<PAGE>1
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, 2000 COMMISSION FILE NUMBER 1-3507
R O H M A N D H A A S C O M P A N Y
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 592-3000
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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
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Common stock outstanding at July 31, 2000: 216,578,929 SHARES
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<PAGE>2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ROHM AND HAAS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS (Unaudited)
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(Millions of dollars, except per-share amounts)
Quarter Ended Six Months Ended
June 30, June 30,
----------------- ------------------
2000 1999 2000 1999
------ ------ ------ ------
Net sales $1,758 $1,144 $3,493 $2,084
Cost of goods sold 1,185 695 2,317 1,253
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Gross profit 573 449 1,176 831
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Selling and administrative expense 275 184 536 347
Purchased in-process research and
development 13 105 13 105
Research and development expense 68 53 127 100
Interest expense 60 18 122 29
Amortization of goodwill and other
intangibles 42 5 80 7
Share of affiliate net earnings (losses) 5 1 11 (6)
Provision for restructuring - - 13 -
Loss on disposition of joint ventures - (22) - (22)
Other income (expense), net 13 (17) 25 7
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Earnings before income taxes 133 46 321 222
Income taxes 56 55 121 121
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Net earnings (loss) $ 77 $ (9) $ 200 $ 101
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Net earnings (loss) applicable
to common shareholders $ 77 $ (10) $ 200 $ 99
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Earnings (loss) per common share
(in dollars):
- Basic $ .35 $ (.06) $ .91 $ .58
- Diluted .35 (.06) .90 .57
Average common shares outstanding
(millions):
- Basic 219.5 172.1 219.3 170.2
- Diluted 221.0 172.1 221.0 178.7
Common dividends $ .19 $ .18 $ .38 $ .36
See Notes to Consolidated Financial Statements.
<PAGE>3
ROHM AND HAAS COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
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Six Months Ended
June 30,
---------------------
2000 1999
---------------------
(Millions of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 200 $ 101
Adjustments to reconcile net earnings to cash provided
by operating activities:
Depreciation 223 139
Purchased in-process research and development 13 105
Loss on sale of facilities and investments - 14
Amortization of goodwill and intangibles 80 7
Changes in current assets and liabilities, net of
acquisitions and divestitures:
Deferred income taxes (85) (45)
Accounts receivable (231) (121)
Inventories 1 (7)
Accounts payable and accrued liabilities (2) 132
Income taxes payable 104 65
Other, net (135) (77)
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Net cash provided by operating activities 168 313
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses and affiliates,
net of cash acquired (328) (3,269)
Proceeds on sales of facilities and investments,
net of cash sold 175 -
Additions to land, buildings and equipment (141) (95)
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Net cash used for investing activities (294) (3,364)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 393 3,230
Repayments of long-term debt (103) -
Net change in short-term borrowings (74) 63
Payment of dividends (85) (60)
Purchases of treasury stock - (2)
Other, net - 13
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Net cash provided by financing activities 131 3,244
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NET INCREASE IN CASH AND CASH EQUIVALENTS 5 193
Cash and cash equivalents at beginning of period 57 16
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Cash and cash equivalents at end of period $ 62 $ 209
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See Notes to Consolidated Financial Statements.
<PAGE>4
<TABLE>
<CAPTION>
ROHM AND HAAS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
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(Millions of dollars, except per-share amounts)
<S> <C> <C> <C>
June 30, December 31, June 30,
2000 1999 1999
-------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 62 $ 57 $ 209
Accounts receivable, net 1,622 1,370 1,382
Inventories (note E) 928 899 866
Prepaid expenses and other assets 209 171 173
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Total current assets 2,821 2,497 2,630
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Land, buildings and equipment, net 3,482 3,496 3,475
Goodwill and other intangible assets, net 4,789 4,482 4,334
Other assets 696 781 847
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$11,788 $11,256 $11,286
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 866 $ 931 $ 289
Accounts payable and accrued liabilities 1,428 1,407 1,309
Accrued income taxes payable 284 172 140
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Total current liabilities 2,578 2,510 1,738
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Long-term debt 3,414 3,122 3,902
Employee benefits 623 610 612
Other liabilities 1,526 1,520 1,546
Minority interest 22 19 25
Commitments and Contingencies (Note C & D)
Stockholders' equity:
$2.75 Cumulative convertible preferred stock - - 64
Common stock: shares issued - 242,078,367 605 605 605
Additional paid-in capital 1,950 1,942 1,891
Retained earnings 1,447 1,331 1,326
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4,002 3,878 3,886
Less: Treasury stock (note G) 217 224 275
Less: ESOP shares 122 125 128
Accumulated other comprehensive income (38) (54) (20)
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Total stockholders' equity 3,625 3,475 3,463
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$11,788 $11,256 $11,286
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</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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(A) These interim financial statements are unaudited. 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. Certain prior year amounts have been
reclassified to conform to current year presentation. These financial
statements should 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, 1999, filed with the Securities and Exchange
Commission on March 27, 2000.
(B) On June 21, 1999, the company acquired Morton International (Morton) for
cash of $3 billion and the issuance of 45 million shares of common stock, for
a total transaction value of approximately $4.9 billion, including the
assumption of $272 million of debt. Morton is a manufacturer of specialty
chemicals and a producer of salt for a variety of markets. The cash portion of
the acquisition was financed primarily through a combination of commercial
paper and the later issuance of longer term instruments. Accounted for by the
purchase method, the financial statements reflect the allocation of the
purchase price based on fair values at the date of acquisition. The final
allocation as of June 30, 2000 resulted in acquired goodwill of $1.7 billion,
which is being amortized on a straight-line basis over 40 years. Based on an
independent appraisal, $105 million of the purchase price was allocated to in-
process research and development, which was recorded as a charge in the second
quarter of 1999. For additional discussion regarding purchased in-process
research and development, see Note 3 in the company's annual report for the
year ended December 31, 1999.
During the first six months of 2000, adjustments totaling $220 million were
made to the purchase price allocation for pre-acquisition contingencies,
businesses divested at fair value, and lease terminations and other items
related to the Morton acquisition.
