Document oeboJJmL4VJRm4gmnn6K1520R

Segment Results and Other Financial Information Ethyl Corporation and Subsidiaries Net sales (a): Petroleum additives Tetraethyl lead Total Segment operating profit (toss): Petroleum additives before nonrecurring items Nonrecurring items (b) Total petroleum additives Tetraethyl lead Nonrecurring items (b) Total tetraethyl lead Segment operating profit (loss) Add back current year nonrecurring item to reconcile Segment Reporting to Consolidated Statements of Income (c) Corporate unallocated expense Interest expense Pension settlement expense including second quarter 2001 excise tax provision (b) Pension (expense) income Other (expense) income, net (b) Loss before income taxes Net (loss) income: Earnings excluding nonrecurring items Nonrecurring items (b) Net (loss) income: Basic and diluted earnings (loss) per share: (d) Earnings excluding nonrecurring items Nonrecurring items (b) Net (loss) income (In millions except per share amounts, unaudited) Second Quarter 2002 2001 ___________Six Months 2002 2001 $ 172.5 3.0 $ 175.5 $ 175.5 2.1 $ 177.6 $ 321.4 4.7 f 326.1 $ $ 381.4 13.5 394.9 $ 13.3 0.3 13.6 3.4 - 3.4 17.0 $ 10.6 (50.3) (39.7) 10.0 - 10.0 (29.7) $ 24.0 $ (1.2) 22.8 7.8 (1.6) 6.2 29.0 . (4.0) (6.6) - (1.5) (6.6) $ (1.7> . (5.1) (9.8) (88.2) 2.8 (1.0) $ (131.0) 3.1 (6.3) (13.6) (3.0) (9.6) $ (0.4) $ 18.9 (73.6) (54.7) 20.6 - 20.6 (34.1) (11.0) (18.0) (88.2) 5.6 (3.1) (148.8) $ 1.4 (3.9) (2.5) $ 5.1 (99.9) $ (94.8) $ 2.3 (6.4) * (4.1) $ 8.6 (114.7) ($106.1) $ 0.09 (0.23) $ (0.14) $ 0.30 (5.98) $ (5.68) $ 0.14 (0.38) $ (0.24) $ $ 0.52 (6.87) (6.35) (a) Certain amounts have been reclassified to conform to the current presentation. ... Nonrecurring items after income taxes are shown below. The engine oil additives rationalization and write-off of 1 1 goodwill are included in segment operating profit. The (loss) gain on impairments and sale of nonoperating assets are reported in other (expense) income, net. (Loss) gain on impairments and sale of nonoperating assets (4.1) 0.6 (4.1) 0.6 Write-off of goodwill - - (2.5) - Engine oil additives rationalization: Write-off assets Severance, early retirement, and other costs (18.4) 0.2 (13.2) 0.2 (25.8) (20.6) Pension settlement expense including second quarter 2001 excise tax provision - (68.9) - (68.9) $ (3.9) $ (99.9) $ (6.4) $ (114.7) (c) For segment reporting, the write-off of goodwill is shown in operating profit as a nonrecurring item in 2002. In the Consolidated Statement of Income, the write-off is shown as a cumulative effect of an accounting change. (d) Basic and diluted earnings (loss) per share have been restated for ail periods presented to reflect the l-for-5 reverse stock split. Attachment 1 of 4 CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts, unaudited) ETHYL CORPORATION AND SUBSIDIARIES Three Months Ended June 30 2002 2001 Six Months Ended June 30 2002 2001 Net sales (a) Cost of goods sold (a, b, c) $ 175,446 $ 177,643 $ 326,060 $ 394,903 138.621 173,364 257,227 360,449 Gross profit 36,825 4,279 68,833 34,454 TEL marketing agreements services 4,446 11,532 10,162 19,614 Selling, general, and administrative expenses Research, development, and testing expenses (c) Special items expense (c) (d) 19,342 13,356 16,717 14,288 (106,261) 35,811 25,588 35,187 32,279 (116,968) Operating profit (loss) 8,573 (121,455) 17,596 (130,366) Interest and financing expenses Other (expense) income, net (e) 6,562 (3,734) 9,783 299 13,600 (4,420) 17,977 (395) Loss before income taxes Income tax expense (benefit) (1,723) 739 (130,939) (36,155) (424) 1,155 (148,738) (42,687) Loss before cumulative effect of accounting change (2,462) (94,784) (1,579) (106,051) Cumulative effect of accounting change for goodwill write-off (net of tax) (0 Net loss $ (2,462) $ (94,784) $ (2,505) (4,084) $ (106,051) Basic and diluted loss per share (g): Loss before cumulative effect of accounting change Cumulative effect of accounting change for goodwill write-off (net of tax) (f) Shares used to compute basic and diluted loss per share (g) $ (0.14) $ (5.68) $ 4 (0.14) $ (5.68) t (0.09) $ (0.15) (0.24) $ (6.35) (6.35) 16,691 16,691 16,691 16,691 Notes to Consolidated Statements of Income (a) Certain amounts have been reclassified to conform to the current presentation. During first quarter 2001, certain TEL inventories were permanently reduced resulting in a liquidation of UFO layers. This (b) LIFO liquidation decreased cost of goods sold by $1.5 million and increased net income by $900 thousand or $.06 per share. (c) Asset writedowns, severance, early retirement, and other costs related to the rationalization of our engine oil additives product lines were $50.3 million ($31.6 million after tax or $1.89 per share) for second quarter 2001 and $73.6 million ($46.4 million after tax or $2.78 per share) for six months 2001. These costs are included in the Consolidated Statements of