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Basis of Presentation | 6 Months Ended
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Jun. 30, 2013
Basis of Presentation | NOTE 1—Basis of Presentation: In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Albemarle Corporation and our wholly-owned, majority-owned and controlled subsidiaries (collectively, “Albemarle,” “we,” “us,” “our” or “the Company”) contain all adjustments necessary for a fair statement, in all material respects, of our condensed consolidated balance sheets as of June 30, 2013 and December 31, 2012, our consolidated statements of income and consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2013 and 2012 and our condensed consolidated statements of cash flows and consolidated statements of changes in equity for the six-month periods ended June 30, 2013 and 2012. All adjustments are of a normal and recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012, which was filed with the Securities and Exchange Commission (SEC) on February 15, 2013. The December 31, 2012 consolidated balance sheet data herein was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles (GAAP) in the United States (U.S.). The results of operations for the three-month and six-month periods ended June 30, 2013 are not necessarily indicative of the results to be expected for the full year. Certain reclassifications have been made to the accompanying consolidated financial statements and the notes thereto to conform to the current presentation. Change in accounting principle regarding pension and other postretirement benefits During 2012, we elected to change our method of accounting for actuarial gains and losses relating to our global pension and other postretirement benefit (OPEB) plans. Previously, we recognized actuarial gains and losses from our pension and OPEB plans in our consolidated balance sheets as Accumulated other comprehensive income (loss) within shareholders’ equity, with amortization of these gains and losses that exceeded ten percent of the greater of plan assets or projected benefit obligations recognized each quarter in our consolidated statements of income over the average future service period of active employees. Under the new method of accounting, referred to as mark-to-market accounting, these gains and losses will be recognized annually in our consolidated statements of income in the fourth quarter and whenever a plan is determined to qualify for a remeasurement during a fiscal year. The remaining components of pension and OPEB plan expense, primarily service cost, interest cost and expected return on assets, will be recorded on a quarterly basis. The gain/loss subject to amortization and expected return on assets components of our pension expense has historically been calculated using a five-year smoothing of asset gains and losses referred to as the market-related value. Under mark-to-market accounting, the market-related value of assets will equal the actual market value as of the date of measurement. While our historical policy of recognizing pension and OPEB plan expense is considered acceptable under U.S. GAAP, we believe that the new policy is preferable as it eliminates the delay in recognizing gains and losses within operating results. This change will also improve transparency within our operating results by immediately recognizing the effects of economic and interest rate trends on plan investments and assumptions in the year these gains and losses are actually incurred. This change in accounting principle has been applied retrospectively, adjusting all prior periods presented. In the second quarter of 2013, we identified that our consolidated statements of income for the three-month and six-month periods ended June 30, 2012 included a correction of $10.3 million for pension and OPEB plan actuarial gains that related to 2011. This amount was deemed to be not material with respect to our financial statements for the year ended December 31, 2012 and any prior period financial statements. The impact of this accounting policy change on Albemarle’s consolidated financial statements for the three-month and six-month periods ended June 30, 2012 is summarized below: Consolidated Statements of Income
