UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549 - 1004
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000
COMMISSION FILE NUMBER 0-2413
MACDERMID, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT 06-0435750
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
245 FREIGHT STREET, WATERBURY, CONNECTICUT 06702
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (203) 575-5700
NONE .
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT.
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 AND 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 FEBRUARY 1, 2001
COMMON STOCK, NO PAR VALUE 31,152,054 SHARES
MACDERMID, INCORPORATED
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CONDENSED BALANCE SHEETS -
DECEMBER 31, 2000 AND MARCH 31, 2000. . . . . . . . . 2
-----
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
AND RETAINED EARNINGS - NINE AND THREE MONTHS
ENDED DECEMBER 31, 2000 AND 1999. . . . . . . . . . . 3
-----
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS -
NINE MONTHS ENDED DECEMBER 31, 2000 AND 1999. . . . . 4
-----
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS. 5-9
-----
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 10-14
-----
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK . . . . . . . . . . . . . . 14
-----
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . 14-15
-----
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . 16
------------------------------------------------------------- -----
MACDERMID, INCORPORATED
CONSOLIDATED CONDENSED BALANCE SHEETS
(AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AMOUNTS)
DECEMBER 31, MARCH 31,
2000 2000
--------- --------
ASSETS (UNAUDITED) (AUDITED)
--------------------- ------------
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 17,732 $ 20,116
------------------------ ---------
ACCOUNTS AND NOTES RECEIVABLE (NET OF
ALLOWANCE FOR DOUBTFUL RECEIVABLES OF
$12,394 AND $10,541) 195,827 180,629
------------------------ ---------
INVENTORIES
FINISHED GOODS 67,301 65,338
------------------------ ---------
RAW MATERIALS 68,432 50,264
------------------------ ---------
PREPAID EXPENSES 9,656 6,976
------------------------ ---------
DEFERRED INCOME TAX ASSET 4,509 9,115
------------------------ ---------
TOTAL CURRENT ASSETS 363,457 332,438
------------------------ ---------
PROPERTY, PLANT & EQUIPMENT (NET OF ACCUMULATED
DEPRECIATION OF $114,475 AND $99,172) 164,994 154,149
------------------------ ---------
GOODWILL (NET OF ACCUMULATED AMORTIZATION OF
$32,655 AND $25,332) 223,468 206,848
------------------------ ---------
INTANGIBLES, INCLUDING PATENTS/TRADEMARKS (NET OF
ACCUMULATED AMORTIZATION OF $34,672 AND $28,109) 66,050 54,891
------------------------ ---------
OTHER ASSETS 50,942 42,166
------------------------ ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
NOTES PAYABLE $ 5,909 $ 4,561
------------------------ ---------
CURRENT INSTALLMENTS OF LONG-TERM OBLIGATIONS 58,187 46,349
------------------------ ---------
ACCOUNTS & DIVIDENDS PAYABLE 71,266 63,545
------------------------ ---------
ACCRUED EXPENSES 69,613 70,698
------------------------ ---------
INCOME TAXES 12,933 13,967
------------------------ ---------
TOTAL CURRENT LIABILITIES 217,908 199,120
------------------------ ---------
LONG-TERM OBLIGATIONS 402,960 360,348
------------------------ ---------
ACCRUED POSTRETIREMENT & POSTEMPLOYMENT BENEFITS 7,440 7,239
------------------------ ---------
DEFERRED INCOME TAXES 3,625 10,531
------------------------ ---------
SHAREHOLDERS' EQUITY
COMMON STOCK STATED VALUE $1 PER SHARE 45,409 45,412
------------------------ ---------
ADDITIONAL PAID-IN CAPITAL 13,900 13,866
------------------------ ---------
RETAINED EARNINGS 245,472 217,149
------------------------ ---------
COMPREHENSIVE INCOME EQUITY ADJUSTMENTS: (NOTE 5)
CUMULATIVE FOREIGN CURRENCY TRANSLATION (9,496) (5,062)
------------------------ ---------
LESS: COST OF 14,277,610 AND 14,267,816
COMMON SHARES IN TREASURY (NOTE 3) (58,307) (58,111)
------------------------ ---------
TOTAL SHAREHOLDERS' EQUITY 236,978 213,254
------------------------ ---------
$868,911 $790,492
--------- --------
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
MACDERMID, INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
AND RETAINED EARNINGS
(AMOUNTS IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------- --------------
2000 1999 2000 1999
-------------- -------------- ------------ ------------
NET SALES . . . . . . . . . . . . . . . . . . . . $ 580,864 $ 566,256 $ 196,481 $ 201,546
-------------- -------------- ------------ ------------
COST AND EXPENSES:
COST OF SALES. . . . . . . . . . . . . . . . . 315,334 296,979 110,950 106,590
-------------- -------------- ------------ ------------
SELLING, TECHNICAL, ADMINISTRATIVE
EXPENSES (NOTE 7) . . . . . . . . . . . . . 175,471 172,884 60,702 64,273
-------------- -------------- ------------ ------------
AMORTIZATION . . . . . . . . . . . . . . . . . 15,774 13,318 5,339 4,452
-------------- -------------- ------------ ------------
INTEREST INCOME. . . . . . . . . . . . . . . . (1,414) (568) (508) (189)
-------------- -------------- ------------ ------------
INTEREST EXPENSE . . . . . . . . . . . . . . . 25,587 24,483 8,592 7,999
-------------- -------------- ------------ ------------
OTHER (INCOME) EXPENSE - NET . . . . . . . . . 2,339 1,228 279 865
-------------- -------------- ------------ ------------
533,091 508,324 185,354 183,990
-------------- -------------- ------------ ------------
EARNINGS BEFORE TAXES AND EXTRAORDINARY ITEM. . . 47,773 57,932 11,127 17,556
-------------- -------------- ------------ ------------
INCOME TAXES. . . . . . . . . . . . . . . . . . . 17,581 21,546 4,095 7,367
-------------- -------------- ------------ ------------
NET EARNINGS BEFORE EXTRAORDINARY ITEM. . . . . . 30,192 36,386 7,032 10,189
-------------- -------------- ------------ ------------
EXTRAORDINARY CHARGE FOR EARLY
RETIREMENT OF DEBT, NET OF $2,305 TAX BENEFIT. - (3,762) - (3,762)
-------------- -------------- ------------ ------------
NET EARNINGS. . . . . . . . . . . . . . . . . . . 30,192 32,624 7,032 6,427
-------------- -------------- ------------ ------------
RETAINED EARNINGS, BEGINNING OF PERIOD. . . . . . 217,149 171,740 239,063 196,931
-------------- -------------- ------------ ------------
CASH DIVIDENDS DECLARED . . . . . . . . . . . . . (1,869) (1,509) (623) (503)
-------------- -------------- ------------ ------------
RETAINED EARNINGS, END OF PERIOD. . . . . . . . . $ 245,472 $ 202,855 $ 245,472 $ 202,855
-------------- -------------- ------------ ------------
NET EARNINGS PER COMMON SHARE (NOTE 4):
BASIC
EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM . $ 0.97 $ 1.17 $ 0.23 $ 0.33
-------------- -------------- ------------ ------------
EXTRAORDINARY ITEM PER SHARE . . . . . . . . . $ - $ (0.12) $ - $ (0.12)
-------------- -------------- ------------ ------------
BASIC EARNINGS PER COMMON SHARE. . . . . . . . $ 0.97 $ 1.05 $ 0.23 $ 0.21
-------------- -------------- ------------ ------------
DILUTED
EARNINGS PER SHARE BEFORE EXTRAORDINARY ITEM . $ 0.93 $ 1.12 $ 0.22 $ 0.32
-------------- -------------- ------------ ------------
EXTRAORDINARY ITEM PER SHARE. . . . . . . . $ - $ (0.12) $ - $ (0.12)
-------------- -------------- ------------ ------------
DILUTED EARNINGS PER COMMON SHARE . . . . . $ 0.93 $ 1.00 $ 0.22 $ 0.20
-------------- -------------- ------------ ------------
