Chemtura swings to Q4 2013 net loss of US$21M compared to net earnings of US$20M a year ago due to lower selling prices, net sales and operating income, weaker sales volumes, facility closures and related costs; net sales up 2.1% to US$544M

PHILADELPHIA , February 25, 2014 (press release) –

Fourth Quarter 2013 Net Sales of $544 million, GAAP net earnings from continuing operations of $0.13 per diluted share and net earnings from continuing operations of $0.16 per diluted share on a managed basis

Completed Sale of Consumer Products

Chemtura Corporation, (NYSE / Euronext Paris: CHMT) (the “Company,” “Chemtura,” “We,” “Us” or “Our”) today announced financial results for the fourth quarter ended December 31, 2013. We also filed with the Securities and Exchange Commission our Annual Report on Form 10-K for the year ended December 31, 2013. For the fourth quarter of 2013, Chemtura reported net sales of $544 million and net earnings from continuing operations attributable to Chemtura on a GAAP basis of $13 million, or $0.13 per diluted share. Net earnings from continuing operations attributable to Chemtura on a managed basis were $16 million, or $0.16 per diluted share. Fourth Quarter 2013 Financial Results

 

The discussion below includes financial information on both a GAAP and non-GAAP managed basis. We present managed basis financial information as management uses this information internally to evaluate and direct the performance of our operations and believes that managed basis financial information provides useful information to investors. A reconciliation of GAAP and managed basis financial information is provided in the supplemental schedules included in this release.

The following is a summary of fourth quarter and year ended December 31, 2013 financial results from continuing operations attributable to Chemtura on a GAAP basis:

(In millions, except per share data)   Fourth Quarters   Years ended December 31,
    2013   2012   % change   2013   2012   % change
Net sales   $ 544     $ 533     2 %   $ 2,231     $ 2,196     2 %
Operating income   $ 24     $ 25     (4 %)   $ 98     $ 179     (45 %)
Net earnings (loss)   $ 13     $ 19     (32 %)   $ (22 )   $ 103     (121 %)
Net earnings (loss) - per diluted share   $ 0.13     $ 0.19     (32 %)   $ (0.23 )   $ 1.04     (122 %)

The following is a summary of fourth quarter and year ended December 31, 2013 financial results from continuing operations attributable to Chemtura on a managed basis:

(In millions, except per share data)   Fourth Quarters   Years ended December 31,
    2013   2012   % change   2013   2012   % change
Net sales   $ 544     $ 533     2 %   $ 2,231     $ 2,196     2 %
Operating income   $ 38     $ 28     36 %   $ 162     $ 191     (15 %)
Net earnings   $ 16     $ 10     60 %   $ 68     $ 91     (25 %)
Net earnings - per diluted share   $ 0.16     $ 0.10     60 %   $ 0.69     $ 0.92     (25 %)
Adjusted EBITDA   $ 65     $ 63     3 %   $ 275     $ 313     (12 %)

CEO Remarks

"We were encouraged to complete what has been a challenging year with a fourth quarter performance that exceeded our performance in the fourth quarter of 2012," commented Craig A. Rogerson, Chairman, President and CEO of Chemtura. “Were it not for the $5 million of expenses incurred in the quarter related to our exploration of a sale of Chemtura AgroSolutions, we would have delivered $70 million of Adjusted EBITDA, 11% higher than the $63 million we delivered in the fourth quarter of 2012. Further, we completed the second major divestiture of the year, closing the sale of our Consumer Products business on December 31, 2013.”

“The year-on-year improvement was again led by Chemtura AgroSolutions, delivering an $8 million or 57% increase in Adjusted EBITDA - even better than I had anticipated,” continued Mr. Rogerson. “Industrial Performance Products delivered $5 million or 18% year-over-year improvement in Adjusted EBITDA. After the changes in demand and price mainly around insulation foam applications during 2013, the fourth quarter challenge for Industrial Engineered Products was to show sequential improvement over the third quarter of 2013. The segment delivered $31 million of Adjusted EBITDA in the fourth quarter of 2013 compared to $11 million in the third quarter of 2013, but still short of the $40 million in the fourth quarter of 2012. As anticipated, the biggest component of the improvement was the actions taken in the third quarter to reduce manufacturing costs. We have actions in place to drive revenue, price and cost improvements in 2014 but the segment still is exposed to several challenging application markets. Excluding the Chemtura AgroSolutions transaction expenses in the fourth quarter of 2013, Corporate on an EBITDA basis was $3 million lower than last year, reflecting the benefit of our stranded cost eliminations."

“In 2013, we made significant progress in shaping our portfolio and giving visibility to the strategic direction of our remaining businesses,” commented Mr. Rogerson. “We successfully completed the divestitures of our Antioxidant and Consumer Products businesses. We have repaid debt to maintain our stated leverage goals and started the process of returning a significant portion of proceeds from our divestitures to our shareholders through stock repurchases. Our Chemtura AgroSolutions segment built on the improvements made in 2012, launching 110 new products and registrations in 2013, increasing revenues by 10% and Adjusted EBITDA by 28%. In 2013, Industrial Performance Products increased revenues by 10% and Adjusted EBITDA by 9%, having absorbed the impact of the start-up of its new plants in The Netherlands and China. Industrial Engineered Products took a step back due to difficult market conditions, but have actions in place to recover and grow.” 

