-----BEGIN PRIVACY-ENHANCED MESSAGE-----

Proc-Type: 2001,MIC-CLEAR

Originator-Name: webmaster@www.sec.gov

Originator-Key-Asymmetric:

 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen

 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB

MIC-Info: RSA-MD5,RSA,

 BkVmU5Se/B5SV5sqCqSMIwCJi1TRg0HVWdSYLZE0cnXLlIegTgfw199S+OPddd5Z

 lI6GEewn2bVoL3wFY8kyPg==

 

<SEC-DOCUMENT>0000033656-96-000034.txt : 19961106

<SEC-HEADER>0000033656-96-000034.hdr.sgml : 19961106

ACCESSION NUMBER:     0000033656-96-000034

CONFORMED SUBMISSION TYPE:   10-Q

PUBLIC DOCUMENT COUNT:       2

CONFORMED PERIOD OF REPORT:  19960930

FILED AS OF DATE:     19961104

SROS:         NYSE

 

FILER:

 

    COMPANY DATA:

       COMPANY CONFORMED NAME:          ETHYL CORP

       CENTRAL INDEX KEY:           0000033656

       STANDARD INDUSTRIAL CLASSIFICATION:    INDUSTRIAL ORGANIC CHEMICALS [2860]

       IRS NUMBER:              540118820

       STATE OF INCORPORATION:         VA

       FISCAL YEAR END:         1231

 

    FILING VALUES:

       FORM TYPE:    10-Q

       SEC ACT:      1934 Act

       SEC FILE NUMBER:  001-05112

       FILM NUMBER:      96653829

 

    BUSINESS ADDRESS:

       STREET 1:     330 S FOURTH ST

       STREET 2:     P O BOX 2189

       CITY:         RICHMOND

       STATE:        VA

       ZIP:          23217

       BUSINESS PHONE:       8047885000

</SEC-HEADER>

<DOCUMENT>

<TYPE>10-Q

<SEQUENCE>1

<DESCRIPTION>FORM 10-Q FOR PERIOD ENDING 09/30/96

<TEXT>

 

<PAGE>   1

                                                           Page 1 of 29 Pages

 

                     SECURITIES AND EXCHANGE COMMISSION

 

                          WASHINGTON, D. C.  20549

 

 

                                  FORM 10-Q

 

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

      EXCHANGE ACT OF 1934

 

 

                                     OR

 

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

      EXCHANGE ACT OF 1934

 

 

For Transition Period from                to

 

For Quarter Ended September 30, 1996          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

RICHMOND, VIRGINIA                                       23219

(Address of principal executive offices)               (Zip Code)

 

Registrant's telephone number, including area code - (804) 788-5000

 

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 the past 90 days.

 

                 Yes   X                             No

 

 

Number of shares of common stock, $1 par value, outstanding as of October 31,

1996:       118,443,835.

<PAGE>   2

 

 

                              ETHYL CORPORATION

 

                                  I N D E X

 

 

                                                                   Page

                                                                  Number

 

PART I.  FINANCIAL INFORMATION

 

  ITEM 1.  Financial Statements

 

     Consolidated Balance Sheets - September 30, 1996 and

        December 31, 1995                                         3 - 4

 

     Consolidated Statements of Income - Three Months and Nine

        Months Ended September 30, 1996 and 1995                    5

 

     Condensed Consolidated Statements of Cash Flows -

        Nine Months Ended September 30, 1996 and 1995               6

 

     Notes to Financial Statements                                7 - 8

 

  ITEM 2.  Management's Discussion and Analysis of Results

             of Operations and Financial Condition                9 - 12

 

  PART II.  OTHER INFORMATION

 

          ITEM 5.   Other Events                                    13

 

          ITEM 6.  Exhibits and Reports on Form 8-K                 13

 

  SIGNATURE                                                         14

 

  EXHIBIT INDEX                                                     15

 