In late January 1999, the company acquired all of the outstanding shares of
LeaRonal, Inc. (LeaRonal) for approximately $460 million. LeaRonal
develops and manufactures specialty chemicals used in the manufacture of
printed circuit boards, semiconductor packaging and for electronic
connector plating and also provides processes for metal-finishing
applications. The acquisition, financed primarily through commercial
paper, was accounted for using the purchase method. The financial
statements reflect the allocation of the purchase price based on fair
values at the date of acquisition and later analysis of certain acquired
assets and liabilities. The final allocation resulted in acquired goodwill
of approximately $202 million, which is being amortized on a straight-line
basis over 40 years.
The results of both Morton and LeaRonal have been included in the
consolidated financial statements since the respective dates of
acquisition.
In the second quarter of 1999, the company announced its intentions to enter
into a joint venture with Stockhausen GmbH & Co. KG ("Stockhausen") of Germany
to form a global partnership for the manufacture of acrylic acid. The company
expects the transaction to close by the end of 2000. In conjunction with the
proposed joint venture, the company acquired Stockhausen's merchant monomer
business in Europe in the first quarter of 2000.
The following acquisition and divestiture activities occurred or were
announced in 2000:
- The company sold its Industrial Coatings business to BASF Corporation for
approximately $175 million, subject to working capital adjustments. The
Industrial Coatings business was acquired by the company in June 1999 as
part of the acquisition of Morton and was recorded at its fair value;
accordingly, no gain or loss was recorded on this transaction.
<PAGE>6
- The company increased its ownership in Rodel from 48% to 90% for a cost
of approximately $200 million. Rodel is a privately-held, Delaware-based
leader in precision polishing technology serving the semiconductor, memory
disk and glass polishing industries. Through March 31, 2000, the
investment had been accounted for on the equity method with the company's
share of earnings reported as equity in affiliates. Beginning in the
second quarter of 2000, the transaction with Rodel, increasing the
company's ownership to approximately 90%, was accounted for using the
purchase method with results of operations combined during the second
quarter of 2000. The financial statements reflect the allocation of the
purchase price based on estimated fair values, and resulted in acquired
goodwill of $58 million, which is being amortized on a straight-line basis
over 30 years. $13 million of the purchase price was allocated to
in-process research and development related to chemical mechanical
planarization and surface preparation technologies under development and
was recorded as a charge in the second quarter of 2000.
- The company acquired 95% of Acima A.G., a Swiss company specializing in
biocidal formulations, polyurethane catalysts and other specialty chemicals.
The company also acquired an 80% interest in Silicon Valley Chemical
Laboratories, Inc. (SVC), a privately-held supplier to high technologies for
the semiconductor industry. The combined cost for these two transactions was
approximately $93 million. These transactions have been accounted for using
the purchase method with results of operations of SVC combined as of the date
of acquisition and the results of operations of Acima combined during the
second quarter of 2000 due to the unavailability of data as of March 31, 2000.
The financial statements reflect the allocation of the purchase prices based
on estimated fair values at the dates of acquisition, and resulted in acquired
combined goodwill of $32 million, which is being amortized on a straight-line
basis over 40 years for Acima and over 20 years for SVC.
In conjunction with the above acquisitions, the company also allocated
$172 million to identifiable intangible assets, which are being amortized
over useful lives ranging from 5 to 30 years.
- The company acquired the photoresist business of Mitsubishi Chemical
Corporation in the second quarter of 2000. Mitsubishi Chemical is a leading
producer of G-line, I-line and deep UV photoresist chemistry used to make
semi-conductor chips. The transaction will be accounted for using the purchase
method with results of operations combined in the third quarter of 2000.
- The company agreed to sell its Thermoplastic Polyurethane business to
Huntsman Corporation for $120 million, subject to adjustment, and its European
Salt business, Salins-Europe, to a consortium, which includes management, led
by Union d'Etudes et d'Investissements SA, a wholly owned subsidiary of Credit
Agricole, for approximately $270 million. Both businesses were acquired by the
company in June 1999 as part of the acquisition of Morton and were recorded at
fair value; accordingly, no gain or loss is expected to be recorded on these
transactions. These transactions are expected to close in the third and fourth
quarters of 2000, respectively.
- The company agreed to sell its 50% interest in TosoHaas to its joint venture
partner, Tosoh Corporation. The transaction is expected to close in the third
quarter of 2000.
<PAGE>7
Restructuring reserve activity for the six months ended June 30, 2000 was as
follows:
<TABLE>
<CAPTION>
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Millions of dollars
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Increases to Decreases to
Reserve (1) Reserve
----------------- --------------------------
Reserve at Charge Reclass Reserve at
Dec. 31, to Inc./(Dec.) Cash to Pension Other June 30,
1999 Earnings Goodwill Payments Asset(2) Changes(3) 2000
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<S> <C> <C> <C> <C> <C> <C> <C>
Severance and
other employee
related
charges(1) $58 $ 6 $ 7 $(2) $(53) $(3) $13
Asset impairments - 17 - - - - 17
Pension related
gains - (10) - - - 10 -
Lease terminations
and other(4) 15 - 35 (1) - - 49
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$73 $13 $42 $(3) $(53) $ 7 $79
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</TABLE>
(1) The "charge to earnings" includes a decrease to expense due to a
reclassification to "increase/(decrease) in goodwill" resulting from a
change in company identification (from acquiring company to acquired
company) for a number of employees expected to be terminated.
(2) Severance of the acquired company will be paid from the pension plan. It
is therefore reclassified for presentation purposes.
(3) Amounts in this column reflect the impact of the treatment of most
severance for U.S. employees. These costs will be paid from the respective
pension plans and not from cash, which also will result in pension-related
gains being recorded as increases to the pension asset when termination
payments are made.
(4) Lease terminations and other primarily relates to the buyout of a portion
of a lease for the corporate headquarters of an acquired company.
(C) There is a risk of environmental damage in chemical manufacturing
operations. The company's environmental policies and practices are
designed to ensure compliance with existing laws and regulations and to
minimize the possibility of significant environmental damage. Following
the 1999 acquisitions of Morton and LeaRonal, the company began a process at
acquired facilities to ensure company-wide uniformity in such
policies and practices.