CASH DIVIDENDS PER COMMON SHARE . . . . . . . . . $ 0.06 $ 0.06 $ 0.02 $ 0.02
-------------- -------------- ------------ ------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC. . . . . . . . . . . . . . . . . . . . . 31,153,318 31,155,702 31,152,532 31,155,924
-------------- -------------- ------------ ------------
DILUTED. . . . . . . . . . . . . . . . . . . . 32,402,219 32,429,765 32,397,214 32,429,502
------------------------------------------------- -------------- -------------- ------------ ------------
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
MACDERMID, INCORPORATED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS OF DOLLARS)
(UNAUDITED)
NINE MONTHS ENDED DECEMBER 31,
--------------------------------
2000 1999
-------------------------------- ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES . . . . . . . $ 39,665 $ 49,053
-------------------------------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES. . . . . . . . . . . . . . . . (10,533) (18,935)
-------------------------------- ---------
PROCEEDS FROM DISPOSITION OF FIXED ASSETS . . . . . 4,591 1,186
-------------------------------- ---------
SALE OF AVAILABLE-FOR-SALE SECURITIES . . . . . . . - 1,147
-------------------------------- ---------
DEPOSIT ON INVESTMENT . . . . . . . . . . . . . . . (13,594) -
-------------------------------- ---------
ACQUISITIONS OF BUSINESS (NOTE 2) . . . . . . . . . (57,280) (16,001)
-------------------------------- ---------
PROCEEDS FROM SALE OF BUSINESS. . . . . . . . . . . 550 9,089
-------------------------------- ---------
NET CASH FLOWS USED IN INVESTING ACTIVITIES . . . . (76,266) (23,514)
-------------------------------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
SHORT-TERM (REPAYMENTS) / BORROWINGS. . . . . . . . (9,949) (5,949)
-------------------------------- ---------
LONG-TERM BORROWINGS. . . . . . . . . . . . . . . . 84,244 17,350
-------------------------------- ---------
LONG-TERM REPAYMENTS. . . . . . . . . . . . . . . . (37,352) (22,845)
-------------------------------- ---------
PURCHASE OF TREASURY SHARES . . . . . . . . . . . . (196) -
-------------------------------- ---------
DIVIDENDS PAID. . . . . . . . . . . . . . . . . . . (1,869) (1,509)
-------------------------------- ---------
NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES. 34,878 (12,953)
-------------------------------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS . . . . . . . . . . . . . . . (661) (844)
-------------------------------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . (2,384) 11,742
-------------------------------- ---------
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR . . . . 20,116 17,628
-------------------------------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . $ 17,732 $ 29,370
-------------------------------- ---------
CASH PAID FOR INTEREST . . . . . . . . . . . . . . . . $ 25,195 $ 22,391
-------------------------------- ---------
CASH PAID FOR INCOME TAXES . . . . . . . . . . . . . . $ 15,204 $ 22,865
------------------------------------------------------ -------------------------------- ---------
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
MACDERMID, INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS OF DOLLARS)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE MARCH 31, 2000 CONDENSED CONSOLIDATED BALANCE SHEET AMOUNTS HAVE BEEN
DERIVED
FROM THE PREVIOUSLY AUDITED CONSOLIDATED BALANCE SHEETS OF MACDERMID,
INCORPORATED (THE CORPORATION). THE BALANCE OF THE CONDENSED FINANCIAL
INFORMATION REFLECTS ALL ADJUSTMENTS WHICH ARE, IN THE OPINION OF MANAGEMENT,
NECESSARY FOR A FAIR PRESENTATION OF THE FINANCIAL POSITION, RESULTS OF
OPERATIONS AND CASH FLOWS FOR THE INTERIM PERIODS PRESENTED AND ARE OF A NORMAL
RECURRING NATURE UNLESS OTHERWISE DISCLOSED IN THIS REPORT. THE RESULTS OF
OPERATIONS FOR THE NINE AND THREE MONTH PERIODS ENDED DECEMBER 31, 2000 AND 1999
ARE NOT NECESSARILY INDICATIVE OF TRENDS OR OF THE RESULTS TO BE EXPECTED FOR
THE FULL YEAR. THE STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THE CORPORATION'S 2000 ANNUAL
REPORT.
NOTE 2. ACQUISITIONS
ON JUNE 13, 2000, THE CORPORATION ACQUIRED THE ASSETS, SUBJECT TO CERTAIN
LIABILITIES, OF THE DIGITAL GRAPHICS BUSINESS UNIT OF VIRTUALFUND.COM, INC. THE
PURCHASE PRICE OF $47,000 WAS PAID AT CLOSING BY BORROWING ON AN EXISTING CREDIT
FACILITY WITH BANK OF AMERICA, N.A. THERE IS ACTIVITY INCLUDED IN THE CONDENSED
CONSOLIDATED STATEMENT OF EARNINGS AND RETAINED EARNINGS FOR THE ACQUIRED
BUSINESS SINCE THE JUNE 13, 2000 CLOSING DATE. THE RELATED CONDENSED
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2000 DISPLAYS INCREASED ASSETS AND
LIABILITIES PRIMARILY DUE TO THIS TRANSACTION. THE AMOUNTS RECORDED FOR THE
ASSETS AND LIABILITIES ACQUIRED, USING PURCHASE ACCOUNTING, INCLUDE GOODWILL OF
APPROXIMATELY $25,000 AND OTHER INTANGIBLES OF APPROXIMATELY $17,000 WHICH ARE
BEING AMORTIZED OVER FIFTEEN YEARS AND ARE SUBJECT TO ADJUSTMENT WHENEVER FINAL
EVALUATIONS ARE COMPLETED. ANY SUCH ADJUSTMENTS ARE NOT EXPECTED TO BE
MATERIAL.
THE CORPORATION ESTABLISHED PURCHASE LIABILITIES (INCLUDED IN ACCRUED
EXPENSES) IN FISCAL YEAR 1999 WHEN RECORDING THE ACQUISITION OF W.CANNING, PLC.
THE REORGANIZATION OF EMPLOYEES HAS BEEN COMPLETED. THE REORGANIZATION OF
FACILITIES IS PROCEEDING AS PLANNED. FIVE FACILITIES HAVE BEEN CLOSED WITH
THOSE ACTIVITIES ASSIMILATED ELSEWHERE. NEGOTIATIONS ARE ONGOING REGARDING THE
ELIMINATION OF LEASED FACILITIES AND SALE OF OWNED FACILITIES, NONE OF WHICH
HAVE CLOSED AT PRESENT. THE FOLLOWING TABLE SUMMARIZES THE ACTIVITY TO THIS
ACCOUNT FOR THE NINE MONTH PERIOD ENDED DECEMBER 31, 2000.
BEGINNING OF YEAR PAYMENTS END OF PERIOD
------------------ -------- --------------
FACILITIES. . $ 2,383 212 $ 2,171
------------------ -------- --------------
REDUNDANCIES. 330 296 34
------------------ -------- --------------
ENVIRONMENTAL 1,880 0 1,880
------------------ -------- --------------
TOTAL. . . $ 4,593 508 $ 4,085
------------- ------------------ -------- --------------
NOTE 3. STOCK REPURCHASE AUTHORIZATION
ON JULY 22, 1998 THE BOARD OF DIRECTORS AUTHORIZED THE CORPORATION TO
PURCHASE UP TO 1,000,000 SHARES OF ITS COMMON STOCK. ON FEBRUARY 17, 1999, THE
BOARD OF DIRECTORS REDUCED THIS AUTHORIZATION TO 200,000 SHARES. AT DECEMBER
31, 2000, THERE REMAINED AUTHORIZATION TO PURCHASE APPROXIMATELY 184,000 SHARES.
SUCH ADDITIONAL SHARES MAY BE ACQUIRED THROUGH PRIVATELY NEGOTIATED TRANSACTIONS
OR ON THE OPEN MARKET FROM TIME TO TIME. ANY FUTURE REPURCHASES BY MACDERMID
WILL DEPEND ON VARIOUS FACTORS, INCLUDING THE MARKET PRICE OF THE SHARES, THE
CORPORATION'S BUSINESS AND FINANCIAL POSITION AND GENERAL ECONOMIC AND MARKET
CONDITIONS. ADDITIONAL SHARES ACQUIRED PURSUANT TO SUCH AUTHORIZATION WILL BE
HELD IN THE CORPORATION'S TREASURY AND WILL BE AVAILABLE FOR THE CORPORATION TO
ISSUE FOR VARIOUS CORPORATE PURPOSES WITHOUT FURTHER SHAREHOLDER ACTION (EXCEPT
AS REQUIRED BY APPLICABLE LAW OR THE RULES OF ANY SECURITIES EXCHANGE ON WHICH
THE SHARES ARE THEN LISTED).
NOTE 4. EARNINGS PER COMMON SHARE
THE COMPUTATION OF BASIC EARNINGS PER SHARE IS BASED UPON THE WEIGHTED
AVERAGE NUMBER OF OUTSTANDING COMMON SHARES. THE COMPUTATION OF DILUTED
EARNINGS PER SHARE IS BASED UPON THE WEIGHTED AVERAGE NUMBER OF OUTSTANDING
COMMON SHARES PLUS THE EFFECT OF ALL DILUTIVE POTENTIAL COMMON SHARES THAT WERE
OUTSTANDING DURING THE PERIOD. EARNINGS PER SHARE IS CALCULATED BASED UPON NET
EARNINGS AVAILABLE FOR COMMON SHAREHOLDERS.