Outlook

 

“As described at our Investor Day in December, for 2014 we target revenue growth in the order of 8-10% and growth in consolidated Adjusted EBITDA in the range of 20-30% as compared to 2013,” continued Mr. Rogerson. “This requires that we deliver year-over-year improvement in most quarters in 2014 (excluding project expenses incurred in the process to explore the sale of Chemtura AgroSolutions), but the first quarter will be our greatest challenge. Our Industrial Engineered Products segment delivered $31 million of Adjusted EBITDA in the first quarter of 2013 which is the same as they earned in the fourth quarter of 2013. However, they have headwinds from the timing of production and related manufacturing variances. Our other segments should deliver improvement to offset some but not all of this impact, so it looks like the first quarter will be our weakest quarter of the year."

"We anticipate being able to report to you on the outcome of our exploration of the sale of Chemtura AgroSolutions at some point in the first half of 2014,” concluded Mr. Rogerson. “Our process is proceeding as planned. We will report to investors as soon as it reaches a conclusion.”

Non-Operating Activities Reflected in Our Fourth Quarter Financial Results

  • In October 2013, we entered into a stock purchase agreement to sell our Consumer Products business, including dedicated manufacturing plants in the U.S. and South Africa, to KIK Custom Products Inc. ("KIK") for $315 million in cash at closing. On December 31, 2013, we entered into an amendment to the stock purchase agreement which, among other matters, reduced the purchase price by $15 million to reflect the resolution of certain pre-closing matters, and completed the sale of the Consumer Products business for an adjusted purchase price of $300 million. The purchase price was also subject to customary post-closing adjustments, primarily for working capital and assumed pension liabilities. The impact of several of these adjustments was estimated in the cash paid at closing and a final reconciliation will occur in the first half of 2014. The assets and liabilities of the Consumer Products business have been presented as assets and liabilities of discontinued operations for the comparative periods and earnings and direct costs associated with the Consumer Products business have been presented as earnings (loss) from discontinued operations, net of tax in the tables attached to this release for the current and comparative periods.
  • On November 12, 2013, our Board of Directors (the "Board") authorized a further increase in our share repurchase program by $50 million (up to $191 million in the aggregate when combined with the May 9, 2013 authorization). The Board also authorized an additional $100 million under the share repurchase program upon the closing of the sale of the Consumer Products business (up to $291 million in the aggregate when combined with the May 9, 2013 and November 12, 2013 authorizations). The Board also extended the authorizations under the share repurchase program to November 9, 2014.
  • In December 2013, we amended and restated our existing senior secured revolving credit facility, which was available through 2015 (the "ABL Facility"). The new senior secured revolving credit facility available through 2018 (the "2018 ABL Facility") provides for $175 million available to our domestic subsidiaries and €60 million available to Chemtura Sales Europe B.V., a Netherlands subsidiary, subject in each case to availability under the borrowing base, as well as providing a $125 million letter of credit sub-facility.
  • We incurred $5 million of expenses in the fourth quarter of 2013 ($6 million process-to-date) related to our exploration of a sale of our Chemtura AgroSolutions business. We are incurring additional project expenses in the first quarter of 2014.

Fourth Quarter 2013 Business Segment Highlights

  • Industrial Performance Products’ net sales increased $28 million or 13% as a result of a $26 million increase in sales volume, a $1 million year-over-year increase in selling prices and $1 million from favorable foreign currency translation. Operating income increased $5 million or 25% in the fourth quarter of 2013 to $25 million. Sales volume improvements were primarily in our petroleum additives and certain synthetic lubricant products in all regions except Europe. We recorded $3 million of unabsorbed costs related to our new Nantong, China and Ankerweg, The Netherlands facilities. Operating income also reflected increases in our selling, general and administrative costs ("SG&A") and research and development costs ("R&D") (collectively, "SGA&R") offset by lower raw material costs and the volume improvement impacted negatively by unfavorable product mix.
  • Industrial Engineered Products’ net sales decreased $26 million or 12% reflecting a $14 million decrease in sales volume and $13 million in lower selling prices, partly offset by $1 million from favorable foreign currency translation. Operating income decreased $7 million or 25% in the fourth quarter of 2013 to $21 million. Operating income decreased by the lower selling prices and lower volume and unfavorable product mix of $13 million offset by favorable manufacturing costs and variances of $15 million and a net decrease in other costs of $4 million. Lower net sales and operating income reflected lower selling prices and weaker sales volumes year-over-year for our flame retardant products used in the insulation foam applications due to the reduction in demand in the first half of 2013. Some of this weakness was offset by an improvement in flame retardants sold into electronics applications and products utilized in energy related applications coupled with favorable selling prices for our tin-based organometallic products. Manufacturing costs and variances were favorable compared with prior year due to restructuring initiatives that were implemented in the third quarter of 2013.
  • Chemtura AgroSolutions’ net sales increased $9 million or 9% resulting from $9 million in higher sales volume and $5 million in higher selling prices partly offset by $5 million of unfavorable foreign currency translation. Operating income increased $8 million in the fourth quarter of 2013 to $19 million. Operating income was favorably impacted by the higher selling prices, a $3 million increase in equity income which resulted from the sale of a product line by our ISEM S.r.l. ("ISEM") joint venture, lower raw material costs of $2 million and a decrease in other costs of $1 million partly offset by unfavorable foreign currency translation of $3 million. We continued to experience strong market demand for insecticides products in Latin America, particularly in Brazil. Operating income also benefited from favorable manufacturing variances due to the higher sales volumes.
  • Corporate expenses for the fourth quarter of 2013 on a GAAP basis decreased by $4 million to $27 million compared with $31 million in 2012. Corporate expenses included amortization expense related to intangible assets and depreciation expense of $4 million for the fourth quarters of 2013 and 2012 and non-cash stock compensation expense of $2 million and $8 million for the fourth quarters of 2013 and 2012, respectively. The decrease in non-cash stock compensation expense was primarily due to a one-time correction recorded in the fourth quarter of 2012. This was offset by $5 million of project expenses incurred in our exploration of a sale of Chemtura AgroSolutions. Stranded costs related to the Antioxidant business were eliminated during the first half of 2013 such that there was no expense in the fourth quarter of 2013 but were $2 million for the fourth quarter of 2012. Stranded costs related to the Consumer Products business were $4 million for the fourth quarters of 2013 and 2012. In the fourth quarter of 2012, our Corporate segment included $3 million of amortization expense related directly to our Antioxidant and Consumer Products businesses. This amount has now been included in earnings (loss) on discontinued operations, net of tax.