Income as follows: Cost of goods sold Research, development, and testing expenses Special items expense $ (31.0) (1.2) $ (50.3) $ (41.8) (3.0) _______ (28.8) $ (73.6) (d) In addition to the 2001 special items expense shown in Note (c), there was a recognition of a $62 million noncash loss ($42.7 million after tax or $2.56 per share) on the settlement of pension liabilities related to the termination of our U.S. salaried pension plan and a $26.2 million charge ($26.2 after tax or $1.57 per share) related to excise tax on the pension reversion. (e) Other (expense) income, net includes a loss on the impairment of nonoperating assets for second quarter 2002 and six months 2002 of $4.1 million ($4.1 million after tax or $.24 per share), as well as expenses related to debt refinancing activities of $1.0 million for six months 2002. Other (expense) income, net in second quarter 2001 includes $1.0 million income ($600 thousand after tax or $.04 per share) related to the gain on the sale of a nonoperating asset. (f) In conformity with Statement of Financial Accounting Standards No. 142, during the first quarter 2002, we wrote-off goodwill of $3.1 million ($2.5 million after tax or $.15 per share.) (g) The number of shares, as well as basic and diluted loss per share, have been restated to reflect the l-for-5 reverse stock split. Attachment 2 of 4 CONSOLIDATED BALANCE SHEETS (In thousands) ETHYL CORPORATION AND SUBSIDIARIES ASSETS Current assets: Cash and cash equivalents Restricted cash Trade and other accounts receivable, less allowance for doubtful accounts ($897 - 2002; $889 - 2001) Receivable - TEL marketing agreements services Inventories Deferred income taxes and prepaid expenses Total current assets Property, plant and equipment, at cost Less accumulated depreciation and amortization Net property, plant and equipment Prepaid pension cost Deferred income taxes Other assets and deferred charges Goodwill and other intangibles, net of amortization Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses Long-term debt, current portion (a) Income taxes payable Total current liabilities Long-term debt Other noncurrent liabilities Shareholders' equity Common stock ($1 par value) Issued - 16,690,930 in 2002 and 83,454,650 in 2001 (b) Additional paid in capital (b) Accumulated other comprehensive loss Retained earnings Total liabilities and shareholders' equity June 30 2002 (unaudited) December 31 2001 $ 15,145 771 129,604 7,545 106,893 15,838 275,796 760,675 553,445 207,230 23,670 12,175 81,926 72,693 $ 673,490 $ 12,382 996 121,261 16,935 121,458 11,742 284,774 760,649 544,892 215,757 25,731 12,440 102,007 78,916 $ 719,625 $ 45,840 43,419 298,478 10,809 398,546 23,931 105,192 $ 54,376 59,907 30,504 14,648 159,435 305,453 109,444 16,691 66,764 (22,558) 84,924 145,821 $ 673,490 83,455 (27,170) 89,008 145,293 $ 719,625 (a) The current maturity date of our bank loans is March 31, 2003. While it is our intent to extend these loans, the amounts outstanding are classified as current in accordance with generally accepted accounting principles. (b) Common stock and additional paid in capital have been restated for the June 30, 2002 balance sheet to reflect the 1-for-5 reverse stock split. Attachment 3 of 4 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) ETHYL CORPORATION AND SUBSIDIARIES Cash and cash equivalents at beginning of year Cash flows from operating activities: Net loss Adjustments to reconcile net loss to cash flows from operating activities: Depreciation and amortization (a) Write-off of goodwill Accrued severance, early retirement and other engine oil additives rationalization charges Deferred income taxes Prepaid pension cost Net loss (gain) on impairments and sale of assets Pension reversion Loss on pension contract settlements TEL working capital advance Working capital changes Other, net Cash provided from operating activities Cash flows from investing activities: Capital expenditures Prepayment for TEL marketing agreements services Equity investments Proceeds from sale of certain assets Other, net Cash used in investing activities Cash flows from financing activities: Repayment of term loans Net borrowings Debt issuance costs Other, net Cash used in financing activities Increase in cash and cash equivalents Six Months Ended June 30 2002 2001 $ 12,382 $ 4,470 (4,084) (106,051) 27,141 3,120 (4,361) 2,957 4,033 479 4,653 4,396 38,334 71,750 - 27,428 (91,775) (5,628) (956) 26,154 62,000 49,331 (619) 31,634 (7,248) (12,800) " 7 (20,041) (4,864) - (1,250) 2,873 (16) 0,257) (43,640) 30,340 (1,982) (248) (15,530) 2,763 (60,000) 44,059 (9,792) 1,074 (24,659) 3,718 Cash and cash equivalents at end of period $ 15,145 $ 8,188 Notes to the Condensed Consolidated Statements of Cash Flows (a) Six months 2001 includes $41.2 million of accelerated depreciation for the engine oil additives facilities indefinitely idled in 2001. Attachment 4 of 4