NOTE 5. COMPREHENSIVE INCOME
THE COMPONENTS OF COMPREHENSIVE INCOME FOR THE NINE AND THREE MONTH PERIODS
ENDED DECEMBER 31, 2000 AND 1999 ARE AS FOLLOWS:
NINE MONTHS ENDED THREE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------- -------------
2000 1999 2000 1999
-------- ------- ------- ------
NET EARNINGS . . . . . . . . . . . . . . . . . . . . . . $30,192 $32,624 $7,032 $6,427
-------- ------- ------- ------
OTHER COMPREHENSIVE INCOME:
CUMULATIVE FOREIGN CURRENCY
TRANSLATION ADJUSTMENT. . . . . . . (4,434) 4,694 (861) 485
-------- ------- ------- ------
AVAILABLE-FOR-SALE SECURITIES
UNREALIZED HOLDING GAIN(NET OF TAX) - 174 - -
-------- ------- ------- ------
COMPREHENSIVE INCOME. . . . . . . . . . $25,758 $37,492 $6,171 $6,912
-------------------------------------------------------- -------- ------- ------- ------
NOTE 6. SEGMENT REPORTING
THE CORPORATION PROVIDES DEVELOPMENT, MANUFACTURE AND TECHNICAL SERVICE FOR A
LARGE VARIETY OF SPECIALTY CHEMICAL PROCESSES AND RELATED EQUIPMENT IN TWO
REPORTABLE OPERATING SEGMENTS: ADVANCED SURFACE FINISHES AND GRAPHIC ARTS. THESE
TWO SEGMENTS UNDER WHICH THE CORPORATION OPERATES ON A WORLDWIDE BASIS ARE
MANAGED SEPARATELY AS EACH SEGMENT HAS DIFFERENCES IN TECHNOLOGY AND MARKETING
STRATEGIES. THE BUSINESS SEGMENTS REPORTED BELOW ARE THE SEGMENTS OF THE
CORPORATION FOR WHICH SEPARATE FINANCIAL INFORMATION IS AVAILABLE AND FOR WHICH
OPERATING RESULTS ARE REVIEWED BY EXECUTIVE MANAGEMENT TO ASSESS PERFORMANCE OF
THE CORPORATION. THE ACCOUNTING POLICIES OF THE BUSINESS SEGMENTS ARE THE SAME
AS THOSE DESCRIBED IN THE SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, NOTE 1.
NET SALES FOR ALL OF THE CORPORATION'S PRODUCTS FALL INTO ONE OF THE TWO
BUSINESS SEGMENTS. THE BUSINESS SEGMENT RESULTS OF OPERATIONS INCLUDE CERTAIN
OPERATING COSTS WHICH ARE ALLOCATED BASED ON THE RELATIVE BURDEN EACH SEGMENT
BEARS ON THOSE COSTS. OPERATING INCOME AMOUNTS ARE EVALUATED BEFORE
AMORTIZATION OF INTANGIBLE ASSETS AND NON-RECURRING CHARGES. THE BUSINESS
SEGMENT IDENTIFIABLE ASSETS EXCLUDE DEFERRED TAX ASSETS, EQUITY METHOD
INVESTMENTS AND CERTAIN OTHER LONG TERM ASSETS NOT ASSOCIATED WITH SUPPORT OF
THE OPERATIONS.
NOTE 6. SEGMENT REPORTING (CONTINUED)
SEGMENT RESULTS OF OPERATIONS:
THREE MONTHS ENDED
NINE MONTHS ENDED DECEMBER 31, DECEMBER 31,
-------------------------------- --------------
2000 1999 2000 1999
-------------------------------- -------------- --------- ---------
NET SALES
ADVANCED SURFACE FINISHES . . $ 348,294 $ 344,944 $119,366 $123,599
-------------------------------- -------------- --------- ---------
GRAPHIC ARTS. . . . . . . . . 232,570 221,312 77,115 77,947
-------------------------------- -------------- --------- ---------
CONSOLIDATED NET SALES. . . $ 580,864 $ 566,256 $196,481 $201,546
-------------------------------- -------------- --------- ---------
OPERATING INCOME
ADVANCED SURFACE FINISHES . . $ 62,417 $ 59,504 $ 21,333 $ 20,401
-------------------------------- -------------- --------- ---------
GRAPHIC ARTS. . . . . . . . . 34,704 44,005 8,111 16,366
-------------------------------- -------------- --------- ---------
RESTRUCTURING EXPENSE . . . . (5,589) - (4,615) -
-------------------------------- -------------- --------- ---------
MERGER EXPENSE. . . . . . . . (1,473) (7,116) - (6,084)
-------------------------------- -------------- --------- ---------
AMORTIZATION EXPENSE. . . . . (15,774) (13,318) (5,339) (4,452)
-------------------------------- -------------- --------- ---------
CONSOLIDATED OPERATING
INCOME. . . . . . . . . $ 74,285 $ 83,075 $ 19,490 $ 26,231
-------------------------------- -------------- --------- ---------
INTEREST INCOME. . . . . 1,414 568 508 189
-------------------------------- -------------- --------- ---------
INTEREST EXPENSE . . . . (25,587) (24,483) (8,592) (7,999)
-------------------------------- -------------- --------- ---------
OTHER (EXPENSE) INCOME
- NET . . . . . . . . . (2,339) (1,228) (279) (865)
-------------------------------- -------------- --------- ---------
EARNINGS BEFORE INCOME
TAXES AND EXTRAORDINARY
ITEM. . . . . . . . . $ 74,285 $ 83,075 $ 19,490 $ 26,231
------------------------------- -------------------------------- -------------- --------- ---------
SEGMENT IDENTIFIABLE ASSETS:
DECEMBER 31, 2000 MARCH 31, 2000
------------------ ---------------
ADVANCED SURFACE FINISHING $ 496,281 $ 453,714
------------------ ---------------
GRAPHIC ARTS . . . . . . . 354,973 314,215
------------------ ---------------
CORPORATE-WIDE . . . . . . 17,657 22,563
------------------ ---------------
CONSOLIDATED ASSETS. . $ 868,911 $ 790,492
-------------------------- ------------------ ---------------
NOTE 7. RESTRUCTURING CHARGES
THE CORPORATION BEGAN A RESTRUCTURING PROGRAM IN THE SECOND QUARTER OF
FISCAL 2001 IN ORDER TO ACHIEVE A STRATEGIC REPOSITIONING OF ITS OPERATIONS
WHICH HAVE GROWN RAPIDLY THROUGH SIGNIFICANT ACQUISITIONS OVER THE PAST TWO
FISCAL YEARS. THE CORPORATION TOOK AN APPROXIMATE $1,000 RESTRUCTURING CHARGE
IN THE SECOND QUARTER ENDING SEPTEMBER 30, 2000. IN ADDITION, THE CORPORATION
TOOK A FURTHER RESTRUCTURING CHARGE OF APPROXIMATELY $4,600 IN THE THIRD QUARTER
ENDING DECEMBER 31, 2000. THESE CHARGES REPRESENT, PRIMARILY, MANAGEMENT AND
OFFICE SUPPORT REDUNDANCIES OF APPROXIMATELY 165 INDIVIDUALS. AS OF DECEMBER
31, 2000, APPROXIMATELY 105 EMPLOYEES HAD BEEN SEVERED IN ACCORDANCE WITH THE
PLAN RESULTING IN CASH PAYMENTS OF $4,007. IT IS EXPECTED THAT THE
RESTRUCTURING PROGRAM AND RELATED CHARGES WILL BE COMPLETED BY THE FISCAL YEAR
END. THE FOLLOWING TABLE SUMMARIZES THE ACTIVITY TO THIS ACCOUNT FOR THE NINE
MONTH PERIOD ENDED DECEMBER 31, 2000.
BEGINNING OF YEAR RESTRUCTURING PAYMENTS END OF PERIOD
------------------ ------------- -------- --------------
REDUNDANCIES $ 0 5,329 4,007 $ 1,322
------------------ ------------- -------- --------------
FACILITIES . 0 260 0 260
------------------ ------------- -------- --------------
TOTAL . . $ 0 5,589 4,007 $ 1,582
------------ ------------------ ------------- -------- --------------
NOTE 8. MARKET RISK AND CONTINGENCIES
MARKET RISK
THE CORPORATION IS EXPOSED TO MARKET RISK IN THE NORMAL COURSE OF ITS BUSINESS
OPERATIONS DUE TO ITS OPERATIONS IN DIFFERENT FOREIGN CURRENCIES AND ITS ONGOING
INVESTING AND FINANCING ACTIVITIES. THE RISK OF LOSS CAN BE ASSESSED FROM THE
PERSPECTIVE OF ADVERSE CHANGES IN FAIR VALUES, CASH FLOWS AND FUTURE EARNINGS.
THE CORPORATION HAS ESTABLISHED POLICIES AND PROCEDURES GOVERNING ITS MANAGEMENT
OF MARKET RISKS AND THE USE OF FINANCIAL INSTRUMENTS TO MANAGE EXPOSURE TO SUCH
RISKS.
THE CORPORATION IS EXPOSED TO INTEREST RATE RISK PRIMARILY FROM ITS CREDIT
FACILITY WHICH IS BASED UPON VARIOUS FLOATING RATES. AT DECEMBER 31, 2000, THE
CORPORATION HAD ENTERED INTO INTEREST RATE SWAPS WITH AN AGGREGATE NOTIONAL
AMOUNT THAT APPROXIMATES ONE-THIRD OF ITS BORROWINGS.
