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Rockwood Holdings Reports Fourth Quarter and Full Year 2012 Results



  Rockwood Holdings Reports Fourth Quarter and Full Year 2012 Results

2012 Highlights

  * Adjusted EPS from continuing operations - $0.47 versus $0.91 for the
    quarter and $3.89 versus $4.02 for the full year
  * Adjusted EBITDA - $141 million versus $196 million for the quarter and
    $779 million versus $863 million for the full year

Business Wire

PRINCETON, N.J. -- February 19, 2013

Rockwood Holdings, Inc. (NYSE: ROC) today reported net income from continuing
operations of $21.2 million, or $0.26 per share for the fourth quarter of
2012, which included other net charges of $16.8 million, as compared to $63.0
million, or $0.79 per share for the same period in the prior year, which
included other net charges of $9.7 million.

Excluding these other net charges, adjusted net income from continuing
operations was $38.0 million, or $0.47 per share, in the fourth quarter of
2012 compared to $72.7 million, or $0.91 per share, for the same period in the
prior year.

For the full year, reported net income from continuing operations was $383.5
million, or $4.80 per share, which included other net benefits of $72.5
million, as compared to $291.1 million, or $3.64 per share for the prior year,
which included other net charges of $30.1 million. Reported net income for the
full year of 2012 was favorably impacted by an income tax benefit related to
the reversal of a majority of our federal valuation allowance.

Excluding these items, adjusted net income from continuing operations was
$311.0 million, or $3.89 per share in 2012, versus $321.2 million, or $4.02
per share in 2011. Year on year performance was down on weak results from
Titanium Dioxide Pigments, and to a lesser extent, Performance Additives,
which was partially offset by improved results from Lithium, Surface Treatment
and our Advanced Ceramics medical business.

Seifi Ghasemi, Chairman and Chief Executive Officer, commented, “Our two core
businesses, Lithium and Surface Treatment, as well as Advanced Ceramics, had a
satisfactory performance in the fourth quarter, each with higher Adjusted
EBITDA versus last year. The results for our Performance Additives segment
were negatively impacted by lower oil and natural gas drilling activity in
North America. Our TiO2 business did not perform well due to lower prices and
higher raw material costs. As a result of our continued focus on cash, we
generated $87 million of free cash in the fourth quarter and nearly $170
million in the second half of 2012.”

Business Segment Review

Fourth quarter and full-year net sales and Adjusted EBITDA results, as
compared with the same period a year ago, are summarized below:

             
Table 1: Net Sales
                                      % Change                                          % Change
($ in                                            Constant                                          Constant
millions)     Q4 2012     Q4 2011     Total      Currency   FY 2012       FY 2011       Total      Currency
                                                 (a)                                               (a)
Lithium       $ 119.1     $ 104.6     13.9  %    15.9  %    $ 474.4       $ 456.5       3.9   %    7.5   %
Surface         175.5       180.7     (2.9  %)   (1.3  %)     723.2         743.2       (2.7  %)   2.6   %
Treatment
Performance     151.4       169.7     (10.8 %)   (10.3 %)     731.5         784.4       (6.7  %)   (4.7  %)
Additives
Titanium
Dioxide         223.0       195.0     14.4  %    19.2  %      889.4         930.4       (4.4  %)   3.5   %
Pigments
Advanced        129.0       129.8     (0.6  %)   2.7   %      546.7         585.1       (6.6  %)   0.3   %
Ceramics
Corporate       31.0        34.6      (10.4 %)   (6.4  %)     141.7         169.7       (16.5 %)   (9.5  %)
and other
Total         $ 829.0     $ 814.4     1.8   %    4.4   %    $ 3,506.9     $ 3,669.3     (4.4  %)   1.0   %
                                                                                                    
               
Table 2: Adjusted EBITDA
                                      % Change                                          % Change
($ in                                            Constant                                          Constant
millions)     Q4 2012     Q4 2011     Total      Currency   FY 2012       FY 2011       Total      Currency
                                                 (a)                                               (a)
Lithium       $ 44.0      $ 40.3      9.2   %    10.4  %    $ 181.9       $ 170.2       6.9   %    10.0  %
Surface         38.6        36.0      7.2   %    8.1   %      155.2         151.0       2.8   %    7.5   %
Treatment
Performance     17.0        26.6      (36.1 %)   (35.7 %)     124.0         144.0       (13.9 %)   (11.7 %)
Additives
Titanium
Dioxide         6.7         64.5      (89.6 %)   (89.3 %)     164.7         257.6       (36.1 %)   (30.8 %)
Pigments
Advanced        38.7        37.3      3.8   %    7.8   %      174.8         183.7       (4.8  %)   2.9   %
Ceramics
Corporate       (4.0  )     (9.0  )   55.6  %    57.8  %      (21.7   )     (43.7   )   50.3  %    53.8  %
and other
Total         $ 141.0     $ 195.7     (28.0 %)   (26.5 %)   $ 778.9       $ 862.8       (9.7  %)   (4.5  %)

(a) The constant currency effect is the translation impact of the change in
the average rate of exchange of another currency to the U.S. dollar for the
applicable period as compared to the preceding period. The impact primarily
relates to the conversion of the Euro to the U.S. dollar. For the three months
ended December 31, 2012 and 2011, the average rate of exchange of the Euro to
the U.S. dollar is $1.2979 and $1.3477, respectively and for the years ended
December 31, 2012 and 2011, the average rate of exchange of the Euro to the
U.S. dollar is $1.2864 and $1.3923, respectively. For further details, see
Appendix Table A-1

Fourth Quarter Segment Drivers

Lithium: Net Sales and Adjusted EBITDA increased 13.9% and 9.2%, respectively.