<PAGE>8
In Wood-Ridge, New Jersey, the company and Velsicol Chemical Corporation
("Velsicol") have been held jointly and severally liable for the cost of
remediation necessary to correct mercury-related environmental problems
associated with a mercury processing plant on the site prior to its
acquisition by Morton. At the date of acquisition Morton had disclosed and
accrued for certain ongoing studies, which were expected to be completed by
the end of 2000, with regulatory decisions expected in 2001. In allocating
the purchase price of Morton, the company accrued for additional study costs
at December 31, 1999 and additional remediation costs in the first quarter
of 2000 based on the progress of the technical studies. A separate study of
the contamination in Berry's Creek, which runs near the plant site, and of
the surrounding wetlands area is expected, but on a timetable yet to be
determined; therefore, the estimated costs of remediation that may result
from this separate study have not been considered in the allocation of the
Morton purchase price. The company's ultimate exposure will also depend
upon the continued ability of Velsicol and its indemnitor, Fruit of the
Loom, Inc., which has filed for protection under the bankruptcy laws, to
contribute to the cost of remediation and on the results of attempts to
obtain contributions from others believed to share responsibility. A cost
recovery action against these responsible parties is pending in federal
court. Settlements have been reached with some defendants for claims
considered de minimis associated with the Wood-Ridge plant site. Where
appropriate, the analysis to determine the company's liability, if any, with
respect to remedial costs at the above sites reflects an assessment of the
likelihood and extent of participation of other potentially responsible
parties.
During 1996, the EPA notified Morton of possible irregularities in water
discharge monitoring reports filed by the Moss Point, Mississippi plant
in early 1995. Morton investigated and identified other environmental issues
at the plant. The company has been provided a copy of a draft multi-count
civil complaint and was served with subpoenas and a request for information
seeking documents related to environmental compliance at Moss Point and other
Morton manufacturing sites. The company engaged in negotiations with the EPA,
the Department of Justice (DOJ) and the State of Mississippi seeking
resolution of these civil issues. The company also engaged in related
negotiations with the DOJ concerning potential criminal sanctions against the
Moss Point plant. Though at the date of acquisition some remediation and
legal costs had been accrued for, the company revised these accruals as part
of the allocation of the purchase price of Morton based on its discussions
with the authorities and on the information available as of June 30, 2000. As
a result of the issues that began with Moss Point, the company may be exposed
to material fines, penalties, and remedial expenses, but is unable to quantify
the ultimate exposure.
The amount charged to earnings before tax for environmental remediation was
$4 million and $7 million for the six months ended June 30, 2000 and 1999,
respectively. Remediation-related reserves were $218 million and $201
million at June 30, 2000 and December 31, 1999, respectively, and are
recorded as "other liabilities" (current and long-term). These reserves
include amounts resulting from the allocation of the purchase price of
Morton. The company is pursuing lawsuits over insurance coverage for
environmental liabilities. It is the company's practice to reflect
environmental insurance recoveries in results of operations for the quarter
in which the litigation is resolved through settlement or other appropriate
legal process. Resolutions typically resolve coverage for both past and
future environmental spending. The company settled with several of its
insurance carriers and recorded income before tax for approximately $1
million and $21 million for the six months ended June 30, 2000 and 1999,
respectively.
<PAGE>9
In addition to accrued environmental liabilities, the company has
reasonably possible loss contingencies related to environmental matters
of approximately $84 million and $110 million at June 30, 2000 and December
31, 1999, respectively. Further, the company has identified other sites,
including its larger manufacturing facilities, where additional future
environmental remediation may be required, but these loss contingencies
cannot reasonably be estimated at this time. These matters involve
significant unresolved issues, including the number of parties found
liable at each site and their ability to pay, the outcome of negotiations with
regulatory authorities, the alternative methods of remediation and the range
of costs associated with those alternatives. The company believes that these
matters, when ultimately resolved, which may be over an extended period of
time, will not have a material adverse effect on the consolidated financial
position or consolidated cash flows of the company, but could have a material
adverse effect on consolidated results of operations or cash flows in any
given period.
There are pending lawsuits filed against Morton related to asbestos
exposure at a facility in Weeks Island, Louisiana with additional
lawsuits expected. The company expects that most of these cases will be
dismissed because they are barred under worker's compensation laws; but
cases involving asbestos-caused malignancies will not be barred under
Louisiana law. Subsequent to the acquisition, the company commissioned
medical studies to estimate possible future claims. Accruals were
recorded as of June 30, 2000 as part of the allocation of the purchase price
of Morton based on these studies.
(D) The company and its subsidiaries are parties to other litigation arising
out of the ordinary conduct of its business. Where appropriate, the company
reserves for such items, including certain product liability claims as part
of the allocation of the purchase price of Morton. Recognizing the amounts
reserved and the uncertainty of the ultimate outcomes, it is the company's
opinion that the resolution of all pending lawsuits, investigations 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.
In the ordinary course of business, the company has entered into certain
purchase commitments, has guaranteed certain loans (with recourse to the
issuer), and has made certain financial guarantees, primarily for the
benefit of its non-U.S. and unconsolidated subsidiaries and affiliates.
It is believed that these commitments and any liabilities which may
result from these guarantees will not have a material adverse effect
upon the consolidated financial position of the company.
(E) Inventories consist of:
(millions of dollars)
June 30, Dec. 31, June 30,
2000 1999 1999
-------- -------- --------
Finished products and work in process $717 $707 $670
Raw materials and supplies 211 192 196
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Total inventories $928 $899 $866
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<PAGE>10
(F) The components of comprehensive income are as follows:
(millions of dollars)
Quarter Ended Six Months Ended
June 30, June 30,
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2000 1999 2000 1999
----- ----- ------ ------
Net earnings $77 $ (9) $200 $101
Other comprehensive income, net of tax:
Foreign currency translation
adjustment 9 (8) 16 (12)
----- ----- ----- ------
Comprehensive income $86 $(17) $216 $ 89
----- ----- ----- ------
(G) The number of common treasury shares were:
June 30, 2000 22,442,809
December 31, 1999 23,097,178
June 30, 1999 28,213,687
(H) The difference in common shares outstanding used in the calculation
of basic and diluted earnings per common share for the quarter and the
six months ended June 30, 2000 is primarily due to the effect of stock
options.
(I) For the company's segment information, see the "Net Sales by Business
Segment and Region" and "Net Earnings by Business Segment" tables within
Management's Discussion and Analysis of Financial Condition and Results
of Operations on pages 11 and 12.
