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Albemarle reports second quarter 2014 results

July 30, 2014

BATON ROUGE, La., July 30, 2014 /PRNewswire/ –

Second quarter 2014 highlights:

    --  Adjusted earnings of $86.8 million, or $1.10 per share, up 10% from
        second quarter 2013.
    --  Net sales grew 5% to $604.7 million as compared to 2013, with an
        Adjusted EBITDA margin of 24 percent.
    --  Cash flow from operations of $146.0 million, up 82 percent from second
        quarter 2013.
    --  Signed definitive agreement to sell antioxidant, ibuprofen and propofol
        businesses and assets to SI Group, Inc.
    --  Announced an agreement on July 15, 2014 to acquire Rockwood Holdings,
        Inc. for a cash and stock value of approximately $6.2 billion.

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                             Three Months Ended                Six Months Ended

                                  June 30,                         June 30,
                                  --------                         --------

    In thousands,
     except per share
     amounts               2014                    2013      2014                   2013
    -----------------      ----                    ----      ----                   ----

    Net sales                      $604,721             $576,842                         $1,204,564 $1,163,439

    Segment income                 $140,900             $126,285                           $271,837   $258,621

    Net income from
     continuing
     operations                     $89,404              $88,500                           $155,408   $176,181

    Net income
     attributable to
     Albemarle
     Corporation                    $22,447              $82,739                            $79,030   $166,726

    Diluted earnings
     per share                        $0.28                $0.98                              $0.99      $1.92

       Non-operating
        pension and OPEB
        items(a)         (0.01)                 (0.01)     0.10                 (0.03)

       Special items(b)    0.07                       -     0.21                      -

       Discontinued
        operations(c)      0.76                  (0.03)     0.78                 (0.05)
                           ----                   -----      ----                  -----

    Adjusted diluted
     earnings per
     share(d)                         $1.10                $0.94                              $2.08      $1.84
                                      =====                =====                              =====      =====

See accompanying notes and reconciliations to the condensed consolidated financial information.

Albemarle Corporation (NYSE: ALB) reported second quarter 2014 earnings of $22.4 million, or $0.28 per share, compared to second quarter 2013 earnings of $82.7 million, or $0.98 per share. Second quarter 2014 adjusted earnings were $86.8 million, or $1.10 per share, compared to $79.2 million, or $0.94 per share, for the second quarter of 2013 (see notes to the condensed consolidated financial information). The Company reported net sales of $604.7 million in the second quarter of 2014, up from net sales of $576.8 million in the second quarter of 2013, driven mainly by higher volumes in Catalysts due to strong market demand partly offset by lower Specialty Chemicals volumes in Performance Chemicals.

Earnings for the six months ended June 30, 2014 were $79.0 million, or $0.99 per share, compared to $166.7 million, or $1.92 per share, for 2013. Adjusted earnings for the six months ended June 30, 2014 were $165.2 million, or $2.08 per share, compared to $160.0 million, or $1.84 per share, for 2013. Net sales for the six months ended June 30, 2014 were $1.20 billion, up from $1.16 billion for the same period in 2013, driven mainly by higher Catalysts volumes on strong demand and order timing, and the favorable impacts of a stronger European Union Euro, partly offset by lower pricing and volumes in Performance Chemicals.

On April 15, 2014, the Company signed a definitive agreement to sell its antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. The Company’s second quarter results include a pre-tax charge of $80.7 million ($60.3 million after income taxes, or $0.76 per share) related to the expected loss on the anticipated sale of the assets. The expected loss represents the difference between the carrying value of the related assets and their estimated fair value, based on the estimated sales price as outlined in the agreement less estimated costs to sell. The charge is included within (Loss) income from discontinued operations (net of tax) in the consolidated statements of income. The sale is subject to customary closing conditions and is expected to close later in 2014.

“Improved trends drove stronger than expected results in Catalyst Solutions where we experienced stronger customer demand across the portfolio and very high operating rates at our Bayport FCC facility in advance of a planned August turnaround. The strength in Catalyst Solutions more than offset weaker Performance Chemicals results, which were hurt by lower clear completion fluid volumes,” said Albemarle’s president and CEO Luke Kissam. “Overall results were up year over year and sequentially in terms of sales and earnings. It is a tribute to our employees and their collective ability to focus on execution that they were able to deliver these quarterly results at the same time as we were finalizing and announcing an agreement on a transaction as transformative as Rockwood.”