Three Months Ended June 30, 2012 (In Thousands, Except Per Share Amounts) |  | As Previously Reported |  |  | Effect of Accounting Change |  |  | As Adjusted |
Net sales |  | $ | 684,894 |  |  | $ | — |  |  | $ | 684,894 |
Cost of goods sold |  |  | 442,209 |  |  |  | (6,603 | ) |  |  | 435,606 |
Gross profit |  |  | 242,685 |  |  |  | 6,603 |  |  |  | 249,288 |
Selling, general and administrative expenses |  |  | 74,624 |  |  |  | (12,889 | ) |  |  | 61,735 |
Research and development expenses |  |  | 20,911 |  |  |  | — |  |  |  | 20,911 |
Restructuring and other charges, net |  |  | 94,703 |  |  |  | — |  |  |  | 94,703 |
Operating profit |  |  | 52,447 |  |  |  | 19,492 |  |  |  | 71,939 |
Interest and financing expenses |  |  | (8,486 | ) |  |  | — |  |  |  | (8,486 | )
Other expenses, net |  |  | (688 | ) |  |  | — |  |  |  | (688 | )
Income before income taxes and equity in net income of unconsolidated investments |  |  | 43,273 |  |  |  | 19,492 |  |  |  | 62,765 |
Income tax expense |  |  | 14,747 |  |  |  | 7,135 |  |  |  | 21,882 |
Income before equity in net income of unconsolidated investments |  |  | 28,526 |  |  |  | 12,357 |  |  |  | 40,883 |
Equity in net income of unconsolidated investments (net of tax) |  |  | 12,712 |  |  |  | — |  |  |  | 12,712 |
Net income |  | $ | 41,238 |  |  | $ | 12,357 |  |  | $ | 53,595 |
Net income attributable to noncontrolling interests |  |  | (3,506 | ) |  |  | — |  |  |  | (3,506 | )
Net income attributable to Albemarle Corporation |  | $ | 37,732 |  |  | $ | 12,357 |  |  | $ | 50,089 |
Basic earnings per share |  | $ | 0.42 |  |  | $ | 0.14 |  |  | $ | 0.56 |
Diluted earnings per share |  | $ | 0.42 |  |  | $ | 0.14 |  |  | $ | 0.56 |
Weighted-average common shares outstanding – basic |  |  | 89,414 |  |  |  | — |  |  |  | 89,414 |
Weighted-average common shares outstanding – diluted |  |  | 90,051 |  |  |  | — |  |  |  | 90,051 |
Cash dividends declared per share of common stock |  | $ | 0.20 |  |  | $ | — |  |  | $ | 0.20 |
Six Months Ended June 30, 2012 (In Thousands, Except Per Share Amounts) |  | As Previously Reported |  |  | Effect of Accounting Change |  |  | As Adjusted |
Net sales |  | $ | 1,396,598 |  |  | $ | — |  |  | $ | 1,396,598 |
Cost of goods sold |  |  | 906,026 |  |  |  | (9,696 | ) |  |  | 896,330 |
Gross profit |  |  | 490,572 |  |  |  | 9,696 |  |  |  | 500,268 |
Selling, general and administrative expenses |  |  | 155,316 |  |  |  | (19,577 | ) |  |  | 135,739 |
Research and development expenses |  |  | 39,960 |  |  |  | — |  |  |  | 39,960 |
Restructuring and other charges, net |  |  | 94,703 |  |  |  | — |  |  |  | 94,703 |
Operating profit |  |  | 200,593 |  |  |  | 29,273 |  |  |  | 229,866 |
Interest and financing expenses |  |  | (17,220 | ) |  |  | — |  |  |  | (17,220 | )
Other expenses, net |  |  | (806 | ) |  |  | — |  |  |  | (806 | )
Income before income taxes and equity in net income of unconsolidated investments |  |  | 182,567 |  |  |  | 29,273 |  |  |  | 211,840 |
Income tax expense |  |  | 50,213 |  |  |  | 10,697 |  |  |  | 60,910 |
Income before equity in net income of unconsolidated investments |  |  | 132,354 |  |  |  | 18,576 |  |  |  | 150,930 |
Equity in net income of unconsolidated investments (net of tax) |  |  | 21,298 |  |  |  | — |  |  |  | 21,298 |
Net income |  | $ | 153,652 |  |  | $ | 18,576 |  |  | $ | 172,228 |