<PAGE>11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following commentary should be read in conjunction with the
Consolidated Financial Statements and Notes to Consolidated Financial
Statements for the year ended December 31, 1999 and Management's
Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's 1999 Annual Report on Form 10-K.
Within the following discussion, unless otherwise stated, "quarter" and "six
month period" refer to the second quarter of 2000 and the six months ended
June 30, 2000. All comparisons are with the corresponding periods in the
previous year, unless otherwise stated. 1999 results have been restated to
reflect the company's current business segmentation.
On June 21, 1999, the company acquired Morton International, Inc.
(Morton), a specialty chemicals producer (see details of this
transaction under "Liquidity, Capital Resources and Other Financial
Data" below). The results of Morton have been included in the
consolidated financial statements for the nine day period from the
acquisition date until the end of the quarter ("the partial period") in 1999.
In addition, unaudited pro forma information is presented for comparison
purposes.
NET SALES BY BUSINESS SEGMENT AND REGION
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(millions of dollars)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------------- ----------------------
Pro Forma Pro Forma
2000 1999 1999 (1) 2000 1999 1999 (1)
--------------------------- ----------------------
BUSINESS SEGMENT
Performance Polymers $ 909 $ 647 $ 931 $1,791 $1,182 $1,795
Chemical Specialties 373 309 369 738 593 719
Electronic Materials 324 171 208 546 292 403
Salt 152 17 154 418 17 462
------ ------ ------ ------ ------ ------
Total $1,758 $1,144 $1,662 $3,493 $2,084 $3,379
------ ------ ------ ------ ------ ------
REGION
North America $1,016 $ 639 $ 986 $2,058 $1,142 $2,030
Europe 427 279 440 870 533 914
Asia-Pacific 232 154 161 414 285 306
Latin America 83 72 75 151 124 129
------ ------ ------ ------ ------ ------
Total $1,758 $1,144 $1,662 $3,493 $2,084 $3,379
------ ------ ------ ------ ------ ------
<PAGE>12
NET EARNINGS BY BUSINESS SEGMENT (3)
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(millions of dollars)
Quarter Ended Six Months Ended
June 30, June 30,
-------------- ----------------
2000 1999 2000 1999
-------------- ----------------
BUSINESS SEGMENT
Performance Polymers $ 80 $ 92 $ 171 $ 169
Chemical Specialties 34 34 70 72
Electronic Materials 26 13 48 18
Salt (6) (1) 12 (1)
Corporate (2) (57) (147) (101) (157)
------ ------ ------ --------
Total $ 77 $ (9) $ 200 $ 101
------ ------ ------ --------
NET EARNINGS BY BUSINESS SEGMENT, EXCLUDING NON-RECURRING ITEMS (3)
-------------------------------------------------------------------
(millions of dollars)
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- -----------------------
Pro Forma Pro Forma
2000 1999 1999 (1) 2000 1999 1999 (1)
------------------------- -----------------------
BUSINESS SEGMENT
Performance Polymers $ 80 $ 90 $109 $168 $167 $203
Chemical Specialties 35 32 42 83 70 84
Electronic Materials 28 14 11 50 26 21
Salt (6) - 1 12 - 26
Corporate (2) (44) (20) (65) (86) (43) (136)
------- ------ ------ ------ ------ ------
Total $ 93 $116 $ 98 $227 $220 $198
------- ------ ------ ------ ------ ------
(1) Pro forma results include adjustments for the Morton acquisition (June
1999) and the LeaRonal acquisition (January 1999) as if they had occurred
as of January 1, 1999.
(2) Corporate includes non-operating items such as interest income and
expense, corporate governance costs, and corporate exploratory research.
(3) Segment earnings reflect after-tax operating results, net of
acquisition-related amortization of goodwill and other assets and
provision for restructuring.
<PAGE>13
RESULTS OF OPERATIONS
SECOND QUARTER 2000 VERSUS SECOND QUARTER 1999
Sales for the company were $1,758 million in the quarter compared to
sales of $1,144 million in the prior year period. On a pro forma basis,
sales increased 6% from $1,662 million. Earnings for the quarter were $77
million compared to net losses of $9 million in the prior year quarter.
Excluding non-recurring items, earnings for the quarter were $93 million
compared to $116 million and $98 million, on a pro forma basis, for 1999.
Diluted earnings per common share was $.35 for the quarter. Excluding non-
recurring items, diluted earnings per common share was $.42 compared to $.67
in the 1999 period and $.44 on a pro forma basis.
Non-recurring items recorded during the quarter of $16 million (after-tax),
or $.07 per common share, were comprised of $14 million of purchased
in-process research and development charges and other one-time charges
related to the Rodel acquisition and $2 million of integration costs.
Second quarter 1999 non-recurring items of $125 million included $105
million of purchased in-process research and development charges related to
the Morton acquisition, $14 million of charges resulting from the
disposition of joint ventures, $5 million of integration and restructuring
costs and $1 million of asset write-downs and other charges in the
Electronic Materials business segment.
Performance Polymers quarterly earnings, excluding non-recurring items,
decreased to $80 million from prior period earnings of $90 million and $109
million, on a pro forma basis. Sales increased to $909 million from $647
million in 1999 but decreased slightly from 1999 pro forma sales of $931
million. Excluding sales related to the Industrial Coatings business sold
in the first quarter of 2000, sales increased 2% on a pro forma basis.
Sales increased modestly primarily as a result of lower selling prices,
weaker European currencies and a slower construction market. In addition,
sales were impacted by slower volume growth during the quarter, primarily in
North America. Although most businesses within Performance Polymers were
affected by these trends, Monomers showed strong volume growth as a result
of the acquired Stockhausen merchant monomer business and Powder Coatings
saw increased sales from the grill market and gains in other markets.
Strong growth was also noted within the Asia-Pacific and Latin America
regions, particularly for the Coatings business. The decrease in earnings
was largely the result of continued raw material increases and delayed
implementation of selling price increases.
Chemical Specialties earnings were flat at $34 million in the second quarter
of 2000 and 1999. Earnings, excluding non-recurring items, were $35
million, up slightly from prior period earnings of $32 million and down from
pro forma earnings of $42 million. Sales increased to $373 million in the
quarter from actual sales of $309 million and pro forma sales of $369
million. Sales were strong for the Consumer and Industrial Specialties
business group but were offset by a decline in Agricultural Chemicals sales
due to poor weather conditions in the North America and Asia-Pacific regions
as well as lower demand in Latin America and production difficulties in
Europe. The decrease in earnings excluding non-recurring items for the
quarter from 1999 quarterly pro forma earnings was primarily attributable to
lower earnings in Agricultural Chemicals and Performance Chemicals offset in
part by strong results in the Consumer and Industrial Specialties
businesses.
