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Albemarle Reports Third Quarter 2007 Results
Date:10/22/2007

- Third quarter net income of $59.1 million, or 61 cents per share.

- Record quarterly Catalysts segment income of $41.0 million.

- Over 400 basis point year-over-year improvement in quarterly Fine

Chemicals segment income margin.

RICHMOND, Va., Oct. 22 /PRNewswire-FirstCall/ -- Albemarle Corporation (NYSE: ALB) reported third quarter 2007 net income of $59.1 million, or 61 cents per share, up from $2.3 million, or 2 cents per share, for third quarter 2006. Excluding the charge related to the divestiture of the Thann, France facility of $89.2 million ($58.4 million after income taxes, or 60 cents per share), third quarter 2006 net income was $60.7 million, or 62 cents per share. Strong performance in the Company's Catalysts and Fine Chemicals business segments was offset by margin declines in our Polymer Additives business segment. The Company reported net sales in the third quarter of 2007 totaling $584 million compared to third quarter 2006 net sales of $608 million.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050801/ALBEMARLELOGO )

Net income for the nine months of 2007 was $171.1 million, or $1.76 per share, up from $80.0 million, or 82 cents per share, for the nine months of 2006. Excluding the second quarter 2007 charge related to the closure of our Dayton fine chemistry facility, net income for the nine months of 2007 was $174.2 million, or $1.79 per share. Net income, excluding the Thann charge, for the nine months of 2006 was $138.4 million, or $1.43 per share. Net sales for the nine months of 2007 were $1.74 billion compared to $1.78 billion for the nine months of 2ented here to exclude the impact of certain non-recurring items on our results. We believe these measures are more reflective of our operations, provide transparency to investors and enable period-to-period comparability of financial performance.

A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the Investor Information section of our website at http://www.albemarle.com, under "Non- GAAP Reconciliations" under "Investor Relations."

006.

Commenting on results, Mark C. Rohr, President and CEO, stated, "The strength of our product portfolio was evident this quarter as record-setting Catalysts income helped overcome the weakness in Polymer Additives sold into consumer product markets. Fine Chemicals also delivered profit improvement year-over-year despite weak bromine demand for Polymer Additives and aggressive efforts to reduce inventory. As we enter the fourth quarter we are seeing some sequential improvement in Polymer Additives sales; however, inflation pressures and global consumer uncertainty require us to keep focused on execution to deliver another successful year."

Quarterly Segment Results

Polymer Additives recorded net sales for third quarter 2007 of $232.7 million, a 3 percent decrease versus third quarter 2006. Net sales declined in our flame retardant portfolio primarily due to reduced volumes in tetrabrom, partially offset by higher year-over-year pricing and increased sales of our proprietary products. Net sales increased in our stabilizers and curatives portfolio due primarily to higher volumes and pricing. Polymer Additives segment income for third quarter 2007 declined 24 percent from third quarter 2006 to $29.4 million due primarily to lower tetrabrom sales volumes and higher costs associated with lower utilization rates, partially offset by improved product pricing and mix.

Catalysts recorded net sales for third quarter 2007 of $216.4 million, a nominal decrease versus third quarter 2006, due primarily to lower volumes in HPC refinery catalysts, partially offset by improved pricing in FCC refinery catalysts and polyolefin catalysts. Catalysts segment income for third quarter 2007 increased 7 percent versus third quarter 2006 to $41.0 million, a quarterly record.

Fine Chemicals net sales for third quarter 2007 were $134.9 million, a 10 percent decrease versus third quarter 2006. This decline is due primarily to the disposition of our Thann, France facility. Excluding the impact of the Thann facility divestiture, net sales decreased 3 percent primarily due to reduced revenue from Fine Chemistry Services. Segment income for third quarter 2007 increased 26 percent versus third quarter 2006 (excluding the Thann divestiture charge) to $20.4 million due to strong performance at our South Haven facility and in intermediates and specialty bromides.

During the quarter, interest and financing expenses were $9.5 million versus third quarter 2006 expenses of $10.8 million. Research and development expenses increased $3.9 million, or 34 percent, from the same period last year.