  * Net sales increased primarily from higher volumes for both lithium
    carbonate used in battery applications and lithium specialties, and
    increased selling prices. This was partially offset by the negative impact
    of currency changes.
  * Adjusted EBITDA increased primarily from higher net sales, partially
    offset by higher raw material costs.

Surface Treatment: Net Sales decreased 2.9%, while Adjusted EBITDA increased
7.2%.

  * Net sales decreased primarily due to lower volumes in Europe, as well as
    the negative impact of currency changes. This was partially offset by
    higher selling prices and higher volumes in Asia and the U.S.
  * Adjusted EBITDA increased due to higher selling prices and lower raw
    material costs.

Performance Additives: Net Sales and Adjusted EBITDA decreased 10.8% and
36.1%, respectively.

  * Net sales decreased primarily due to lower North American oil and natural
    gas drilling volumes and lower coatings and construction volumes in
    Europe.
  * Adjusted EBITDA decreased primarily from lower volumes and lower
    production levels to reduce inventory resulting in lower fixed cost
    absorption in Color Pigments and Services.

Titanium Dioxide Pigments: Net Sales increased 14.4%, while Adjusted EBITDA
decreased 89.6%.

  * Net sales increased from higher volumes, particularly driven by the
    acquisition of certain assets of crenox GmbH in July 2012. This was
    partially offset by lower selling prices and the negative impact of
    currency changes.
  * Adjusted EBITDA decreased from lower production levels to reduce inventory
    resulting in lower fixed cost absorption, higher raw material costs
    (primarily slag and ilmenite) and lower selling prices, partially offset
    by lower variable costs.

Advanced Ceramics: Net Sales decreased 0.6%, while Adjusted EBITDA increased
3.8%.

  * Net sales decreased slightly primarily from the negative impact of
    currency changes and lower volumes in most applications, partially offset
    by higher volumes of medical ceramics.
  * Adjusted EBITDA increased primarily from higher medical ceramic volumes.

Corporate and other: Net Sales decreased 10.4% and Adjusted loss before
interest, taxes, depreciation and amortization decreased 55.6%.

  * Net sales decreased primarily from lower volumes in our metal sulfides
    business.
  * Adjusted loss before interest, taxes, depreciation and amortization
    decreased primarily from lower variable compensation costs.

Outlook

Commenting on the outlook, Mr. Ghasemi said, “Rockwood is very well positioned
to benefit from any improvement in the economy. We are optimistic about the
performance of our Lithium, Surface Treatment and Advanced Ceramics businesses
as we move forward. Our Performance Additives segment is anticipated to
benefit from any strengthening of the U.S. housing market. We expect our TiO2
business to have a weak performance in the first half of the year with results
improving in the second half should pricing and raw material costs stabilize.”

Conference Call and Webcast

On February 19, 2013 at 10:00 am EST, Rockwood Holdings plans to host its
conference call and webcast to discuss these results.

To access this conference call, the dial-in number in the U.S. is (877)
209-9921, and the international dial-in number is (612) 332-0637. No access
code is needed for either call. A listen-only, live webcast of the conference
call will also be available at www.rocksp.com. Materials for the call,
including the earnings release and presentation, will be available for
download on the company’s website on the morning of the call. For persons
unable to listen to the live conference call or webcast, a webcast replay of
the call will be available on Rockwood’s website.

Non-GAAP Financial Measures

This press release includes “non-GAAP financial measures,” such as, a
discussion of Adjusted EBITDA, free cash flow and net income/diluted earnings
per share from continuing operations excluding certain items. Adjusted EBITDA
is not intended to be an alternative to net income as an indicator of
operating performance or to cash flows from operating activities as a measure
of liquidity. Additionally, Adjusted EBITDA is not intended to be a measure of
free cash flow for management’s discretionary use, as it does not consider
certain cash requirements such as interest payments, tax payments and debt
service requirements. All presentations of consolidated Adjusted EBITDA are
calculated using the definition set forth in the Company’s senior secured
credit agreement as a basis and reflects management’s interpretations thereof.
Adjusted EBITDA, which is referred to under the senior secured credit
agreement as “Consolidated EBITDA,” is defined in the senior secured credit
agreement as consolidated earnings (which, as defined in the senior secured
credit agreement, equals income (loss) before the deduction of income taxes of
Rockwood Specialties Group, Inc. and the Restricted Subsidiaries (as such term
is defined in the senior secured credit agreement), excluding extraordinary
items) plus certain items including interest expense, depreciation expense,
amortization expense, extraordinary losses and non-recurring charges, losses
on asset sales, less certain items including extraordinary gains and
non-recurring gains, non-cash gains and gains on asset sales. We use Adjusted
EBITDA on a consolidated basis to assess our operating performance, to
calculate performance-based cash bonuses and determine whether certain
performance-based options and restricted stock units vest (as such bonuses,
options and restricted stock units are tied to Adjusted EBITDA), and as a
liquidity measure. In addition, we use Adjusted EBITDA to determine compliance
with our debt covenants. We also use Adjusted EBITDA on a segment basis as the
primary measure used by our chief operating decision maker to evaluate the
ongoing performance of our business segments and reporting units. A
reconciliation of net income attributable to Rockwood Holdings, Inc.
shareholders to Adjusted EBITDA is contained in this press release. We
strongly urge you to review the reconciliation. In addition, we discuss sales
growth in terms of nominal (actual) and net change (nominal less constant
currency impacts).

