Basis of Presentation

9 Months Ended

Sep. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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 September 30, 2013 and December 31, 2012, our consolidated statements of income and consolidated statements of comprehensive income for the three-month and nine-month periods ended September 30, 2013 and 2012 and our condensed consolidated statements of cash flows and consolidated statements of changes in equity for the nine-month periods ended September 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 nine-month periods ended September 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 statement of income for the nine-month period ended September 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 nine-month periods ended September 30, 2012 is summarized below:

Consolidated Statements of Income

Three Months Ended September 30, 2012 (In Thousands, Except Per Share Amounts)	As Previously Reported			Effect of Accounting Change			As Adjusted
Net sales	$	661,226		$	—		$	661,226
Cost of goods sold	446,469			(2,993		)	443,476
Gross profit	214,757			2,993			217,750
Selling, general and administrative expenses	59,982			(6,578		)	53,404
Research and development expenses	19,831			—			19,831
Restructuring and other charges, net	6,508			(6,508		)	—
Operating profit	128,436			16,079			144,515
Interest and financing expenses	(7,914		)	—			(7,914		)
Other income, net	2,370			—			2,370
Income before income taxes and equity in net income of unconsolidated investments	122,892			16,079			138,971
Income tax expense	26,591			5,881			32,472
Income before equity in net income of unconsolidated investments	96,301			10,198			106,499
Equity in net income of unconsolidated investments (net of tax)	7,935			—			7,935
Net income	104,236			10,198			114,434
Net income attributable to noncontrolling interests	(4,975		)	—			(4,975		)
Net income attributable to Albemarle Corporation	$	99,261		$	10,198		$	109,459
Basic earnings per share	$	1.11		$	0.12		$	1.23
Diluted earnings per share	$	1.10		$	0.12		$	1.22
Weighted-average common shares outstanding – basic	89,327			—			89,327
Weighted-average common shares outstanding – diluted	89,879			—			89,879
Cash dividends declared per share of common stock	$	0.20		$	—		$	0.20

Nine Months Ended September 30, 2012 (In Thousands, Except Per Share Amounts)	As Previously Reported			Effect of Accounting Change			As Adjusted
Net sales	$	2,057,824		$	—		$	2,057,824
Cost of goods sold	1,352,495			(12,689		)	1,339,806
Gross profit	705,329			12,689			718,018
Selling, general and administrative expenses	215,298			(26,155		)	189,143
Research and development expenses	59,791			—			59,791
Restructuring and other charges, net	101,211			(6,508		)	94,703
Operating profit	329,029			45,352			374,381
Interest and financing expenses	(25,134		)	—			(25,134		)
Other income, net	1,564			—			1,564
Income before income taxes and equity in net income of unconsolidated investments	305,459			45,352			350,811
Income tax expense	76,804			16,578			93,382
Income before equity in net income of unconsolidated investments	228,655			28,774			257,429
Equity in net income of unconsolidated investments (net of tax)	29,233			—			29,233
Net income	257,888			28,774			286,662
Net income attributable to noncontrolling interests	(12,852		)	—			(12,852		)
Net income attributable to Albemarle Corporation	$	245,036		$	28,774		$	273,810
Basic earnings per share	$	2.75		$	0.32		$	3.07
Diluted earnings per share	$	2.72		$	0.32		$	3.04
Weighted-average common shares outstanding – basic	89,246			—			89,246
Weighted-average common shares outstanding – diluted	89,959			—			89,959
Cash dividends declared per share of common stock	$	0.60		$	—		$	0.60

Consolidated Statements of Comprehensive Income

Three Months Ended September 30, 2012 (In Thousands)	As Previously Reported			Effect of Accounting Change			As Adjusted
Net income	$	104,236		$	10,198		$	114,434
Other comprehensive income (loss), net of tax:
Foreign currency translation	29,165			—			29,165
Pension and postretirement benefits	10,030			(10,198		)	(168		)
Other	29			—			29
Total other comprehensive income, net of tax	39,224			(10,198		)	29,026
Comprehensive income	143,460			—			143,460
Comprehensive income attributable to non-controlling interests	(4,975		)	—			(4,975		)
Comprehensive income attributable to Albemarle Corporation	$	138,485		$	—		$	138,485

Nine Months Ended September 30, 2012 (In Thousands)	As Previously Reported			Effect of Accounting Change			As Adjusted
Net income	$	257,888		$	28,774		$	286,662
Other comprehensive income (loss), net of tax:
Foreign currency translation	2,295			—			2,295
Pension and postretirement benefits	28,272			(28,774		)	(502		)
Other	95			—			95
Total other comprehensive income, net of tax	30,662			(28,774		)	1,888
Comprehensive income	288,550			—			288,550
Comprehensive income attributable to non-controlling interests	(13,007		)	—			(13,007		)
Comprehensive income attributable to Albemarle Corporation	$	275,543		$	—		$	275,543

Consolidated Statements of Changes In Equity

Nine Months Ended September 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 income	30,507			(28,774		)	1,733
Balance at September 30, 2012	$	(192,415	)	$	254,477		$	62,062
Retained earnings:
Balance at January 1, 2012	$	1,798,117		$	(283,251	)	$	1,514,866
Net income	245,036			28,774			273,810
Cash dividends declared	(53,567		)	—			(53,567		)
Balance at September 30, 2012	$	1,989,586		$	(254,477	)	$	1,735,109

Consolidated Statements of Cash Flows

Nine Months Ended September 30, 2012 (In Thousands)	As Previously Reported			Effect of Accounting Change			As Adjusted
Cash flows from operating activities:
Net income	$	257,888		$	28,774		$	286,662
Non-cash charges associated with restructuring and other, net	77,095			(6,508		)	70,587
Pension and postretirement expense (benefit)	28,727			(38,844		)	(10,117		)
Deferred income taxes	(2,136		)	16,578			14,442