Fourth Quarter 2013 Results – GAAP

  • Consolidated net sales of $544 million for the fourth quarter of 2013 were $11 million or 2% higher than 2012 driven by higher sales volume of $21 million, offset by lower selling prices of $7 million and unfavorable foreign currency translation of $3 million.
  • Gross profit for the fourth quarter of 2013 was $133 million, an increase of $6 million compared with the fourth quarter of 2012. Gross profit as a percentage of net sales of 24% remained constant as compared with the same quarter of 2012. Gross profit benefited from favorable manufacturing costs and variances of $19 million, lower raw material costs of $3 million and a decrease in net other costs of $7 million, partly offset by unfavorable product mix of $8 million, the lower selling prices of $7 million, unfavorable foreign currency translation of $3 million, a charge of $2 million related to an increase in our excess inventory reserves and $3 million of costs related to our new Nantong, China and Ankerweg, The Netherlands facilities.
  • Operating income for the fourth quarter of 2013 decreased $1 million to $24 million compared with $25 million for the fourth quarter of 2012. The decrease was primarily due to an $11 million increase in facility closures, severance and related costs, partly offset by a $6 million increase in gross profit, a $4 million increase in equity income primarily resulting from the sale of a product line by our ISEM joint venture in Italy.
  • Included in the computation of operating income for the fourth quarters of 2013 and 2012 was $2 million and $10 million, respectively, of stock-based compensation expense. The decrease was primarily due to a one-time correction recorded in the fourth quarter of 2012 coupled with a reduction in staff count resulting from our restructuring plans.
  • Interest expense was $15 million during the fourth quarter of 2013 which was $2 million lower than 2012, primarily due to lower interest expense as a result of our debt refinancing activities during the second half of 2013.
  • Other expense, net was $2 million in the fourth quarter of 2013 compared with other income of $23 million in the fourth quarter of 2012. The decrease was primarily due to a $21 million gain in the fourth quarter of 2012, which related to the release of the cumulative translation adjustments associated with the rationalization of certain European subsidiaries no longer required.
  • Reorganization items, net were $1 million in the fourth quarter of 2012 which is comprised primarily of professional fees directly associated with our Chapter 11 reorganization.
  • The income tax benefit in the fourth quarter of 2013 was $6 million compared with income tax expense of $10 million in the fourth quarter of 2012.
  • Net earnings from continuing operations attributable to Chemtura for the fourth quarter of 2013 was $13 million, or $0.13 per diluted share, compared with $19 million, or $0.19 per diluted share, for the fourth quarter of 2012.
  • Loss from discontinued operations, net of tax attributable to Chemtura for the fourth quarter of 2013 was $3 million, or $0.03 per diluted share compared with earnings from discontinued operations, net of tax attributable to Chemtura of $1 million, or $0.01 per diluted share for the fourth quarter of 2012. Discontinued operations included the Antioxidant and Consumer Products businesses.
  • Loss on sale of discontinued operations, net of tax attributable to Chemtura for the fourth quarter of 2013, was $31 million, or $0.32 per diluted share, which primarily represented the sale of the Consumer Products business.

Fourth Quarter 2013 Results - Managed Basis

  • On a managed basis, fourth quarter 2013 gross profit was $133 million, as compared with $127 million in the same period last year. Gross profit as a percentage of net sales remained constant at 24%. The increase in gross profit was primarily due to favorable manufacturing costs and variances and lower raw material costs, partly offset by unfavorable product mix and lower selling prices.
  • On a managed basis, fourth quarter 2013 operating income was $38 million as compared with $28 million in the same period last year. The increase in operating income primarily reflected the increases in gross profit and equity income.
  • Adjusted EBITDA in the fourth quarter of 2013 was $65 million as compared with $63 million in the fourth quarter of 2012 (see the tables attached to this earnings release for a reconciliation of the computation of Adjusted EBITDA). Excluding the $5 million of expenses related to the exploration of the sale of Chemtura AgroSolutions, Adjusted EBITDA in the fourth quarter of 2013 would have been $70 million. The increase in Adjusted EBITDA was principally driven by higher gross profit and equity income. Adjusted EBITDA for the last twelve months decreased from $313 million at December 31, 2012 to $275 million at December 31, 2013. Excluding the $6 million of expenses related to the exploration of the sale of Chemtura AgroSolutions, Adjusted EBITDA for the twelve months ended December 31, 2013 would have been $281 million. Adjusted EBITDA excludes the Antioxidant and Consumer Products businesses which are classified as discontinued operations.
  • Net earnings from continuing operations before income taxes on a managed basis in the fourth quarters of 2013 and 2012 were $23 million and $13 million, respectively, and exclude pre-tax GAAP adjustments of $16 million and $16 million, respectively. These adjustments are primarily related to facility closures, severance and related costs, accelerated depreciation of property, plant and equipment and a gain or loss related to the liquidation of entities.
  • Chemtura has chosen to apply an estimated tax rate to our managed basis pre-tax income to simplify for investors the comparison of underlying operating performance. In 2012, we applied an estimated managed basis tax rate of 28% reflecting the expected performance of our core operations in 2012. With a projected shift in relative profitability to the U.S. from international operations, in 2013, we are applying an estimated managed basis tax rate of 31%. The estimated managed basis tax rate reflects (i) the impact of the adjustments made in the preparation of pre-tax managed basis income; (ii) the exclusion of the benefit or charge arising from the creation or release of valuation allowances on U.S. income; (iii) the utilization of foreign tax credits generated in the current year; and (iv) the conclusion that we will indefinitely re-invest the majority of the earnings of our foreign subsidiaries in our international operations. We will continue to monitor our estimated managed basis tax rate and may modify it based on changes in the composition of our taxable income and in tax rates around the world.

