, 1996 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 835
<ALLOWANCES> 15
<INVENTORY> 477
<CURRENT-ASSETS> 1,563
<PP&E> 4,282
<DEPRECIATION> 2,223
<TOTAL-ASSETS> 4,060
<CURRENT-LIABILITIES> 970
<BONDS> 583
0
132
<COMMON> 197
<OTHER-SE> 1,455
<TOTAL-LIABILITY-AND-EQUITY> 3,988
<SALES> 2,048
<TOTAL-REVENUES> 2,048
<CGS> 1,322
<TOTAL-COSTS> 1,322
<OTHER-EXPENSES> 401
<LOSS-PROVISION> 3
<INTEREST-EXPENSE> 17
<INCOME-PRETAX> 294
<INCOME-TAX> 93
<INCOME-CONTINUING> 201
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 201
<EPS-PRIMARY> 2.96
<EPS-DILUTED> 2.96
</TABLE>