Our third quarter 2007 effective income tax rate on a reported basis was 15.4 percent, which includes a benefit from recently enacted lower tax rates in Germany. The full year reported effective tax rate is expected to be approximately 21.5 percent.

Earnings Call

The Company's performance for the third quarter ended September 30, 2007 will be discussed on a conference call at 10:00 AM Eastern Daylight Time on October 23, 2007, which can be accessed through Albemarle's website under Investor Information at http://www.albemarle.com.

Albemarle Corporation, headquartered in Richmond, Virginia, is a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals for consumer electronics; petroleum and petrochemical processing; transportation and industrial products; pharmaceuticals; agricultural products; construction and packaging materials. The Company operates in three business segments, Polymer Additives, Catalysts and Fine Chemicals, and serves customers in approximately 100 countries.

Forward-Looking Statements

Some of the information presented in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations as reflected are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation: the inability to pass through increases in costs and expenses for raw materials and energy; competition from other manufacturers; changes in demand for our products; the gain or loss of significant customers; fluctuations in foreign currencies; and increased government regulation of our operations or our products. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2006 and in our other public filings with the Securities and Exchange Commission. Readers are urged to review and consider carefully the disclosures we make in our filings with the Securities and Exchange Commission.

Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

(In Thousands of Dollars, Except Share and Per Share Amounts) (Unaudited)

Third Quarter Ended Nine Months Ended

September 30, September 30,

2007 2006 2007 2006

Net sales $583,981 $607,818 $1,737,031 $1,783,969

Cost of goods sold 431,019 459,590 1,270,898 1,381,904

Gross profit 152,962 148,228 466,133 402,065

Selling, general and

administrative

expenses 61,004 58,000 182,745 178,055

Research and

development

expenses 15,422 11,549 46,057 34,192

Dayton facility

closure charge - - 4,944(b) -

Loss on Thann

facility divestiture - 89,175(a) - 89,175(a)

Operating profit

(loss) 76,536 (10,496) 232,387 100,643

Interest and

financing expenses (9,500) (10,759) (28,827) (33,415)

Other income

(expenses), net 828 1,007 3,411 (370)

Income (loss) before

income tax (expense)

benefit, minority

interests and equity

in net income of

unconsolidated

investments 67,864 (20,248) 206,971 66,858

Income tax (expense)

benefit (10,433) 23,330 (42,954) 952

Income before

minority interests

and equity in net

income of

unconsolidated

investments 57,431 3,082 164,017 67,810

Minority interests in

income of

consolidated

subsidiaries

(net of tax) (4,613) (5,176) (12,310) (8,795)

Equity in net income

of unconsolidated

investments

(net of tax) 6,281 4,383 19,363 20,977

Net income $59,099 $2,289 $171,070 $79,992

Basic earnings per

share $0.62 $0.02 $1.80 $0.85

Diluted earnings per

share $0.61 $0.02 $1.76 $0.82

Weighted-average

common shares

outstanding - Basic 95,245 94,755 95,269 94,532

Weighted-average

common shares

outstanding -

Diluted 97,106 97,298 97,288 97,009

See accompanying notes to the condensed consolidated financial information.

Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands of Dollars) (Unaudited)

September 30, December 31,

2007 2006

ASSETS

Cash and cash equivalents $101,281 $149,499

Other current assets 910,093 811,355

Total current assets 1,011,374 960,854

Property, plant and equipment 2,276,046 2,169,433

Less accumulated depreciation

and amortization 1,252,365 1,188,858

Net property, plant and equipment 1,023,681 980,575

Other assets and intangibles 689,932 588,939

Total assets $2,724,987 $2,530,368

LIABILITIES &

SHAREHOLDERS' EQUITY

Current portion of long-term debt $18,774 $50,731

Other current liabilities 382,489 432,218

Total current liabilities 401,263 482,949

Long-term debt 679,726 681,859

Other noncurrent liabilities 339,753 236,594

Deferred income taxes 88,641 100,868

Shareholders' equity 1,215,604 1,028,098

Total liabilities & shareholders' equity $2,724,987 $2,530,368

See accompanying notes to the condensed consolidated financial information.