THE RESULTING WEIGHTED-AVERAGE FIXED INTEREST RATE IS APPROXIMATELY 7.6%. BASED
UPON EXPECTED LEVELS OF BORROWING UNDER THIS FACILITY FOR THE REMAINDER OF
FISCAL YEAR 2001, AN INCREASE IN INTEREST RATES OF 100 BASIS POINTS WOULD RESULT
IN AN INCREMENTAL $4.0 MILLION ANNUAL INTEREST EXPENSE AND WOULD NOT HAVE A
MATERIAL ADVERSE AFFECT ON THE CORPORATION'S CONSOLIDATED FINANCIAL POSITION,
RESULTS OF OPERATIONS OR CASH FLOWS.
THE CORPORATION OPERATES MANUFACTURING FACILITIES IN EIGHT COUNTRIES AND SELLS
PRODUCTS IN OVER 25 COUNTRIES. APPROXIMATELY 45% OF THE CORPORATION'S SALES ARE
DENOMINATED IN CURRENCIES OTHER THAN THE US DOLLAR. HISTORICALLY, THE
CORPORATION RETURNS SLIGHTLY LESS THAN 10% ON SALES AND FOREIGN EXCHANGE
FLUCTUATIONS HAVE NOT HAD ANY SIGNIFICANTLY MEASURABLE EFFECT ON EARNINGS.
FURTHERMORE, THOSE EARNINGS ARE GENERALLY REINVESTED LOCALLY AND THE IMPACT ON
OPERATING CASH FLOWS HAS BEEN LESS THAN $3.5 MILLION ANNUALLY. MANAGEMENT
CONTINUALLY REVIEWS THE BALANCE BETWEEN FOREIGN CURRENCY DENOMINATED ASSETS AND
LIABILITIES IN ORDER TO MINIMIZE THE EXPOSURE TO FOREIGN EXCHANGE FLUCTUATIONS.
THE CORPORATION DOES NOT ENTER INTO ANY DERIVATIVE FINANCIAL INSTRUMENTS FOR
TRADING PURPOSES, NOR DOES IT ENTER INTO ANY FOREIGN CURRENCY HEDGING. THE
CORPORATION HAS CERTAIN SUPPLY AGREEMENTS FOR QUANTITIES BUT HAS CHOSEN NOT TO
ENTER INTO ANY PRICE HEDGING WITH ITS SUPPLIERS FOR COMMODITIES.
CONTINGENCIES
(A) ENVIRONMENTAL. THE CORPORATION HAS BEEN NAMED AS A POTENTIALLY
RESPONSIBLE PARTY (PRP) BY THE ENVIRONMENTAL PROTECTION AGENCY IN CONNECTION
WITH TWO WASTE SITES. THERE ARE MANY OTHER COMPANIES INVOLVED AT EACH OF THESE
SITES AND THE CORPORATION'S PARTICIPATION IS MINOR. THE CORPORATION HAS RECORDED
ITS BEST ESTIMATE OF LIABILITIES IN CONNECTION WITH SITE CLEAN-UP BASED UPON THE
EXTENT OF ITS INVOLVEMENT, THE NUMBER OF PRPS AND ESTIMATES OF THE TOTAL COSTS
OF THE SITE CLEAN-UP. THOUGH IT IS DIFFICULT TO PREDICT THE FINAL COSTS OF SITE
REMEDIATION, MANAGEMENT BELIEVES THAT THE RECORDED LIABILITIES OF $200 AT
SEPTEMBER 30, 2000 ARE REASONABLE ESTIMATES OF PROBABLE LIABILITY AND THAT ANY
DIFFERENCES IN ACTUAL CASH OUTLAYS FROM THE AMOUNT RECORDED ARE UNLIKELY TO BE
MATERIAL TO ITS CONSOLIDATED FINANCIAL POSITION, RESULTS OF OPERATIONS OR CASH
FLOWS.
THE CORPORATION HAS ESTABLISHED AN ENVIRONMENTAL REMEDIATION RESERVE WITH
RESPECT TO ITS DECEMBER 1998 ACQUISITION OF CANNING. A SUBSTANTIAL MAJORITY OF
THAT RESERVE IS ATTRIBUTABLE TO TWO U.S. SITES OF A CANNING U.S. SUBSIDIARY THAT
ARE BELIEVED TO REQUIRE ENVIRONMENTAL REMEDIATION ACTIVITIES. THE RESERVES
ESTABLISHED BY THE CORPORATION WERE BASED UPON PHASE I AND PHASE II
ENVIRONMENTAL INVESTIGATIONS OF THOSE SITES AND REMEDIATION ESTIMATES PRODUCED
BY REMEDIATION CONTRACTORS, WHICH ESTIMATES INDICATED THAT THE REASONABLE RANGE
OF THE CORPORATION'S GROSS LIABILITY IS $2,000 TO $11,500. BASED UPON THE
CORPORATION'S EXPERIENCE AND THE FACTS KNOWN TO IT AS OF THE DATE OF THIS
FILING, THE CORPORATION EXPECTS THAT ITS GROSS LIABILITY FOR THOSE TWO CANNING
SITES WILL NOT EXCEED $4,500. THE CORPORATION BELIEVES THAT ITS CANNING
SUBSIDIARY CLEARLY IS ENTITLED UNDER CANNING'S ACQUISITION AGREEMENT RELATING TO
THOSE SITES TO WITHHOLD A DEFERRED PURCHASE PRICE PAYMENT OF APPROXIMATELY
$2,300, WHICH WILL BE APPLIED TO REDUCE ITS NET LIABILITY FOR THOSE SITES. TO
THE EXTENT THE CORPORATION'S LIABILITIES EXCEED $2,300 IT MAY BE ENTITLED TO
ADDITIONAL INDEMNIFICATION PAYMENTS FROM THE PREVIOUS TWO
NOTE 8. MARKET RISK AND CONTINGENCIES (CONTINUED)
LARGEST SHAREHOLDERS OF THE PRIOR OWNER OF THE TWO SITES. SUCH RECOVERY IS
SUBSTANTIALLY UNCERTAIN, HOWEVER, AND WOULD LIKELY INVOLVE SIGNIFICANT
LITIGATION EXPENSE. AS A RESULT, THE CORPORATION HAS RECORDED A NET LIABILITY OF
$2,000. THE FOREGOING ESTIMATES OF POTENTIAL GROSS AND NET LIABILITIES AND
RECOVERIES HAVE NOT BEEN DISCOUNTED TO REFLECT THE TIME VALUE OF MONEY. THE
CORPORATION EXPECTS THAT THE LIABILITIES PERTAINING TO THE TWO CANNING SITES
WILL BE INCURRED WITHIN THE NEXT FIVE YEARS; THE CORPORATION WILL RECOGNIZE THE
RECOVERY FROM THE DEFERRED PURCHASE PRICE PAYMENT CONTEMPORANEOUSLY WITH ITS
PAYMENT OF THE UNDERLYING EXPENSE.
(B) LEGAL PROCEEDINGS. ON JANUARY 30, 1997, THE CORPORATION WAS SERVED WITH A
SUBPOENA FROM A FEDERAL GRAND JURY IN CONNECTICUT REQUESTING CERTAIN DOCUMENTS.
THE CORPORATION WAS SUBSEQUENTLY INFORMED THAT IT IS A SUBJECT OF THE GRAND
JURY'S INVESTIGATION. THE SUBPOENA REQUESTED INFORMATION RELATING TO AN
ACCIDENTAL SPILL FROM THE CORPORATION'S HUNTINGDON AVENUE, WATERBURY,
CONNECTICUT FACILITY THAT OCCURRED IN NOVEMBER OF 1994, TOGETHER WITH OTHER
INFORMATION RELATED TO OPERATIONS AND COMPLIANCE AT THE HUNTINGDON AVENUE
FACILITY. THE CORPORATION HAS RETAINED OUTSIDE LAW FIRMS TO ASSIST IN COMPLYING
WITH THE SUBPOENA AND THE UNDERLYING INVESTIGATION. THE CORPORATION HAS FROM
THE OUTSET COOPERATED WITH THE INVESTIGATION AND IS CURRENTLY INVOLVED IN
INFORMAL NEGOTIATIONS WITH THE GOVERNMENT, WITH A VIEW TOWARDS SETTLING ANY AND
ALL CHARGES IN THIS MATTER WITHOUT RESORT TO TRIAL. SINCE THESE NEGOTIATIONS
HAVE ONLY RECENTLY BEGUN, AT THIS TIME IT IS TOO SPECULATIVE TO QUANTIFY THE
PRECISE FINANCIAL IMPLICATIONS TO THE CORPORATION.