On July 15, 2014, Albemarle entered into the Merger Agreement with Rockwood Holdings Inc. (“Rockwood”), pursuant to which Albemarle will acquire Rockwood in a cash and stock transaction valued at approximately $6.2 billion. Under the terms of the transaction, each outstanding share of Rockwood common stock will be exchanged for $50.65 in cash and 0.4803 of a share of Albemarle common stock. The transaction values Rockwood at $85.53 per share, based on the closing price of Albemarle’s shares on July 14, 2014. Upon closing of the transaction, Albemarle shareholders will own approximately 70% of the combined company and Rockwood shareholders will own approximately 30% of the combined company. The boards of directors of both Albemarle and Rockwood have approved the transaction. The transaction is subject to shareholder and regulatory approvals and other customary closing conditions and is expected to close by the first quarter of 2015.

Quarterly Segment Results

Performance Chemicals reported net sales of $334.2 million in the second quarter of 2014, a decrease of 3 percent compared to net sales in the second quarter of 2013, on unfavorable Specialty Chemicals volumes and lower pricing mainly driven by Fire Safety Solutions, partly offset by the favorable impacts of a stronger European Union Euro. Segment income for Performance Chemicals was $73.0 million in the second quarter of 2014, a 12 percent decline from $82.6 million in the second quarter of 2013, driven by unfavorable volumes on market demand and order timing, mainly in Specialty Chemicals, unfavorable pricing impacts in Fire Safety Solutions and higher factory spending, partly offset by lower raw materials pricing in Specialty Chemicals and the favorable impacts of a stronger European Union Euro.

Catalyst Solutions generated net sales of $270.5 million in the second quarter of 2014, a 16 percent increase from net sales in the second quarter of 2013, primarily on favorable volumes and pricing. Catalyst Solutions segment income was $67.9 million in the second quarter of 2014, up 56 percent from second quarter 2013 results of $43.7 million, due primarily to strong volumes across the board and lower costs.

Corporate and Other

Corporate and other expense was $18.8 million ($20.1 million excluding non-operating pension and OPEB items) for the second quarter of 2014. The $2.2 million increase from the comparable period in 2013 was due primarily to higher incentive compensation costs.

Interest and financing expenses were $8.7 million for the second quarter of 2014 compared to $7.6 million for the second quarter of 2013, due primarily to decreases in interest capitalized on lower average construction work in progress balances in the 2014 period.

Our adjusted effective income tax rates, which exclude discontinued operations, special and non-operating pension and OPEB items, were 22.6 percent and 20.3 percent for the second quarter of 2014 and 2013, respectively. Our effective tax rate continues to be influenced by the level and geographic mix of income, and benefits from a favorable mix of income in lower tax jurisdictions.

Cash Flow

Our cash flow from operations was approximately $295.1 million for the six months ended June 30, 2014, up 65 percent from the same period in 2013, and we had $515.1 million in cash and cash equivalents at June 30, 2014. During the six months ending June 30, 2014, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of approximately $46.7 million, dividends to shareholders of $41.3 million and $150.0 million for repurchases of approximately 2.0 million shares of our common stock pursuant to the terms of our accelerated share repurchase programs entered into in the first and second quarters of 2014.

Earnings Call

The Company’s performance for the second quarter ended June 30, 2014 will be discussed on a conference call at 9:00 AM Eastern Daylight time on July 31, 2014. The call can be accessed by dialing 888-713-4213 (International Dial-In # 617-213-4865), and entering conference ID 37694874. The Company’s earnings presentation and supporting material can be accessed through Albemarle’s website under Investors at www.albemarle.com.