Free cash flow is not intended to be an alternative to cash flows from
operating activities as a measure of liquidity. Our presentation of free cash
flow is defined as net cash from operating activities of continuing
operations, less capital expenditures, net of proceeds from government grants
received, and other items (including, among others, the cash impact of
adjustments made to Adjusted EBITDA under our senior secured credit
agreement). Management believes that free cash flow is meaningful to investors
because it provides an additional measure of liquidity. However, a limitation
of free cash flow is that it does not represent the total increase or decrease
in cash during the period. An additional limitation associated with the use of
this measure is that the term “free cash flow” does not have a standardized
meaning. Therefore, other companies may use the same or a similarly named
measure but exclude different items or use different computations, which may
provide investors a comparable view of our performance in relation to other
companies. Management compensates for this limitation by presenting the most
comparable GAAP measure, net cash provided by operating activities of
continuing operations, with free cash flow within its earnings release and by
providing a reconciliation that shows and describes the adjustments made. A
reconciliation of net cash provided by operating activities of continuing
operations to free cash flow is provided in the accompanying tables.

Neither net income from continuing operations excluding certain items nor
diluted earnings per share from continuing operations excluding certain items
is intended to be an alternative for net income or diluted earnings per share.
Management believes that net income and diluted earnings per share from
continuing operations excluding certain items is meaningful to investors
because it provides a view of the Company with respect to ongoing operating
results. Reconciliations of these non-GAAP financial measures are included
herein. These non-GAAP measures should not be viewed as an alternative to GAAP
measures of performance. Furthermore, these measures may not be consistent
with similar measures provided by other companies.

Rockwood Holdings, Inc. is a leading global specialty chemicals and advanced
materials company. Rockwood has a worldwide employee base of approximately
10,200 people and annual net sales of $3.5 billion in 2012. Rockwood focuses
on global niche segments of the specialty chemicals, pigments and additives
and advanced materials markets. For more information on Rockwood, please visit
www.rocksp.com.

                                    * * *

The information set forth in this press release contains certain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 concerning the business, operations and
financial condition of Rockwood Holdings, Inc. and its subsidiaries and
affiliates ("Rockwood"). Words such as "anticipates," "believes," "estimates,"
"expects," "forecasts," "predicts" and variations of such words or expressions
are intended to identify forward-looking statements. Although Rockwood
believes the expectations reflected in such forward-looking statements are
based upon reasonable assumptions, there can be no assurance that its
expectations will be realized. "Forward-looking statements" consist of all
non-historical information, including any statements referring to the
prospects and future performance of Rockwood. Actual results could differ
materially from those projected in Rockwood's forward-looking statements due
to numerous known and unknown risks and uncertainties, including, among other
things, the "Risk Factors" described in Rockwood's periodic reports on file
with the Securities and Exchange Commission. Rockwood does not undertake any
obligation to publicly update any forward-looking statement to reflect events
or circumstances after the date on which any such statement is made or to
reflect the occurrence of unanticipated events.

                                                                     
                                                                       
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Statements of Operations
(Dollars in millions, except per share amounts; shares in thousands)
                                                                       
                              Three months ended        Year ended
                              December 31,              December 31,
                              2012         2011         2012          2011
Net sales                     $ 829.0      $ 814.4      $ 3,506.9     $ 3,669.3
Cost of products sold           604.6        523.3        2,351.8       2,380.0  
Gross profit                    224.4        291.1        1,155.1       1,289.3
                                                                       
Selling, general and            155.4        169.4        656.3         707.5
administrative expenses
Restructuring and other         21.6         5.0          45.5          14.5     
severance costs
Operating income                47.4         116.7        453.3         567.3    
                                                                       
Other expenses, net:
Interest expense, net (a)       (30.2  )     (22.1  )     (86.7   )     (96.1   )
Loss on early
extinguishment/modification     (2.3   )     -            (14.8   )     (16.6   )
of debt
Foreign exchange (loss)
gain on financing               (2.3   )     (0.5   )     (9.6    )     1.3
activities, net
Other, net                      0.2          0.3          0.1           0.2      
Other expenses, net             (34.6  )     (22.3  )     (111.0  )     (111.2  )
                                                                       
Income from continuing          12.8         94.4         342.3         456.1
operations before taxes
Income tax (benefit)            (1.0   )     23.4         (55.9   )     124.4    
provision (b)
Income from continuing          13.8         71.0         398.2         331.7
operations
(Loss) income from
discontinued operations,        -            (0.1   )     -             120.2    
net of tax (c)
Net income                      13.8         70.9         398.2         451.9
Net loss (income)
attributable to                 7.4          (8.0   )     (14.7   )     (40.6   )
noncontrolling interest
Net income attributable to
Rockwood Holdings, Inc.       $ 21.2       $ 62.9       $ 383.5       $ 411.3    
shareholders
                                                                       
Amounts attributable to
Rockwood Holdings, Inc.
shareholders:
Income from continuing        $ 21.2       $ 63.0       $ 383.5       $ 291.1
operations
(Loss) income from              -            (0.1   )     -             120.2    
discontinued operations
Net income                    $ 21.2       $ 62.9       $ 383.5       $ 411.3    
                                                                       
Basic earnings per share
attributable to Rockwood
Holdings, Inc.
shareholders:
Earnings from continuing      $ 0.27       $ 0.82       $ 4.94        $ 3.80
operations
Earnings from discontinued      -            -            -             1.57     
operations (b)
Basic earnings per share      $ 0.27       $ 0.82       $ 4.94        $ 5.37     
                                                                       
Diluted earnings per share
attributable to Rockwood
Holdings, Inc.
shareholders:
Earnings from continuing      $ 0.26       $ 0.79       $ 4.80        $ 3.64
operations
Earnings from discontinued      -            -            -             1.51     
operations (b)
Diluted earnings per share    $ 0.26       $ 0.79       $ 4.80        $ 5.15     
                                                                       
Dividends declared per        $ 0.35       $ -          $ 1.05        $ -        
share of common stock
                                                                       
Weighted average number of      78,032       76,925       77,665        76,555   
basic shares outstanding
Weighted average number of      80,073       79,857       79,943        79,865   
diluted shares outstanding
                                                                       
(a) Interest expense, net
includes:
Interest expense on debt,     $ (27.6  )   $ (20.5  )   $ (76.4   )   $ (91.8   )
net
Mark-to-market gains
(losses) on interest rate       0.2          (0.5   )     (2.3    )     0.5
swaps
Deferred financing costs        (2.8   )     (1.1   )     (8.0    )     (4.8    )
Total                         $ (30.2  )   $ (22.1  )   $ (86.7   )   $ (96.1   )

(b) Includes the reversal of $2.5 million and $150.0 million of our federal
valuation allowance for the three months and year ended December 31, 2012,
respectively.

