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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FROM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 24, 1995
STEPAN COMPANY
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 1-4462 36-1823834
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State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation Identification Number)
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Edens and Winnetka Road, Northfield, Illinois 60093
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(Address of principal executive offices)
Registrant's telephone number, including area code: (708) 446-7500
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. STEPAN REPORTS LOSS DURING THIRD QUARTER
NORTHFIELD, Illinois, October 20, 1995 -- Stepan Company today
reported a loss for the third quarter attributable to additional legal and
environmental charges.
The third quarter of 1995 resulted in a loss of $550,000 or $0.08 per
share, down from income of $4,112,000, or $0.39 per share, recorded in the same
quarter of 1994. Net sales for the quarter increased 18 percent to
$130,410,000, up from $110,761,000 recorded a year ago.
Supported by strong first half earnings, net income for the nine month
period of 1995 increased seven percent to $10,977,000, or $1.02 per share,
compared to $10,212,000, or $0.95 per share in 1994. Net sales for this period
increased 22 percent to $401,454,000 from $330,345,000.
"The company has recorded an additional $5 million pre-tax provision
for future legal and environmental costs," said F. Quinn Stepan, Chairman and
President. "The strong first half earnings momentum was also restrained during
the current quarter by the planned maintenance shutdowns of our phthalic
anhydride (PA) and polyol plants. As a result of these shutdowns, polymer
earnings were down from the prior year quarter and well off the pace of the
first two quarters."
During the quarter, a draft of the Remedial Investigation Feasibility
Study for the remediation of the company's Maywood, New Jersey plant and
adjacent property was filed with the Environmental Protection Agency containing
a wide range of alternatives and costs. While many of these costs may or may
not be incurred, an additional charge to earnings is based on the company's
estimate of costs that may be incurred considering all the information
available. The potential benefit of insurance and other third party recoveries
for these costs has not been recorded.
Surfactant earnings were up from the year ago quarter on substantially
higher domestic sales volume at large national customers. Sales volume and
earnings were down for the broader commercial surfactant customer base.
International surfactant earnings were down slightly on lower sales volume in
Canada and Mexico and continuing weak profit margins in Europe.
Operating expenses increased 57 percent due to the legal and
environmental charge. Overall research and marketing expenditures were also
higher. Interest expense rose 25 percent primarily as a result of lower
capitalized interest coupled with higher short term borrowing rates.
"For the year, surfactants and polymers have both experienced
significant growth in sales volume and earnings," said Mr. Stepan.
"Unfortunately, earnings were severely hindered by legal and environmental
charges which account for $8.4 million of the increase in operating expenses."
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"The PA plant turnaround substantially concludes over $10 million of
planned renovations aimed at maximizing capacity and improving reliability of
this facility. PA continues to be in relatively high demand and our internal
consumption of PA in the manufacture of polyurethane polyols continues to
grow," said Mr. Stepan. "We expect a strong fourth quarter driven by growth in
surfactant and polymer earnings."
Stepan Company, headquartered in Northfield, Illinois, is a leading
producer of basic and intermediate chemicals used in household, industrial,
personal care, agricultural and energy-related products. The common stock is
traded on the American and Chicago Stock Exchanges under the symbol SCL, and
the convertible preferred stock is traded on the Chicago Stock Exchange under
the symbol SCLPR.
# # # # #
table follows
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STEPAN COMPANY
Statements of Income
For the Three and Nine Months Ended September 30, 1995 and 1994
(Unaudited - 000's Omitted)
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<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
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% %
1995 1994 CHANGE 1995 1994 CHANGE
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<S> <C> <C> <C> <C> <C> <C>
NET SALES $130,410 $110,761 +18 $401,454 $ 330,345 +22
OPERATING COSTS AND EXPENSES:
Cost of sales 109,763 89,778 +22 328,345 269,562 +22
Operating expenses 19,480 12,405 +57 49,508 38,145 +30
Interest, net 2,046 1,639 +25 6,038 5,360 +13
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131,289 103,822 +26 383,891 313,067 +23
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PRE-TAX (LOSS) INCOME (879) 6,939 -113 17,563 17,278 +2
PROVISION FOR INCOME TAXES (BENEFIT) (329) 2,827 -112 6,586 7,066 -7
-------- --------- --------- ----------
NET (LOSS) INCOME $ (550) $ 4,112 -113 $ 10,977 $ 10,212 +7
======== ========= ========= =========
NET (LOSS) INCOME
PER COMMON SHARE
PRIMARY $ (0.08) $ 0.39 -121 $ 1.02 $ 0.95 +7
======== ======== ======== ==========
FULLY DILUTED $ - $ 0.37 - $ 1.00 $ 0.93 +8
======== ======== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING 9,998 9,938 +1 9,976 9,918 +1
======== ========= =========== =========
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All 1994 share and per share data have been restated for the two-for-one-common
stock split effective December 15, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 24, 1995 Stepan Company
By: /s/ Walter J. Klein
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Name: Walter J. Klein
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Title: Vice President - Finance