  EXHIBIT 3.1     Corrected Restated Articles of Incorporation,

                  together with explanatory letter.              16 - 29

 

 

 

 

 

 

 

 

 

 

 

                                      2

<PAGE>   3

          PART I.  FINANCIAL INFORMATION

 

          ITEM 1.  Financial Statements

 

<TABLE>

<CAPTION>

                                ETHYL CORPORATION AND SUBSIDIARIES

                                    CONSOLIDATED BALANCE SHEETS

                                      (Dollars in Thousands)

 

                                                                     September 30

                                                                          1996      December 31

                   ASSETS                                             (unaudited)      1995

                                                                     ------------  ------------

 

      <S>                                                            <C>           <C>

      Current assets:

        Cash and cash equivalents                                    $    32,630   $    29,972

        Accounts receivable, less allowance for doubtful

          accounts (1996 - $2,340; 1995 - $2,317)                        172,398       169,451

        Inventories:

          Finished goods                                                 181,188       146,010

          Raw materials                                                   22,233        13,285

          Stores, supplies and other                                       9,522         6,587

                                                                     -----------      --------

                                                                         212,943       165,882

 

        Deferred income taxes and prepaid expenses                        19,670        23,207

                                                                     -----------      --------

            Total current assets                                         437,641       388,512

                                                                     -----------      --------

 

      Property, plant and equipment, at cost                             763,750       713,635

          Less  accumulated depreciation and amortization               (319,141)     (285,327)

                                                                     -----------      --------

            Net property, plant and equipment                            444,609       428,308

                                                                     -----------      --------

 

      Other assets and deferred charges                                  160,402       151,833

      Goodwill and other intangibles - net of amortization                59,901        15,134

                                                                     -----------      --------

      Total assets                                                   $ 1,102,553   $   983,787

                                                                     ===========      ========

 

See accompanying notes to financial statements.

 

 

</TABLE>

 

 

 

 

 

 

 

                                      3

<PAGE>   4

 

                     ETHYL CORPORATION AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                           (Dollars In Thousands)

 

                                               September 30

                                                    1996       December 31

      LIABILITIES AND SHAREHOLDERS' EQUITY      (unaudited)       1995

                                                ----------     -----------

Current liabilities:

  Accounts payable                             $    69,230     $    55,903

  Accrued expenses                                  64,681          58,682

  Cash dividends payable                            14,806          14,806

  Long-term debt, current portion                    9,000           -

  Income taxes payable                              30,977          16,379

                                                ----------     -----------

      Total current liabilities                    188,694         145,770

                                                ----------     -----------

Long-term debt                                     353,129         302,973

 

Other noncurrent liabilities                        88,214          84,171

 

Deferred income taxes                               41,936          40,745

 

Shareholders' equity:

  Common stock ($1 par value)

   Issued - 118,443,835 in 1996 and 1995           118,444         118,444

  Additional paid-in capital                         2,799           2,799

  Foreign currency translation adjustments            (669)          2,090

  Retained earnings                                310,006         286,795

                                                ----------     -----------

                                                   430,580         410,128

                                                ----------     -----------

 

Total liabilities and shareholders' equity     $ 1,102,553     $   983,787

                                                ==========     ===========

 

See accompanying notes to financial statements.

 

 

 

 

 

 

 

 

 

 

 

                                      4

 

<PAGE>   5

 

 

                                ETHYL CORPORATION AND SUBSIDIARIES

                                 CONSOLIDATED STATEMENTS OF INCOME

                              (In Thousands Except Per Share Amounts)

                                            (Unaudited)

<TABLE>

<CAPTION>

 

                                                  Three Months Ended          Nine Months Ended

                                                     September 30                September 30

                                                   1996         1995           1996         1995

                                                 --------    ---------       --------    ---------

    <S>                                         <C>         <C>             <C>         <C>

    Net sales                                   $ 304,169   $  241,672      $ 845,674   $  700,493

