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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
Commission file number 1-5112
ETHYL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0118820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 SOUTH FOURTH STREET
P. O. Box 2189 (Zip: 23218)
RICHMOND, VIRGINIA 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: 804-788-5000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
COMMON STOCK, $1 Par NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for at least the past 90 days.
Yes X No
Aggregate market value of voting stock held by non-affiliates of the
registrant as of December 31, 1995: $1,202,946,376.50.*
Number of shares of Common Stock outstanding as of December 31, 1995:
118,443,835.
*In determining this figure, an aggregate of 21,236,047 shares of Common Stock
reported in the registrant's Proxy Statement for the 1996 Annual Meeting of
Shareholders as beneficially owned by Floyd D. Gottwald, Jr., Bruce C.
Gottwald, and the members of their immediate families have been excluded
because the shares are held by affiliates. See Item 12 herein. The
aggregate market value has been computed on the basis of the closing price
in the New York Stock Exchange Composite Transactions on December 29, 1995,
as reported by The Wall Street Journal.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of Ethyl Corporation's Annual Report to Shareholders for the
year ended December 31, 1995 (the "Annual Report"), are incorporated
by reference into Parts I, II and IV of this Form 10-K.
2. Portions of Ethyl Corporation's definitive Proxy Statement for its
1996 Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A under the Securities
Exchange Act of 1934 (the "Proxy Statement") are incorporated by
reference into Part III of this Form 10-K.
PART I
Item 1. BUSINESS
DESCRIPTION OF BUSINESS
Ethyl Corporation (the "Company") is incorporated in Virginia
and is a major manufacturer and blender of petroleum additives.
Petroleum additives products include additives for gasoline,
diesel fuels, and home heating oils as well as additives for
passenger-car and diesel crankcase lubricants including railroad
engine oil additives, automatic transmission fluids and
lubricants for gears, hydraulic and industrial equipment.
On February 29, 1996, the Company purchased the worldwide
lubricant additives business of Texaco, Inc. The purchase
transaction is discussed in the footnotes to the Company's
annual report in Note 21 Subsequent Event of the Notes to the
Financial Statements on page 44 and is incorporated herein by
reference.
During 1994 and 1993, the Company completed certain actions in
positioning itself as a highly focused maker and marketer of
petroleum additives to customers around the world. On September
15, 1994, the Company sold its wholly owned pharmaceuticals
subsidiary, Whitby, Inc., which marketed and distributed
finished pharmaceuticals. Earlier in the year, the Company
completed the tax-free spin-off of its wholly owned subsidiary,
Albemarle Corporation ("Albemarle"), at the close of business on
February 28, 1994, which included the operations of the olefins
and derivatives, bromine chemicals and specialty chemicals
businesses. The results of both the pharmaceuticals subsidiary
and Albemarle are included in the consolidated financial
statements in Ethyl's annual report through those dates.
The Company also completed the tax-free spin-off of its
approximately 80% interest in First Colony Corporation (First
Colony) on July 1, 1993, which included the operations of First
Colony Life Insurance Company and subsidiaries, which engage primarily
in writing life insurance and annuities.
The completion of these transactions places the Company solely
in the petroleum additives business with approximately 1,800
employees.
The following discussion of the Company's businesses as of
December 31, 1995, should be read in conjunction with the
information contained in the "1995 Financial Review" section of
Ethyl's Annual Report as of December 31, 1995, referred to in
Item 7 below. Pro forma financial information to help explain
Ethyl's comparative results of operations as if the spin-off of
Albemarle had occurred January 1, 1993, is shown in the
footnotes to the Annual Report and is incorporated herein by
reference thereto.
The Company manufactures and blends a broad range of
performance enhancing additives for motor fuels and lubricating
oils. Most sales of fuel additives for gasoline, diesel fuels
and heating oils are directly to petroleum refiners and
marketers, terminals and blenders. Lubricant additive packages
are sold directly to companies producing finished oils and
fluids in the United States and throughout the world. The
processes and technologies for most of Ethyl's products were
developed in the Company's research and development
laboratories, although some technology was obtained from
acquired businesses.
The Company manufactures and blends a majority of its lubricant
additives and nonantiknock fuel additives in the United States
but also has manufacturing and blending facilities in Belgium,
Canada and Brazil and obtains some products under long-term
supply agreements (discussed on pages 14 and 15.) The Company
obtains most of its lead antiknock fuel additives under a
long-term supply agreement with The Associated Octel Company
Ltd. of London, England, ("Octel") (discussed on pages 5 and 6)
and all of its manganese based antiknock fuel additive under a
long-term supply agreement with Albemarle (discussed on pages 6,
14 and 18).
