Date: 7 November 2008
Income from continuing operations for the 2008 third quarter was $4.9 million, or $0.11 per diluted share, compared with $5.6 million, or $0.12 per diluted share, in the third quarter of 2007. Income from continuing operations declined primarily as a result of higher selling, general and administrative expenses, a loss on the extinguishment of debt resulting from bond refinancing actions, and higher restructuring charges. Partially offsetting these higher costs were increased gross profit and lower interest expense. Income from continuing operations for the third quarter of 2008 included net pre-tax expenses of $17.9 million primarily related to restructuring charges, the loss on extinguishment of debt, and corporate development activities. In the third quarter of 2007, income from continuing operations included net pre-tax expenses of $6.5 million primarily related to restructuring charges.
"Our third-quarter results continued the momentum built throughout 2008, with growth in net sales and segment income," said Chairman, President and Chief Executive Officer James F. Kirsch. "Despite a deteriorating economic environment, the initiatives that we began in 2006 to rationalize our manufacturing assets and improve our business processes continue to generate positive results. We were successful in our sale of the Fine Chemicals business, and we are investing in our growth businesses, as evidenced by the construction of our latest solar pasting facility in Suzhou, China. We remain committed to our long-term goals, including completing our manufacturing restructuring and improving profitability, even as we focus our near-term efforts on controlling costs and discretionary spending."
Price increases and changes in foreign exchange were the most significant drivers of sales growth during the quarter. Price increases during the quarter included higher precious metal costs, which are passed through to customers as higher product prices. Changes in foreign currency exchange rates accounted for approximately one-third of the sales increase. Volume was a negative contributor to sales in the quarter, as increased sales volume of electronic materials and tile coating products was more than offset by volume declines in other product lines.
In the 2008 third quarter, sales growth was strongest in the Electronic Materials segment, driven by conductive pastes used by solar cell manufacturers. Increased precious metal costs contributed to the sales increase. Sales also increased in Performance Coatings, Polymer Additives and Other Businesses primarily as a result of a combination of increased prices and foreign currency exchange rates, partially offset by lower sales volume. Sales in Color and Glass Performance Materials increased slightly as favorable changes in foreign currency exchange rates were largely offset by lower sales volume. Sales in Specialty Plastics declined as a result of lower demand from customers in the automotive, appliance and housing markets.
Gross profit percentage was 18.7 percent of sales for the third quarter of 2008, compared with 18.2 percent of sales in the third quarter of 2007. Gross profit for the 2008 third quarter was reduced by $1.5 million primarily as a result of asset write-offs and manufacturing rationalization activities. During the third quarter of 2007, gross profit was negatively impacted by charges of $0.5 million primarily related to manufacturing rationalization.
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