About Albemarle

Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a leading global developer, manufacturer, and marketer of highly-engineered specialty chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, automotive/transportation, pharmaceuticals, crop protection, food-safety and custom chemistry services. The Company is committed to global sustainability and is advancing its eco-practices and solutions in its two global business units: Performance Chemicals and Catalyst Solutions. Corporate Responsibility Magazine selected Albemarle to its prestigious “100 Best Corporate Citizens” list for 2010, 2011 and 2013. Albemarle employs approximately 3,900 people and serves customers in approximately 100 countries. Albemarle regularly posts information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, Regulation G reconciliations, SEC filings, and other information regarding the Company, its businesses and the markets we serve.

Forward-Looking Statements

Some of the information presented in this press release and the conference call and discussions that follow, including, without limitation, statements with respect to product development, changes in productivity, market trends, price, volume and mix changes, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ materially include, without limitation: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy and in our ability to pass through such increases; acquisitions and divestitures, and changes in performance of acquired companies; changes in our markets in general; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest affecting the global economy, including adverse effects from terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings and changes in tax laws and rates; changes in monetary policies, inflation or interest rates that may impact our ability to raise capital or increase our cost of funds, impact the performance of our pension fund investments and increase our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement, including cyber security breaches, and other innovation risks; decisions we may make in the future; and the other factors detailed from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.


    Albemarle Corporation and Subsidiaries

    Consolidated Statements of Income

    (In Thousands Except Per Share Amounts) (Unaudited)

                                                       Three Months Ended                  Six Months Ended

                                                            June 30,                           June 30,
                                                          --------                       --------

                                                     2014                     2013       2014                      2013
                                                     ----                     ----       ----                      ----

    Net sales                                                $604,721               $576,842                            $1,204,564 $1,163,439

    Cost of goods sold(a)                         397,358                  385,172    801,602                   775,858
                                                  -------                  -------    -------                   -------

    Gross profit                                  207,363                  191,670    402,962                   387,581

    Selling, general and
     administrative
     expenses(a)                                   67,011                   61,725    145,115                   125,300

    Research and development
     expenses                                      21,937                   21,565     44,509                    41,518

    Restructuring and other
     charges, net(b)                                8,175                        -    25,175                         -
                                                    -----                      ---    ------                       ---

    Operating profit                              110,240                  108,380    188,163                   220,763

    Interest and financing
     expenses                                     (8,733)                 (7,608)  (17,506)                 (12,839)

    Other (expenses) income,
     net                                            (979)                 (1,585)       164                   (5,779)
                                                     ----                   ------        ---                    ------

    Income from continuing
     operations before
     income taxes and equity
     in net income of
     unconsolidated
     investments                                  100,528                   99,187    170,821                   202,145

    Income tax expense                             21,773                   20,396     34,963                    45,934
                                                   ------                   ------     ------                    ------

    Income from continuing
     operations before
     equity in net income of
     unconsolidated
     investments                                   78,755                   78,791    135,858                   156,211

    Equity in net income of
     unconsolidated
     investments (net of
     tax)                                          10,649                    9,709     19,550                    19,970
                                                   ------                    -----     ------                    ------

    Net income from
     continuing operations                         89,404                   88,500    155,408                   176,181

    (Loss) income from
     discontinued operations
     (net of tax)(c)                             (60,025)                   2,628   (61,794)                    4,463
                                                  -------

    Net income                                     29,379                   91,128     93,614                   180,644

    Net income attributable
     to noncontrolling
     interests                                    (6,932)                 (8,389)  (14,584)                 (13,918)
                                                   ------                   ------    -------                   -------

    Net income attributable
     to Albemarle
     Corporation                                              $22,447                $82,739                               $79,030   $166,726
                                                              =======                =======                               =======   ========

    Basic earnings (loss) per share

         Continuing operations                                  $1.05                  $0.95                                 $1.78      $1.88

         Discontinued operations                   (0.76)                    0.03     (0.78)                     0.05

                                                                $0.29                  $0.98                                 $1.00      $1.93
                                                                =====                  =====                                 =====      =====

    Diluted earnings (loss) per share

         Continuing operations                                  $1.04                  $0.95                                 $1.77      $1.87

         Discontinued operations                   (0.76)                    0.03     (0.78)                     0.05

                                                                $0.28                  $0.98                                 $0.99      $1.92
                                                                =====                  =====                                 =====      =====

    Weighted-average common
     shares outstanding -
     basic                                         78,662                   84,028     79,199                    86,374

    Weighted-average common
     shares outstanding -
     diluted                                       79,091                   84,489     79,602                    86,862

See accompanying notes to the condensed consolidated financial information.