The Company operates in a highly competitive environment. Some
market areas involve a significant number of competitors, while
others involve only a few. The competitors are both larger and
smaller than the Company in terms of resources and market
shares. Competition and specifications and regulatory changes
in connection with all of the Company's products require
continuing investments in research and development of new
products or leading technologies, in continuing product and
process improvements and in providing specialized customer
services.
Lubricant additives extend the useful life of lubricants and
assist them in preventing wear and corrosion of metallic parts,
protecting seals, allowing metallic parts to withstand extremely
high temperatures and pressures and increasing adhesion of oils
to metallic parts. Lubricant additives are used in oils, fluids
and greases for over-the-road and off-highway vehicles,
aircraft, power tools and marine, railroad and industrial
equipment and machinery requiring lubrication, thereby extending
equipment life. Lubricant additives are used in meeting
government regulations and original equipment manufacturers'
specifications and standards, including improving fuel economy.
Fuel additives increase the quality of gasolines and diesel
fuel by raising the level of octane and cetane, respectively,
retaining the quality of fuel over time, maintaining engine
cleanliness, protecting metals, reducing friction and wear and
lowering emissions. Fuel additives are used by refiners to meet
regulations and standards, including those reducing exhaust
emissions. Additives also are used in fuels for over-the-road
and off-highway vehicles, piston and jet aircraft, as well as
railroad, marine and other gasoline, diesel or synfuel powered
engines and also in home heating oil.
Lubricant additives include packages for (i) passenger car
motor oils for gasoline engines, heavy-duty diesel oils for
diesel-powered vehicles, diesel oils for locomotive, marine and
stationary power engines and oils for two-cycle engines, and
(ii) automatic transmission fluids, automotive and industrial
gear oils, hydraulic fluids and industrial oils; as well as
components for engine oil and other additive packages such as
(i) antioxidants to resist high-temperature degradation,
antiwear agents to protect metal surfaces from abrasion, (ii)
detergents to prevent carbon and varnish deposits from forming
on engine parts, (iii) dispersants to keep engine parts clean by
suspending insoluble products of fuel combustion and oil
oxidation, (iv) friction reducers to facilitate movement, (v)
pour point depressants to enable oils to flow at cold
temperatures, (vi) corrosion inhibitors to protect metal parts
and (vii) viscosity index improvers to provide uniform flow
properties over a wide range of temperatures.
Fuel additives include lead and manganese antiknock compounds
to increase octane and prevent power loss due to early or late
combustion (engine knock) in gasoline engines; cetane improvers
to improve the combustion properties and power delivery of
diesel fuels; amine stabilizers and hindered phenolic
antioxidants to prevent thermal degradation during storage and
transport; corrosion inhibitors to prevent failures during fuel
storage and pumping; cold flow improvers to enhance diesel fuel
pumping under cold-weather conditions; detergent packages to
keep carbon deposits from forming on fuel injectors, intake
valves, carburetors and combustion chambers; dyes for fuel
identification and leak detection; lubricity agents; and a
conductivity modifier to neutralize static charge build-up in
fuel and products for home heating oils. The Company also
markets Greenburn(tm), an environmentally friendly line of
proprietary products designed for the diesel fuel, home heating
oil and power generation fuel markets worldwide. Greenburn
products contain HiTEC(tm) 3000 performance additive ("MMT").
Lead antiknock compounds, sold to petroleum refiners in many
countries around the world, remain one of the Company's largest
product lines. The Company's sales comprise approximately
one-third of the world's market for lead antiknock compounds.
Lead antiknock compounds have been subject to regulations
restricting the amount of the product that can be used in
gasoline in the United States since the 1970s and in Canada
since 1990. The market for these products in motor vehicles in
the United States and Canada has been eliminated, but the market
for their use in certain other applications has remained at
about the same level for years and is expected to remain stable.
As the Company has forecasted and planned, the market for lead
antiknock compounds in other major markets, particularly Western
Europe, continues to decline as the use of unleaded gasoline
grows.
On a consolidated basis, including prior-year operations of
spun-off businesses while they were part of Ethyl, the
contribution of lead antiknock compounds to the Company's net
sales was about 26% in 1995, 22% in 1994 and 13% in 1993. The
lead antiknock profit contribution to the Company's consolidated
operating profit, excluding allocation of corporate expenses, is
estimated to have been 74% in 1995, 56% in 1994 and 49% in 1993.
On a pro forma basis, excluding prior-year operations of the
spun-off businesses, the contribution of lead antiknock
compounds to net sales would have been 25% in 1994 and 1993. On
a pro forma basis, the contribution to operating profit would
have been 60% in 1994 and 70% in 1993. In recent years, the
Company has been able to offset a continuing decline in
shipments of lead antiknock compounds with higher margins due
primarily to increases in selling prices. Any further decline
in the use of lead antiknocks would adversely affect sales and,
unless the Company can offset such volume declines with
increased margins, also adversely affect profits from lead
antiknocks.