Cash Flows Details - GAAP

  • Net cash provided by operating activities for the fourth quarter of 2013 was $20 million as compared with $107 million for the fourth quarter of 2012. The reduction was primarily due to a smaller net working capital inflow in the fourth quarter of 2013 than in the fourth quarter of 2012 and the timing within the year of cash contributions to pension plans.
  • Capital expenditures for the fourth quarter of 2013 were $46 million compared with $55 million in the fourth quarter of 2012.
  • Cash income taxes paid (net of refunds) in the fourth quarters of 2013 and 2012 were $5 million and $16 million, respectively.
  • During the fourth quarter of 2013, we repurchased 0.2 million shares at a cost of $4 million. As of December 31, 2013, the remaining authorization under our share repurchase program was approximately $196 million.
  • Our total debt was $898 million as of December 31, 2013 compared with $894 million as of September 30, 2013. In January 2014, we repaid $110 million of our senior secured term loan facility due 2016 (the “Term Loan") with proceeds from the sale of our Consumer Products business. In light of this transaction, we classified the $110 million as short-term borrowings in our Consolidated Balance Sheet as of December 31, 2013. Cash and cash equivalents increased to $549 million as of December 31, 2013 compared with $311 million as of September 30, 2013. The increase was primarily the result of cash proceeds from the sale of the Consumer Products business.
  • Total debt less cash and cash equivalents of $349 million as of December 31, 2013 decreased $234 million compared with total debt less cash and cash equivalents of $583 million as of September 30, 2013. The decrease was primarily due to cash proceeds from the sale of the Consumer Products business.
Chemtura Corporation, with 2013 net sales of $2.2 billion 1, is a global manufacturer and marketer of specialty chemicals, and agrochemicals. Additional information concerning us is available at www.chemtura.com.

1 2013 net sales of $2.2 billion reflects discontinued operations treatment for the sale of Chemtura’s Antioxidants and Consumer Products businesses.


CHEMTURA CORPORATION

Index of Financial Statements and Schedules

     
     
Financial Statements    
     
Consolidated Statements of Operations (Unaudited) -    
Quarters and years ended December 31, 2013 and 2012  

9

     
Consolidated Statements of Comprehensive Income (Loss) (Unaudited) -    
Quarters and years ended December 31, 2013 and 2012  

10

     
Consolidated Balance Sheets - December 31, 2013 and December 31, 2012  

11

     
Condensed Consolidated Statements of Cash Flows (Unaudited) -    
Year ended December 31, 2013 and 2012  

12

     
Segment Net Sales and Operating Income (Unaudited) -    
Quarters and years ended December 31, 2013 and 2012  

13

     
Supplemental Schedules    
     
Major Factors Affecting Net Sales and Operating Results (Unaudited) -    
Quarter and year ended December 31, 2013 versus 2012  

14

     
GAAP and Managed Basis Consolidated Statements of Operations (Unaudited) -    
Quarters ended December 31, 2013 and 2012  

15

     
GAAP and Managed Basis Consolidated Statements of Operations (Unaudited) -    
Years ended December 31, 2013 and 2012  

16

     
GAAP and Managed Basis Segment Net Sales and Operating Income (Unaudited) -    
Quarters ended December 31, 2013 and 2012  

17

     
GAAP and Managed Basis Segment Net Sales and Operating Income (Unaudited) -    
Years ended December 31, 2013 and 2012  

18

Page 9

CHEMTURA CORPORATION
Consolidated Statements of Operations (Unaudited)
(In millions, except per share data)

    Quarters ended December 31,   Years ended December 31,
    2013   2012   2013   2012
Net sales   $ 544     $ 533     $ 2,231     $ 2,196  
Cost of goods sold   411     406     1,721     1,615  
Gross profit   133     127     510     581  
Gross profit %   24 %   24 %   23 %   26 %
Selling, general and administrative   60     63     229     245  
Depreciation and amortization   25     25     101     100  
Research and development   13     10     40     41  
Facility closures, severance and related costs   14     3     42     11  
Changes in estimates related to expected allowable claims               1  
Equity (income) loss   (3 )   1         4  
Operating income   24     25     98     179  
Interest expense   (15 )   (17 )   (60 )   (64 )
Loss on early extinguishment of debt       (1 )   (50 )   (1 )
Other (expense) income, net   (2 )   23     9     20  
Reorganization items, net       (1 )   (1 )   (5 )
Earnings (loss) from continuing operations before income taxes   7     29     (4 )   129  
Income tax benefit (expense)   6     (10 )   (18 )   (26 )
Earnings (loss) from continuing operations   13     19     (22 )   103  
(Loss) earnings from discontinued operations, net of tax   (3 )   1     25     (3 )
Loss on sale of discontinued operations, net of tax   (31 )       (180 )    
Net (loss) earnings   (21 )   20     (177 )   100  
Less: Net loss attributable to non-controlling interests               1  
Net (loss) earnings attributable to Chemtura   $ (21 )   $ 20     $ (177 )   $ 101  

