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Rockwood Reports Second Quarter Results

Stocks in this article: ROC

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
Condensed Consolidated Statements of Operations
(Dollars in millions, except per share amounts; shares in thousands)
(Unaudited)
       
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
Net sales $ 905.6 $ 1,000.0 $ 1,815.1 $ 1,914.0
Cost of products sold   585.3     654.4     1,152.0     1,247.3  
Gross profit 320.3 345.6 663.1 666.7
 
Selling, general and administrative expenses 167.5 181.4 344.6 362.1
Restructuring and other severance costs   3.7     4.0     17.9     5.0  
Operating income   149.1     160.2     300.6     299.6  
 
Other expenses, net:
Interest expense, net (a) (14.9 ) (24.7 ) (35.4 ) (47.7 )
Loss on early extinguishment/modification of debt (2.7 ) (0.3 ) (12.4 ) (16.5 )
Foreign exchange (loss) gain on financing activities, net (6.7 ) 2.2 (7.7 ) 4.2
Other, net   0.1     (0.1 )   0.1     (0.1 )
Other expenses, net   (24.2 )   (22.9 )   (55.4 )   (60.1 )
 
Income from continuing operations before taxes 124.9 137.3 245.2 239.5
Income tax (benefit) provision   (108.8 )   37.8     (78.2 )   66.6  
Income from continuing operations 233.7 99.5 323.4 172.9
Income from discontinued operations, net of tax (b)   -     5.6     -     120.3  
Net income 233.7 105.1 323.4 293.2
Net income attributable to noncontrolling interest   (8.8 )   (10.6 )   (22.7 )   (20.7 )
Net income attributable to Rockwood Holdings, Inc. $ 224.9   $ 94.5   $ 300.7   $ 272.5  
 
Amounts attributable to Rockwood Holdings, Inc.:
Income from continuing operations $ 224.9 $ 88.9 $ 300.7 $ 152.2
Income from discontinued operations   -     5.6     -     120.3  
Net income $ 224.9   $ 94.5   $ 300.7   $ 272.5  
 
Basic earnings per share attributable to Rockwood Holdings, Inc.:
Earnings from continuing operations $ 2.90 $ 1.16 $ 3.88 $ 1.99
Earnings from discontinued operations (b)   -     0.08     -     1.58  
Basic earnings per share $ 2.90   $ 1.24   $ 3.88   $ 3.57  
 
Diluted earnings per share attributable to Rockwood Holdings, Inc.:
Earnings from continuing operations $ 2.81 $ 1.11 $ 3.76 $ 1.91
Earnings from discontinued operations (b)   -     0.07     -     1.51  
Diluted earnings per share $ 2.81   $ 1.18   $ 3.76   $ 3.42  
 
Weighted average number of basic shares outstanding   77,600     76,446     77,492     76,292  
Weighted average number of diluted shares outstanding   80,011     79,946     79,994     79,778  
 
(a) Interest expense, net includes:
Interest expense on debt, net $ (13.5 ) $ (22.1 ) $ (32.3 ) $ (50.1 )
Mark-to-market gains (losses) on interest rate swaps 0.2 (1.4 ) (0.2 ) 4.9
Deferred financing costs   (1.6 )   (1.2 )   (2.9 )   (2.5 )
Total $ (14.9 ) $ (24.7 ) $ (35.4 ) $ (47.7 )
 
(b) Primarily relates to the gain on sale of the AlphaGary plastic compounding business.
 