(c) Primarily relates to the gain on sale of the AlphaGary plastic compounding
business.

 
 
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions, except per share amounts; shares in thousands)
                                                                  
                                                     December 31,
                                                     2012          2011
ASSETS
Current assets:
Cash and cash equivalents                            $ 1,273.6     $ 321.5
Accounts receivable, net                               474.3         454.1
Inventories                                            822.9         674.3
Deferred income taxes                                  10.6          10.2
Prepaid expenses and other current assets              85.1          75.1     
Total current assets                                   2,666.5       1,535.2
Property, plant and equipment, net                     1,715.4       1,618.5
Goodwill                                               864.8         849.6
Other intangible assets, net                           445.8         509.7
Deferred financing costs, net                          51.7          14.3
Deferred income taxes                                  171.8         19.3
Other assets                                           57.7          41.0     
Total assets                                         $ 5,973.7     $ 4,587.6  
LIABILITIES
Current liabilities:
Accounts payable                                     $ 233.3       $ 249.1
Income taxes payable                                   33.1          45.8
Accrued compensation                                   105.5         161.4
Accrued expenses and other current liabilities         152.0         129.6
Deferred income taxes                                  3.6           3.8
Long-term debt, current portion                        553.7         250.5    
Total current liabilities                              1,081.2       840.2
Long-term debt                                         2,198.1       1,437.2
Pension and related liabilities                        576.6         450.7
Deferred income taxes                                  72.0          86.5
Other liabilities                                      123.6         100.6    
Total liabilities                                      4,051.5       2,915.2
Restricted stock units                                 12.5          14.0
EQUITY
Rockwood Holdings, Inc. stockholders' equity:
Common stock ($0.01 par value, 400,000 shares
authorized, 78,560
shares issued and 78,466 shares outstanding at
December 31, 2012;
400,000 shares authorized, 77,030 shares issued
and 76,936
shares outstanding at December 31, 2011)               0.8           0.8
Paid-in capital                                        1,243.1       1,222.2
Accumulated other comprehensive (loss) income          (14.3   )     10.1
Retained earnings                                      428.4         128.5
Treasury stock, at cost                                (1.4    )     (1.4    )
Total Rockwood Holdings, Inc. stockholders' equity     1,656.6       1,360.2
Noncontrolling interest                                253.1         298.2    
Total equity                                           1,909.7       1,658.4  
Total liabilities and equity                         $ 5,973.7     $ 4,587.6  

 
 
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in millions)
                                                                   
                                                      Year ended December 31,
                                                      2012          2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                            $ 398.2       $ 451.9
Adjustments to reconcile net income to net cash
provided by operating activities:
Income from discontinued operations, net of tax (a)     -             (120.2 )
Depreciation and amortization                           265.3         267.2
Deferred financing costs amortization                   8.0           4.8
Loss on early extinguishment/modification of debt       14.8          16.6
Foreign exchange loss (gain) on financing               9.6           (1.3   )
activities, net
Fair value adjustment of derivatives                    2.3           (0.5   )
Bad debt provision                                      0.7           (0.2   )
Stock-based compensation                                11.4          12.6
Deferred income taxes                                   (137.2  )     26.3
Restructuring and other                                 25.1          1.6
Excess tax benefits from stock-based payment            (3.7    )     (4.0   )
arrangements
Changes in assets and liabilities, net of the
effect of foreign currency translation and
acquisitions:
Accounts receivable                                     (15.3   )     (29.8  )
Inventories                                             (63.2   )     (150.8 )
Prepaid expenses and other assets                       (24.4   )     (16.9  )
Accounts payable                                        (6.6    )     (2.8   )
Income taxes payable                                    (6.7    )     36.4
Accrued expenses and other liabilities                  (33.4   )     (40.1  )
Net cash provided by operating activities of            444.9         450.8
continuing operations
Net cash used in operating activities of                (2.7    )     (1.8   )
discontinued operations
Net cash provided by operating activities               442.2         449.0   
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (b)                                (286.4  )     (279.7 )
Acquisitions                                            (69.2   )     (0.8   )
Proceeds on sale of assets                              2.2           1.1     
Net cash used in investing activities of continuing     (353.4  )     (279.4 )
operations
Net cash provided by investing activities of
discontinued operations, representing net sale          -             300.6   
proceeds in 2011
Net cash (used in) provided by investing activities     (353.4  )     21.2    
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of fees                   8.9           14.6
Excess tax benefits from stock-based payment            3.7           4.0
arrangements
Payments of long-term debt                              (953.4  )     (458.1 )
Proceeds from long-term debt                            1,987.5       -
Loan repayments to noncontrolling shareholders          -             (5.0   )
Deferred financing costs                                (49.8   )     (5.3   )
Fees related to early extinguishment/modification       (9.2    )     (13.4  )
of debt
Dividend distributions to shareholders                  (81.8   )     -
Dividend distributions to noncontrolling                (47.3   )     (19.4  )
shareholders
Net cash provided by (used in) financing activities     858.6         (482.6 )
Effect of exchange rate changes on cash and cash        4.7           (6.8   )
equivalents
Net increase (decrease) in cash and cash                952.1         (19.2  )
equivalents
Less net decrease in cash and cash equivalents from     -             (16.6  )
discontinued operations
Increase (decrease) in cash and cash equivalents        952.1         (2.6   )
from continuing operations
Cash and cash equivalents of continuing operations,     321.5         324.1   
beginning of period
Cash and cash equivalents of continuing operations,   $ 1,273.6     $ 321.5   
end of period
                                                                     