Basic per share information - attributable to Chemtura:

               
Earnings (loss) from continuing operations, net of tax   $ 0.13     $ 0.19     $ (0.23 )   $ 1.04  
(Loss) earnings from discontinued operations, net of tax   (0.03 )   0.01     0.26     (0.02 )
Loss on sale of discontinued operations, net of tax   (0.32 )       (1.84 )    
Net (loss) earnings attributable to Chemtura   $ (0.22 )   $ 0.20     $ (1.81 )   $ 1.02  

Diluted per share information - attributable to Chemtura:

               
Earnings (loss) from continuing operations, net of tax   $ 0.13     $ 0.19     $ (0.23 )   $ 1.04  
(Loss) earnings from discontinued operations, net of tax   (0.03 )   0.01     0.26     (0.02 )
Loss on sale of discontinued operations, net of tax   (0.32 )       (1.84 )    
Net (loss) earnings attributable to Chemtura   $ (0.22 )   $ 0.20     $ (1.81 )   $ 1.02  
Weighted average shares outstanding - Basic   96.6     97.9     97.7     98.2  
Weighted average shares outstanding - Diluted   98.1     99.0     97.7     98.8  

Amounts attributable to Chemtura Stockholders:

               
Earnings (loss) from continuing operations, net of tax   $ 13     $ 19     $ (22 )   $ 103  
(Loss) earnings from discontinued operations, net of tax   (3 )   1     25     (2 )
Loss on sale of discontinued operations, net of tax   (31 )       (180 )    
Net (loss) earnings attributable to Chemtura   $ (21 )   $ 20     $ (177 )   $ 101  

Page 10

CHEMTURA CORPORATION
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In millions)

    Quarters ended December 31,   Years ended December 31,
    2013   2012   2013   2012
Net (loss) earnings   $ (21 )   $ 20     $ (177 )   $ 100  
Other comprehensive income (loss), net of tax:                
Foreign currency translation adjustments   (44 )   (21 )   (60 )   (6 )
Unrecognized pension and other post-retirement benefit costs   66     (82 )   208     (76 )
Comprehensive income (loss)   1     (83 )   (29 )   18  
Comprehensive loss attributable to the non-controlling interest               1  
Comprehensive income (loss) attributable to Chemtura   $ 1     $ (83 )   $ (29 )   $ 19  

Page 11

CHEMTURA CORPORATION
Consolidated Balance Sheets
(In millions)

   

December 31, 2013

 

December 31, 2012

         
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents   $ 549     $ 363  
Accounts receivable, net   361     345  
Inventories, net   415     398  
Other current assets   158     123  
Assets held for sale   4      
Current assets of discontinued operations       383  
Total current assets   1,487     1,612  
NON-CURRENT ASSETS        
Property, plant and equipment, net   724     655  
Goodwill   179     177  
Intangible assets, net   142     146  
Other assets   172     169  
Non-current assets of discontinued operations       271  
Total Assets   $ 2,704     $ 3,030  
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
CURRENT LIABILITIES        
Short-term borrowings   $ 117     $ 5  
Accounts payable   172     152  
Accrued expenses   189     178  
Income taxes payable   6     8  
Liabilities held for sale   2      
Current liabilities of discontinued operations       168  
Total current liabilities   486     511  
NON-CURRENT LIABILITIES        
Long-term debt   781     871  
Pension and post-retirement health care liabilities   246     386  
Other liabilities   192     109  
Non-current liabilities of discontinued operations       85  
Total liabilities   1,705     1,962  
STOCKHOLDERS' EQUITY        
Common stock   1     1  
Additional paid-in capital   4,375     4,366  
Accumulated deficit   (3,025 )   (2,848 )
Accumulated other comprehensive loss   (280 )   (428 )
Treasury stock   (73 )   (30 )
Total Chemtura stockholders' equity   998     1,061  
Non-controlling interest - Continuing operations   1      
Non-controlling interest - Discontinued operations       7  
Total Non-controlling interest   1     7  
Total stockholders' equity   999     1,068  
Total Liabilities and Stockholders' Equity   $ 2,704     $ 3,030  

Page 12

CHEMTURA CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)

    Years ended December 31,
Increase (decrease) to cash   2013   2012
CASH FLOWS FROM OPERATING ACTIVITIES        
Net (loss) earnings   (177 )   100  
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:        
Loss on sale of discontinued operations   180      
Impairment charges   7     47  
Release of translation adjustment from liquidation of entities   (13 )   (21 )
Loss on early extinguishment of debt   50     1  
Depreciation and amortization   123     139  
Stock-based compensation expense   14     24  
Reorganization items, net       1  
Changes in estimates related to expected allowable claims       1  
Equity income   (2 )   (3 )
Changes in assets and liabilities, net   (103 )   (71 )
Net cash provided by operating activities   79     218  
CASH FLOWS FROM INVESTING ACTIVITIES        
Proceeds from divestments, net   357     9  
Payments for acquisitions   (3 )    
Capital expenditures   (170 )   (149 )
Net cash provided by (used in) investing activities   184     (140 )
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from 2021 Senior Notes   450      
Payments on 2018 Senior Notes, includes premium on tendering of notes   (396 )    
(Payments on) proceeds from Term Loan   (102 )   125  
Proceeds from other long-term borrowings   31      
Payments on other long-term borrowings   (4 )    
Payments on other short-term borrowings, net   (1 )   (3 )
Common shares acquired   (54 )   (20 )
Payment for debt issuance costs   (12 )   (2 )
Proceeds from exercise of stock options   8     5  
Net cash (used in) provided by financing activities   (80 )   105  
CASH        
Effect of exchange rates on cash and cash equivalents   1     2  
Change in cash and cash equivalents   184     185  
Cash and cash equivalents at beginning of period   365     180  
Cash and cash equivalents at end of period   $ 549     $ 365  
         