    Albemarle Corporation and Subsidiaries

    Condensed Consolidated Balance Sheets

    (In Thousands) (Unaudited)

                                           June 30,             December 31,

                                                2014                     2013
                                                ----                     ----

    ASSETS

    Cash and cash
     equivalents                                       $515,119                 $477,239

    Other current assets                   1,010,764                1,005,676
                                           ---------                ---------

    Total current assets                   1,525,883                1,482,915
                                           ---------                ---------

    Property, plant and
     equipment                             2,628,376                2,972,084

    Less accumulated
     depreciation and
     amortization                          1,388,790                1,615,015
                                           ---------                ---------

    Net property, plant
     and equipment                         1,239,586                1,357,069

    Other assets and
     intangibles                             689,063                  744,813
                                             -------                  -------

    Total assets                                     $3,454,532               $3,584,797
                                                     ==========               ==========

    LIABILITIES AND EQUITY

    Current portion of
     long-term debt                                    $377,521                  $24,554

    Other current
     liabilities                             438,393                  411,809
                                             -------                  -------

    Total current
     liabilities                             815,914                  436,363
                                             -------                  -------

    Long-term debt                           685,845                1,054,310

    Other noncurrent
     liabilities                             221,247                  222,160

    Deferred income
     taxes                                   106,436                  129,188

    Albemarle
     Corporation
     shareholders'
     equity                                1,502,981                1,627,361

    Noncontrolling
     interests                               122,109                  115,415
                                             -------                  -------

    Total liabilities
     and equity                                      $3,454,532               $3,584,797
                                                     ==========               ==========

See accompanying notes to the condensed consolidated financial information.


    Albemarle Corporation and Subsidiaries

    Selected Consolidated Cash Flow Data

    (In Thousands) (Unaudited)

                                                   Six Months Ended

                                                       June 30,
                                                     --------

                                                2014                     2013

    Cash and cash equivalents
     at beginning of year                               $477,239              $477,696

    Cash and cash equivalents
     at end of period                                   $515,119              $314,659

    Sources of cash and cash equivalents:

    Net income                                           $93,614              $180,644

    Proceeds from borrowings
     of long-term debt                             -                 117,000

    Proceeds from other
     borrowings, net                               -                 266,248

    Proceeds from exercise of
     stock options                             2,355                    3,917

    Working capital changes                   63,235                        -

    Uses of cash and cash equivalents:

    Working capital changes                        -                (53,018)

    Capital expenditures                    (46,670)               (103,168)

    Repurchases of common
     stock                                 (150,000)               (582,298)

    Repayments of long-term
     debt                                    (3,016)                 (6,380)

    Repayments of other
     borrowings, net                        (13,083)                       -

    Dividends paid to
     shareholders                           (41,316)                (39,049)

    Pension and
     postretirement
     contributions                           (4,717)                 (4,246)

    Non-cash and other items:

    Depreciation and
     amortization                             52,714                   51,817

    Write-offs associated
     with restructuring and
     other                                     6,333                        -

    Impairment of assets of
     discontinued operations                  80,711                        -

    Pension and
     postretirement expense                   17,917                    3,152

    Equity in net income of
     unconsolidated
     investments                            (19,550)                (19,970)

See accompanying notes to the condensed consolidated financial information.


    Albemarle Corporation and Subsidiaries

    Consolidated Summary of Segment Results

    (In Thousands) (Unaudited)

                                                    Three Months Ended                  Six Months Ended

                                                         June 30,                           June 30,
                                                       --------                       --------

                                                  2014                     2013       2014                      2013
                                                  ----                     ----       ----                      ----

    Net sales:

    Performance Chemicals                                 $334,187               $343,024                              $684,444   $694,048

    Catalyst Solutions                         270,534                  233,818    520,120                   469,391

    Total net sales                                       $604,721               $576,842                            $1,204,564 $1,163,439
                                                          ========               ========                            ========== ==========

    Segment operating profit:

    Performance Chemicals                                  $77,265                $88,694                              $157,741   $174,159

    Catalyst Solutions                          59,918                   36,271    109,130                    78,410

    Total segment operating profit             137,183                  124,965    266,871                   252,569
                                               -------                  -------    -------                   -------

    Equity in net income of unconsolidated
     investments:

    Performance Chemicals                        2,660                    2,328      5,577                     4,636

    Catalyst Solutions                           7,989                    7,381     13,973                    15,334

    Total equity in net income of
     unconsolidated investments                 10,649                    9,709     19,550                    19,970
                                                ------                    -----     ------                    ------

    Net income attributable to noncontrolling
     interests:

    Performance Chemicals                      (6,932)                 (8,389)  (14,584)                 (13,918)

    Total net income attributable to
     noncontrolling interests                  (6,932)                 (8,389)  (14,584)                 (13,918)
                                                ------                   ------    -------                   -------

    Segment income:

    Performance Chemicals                       72,993                   82,633    148,734                   164,877

    Catalyst Solutions                          67,907                   43,652    123,103                    93,744

    Total segment income                       140,900                  126,285    271,837                   258,621

    Corporate & other(a)                      (18,768)                (16,585)  (53,533)                 (31,806)

    Restructuring and other charges,
     net(b)                                    (8,175)                       -  (25,175)                        -

    Interest and financing expenses            (8,733)                 (7,608)  (17,506)                 (12,839)

    Other (expenses) income, net                 (979)                 (1,585)       164                   (5,779)

    Income tax expense                        (21,773)                (20,396)  (34,963)                 (45,934)

    (Loss) income from discontinued
     operations (net of tax)(c)               (60,025)                   2,628   (61,794)                    4,463
                                               -------                    -----    -------                     -----

    Net income attributable to
     Albemarle Corporation                                 $22,447                $82,739                               $79,030   $166,726
                                                           =======                =======                               =======   ========

See accompanying notes to the condensed consolidated financial information.

Notes to the Condensed Consolidated Financial Information

(a) Non-operating pension and OPEB items, consisting of mark-to-market (MTM) actuarial gains/losses as well as interest cost and expected return on assets, are included in Corporate & other as follows:

    --  For the three months ended June 30, 2014 and 2013, net charges
        (benefits) amounting to $(1.4) million ($0.9 million after income taxes,
        or $0.01 per share) and $(1.5) million ($0.9 million after income taxes,
        or $0.01 per share), respectively.  There were no MTM actuarial
        gains/losses recorded during the three months ended June 30, 2014 or
        2013.
    --  For the six months ended June 30, 2014 and 2013, net charges (benefits)
        amounting to $12.7 million ($8.1 million after income taxes, or $0.10
        per share) and $(3.6) million ($2.2 million after income taxes, or $0.03
        per share), respectively.  The MTM actuarial loss in 2014 was $15.4
        million ($9.8 million after income taxes, or $0.12 per share) and
        resulted from a curtailment related to one of our U.S. defined benefit
        pension plans and our supplemental executive retirement plan which
        required a remeasurement of the related assets and obligations during
        the first quarter.  The curtailment was in connection with our workforce
        reduction plan initiated in the fourth quarter of 2013.  There were no
        MTM actuarial gains/losses recorded during the six months ended June 30,
        2013.

Although non-operating pension and OPEB items are included in cost of goods sold and selling, general and administrative expenses in accordance with GAAP, we believe that these components of pension cost are mainly driven by market performance, and we manage these separately from the operational performance of our businesses. Non-operating pension and OPEB items included in cost of goods sold and selling, general and administrative expenses are as follows (in millions):


                        Three Months Ended        Six Months Ended

                             June 30,                 June 30,
                             --------                 --------

                                      2014          2013                 2014     2013
                                      ----          ----                 ----     ----

    Cost of goods sold:

    MTM actuarial loss                   $      -                  $      -             $2.9   $      -

    Interest cost and
     expected return on
     assets, net                     (0.5)        (0.8)               (1.0)   (1.5)
                                      ----          ----                 ----     ----

    Total                                  $(0.5)                    $(0.8)             $1.9     $(1.5)
                                            =====                      =====              ====      =====

