<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO __________
1-4462
------------------------------
Commission File Number
STEPAN COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36 1823834
- ---------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Edens and Winnetka Road, Northfield, Illinois 60093
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number (847) 446-7500
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 2000
- ----------------------------------- -----------------------------------
Common Stock, $1 par value 9,439,346 shares
<PAGE>
Part I FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1 - Financial Statements
STEPAN COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2000 and December 31, 1999
Unaudited
<TABLE>
<CAPTION>
(Dollars in thousands) 3/31/00 12/31/99
-------- ---------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 4,020 $ 3,969
Receivables, net 97,867 97,089
Inventories (Note 2) 51,533 51,849
Deferred income taxes 9,361 9,361
Other current assets 4,982 4,392
-------- ---------
Total current assets 167,763 166,660
-------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Cost 601,021 596,904
Less: Accumulated depreciation 396,128 387,423
-------- ---------
204,893 209,481
-------- ---------
OTHER ASSETS 37,728 38,435
-------- ---------
Total assets $410,384 $ 414,576
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 7,588 $ 7,663
Accounts payable 43,807 48,676
Accrued liabilities 36,774 41,706
-------- ---------
Total current liabilities 88,169 98,045
-------- ---------
DEFERRED INCOME TAXES 41,733 41,975
-------- ---------
LONG-TERM DEBT, less current maturities 112,542 107,420
-------- ---------
11,342 12,072
-------- ---------
OTHER NON-CURRENT LIABILITIES
STOCKHOLDERS' EQUITY:
5-1/2% convertible preferred stock, cumulative, voting without par value;
authorized 2,000,000 shares; issued 777,712 shares in 2000 and 783,003
shares in 1999 19,443 19,575
Common stock, $1 par value; authorized 30,000,000 shares;
issued 9,704,840 shares in 2000 and 9,684,600 shares in 1999 9,705 9,685
Additional paid-in capital 11,924 11,909
Accumulated other comprehensive loss (11,277) (10,631)
Retained earnings (approximately $49,680 unrestricted in 2000 and $48,329 in 1999) 136,741 134,224
-------- ---------
Less: Treasury stock, at cost 9,938 9,698
-------- ---------
Stockholders' equity 156,598 155,064
-------- ---------
Total liabilities and stockholders' equity $410,384 $ 414,576
======== =========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these condensed consolidated balance sheets.
<PAGE>
STEPAN COMPANY
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2000 and 1999
Unaudited
<TABLE>
<CAPTION>
(In thousands, except per share amounts) Three Months
Ended March 31
2000 1999
---- ----
<S> <C> <C>
NET SALES $167,376 $163,961
Cost of Sales 140,293 135,042
-------- --------
Gross Profit 27,083 28,919
-------- --------
Operating Expenses:
Marketing 6,176 5,682
Administrative 6,149 5,520
Research, Development and Technical Services 5,758 5,492
-------- --------
18,083 16,694
-------- --------
Operating Income 9,000 12,225
Other Income (Expense):
Interest, Net (2,051) (2,110)
Income from Equity Joint Ventures 54 33
-------- --------
(1,997) (2,077)
-------- --------
Income Before Income Taxes 7,003 10,148
Provision for Income Taxes 2,732 4,006
-------- --------
NET INCOME $ 4,271 $ 6,142
======== ========
Net Income Per Common Share (Note 4)
Basic $ 0.43 $ 0.61
======== ========
Diluted $ 0.41 $ 0.57
======== ========
Dividends per Common Share $ 0.1625 $ 0.1500
======== ========
Average Common Shares Outstanding 9,501 9,681
======== ========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
STEPAN COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2000 and 1999
Unaudited
<TABLE>
<CAPTION>
(Dollars in thousands) 3/31/00 3/31/99
-------- --------
<S> <C> <C>
NET CASH FLOW FROM OPERATING ACTIVITIES
Net income $ 4,271 $ 6,142
Depreciation and amortization 10,307 10,211
Deferred revenue recognition (755) (1,112)
Deferred income taxes (239) 836
Environmental and legal liabilities 25 (186)
Other non-cash items 45 438
Changes in Working Capital:
Receivables, net (778) (12,051)
Inventories 316 5,251
Accounts payable and accrued liabilities (9,801) 5,273
Other (590) 287
-------- --------
Net Cash Provided by Operating Activities 2,801 15,089