    Cost of goods sold                            208,742      159,754        592,386      465,797

                                                 --------    ---------       --------    ---------

 

       Gross profit                                95,427       81,918        253,288      234,696

    Selling, general and administrative expenses   26,027       24,500         75,870       71,646

    Research, development and testing expenses     18,105       18,854         52,133       57,359

    Special charge                                   -           4,750           -           4,750

                                                 --------    ---------       --------    ---------

 

       Operating profit                            51,295       33,814        125,285      100,941

    Interest and financing expenses                 6,452        7,564         18,650       21,581

    Other (income),  net                             (303)        (340)        (1,258)        (588)

                                                 --------    ---------       --------    ---------

    Income before income taxes                     45,146       26,590        107,893       79,948

    Income taxes                                   16,661        9,623         40,266       28,482

                                                 --------    ---------       --------    ---------

    Net Income                                  $  28,485   $   16,967      $  67,627   $   51,466

                                                 ========    =========       ========    =========

 

    Earnings per share                          $     .24   $      .14      $     .57   $      .43

                                                 ========    =========       ========    =========

 

    Shares used to compute earnings per share     118,444      118,442        118,449      118,442

                                                 ========    =========       ========    =========

 

    Cash dividends per share of common stock    $    .125   $     .125      $    .375   $     .375

                                                 ========    =========       ========    =========

 

 

    See accompanying notes to financial statements.

 

 

 

</TABLE>

 

 

 

 

 

                                      5

<PAGE>   6

 

 

                     ETHYL CORPORATION AND SUBSIDIARIES

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                           (Dollars In Thousands)

                                 (Unaudited)

 

 

                                                          Nine Months Ended

                                                            September 30

                                                        --------------------

                                                          1996        1995

                                                        --------    --------

Cash and cash equivalents at beginning of year         $  29,972   $  31,166

                                                        --------    --------

Cash flows from operating activities:

  Net income                                              67,627      51,466

  Adjustments to reconcile net income to cash flows from

    operating activities:

     Depreciation and amortization                        43,116      35,795

     Special charge                                         -          4,750

     Working capital decreases, net of effects from

       acquisition                                        35,151      10,012

     Other, net                                            1,139       4,746

                                                        --------    --------

       Cash provided from operating activities           147,033     106,769

                                                        --------    --------

 

Cash flows from investing activities:

  Acquisition of business (net of $1,245 cash acquired) (133,032)       -

  Capital expenditures                                   (23,804)    (33,608)

  Other, net                                              (2,123)      2,149

                                                        --------    --------

       Cash used in investing activities                (158,959)    (31,459)

                                                        --------    --------

 

Cash flows from financing activities:

  Additional long-term debt                               59,000     162,000

  Repayment of long-term debt                               -       (200,000)

  Cash dividends paid                                    (44,416)    (44,416)

  Other, net                                                -            196

                                                        --------    --------

       Cash provided from (used in) financing activities  14,584     (82,220)

                                                        --------    --------

 

Increase in cash and cash equivalents                      2,658      (6,910)

                                                        --------    --------

 

 

Cash and cash equivalents at end of period             $  32,630   $  24,256

                                                        ========    ========

 

 

See accompanying notes to financial statements.

 

 

 

 

 

                                      6

 

<PAGE>   7

 

 

                     ETHYL CORPORATION AND SUBSIDIARIES

                        NOTES TO FINANCIAL STATEMENTS

                   (In Thousands Except Per-Share Amounts)

                                 (Unaudited)

 

 

1.      In the opinion of management, the accompanying consolidated financial

        statements of Ethyl Corporation and Subsidiaries (the "Company")

        contain all adjustments necessary to present fairly, in all material

        respects, the Company's consolidated financial position as of

        September 30, 1996, the consolidated results of operations for the

        three and nine-month periods ended September 30, 1996 and 1995 and the

        consolidated cash flows for the nine-month periods ended September 30,

        1996 and 1995.  All adjustments are of a normal, recurring nature.