    Selling, general
     and administrative
     expenses:

    MTM actuarial loss                   $      -                  $      -            $12.5   $      -

    Interest cost and
     expected return on
     assets, net                     (0.9)        (0.7)               (1.7)   (2.1)
                                      ----          ----                 ----     ----

    Total                                  $(0.9)                    $(0.7)            $10.8     $(2.1)
                                            =====                      =====             =====      =====

(b) Restructuring and other special items consisted of the following:

Three months ended June 30, 2014 -

    --  Certain significant acquisition-related costs of $4.9 million ($3.1
        million after income taxes, or $0.04 per share).
    --  Charges of $3.3 million ($2.1 million after income taxes, or $0.03 per
        share) related to the write-off of certain multi-product facility
        project costs that we do not expect to recover in future periods.

Six months ended June 30, 2014 -

    --  Net charges amounting to $17.0 million ($11.1 million after income
        taxes, or $0.14 per share) in connection with a reduction of aluminum
        alkyls high cost supply capacity.
    --  Certain significant acquisition-related costs of $4.9 million ($3.1
        million after income taxes, or $0.04 per share).
    --  Charges of $3.3 million ($2.1 million after income taxes, or $0.03 per
        share) related to the write-off of certain multi-product facility
        project costs that we do not expect to recover in future periods.

(c) On April 15, 2014, the Company signed a definitive agreement to sell its antioxidant, ibuprofen and propofol businesses and assets to SI Group, Inc. for an undisclosed amount of cash. In the second quarter of 2014, the Company began accounting for these assets as held for sale, and as such the financial results of the disposal group have been presented as discontinued operations in the consolidated statements of income and excluded from segment results for all periods presented. (Loss) income from discontinued operations (net of tax) in the consolidated statements of income for the second quarter of 2014 includes a pre-tax charge of $80.7 million ($60.3 million after income taxes, or $0.76 per share) related to the expected loss on the anticipated sale of the assets. The expected loss represents the difference between the carrying value of the related assets and their estimated fair value, based on the estimated sales price as outlined in the agreement less estimated costs to sell.

(d) Totals may not add due to rounding.

Additional Information

It should be noted that Adjusted net income attributable to Albemarle Corporation (“adjusted earnings”), Adjusted diluted earnings per share and Adjusted effective income tax rates, Segment operating profit, Segment income, EBITDA, Adjusted EBITDA, EBITDA margin and Adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These measures are presented here to provide additional useful measurements to review 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 Investors section of our website at www.albemarle.com, under “Non-GAAP Reconciliations” under “Financials.” Also, see attached for a supplemental reconciliation of our Segment operating profit and Segment income amounts to GAAP Operating profit and GAAP Net income attributable to Albemarle Corporation, respectively, as well as for a supplemental reconciliation of Adjusted net income attributable to Albemarle Corporation, EBITDA and Adjusted EBITDA to Net income attributable to Albemarle Corporation.

ALBEMARLE CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliations

(In Thousands)

(Unaudited)

Our segment information includes measures we refer to as Segment operating profit, Segment income, EBITDA and Adjusted EBITDA, which are financial measures that are not required by, or presented in accordance with, GAAP. The Company has reported Segment operating profit, Segment income, EBITDA and Adjusted EBITDA because management believes that these financial measures provide transparency to investors and enable period-to-period comparability of financial performance. Segment operating profit, Segment income, EBITDA and Adjusted EBITDA should not be considered as alternatives to Operating profit or Net income attributable to Albemarle Corporation, as determined in accordance with GAAP.

See below for a reconciliation of Segment operating profit and Segment income, the non-GAAP financial measures, to Operating profit and Net income attributable to Albemarle Corporation, respectively, the most directly comparable financial measures calculated and reported in accordance with GAAP.