<PAGE>14
Electronic Materials earnings of $26 million increased significantly
from reported earnings of $13 million in the 1999 period. Excluding non-
recurring items, earnings were $28 million in the quarter compared to $14
million in the 1999 period and $11 million on a pro forma basis. Sales
increased significantly to $324 million from actual sales of $171 million and
pro forma sales of $208 million in the previous 1999 period. Increases in
sales and earnings were impacted by contributions from Rodel. Results of
operations for Rodel were combined during the second quarter of 2000,
following the transactions increasing the company's ownership to approximately
90%. In addition, sales and earnings increases, on a pro forma basis, were
notable in both the Shipley Ronal and Microelectronics businesses,
particularly in Europe and Asia-Pacific, due to continued demand for new
technologies.
Salt reported losses, excluding non-recurring items, of $6 million in the
quarter compared to prior period pro forma earnings, excluding non-recurring
items, of $1 million. Sales of $152 million for the quarter were comparable to
prior quarter pro forma sales of $154 million. The change in pro forma sales
and earnings in the second quarter of 2000 was attributable to weather-related
inventory adjustments and competitive pressures in Europe.
The quarter's gross profit margin was 33%, down from 39% in the prior
year period. The change in gross profit margin is primarily the result of
an increase in hydrocarbon-based raw material prices, which were 60% higher in
the second quarter of 2000 compared to the same period of the prior year.
Higher energy costs in the form of higher natural gas prices and increased
freight charges also contributed to the change in gross profit margin. To a
lesser extent, former Morton businesses operating at lower margins than most
legacy Rohm and Haas businesses and higher depreciation resulting from fair
values being assigned to acquired assets were additional factors.
Selling, administrative and research expenses remained level at 20% of net
sales for the quarter compared to the same period of 1999 on a pro forma
basis.
Interest expense increased to $60 million in 2000 from $18 million in
1999 due largely to higher debt levels resulting from 1999 acquisitions.
Amortization of goodwill and other intangibles increased significantly during
the quarter to $42 million from $5 million in 1999 period, also attributable
to the 1999 acquisitions.
Corporate expenses totaled $57 million in the quarter, compared to $147
million in the previous period. The quarter's actual expenses reflect
higher interest costs, associated primarily with the financing of
acquisitions, in addition to a charge for purchased in-process research and
development related to the Rodel acquisition. The second quarter of 1999
includes a $105 million charge for purchased in-process research and
development associated to the Morton acquisition and a charge to settle a
matter related to the company's 1998 sale of the AtoHaas joint venture.
Other income was $13 million for the quarter in contrast with other expense
of $17 million in the prior year period. The 2000 period mainly comprises
foreign currency gains. The 1999 period includes Morton integration costs.
<PAGE>15
The effective tax rate for the second quarter of 2000 and 1999 was 38% and
36%, respectively, excluding the non-tax deductible purchased in-process
research and development charge recorded during each period. The rates for
both quarters also reflect the effect of certain non-tax deductible
amortization charges resulting from the company's acquisition activities
during those periods.
SIX MONTHS 2000 VERSUS SIX MONTHS 1999
Sales for the company were $3,493 million in the first six months of 2000
compared to actual sales of $2,084 million and pro forma sales of $3,379
million in the prior year period. Earnings for the six months were $200
million compared to $101 million in the prior period. Excluding non-recurring
items, earnings were $227 million compared to $220 million and $198 million, on
a pro forma basis, for the same periods. Diluted earnings per common share was
$.90 for the period. Excluding non-recurring items, diluted earnings per
common share was $1.03 compared to $1.23 in the 1999 period. On a pro-forma
basis, diluted earnings per share, excluding non-recurring items, was $.88 for
the 1999 period.
Non-recurring items for the six months of $27 million (after-tax) included
$14 million of purchased in-process research and development charges and
other one-time charges related to the Rodel acquisition and $13 million of
integration costs. 1999 non-recurring items of $119 million included $105
million of purchased in-process research and development charges related to
the Morton acquisition, $14 million of charges resulting from the
disposition of joint ventures, $13 million gain related to a favorable
settlement with insurance carriers over certain environmental remediation
matters, $5 million of integration and restructuring costs, and $8 million
of asset write-downs and other charges in the Electronic Materials business
segment.
Performance Polymers six month earnings were $171 million compared to prior
period earnings of $169 million. Excluding non-recurring items, earnings
were $168 million compared to $167 million and $203 million, on a pro forma
basis, in the six month period of 1999. Sales increased to $1,791 million
from $1,182 million in 1999 and were flat with 1999 pro forma sales of
$1,795 million. Excluding sales related to the Industrial Coatings business
sold in the first quarter of 2000, sales increased 3% on a pro forma basis.
Volume growth, stronger in the first quarter of 2000 than in the second
quarter of 2000, was offset by lower selling prices and weaker European
currencies, contributing to relatively unchanged sales levels for the six
months ended June 30, 2000 on a pro forma basis. The decline in growth for
the second quarter of 2000 affected most businesses within Performance
Polymers but was offset by strong volume growth in the Monomers business as
a result of the acquired Stockhausen merchant monomer business and increased
sales for the Powder Coatings business from the grill market and gains in
other markets. Sales increases for the first quarter of 2000 were most
notable in the Coatings and Adhesive and Sealants business in the Europe,
Asia-Pacific and Latin America regions. Increased raw material prices
continued to impact earnings for the period.
<PAGE>16
Chemical Specialties earnings were steady at $70 million for the six month
period versus earnings of $72 million for the 1999 period. Earnings,
excluding non-recurring items, were $83 million, increasing $13 million from
prior period earnings of $70 million and relatively unchanged from 1999 pro
forma earnings of $84 million. Sales increased to $738 million from actual
sales of $593 million in the prior period and increased 3% from pro forma
sales of $719 million. Sales increases were driven by Consumer and
Industrial Specialties with strong contributions from Ion Exchange Resins
in the first quarter of 2000. These increases were offset by a decline in
Agricultural Chemicals sales due to poor weather conditions in the North
America and Asia-Pacific regions.