Supplemental disclosures of cash flow information:
Interest paid                                         $ 70.8        $ 104.3
Income taxes paid, net of refunds                       87.9          61.7
Non-cash investing activities:
Acquisition of capital equipment included in            24.7          35.3
accounts payable

(a) Primarily relates to the gain on sale of the AlphaGary plastic compounding
business in January 2011.

(b) Net of government grants of $9.4 million and $16.0 million for the years
ended December 31, 2012 and 2011, respectively.

 
 
Appendix Table A-1: Segment Net Sales and Adjusted EBITDA
                                                                                          
              Three Months Ended                                               Constant Currency
                                                                  Constant     Basis
              December 31,                                        Currency
                                          Total        Total      Effect in    Net         Net
($ in         2012          2011          Change in    Change     $ (a)        Change in   Change
millions)                                 $            in %                    $           in %
Net Sales:
Lithium       $ 119.1       $ 104.6       $ 14.5       13.9  %    $ (2.1   )   $ 16.6      15.9  %
Surface         175.5         180.7         (5.2   )   (2.9  )      (2.8   )     (2.4  )   (1.3  )
Treatment
Performance     151.4         169.7         (18.3  )   (10.8 )      (0.9   )     (17.4 )   (10.3 )
Additives
Titanium
Dioxide         223.0         195.0         28.0       14.4         (9.4   )     37.4      19.2
Pigments
Advanced        129.0         129.8         (0.8   )   (0.6  )      (4.3   )     3.5       2.7
Ceramics
Corporate
and other       31.0          34.6          (3.6   )   (10.4 )      (1.4   )     (2.2  )   (6.4  )
(b)
Total         $ 829.0       $ 814.4       $ 14.6       1.8   %    $ (20.9  )   $ 35.5      4.4   %
                                                                                            
              Three Months Ended                                               Constant Currency
                                                                  Constant     Basis
              December 31,                                        Currency
                                          Total        Total      Effect in    Net         Net
($ in         2012          2011          Change in    Change     $ (a)        Change in   Change
millions)                                 $            in %                    $           in %
Adjusted
EBITDA:
Lithium       $ 44.0        $ 40.3        $ 3.7        9.2   %    $ (0.5   )   $ 4.2       10.4  %
Surface         38.6          36.0          2.6        7.2          (0.3   )     2.9       8.1
Treatment
Performance     17.0          26.6          (9.6   )   (36.1 )      (0.1   )     (9.5  )   (35.7 )
Additives
Titanium
Dioxide         6.7           64.5          (57.8  )   (89.6 )      (0.2   )     (57.6 )   (89.3 )
Pigments
Advanced        38.7          37.3          1.4        3.8          (1.5   )     2.9       7.8
Ceramics
Corporate
and other       (4.0    )     (9.0    )     5.0        55.6         (0.2   )     5.2       57.8
(b)
Total         $ 141.0       $ 195.7       $ (54.7  )   (28.0 )%   $ (2.8   )   $ (51.9 )   (26.5 )%
                                                                                            
              Year Ended                                                       Constant Currency
                                                                  Constant     Basis
              December 31,                                        Currency
                                          Total        Total      Effect in    Net         Net
($ in         2012          2011          Change in    Change     $ (a)        Change in   Change
millions)                                 $            in %                    $           in %
Net Sales:
Lithium       $ 474.4       $ 456.5       $ 17.9       3.9   %    $ (16.4  )   $ 34.3      7.5   %
Surface         723.2         743.2         (20.0  )   (2.7  )      (39.4  )     19.4      2.6
Treatment
Performance     731.5         784.4         (52.9  )   (6.7  )      (15.8  )     (37.1 )   (4.7  )
Additives
Titanium
Dioxide         889.4         930.4         (41.0  )   (4.4  )      (73.8  )     32.8      3.5
Pigments
Advanced        546.7         585.1         (38.4  )   (6.6  )      (40.1  )     1.7       0.3
Ceramics
Corporate
and other       141.7         169.7         (28.0  )   (16.5 )      (11.9  )     (16.1 )   (9.5  )
(b)
Total         $ 3,506.9     $ 3,669.3     $ (162.4 )   (4.4  )%   $ (197.4 )   $ 35.0      1.0   %
                                                                                            
              Year Ended                                                       Constant Currency
                                                                  Constant     Basis
              December 31,                                        Currency
                                          Total        Total      Effect in    Net         Net
($ in         2012          2011          Change in    Change     $ (a)        Change in   Change
millions)                                 $            in %                    $           in %
Adjusted
EBITDA:
Lithium       $ 181.9       $ 170.2       $ 11.7       6.9   %    $ (5.4   )   $ 17.1      10.0  %
Surface         155.2         151.0         4.2        2.8          (7.1   )     11.3      7.5
Treatment
Performance     124.0         144.0         (20.0  )   (13.9 )      (3.2   )     (16.8 )   (11.7 )
Additives
Titanium
Dioxide         164.7         257.6         (92.9  )   (36.1 )      (13.6  )     (79.3 )   (30.8 )
Pigments
Advanced        174.8         183.7         (8.9   )   (4.8  )      (14.2  )     5.3       2.9
Ceramics
Corporate
and other       (21.7   )     (43.7   )     22.0       50.3         (1.5   )     23.5      53.8
(b)
Total         $ 778.9       $ 862.8       $ (83.9  )   (9.7  )%   $ (45.0  )   $ (38.9 )   (4.5  )%