                              Three Months Ended                  Six Months Ended

                                   June 30,                           June 30,
                                   --------                           --------

                            2014                     2013       2014                      2013
                            ----                     ----       ----                      ----

    Total segment
     operating profit               $137,183               $124,965                            $266,871 $252,569

    Corporate & other   (18,768)                (16,585)  (53,533)                 (31,806)

    Restructuring and
     other charges, net  (8,175)                       -  (25,175)                        -
                          ------                      ---

    GAAP Operating
     profit                         $110,240               $108,380                            $188,163 $220,763
                                    ========               ========                            ======== ========

    Total segment
     income                         $140,900               $126,285                            $271,837 $258,621

    Corporate & other   (18,768)                (16,585)  (53,533)                 (31,806)

    Restructuring and
     other charges, net  (8,175)                       -  (25,175)                        -

    Interest and
     financing expenses  (8,733)                 (7,608)  (17,506)                 (12,839)

    Other (expenses)
     income, net           (979)                 (1,585)       164                   (5,779)

    Income tax expense  (21,773)                (20,396)  (34,963)                 (45,934)

    (Loss) income from
     discontinued
     operations         (60,025)                   2,628   (61,794)                    4,463
                         -------                    -----    -------                     -----

    GAAP Net income
     attributable to
     Albemarle
     Corporation                     $22,447                $82,739                             $79,030 $166,726
                                     =======                =======                             ======= ========

See below for a reconciliation of Adjusted net income attributable to Albemarle Corporation (“adjusted earnings”), EBITDA and Adjusted EBITDA, the non-GAAP financial measures, to Net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP. Adjusted net income attributable to Albemarle Corporation is defined as Net income attributable to Albemarle Corporation before discontinued operations and the special and non-operating pension and OPEB items as listed below. EBITDA is defined as Net income attributable to Albemarle Corporation before interest and financing expenses, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before discontinued operations and the special and non-operating pension and OPEB items as listed below.


                                 Three Months Ended                            Six Months Ended

                                      June 30,                                     June 30,
                                      --------                                     --------

                           2014                    2013          2014                 2013
                           ----                    ----          ----                 ----

    Net income
     attributable to
     Albemarle
     Corporation                 $22,447                               $82,739                     $79,030    $166,726
                                 =======                               =======                     =======    ========

    Add back:

      Non-operating
       pension and OPEB
       items (net of
       tax)               (855)                           (947)                   8,089           (2,244)

      Special items
       (net of tax)       5,189                                -                  16,334                 -

      Loss (income)
       from
       discontinued
       operations (net
       of tax)           60,025                          (2,628)                  61,794           (4,463)
                         ------                           ------                   ------            ------

    Adjusted net
     income
     attributable to
     Albemarle
     Corporation                 $86,806                               $79,164                    $165,247    $160,019
                                 =======                               =======                    ========    ========

    Net income
     attributable to
     Albemarle
     Corporation                 $22,447                               $82,739                     $79,030    $166,726
                                 =======                               =======                     =======    ========

    Add back:

      Interest and
       financing
       expenses           8,733                            7,608                   17,506            12,839

      Income tax
       expense (from
       continuing and
       discontinued
       operations)        1,624                           21,450                   14,070            47,642

      Depreciation and
       amortization      24,905                           26,573                   52,714            51,817
                         ------                           ------                   ------            ------

    EBITDA               57,709                          138,370                  163,320           279,024

      Non-operating
       pension and OPEB
       items            (1,370)                         (1,515)                  12,701           (3,584)

      Special items       8,175                                -                  25,175                 -

      Loss (income)
       from
       discontinued
       operations        80,174                          (3,682)                  82,687           (6,171)

      Less depreciation
       and amortization
       from
       discontinued
       operations             -                         (3,012)                 (3,165)          (5,990)
                            ---                          ------                   ------            ------

    Adjusted EBITDA             $144,688                              $130,161                    $280,718    $263,279
                                ========                              ========                    ========    ========

    Net sales                   $604,721                              $576,842                  $1,204,564  $1,163,439
                                ========                              ========                  ==========  ==========

    EBITDA Margin          9.5%                           24.0%                   13.6%            24.0%
                            ===                             ====                     ====              ====

    Adjusted EBITDA
     Margin               23.9%                           22.6%                   23.3%            22.6%
                           ====                             ====                     ====              ====

Logo – http://photos.prnewswire.com/prnh/20111129/MM14279LOGO

SOURCE Albemarle Corporation


Source: PR Newswire



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