        The December 31, 1995 consolidated balance sheet data was derived from

        audited financial statements but does not include all the information

        and footnotes required by generally accepted accounting principles for

        audited financial statements.  Therefore, these financial statements

        should be read in conjunction with the consolidated financial

        statements and notes thereto included in the December 31, 1995 Annual

        Report.  The results of operations for the nine-month period ended

        September 30, 1996, are not necessarily indicative of the results to

        be expected for the full year.

 

 

 

2.  On February 29, 1996, the Company completed the acquisition

        of the worldwide lubricant additives business of Texaco Inc.,

        ("Texaco") including manufacturing and blending facilities,

        identifiable intangibles and working capital.  The acquisition,

        accounted for under the purchase method, included a cash payment of

        $134.2 million and a future contingent payment of up to $60 million.

        The cash payment was financed primarily under the Company's revolving

        credit agreement.  The payment of up to $60 million will become due on

        February 26, 1999, with interest payable on the contingent debt until

        such date.  The actual amount of the contingent payment and total

        interest will be determined using an agreed-upon formula based on

        volumes of certain acquired product lines shipped during the calendar

        years 1996 through 1998, as specified in the contingent note

        agreement.  Texaco retained substantially all noncurrent liabilities.

 

 

 

        As the Company's 1996 financial statements only include seven months

        of operations of the recently acquired lubricant additives business,

        the following selected unaudited pro forma information is being

        provided to present a summary of the combined results of the Company

        and the worldwide lubricant additives business of Texaco as if the

        acquisition had occurred as of January 1, 1996 and 1995, giving effect

        to adjustments for interest expense that would have been incurred to

        finance the acquisition and other purchase accounting adjustments.

        The pro forma data is for informational purposes only and may not

        necessarily reflect the results of operations of Ethyl had the

        acquired business operated as part of the Company for the nine-month

        periods ended September 30, 1996 and 1995.

 

 

 

                                   Nine Months Ended

                                     September 30

                               -------------------------

                                 1996             1995

                               ---------       ---------

 

      Net Sales                 $894,849        $975,271

      Net Income                $ 70,517        $ 66,185

      Earnings Per Share            $.60            $.56

 

 

 

                                    7<PAGE>

 

<PAGE>   8

 

                     ETHYL CORPORATION AND SUBSIDIARIES

                   NOTES TO FINANCIAL STATEMENTS (Cont'd.)

                   (In Thousands Except Per-Share Amounts)

                                 (Unaudited)

 

 

3.      Long-term debt consists of the following:  September 30     December 31

                                                       1996            1995

                                                    -----------      ----------

        Variable-rate bank loans (average effective

         interest rates were 5.9% for the nine month

         period ended September 30, 1996 and 6.4%

         for  the year 1995)                          $320,000        $270,000

        5.76% Bank Credit Agreement                      9,000             -

        8.6% to 8.86% Medium-Term Notes  due

         through 2001                                   33,750          33,750

                                                       -------        --------

             Total long-term debt                      362,750         303,750

               Less unamortized discount                  (621)           (777)

                                                       -------        --------

             Net long-term debt                        362,129         302,973

                  Less current portion                  (9,000)            -

                                                       -------        --------

                                                      $353,129        $302,973

                                                       =======        ========

 

 

        No portion of the $60 million contingent note principal related to the

        purchase of the lubricant additives business from Texaco has been

        recorded on the September 30,1996 balance sheet.  Any principal or

        interest amount ultimately paid on the note will be accounted for as

        an adjustment to the purchase price when paid.

 

 

 

4.  The special charge in 1995 relates to a provision for a legal

        settlement by the Company with the civil division of the U. S.

        Department of Justice resulting in an after tax charge of $4,150 or

        $.04 per share.