(a) The constant currency effect is the translation impact of the change in
the average rate of exchange of another currency to the U.S. dollar for the
applicable period as compared to the preceding period. The impact primarily
relates to the conversion of the Euro to the U.S. dollar. For the three months
ended December 31, 2012 and 2011, the average rate of exchange of the Euro to
the U.S. dollar is $1.2979 and $1.3477, respectively and for the years ended
December 31, 2012 and 2011, the average rate of exchange of the Euro to the
U.S. dollar is $1.2864 and $1.3923, respectively.

(b) Corporate and other includes the results of operations of the metal
sulfides business, rubber/thermoplastics compounding business and the wafer
reclaim business, as well as the costs of operating the Company's corporate
offices.

 
 
Appendix Table A-2: Reconciliation of Income (Loss) from Continuing Operations
before
Taxes to Adjusted EBITDA by Segment
                                                                    
                                          Surface     Performance    Titanium
($ in millions)                Lithium    Treatment   Additives      Dioxide
                                                                     Pigments
Three months ended December
31, 2012
                                                                      
Income (loss) from
continuing operations before   $ 14.2     $ 22.1      $   (1.3   )   $ (26.2 )
taxes
Interest expense, net            0.7        3.8           1.4          7.2
Depreciation and                 11.6       8.3           14.3         19.2
amortization
Restructuring and other          12.7       3.6           2.0          1.8
severance costs
Systems/organization             0.2        0.8           -            0.3
establishment expenses
Acquisition and disposal         -          0.1           -            0.1
costs
Acquisition method inventory     -          -             -            3.3
charges
Loss on early
extinguishment/modification      0.4        -             0.3          -
of debt
Foreign exchange loss (gain)     4.2        (0.1  )       -            -
on financing activities, net
Other                            -          -             0.3          1.0    
Total Adjusted EBITDA          $ 44.0     $ 38.6      $   17.0       $ 6.7    
                                                                      
                               Advanced   Corporate
($ in millions)                Ceramics   and         Consolidated
                                          other
Three months ended December
31, 2012
                                                                      
Income (loss) from
continuing operations before   $ 18.9     $ (14.9 )   $   12.8
taxes
Interest expense, net            3.5        13.6          30.2
Depreciation and                 13.2       2.3           68.9
amortization
Restructuring and other          1.5        -             21.6
severance costs
Systems/organization             -          0.1           1.4
establishment expenses
Acquisition and disposal         1.1        (4.1  )       (2.8   )
costs
Acquisition method inventory     -          -             3.3
charges
Loss on early
extinguishment/modification      0.5        1.1           2.3
of debt
Foreign exchange loss (gain)     (0.1 )     (1.7  )       2.3
on financing activities, net
Other                            0.1        (0.4  )       1.0     
Total Adjusted EBITDA          $ 38.7     $ (4.0  )   $   141.0   
                                                                      
                                          Surface     Performance    Titanium
($ in millions)                Lithium    Treatment   Additives      Dioxide
                                                                     Pigments
Three months ended December
31, 2011
                                                                      
Income (loss) from
continuing operations before   $ 27.1     $ 20.1      $   7.9        $ 37.1
taxes
Interest expense, net            1.3        4.6           2.2          3.5
Depreciation and                 10.7       7.5           15.1         18.3
amortization
Restructuring and other          0.8        3.4           0.4          -
severance costs
Systems/organization             -          0.4           0.1          4.7
establishment expenses
Foreign exchange (gain) loss     0.5        0.2           (0.1   )     -
on financing activities, net
Other                            (0.1 )     (0.2  )       1.0          0.9    
Total Adjusted EBITDA          $ 40.3     $ 36.0      $   26.6       $ 64.5   
                                                                      
                               Advanced   Corporate
($ in millions)                Ceramics   and         Consolidated
                                          other
Three months ended December
31, 2011
                                                                      
Income (loss) from
continuing operations before   $ 18.6     $ (16.4 )   $   94.4
taxes
Interest expense, net            4.8        5.7           22.1
Depreciation and                 13.3       2.1           67.0
amortization
Restructuring and other          0.2        0.2           5.0
severance costs
Systems/organization             -          -             5.2
establishment expenses
Foreign exchange (gain) loss     -          (0.1  )       0.5
on financing activities, net
Other                            0.4        (0.5  )       1.5     
Total Adjusted EBITDA          $ 37.3     $ (9.0  )   $   195.7   

 
 
Appendix Table A-3: Reconciliation of Income (Loss) from Continuing Operations
before
Taxes to Adjusted EBITDA by Segment
                                                                    
                                          Surface     Performance    Titanium
($ in millions)               Lithium     Treatment   Additives      Dioxide
                                                                     Pigments
Year ended December 31,
2012
                                                                      
Income (loss) from
continuing operations         $ 98.8      $ 91.6      $   49.5       $ 56.2
before taxes
Interest expense, net           3.3         15.6          6.6          22.6
Depreciation and                44.2        31.9          59.0         70.6
amortization
Restructuring and other         26.1        8.0           6.9          1.8
severance costs
Systems/organization            0.6         1.4           0.2          2.2
establishment expenses
Acquisition and disposal        -           0.2           -            2.2
costs
Acquisition method              -           -             -            3.3
inventory charges
Loss on early
extinguishment/modification     2.6         3.0           1.2          2.8
of debt
Foreign exchange loss
(gain) on financing             6.2         3.0           (0.1   )     -
activities, net
Other                           0.1         0.5           0.7          3.0    
Total Adjusted EBITDA         $ 181.9     $ 155.2     $   124.0      $ 164.7  
                                                                      