Cash and cash equivalents at end of period - Continuing operations   $ 549     $ 363  
Cash and cash equivalents at end of period - Discontinued operations   $     $ 2  

Page 13

CHEMTURA CORPORATION
Segment Net Sales and Operating Income (Unaudited)
(In millions)

    Quarters ended December 31,   Years ended December 31,
    2013   2012   2013   2012
NET SALES                
Petroleum additives   $ 170     $ 146     $ 689     $ 600  
Urethanes   72     68     290     291  
Industrial Performance Products   242     214     979     891  
Bromine based & related products   154     181     639     730  
Organometallics   41     40     164     166  
Industrial Engineered Products   195     221     803     896  
Chemtura AgroSolutions   107     98     449     409  
Total net sales   $ 544     $ 533     $ 2,231     $ 2,196  
OPERATING INCOME                
Industrial Performance Products   $ 25     $ 20     $ 109     $ 102  
Industrial Engineered Products   21     28     55     140  
Chemtura AgroSolutions   19     11     88     65  
Segment operating income   65     59     252     307  
General corporate expense, including amortization   (27 )   (31 )   (112 )   (116 )
Facility closures, severance and related costs   (14 )   (3 )   (42 )   (11 )
Changes in estimates related to expected allowable claims               (1 )
Total operating income   $ 24     $ 25     $ 98     $ 179  

Page 14

CHEMTURA CORPORATION
Major Factors Affecting Net Sales and Operating Results (Unaudited)
Quarter and Year ended December 31, 2013 versus 2012
(In millions)

The following table summarizes the major factors contributing to the changes in operating results versus the prior year:

    Quarter ended December 31,   Years ended December 31,
    Net

Sales

  Earnings from

continuing operations

before income taxes

  Net

Sales

  Earnings (loss) from

continuing operations

before income taxes

2012   $ 533     $ 29     $ 2,196     $ 129  
2012 Facility closures, severance and related costs       3         11  
2012 Changes in estimates related to expected allowable claims               1  
2012 Loss on early extinguishment of debt       1         1  
2012 Reclass of translation adjustments from liquidation of entities       (21 )       (21 )
2012 Reorganization items, net       1         5  
    533     13     2,196     126  
Changes in selling prices   (7 )   (7 )   (16 )   (16 )
Unit volume and mix   21     (8 )   61     (12 )
Foreign currency impact - operating income   (3 )   (3 )   (10 )   (7 )
Lower raw materials and energy costs       3          
Manufacturing cost impacts       16         (13 )
Distribution cost impact               (4 )
Changes in SGA&R, excluding foreign exchange impact       (1 )       14  
Changes in equity income       4         4  
Lower interest expense       2         4  
Foreign currency impact - other expense, net       (4 )       (1 )
Other       8         3  
    544     23     2,231     98  
2013 Environmental reserves               (21 )
2013 UK pension benefit matter               2  
2013 Accelerated recognition of asset retirement obligations               (2 )
2013 Accelerated depreciation of property, plant and equipment               (1 )
2013 Facility closures, severance and related costs       (14 )       (42 )
2013 Loss on early extinguishment of debt               (50 )
2013 Reclass of translation adjustments from liquidation of entities       (2 )       13  
2013 Reorganization items, net               (1 )
2013   $ 544     $ 7     $ 2,231     $ (4 )

Page 15

CHEMTURA CORPORATION
GAAP and Managed Basis Consolidated Statements of Operations (Unaudited)
(In millions, except per share data)

    Quarter ended December 31, 2013   Quarter ended December 31, 2012
    GAAP   Managed Basis

Adjustments

  Managed Basis   GAAP   Managed Basis

Adjustments

  Managed Basis
Net sales   $ 544     $     $ 544     $ 533     $     $ 533  
Cost of goods sold   411         411     406         406  
Gross profit   133         133     127         127  
Gross profit %   24 %       24 %   24 %       24 %
Selling, general and administrative   60         60     63         63  
Depreciation and amortization   25         25     25         25  
Research and development   13         13     10         10  
Facility closures, severance and related costs   14     (14 )       3     (3 )    
Changes in estimates related to expected allowable claims                        
Equity (income) loss   (3 )       (3 )   1         1  
Operating income   24     14     38     25     3     28  
Interest expense   (15 )       (15 )   (17 )       (17 )
Loss on early extinguishment of debt               (1 )   1      
Other (expense) income, net   (2 )   2         23     (21 )   2  
Reorganization items, net               (1 )   1      
Earnings from continuing operations before income taxes   7     16     23     29     (16 )   13  
Income tax benefit (expense)   6     (13 )   (7 )   (10 )   7     (3 )
Earnings from continuing operations   13     3     16     19     (9 )   10  
(Loss) earnings from discontinued operations, net of tax   (3 )   3         1     (1 )    
Loss on sale of discontinued operations, net of tax   (31 )   31                  
Net (loss) earnings attributable to Chemtura   $ (21 )   $ 37     $ 16     $ 20     $ (10 )   $ 10  

Basic per share information - attributable to Chemtura:

                       
Earnings from continuing operations, net of tax   $ 0.13         $ 0.17     $ 0.19         $ 0.10  
(Loss) earnings from discontinued operations, net of tax   (0.03 )           0.01          
Loss on sale of discontinued operations, net of tax   (0.32 )                    
Net (loss) earnings   $ (0.22 )       $ 0.17     $ 0.20         $ 0.10  

Diluted per share information - attributable to Chemtura:

                       
Earnings from continuing operations, net of tax   $ 0.13         $ 0.16     $ 0.19         $ 0.10  
(Loss) earnings from discontinued operations, net of tax   (0.03 )           0.01          
Loss on sale of discontinued operations, net of tax   (0.32 )                    
Net (loss) earnings   $ (0.22 )       $ 0.16     $ 0.20         $ 0.10  
Weighted average shares outstanding - Basic   96.6         96.6     97.9         97.9  
Weighted average shares outstanding - Diluted   98.1         98.1     99.0         99.0  
Managed Basis Adjustments consist of the following:                        
Facility closures, severance and related costs       $ 14             $ 3      
Loss on early extinguishment of debt                   1      
Release of translation adjustment from liquidation of entities       2             (21 )    
Reorganization items, net                   1      
Pre-tax       16             (16 )    
Adjustment to apply a Managed Basis effective tax rate       (13 )           7      
(Loss) earnings from discontinued operations, net of tax       3             (1 )    
Loss on sale of discontinued operations, net of tax       31                  
After-tax       $ 37             $ (10 )    
Adjusted EBITDA consists of the following:                        
Operating income - GAAP           $ 24             $ 25  
Facility closures, severance and related costs           14             3  
Operating income - Managed Basis           38             28  
Depreciation and amortization - Managed Basis           25             25  
Non-cash stock-based compensation expense           2             10  
Adjusted EBITDA           $ 65             $ 63  

Page 16

CHEMTURA CORPORATION
GAAP and Managed Basis Consolidated Statements of Operations (Unaudited)
(In millions, except per share data)

    Year ended December 31, 2013   Year ended December 31, 2012
    GAAP   Managed Basis

Adjustments

  Managed Basis   GAAP   Managed Basis

Adjustments

  Managed Basis
Net sales   $ 2,231     $     $ 2,231     $ 2,196     $     $ 2,196  
Cost of goods sold   1,721     (21 )   1,700     1,615         1,615  
Gross profit   510     21     531     581         581  
Gross profit %   23 %       24 %   26 %       26 %
Selling, general and administrative   229         229     245         245  
Depreciation and amortization   101     (1 )   100     100         100  
Research and development   40         40     41         41  
Facility closures, severance and related costs   42     (42 )       11     (11 )    
Changes in estimates related to expected allowable claims               1     (1 )    
Equity loss               4         4  
Operating income   98     64     162     179     12     191  
Interest expense   (60 )       (60 )   (64 )       (64 )
Loss on early extinguishment of debt   (50 )   50         (1 )   1      
Other income (expense), net   9     (13 )   (4 )   20     (21 )   (1 )
Reorganization items, net   (1 )   1         (5 )   5      
(Loss) earnings from continuing operations before income taxes   (4 )   102     98     129     (3 )   126  
Income tax expense   (18 )   (12 )   (30 )   (26 )   (9 )   (35 )
(Loss) earnings from continuing operations   (22 )   90     68     103     (12 )   91  
Earnings (loss) from discontinued operations, net of tax   25     (25 )       (3 )   3      
Loss on sale of discontinued operations, net of tax   (180 )   180                  
Net (loss) earnings   (177 )   245     68     100     (9 )   91  
Less: Net loss attributable to non-controlling interests               1     (1 )    
Net (loss) earnings attributable to Chemtura   $ (177 )   $ 245     $ 68     $ 101     $ (10 )   $ 91  

Basic per share information - attributable to Chemtura:

                       
(Loss) earnings from continuing operations, net of tax   $ (0.23 )       $ 0.70     $ 1.04         $ 0.93  
Earnings (loss) from discontinued operations, net of tax   0.26             (0.02 )        
Loss on sale of discontinued operations, net of tax   (1.84 )                    
Net (loss) earnings   $ (1.81 )       $ 0.70     $ 1.02         $ 0.93  

Diluted per share information - attributable to Chemtura:

                       
(Loss) earnings from continuing operations, net of tax   $ (0.23 )       $ 0.69     $ 1.04         $ 0.92  
Earnings (loss) from discontinued operations, net of tax   0.26             (0.02 )        
Loss on sale of discontinued operations, net of tax   (1.84 )                    
Net (loss) earnings   $ (1.81 )       $ 0.69     $ 1.02         $ 0.92  
Weighted average shares outstanding - Basic   97.7         97.7     98.2         98.2  
Weighted average shares outstanding - Diluted   97.7         99.0     98.8         98.8  

Managed Basis Adjustments consist of the following:

                       
Environmental reserves       $ 21             $      
UK pension benefit matter       (2 )                
Accelerated recognition of asset retirement obligation       2                  
Accelerated depreciation of property, plant and equipment       1                  
Facility closures, severance and related costs       42             11      
Changes in estimates related to expected allowable claims                   1      
Loss on early extinguishment of debt       50             1      
Reclass of translation adjustments from liquidation of entities       (13 )           (21 )    
Reorganization items, net       1             5      
Pre-tax       102             (3 )    
Adjustment to apply a Managed Basis effective tax rate       (12 )           (9 )    
(Earnings) loss from discontinued operations, net of tax       (25 )           3      
Loss on sale of discontinued operations, net of tax       180                  
Non-controlling interests - Discontinued Operations                   (1 )    
After-tax       $ 245             $ (10 )    