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property, plant and equipment (5,436) (7,886)
Other non-current assets 23 82
-------- --------
Net Cash Used for Investing Activities (5,413) (7,804)
-------- --------
CASH FLOWS FROM FINANCING AND OTHER RELATED ACTIVITIES
Revolving debt and notes payable to banks, net 5,200 (400)
Other debt repayments (153) (352)
Purchases of treasury stock, net (239) (2,429)
Dividends paid (1,754) (1,676)
Other non-cash items (391) 372
-------- --------
Net Cash Provided by (Used for) Financing and Other Related Activities 2,663 (4,485)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 51 2,800
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,969 983
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,020 $ 3,783
======== ========
CASH PAID DURING THE PERIOD FOR:
Interest $ 739 $ 735
Income taxes $ (163) $ 1,728
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
STEPAN COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000 and December 31, 1999
Unaudited
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
-------------------------------------------
The condensed consolidated financial statements included herein have been
prepared by the company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
management believes that the disclosures are adequate and make the
information presented not misleading. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the company's latest Annual
Report to Stockholders and the Annual Report to the Securities and Exchange
Commission on Form 10-K for the year ended December 31, 1999. In the
opinion of management all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the consolidated financial
position of Stepan Company as of March 31, 2000, and the consolidated
results of operations and cash flows for the three months then ended, have
been included.
2. INVENTORIES
-----------
Inventories include the following amounts:
(Dollars in thousands) 3/31/00 12/31/99
------- --------
Inventories valued primarily on LIFO basis -
Finished products $ 32,971 $ 32,729
Raw materials 18,562 19,120
-------- --------
Total inventories $ 51,533 $ 51,849
======== ========
If the first-in, first-out (FIFO) inventory valuation method had been used
for all inventories, inventory balances would have been approximately
$10,400,000 and $10,600,000 higher than reported at March 31, 2000, and
December 31, 1999, respectively.
3. CONTINGENCIES
-------------
There are a variety of legal proceedings pending or threatened against the
company. Some of these proceedings may result in fines, penalties,
judgments or costs being assessed against the company at some future time.
The company's operations are subject to extensive local, state and federal
regulations, including the federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("Superfund") and the Superfund
amendments of 1986. The company, and others, have been named as
<PAGE>
potentially responsible parties at affected geographic sites. As discussed
in Management's Discussion and Analysis of Financial Condition and Results
of Operations included in this filing, the company believes that it has
made adequate provisions for the costs it may incur with respect to these
sites.
The company has estimated a range of possible environmental and legal
losses from $4.2 million to $24.7 million at March 31, 2000. The company's
reserve at March 31, 2000, and December 31, 1999, was $11.6 million.
For certain sites, estimates cannot be made of the total costs of
compliance, or the company's share of such costs; accordingly, the company
is unable to predict the effect thereof on future results of operations.
In the event of one or more adverse determinations in any annual or interim
period, the impact on results of operations for those periods could be
material. However, based upon the company's present belief as to its
relative involvement at these sites, other viable entities'
responsibilities for cleanup and the extended period over which any costs
would be incurred, the company believes that these matters will not have a
material effect on the company's financial position. Certain of these
matters are discussed in Item 3, Legal Proceedings, in the 1999 Form 10-K
Annual Report and in other filings of the company with the Securities and
Exchange Commission, which are available upon request from the company.