                              Advanced    Corporate
($ in millions)               Ceramics    and         Consolidated
                                          other
Year ended December 31,
2012
                                                                      
Income (loss) from
continuing operations         $ 104.8     $ (58.6 )   $   342.3
before taxes
Interest expense, net           14.5        24.1          86.7
Depreciation and                51.0        8.6           265.3
amortization
Restructuring and other         2.5         0.2           45.5
severance costs
Systems/organization            -           0.1           4.5
establishment expenses
Acquisition and disposal        1.1         (2.3  )       1.2
costs
Acquisition method              -           -             3.3
inventory charges
Loss on early
extinguishment/modification     1.2         4.0           14.8
of debt
Foreign exchange loss
(gain) on financing             (0.6  )     1.1           9.6
activities, net
Other                           0.3         1.1           5.7     
Total Adjusted EBITDA         $ 174.8     $ (21.7 )   $   778.9   
                                                                      
                                          Surface     Performance    Titanium
($ in millions)               Lithium     Treatment   Additives      Dioxide
                                                                     Pigments
Year ended December 31,
2011
                                                                      
Income (loss) from
continuing operations         $ 118.0     $ 80.3      $   69.7       $ 163.7
before taxes
Interest expense, net           7.4         20.6          9.1          12.7
Depreciation and                41.4        33.1          58.4         71.9
amortization
Restructuring and other         3.2         8.0           2.3          -
severance costs
Systems/organization            -           0.8           0.7          5.0
establishment expenses
Acquisition and disposal        -           0.1           -            -
costs
Loss on early
extinguishment/modification     2.9         4.8           1.7          -
of debt
Foreign exchange (gain)
loss on financing               (2.8  )     3.0           1.1          -
activities, net
Other                           0.1         0.3           1.0          4.3    
Total Adjusted EBITDA         $ 170.2     $ 151.0     $   144.0      $ 257.6  
                                                                      
                              Advanced    Corporate
($ in millions)               Ceramics    and         Consolidated    
                                          other
Year ended December 31,
2011
                                                                      
Income (loss) from
continuing operations         $ 102.2     $ (77.8 )   $   456.1         
before taxes
Interest expense, net           21.6        24.7          96.1          
Depreciation and                53.7        8.7           267.2         
amortization
Restructuring and other         0.7         0.3           14.5          
severance costs
Systems/organization            -           -             6.5           
establishment expenses
Acquisition and disposal        0.1         0.2           0.4           
costs
Loss on early
extinguishment/modification     4.0         3.2           16.6          
of debt
Foreign exchange (gain)
loss on financing               0.8         (3.4  )       (1.3   )            
activities, net
Other                           0.6         0.4           6.7           
Total Adjusted EBITDA         $ 183.7     $ (43.7 )   $   862.8         

 
 
Appendix Table A-4: Consolidated Reconciliation of Net Income to Adjusted EBITDA by
Segment
 
                                                                       
                              Three Months Ended        Year Ended
                              December 31,              December 31,
                              2012        2011          2012            2011
Net income attributable to
Rockwood Holdings, Inc.       $ 21.2      $ 62.9        $     383.5     $     411.3
shareholders
Net (loss) income
attributable to                 (7.4  )     8.0               14.7            40.6    
noncontrolling interest
Net income                      13.8        70.9              398.2           451.9
Income tax (benefit)            (1.0  )     23.4              (55.9 )         124.4
provision
Loss (income) from
discontinued operations,        -           0.1               -               (120.2 )
net of tax (a)
Income from continuing          12.8        94.4              342.3           456.1
operations before taxes
Interest expense, net           30.2        22.1              86.7            96.1
Depreciation and                68.9        67.0              265.3           267.2
amortization
Restructuring and other         21.6        5.0               45.5            14.5
severance costs
Systems/organization            1.4         5.2               4.5             6.5
establishment expenses
Acquisition and disposal        (2.8  )     -                 1.2             0.4
costs
Acquisition method              3.3         -                 3.3             -
inventory charges
Loss on early
extinguishment/modification     2.3         -                 14.8            16.6
of debt
Foreign exchange loss
(gain) on financing             2.3         0.5               9.6             (1.3   )
activities, net
Other                           1.0         1.5               5.7             6.7     
Total Adjusted EBITDA         $ 141.0     $ 195.7       $     778.9     $     862.8   

(a) Primarily relates to the gain on sale of the AlphaGary plastic compounding
business.

                                                                    
                                                                      
Appendix Table A-5: Reconciliation of Net Cash Provided by Operating
Activities From
Continuing Operations to Adjusted EBITDA
                                                                      
                                                         Year ended
                                                         December 31,
($ in millions)                                          2012        2011
Net cash provided by operating activities from           $ 444.9     $ 450.8  
continuing operations
Changes in assets and liabilities, net of the effect       116.8       191.4
of foreign currency translation and acquisitions
Current portion of income tax provision                    81.3        98.1
Interest expense, net, excluding amortization of
deferred financing costs and unrealized losses/gains       76.4        91.8
on derivatives
Restructuring and other severance costs                    45.5        14.5
Systems/organization establishment expenses                4.5         6.5
Acquisition and disposal costs                             1.2         0.4
Acquisition method inventory charges                       3.3         -
Bad debt provision                                         (0.7  )     0.2
Other                                                      5.7         9.1    
Total Adjusted EBITDA                                    $ 778.9     $ 862.8  

 
 
Appendix Table A-6: Reconciliation of Net Cash Provided by Operating
Activities of
Continuing Operations to Free Cash Flow
                                                            
($ in millions)                         Three months ended   Six months ended
                                        December 31, 2012    December 31, 2012
Net cash provided by operating          $    153.3           $    296.4
activities of continuing operations
Capital expenditures, net of                 (71.1    )           (142.4   )
government grants received
Restructuring charges                        3.9                  8.7
Excess tax benefit from stock-based          2.3                  2.3
payment arrangements
Other (a)                                    (1.3     )           3.3       
Free Cash Flow                          $    87.1            $    168.3     

(a) Represents the cash impact of adjustments made to EBITDA under our senior
secured credit agreement, which include fees incurred in connection with the
acquisition of certain business assets, particularly crenox GmbH.