 

 

 

 

 

 

 

 

                                      8

 

 

<PAGE>  9

 

                    MANAGEMENT'S DISCUSSION AND ANALYSIS

              OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

The following is management's discussion and analysis of certain significant

factors affecting the Company's results of operations during the periods

included in the accompanying consolidated statement of income and changes in

the Company's financial condition since year-end 1995.  The Company's 1996

results of operations include the results of the lubricant additives business

of Texaco Inc. ("Texaco") since it was acquired on February 29, 1996, while

the balance sheet at September 30, 1996, includes a preliminary allocation of

the purchase price and other purchase accounting adjustments as well as

borrowing used to finance the acquisition.

 

Results of Operations

Third Quarter 1996 Compared to Third Quarter 1995

 

Net sales for the third quarter of 1996 amounted to $304.2 million, up $62.5

million from $241.7 million in the 1995 quarter.  The increase in net sales

was due to higher shipments ($73.8 million), partially offset by the impact of

lower selling prices ($11.3 million).  The increased sales reflected the

inclusion of $73.7 million of lubricant additives revenues from the worldwide

lubricant additives business of Texaco acquired on February 29, 1996, and also

higher shipments of  certain other lubricant additives as well as higher

selling prices for antiknocks and other fuel additives, partly offset by lower

selling prices of lubricant additives products and lower shipments of lead

antiknocks.

 

Cost of goods sold in 1996 of $208.7 million increased $48.9 million from

$159.8 million in the 1995 quarter.  The increase reflected the inclusion of

cost of goods sold of the worldwide lubricant additives business acquired from

Texaco ($60.9 million).  The overall increase was due to higher shipments

($62.5 million) partly offset by the impact of lower costs ($13.6 million),

including lower per unit raw material costs in the 1996 quarter.

 

The net result of a 26% increase in net sales and a 31% increase in cost of

goods sold was that the gross profit margin decreased to 31.4% in the 1996

quarter from 33.9% in the 1995 quarter, mainly reflecting lower margins due to

continued soft market conditions in lubricant additives, and a change in

product mix reflecting an increase in the extent to which sales and profits

come from lubricant additives and other fuel additives.

 

Selling, general and administrative expenses combined with research,

development and testing expenses amounted to $44.1 million in the third

quarter 1996, up $0.7 million from $43.4 million in the third quarter 1995.

The increase primarily results from higher expenses related to marketing

activities for  HITEC (R) 3000 performance additive ("MMT"), in spite of a

general reduction in research, development and testing expenses, and also

reflects the synergistic benefit of the acquisition and having the Company's

research laboratory more fully utilized.  As a percentage of net sales,

selling, general and administrative expenses, including research, development

and testing expenses decreased to 14.5% during the 1996 quarter from 17.9%

during the 1995 quarter.

 

Operating profit in the 1996 quarter increased to $51.3 million, up $17.5

million from $33.8 million in the 1995 quarter.  Most of the increase resulted

 

 

 

 

 

 

                                      9

<PAGE>   10

 

from the effect of the acquired lubricant additives business, and the absence

of the third quarter 1995 special charge provision of $4.75 million for a

legal settlement by the company with the civil division of the U.S. Department

of Justice, offset in part by lower margins in the 1996 quarter reflecting

soft lubricant additives market conditions and changes in product mix.

 

Interest expense in third quarter 1996 decreased 15% to $6.5 million from $7.6

million in the 1995 quarter.  The $1.1 million decline reflects $2.1 million

lower interest cost from lower average interest rates as a result of replacing

a $200 million, 9.8% note on September 1995, with lower cost variable-rate

debt as well as a $0.7 million reduction in other fees, largely offset by $1.7

million higher interest expense from an increase in average debt outstanding,

reflecting the effect of funds used to finance the Texaco lubricant additives

acquisition.

 

Other income, net, decreased to $303 thousand in the 1996 quarter from $340

thousand other income, net, in the 1995 quarter.  The decrease reflects

changes in a number of nonoperating items, none of which are material in

either quarter.