Rockwood Holdings, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts; shares in thousands)
(Unaudited)
   
 
June 30, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $ 343.4 $ 321.5
Accounts receivable, net 532.2 454.1
Inventories 763.1 674.3
Deferred income taxes 13.8 10.2
Prepaid expenses and other current assets   64.1     75.1  
Total current assets 1,716.6 1,535.2
Property, plant and equipment, net 1,617.4 1,618.5
Goodwill 830.6 849.6
Other intangible assets, net 462.2 509.7
Deferred financing costs, net 36.4 14.3
Deferred income taxes 155.2 19.3
Other assets   51.8     41.0  
Total assets $ 4,870.2   $ 4,587.6  
LIABILITIES
Current liabilities:
Accounts payable $ 213.7 $ 249.1
Income taxes payable 68.1 45.8
Accrued compensation 109.8 161.4
Accrued expenses and other current liabilities 153.8 129.6
Deferred income taxes 3.7 3.8
Long-term debt, current portion   88.3     250.5  
Total current liabilities 637.4 840.2
Long-term debt 1,678.5 1,437.2
Pension and related liabilities 447.8 450.7
Deferred income taxes 93.1 86.5
Other liabilities   110.4     100.6  
Total liabilities 2,967.2 2,915.2
Restricted stock units 19.7 14.0
EQUITY
Rockwood Holdings, Inc. stockholders' equity:
Common stock ($0.01 par value, 400,000 shares authorized, 77,731
shares issued and 77,637 shares outstanding at June 30, 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 1,230.5 1,222.2
Accumulated other comprehensive (loss) income (20.9 ) 10.1
Retained earnings 401.2 128.5
Treasury stock, at cost   (1.4 )   (1.4 )
Total Rockwood Holdings, Inc. stockholders' equity 1,610.2 1,360.2
Noncontrolling interest   273.1     298.2  
Total equity   1,883.3     1,658.4  
Total liabilities and equity $ 4,870.2   $ 4,587.6  
 
Rockwood Holdings, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions)
(Unaudited)
 
  Six months ended
June 30,
2012   2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 323.4 $ 293.2

Adjustments to reconcile net income to net cash

provided by operating activities:

Income from discontinued operations, net of tax (a) - (120.3 )
Depreciation and amortization 130.9 133.2
Deferred financing costs amortization 2.9 2.5
Loss on early extinguishment/modification of debt 12.4 16.5
Foreign exchange loss (gain) on financing activities, net 7.7 (4.2 )
Fair value adjustment of derivatives 0.2 (4.9 )
Bad debt provision 0.1 0.5
Stock-based compensation 5.8 6.4
Deferred income taxes (131.2 ) 14.8
Restructuring and other 11.7 0.3
Excess tax benefits from stock-based payment arrangements (1.4 ) -

Changes in assets and liabilities, net of the effect of

foreign currency translation and acquisitions:

Accounts receivable (85.8 ) (106.1 )
Inventories (100.4 ) (38.4 )
Prepaid expenses and other assets (0.7 ) (0.8 )
Accounts payable (12.1 ) (5.2 )
Income taxes payable 24.0 24.7
Accrued expenses and other liabilities   (39.0 )   (47.4 )
Net cash provided by operating activities of continuing operations 148.5 164.8
Net cash used in operating activities of discontinued operations   (1.9 )   (1.8 )
Net cash provided by operating activities   146.6     163.0  
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (b) (144.0 ) (110.6 )
Acquisitions (0.8 ) (0.8 )
Proceeds on sale of assets   1.7     0.3  
Net cash used in investing activities of continuing operations (143.1 ) (111.1 )

Net cash provided by investing activities of discontinued

operations, representing net sale proceeds in 2011

  -     300.8  
Net cash (used in) provided by investing activities   (143.1 )   189.7  
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of fees 6.0 9.2
Excess tax benefits from stock-based payment arrangements 1.4 -
Payments of long-term debt (664.7 ) (432.1 )
Proceeds from long-term debt 737.4 -
Loan repayments to noncontrolling shareholders - (5.0 )
Deferred financing costs (27.6 ) (5.3 )
Fees related to early extinguishment/modification of debt (8.8 ) (12.9 )

Dividend distributions to noncontrolling shareholder

  (41.3 )   (0.5 )
Net cash provided by (used in) financing activities   2.4     (446.6 )
Effect of exchange rate changes on cash and cash equivalents   16.0     (11.6 )
Net increase (decrease) in cash and cash equivalents 21.9 (105.5 )
Less net decrease in cash and cash equivalents from discontinued operations   -     (16.6 )
Increase (decrease) in cash and cash equivalents from continuing operations 21.9 (88.9 )
Cash and cash equivalents of continuing operations, beginning of period   321.5     324.1  
Cash and cash equivalents of continuing operations, end of period $ 343.4   $ 235.2  
 