The Company entered into an agreement in December 1993 under
which Octel allocates a portion of its production capacity of
lead antiknock compounds to the Company for sale and
distribution through the Company's worldwide network. As a
result, the Company has discontinued production of lead
antiknock compounds, while continuing to maintain the production
equipment in its subsidiary's Canadian plant, where the Company
had previously produced some of its lead antiknock compounds.
The Octel agreement continues as long as the Company determines
that a market continues to exist for lead antiknock compounds.
Under the agreement with Octel, which is cancelable at the
Company's option with no minimum purchase obligations, the
Company has the right to purchase from Octel antiknock compounds
which the Company estimates will be sufficient to cover its
needs in any contract year. Prices are subject to periodic
escalation and adjustment.
In addition to the supply agreement, Octel and the Company have
agreed that the Company's fleet of ships will distribute for
Octel its lead antiknock compounds that are shipped in bulk in
ocean-going vessels.
The Company believes the agreement with Octel will assure the
Company of an ongoing efficient source of supply for lead
antiknock compounds as the worldwide demand for these products
continues to decline. The Company does not anticipate that the
entry into the Octel supply agreement and the Company's
discontinuance of lead antiknock manufacturing operations will
adversely affect its relations with its customers, or have a
material effect on its future results of operations. The
Company and Octel continue to compete vigorously in sales and
marketing of lead antiknock compounds.
The Company also sells a manganese-based antiknock compound,
HiTEC 3000 performance additive ("MMT"), which is used in
leaded and unleaded gasoline. The compounds are manufactured by
Albemarle under a long-term supply contract with Ethyl. MMT has
been used in Canadian unleaded gasoline for nearly 20 years.
On November 30, 1993, the United States Environmental
Protection Agency ("EPA") determined that emissions data
contained in the Company's application for a waiver satisfy all
Clean Air Act standards, and demonstrated that MMT does not
cause or contribute to the failure of the emission control
systems, but reported that it was not able to complete its
assessment of the overall public health implications of
manganese. The Company and the EPA mutually agreed to an
180-day extension, subsequently extended for an additional six
weeks, to resolve this last remaining issue.
In July 1994, the EPA refused to grant the waiver for the use
of the additive in unleaded gasoline, finding that there was
insufficient data to alleviate its concerns about the overall
public health implications of manganese despite its own
statements about favorable health effects. The Company filed an
appeal in July 1994, with the United States Court of Appeals for
the District of Columbia Circuit seeking relief from the EPA's
actions. The Court heard oral arguments in Ethyl's appeal on
January 13, 1995.
On April 14, 1995, a three-judge panel ruled unanimously in
Ethyl's favor and ordered the EPA to grant the waiver for MMT.
The Court's opinion noted the EPA Administrator "violated the
clear terms" of the Clean Air Act in denying Ethyl's waiver
application. The EPA granted the waiver on July 11, 1995.
In a related matter, in 1994 the EPA determined that the
Company must complete additional manganese health testing before
it could obtain a "registration" under the Clean Air Act for
sale of MMT as an unleaded gasoline fuel additive. The Company
challenged the ruling. On October 20, 1995, the District of
Columbia Circuit Court unanimously ordered the EPA to register
MMT for use in unleaded gasoline retroactively to November 30,
1993--the date on which the EPA determined that Ethyl's waiver
application satisfied all applicable Clean Air Act standards.
Accordingly, in late December 1995, the Company began the sale
of MMT to the U.S. refining industry for use in unleaded
gasoline. Sales remain approximately level with 1995, and it is
not possible to determine if or when or the degree to which
sales of MMT will increase in the U.S., as well as in other
countries.
In February 1996, the Environmental Defense Fund ("EDF")
initiated a campaign to prevent refiners from using MMT in the
U.S. The Company takes strong exception to the EDF's position
and will continue aggressively to defend MMT against all
attempts to handicap the marketing of this product.
In Canada, the Minister of Environment introduced in May 1995
Bill C-94 in the Canadian Parliament to ban the inter-provincial
transport of MMT. Substantial opposition to Bill C-94 surfaced
during Canadian Parliamentary sessions in 1995. When Parliament
adjourned in mid-December 1995, Bill C-94 had not passed the
House of Commons. On February 2, 1996, the First Session of the
35th Parliament was prorogued by the Prime Minister. This
action means that all Bills and Motions currently before the
House of Commons and the Senate automatically die, including
Bill C-94. The Canadian Parliament is considering restoring
some bills to their status at adjournment, but no decision yet
has been reached on Bill C-94.
Major raw materials used by the Company include process oil,
polybutene, olefins, phosphorus pentasulfide, 2-ethyl-1-hexanol,
amines and polypropene, as well as electricity and natural gas
as fuels, which are purchased or provided under supply contracts
at prices the Company believes are competitive.