4. EARNINGS PER SHARE
------------------
Below is the computation of basic and diluted earnings per share for the
three months ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
(In thousands, except per share amounts) Three Months
Ended March 31
2000 1999
---- ----
Computation of Basic Earnings per Share
- ----------------------------------------
<S> <C> <C>
Net income $ 4,271 $ 6,142
Deduct dividends on preferred stock 207 224
------- -------
Income applicable to common stock $ 4,064 $ 5,918
======= =======
Weighted-average number of shares outstanding 9,501 9,681
Basic earnings per share $ 0.43 $ 0.61
======= =======
Computation of Diluted Earnings per Share
- -----------------------------------------
Net income $ 4,271 $ 6,142
======= =======
Weighted-average number of shares outstanding 9,501 9,681
Add net shares issuable from assumed exercise of options
(under treasury stock method) 223 336
Add weighted-average shares issuable from assumed conversion of convertible
preferred stock 692 743
------- -------
Shares applicable to diluted earnings 10,416 10,760
======= =======
Diluted earnings per share $ 0.41 $ 0.57
======= =======
</TABLE>
<PAGE>
5. COMPREHENSIVE INCOME
--------------------
Below is the company's comprehensive income for the three months ended
March 31, 2000 and 1999.
<TABLE>
<CAPTION>
(Dollars in thousands) Three Months Ended
------------------
March 31
--------
2000 1999
---- ----
<S> <C> <C>
Net income $ 4,271 $ 6,142
Other comprehensive loss:
Foreign currency translation adjustments (646) (928)
------- -------
Comprehensive income $ 3,625 $ 5,214
======= =======
</TABLE>
6. SEGMENT REPORTING
-----------------
Stepan Company has three reportable segments: surfactants, polymers and
specialty products. Financial results of Stepan Company's operating
segments for the quarters ended March 31, 2000 and 1999, are summarized
below:
<TABLE>
<CAPTION>
(Dollars in thousands) Specialty Segment
Surfactants Polymers Products Totals
----------- -------- -------- -------
For the quarter ended March 31, 2000
-------------------------------------
<S> <C> <C> <C> <C>
Net Sales $132,796 $30,383 $4,197 $167,376
Operating income 11,786 4,415 (198) 16,003
For the quarter ended March 31, 1999
-------------------------------------
Net Sales $131,749 $27,762 $4,450 $163,961
Operating income 13,605 4,856 626 19,087
</TABLE>
Below are reconciliations of segment operating income to consolidated
income before income taxes:
<TABLE>
<CAPTION>
(Dollars in thousands) Three Months Ended March 31
----------------------------------------
2000 1999
---- ----
<S> <C> <C>
Operating income segment totals $16,003 $19,087
Unallocated corporate expenses (a) (7,003) (6,862)
Interest expense (2,051) (2,110)
Income from equity in joint ventures 54 33
------- -------
Consolidated income before income taxes $ 7,003 $10,148
======= =======
</TABLE>
(a) Includes corporate administrative and corporate manufacturing
expenses which are not included in segment operating income and not
used to evaluate segment performance.
There have been no changes in the basis of segmentation or the measurement
of segment profit or loss and no material change in segment assets from
those disclosed in the annual report for the year ended December 31, 1999.
The company has certain customers included within the surfactants business
that are under long-term contracts. These contracts range from a period of
2 to 5 years. Certain of these contracts are up for renewal beginning in
2001.
<PAGE>
STEPAN COMPANY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following is management's discussion and analysis of certain significant
factors which have affected the company's financial condition and results of
operations during the interim period included in the accompanying condensed
consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
For the quarter ended March 31, 2000 net cash from operations totaled $2.8
million compared to $15.1 million for the same period in 1999. Working capital
totaled to a net use of $10.9 million. Accounts payable and accrued liabilities
decreased by $9.8 million during the most recent quarter due to payment timing.
Accounts receivable increased by $0.8 million during the current year quarter
while inventories decreased by $0.3 million over the same period.
Capital spending has totaled $5.4 million for the first three months of 2000
compared to $7.9 million for the same period in 1999. Despite lower current
quarter expenditures, total year capital spending is projected to increase from
year to year.
Since December 31, 1999 total company debt increased by $5.0 million, to $120.1
million. As of March 31, 2000 the ratio of long-term debt to long-term debt
plus shareholders' equity was 41.8 percent compared to 40.9 percent last year-
end.