Supplemental disclosures of cash flow information:
Interest paid $ 38.1 $ 62.0
Income taxes paid, net of refunds 29.0 27.1
Non-cash investing activities:
Acquisition of capital equipment 15.1 15.1
 
(a) Primarily relates to the gain on sale of the AlphaGary plastic compounding business.

(b) Net of government grants of $7.6 million and $6.3 million for the six months ended

June 30, 2012 and 2011, respectively.

 
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
   
Net Sales
 
Three Months Ended  
June 30,

($ in millions)

2012   2011 % Change
Lithium $ 124.6   $ 124.3 0.2 %
Surface Treatment 183.8 194.3 (5.4 )
Performance Additives 205.5 221.2 (7.1 )
Titanium Dioxide Pigments 211.7 256.2 (17.4 )
Advanced Ceramics 142.8 155.0 (7.9 )
Corporate and other   37.2       49.0   (24.1 )
Total $ 905.6     $ 1,000.0   (9.4 ) %
 
 
Adjusted EBITDA
 
Three Months Ended
June 30,

($ in millions)

2012   2011   % Change
Lithium $ 48.1 $ 46.1 4.3 %
Surface Treatment 39.0 39.9 (2.3 )
Performance Additives 38.3 46.0 (16.7 )
Titanium Dioxide Pigments 54.8 63.5 (13.7 )
Advanced Ceramics 47.7 50.6 (5.7 )
Corporate and other   (6.8 )     (12.5 ) 45.6
Total Adjusted EBITDA $ 221.1     $ 233.6   (5.4 ) %
 
Rockwood Holdings, Inc. and Subsidiaries
Net Sales and Adjusted EBITDA
   
Net Sales
 
Six Months Ended  
June 30,

($ in millions)

2012   2011 % Change
Lithium $ 239.3   $ 237.6 0.7

%

Surface Treatment 372.4 376.7 (1.1 )
Performance Additives 402.0 414.0 (2.9 )
Titanium Dioxide Pigments 436.8 482.8 (9.5 )
Advanced Ceramics 287.4 309.1 (7.0 )
Corporate and other   77.2       93.8   (17.7 )
Total $ 1,815.1     $ 1,914.0   (5.2 )

%

 
 
Adjusted EBITDA
 
Six Months Ended
June 30,

($ in millions)

2012   2011 % Change
Lithium $ 92.5 $ 87.2 6.1

%

Surface Treatment 78.7 77.1 2.1
Performance Additives 77.1 80.9 (4.7 )
Titanium Dioxide Pigments 130.4 118.2 10.3
Advanced Ceramics 94.0 98.9 (5.0 )
Corporate and other   (16.7 )     (22.1 ) 24.4
Adjusted EBITDA from continuing operations 456.0 440.2 3.6
Discontinued operations - Plastic Compounding   -       0.2   (100.0 )
Total Adjusted EBITDA $ 456.0     $ 440.4   3.5

%

 
(a) Excludes net sales of $3.9 million for the six months ended June 30, 2011 from the AlphaGary
plastic compounding business that was sold in January 2011. The results of this business have been
accounted for as a discontinued operation in the condensed consolidated financial statements for all
periods presented.
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
 
  Three Months Ended    
June 30, Total Total

($ in millions)