THE CORPORATION IS A PARTY TO A NUMBER OF LAWSUITS AND CLAIMS IN ADDITION TO
THOSE DISCUSSED ABOVE ARISING OUT OF THE ORDINARY CONDUCT OF BUSINESS. WHILE THE
ULTIMATE RESULTS OF THE PROCEEDINGS AGAINST THE CORPORATION CANNOT BE PREDICTED
WITH CERTAINTY, MANAGEMENT DOES NOT EXPECT THAT RESOLUTION OF THESE MATTERS WILL
HAVE A MATERIAL ADVERSE EFFECT UPON ITS CONSOLIDATED FINANCIAL POSITION, RESULTS
OF OPERATIONS OR CASH FLOWS. IT IS THE CORPORATION'S POLICY TO RECORD ACCRUALS
IN ACCORDANCE WITH THE PROVISIONS OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
NO. 5, ACCOUNTING FOR CONTINGENCIES (SFAS 5) WHICH REQUIRES AN ACCRUAL TO BE
RECORDED WHEN IT IS BOTH PROBABLE A LIABILITY HAS BEEN INCURRED AND THE COST IS
REASONABLY ESTIMABLE.
(C) OTHER. THE CORPORATION'S BUSINESS OPERATIONS, CONSIST PRINCIPALLY OF
MANUFACTURE AND SALE OF SPECIALTY CHEMICALS, SUPPLIES AND RELATED EQUIPMENT TO
CUSTOMERS THROUGHOUT MUCH OF THE WORLD. APPROXIMATELY 40% OF THE BUSINESS IS
CONCENTRATED IN THE PRINTING INDUSTRY WHERE OUR PRODUCTS ARE USED FOR A WIDE
VARIETY OF APPLICATIONS, INCLUDING OFFSET BLANKETS, PRINTING PLATES, TEXTILE
BLANKETS AND RUBBER BASED COVERS FOR INDUSTRIAL ROLLERS, WHILE 25% OF THE
BUSINESS IS CONCENTRATED WITH MANUFACTURERS OF PRINTED CIRCUIT BOARDS WHICH ARE
USED IN A WIDE VARIETY OF END-USE APPLICATIONS, INCLUDING COMPUTERS,
COMMUNICATIONS AND CONTROL EQUIPMENT, APPLIANCES, AUTOMOBILES AND ENTERTAINMENT
PRODUCTS. AS IS USUAL FOR THIS BUSINESS, THE CORPORATION GENERALLY DOES NOT
REQUIRE COLLATERAL OR OTHER SECURITY AS A CONDITION OF SALE, CHOOSING, RATHER,
TO CONTROL CREDIT RISK OF TRADE ACCOUNT FINANCIAL INSTRUMENTS BY CREDIT
APPROVAL, BALANCE LIMITATION AND MONITORING PROCEDURES. MANAGEMENT BELIEVES THAT
RESERVES FOR LOSSES, WHICH ARE ESTABLISHED BASED UPON REVIEW OF ACCOUNT BALANCES
AND HISTORICAL EXPERIENCE, ARE ADEQUATE.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION COMPARES THE RESULTS OF OPERATIONS FOR THE THREE AND
NINE MONTH PERIODS WHICH ENDED DECEMBER 31, 2000 TO THE SAME PERIODS IN 1999 AND
PROVIDES INFORMATION WITH RESPECT TO CHANGES IN FINANCIAL CONDITION DURING THE
NINE MONTHS THEN ENDED.
SALES
TOTAL SALES FOR THE CURRENT QUARTER, $196.5 MILLION, DECREASED $5.0 MILLION OR
3% FROM $201.5 MILLION IN THE SAME PERIOD LAST YEAR. PROPRIETARY SALES, ROUGHLY
89% OF TOTAL SALES, DECREASED $3.9 MILLION OR 2%. ACQUISITIONS (NET OF
DIVESTITURES) ADDED $19.8 MILLION TO PROPRIETARY SALES, WHILE FOREIGN CURRENCY
TRANSLATION REDUCED REPORTED PROPRIETARY SALES APPROXIMATELY $10.3 MILLION OR
ROUGHLY 6%. PROPRIETARY SALES EXCLUDING THE EFFECTS OF ACQUISITIONS AND FOREIGN
CURRENCY TRANSLATION WOULD HAVE DECREASED 8%.
FOR THE NINE MONTH PERIOD, TOTAL SALES OF $580.9 MILLION INCREASED $14.6 MILLION
OR 3% FROM $566.3 MILLION IN THE SAME PERIOD LAST YEAR. PROPRIETARY SALES,
ROUGHLY 91% OF TOTAL SALES, INCREASED $20.1 MILLION OR 4%. ACQUISITIONS (NET OF
DIVESTITURES) ADDED $42.6 MILLION, WHILE FOREIGN CURRENCY TRANSLATION REDUCED
REPORTED PROPRIETARY SALES APPROXIMATELY $22.2 MILLION OR ROUGHLY 4%.
PROPRIETARY SALES EXCLUDING THE EFFECTS OF ACQUISITIONS AND FOREIGN CURRENCY
TRANSLATION WOULD HAVE BEEN FLAT.
THE CORPORATION'S UNDERLYING (EXCLUDING THE EFFECTS OF ACQUISITIONS AND FOREIGN
CURRENCY TRANSLATION) SALES GROWTH, FOR ADVANCED SURFACE FINISHES ("ASF"), WAS
FUELED BY ASIA AND TO A LESSER EXTENT, FURTHER ENHANCED BY EUROPE. THE
UNDERLYING SALES IN NORTH AMERICA WERE SOMEWHAT LESS THAN THE SAME PERIODS LAST
YEAR, FOR BOTH ASF AND GRAPHIC ARTS ("GA"). WORLDWIDE GA PROPRIETARY SALES WERE
12% AND 3% LOWER FOR THE THREE AND NINE MONTH PERIODS, RESPECTIVELY. WORLDWIDE
ASF PROPRIETARY SALES WERE 1% AND 5% HIGHER FOR THE THREE AND NINE MONTH
PERIODS, RESPECTIVELY.
COSTS AND EXPENSES
GROSS PROFITS ARE DOWN 10% FOR THE THREE MONTH PERIOD AND DOWN 1% FOR THE NINE
MONTH PERIOD, AS COMPARED TO THE SAME PERIODS LAST YEAR. THE ADVANCEMENT OF ASF
PROPRIETARY CHEMICAL SALES WAS OFFSET BY A DEPRESSED THIRD QUARTER FOR GA
BUSINESS. GROSS PROFIT, AS A PERCENTAGE OF SALES FOR THE THREE MONTH PERIOD IS
43.8% AS COMPARED TO 47.4% FOR THE SAME PERIOD LAST YEAR. GROSS PROFIT, AS A
PERCENTAGE OF SALES FOR THE NINE MONTH PERIOD IS 45.9% AS COMPARED TO 47.8% FOR
THE SAME PERIOD LAST YEAR. THE PRIMARY REASONS FOR THESE DIFFERENCES ARE THAT
OVERHEAD RECOVERIES HAVE BEEN NEGATIVELY IMPACTED BY VIATEK PRODUCTION COSTS AND
GA COST VARIANCES IN THE MOST RECENT QUARTER.
SELLING, TECHNICAL AND ADMINISTRATIVE (ST&A) EXPENSES INCREASED 1% FOR THE THREE
MONTH PERIOD AND DECREASED 6% FOR THE NINE MONTH PERIOD, AS COMPARED TO THE SAME
PERIODS LAST YEAR. INCLUDED IN THE THREE MONTH PERIOD ARE RESTRUCTURING CHARGES
OF $4.6 MILLION THIS YEAR, AND MERGER RELATED COSTS OF $6.1 MILLION LAST YEAR.
FOR THE NINE MONTH PERIOD THERE ARE RESTRUCTURING CHARGES OF $5.6 MILLION, THIS
YEAR AND MERGER RELATED COSTS OF $1.5 MILLION, THIS YEAR AS COMPARED TO $7.1
MILLION, LAST YEAR. EXCLUDING THESE CHARGES, ST&A EXPENSES WOULD BE 4% LOWER
FOR THE THREE MONTH PERIOD AND 2% HIGHER FOR THE NINE MONTH PERIOD AS COMPARED
TO THE SIMILAR PERIODS LAST YEAR.
BOTH THE THREE AND NINE MONTH PERIODS HAD INCREASED COSTS FROM ACQUISITIONS THAT
WERE SOMEWHAT FAVORABLY OFFSET BY CURRENCY TRANSLATION. FOR BOTH PERIODS,
EXPENSES INCREASED MODESTLY IN SUPPORT OF BUSINESS GROWTH AND PRODUCT
DEVELOPMENT WHILE COST AWARENESS INITIATIVES HAVE HELD ADMINISTRATIVE EXPENSES
DOWN. THEREFORE, THE NINE MONTH PERIOD INCREASED DUE TO THESE FACTORS, WHILE
THE THREE MONTH PERIOD DECREASED PRIMARILY FROM THE EFFECTS OF COST REDUCTIONS
AS A RESULT OF THE RESTRUCTURING AND FROM A LOWER PROVISION FOR INCENTIVE
COMPENSATION. AS A RESULT, ST&A EXCLUDING THE MERGER RELATED AND RESTRUCTURING
CHARGES, AS A PERCENTAGE OF SALES, IS 28.5% AND 29.0% FOR THE THREE AND NINE
MONTH PERIODS THIS YEAR, RESPECTIVELY, AS COMPARED TO 28.9% AND 29.3% FOR THE
SAME PERIODS LAST YEAR.