The company maintains contractual relationships with its domestic banks that
provide for revolving credit of up to $60 million, which may be drawn upon as
needed for general corporate purposes. The company also meets short-term
liquidity requirements through uncommitted domestic bank lines of credit. The
company's foreign subsidiaries maintain committed and uncommitted bank lines of
credit in their respective countries to meet working capital requirements as
well as to fund capital expenditure programs and acquisitions.
The company anticipates that cash from operations and from committed credit
facilities will be sufficient to fund anticipated capital expenditures,
dividends and other planned financial commitments for the foreseeable future.
Any substantial acquisitions would require additional funding.
There have been no material changes in the company's market risks since December
31, 1999.
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Three Months Ended March 31, 2000 and 1999
- ------------------------------------------
Net income for the first quarter ended March 31, 2000, was $4.3 million, or
$0.41 per share diluted, down 30 percent from $6.1 million, or $0.57 per share
diluted reported for the same quarter a year ago. Net sales increased two
percent to $167.4 million from $164.0 million reported for the first quarter of
1999. Net sales by segments were:
(Dollars in thousands) Three Months
Ended March 31
------------------------------------------------
2000 1999 % Change
---- ---- --------
Net Sales:
Surfactants $132,796 $131,749 +1%
Polymers 30,383 27,762 +9%
Specialty Products 4,197 4,450 -6%
-------- --------
Total $167,376 $163,961 +2%
======== ========
Surfactants net sales increased one percent between years. Domestic operations,
which accounted for 77 percent of total surfactant revenues, reported a $1.0
million, or one percent, decline in net sales from year to year. Sales volume
increased one percent due to improved sales of the company's laundry and
cleaning products and to higher sales to distributors. Lower sales of personal
care products, due to customer inventory adjustments, partially offset the
volume gains. Decreased average selling prices, due largely to sales mix, more
than offset the effect of higher sales volumes. Net sales for foreign
operations increased $2.1 million, or seven percent. A 15 percent increase in
sales volume, due to higher European and South American sales, caused the
improvement. Lower exchange rates somewhat tempered European operations' net
sales.
Surfactants gross profit decreased three percent to $21.1 million in 2000 from
$21.7 million in 1999. Domestic operations reported a $1.7 million, or 10
percent, decline in gross profit due to a drop in average margins. The decrease
in average margins was mainly due to unfavorable sales mix. The 1999 second
quarter termination of a supply contract also contributed to the decrease.
Gross profit for foreign operations improved $1.1 million, or 32 percent, from
year to year. The company's Canadian and Mexican operations contributed most of
the increase due to improved average margins. Despite strong sales volume,
European operations' gross profit declined primarily due to lower margins
resulting from strong competition and product mix.
Polymers net sales increased $2.6 million, or nine percent, to $30.4 million in
2000 from $27.8 million a year ago. Sales volume rose three percent from year
to year. Phthalic anhydride (PA) net sales increased 26 percent from $8.1
million in 1999 to $10.2 million in 2000 and accounted for most of the increase.
The improvement was mainly due to a 24 percent rise in average selling prices.
The higher prices were due to increased raw material costs which were passed on
to customers. PA sales volume increased two percent. Global net sales of
polyurethane polyols, driven by a seven percent rise in sales volume, increased
$1.1 million, or eight percent, between years. Polyurethane systems net sales
dropped $0.6 million, or 12 percent, due to decreased sales volume.
<PAGE>
Polymers gross profit decreased $0.4 million, or seven percent, from $6.3
million in 1999 to $5.9 million in 2000. A $0.7 million, or 16 percent, decrease
in polyurethane polyols gross profit accounted for the decline. A decrease in
domestic and European margins, resulting from higher material costs, more than
offset the effect of higher polyurethane polyol volumes. Gross profit for PA
increased 21 percent to $1.3 million in 2000 from $1.1 million a year ago. The
rise was due to improved average margins which resulted primarily from plant
operating efficiencies. Polyurethane systems gross profit increased $0.1
million, or 14 percent, from year to year. Higher margins, resulting from a
more profitable sales mix, led to the gross profit improvement.