 

Income Taxes

 

Income taxes in the third quarter 1996 increased 73% from the third quarter

1995, primarily due to a 70% increase in income before income taxes as well as

the impact of a higher effective income tax rate (36.9% in the 1996 quarter

versus 36.2% in the 1995 quarter).  The third quarter 1995 effective tax rate

was lower than the 1996 rate primarily due to the benefit included in 1995

from a redetermination of prior years research and development tax credits

resulting from a change in federal tax regulations, as well as other favorable

adjustments related to prior tax years.

 

Nine Months 1996 Compared to Nine Months 1995

 

Net sales for the nine months 1996 amounted to $845.7 million, up $145.2

million from $700.5 million in nine months 1995.  The increase in net sales

was due to higher shipments ($175.5 million), partially offset by the impact

of lower selling prices ($30.3 million).  The increased sales reflected the

inclusion of $175.2 million of lubricant additives revenues from the worldwide

lubricant additives business of Texaco acquired on February 29, 1996, and also

reflected higher shipments of certain nonlead fuel additives as well as higher

selling prices for antiknocks and other fuel additives, partly offset by lower

selling prices of lubricant additives products and lower shipments of lead

antiknocks.

 

Cost of goods sold in 1996 of $592.4 million increased $126.6 million from

$465.8 million in the 1995 period.  The increase primarily reflected the

inclusion of cost of goods sold of the worldwide lubricant additives business

acquired from Texaco ($148.6 million).  The overall increase was primarily due

to higher shipments ($140.3 million) as well as an unfavorable foreign

exchange effect.  The overall increase in 1996 was partially offset by lower

per unit raw material costs in the 1996 period and nonrecurring costs in nine

months 1995, including costs associated with the second quarter 1995 shutdown

of operations at a contract manufacturing site, the start-up of certain

lubricant additives facilities and the April 1995 strike at the Feluy,

Belgium, manufacturing plant.

 

 

 

                                     10

 

<PAGE>   11

 

The net result of a 21% increase in net sales and a 27% increase in cost of

goods sold was that the gross profit margin decreased to 30.0% in the 1996

period from 33.5% in the 1995 period, mainly reflecting lower margins due to

continued soft market conditions in lubricant additives, and a change in

product mix reflecting an increase in the extent to which sales and profits

come from lubricant additives and other fuel additives.

 

Selling, general and administrative expenses combined with research,

development and testing expenses amounted to $128.0 million in the nine months

1996, down $1.0 million from $129.0 million in the nine months 1995.  The

decrease primarily results from a general reduction in research, development

and testing expenses, and also largely reflects the synergistic benefit of the

acquisition and having the Company's research laboratory more fully utilized

and of having more of the 1996 research, development and testing expenses

scheduled in the second half of the year, partially offset by higher expenses

related to marketing activities for MMT.  As a percentage of net sales, the

selling, general and administrative expenses, including research, development

and testing expenses, decreased to 15.1% during the 1996 period from 18.4%

during the 1995 period.

 

Operating profit in the nine months 1996 increased to $125.3 million, up $24.4

million from $100.9 million in the nine months 1995.  Most of the increase

resulted from the effect of the acquired lubricant additives business, and the

absence of the 1995 special charge provision of $4.75 million for a legal

settlement, offset in part by lower margins in the 1996 period reflecting soft

lubricant additives market conditions and changes in product mix, as well as

an unfavorable foreign currency variance.

 

Interest expense in nine months 1996 decreased 14% to $18.6 million from $21.6

million in the 1995 period.  The $3.0 million decline reflects $6.9 million

lower interest cost from lower average interest rates as a result of replacing

a $200 million, 9.8% note on September 15, 1995, with lower cost variable-rate

debt and a $1.2 million reduction in other fees, mostly offset by $3.8 million

higher interest expense from an increase in average debt outstanding,

reflecting the effect of funds used to finance the Texaco lubricant additives

acquisition, and a $1.3 million reduction in interest costs capitalized in the

1996 period.