Recent product developments include formulated additive
packages meeting new industry specifications for passenger car
motor oils, gear oils, and gasoline protecting intake valve
systems. The Company continues to review its product lines as a
part of a major ongoing effort to expand and improve product
lines and expand geographic distribution of petroleum additives.
The market for lubricant additives has been experiencing
significant changes as a result of market and regulatory
demands. The demands for better fuel economy, reduced emissions
and cleaner oils have led to new equipment design and more
stringent performance requirements. Such requirements mean
reformulation of many products, new product development and more
product qualification tests.
To maintain and enhance a responsive worldwide product supply
network for its petroleum additives, the Company has constructed
major new manufacturing capacity for some products and expanded
manufacturing capacity for other products. Some of the new
capacity replaced contract production of products by Amoco
Petroleum Additives Company. The three-year supply contract had
been in effect since mid-1992, when Amoco's petroleum additives
business was acquired. Certain of the new, more efficient
facilities were started up in late 1994, at Sauget, Illinois,
and Natchez, Mississippi, while others were started up in early
1995 at Houston, Texas, and Feluy, Belgium.
Research and Patents
The Company's research and development staff activities consist
primarily of research and development projects with the balance
of endeavors being related to technical services support to
customers, testing of existing products, cost reduction, quality
improvement and environmental studies. Substantially all of
such activities were sponsored by the Company.
On a consolidated basis, including prior-year operations spun
off, the Company spent approximately $77 million, $83 million
and $127 million in 1995, 1994 and 1993, respectively, on
research, development and testing expenses, of which
approximately $54 million, $50 million and $76 million in 1995,
1994 and 1993, respectively, qualified as research and
development expense under the technical accounting definition.
Most of the research and development expense was related to the
Company's petroleum additives and, prior to the spin-off of
Albemarle, to the Company's petroleum additives and specialty
chemicals.
On a pro forma basis, the Company spent approximately $74
million and $76 million in 1994 and 1993, respectively, on
research, development and testing expense, of which
approximately $46 million and $45 million in 1994 and 1993,
respectively, qualified as research and development expense
under the technical accounting definition. Most of the research
and development expense was related to the Company's petroleum
additives operations, but a small portion in 1993 was related to
design and development of new drug molecules prior to the
decision to sell Whitby, Inc. and discontinue pharmaceutical
research in December 1993.
The Company owns over 1,000 active United States and foreign
patents with over 450 patents pending. Some of these patents
are licensed to others. In addition, rights under the patents
and inventions of others have been acquired by the Company
through licenses. The Company's patent position is actively
managed and is considered to be adequate for the conduct of its
business.
Environmental Requirements
In the areas of health, safety and the environment, the
Company's policy is to provide work places for employees that
are safe, healthy and environmentally sound and to provide work
environments which will not adversely affect the safety, health
or environment of communities in which the Company does
business. The Chemical Manufacturers Association's Responsible
Carer continuous improvement initiative in these areas remains a
top priority.
The Company is subject to federal, state and local requirements
regulating the handling, manufacture or use of materials (some
of which are classified as hazardous or toxic by one or more
regulatory agencies), the discharge of materials into the
environment and the protection of the environment. The
Company's policy is to comply with these requirements. The
Company believes as a general matter its policies, practices and
procedures are properly designed to prevent any unreasonable
risk of environmental damage, and of resulting financial
liability.
Among other environmental requirements, the Company is subject
to the Federal Comprehensive Environmental Response,
Compensation and Liability Act ("Superfund") and similar state
laws, under which the Company has been designated as a
potentially responsible party ("PRP") and may be liable for a
share of the costs associated with cleaning up various hazardous
waste sites, some of which are on the EPA's Superfund national
priority list. Under some court interpretations of these laws,
a PRP might have to bear more than its proportional share of the
cleanup costs if appropriate contributions from other PRPs are
not obtained. However, the Company has been able to demonstrate
it is only a minor participant at all but two of the sites where
Ethyl has been named a PRP. The Company has settled or
substantially resolved its share of liability related to certain
sites (including the two largest ones) and generally has not
borne significantly more than its proportional share in
multiparty situations. Further, almost all of the sites,
including the two largest, represent environmental issues that
are quite mature and that have been investigated, studied and in
many cases, including the two largest ones, the remediation
methodology and proportionate shares of each PRP have been
substantially established and the financial viability of the
other PRP's is reasonably assured. Therefore, point estimates
for remediation and monitoring costs had been accrued
previously. At one of the largest sites, the remediation is
substantially complete. The other is partly remediated. At
these and certain other sites, the remediation and/or monitoring
probably will continue for extended periods of time. The
estimated remaining remediation and post remediation monitoring
costs have been substantially provided for, with the remaining
unaccrued amounts estimated to be immaterial, after considering
expected insurance recoveries. In de minimis PRP matters, the
Company's policy generally is to negotiate a consent decree and
to pay any apportioned settlement, enabling the Company to be
effectively relieved of any further liability as a PRP, except
for remote contingencies. In minor PRP matters other than those
that are de minimis, the Company's records indicate that
unresolved exposures are not expected, individually or in the
aggregate, to materially affect the Company's financial position
or results of operations.