Specialty products reported a six percent decline in net sales from $4.5 million
in 1999 to $4.2 million in 2000. The decline was primarily due to the drop in
sales volume caused by customer inventory adjustments brought on by Y2K. Gross
profit dropped from $0.9 million in 1999 to $0.1 million in the first quarter of
2000. The decline was mainly due to a lower sales volume of higher margin
products. Improvement is expected in the remainder of the year.
Operating expenses rose eight percent from $16.7 million in 1999 to $18.1
million in 2000. Administrative expenses increased $0.6 million, or 11 percent,
between years. Higher payroll costs, legal expenses and consulting fees caused
the increase. Marketing expenses rose $0.5 million, or nine percent, and
research and development expenses increased $0.3 million, or five percent.
Interest expense declined three percent due to a lower average level of debt and
to lower average borrowing rates.
ENVIRONMENTAL AND LEGAL MATTERS
- -------------------------------
The company is subject to extensive federal, state and local environmental laws
and regulations. Although the company's environmental policies and practices
are designed to ensure compliance with these laws and regulations, future
developments and increasingly stringent environmental regulation could require
the company to make additional unforeseen environmental expenditures. The
company will continue to invest in the equipment and facilities necessary to
comply with existing and future regulations. During the first quarter of 2000,
company expenditures for capital projects related to the environment were $0.3
million and should approximate $1.5 million to $1.8 million for the full year
2000. These projects are capitalized and typically depreciated over 10 years.
Recurring costs associated with the operation and maintenance of facilities for
waste treatment and disposal and managing environmental compliance in ongoing
operations at our manufacturing locations were $1.9 million for the first three
months of 2000. While difficult to project, it is not anticipated that these
recurring expenses will increase significantly in the future.
The company has been named by the government as a potentially responsible party
at 17 waste disposal sites where cleanup costs have been or may be incurred
under the federal Comprehensive Environmental Response, Compensation and
Liability Act and similar state statutes. In addition, damages are being
claimed against the company in general liability actions for alleged personal
injury or property damage in the case of some disposal and plant sites. The
company believes that it has made adequate provisions for the costs it may incur
with respect to
<PAGE>
these sites. The company has estimated a range of possible environmental and
legal losses from $4.2 million to $24.7 million at March 31, 2000. The company's
reserve at March 31, 2000 and December 31, 1999, was $11.6 million. During the
first three months of 2000, expenditures related to legal and environmental
matters approximated $0.5 million. For certain sites, estimates cannot be made
of the total costs of compliance or the company's share of such costs;
accordingly, the company is unable to predict the effect thereof on future
results of operations. In the event of one or more adverse determinations in any
annual or interim period, the impact on results of operations for those periods
could be material. However, based upon the company's present belief as to its
relative involvement at these sites, other viable entities' responsibilities for
cleanup and the extended period over which any costs would be incurred, the
company believes that these matters will not have a material effect on the
company's financial position. Certain of these matters are discussed in Item 3,
Legal Proceedings, in the 1999 Form 10-K Annual Report and in other filings of
the company with the Securities and Exchange Commission, which are available
upon request from the company.
NEW ACCOUNTING STANDARD
- -----------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective for fiscal years beginning after
June 15, 1999. The standard establishes accounting and reporting requirements
for derivative instruments. In June 1999, the FASB issued SFAS No. 137, which
deferred the effective date to fiscal years beginning after June 15, 2000. The
company believes that the adoption of SFAS No. 133 in 2001 will not have a
material effect on its consolidated results of operations or financial position.
OTHER
- -----
Except for the historical information contained herein, the matters discussed in
this document are forward looking statements that involve risks and
uncertainties. The results achieved this quarter are not necessarily an
indication of future prospects for the company. Actual results in future
quarters may differ materially. Potential risks and uncertainties include,
among others, fluctuations in the volume and timing of product orders, changes
in demand for the company's products, changes in technology, continued
competitive pressures in the marketplace, outcome of environmental
contingencies, availability of raw materials, foreign currency fluctuations and
the general economic conditions.
<PAGE>
Part II OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1 - Legal Proceedings
As reported previously, the company has been named as a potentially responsible
party (PRP) in the case USEPA v. Jerome Lightman (92 CV 4710) (JBS) which
------------------------
involves the Ewan and D'Imperio Superfund Sites located in New Jersey. Trial on
the issue of the company's liability at these sites was completed in March 2000.