Adjusted EBITDA consists of the following:

                       
Operating income - GAAP           $ 98             $ 179  
Environmental reserves           21              
UK pension benefit matter           (2 )            
Accelerated recognition of asset retirement obligation           2              
Accelerated depreciation of property, plant and equipment           1              
Facility closures, severance and related costs           42             11  
Changes in estimates related to expected allowable claims                       1  
Operating income - Managed Basis           162             191  
Depreciation and amortization - Managed Basis           100             100  
Non-cash stock-based compensation expense           13             22  
Adjusted EBITDA           $ 275             $ 313  

Page 17

CHEMTURA CORPORATION
GAAP and Managed Basis Segment Net Sales and Operating Income (Unaudited)
(In millions of dollars)

    Quarter ended December 31, 2013   Quarter ended December 31, 2012
    GAAP

Historical

  Managed Basis

Adjustments

  Managed Basis   GAAP

Historical

  Managed Basis

Adjustments

  Managed Basis
NET SALES                        
Industrial Performance Products   $ 242     $     $ 242     $ 214     $     $ 214  
Industrial Engineered Products   195         195     221         221  
Chemtura AgroSolutions   107         107     98         98  
Total net sales   $ 544     $     $ 544     $ 533     $     $ 533  
OPERATING INCOME                        
Industrial Performance Products   $ 25     $     $ 25     $ 20     $     $ 20  
Industrial Engineered Products   21         21     28         28  
Chemtura AgroSolutions   19         19     11         11  
Segment operating income   65         65     59         59  
General corporate expense, including amortization   (27 )       (27 )   (31 )       (31 )
Facility closures, severance and related costs   (14 )   14         (3 )   3      
Total operating income   $ 24     $ 14     $ 38     $ 25     $ 3     $ 28  

Managed Basis Adjustments consist of the following:

                       
Facility closures, severance and related costs       $ 14             $ 3      
                         

DEPRECIATION AND AMORTIZATION

                       
Industrial Performance Products   $ 8     $     $ 8     $ 7     $     $ 7  
Industrial Engineered Products   10         10     11         11  
Chemtura AgroSolutions   3         3     3         3  
General corporate expense   4         4     4         4  
Total depreciation and amortization   $ 25     $     $ 25     $ 25     $     $ 25  

NON-CASH STOCK-BASED COMPENSATION EXPENSE

                       
Industrial Performance Products           $             $ 1  
Industrial Engineered Products                       1  
Chemtura AgroSolutions                        
General corporate expense           2             8  
Total non-cash stock-based compensation expense           $ 2             $ 10  

Adjusted EBITDA by Segment:

                       
Industrial Performance Products           $ 33             $ 28  
Industrial Engineered Products           31             40  
Chemtura AgroSolutions           22             14  
General corporate expense           (21 )           (19 )
Adjusted EBITDA           $ 65             $ 63  

Page 18

CHEMTURA CORPORATION
GAAP and Managed Basis Segment Net Sales and Operating Income (Unaudited)
(In millions of dollars)

    Year ended December 31, 2013   Year ended December 31, 2012
    GAAP

Historical

  Managed Basis

Adjustments

  Managed Basis   GAAP

Historical

  Managed Basis

Adjustments

  Managed Basis
NET SALES                        
Industrial Performance Products   $ 979     $     $ 979     $ 891     $     $ 891  
Industrial Engineered Products   803         803     896         896  
Chemtura AgroSolutions   449         449     409         409  
Total net sales   $ 2,231     $     $ 2,231     $ 2,196     $     $ 2,196  
OPERATING INCOME                        
Industrial Performance Products   $ 109     $ 2     $ 111     $ 102     $     $ 102  
Industrial Engineered Products   55         55     140         140  
Chemtura AgroSolutions   88         88     65         65  
Segment operating income   252     2     254     307         307  
General corporate expense, including amortization   (112 )   20     (92 )   (116 )       (116 )
Facility closures, severance and related costs   (42 )   42         (11 )   11      
Changes in estimates related to expected allowable claims               (1 )   1      
Total operating income   $ 98     $ 64     $ 162     $ 179     $ 12     $ 191  

Managed Basis Adjustments consist of the following:

                       
Environmental reserves       $ 21             $      
UK pension benefit matter       (2 )                
Accelerated recognition of asset retirement obligation       2                  
Accelerated depreciation of property, plant and equipment       1                  
Facility closures, severance and related costs       42             11      
Changes in estimates related to expected allowable claims                   1      
        $ 64             $ 12      

DEPRECIATION AND AMORTIZATION

                       
Industrial Performance Products   $ 28     $     $ 28     $ 25     $     $ 25  
Industrial Engineered Products   43         43     43         43  
Chemtura AgroSolutions   12         12     13         13  
General corporate expense   18     (1 )   17     19         19  
Total depreciation and amortization   $ 101     $ (1 )   $ 100     $ 100     $     $ 100  

NON-CASH STOCK-BASED COMPENSATION EXPENSE

                       
Industrial Performance Products           $ 1             $ 2  
Industrial Engineered Products           1             2  
Chemtura AgroSolutions           1             1  
General corporate expense           10             17  
Total non-cash stock-based compensation expense           $ 13             $ 22  

Adjusted EBITDA by Segment:

                       
Industrial Performance Products           $ 140             $ 129  
Industrial Engineered Products           99             185  
Chemtura AgroSolutions           101             79  
General corporate expense           (65 )           (80 )
Adjusted EBITDA           $ 275             $ 313  

© 2017 Business Wire, Inc., All rights reserved.