Net income attributable to noncontrolling interests |  |  | (7,877 | ) |  |  | — |  |  |  | (7,877 | )
Net income attributable to Albemarle Corporation |  | $ | 145,775 |  |  | $ | 18,576 |  |  | $ | 164,351 |
Basic earnings per share |  | $ | 1.63 |  |  | $ | 0.21 |  |  | $ | 1.84 |
Diluted earnings per share |  | $ | 1.62 |  |  | $ | 0.21 |  |  | $ | 1.83 |
Weighted-average common shares outstanding – basic |  |  | 89,206 |  |  |  | — |  |  |  | 89,206 |
Weighted-average common shares outstanding – diluted |  |  | 89,999 |  |  |  | — |  |  |  | 89,999 |
Cash dividends declared per share of common stock |  | $ | 0.40 |  |  | $ | — |  |  | $ | 0.40 |
Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended June 30, 2012 (In Thousands) |  | As Previously Reported |  |  | Effect of Accounting Change |  |  | As Adjusted |
Net income |  | $ | 41,238 |  |  | $ | 12,357 |  |  | $ | 53,595 |
Other comprehensive (loss) income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation |  |  | (55,882 | ) |  |  | — |  |  |  | (55,882 | )
Pension and postretirement benefits |  |  | 12,203 |  |  |  | (12,357 | ) |  |  | (154 | )
Other |  |  | 31 |  |  |  | — |  |  |  | 31 |
Total other comprehensive loss, net of tax |  |  | (43,648 | ) |  |  | (12,357 | ) |  |  | (56,005 | )
Comprehensive loss |  |  | (2,410 | ) |  |  | — |  |  |  | (2,410 | )
Comprehensive income attributable to non-controlling interests |  |  | (3,516 | ) |  |  | — |  |  |  | (3,516 | )
Comprehensive loss attributable to Albemarle Corporation |  | $ | (5,926 | ) |  | $ | — |  |  | $ | (5,926 | )
Six Months Ended June 30, 2012 (In Thousands) |  | As Previously Reported |  |  | Effect of Accounting Change |  |  | As Adjusted |
Net income |  | $ | 153,652 |  |  | $ | 18,576 |  |  | $ | 172,228 |
Other comprehensive (loss) income, net of tax: |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation |  |  | (26,870 | ) |  |  | — |  |  |  | (26,870 | )
Pension and postretirement benefits |  |  | 18,242 |  |  |  | (18,576 | ) |  |  | (334 | )
Other |  |  | 66 |  |  |  | — |  |  |  | 66 |
Total other comprehensive loss, net of tax |  |  | (8,562 | ) |  |  | (18,576 | ) |  |  | (27,138 | )
Comprehensive income |  |  | 145,090 |  |  |  | — |  |  |  | 145,090 |
Comprehensive income attributable to non-controlling interests |  |  | (8,032 | ) |  |  | — |  |  |  | (8,032 | )
Comprehensive income attributable to Albemarle Corporation |  | $ | 137,058 |  |  | $ | — |  |  | $ | 137,058 |
Consolidated Statements of Changes In Equity
Six Months Ended June 30, 2012 (In Thousands) |  | As Previously Reported |  |  | Effect of Accounting Change |  |  | As Adjusted |
Accumulated other comprehensive (loss) income: |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2012 |  | $ | (222,922 | ) |  | $ | 283,251 |  |  | $ | 60,329 |
Other comprehensive loss |  |  | (8,717 | ) |  |  | (18,576 | ) |  |  | (27,293 | )
Balance at June 30, 2012 |  | $ | (231,639 | ) |  | $ | 264,675 |  |  | $ | 33,036 |
Retained earnings: |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2012 |  | $ | 1,798,117 |  |  | $ | (283,251 | ) |  | $ | 1,514,866 |
Net income |  |  | 145,775 |  |  |  | 18,576 |  |  |  | 164,351 |
Cash dividends declared |  |  | (35,715 | ) |  |  | — |  |  |  | (35,715 | )
Balance at June 30, 2012 |  | $ | 1,908,177 |  |  | $ | (264,675 | ) |  | $ | 1,643,502 |
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2012 (In Thousands) |  | As Previously Reported |  |  | Effect of Accounting Change |  |  | As Adjusted |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 153,652 |  |  | $ | 18,576 |  |  | $ | 172,228 |
Pension and postretirement expense (benefit) |  |  | 19,070 |  |  |  | (29,273 | ) |  |  | (10,203 | )
Deferred income taxes |  |  | (5,826 | ) |  |  | 10,697 |  |  |  | 4,871 |

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