The company is awaiting a decision from the court. If the company is found
liable at either site, a second trial as to the company's allocated share of
clean-up costs at these sites will be held in calendar year 2000 or calendar
year 2001. The company believes it has adequate defenses to the issue of
liability. In the event of an unfavorable outcome related to the issue of
liability, the company believes it has adequate reserves. On a related matter,
the company has filed an appeal to the United States Third Circuit Court of
Appeals objecting to the lodging of a partial consent decree in favor of the
United States Government in this action. Under the partial consent decree, the
government recovered past costs at the site from all PRPs including the company.
The company paid its assessed share but by objecting to the partial consent
decree, the company is seeking to recover back the sums it paid.
The company received a Section 104(e) Request for Information from the United
States Environmental Protection Agency (USEPA) dated March 21, 2000, regarding
the Lightman Drum Site located in Winslow Township, New Jersey. The company's
response to this request is due on May 18, 2000. The company is currently
investigating this matter and therefore, cannot predict what its liability, if
any, will be for this site.
Reference is made to the action entitled Pennsauken Solid Waste Management
---------------------------------
Authority v. State of New Jersey, et al. The company was served in this action
- ---------------------------------------
on December 13, 1999, and filed its answer. It appears that although the
company was named as a party, there are no allegations regarding dates of
hauling or amounts. The company is attempting to get dismissed from this
action. Therefore, the company does not believe its liability, if any, will
have a material impact on the financial condition of the company.
Reference is made to the Administrative Complaint filed by Region 5 of the USEPA
(FIFRA-5-2000-011) alleging violations of the Federal Insecticide, Fungicide and
Rodenticide Act. The total proposed penalty is $141,000. Settlement
negotiations with USEPA are currently taking place. The company does not
believe that this matter will have a material impact on the financial condition
of the company.
<PAGE>
Item 4 - Submission of Matters to a Vote of Security Holders
(A) The company's 2000 Annual Meeting of Stockholders was held on May 9,
2000.
(B) At the annual meeting of the company's shareholders on May 9, 2000,
shareholders elected Robert D. Cadieux and Paul H. Stepan as Directors
of the company, all for three-year terms.
For Withheld
--- --------
Robert D. Cadieux 7,122,766 1,106,369
Paul H. Stepan 7,110,868 1,118,267
(C) A majority of the outstanding shares voted to approve the adoption of
the Stepan Company 2000 stock option plan.
5,760,295 For
1,500,133 Against
20,198 Abstentions
948,508 Broker non-votes
(D) A majority of the outstanding shares voted to ratify the appointment of
Arthur Andersen LLP as independent auditors for the company for 2001.
8,212,226 For
14,282 Against
2,627 Abstentions
Item 6 - Exhibits and Reports on Form 8-K
(A) Exhibits
(27) Financial Data Schedule
(B) Reports on Form 8-K
None
<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.
STEPAN COMPANY
/s/ Walter J. Klein
Walter J. Klein
Vice President - Finance
Principal Financial and Accounting Officer
Date: May 12, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 AND CONSOLIDATED STATEMENT OF
INCOME FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,020
<SECURITIES> 0
<RECEIVABLES> 97,867
<ALLOWANCES> 0
<INVENTORY> 51,533
<CURRENT-ASSETS> 167,763
<PP&E> 601,021
<DEPRECIATION> 396,128
<TOTAL-ASSETS> 410,384
<CURRENT-LIABILITIES> 88,169
<BONDS> 0
0
19,443
<COMMON> 9,705
<OTHER-SE> 127,450
<TOTAL-LIABILITY-AND-EQUITY> 410,384
<SALES> 167,376
<TOTAL-REVENUES> 167,376
<CGS> 140,293
<TOTAL-COSTS> 158,376
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,051
<INCOME-PRETAX> 7,003
<INCOME-TAX> 2,732
<INCOME-CONTINUING> 4,271
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,271
<EPS-BASIC> 0.43
<EPS-DILUTED> 0.41
</TABLE>