The Company reviews the status of significant existing or
potential environmental issues, including Superfund sites and
current or former plant sites, accrues and expenses its
proportionate share of environmental remediation and monitoring
costs in accordance with FASB Statement No. 5 and FASB
Interpretation No. 14, and adjusts reserves, as appropriate, on
the basis of additional information. The Company believes that
the costs of remediation of current sites, which will occur over
an extended period of time, will not have a material adverse
impact on its consolidated financial position but possibly could
have a material effect, when ultimately resolved, on results of
operations or liquidity in any quarterly or annual period.
Compliance with government pollution-abatement and safety
regulations usually increases operating costs and requires
remediation costs and investment of capital that in some cases
produces no monetary return. Consolidated operating and
remediation costs charged to expense were $20 million in 1995,
and are expected to be somewhat higher than in 1995 in each of
the next few years. The ongoing costs of operations were about
$14 million in 1995, with the balance representing remediation
and monitoring costs incurred or accrued. Consolidated capital
expenditures for pollution-abatement and safety projects,
including such costs that are included in other projects, were
about $4 million in 1995. For each of the next few years,
capital expenditures for these types of projects are likely to
be somewhat higher than in 1995. Comparative information on
environmental spending is included in Management's Discussion
and Analysis in the Annual Report, which is incorporated by
reference.
Management's estimates of the effects of compliance with
governmental pollution-abatement and safety regulations are
subject to (i) the possibility of changes in the applicable
statutes and regulations or in judicial or administrative
construction of such statutes and regulations, and (ii)
uncertainty as to whether anticipated solutions to pollution
problems will be successful, or whether additional expenditures
may prove necessary and (iii) the possibility that emerging
technology will change remediation methods and reduce
remediation and monitoring costs.
FINANCIAL INFORMATION AS TO INDUSTRY SEGMENTS AND GEOGRAPHIC
AREAS
The Company's operations, as of December 31, 1995, are in
petroleum additives. Geographic area information for the
Company's operations for the three years ended December 31,
1995, is presented in the Annual Report to Shareholders (Annual
Report) on pages 24 and 25 (and the related notes on page 26)
and is incorporated herein by reference.
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND
EXPORT SALES
Financial information about the Company's foreign and domestic
operations and export sales for the three years ended December
31, 1995, is set forth in the Annual Report on pages 24 and 25
and in Notes 1, 4, 13, 15, 16 and 18 of the Notes to the
Financial Statements on pages 33, 34, 36, 39, 40, 41, 42 and 43
is incorporated herein by reference. See also information as to
the Company's foreign lead antiknock compounds business under
"DESCRIPTION OF BUSINESS" above.
Export sales from the United States to non-affiliates are made
primarily in the Far East, Latin America and Europe. Foreign
unaffiliated sales are made primarily in Europe, Canada, the Far
East and the Middle East.
The Company's foreign operations, and the manufacturing
facilities and laboratories supporting them, are in European,
Asian and Latin American countries. The European and Asian
countries have stable economies from which repatriation of
earnings has been successful. The Company's operations in Latin
America, with manufacturing facilities in Brazil, are conducted
primarily in U.S. dollars; consequently, there is no expectation
that the Company will experience currency exposures. Also,
under current governmental regulations, repatriation of earnings
is possible. Sales in other areas are normally paid for through
letters of credit or are prepaid. Customer relationships of all
foreign operations mainly consist of financially viable
governmental organizations and large private companies.
The Company attempts to limit its exposure to changing foreign
currency exchange rates primarily through operational actions.
The Company both manufactures for and purchases from certain
foreign companies giving it a cost basis to offset its revenue
exposures in its foreign operations. The foreign currency
exposure risk has been relatively low. since the Company's
policy is to monitor its exposures and keep them at a minimum,
the practice of using external hedging transactions is used
infrequently.
Item 2. PROPERTIES
The following is a brief description of the principal plants
and related facilities of the Company, all of which are owned
except as stated below.