Electronic Materials earnings were $48 million versus $18 million in the
prior six month period. Excluding non-recurring items, earnings were $50
million and increased significantly from $26 million and pro forma amounts
of $21 million in the 1999 period. Sales of $546 million increased
considerably from actual prior period sales of $292 million and pro forma
1999 sales of $403 million. Increases in sales and earnings were impacted
by contributions from Rodel. Results of operations for Rodel were combined
during the second quarter of 2000, following the transactions increasing the
company's ownership to approximately 90%. In addition, sales and earnings
increases, on a pro forma basis, were notable in both the Shipley Ronal and
Microelectronics businesses, particularly in Europe and Asia-Pacific, due
to continued demand for new technologies.
Salt earnings for the six month period were $12 million compared to pro forma
1999 earnings, excluding non-recurring items, of $26 million. Sales decreased
to $418 million in the period compared to 1999 pro forma sales of $462
million. The change in sales and earnings from the 1999 period to the 2000
period was largely attributable to the impact of a mild winter in 2000 on ice
control salt sales in contrast with a more severe winter in 1999.
Corporate expenses totaled $101 million in the first six months of 2000,
compared to $157 million in the same period of the prior year. The 2000
period's actual expenses reflect higher interest costs, associated primarily
with the financing of acquisitions, in addition to a second quarter 2000
charge for purchased in-process research and development related to the
Rodel acquisition. The 1999 period primarily includes a $105 million charge
for purchased in-process research and development associated with the Morton
acquisition and a charge to settle a matter related to the company's 1998
sale of the AtoHaas joint venture.
Gross profit margin was 34%, down from 40% from the prior six month period.
The change in gross profit margin is primarily the result of increased
hydrocarbon-based raw material prices in addition to higher energy costs in
the form of higher natural gas prices and increased freight charges. To a
lesser extent, former Morton businesses operating at lower margins than most
legacy Rohm and Haas businesses and higher depreciation resulting from fair
values being assigned to acquired assets also contributed to the change in
gross profit margin. The impact of increased raw material prices is primarily
in the Performance Polymers business segment. The extent to which these prices
will continue to rise is uncertain, but the company has assumed that pricing
will remain elevated through the end of the year. The company is responding by
actively pursuing increases in selling prices.
<PAGE>17
Selling, administrative and research expenses decreased to 19% of net sales
for the six months ended June 30, 2000 from 20% on a pro forma basis for the
same period of 1999. In 1999, the company began implementing a planned
redesign of its selling and administrative infrastructure and instituted other
cost saving measures. The stated goal of these efforts was to reduce annual
procurement, SAR and other expenses by $300 million. Through June 30,
2000, approximately $250 million of this goal had been reached through
cost reductions in support services, procurement and manufacturing.
Interest expense increased to $122 million in 2000 from $29 million in
1999 due largely to higher debt levels resulting from 1999 acquisitions.
Amortization of goodwill and other intangibles also increased significantly
during the period to $80 million from $7 million in 1999 period, also
attributable to the 1999 acquisitions.
Other income was $25 million for the 2000 period compared to $7 million in
1999. The increase in the 2000 period was attributable to foreign currency
gains. The 1999 period includes Morton integration costs offset by a gain
related to a favorable settlement with insurance carriers over certain
environmental remediation matters. The $22 million loss on disposition of
joint venture recorded in the 1999 period reflects the pre-tax settlement
related to the 1998 sale of AtoHaas.
The effective tax rate for the six months ended June 30, 2000 and 1999 was 36%
and 37%, respectively, excluding the non-tax deductible purchased in-process
research and development charge recorded during each period. The rates for
both six month periods also reflect the effect of certain non-tax deductible
amortization charges resulting from the company's acquisition activities
during those periods.
LIQUIDITY, CAPITAL RESOURCES AND OTHER FINANCIAL DATA
On June 21, 1999, the company acquired Morton for cash of $3 billion and the
issuance of 45 million shares of common stock, for a total transaction value
of approximately $4.9 billion, including the assumption of $272 million of
debt. Morton is a manufacturer of specialty chemicals and a producer of salt
for a variety of markets. The cash portion of the acquisition was financed
primarily through a combination of commercial paper and the later issuance of
longer term instruments. Accounted for by the purchase method, the financial
statements reflect the allocation of the purchase price based on fair values
at the date of acquisition. The final allocation as of June 30, 2000 resulted
in acquired goodwill of $1.7 billion, which is being amortized on a straight-
line basis over 40 years. Based on an independent appraisal, $105 million of
the purchase price was allocated to in-process research and development, which
was recorded as a charge in the second quarter of 1999. For additional
discussion regarding purchased in-process research and development, see
Note 3 in the company's annual report for the year ended December 31, 1999.
During the first six months of 2000, adjustments totaling $220 million were
made to the purchase price allocation for pre-acquisition contingencies,
businesses divested at fair value, and lease terminations and other items
related to the Morton acquisition.
In late January 1999, the company acquired all of the outstanding shares of
LeaRonal, Inc. (LeaRonal) for approximately $460 million. LeaRonal
develops and manufactures specialty chemicals used in the manufacture of
printed circuit boards, semiconductor packaging and for electronic connector
plating and also provides processes for metal-finishing applications. The
acquisition, financed primarily through commercial paper, was accounted for
using the purchase method. The financial statements reflect the allocation
of the purchase price based on fair values at the date of acquisition and
later analysis of certain acquired assets and liabilities. The final
allocation resulted in acquired goodwill of approximately $202 million,
which is being amortized on a straight-line basis over 40 years.
<PAGE>18
The results of both Morton and LeaRonal have been included in the
consolidated financial statements since the respective dates of
acquisition.
In the second quarter of 1999, the company announced its intentions to enter
into a joint venture with Stockhausen GmbH & Co. KG ("Stockhausen") of Germany
to form a global partnership for the manufacture of acrylic acid. The company
expects the transaction to close by the end of 2000. In conjunction with the
proposed joint venture, the company acquired Stockhausen's merchant monomer
business in Europe in the first quarter of 2000.