Albemarle Corporation and Subsidiaries

Selected Cash Flows Data

(In Thousands of Dollars) (Unaudited)

Nine Months Ended

September 30,

2007 2006

Cash and cash equivalents at beginning of year $149,499 $58,570

Cash and cash equivalents at end of period $101,281 $89,575

Sources of cash and cash equivalents:

Net income 171,070 79,992

Dayton facility closure charge 4,944 -

Loss on Thann facility divestiture - 89,175

Depreciation and amortization 79,824 86,015

Proceeds from borrowings 78,125 133,810

Proceeds from exercise of stock options 20,459 13,694

Uses of cash and cash equivalents:

Capital expenditures (71,262) (73,103)

Purchases of common stock (51,956) (14,694)

Repayments of long-term debt (129,246) (184,181)

Acquisitions, net of cash acquired in 2007 (17,444)( c ) (25,000)

Dividends paid to shareholders (30,172) (23,086)

Dividends paid to minority interests (11,888) (3,600)

See accompanying notes to the condensed consolidated financial information.

Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands of Dollars) (Unaudited)

Third Quarter Ended Nine Months Ended

September 30, September 30,

2007 2006 2007 2006

Segment net sales:

Polymer Additives $232,700 $240,746 $670,969 $691,176

Catalysts 216,399 217,366 659,674 646,767

Fine Chemicals 134,882 149,706 406,388 446,026

Total segment net

sales $583,981 $607,818 $1,737,031 $1,783,969

Segment operating profit (loss):

Polymer Additives $30,970 $40,736 $102,741 $112,100

Catalysts 35,474 35,032 97,490 75,677

Fine Chemicals(a) 22,772 18,025 75,272 43,632

Corporate & Other (12,680) (15,114) (38,172) (41,591)

Total segment

operating profit 76,536 78,679 237,331 189,818

Minority interests in income of consolidated subsidiaries:

Polymer Additives (2,351) (3,333) (6,410) (6,706)

Catalysts - - - -

Fine Chemicals (2,361) (1,823) (6,067) (3,972)

Corporate & Other 99 (20) 167 1,883

Total minority

interests in income

of consolidated

subsidiaries (4,613) (5,176) (12,310) (8,795)

Equity in net income of unconsolidated investments:

Polymer Additives 746 1,193 4,037 3,662

Catalysts 5,555 3,208 15,355 17,410

Fine Chemicals - - - -

Corporate & Other (20) (18) (29) (95)

Total equity in net

income of

unconsolidated

investments 6,281 4,383 19,363 20,977

Segment income (loss):

Polymer Additives 29,365 38,596 100,368 109,056

Catalysts 41,029 38,240 112,845 93,087

Fine Chemicals(a) 20,411 16,202 69,205 39,660

Corporate & Other (12,601) (15,152) (38,034) (39,803)

Total segment

income 78,204 77,886 244,384 202,000

Dayton facility

closure charge - - (4,944) -

Loss on Thann

facility divestiture - (89,175) - (89,175)

Interest and financing

expenses (9,500) (10,759) (28,827) (33,415)

Other income (expenses),

net 828 1,007 3,411 (370)

Income tax (expense)

benefit (10,433) 23,330 (42,954) 952

Net income $59,099 $2,289 $171,070 $79,992

(a) Excludes the Thann facility divestiture charge and the Dayton facility

closure charge.

See accompanying notes to the condensed consolidated financial information.

Notes to the Condensed Consolidated Financial Information

(a) The three and nine-month periods ended September 30, 2006 include a

charge amounting to $89.2 million ($58.4 million after income taxes,

or 60 cents per share) that relates to the divestiture of the Thann,

France facility effective August 31, 2006.

(b) The nine-month period ended September 30, 2007 includes a charge

amounting to $4.9 million ($3.1 million after income taxes, or

3 cents per share) that relates to the closure of our Dayton, Ohio

fine chemistry facility.

( c ) On July 31, 2007, we acquired controlling interests in our two

antioxidant joint ventures in China: Ningbo Jinhai Albemarle

Chemical and Industry Co., Ltd. and Shanghai Jinhai Albemarle Fine

Chemicals Co., Ltd. Our ownership interests increased from 25

percent to 75 percent.

Additional Information

It should be noted that net income excluding the Dayton charge and net income excluding the Thann charge are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. They are pres
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SOURCE Albemarle Corporation
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