LOCATION PRINCIPAL OPERATIONS
Bracknell, Berkshire, England Research, development and testing
activities
Feluy, Belgium Production of lubricant additives
Ghent, Belgium Production of lubricant additives
Houston, Texas Production of lubricant additive
dispersants and blends and other
petroleum additives
Natchez, Mississippi Production of lubricant additives,
mainly detergents
Orangeburg, South Carolina Production of fuel additives,
(Leased Land) including diesel fuel cetane improver
Port Arthur, Texas Production of lubricant additives
Richmond, Virginia Research, development and testing
activities
Rio de Janeiro, Brazil Production of lubricant additives
Sarnia, Ontario, Canada Blending of lubricant additives and
production of diesel fuel cetane
improver
Sauget, Illinois Production of lubricant additives,
including detergents, dispersants,
antioxidants, antiwear agents,
crankcase packages, transmission
and gear packages and friction
reducers
The Company receives most of its lead antiknock compounds under
a long-term supply agreement with Octel, as discussed on pages 5
and 6. The Company receives all of its MMT under a long-term
supply agreement with Albemarle, as discussed on pages 6 and 18.
The Company receives its olefin copolymer viscosity index
improver under a long-term supply agreement with DSM Copolymer,
Inc.
The Company is obtaining lubricant additives, including
crankcase packages and certain components, under a long-term
supply agreement with a subsidiary of Mitsubishi Kasei
Corporation from its petroleum additives plant in Yokkaichi, Japan.
The Company also has a long-term services agreement for research
and development and customer technical services activities at the
research facility associated with the petroleum additives plant in
Yokkaichi, Japan.
The Company has largely replaced the manufacturing capacity of
Amoco's Wood River, Illinois, lubricant and fuel additives plant
from which the Company received products under a supply
agreement that ended June 30, 1995. The new and more efficient
replacement facilities started up in late 1994 at Sauget,
Illinois, and Natchez, Mississippi, and early 1995 at Houston,
Texas, and Feluy, Belgium.
The Company also receives certain miscellaneous products under
various term supply contracts.
The Company believes that its plants, including approved
expansions, as well as contract manufacturing under long-term
supply agreements, are more than adequate to meet projected
sales levels. Operating rates of certain plants vary with
product mix and normal seasonal sales swings. The Company
believes that its plants generally are well maintained and in
good operating condition.
The Company owns its corporate headquarters offices in
Richmond, Virginia, and its regional offices in Bracknell,
Berkshire, England. The Company leases its regional offices in
Brussels, Belgium; Mississauga, Ontario, Canada; Sydney,
Australia; Singapore; Tokyo, Japan; and Coral Gables, Florida,
as well as various sales and other offices.
Item 3. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved from time
to time in legal proceedings of types regarded as common in the
Company's businesses, particularly administrative or judicial
proceedings seeking remediation under environmental laws, such
as Superfund, and product liability litigation. While it is not
possible to predict or determine the outcome of such pending
proceedings, in the Company's opinion they are not expected
ultimately to have a material adverse effect upon the results of
operations or financial condition of the Company and its
subsidiaries on a consolidated basis.
A settlement agreement on the legal proceeding between
the Department of Justice and a subsidiary, Ethyl Petroleum
Additives, Inc., was signed on March 15, 1996. This legal
proceeding was previously disclosed in the Form 8-K filed on
October 23, 1995, which is incorporated herein by reference.
ADDITIONAL INFORMATION - EXECUTIVE OFFICERS OF THE COMPANY
The names and ages of all executive officers of the Company,
as of March 25, 1996, are set forth on the following pages. The
term of office of each such officer is until the meeting of the
Board of Directors following the next annual shareholders
meeting (May 17, 1996). All such officers have been employed
by the Company for at least the last five years, with the
exceptions of Thomas E. Gottwald, who rejoined the Company
August 1, 1991, following two years as General Manager of
Tredegar Film Products, a division of Tredegar Industries, Inc.,
which was spun off to the Company's shareholders in mid-1989,
following assignments with Ethyl in Corporate Business
Development and Strategic Planning; Raymond C. Gudum, who was
elected vice president effective May 1, 1995, following three
years as marketing vice president-North America since 1992 when
the Company acquired the fuel and lubricant additives business
of Amoco Petroleum Additives Company, prior to which he had
served for five years as vice president of worldwide marketing
for Amoco Petroleum Additives; and Christopher Hicks, who joined
the Company on May 1, 1994, after five years as a partner in the
Washington law firm of Anderson, Hibey & Blair, three years
prior thereto as general counsel of the U.S. Department of
Agriculture, and five years prior thereto on the White House
staff, including service as deputy assistant to the President.