THE CORPORATION HAS RECORDED SPECIAL CHARGES OF APPROXIMATELY $5.6 MILLION
DURING THE SECOND AND THIRD QUARTERS OF FISCAL 2001 WHICH RELATES TO THE
RESTRUCTURING PROGRAM UNDERTAKEN DURING THIS PERIOD. THE RESTRUCTURING IS
INTENDED TO REPOSITION OPERATIONS IN A MORE STRATEGIC MANNER AND CONSISTS
PRIMARILY OF THE PLANNED REDUCTION OF 165 INDIVIDUALS FROM THE CORPORATION'S
NORTH AMERICAN AND EUROPEAN WORKFORCES. THESE REDUCTIONS ARE MAINLY DUPLICATE
MANAGEMENT AND OFFICE SUPPORT POSITIONS WITH ROUGHLY TWO-THIRDS RELATING TO THE
GA OPERATIONS. THE CORPORATION EXPECTS TO SAVE APPROXIMATELY $12 MILLION OR
$0.24 PER SHARE, PER ANNUM. AS OF DECEMBER 31, 2000, 105 EMPLOYEES HAD BEEN
SEVERED IN ACCORDANCE WITH THE PLAN RESULTING IN CASH PAYMENTS OF $4.0 MILLION.
IT IS EXPECTED THAT THE RESTRUCTURING PROGRAM AND RELATED CHARGES WILL BE
COMPLETED BY THE FISCAL YEAR END.
TOTAL AMORTIZATION CHARGED TO EARNINGS WAS $5.4 MILLION AND $15.8 MILLION FOR
THE THREE AND NINE MONTH PERIODS ENDED DECEMBER 31, 2000, RESPECTIVELY. THE
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES HAS INCREASED APPROXIMATELY $1.0
MILLION AND $2.5 MILLION FOR THE THREE AND NINE MONTH PERIODS, RESPECTIVELY,
OVER THE SAME PERIODS LAST YEAR DUE TO RECENT ACQUISITIONS BY THE GA BUSINESS.
OPERATING PROFITS, EXCLUDING THE EFFECTS OF THE MERGER RELATED AND RESTRUCTURING
CHARGES, FOR THE THREE AND NINE MONTH PERIODS DECREASED 25% AND 10%,
RESPECTIVELY, AS COMPARED TO THE SAME PERIODS LAST YEAR. OPERATING PROFITS,
INCLUDING THE MERGER RELATED AND RESTRUCTURING CHARGES DECREASED 26% AND 11% FOR
THE THREE AND NINE MONTH PERIODS, RESPECTIVELY, FROM THE SAME PERIODS LAST YEAR.
FOR THE THREE MONTH PERIOD, GA OPERATING PROFITS DECREASED 50% AND ASF OPERATING
PROFITS INCREASED 5%. FOR THE NINE MONTH PERIOD, GA OPERATING PROFITS DECREASED
21% AND ASF OPERATING PROFITS INCREASED 5%.
PROVISION FOR INCOME TAXES
THE CORPORATION'S EFFECTIVE INCOME TAX RATE APPROXIMATES 37% FOR THE NINE MONTH
PERIODS ENDED DECEMBER 31, 2000 AND 1999, RESPECTIVELY. FOR THE THREE MONTH
PERIODS, THE CORPORATION'S EFFECTIVE INCOME TAX RATE APPROXIMATES 37% FOR THE
PERIOD ENDED DECEMBER 31, 2000 AS COMPARED TO APPROXIMATELY 42% FOR THE PERIOD
ENDED DECEMBER 31, 1999. THE DIFFERENCE IS DUE TO NON-DEDUCTIBLE MERGER RELATED
COSTS INCURRED IN THE PERIOD ENDED DECEMBER 31, 1999 SOMEWHAT OFFSET BY A
LIMITATION ON THE UTILIZATION OF FOREIGN TAX CREDITS FOR THE PERIOD ENDED
DECEMBER 31, 2000.
NET EARNINGS
NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS INCREASED 9% FOR THE THREE MONTH
PERIOD AND DECREASED 7% FOR THE NINE MONTH PERIOD AS COMPARED TO THE SIMILAR
PERIODS LAST YEAR. FOREIGN CURRENCY TRANSLATION HAD THE EFFECT OF REDUCING THE
REPORTED EARNINGS BY APPROXIMATELY 10% FOR THE THREE MONTH PERIOD AND 4% FOR THE
NINE MONTH PERIOD.
FINANCIAL CONDITION
OPERATING ACTIVITIES DURING THE NINE MONTHS ENDING DECEMBER 31, 2000 RESULTED IN
A NET CASH INFLOW OF $39.7 MILLION. THE CASH GENERATED WAS USED FOR CAPITAL
IMPROVEMENTS, DIVIDENDS TO COMMON SHAREHOLDERS AND LONG-TERM DEBT REPAYMENTS.
WORKING CAPITAL AT DECEMBER 31, 2000 WAS $145.5 MILLION AS COMPARED TO $133.3
MILLION AT MARCH 31, 2000.
CAPITAL EXPENDITURES WERE $10.5 MILLION FOR THE NINE MONTHS ENDED DECEMBER 31,
2000 AND ARE IN LINE WITH THE TOTAL PLANNED EXPENDITURES OF APPROXIMATELY $22.0
MILLION FOR THE FISCAL YEAR.
THE FOLLOWING TABLE CONTAINS OTHER DATA FOR THE NINE MONTHS ENDED DECEMBER 31,
2000 AND 1999. EBITDA IS EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION. OWNERS EARNINGS IS CASH FLOW FROM OPERATIONS LESS NET CAPITAL
SPENDING. NEITHER EBITDA, NOR OWNERS EARNINGS ARE INTENDED TO REPRESENT CASH
FLOW FROM OPERATIONS AS DEFINED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
THESE MEASURES SHOULD NOT BE USED AS AN ALTERNATIVE TO NET INCOME AS AN
INDICATOR OF OPERATING PERFORMANCE OR TO CASH FLOWS AS A MEASURE OF LIQUIDITY.
($MILLIONS) 2000 1999
------------------------------------------------ -------- --------
CASH PROVIDED BY OPERATIONS. . . . . . . . . . . $ 39.7 $ 49.1
-------- --------
CASH USED IN INVESTING ACTIVITIES. . . . . . . . <$76.3> <$23.5>
-------- --------
CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES. $ 34.9 <$12.9>
-------- --------
EBITDA . . . . . . . . . . . . . . . . . . . . . $ 112.8 $ 103.1
------------------------------------------------ -------- --------
CASH PROVIDED BY OPERATIONS. . . . . . . . . . . $ 39.7 $ 49.1
------------------------------------------------ -------- --------
LESS NET CAPITAL SPENDING. . . . . . . . . . . . <$5.9> <$17.7>
-------- --------
OWNERS EARNINGS. . . . . . . . . . . . . . . . $ 33.8 $ 31.4
------------------------------------------------ -------- --------
MACDERMID HAS A LONG-TERM CREDIT ARRANGEMENT, WHICH CONSISTS OF A COMBINED
REVOLVING LOAN AND THREE SIX-YEAR TERM LOANS. TWO OF THE TERM LOANS ARE
DENOMINATED IN US DOLLARS AND THE OTHER IS POUND STERLING DENOMINATED. THE
OUTSTANDING BALANCE ON THE CREDIT FACILITIES INCREASED $47.0 MILLION TO EFFECT
THE ACQUISITION OF THE DIGITAL GRAPHICS BUSINESS UNIT OF VIRTUALFUND.COM, INC
AND $13.6 MILLION FOR A DEPOSIT TOWARDS AN ACQUISITION WHICH WILL OCCUR IN THE
FOURTH QUARTER. IN ADDITION, THE REMAINING OUTSTANDING BALANCE ON THE CREDIT
FACILITIES DECREASED A NET $13.4 MILLION DURING THE YEAR.
THE AMOUNTS OUTSTANDING ON THE LONG-TERM CREDIT ARRANGEMENT AT DECEMBER 31,
2000, CONSISTS OF $136.0 MILLION FOR THE REVOLVING LOAN, $253.0 MILLION ON THE
US DOLLAR TERM LOANS AND $53.0( 35.5) MILLION ON THE POUND STERLING TERM LOAN.
THE REVOLVING LOAN FACILITY PERMITS BORROWINGS OF UP TO $215 MILLION. THE
CORPORATION'S OTHER CREDIT FACILITIES PRESENTLY TOTAL APPROXIMATELY $55 MILLION.