2012   2011 Change in $ Change in %
Net Sales:
Lithium $ 124.6 $ 124.3 $ 0.3 0.2 %
Surface Treatment 183.8 194.3 (10.5 ) (5.4 )
Performance Additives 205.5 221.2 (15.7 ) (7.1 )
Titanium Dioxide Pigments 211.7 256.2 (44.5 ) (17.4 )
Advanced Ceramics 142.8 155.0 (12.2 ) (7.9 )
Corporate and other   37.2     49.0     (11.8 ) (24.1 )
Total $ 905.6   $ 1,000.0   $ (94.4 ) (9.4 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Net Sales:
Lithium $ (6.4 ) $ 6.7 5.4 %
Surface Treatment (16.4 ) 5.9 3.0
Performance Additives (6.7 ) (9.0 ) (4.1 )
Titanium Dioxide Pigments (25.6 ) (18.9 ) (7.4 )
Advanced Ceramics (15.5 ) 3.3 2.1
Corporate and other   (4.5 )   (7.3 ) (14.9 )
Total $ (75.1 ) $ (19.3 ) (1.9 ) %
 
Three Months Ended
June 30, Total Total

($ in millions)

2012 2011 Change in $ Change in %
Adjusted EBITDA:
Lithium $ 48.1 $ 46.1 $ 2.0 4.3 %
Surface Treatment 39.0 39.9 (0.9 ) (2.3 )
Performance Additives 38.3 46.0 (7.7 ) (16.7 )
Titanium Dioxide Pigments 54.8 63.5 (8.7 ) (13.7 )
Advanced Ceramics 47.7 50.6 (2.9 ) (5.7 )
Corporate and other   (6.8 )   (12.5 )   5.7   45.6
Total Adjusted EBITDA $ 221.1   $ 233.6   $ (12.5 ) (5.4 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Adjusted EBITDA:
Lithium $ (1.9 ) $ 3.9 8.5 %
Surface Treatment (3.0 ) 2.1 5.3
Performance Additives (1.4 ) (6.3 ) (13.7 )
Titanium Dioxide Pigments (6.6 ) (2.1 ) (3.3 )
Advanced Ceramics (5.6 ) 2.7 5.3
Corporate and other   (0.7 )   6.4   51.2
Total Adjusted EBITDA $ (19.2 ) $ 6.7   2.9 %
 
(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.
 
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Segment Net Sales and Adjusted EBITDA
 
  Six Months Ended    
June 30, Total Total

($ in millions)

2012   2011 Change in $ Change in %
Net Sales:
Lithium $ 239.3 $ 237.6 $ 1.7 0.7 %
Surface Treatment 372.4 376.7 (4.3 ) (1.1 )
Performance Additives 402.0 414.0 (12.0 ) (2.9 )
Titanium Dioxide Pigments 436.8 482.8 (46.0 ) (9.5 )
Advanced Ceramics 287.4 309.1 (21.7 ) (7.0 )
Corporate and other   77.2     93.8     (16.6 ) (17.7 )
Total $ 1,815.1   $ 1,914.0   $ (98.9 ) (5.2 ) %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Net Sales:
Lithium $ (8.5 ) $ 10.2 4.3 %
Surface Treatment (22.9 ) 18.6 4.9
Performance Additives (9.1 ) (2.9 ) (0.7 )
Titanium Dioxide Pigments (35.4 ) (10.6 ) (2.2 )
Advanced Ceramics (21.0 ) (0.7 ) (0.2 )
Corporate and other   (6.2 )   (10.4 ) (11.1 )
Total $ (103.1 ) $ 4.2   0.2 %
 
Six Months Ended
June 30, Total Total

($ in millions)

2012 2011 Change in $ Change in %
Adjusted EBITDA:
Lithium $ 92.5 $ 87.2 $ 5.3 6.1 %
Surface Treatment 78.7 77.1 1.6 2.1
Performance Additives 77.1 80.9 (3.8 ) (4.7 )
Titanium Dioxide Pigments 130.4 118.2 12.2 10.3
Advanced Ceramics 94.0 98.9 (4.9 ) (5.0 )
Corporate and other   (16.7 )   (22.1 )   5.4   24.4
Adjusted EBITDA from continuing operations 456.0 440.2 15.8 3.6
Discontinued operations - Plastic Compounding   -     0.2     (0.2 ) (100.0 )
Total Adjusted EBITDA $ 456.0   $ 440.4   $ 15.6   3.5 %
 