 
 
Appendix Table A-7: Consolidated Reconciliation of Net Income/Diluted Earnings
Per Share
from Continuing Operations as Reported to Net Income/Diluted Earnings Per Share
from
Continuing Operations as Adjusted
                                                                    
                              Three Months Ended        Three Months Ended
                              December 31, 2012         December 31, 2011
($ in millions, except per    Net Income   Diluted      Net Income   Diluted
share amounts; shares in      from         EPS from     from         EPS from
thousands)                    Continuing   Continuing   Continuing   Continuing
                              Operations   Operations   Operations   Operations
As reported                   $  21.2      $ 0.26       $  63.0      $ 0.79    
                                                                      
                                                                      
Adjustments to expenses
from continuing operations:
Restructuring and other          21.0        0.26          5.0         0.06
severance costs
Impact of tax related items      4.6         0.06          -           -
Loss on early
extinguishment/modification      2.2         0.03          -           -
of debt
Foreign exchange loss on         1.6         0.02          0.3         0.01
financing activities, net
Acquisition method               1.4         0.02          -           -
inventory charges
Mark-to-market interest          -           -             0.2         -
rate swap loss
Systems/organization             1.2         0.01          2.5         0.03
establishment expenses
Other                            0.2         -             1.7         0.02    
Subtotal                         32.2        0.40          9.7         0.12
                                                                      
Adjustments to income from
continuing operations:
Federal tax benefit on net       (9.3  )     (0.12  )      -           -
operating loss
Acquisition and disposal         (3.5  )     (0.04  )      -           -
costs
Valuation allowance              (2.5  )     (0.03  )      -           -
reversal
Mark-to-market interest          (0.1  )     -             -           -
rate swap gain
Other                            -           -             -           -       
Subtotal                         (15.4 )     (0.19  )      -           -       
                                                                      
Total adjustments (a)            16.8        0.21          9.7         0.12
                                                                      
As adjusted                   $  38.0      $ 0.47       $  72.7      $ 0.91    
                                                                      
Weighted average number of                   80,073                    79,857  
diluted shares outstanding

(a) The tax effects of the adjustments are benefits of $11.5 million and $1.7
million for the three months ended December 31, 2012 and 2011, respectively,
based on the statutory tax rate in the various tax jurisdictions in which the
adjustments occurred, adjusted for the impact of certain valuation allowances.

                             
 
Appendix Table A-8: Consolidated Reconciliation of Net Income/Diluted Earnings
Per Share
from Continuing Operations as Reported to Net Income/Diluted Earnings Per Share
from
Continuing Operations as Adjusted
                                                                    
                              Year Ended                Year Ended
                              December 31, 2012         December 31, 2011
($ in millions, except per    Net Income   Diluted      Net Income   Diluted
share amounts; shares in      from         EPS from     from         EPS from
thousands)                    Continuing   Continuing   Continuing   Continuing
                              Operations   Operations   Operations   Operations
As reported                   $ 383.5      $ 4.80       $  291.1     $ 3.64
                                                                      
Adjustments to expenses
from continuing operations:
Restructuring and other         43.9         0.55          12.5        0.16
severance costs
Loss on early
extinguishment/modification     11.2         0.14          13.5        0.17
of debt
Foreign exchange loss on        8.0          0.10          -           -
financing activities, net
Impact of tax related items     7.5          0.09          -           -
Systems/organization            2.7          0.04          3.4         0.04
establishment expenses
Acquisition method              1.4          0.02          -           -
inventory charges
Mark-to-market interest         1.0          0.01          -           -
rate swap loss
Other                           3.3          0.04          4.8         0.06    
Subtotal                        79.0         0.99          34.2        0.43
                                                                      
Adjustments to income from
continuing operations:
Valuation allowance             (141.5 )     (1.77  )      -           -
reversal
Federal tax benefit on net      (9.3   )     (0.12  )      -           -
operating loss
Acquisition and disposal        (0.7   )     (0.01  )      -           -
costs
Mark-to-market interest         -            -             (1.4  )     (0.02  )
rate swap gain
Foreign exchange gain on        -            -             (2.7  )     (0.03  )
financing activities, net
Subtotal                        (151.5 )     (1.90  )      (4.1  )     (0.05  )
                                                                      
Total adjustments (a)           (72.5  )     (0.91  )      30.1        0.38
                                                                      
As adjusted                   $ 311.0      $ 3.89       $  321.2     $ 4.02    
                                                                      
Weighted average number of                   79,943                    79,865  
diluted shares outstanding

(a) The tax effects of the adjustments are benefits of $158.2 million and $9.6
million for the years ended December 31, 2012 and 2011, respectively, based on
the statutory tax rate in the various tax jurisdictions in which the
adjustments occurred, adjusted for the impact of certain valuation allowances.

Contact:

Rockwood Holdings, Inc.
Nahla A. Azmy, 609-524-1109
nazmy@rocksp.com
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