THESE, TOGETHER WITH THE CORPORATION'S CASH FLOWS FROM OPERATIONS ARE ADEQUATE
TO FUND WORKING CAPITAL AND EXPECTED CAPITAL EXPENDITURES.
THE CORPORATION ESTABLISHED PURCHASE LIABILITIES, IN FISCAL YEAR 1999, UPON THE
ACQUISITION OF CANNING. THE REORGANIZATION OF EMPLOYEES HAS BEEN COMPLETED.
THE REORGANIZATION OF FACILITIES IS PROCEEDING AS PLANNED. NEGOTIATIONS ARE
ONGOING REGARDING THE ELIMINATION OF LEASED FACILITIES AND SALE OF OWNED
FACILITIES, NONE OF WHICH HAVE CLOSED AT PRESENT. IT IS UNLIKELY THIS
REORGANIZATION PLAN WOULD HAVE ANY MATERIAL EFFECTS ON THE FUTURE OPERATIONS OR
FINANCIAL CONDITION.
NEW ACCOUNTING PRONOUNCEMENTS
THE FINANCIAL ACCOUNTING STANDARDS BOARD (FASB) ISSUED STATEMENT OF FINANCIAL
ACCOUNTING STANDARD NO.133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES" (SFAS 133). SFAS 133 REPLACES EXISTING PRONOUNCEMENTS AND PRACTICES
WITH A SINGLE INTEGRATED ACCOUNTING FRAMEWORK FOR DERIVATIVES AND HEDGING
ACTIVITIES. FASB LATER ISSUED TWO OTHER STATEMENTS THAT AMEND SFAS133;
STATEMENT OF FINANCIAL ACCOUNTING STANDARD NO. 137, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES - DEFERRAL OF THE EFFECTIVE DATE OF FASB
STATEMENT NO. 133" (SFAS 137), WHICH ESTABLISHES AN EFFECTIVE DATE FOR SFAS 133
FOR FISCAL YEARS BEGINNING AFTER JUNE 15, 2000 AND STATEMENT OF FINANCIAL
ACCOUNTING STANDARD NO. 138, "ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND
CERTAIN HEDGING ACTIVITIES" (SFAS 138), WHICH ADDRESSES A LIMITED NUMBER OF
ISSUES THAT HAD BEEN CAUSE FOR IMPLEMENTATION DIFFICULTIES AS ESTABLISHED BY
SFAS 133. THE CORPORATION IS CURRENTLY EVALUATING THE REQUIREMENTS OF THESE
THREE STATEMENTS AND BELIEVES THAT THE ADOPTION OF THESE STATEMENTS, FOR ITS
FISCAL 2002 FINANCIAL STATEMENTS, WILL NOT HAVE A MATERIAL IMPACT ON PREVIOUSLY
REPORTED INFORMATION.
EURO CURRENCY CONVERSION
ON JANUARY 1, 1999, CERTAIN MEMBER COUNTRIES OF THE EUROPEAN UNION ESTABLISHED
FIXED CONVERSION RATES BETWEEN THEIR EXISTING CURRENCIES AND THE EUROPEAN
UNION'S COMMON CURRENCY ("EURO"). THE TRANSITION PERIOD FOR THE INTRODUCTION OF
THE EURO ENDS JUNE 30, 2002. ISSUES THAT FACE THE CORPORATION AS A RESULT OF THE
INTRODUCTION OF THE EURO INCLUDE CONVERTING INFORMATION TECHNOLOGY SYSTEMS WHICH
WERE LARGELY UPGRADED UNDER THE YEAR 2000 COMPLIANCE REVIEW, REASSESSING
CURRENCY RISK, NEGOTIATING AND AMENDING CONTRACTS, AS WELL AS PROCESSING
ACCOUNTING AND TAX RECORDS. THE CORPORATION IS ADDRESSING THESE ISSUES AND DOES
NOT EXPECT THE EURO TO HAVE A MATERIAL EFFECT ON ITS FINANCIAL CONDITION OR
RESULTS OF OPERATIONS.
CONTINGENCIES
(A) ENVIRONMENTAL. THE CORPORATION HAS BEEN NAMED AS A POTENTIALLY RESPONSIBLE
PARTY (PRP) BY THE ENVIRONMENTAL PROTECTION AGENCY IN CONNECTION WITH TWO WASTE
SITES. THERE ARE MANY OTHER COMPANIES INVOLVED AT EACH OF THESE SITES AND THE
CORPORATION'S PARTICIPATION IS MINOR. THE CORPORATION HAS RECORDED ITS BEST
ESTIMATE OF LIABILITIES IN CONNECTION WITH SITE CLEAN-UP BASED UPON THE EXTENT
OF ITS INVOLVEMENT, THE NUMBER OF PRPS AND ESTIMATES OF THE TOTAL COSTS OF THE
SITE CLEAN-UP THAT REFLECT THE RESULTS OF PHASE I AND II ENVIRONMENTAL
INVESTIGATIONS AND REMEDIATION ESTIMATES PRODUCED BY REMEDIATION CONTRACTORS.
THOUGH IT IS DIFFICULT TO PREDICT THE FINAL COSTS OF SITE REMEDIATION,
MANAGEMENT BELIEVES THAT THE RECORDED LIABILITIES ARE REASONABLE ESTIMATES OF
PROBABLE LIABILITY AND THAT ANY DIFFERENCES IN ACTUAL CASH OUTLAYS FROM THE
AMOUNT RECORDED ARE UNLIKELY TO BE MATERIAL TO ITS CONSOLIDATED FINANCIAL
POSITION, RESULTS OF OPERATIONS OR CASH FLOWS.
THE CORPORATION HAS ESTABLISHED AN ENVIRONMENTAL REMEDIATION RESERVE WITH
RESPECT TO ITS DECEMBER 1998 ACQUISITION OF CANNING. A SUBSTANTIAL MAJORITY OF
THAT RESERVE IS ATTRIBUTABLE TO SEVERAL SITES OF CANNING THAT ARE BELIEVED TO
REQUIRE ENVIRONMENTAL REMEDIATION ACTIVITIES. THE RESERVES ESTABLISHED BY THE
CORPORATION WERE BASED UPON PHASE I AND PHASE II ENVIRONMENTAL INVESTIGATIONS OF
THOSE SITES AND REMEDIATION ESTIMATES PRODUCED BY REMEDIATION CONTRACTORS, WHICH
ESTIMATES INDICATED THAT THE REASONABLE RANGE OF THE CORPORATION'S GROSS
LIABILITY IS $2 MILLION TO $11.5 MILLION. BASED UPON THE CORPORATION'S
EXPERIENCE AND THE FACTS KNOWN TO IT AS OF THE DATE OF THIS FILING, THE
CORPORATION EXPECTS THAT ITS GROSS LIABILITY FOR THOSE CANNING SITES WILL NOT
EXCEED $4.5 MILLION. THE CORPORATION BELIEVES THAT ITS CANNING SUBSIDIARY IS
ENTITLED UNDER ITS ACQUISITION AGREEMENT RELATING TO THOSE SITES TO WITHHOLD A
DEFERRED PURCHASE PRICE PAYMENT OF APPROXIMATELY $2.3 MILLION, WHICH WILL BE
APPLIED TO REDUCE ITS NET LIABILITY FOR THOSE SITES. TO THE EXTENT THE
CORPORATION'S LIABILITIES EXCEED $2.3 MILLION IT MAY BE ENTITLED TO ADDITIONAL
INDEMNIFICATION PAYMENTS. SUCH RECOVERY MAY BE UNCERTAIN, HOWEVER, AND WOULD
LIKELY INVOLVE SIGNIFICANT LITIGATION EXPENSE. AS A RESULT, THE CORPORATION HAS
RECORDED A NET LIABILITY OF $2 MILLION. THE FOREGOING ESTIMATES OF POTENTIAL
GROSS AND NET LIABILITIES AND RECOVERIES REPRESENT OUR BEST ESTIMATES OF THE
FAIR VALUE OF THESE OBLIGATIONS. THE CORPORATION EXPECTS THAT THE LIABILITIES
PERTAINING TO THE CANNING SITES WILL BE INCURRED WITHIN THE NEXT FIVE YEARS; THE
CORPORATION WILL RECOGNIZE THE RECOVERY FROM THE DEFERRED PURCHASE PRICE PAYMENT
CONTEMPORANEOUSLY WITH ITS PAYMENT OF THE UNDERLYING EXPENSE.
(B) LEGAL PROCEEDINGS. ON JANUARY 30, 1997, THE CORPORATION WAS SERVED WITH A
SUBPOENA FROM A FEDERAL GRAND JURY IN CONNECTICUT REQUESTING CERTAIN DOCUMENTS.