Constant Constant Currency Basis
Currency Net Net

($ in millions)

Effect in $ (a) Change in $ Change in %
Adjusted EBITDA:
Lithium $ (3.0 ) $ 8.3 9.5 %
Surface Treatment (4.2 ) 5.8 7.5
Performance Additives (1.9 ) (1.9 ) (2.3 )
Titanium Dioxide Pigments (9.8 ) 22.0 18.6
Advanced Ceramics (7.6 ) 2.7 2.7
Corporate and other   (0.9 )   6.3   28.5
Adjusted EBITDA from continuing operations (27.4 ) 43.2 9.8
Discontinued operations - Plastic Compounding   -     (0.2 ) (100.0 )
Total Adjusted EBITDA $ (27.4 ) $ 43.0   9.8 %
 
(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.
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (Loss) from Continuing Operations before Taxes
to Adjusted EBITDA by Segment
 
        Titanium
Surface Performance Dioxide

($ in millions)

Lithium Treatment Additives Pigments
Three months ended June 30, 2012
 
Income (loss) from continuing operations before taxes $ 36.4 $ 23.7 $ 20.0 $ 29.6
Interest expense, net 0.9 3.6 1.8 3.6
Depreciation and amortization 10.8 7.9 14.7 17.0
Restructuring and other severance costs 0.8 1.2 1.6 -
Systems/organization establishment expenses 0.3 - 0.1 -
Acquisition and disposal costs - 0.1 - 1.7
Loss on early extinguishment/modification of debt - - - 2.7
Foreign exchange (gain) loss on financing activities, net (1.2 ) 2.1 (0.1 ) -
Other   0.1     0.4     0.2     0.2
Total Adjusted EBITDA $ 48.1   $ 39.0   $ 38.3   $ 54.8
 
Advanced Corporate and

($ in millions)

Ceramics other Consolidated
Three months ended June 30, 2012
 
Income (loss) from continuing operations before taxes $ 31.3 $ (16.1 ) $ 124.9
Interest expense, net 3.6 1.4 14.9
Depreciation and amortization 12.6 2.1 65.1
Restructuring and other severance costs 0.1 - 3.7
Systems/organization establishment expenses - - 0.4
Acquisition and disposal costs - 0.2 2.0
Loss on early extinguishment/modification of debt - - 2.7
Foreign exchange (gain) loss on financing activities, net 0.2 5.7 6.7
Other   (0.1 )   (0.1 )   0.7  
Total Adjusted EBITDA $ 47.7   $ (6.8 ) $ 221.1  
 
Titanium
Surface Performance Dioxide

($ in millions)

Lithium Treatment Additives Pigments
Three months ended June 30, 2011
 
Income (loss) from continuing operations before taxes $ 31.9 $ 25.2 $ 28.4 $ 40.7
Interest expense, net 2.0 4.9 2.2 4.2
Depreciation and amortization 10.4 8.7 14.5 18.3
Restructuring and other severance costs 1.9 1.3 0.7 -
Systems/organization establishment expenses - 0.2 0.2 0.3
Acquisition and disposal costs - - - -
(Gain) loss on early extinguishment/modification of debt (0.2 ) 0.2 - -
Foreign exchange loss (gain) on financing activities, net 0.1 (1.0 ) - -
Other   -     0.4     -     -
Total Adjusted EBITDA $ 46.1   $ 39.9   $ 46.0   $ 63.5
 
Advanced Corporate and

($ in millions)

Ceramics other Consolidated
Three months ended June 30, 2011
 
Income (loss) from continuing operations before taxes $ 31.4 $ (20.3 ) $ 137.3
Interest expense, net 5.4 6.0 24.7
Depreciation and amortization 13.7 2.2 67.8
Restructuring and other severance costs 0.1 - 4.0
Systems/organization establishment expenses - - 0.7
Acquisition and disposal costs - 0.1 0.1
(Gain) loss on early extinguishment/modification of debt - 0.3 0.3
Foreign exchange loss (gain) on financing activities, net (0.1 ) (1.2 ) (2.2 )
Other   0.1     0.4     0.9  
Total Adjusted EBITDA $ 50.6   $ (12.5 ) $ 233.6  
 