The following acquisition and divestiture activities occurred or were
announced in 2000:
- The company sold its Industrial Coatings business to BASF Corporation for
approximately $175 million, subject to working capital adjustments. The
Industrial Coatings business was acquired by the company in June 1999 as
part of the acquisition of Morton and was recorded at its fair value;
accordingly, no gain or loss was recorded on this transaction.
- The company increased its ownership in Rodel from 48% to 90% for a cost of
approximately $200 million. Rodel is a privately-held, Delaware-based
leader in precision polishing technology serving the semiconductor, memory
disk and glass polishing industries. Through March 31, 2000, the investment
had been accounted for on the equity method with the company's share of
earnings reported as equity in affiliates. Beginning in the second quarter
of 2000, the transaction with Rodel, increasing the company's ownership to
approximately 90%, was accounted for using the purchase method with results
of operations combined during the second quarter of 2000. The financial
statements reflect the allocation of the purchase price based on estimated
fair values, and resulted in acquired goodwill of $58 million, which is
being amortized on a straight-line basis over 30 years. $13 million of the
purchase price was allocated to in-process research and development related
to chemical mechanical planarization and surface preparation technologies
under development and was recorded as a charge in the second quarter of
2000.
- The company acquired 95% of Acima A.G., a Swiss company specializing in
biocidal formulations, polyurethane catalysts and other specialty chemicals.
The company also acquired an 80% interest in Silicon Valley Chemical
Laboratories, Inc. (SVC), a privately-held supplier to high technologies for
the semiconductor industry. The combined cost for these two transactions was
approximately $93 million. These transactions have been accounted for using
the purchase method with results of operations of SVC combined as of the date
of acquisition and the results of operations of Acima combined during the
second quarter of 2000 due to the unavailability of data as of March 31, 2000.
The financial statements reflect the allocation of the purchase prices based
on estimated fair values at the dates of acquisition, and resulted in acquired
combined goodwill of $32 million, which is being amortized on a straight-line
basis over 40 years for Acima and over 20 years for SVC.
In conjunction with the above acquisitions, the company also allocated
$172 million to identifiable intangible assets, which are being amortized
over useful lives ranging from 5 to 30 years.
- The company acquired the photoresist business of Mitsubishi Chemical
Corporation in the second quarter of 2000. Mitsubishi Chemical is a leading
producer of G-line, I-line and deep UV photoresist chemistry used to make
semi-conductor chips. The transaction will be accounted for using the purchase
method with results of operations combined in the third quarter of 2000.
<PAGE>19
- The company agreed to sell its Thermoplastic Polyurethane business to
Huntsman Corporation for $120 million, subject to adjustment, and its European
Salt business, Salins-Europe, to a consortium, which includes management, led
by Union d'Etudes et d'Investissements SA, a wholly owned subsidiary of Credit
Agricole, for approximately $270 million. Both businesses were acquired by the
company in June 1999 as part of the acquisition of Morton International and
were recorded at fair value; accordingly, no gain or loss is expected to be
recorded on these transactions. These transactions are expected to close in
the third and fourth quarters of 2000, respectively.
- The company agreed to sell its 50% interest in TosoHaas to its joint venture
partner, Tosoh Corporation. The transaction is expected to close in the third
quarter of 2000.
Net cash in-flows during the six months ended June 30, 2000 resulted in a $5
million net increase in cash and cash equivalents versus year-end 1999. Free
cash flows for the six month period in 2000 versus 1999 were as follows (in
millions):
Six Months Ended
June 30,
--------------------
2000 1999
--------- --------
Cash provided by operating activities $168 $313
Capital additions (141) (95)
Dividends (85) (60)
--------- --------
Free cash flow $(58) $158
--------- --------
Free cash outflows reflect seasonality and are not indicative of full year
free cash flows. Fixed asset additions during the six months ended June 30,
2000 included an Acrylic Acid plant expansion in Houston, a Dithane plant
expansion in China and an Emulsion plant expansion in Argentina, in
addition to on-going investments related to general support of
manufacturing facilities. Spending for the full year of 2000 is expected
to be approximately $460 million.
The debt ratio was 53% at the end of the quarter, compared with 52% at
year-end 1999. (The debt ratio is total debt, net of cash, divided by
the sum of net debt, minority interest, shareholders' equity and ESOP
shares.)
The company expects estimated working capital requirements and capital
expenditures will be funded by cash from operations and through the company's
credit facilities.
On July 24, 2000 the board of directors approved an increase in the
quarterly dividend on common shares from 19 cents to 20 cents per common
share payable September 1, 2000 to stockholders of record on August 4,
2000.
There is a risk of environmental damage in chemical manufacturing
operations. The company's environmental policies and practices are
designed to ensure compliance with existing laws and regulations and to
minimize the possibility of significant environmental damage. Following
the 1999 acquisitions of Morton and LeaRonal, the company began a process at
acquired facilities to ensure company-wide uniformity in such
policies and practices.
<PAGE>20
In Wood-Ridge, New Jersey, the company and Velsicol Chemical Corporation
("Velsicol") have been held jointly and severally liable for the cost of
remediation necessary to correct mercury-related environmental problems
associated with a mercury processing plant on the site prior to its
acquisition by Morton. At the date of acquisition Morton had disclosed and
accrued for certain ongoing studies, which were expected to be completed by
the end of 2000, with regulatory decisions expected in 2001. In allocating
the purchase price of Morton, the company accrued for additional study costs
at December 31, 1999 and additional remediation costs in the first quarter
of 2000 based on the progress of the technical studies. A separate study of
the contamination in Berry's Creek, which runs near the plant site, and of
the surrounding wetlands area is expected, but on a timetable yet to be
determined; therefore, the estimated costs of remediation that may result
from this separate study have not been considered in the allocation of the
Morton purchase price. The company's ultimate exposure will also depend
upon the continued ability of Velsicol and its indemnitor, Fruit of the
Loom, Inc., which has filed for protection under the bankruptcy laws, to
contribute to the cost of remediation and on the results of attempts to
obtain contributions from others believed to share responsibility. A cost
recovery action against these responsible parties is pending in federal
court. Settlements have been reached with some defendants for claims
considered de minimis associated with the Wood-Ridge plant site. Where
appropriate, the analysis to determine the company's liability, if any, with
respect to remedial costs at the above sites reflects an assessment of the
likelihood and extent of participation of other potentially responsible
parties.