THE CORPORATION WAS SUBSEQUENTLY INFORMED THAT IT IS A SUBJECT OF THE GRAND
JURY'S INVESTIGATION. THE SUBPOENA REQUESTED INFORMATION RELATING TO AN
ACCIDENTAL SPILL FROM THE CORPORATION'S HUNTINGDON AVENUE, WATERBURY,
CONNECTICUT FACILITY THAT OCCURRED IN NOVEMBER OF 1994, TOGETHER WITH OTHER
INFORMATION RELATED TO OPERATIONS AND COMPLIANCE AT THE HUNTINGDON AVENUE
FACILITY. THE CORPORATION HAS RETAINED OUTSIDE LAW FIRMS TO ASSIST IN COMPLYING
WITH THE SUBPOENA AND THE UNDERLYING INVESTIGATION. THE CORPORATION HAS FROM
THE OUTSET COOPERATED WITH THE INVESTIGATION AND IS CURRENTLY INVOLVED IN
INFORMAL NEGOTIATIONS WITH THE GOVERNMENT WITH A VIEW TOWARDS SETTLING ANY AND
ALL CHARGES IN THIS MATTER WITHOUT RESORT TO TRIAL. SINCE THESE NEGOTIATIONS
HAVE ONLY RECENTLY BEGUN, AT THIS TIME IT IS TOO SPECULATIVE TO QUANTIFY THE
PRECISE FINANCIAL IMPLICATIONS TO THE CORPORATION.
ON JULY 26, 1999 THE CORPORATION WAS NAMED IN A CIVIL LAWSUIT COMMENCED IN THE
SUPERIOR COURT OF THE STATE OF CONNECTICUT. THE ACTION WAS INITIATED BY THE
COMMISSIONER OF ENVIRONMENTAL PROTECTION ALLEGING VARIOUS COMPLIANCE VIOLATIONS
AT THE CORPORATION'S HUNTINGDON AVENUE AND FREIGHT STREET LOCATIONS BETWEEN THE
YEARS 1992 THROUGH 1998. THE COMPLAINT CONTAINS ALLEGATIONS OF PERMIT VIOLATIONS
AND VIOLATIONS OF PROCEDURAL, NOTIFICATION AND OTHER REQUIREMENTS OF
CONNECTICUT'S ENVIRONMENTAL REGULATIONS OVER THE FOREGOING PERIOD OF TIME. THE
CORPORATION IS VIGOROUSLY DEFENDING THIS COMPLAINT. THE CORPORATION CURRENTLY
BELIEVES THAT THE OUTCOME OF THIS PROCEEDING WILL NOT MATERIALLY AFFECT THE
CORPORATION'S BUSINESS OR FINANCIAL POSITION, HOWEVER, THE PROCEEDING IS IN THE
EARLY STAGES. THEREFORE, AT THIS TIME IT IS TOO SPECULATIVE TO QUANTIFY THE
FINANCIAL IMPLICATIONS TO THE CORPORATION.
THE CORPORATION IS A PARTY TO A NUMBER OF LAWSUITS AND CLAIMS IN ADDITION TO
THOSE DISCUSSED ABOVE ARISING OUT OF THE ORDINARY CONDUCT OF BUSINESS. WHILE THE
ULTIMATE RESULTS OF THE PROCEEDINGS AGAINST THE CORPORATION CANNOT BE PREDICTED
WITH CERTAINTY, MANAGEMENT DOES NOT EXPECT THAT RESOLUTION OF THESE MATTERS WILL
HAVE A MATERIAL ADVERSE EFFECT UPON ITS CONSOLIDATED FINANCIAL POSITION, RESULTS
OF OPERATIONS OR CASH FLOWS. IT IS THE CORPORATION'S POLICY TO ACCRUE
LIABILITIES IN THESE REGARDS WHEN IT IS BOTH PROBABLE A LIABILITY HAS BEEN
INCURRED AND THE COST IS REASONABLY ESTIMABLE IN ACCORDANCE WITH STATEMENT OF
FINANCIAL ACCOUNTING STANDARDS NO. 5, "ACCOUNTING FOR CONTINGENCIES."
OUTLOOK: ISSUES AND RISKS
THIS REPORT AND OTHER CORPORATION REPORTS AND STATEMENTS DESCRIBE MANY OF THE
POSITIVE FACTORS AFFECTING THE CORPORATION'S FUTURE BUSINESS PROSPECTS. READERS
SHOULD ALSO BE AWARE OF FACTORS WHICH COULD HAVE A NEGATIVE IMPACT ON THOSE
PROSPECTS. THESE INCLUDE POLITICAL, ECONOMIC OR OTHER CONDITIONS SUCH AS
CURRENCY EXCHANGE RATES, INFLATION RATES, RECESSIONARY OR EXPANSIVE TRENDS,
TAXES AND REGULATIONS AND LAWS AFFECTING THE BUSINESS; COMPETITIVE PRODUCTS,
ADVERTISING, PROMOTIONAL AND PRICING ACTIVITY, THE DEGREE OF ACCEPTANCE OF NEW
PRODUCT INTRODUCTIONS IN THE MARKETPLACE AND THE DIFFICULTY OF FORECASTING SALES
AT VARIOUS TIMES IN VARIOUS MARKETS.
THE CORPORATION OPERATES THROUGHOUT THE WORLD IN AREAS GENERALLY CONSIDERED
STABLE. SALES ARE MAINLY TO COMPANIES WHOSE OUTPUTS BECOME COMPONENTS IN
CONSUMER AND INDUSTRIAL PRODUCTS HAVING WIDE APPLICATION AND DEMAND AND NO ONE
CUSTOMER ACCOUNTS FOR A MATERIAL PROPORTION OF SALES. MANAGEMENT BELIEVES THAT
INFLATION, GENERALLY, HAS HAD LITTLE OVERALL IMPACT UPON THE CORPORATION'S
OPERATIONS AND REPORTED EARNINGS. WHILE THERE MAY BE TEMPORARY DISRUPTIONS OF
ECONOMIC STABILITY, MANAGEMENT BELIEVES THAT THEIR LONG-TERM EFFECTS WILL NOT BE
SIGNIFICANT TO THE CORPORATION.
ITEM 3:
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
REFER TO THE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, NOTE 8
"MARKET RISK AND CONTINGENCIES".
PART II. OTHER INFORMATION
ITEM 1 : LEGAL PROCEEDINGS
NONE.
ITEM 2 : CHANGES IN THE RIGHTS OF SECURITY HOLDERS
NONE.
ITEM 3 : DEFAULTS BY THE CORPORATION ON ITS SENIOR SECURITIES
NONE.
ITEM 4 : RESULTS OF VOTES OF SECURITY HOLDERS
NONE.
ITEM 5 : OTHER INFORMATION
5.1 THE CORPORATION MADE BORROWINGS ON THE REVOLVING LOAN UNDER ITS CREDIT
FACILITY ON DECEMBER 13, 2000, IN THE AMOUNT OF $13.6 MILLION AND ON JANUARY 11,
2001, IN THE AMOUNT OF $16.9 MILLION TO EFFECT THE ACQUISITION OF A SPANISH
PRINTED CIRCUIT BOARD MANUFACTURER. THIS TRANSACTION IS EXPECTED TO FURTHER
ENHANCE THE CORPORATION'S ABILITY TO COMMERCIALIZE ITS VIATEK CHEMISTRY PROCESS,
WORLDWIDE. THE FIRST BORROWING IS REFLECTED AS A DEPOSIT ON THE DECEMBER 31,
2000 CONSOLIDATED CONDENSED BALANCE SHEET AND STATEMENT OF CASH FLOWS.
5.2 THE CORPORATION ISSUED A PRESS RELEASE ON OCTOBER 26, 2000 FOR ITS SECOND
QUARTER EARNINGS AND TO CONCURRENTLY ANNOUNCE A RESTRUCTURING PROGRAM. THIS
RESTRUCTURING WILL REPRESENT ONGOING SAVINGS IN EXCESS OF $12 MILLION. THE
PROGRAM HAD BEEN INITIATED DURING THE SECOND QUARTER AND IS EXPECTED TO BE
COMPLETED BY THE END OF THE FISCAL YEAR, WITH TOTAL CHARGES TO EARNINGS OF
APPROXIMATELY $5.6 MILLION EXPECTED. THE RESTRUCTURING PROGRAM RECOGNIZES THE
REDUNDANCIES IN MANAGEMENT AND OFFICE SUPPORT AS A RESULT OF RECENT LARGE
ACQUISITIONS, FOR WHICH THE DECISION WAS MADE TO INTEGRATE THESE ACQUISITIONS
SLOWLY IN ORDER TO ENSURE THE OPERATIONS WERE FIRST WELL INTEGRATED.
ITEM 6(A) : EXHIBITS
NONE.
ITEM 6(B) : REPORTS ON FORM 8-K
NONE.
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.
MACDERMID, INCORPORATED
(REGISTRANT)
DATE: FEBRUARY 14, 2001 /S/ DANIEL H. LEEVER
DANIEL H. LEEVER
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
DATE: FEBRUARY 14, 2001 / S / GREGORY M. BOLINGBROKE
GREGORY M. BOLINGBROKE
CORPORATE CONTROLLER AND
TREASURER