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Income (Loss) from Continuing Operations before Taxes
to Adjusted EBITDA by Segment
 
        Titanium
Surface Performance Dioxide

($ in millions)

Lithium Treatment Additives Pigments
Six months ended June 30, 2012
 
Income (loss) from continuing operations before taxes $ 52.4 $ 46.4 $ 38.5 $ 83.2
Interest expense, net 1.9 8.8 4.0 5.5
Depreciation and amortization 21.5 15.8 29.8 34.3
Restructuring and other severance costs 12.1 2.0 3.6 -
Systems/organization establishment expenses 0.3 - 0.2 1.5
Acquisition and disposal costs - 0.1 - 1.7
Loss on early extinguishment/modification of debt 2.2 3.0 0.9 2.7
Foreign exchange loss (gain) on financing activities, net 2.0 2.1 (0.1) -
Other 0.1 0.5 0.2 1.5
Total Adjusted EBITDA $ 92.5 $ 78.7 $ 77.1 $ 130.4
 
Advanced Corporate and

($ in millions)

Ceramics other Consolidated
Six months ended June 30, 2012
 
Income (loss) from continuing operations before taxes $ 59.9 $ (35.2) $ 245.2
Interest expense, net 8.2 7.0 35.4
Depreciation and amortization 25.4 4.1 130.9
Restructuring and other severance costs 0.1 0.1 17.9
Systems/organization establishment expenses - - 2.0
Acquisition and disposal costs - 0.2 2.0
Loss on early extinguishment/modification of debt 0.7 2.9 12.4
Foreign exchange loss (gain) on financing activities, net (0.3) 4.0 7.7
Other - 0.2 2.5
Total Adjusted EBITDA $ 94.0 $ (16.7) $ 456.0
 
Titanium
Surface Performance Dioxide

($ in millions)

Lithium Treatment Additives Pigments
Six months ended June 30, 2011
 
Income (loss) from continuing operations before taxes $ 57.6 $ 42.4 $ 43.5 $ 79.4
Interest expense, net 4.2 10.8 4.7 3.1
Depreciation and amortization 20.1 17.5 28.7 35.4
Restructuring and other severance costs 1.9 2.2 0.8 -
Systems/organization establishment expenses - 0.3 0.4 0.3
Acquisition and disposal costs - 0.1 - -
Loss on early extinguishment/modification of debt 2.9 4.7 1.7 -
Foreign exchange loss (gain) on financing activities, net 0.4 (1.4) 1.0 -
Other 0.1 0.5 0.1 -
Adjusted EBITDA from continuing operations 87.2 77.1 80.9 118.2
Discontinued operations - Plastic Compounding - - - -
Total Adjusted EBITDA $ 87.2 $ 77.1 $ 80.9 $ 118.2
 
Discontinued
Operations -
Advanced Plastic Corporate and

($ in millions)

Ceramics Compounding other Consolidated
Six months ended June 30, 2011
 
Income (loss) from continuing operations before taxes $ 56.2 $ - $ (39.6) $ 239.5
Interest expense, net 11.6 - 13.3 47.7
Depreciation and amortization 27.1 - 4.4 133.2
Restructuring and other severance costs 0.1 - - 5.0
Systems/organization establishment expenses - - - 1.0
Acquisition and disposal costs - - 0.1 0.2
Loss on early extinguishment/modification of debt 4.0 - 3.2 16.5
Foreign exchange loss (gain) on financing activities, net (0.2) - (4.0) (4.2)
Other 0.1 - 0.5 1.3
Adjusted EBITDA from continuing operations 98.9 - (22.1) 440.2
Discontinued operations - Plastic Compounding - 0.2 - 0.2
Total Adjusted EBITDA $ 98.9 $ 0.2 $ (22.1) $ 440.4
 
Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of Net Income Attributable to
Rockwood Holdings, Inc. to Adjusted EBITDA
($ in millions)
 
  Three Months Ended   Six Months Ended
June 30, June 30,
2012   2011 2012   2011
Net income attributable to Rockwood Holdings, Inc. $ 224.9 $ 94.5 $ 300.7 $ 272.5
Net income attributable to noncontrolling interest   8.8     10.6     22.7     20.7  
Net income 233.7 105.1 323.4 293.2
Income tax (benefit) provision (108.8 ) 37.8 (78.2 ) 66.6
Income from discontinued operations, net of tax (a)   -     (5.6 )   -     (120.3 )
Income from continuing operations before taxes 124.9 137.3 245.2 239.5
Interest expense, net 14.9 24.7 35.4 47.7
Depreciation and amortization 65.1 67.8 130.9 133.2
Restructuring and other severance costs 3.7 4.0 17.9 5.0
Systems/organization establishment expenses 0.4 0.7 2.0 1.0
Acquisition and disposal costs 2.0 0.1 2.0 0.2
Loss on early extinguishment/modification of debt 2.7 0.3 12.4 16.5
Foreign exchange loss (gain) on financing activities, net 6.7 (2.2 ) 7.7 (4.2 )
Other   0.7     0.9     2.5     1.3  
Adjusted EBITDA from continuing operations 221.1 233.6 456.0 440.2
Discontinued operations - Plastic Compounding   -     -     -     0.2  
Total Adjusted EBITDA $ 221.1   $ 233.6   $ 456.0   $ 440.4  
 
(a) Primarily relates to the gain on sale of the AlphaGary plastic compounding business.
 
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Net Cash Provided By Operating Activities From
Continuing Operations to Adjusted EBITDA
 
  Six months ended
June 30,

($ in millions)

2012   2011

Net cash provided by operating activities from

continuing operations

$ 148.5 $ 164.8

Changes in assets and liabilities, net of the effect of

foreign currency translation and acquisitions

197.9 166.8
Current portion of income tax provision 53.0 51.8

Interest expense, net, excluding amortization of deferred

financing costs and unrealized losses/gains on derivatives

32.3 50.1
Restructuring and other severance costs 17.9 5.0
Systems/organization establishment expenses 2.0 1.0
Acquisition and disposal costs 2.0 0.2
Bad debt provision (0.1 ) (0.5 )
Other   2.5     1.0  
Adjusted EBITDA from continuing operations 456.0 440.2
Discontinued operations - Plastic Compounding   -     0.2  
Total Adjusted EBITDA $ 456.0   $ 440.4  
 
Rockwood Holdings, Inc. and Subsidiaries
Reconciliation of Net Cash Provided by Operating Activities From
Continuing Operations to Free Cash Flow
 
  Three months ended

($ in millions)

June 30, 2012
Net cash provided by operating activities of continuing operations $ 100.9
Capital expenditures, net of government grants received (69.8 )
Restructuring charges 4.2
Excess tax benefits from stock-based payment arrangements 0.7
Other (a)   3.0  
Free Cash Flow $ 39.0  
 
(a) Represents the cash impact of adjustments made to EBITDA under our senior secured credit agreement.
 
Rockwood Holdings, Inc. and Subsidiaries

Consolidated Reconciliation of Net Income/Diluted Earnings Per Share from

Continuing Operations Attributable to Rockwood Holdings, Inc.

as Reported to Net Income/Diluted Earnings Per Share from Continuing

Operations Attributable to Rockwood Holdings, Inc. as Adjusted

(Dollars in millions, except per share amounts; shares in thousands)
 
  Three Months Ended   Three Months Ended
June 30, 2012 June 30, 2011

Net Income

 

Net Income

 

from Continuing

 

from Continuing

 

Operations

Diluted EPS

Operations

Diluted EPS

Attributable

from

Attributable

from
to Rockwood Continuing to Rockwood Continuing
Holdings, Inc. Operations Holdings, Inc. Operations
As reported $ 224.9 $ 2.81 $ 88.9 $ 1.11
 