During 1996, the EPA notified Morton of possible irregularities in water
discharge monitoring reports filed by the Moss Point, Mississippi plant
in early 1995. Morton investigated and identified other environmental issues
at the plant. The company has been provided a copy of a draft multi-count
civil complaint and was served with subpoenas and a request for information
seeking documents related to environmental compliance at Moss Point and other
Morton manufacturing sites. The company engaged in negotiations with the EPA,
the Department of Justice (DOJ) and the State of Mississippi seeking
resolution of these civil issues. The company also engaged in related
negotiations with the DOJ concerning potential criminal sanctions against the
Moss Point plant. Though at the date of acquisition some remediation and
legal costs had been accrued for, the company revised these accruals as part
of the allocation of the purchase price of Morton based on its discussions
with the authorities and on the information available as of June 30, 2000. As
a result of the issues that began with Moss Point, the company may be exposed
to material fines, penalties, and remedial expenses, but is unable to quantify
the ultimate exposure.
The amount charged to earnings before tax for environmental remediation was
$4 million and $7 million for the six months ended June 30, 2000 and 1999,
respectively. Remediation-related reserves were $218 million and $201
million at June 30, 2000 and December 31, 1999, respectively, and are
recorded as "other liabilities" (current and long-term). These reserves
include amounts resulting from the allocation of the purchase price of
Morton. The company is pursuing lawsuits over insurance coverage for
environmental liabilities. It is the company's practice to reflect
environmental insurance recoveries in results of operations for the quarter
in which the litigation is resolved through settlement or other appropriate
legal process. Resolutions typically resolve coverage for both past and
future environmental spending. The company settled with several of its
insurance carriers and recorded income before tax for approximately $1
million and $21 million for the six months ended June 30, 2000 and 1999,
respectively.
<PAGE>21
In addition to accrued environmental liabilities, the company has
reasonably possible loss contingencies related to environmental matters
of approximately $84 million and $110 million at June 30, 2000 and December
31, 1999, respectively. Further, the company has identified other sites,
including its larger manufacturing facilities, where additional future
environmental remediation may be required, but these loss contingencies
cannot reasonably be estimated at this time. These matters involve
significant unresolved issues, including the number of parties found
liable at each site and their ability to pay, the outcome of negotiations with
regulatory authorities, the alternative methods of remediation and the range
of costs associated with those alternatives. The company believes that these
matters, when ultimately resolved, which may be over an extended period of
time, will not have a material adverse effect on the consolidated financial
position or consolidated cash flows of the company, but could have a material
adverse effect on consolidated results of operations or cash flows in any
given period.
There are pending lawsuits filed against Morton related to asbestos
exposure at a facility in Weeks Island, Louisiana with additional
lawsuits expected. The company expects that most of these cases will be
dismissed because they are barred under worker's compensation laws; but
cases involving asbestos-caused malignancies will not be barred under
Louisiana law. Subsequent to the acquisition, the company commissioned
medical studies to estimate possible future claims. Accruals were
recorded as of June 30, 2000 as part of the allocation of the purchase price
of Morton based on these studies.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, which addresses principles of revenue
recognition. The company is currently evaluating the impact SAB No. 101 will
have on its financial statements and revenue recognition policies and
procedures, if any.
In 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes a new model for
the accounting and reporting of derivative and hedging transactions.
The statement amends a number of existing standards and, as amended by
SFAS No. 138, is scheduled to be effective for fiscal years beginning
after June 15, 2000. The company expects to adopt this standard as of January
1, 2001, as required, and is currently evaluating its potential impact on its
financial position or results of operations. Because of continual business-
driven changes to its derivatives and hedging programs, its impact has not
been fully assessed.
This report includes forward-looking statements, reflecting management's
current expectations, based on reasonable assumptions. Results could
differ materially depending on such factors as changes in business
climate, economic and competitive uncertainties, the company's ability
to integrate Morton and LeaRonal in addition to other future acquisitions,
changes in strategies, risks in developing new products and technologies,
interest rates, environmental and safety regulations and clean-up costs and
foreign exchange rates. As appropriate, additional factors are contained in
the company's 1999 Form 10-K report filed with the Securities and Exchange
Commission on March 27, 2000.
<PAGE>22
ITEM 3. - QUANTITATIVE AND QUALITATIVE DISCUSSION ABOUT MARKET RISK
Management's discussion of market risk is incorporated herein
by reference to Item 7a of the Form 10-K for the year ended
December 31, 1999, filed with the Securities and Exchange
Commission on March 27, 2000.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEEDINGS (See pages 7 through 9)
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The company's 82nd annual meeting of stockholders was held on
May 1, 2000, in Philadelphia, Pennsylvania.
(b) The following is a tabulation of the results of voting by security
holders for the election of directors:
Nominees Votes For Votes Withheld
----------------------- ----------- --------------
William J. Avery 195,034,054 1,716,551
James R. Cantalupo 195,168,860 1,581,745
J. Michael Fitzpatrick 195,102,214 1,648,391
Earl G. Graves 195,019,051 1,731,554
Rajiv L. Gupta 195,171,913 1,578,692
David W. Haas 195,166,504 1,584,101
Thomas W. Haas 195,100,827 1,649,778
James A. Henderson 195,235,022 1,515,583
Richard L. Keyser 195,106,261 1,644,344
John H. McArthur 194,817,838 1,932,767
Jorge P. Montoya 193,550,265 3,200,340
Sandra O. Moose 195,129,939 1,620,666
Gilbert S. Omenn 195,283,170 1,467,435
Ronaldo H. Schmitz 193,548,857 3,201,748
Marna C. Whittington 195,260,388 1,490,217
(c) The following is a tabulation of the results of voting by security
holders for other matters:
Proposal to approve the 2000 Rohm and Haas Long-Term Bonus Plan:
For 190,545,156
Against 4,618,990
Abstain 1,586,459
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit (27) Financial Data Schedule
(b) Reports filed on Form 8-K during the quarter ended
June 30, 2000:
None.
<PAGE>23
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 10, 2000 ROHM AND HAAS COMPANY
--------------- (Registrant)
BRADLEY J. BELL
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
<PAGE>24
EXHIBIT INDEX
(Pursuant to Part 232.102(d) of Regulation S-T)
Exhibit
No. Description
-------- ------------------------------------------------------------
(27) Financial Data Schedule