Name Age Office
*Bruce C. Gottwald 62 Chairman of the Board and of
the Executive Committee, Chief
Executive Officer, Director
*Charles B. Walker 57 Vice Chairman of the Board, Chief
Financial Officer and Treasurer,
Director
*Thomas E. Gottwald 35 President and Chief Operating
Officer, Director
William M. Gottwald, MD 48 Senior Vice President - Planning
and Support
E. Whitehead Elmore 57 Special Counsel to the Company's
Executive Committee and Corporate
Secretary
Sampson H. Bass, Jr. 66 Vice President - Secretary to the
Executive Committee
Wayne C. Drinkwater 49 Controller
David A. Fiorenza 46 Vice President - Business Evaluation
and Support
Raymond C. Gudum 58 Vice President - Worldwide Sales and
Marketing for Lubricant and Fuel
Additives
Christopher Hicks 45 Vice President - Government Relations
C.S. Warren Huang 46 Vice President - Worldwide Research
and Development
Donald R. Lynam 57 Vice President - Air Conservation
Steven M. Mayer 53 Vice President and General Counsel
Ian A. Nimmo 54 Vice President - Product Supply
Henry C. Page, Jr. 57 Vice President - Human Resources
Newton A. Perry 53 Vice President - Worldwide Refinery
Chemicals
Ann M. Pettigrew 41 Vice President - Health, Safety and
Environment
A. Prescott Rowe 58 Vice President - External Affairs
* Member of the Executive Committee
Bruce C. Gottwald and Floyd D. Gottwald, Jr. (Vice Chairman
until February 29, 1996) are brothers. Thomas E. Gottwald is
a son of Bruce C. Gottwald. William M. Gottwald, MD, is a son
of Floyd D. Gottwald, Jr.
Certain Agreements Between Ethyl (the Company) and Albemarle
The Company and Albemarle entered into agreements, dated as of
February 28, 1994, pursuant to which the Company and Albemarle
agreed to coordinate certain facilities and services of adjacent
operating facilities at plants in Houston, Texas and Feluy,
Belgium. Effective March 1, 1996, certain of these agreements
have been transferred to Amoco Chemical Company as part of
Albemarle's sale of a portion of its business. In addition, the
Company and Albemarle, as discussed in the previous Form 10-K,
entered into a tax-sharing agreement and an indemnification
agreement which together allocate taxes and various
indemnifications, respectively, for periods prior to February
28, 1994. Also as discussed in the previous Form 10-K, the
Company and Albemarle entered into agreements providing for the
blending by Albemarle for the Company of certain products and
the production of others including MMT at the Orangeburg, South
Carolina, plant.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information contained on page 27 of the Annual Report under
the captions "Dividend Information & Equity Per Common Share"
and "Market Prices of Common Stock & Shareholder Data" and on
pages 34 and 38 of the Annual Report in Notes 1 and 12 of the
Notes to Financial Statements is incorporated herein by
reference.
Item 6. SELECTED FINANCIAL DATA
The information for the five years ended December 31, 1995,
contained in the Five-Year Summary on pages 46 and 47 of the
Annual Report is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The textual and tabular information concerning the years 1995,
1994 and 1993 contained in the "1995 Financial Review" section
on pages 14 through 25 of the Annual Report (and the related
notes on page 26) are incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements contained on pages 28
through 32, the Notes to Financial Statements contained on pages
33 through 44, the Report of Independent Accountants on page 45
and the information under the caption "Selected Quarterly
Consolidated Financial Data (Unaudited)" on page 26 of the
Annual Report are incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Inapplicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained in the Proxy Statement under the
caption "Election of Directors" concerning directors and persons
nominated to become directors of the Company is incorporated
herein by reference. See "Additional Information -- Executive
Officers of the Company" in Part I above for information about
the executive officers of the Company.
Item 11. EXECUTIVE COMPENSATION
The information contained in the Proxy Statement under the
caption "Compensation of Executive Officers and Directors"
concerning executive compensation is incorporated herein by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information contained in the Proxy Statement under the
caption "Stock Ownership" is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in the Proxy Statement under the
caption "Certain Relationships and Related Transactions,"
specifically in the last several paragraphs of such section, is
incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) (1) The following consolidated financial statements
of the Registrant, and related information, are included on pages 28
to 45 in the Annual Report and are incorporated herein by reference in
Item 8:
Consolidated balance sheets as of December 31, 1995 and
December 31, 1994
Consolidated statements of income, shareholders' equity and
cash flows for the years ended December 31, 1995, 1994, and 1993
Notes to financial statements
Report of Independent Accountants
(a) (2) Financial Statement Schedules - none required
(a) (3) Exhibits
The following documents are filed as exhibits to this Form 10-K
pursuant to Item 601 of Regulation S-K:
3.1 Restated Articles of Incorporation of the registrant (filed
as Exhibit 3.1 to the registrant's Report on Form 10-Q for
the period ended September 30, 1995, and incorporated herein
by reference thereto).