 

Adjustments to expenses from continuing operations:

Foreign exchange loss on financing activities, net

5.9 0.07 - -

Restructuring and other severance costs

4.4 0.06 2.8 0.03
Acquisition and disposal costs 1.2 0.02 0.1 -

Loss on early extinguishment/modification of debt

1.1 0.01 0.2 -

Systems/organization establishment expenses

0.3 - 0.4 0.01
Impact of tax related items - - 0.9 0.01
Mark-to-market swap loss - - 1.2 0.02
Other   0.4     0.01     0.9     0.01  
Subtotal 13.3 0.17 6.5 0.08
 

Adjustments to income from continuing operations:

Valuation allowance reversal (139.0 ) (1.74 ) - -
Mark-to-market swap gain (0.1 ) - - -

Foreign exchange gain on financing activities, net

  -     -     (1.8 )   (0.02 )
Subtotal   (139.1 )   (1.74 )   (1.8 )   (0.02 )
 
Total adjustments (a) (125.8 ) (1.57 ) 4.7 0.06
       
As adjusted $ 99.1   $ 1.24   $ 93.6   $ 1.17  
 

Weighted average number of diluted shares outstanding

  80,011     79,946  
 

(a) The tax effects of the adjustments are benefits of $141.5 million and $0.5 million for the three months

ended June 30, 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.

 
Rockwood Holdings, Inc. and Subsidiaries

Consolidated Reconciliation of Net Income/Diluted Earnings Per Share from Continuing

Operations Attributable to Rockwood Holdings, Inc.

as Reported to Net Income/Diluted Earnings Per Share from Continuing Operations

Attributable to Rockwood Holdings, Inc. as Adjusted

(Dollars in millions, except per share amounts; shares in thousands)
 
  Six Months Ended   Six Months Ended
June 30, 2012 June 30, 2011

Net Income

 

Net Income

 

from Continuing

 

from Continuing

 

Operations

Diluted EPS

Operations

Diluted EPS

Attributable

from

Attributable

from
to Rockwood Continuing to Rockwood Continuing
Holdings, Inc. Operations Holdings, Inc. Operations
As reported $ 300.7 $ 3.76 $ 152.2 $ 1.91
 

Adjustments to expenses from continuing operations:

Restructuring and other severance costs

16.6 0.21 3.7 0.05

Loss on early extinguishment/modification of debt

9.0 0.11 13.4 0.17

Foreign exchange loss on financing activities, net

6.7 0.08 - -
Acquisition and disposal costs 1.2 0.02 0.2 -

Systems/organization establishment expenses

0.8 0.01 0.6 -
Mark-to-market swap loss 0.1 - - -
Other   1.6     0.02     1.1     0.01  
Subtotal 36.0 0.45 19.0 0.23
 

Adjustments to income from continuing operations:

Valuation allowance reversal (139.0 ) (1.74 ) - -
Mark-to-market swap gain - - (3.2 ) (0.04 )

Foreign exchange gain on financing activities, net

  -     -     (4.2 )   (0.05 )
Subtotal   (139.0 )   (1.74 )   (7.4 )   (0.09 )
 
Total adjustments (a) (103.0 ) (1.29 ) 11.6 0.14
       
As adjusted $ 197.7   $ 2.47   $ 163.8   $ 2.05  
 

Weighted average number of diluted

shares outstanding

  79,994     79,778  
 

(a) The tax effects of the adjustments are benefits of $147.4 million and $4.3 million for the six months

ended June 30, 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.

 

Rockwood Holdings, Inc. and Subsidiaries
Consolidated Reconciliation of the Effective Tax Rate as Reported
to the Normalized Effective Tax Rate
 
  Three months ended
June 30, 2012
As reported effective tax rate (87.1 ) %
Adjustments:
Valuation allowance reversal 111.3
Other (1.0 )
Total adjustments 110.3
 
Normalized effective tax rate 23.2   %




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