3.2 By-laws of the registrant.
4.1 $500 million Credit Agreement, dated as of February 16,
1994 (filed as Exhibit 4.1 to the registrant's Report on Form
10-K for the year ended December 31, 1993, and incorporated
herein by reference thereto) as supplemented by the Extension
Agreement thereto dated as of March 1, 1995 (filed as Exhibit
4.1 to the registrant's report on Form 10-K for the period
ended December 31, 1994, and incorporated herein by reference
thereto).
10.1 Bonus Plan of the registrant (filed as Exhibit 10.1 to the
registrant's Report on Form 10-K for the year ended December
31, 1992, and incorporated herein by reference thereto).
10.2 Incentive Stock Option Plan of the registrant (filed as
Exhibit 10.2 to the registrant's Report on Form 10-K for
the year ended December 31, 1992, and incorporated herein by
reference thereto).
10.3 Non-Employee Directors' Stock Acquisition Plan (filed as
Exhibit A to the registrant's Proxy Statement for Annual
Meeting of Shareholders filed on March 17, 1993, and
incorporated herein by reference thereto).
10.4 Excess Benefit Plan of the registrant (filed as Exhibit
10.4 to the registrant's Report on Form 10-K for the year
ended December 31, 1992, and incorporated herein by
reference thereto).
10.5 Supply Agreement, dated as of December 22, 1993, between
Ethyl Corporation and the Associated Octel Company Limited
(filed as Exhibit 99 on the Registrant's Report on Form 8-K
filed on February 17, 1994, and incorporated herein by
reference thereto).
11.1 Computation of Earnings Per Share.
11.2 Computation of Pro Forma Earnings Per Share.
13 The registrant's Annual Report to Shareholders for the year
ended December 31, 1995 (note 1).
22 List of subsidiaries of the registrant.
23 Consent of Independent Certified Public Accountants.
28 Trust Agreement Between Ethyl Corporation and Nations Bank
of Virginia, N.A. (filed as Exhibit 28 to the registrant's
Report on Form 10-K for the year ended December 31, 1992, and
incorporated herein by reference thereto).
(b) A Form 8-K was filed on October 23, 1995, to which was attached a
press release announcing the Federal Appeals Court's unanimous
decision ordering the U.S. Environmental Protection Agency to
register the Company's manganese-based fuel additive for use in
unleaded gasoline retroactively to November 30, 1993. Also attached
to that 8-K was a press release which announced the Company's third
quarter earnings and an anticipated settlement (by the Company's
subsidiary, Ethyl Petroleum Additives, Inc.) with the Civil Division
of the U.S. Department of Justice.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
__________________________
Note 1. With the exception of the information incorporated
in this Form 10-K by reference thereto, the Annual Report
shall not be deemed "filed" as part of this Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ETHYL CORPORATION
(Registrant)
By: /s/ Bruce C Gottwald
Bruce C. Gottwald
Chairman of the Board
Dated: March 29, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated as of March 29, 1996
Signature Title
/s/ Bruce C Gottwald Chairman of the Board,
(Bruce C. Gottwald) Chairman of the Executive
Committee, Chief Executive
Officer and Director
(Principal Executive Officer)
/s/ Charles B Walker Vice Chairman of the Board,
(Charles B. Walker) Treasurer, Chief Financial
Officer and Director
(Principal Financial Officer)
Signature Title
/s/ William W Berry Director
(William W. Berry)
/s/ Phyllis Cothran Director
(Phyllis L. Cothran)
/s/ D A Fiorenza Vice President
(David A. Fiorenza) (Principal Accounting Officer)
/s/ Thomas E Gottwald President, Chief Operating
(Thomas E. Gottwald) Officer and Director
Director
(Gilbert M. Grosvenor)
/s/ S B Scott Director
(Sidney Buford Scott)
EXHIBIT INDEX
Number and Name of Exhibit Page Number
3.1 Restated Articles of Incorporated by reference -
Incorporation see Page 23
3.2 By-laws Pages 28 through 46
4.1 $500 million Credit Agreement, Incorporated by reference -
dated as of February 16, 1994, see Page 23
and Extension Agreement dated
March 1, 1995
10.1 Bonus Plan Incorporated by reference -
see Page 23
10.2 Incentive Stock Option Incorporated by reference -
Plan see Page 23
10.3 Non-Employee Directors' Stock Incorporated by reference -
Acquisition Plan see Page 24
10.4 Excess Benefit Plan Incorporated by reference -
see Page 24
10.5 Supply Agreement between Ethyl Incorporated by reference -
Corporation & Associated Octel see Page 24
Company
11.1 Computation of Earnings Per Share Page 47
11.2 Computation of Pro Forma Earnings Page 48
Per Share
13 Annual Report Pages 49 through 100
22 List of Subsidiaries Page 101
23 Consent of Independent Page 102
Certified Public Accountants
28 Trust Agreement Incorporated by reference -
see Page 24