 

Other income, net, increased to $1.3 million in the 1996 period from $0.6

million in the 1995 period.  The increase reflects changes in a number of

nonoperating items, none of which are material in either period.

 

Income Taxes

 

Income taxes in the nine months 1996 increased 41% from the nine months 1995,

primarily due to a 35% increase in income before income taxes, as well as the

impact of a higher effective income tax rate (37.3% in the 1996 period versus

35.6% in the 1995 period).  The nine months 1995 effective tax rate was lower

than the 1996 rate primarily due to the benefit included in 1995 from a

redetermination of prior years research and development tax credits resulting

from a change in federal tax regulations, as well as other favorable

adjustments related to prior tax years.

 

 

                                     11

 

<PAGE>   12

 

Financial Condition and Liquidity

 

Cash and cash equivalents at September 30, 1996, were about $32.6 million,

which represents an increase of about $2.6 million from $30.0 million at

year-end 1995.

 

Cash flows were more than sufficient to cover operating activities during the

1996 period.  Cash flows from operating activities of $147.0 million, together

with $59.0 million in additional long-term debt were used to fund the

acquisition of the worldwide lubricant additives business from Texaco for a

purchase price of $133.0 million, and to cover capital expenditures of $23.8

million and cash dividends to shareholders of $44.4 million, as well as an

increase in cash and cash equivalents of $2.6 million.  Management anticipates

that cash provided from operations in the future will be sufficient to cover

the Company's operating expenses, service debt obligations, including reducing

long-term debt, and make dividend payments to shareholders.

 

The noncurrent portion of Ethyl's long-term debt amounted to $353.1 million at

September 30, 1996, representing an increase in long-term debt of about $50.1

million from December 31, 1995, primarily representing funds borrowed in

connection with the lubricant additives acquisition, partially offset by about

$75.3 million of repayments of amounts borrowed under the revolving credit

agreement, as well as $9.0 million reclassified to current portion of

long-term debt.  The Company also has a contingent note associated with the

acquisition of up to $60 million payable to Texaco.  The actual amount due on

the contingent note will be determined using an agreed upon formula based on

volumes of certain acquired product lines shipped during calendar years 1996

through 1998.  The Company's long-term debt as a percent of total

capitalization was 45.1% at September 30, 1996, excluding the effect of the

contingent note, compared to 42.5% at December 31, 1995.  The Company targets

a range of 30% to 50% for its long-term debt ratio, and intends to continue to

utilize its strong cash flows to reduce long-term debt outstanding.

 

The Company's capital spending program over the next three to five years is

expected to be somewhat higher than in 1995 but lower than in 1994 and 1993,

reflecting the prior year completion of major construction and expansion

programs. Capital spending for environmental and safety projects on nonplant

expansion and replacement related construction will likely increase from

current levels largely reflecting the acquisition of the lubricant additives

business from Texaco. The capital spending will be financed primarily with

cash provided from operations.

 

 

 

 

 

                                     12

<PAGE>   13

 

 

 

                         PART II - Other Information

 

 

ITEM 5.         Other Events

 

                In Canada, in May 1995 legislation was introduced in the

                Canadian Parliament to restrict the inter-provincial transport

                of HiTEC 3000 (R) performance additive ("MMT")  in Canada as

                well as the import of  MMT into Canada.  When Parliament

                adjourned in mid-December 1995, the legislation had not passed

                the House of Commons.  In April 1996 the legislation was

                reintroduced, but it has not passed the House of Commons.  On

                September 10, 1996, the Company served notice on the Canadian

                government that, if such legislation is enacted by Parliament,

                the Company intends to file a claim against the Canadian

                government for damages under an arbitration provision of the

                North American Free Trade Agreement.  The NAFTA provision

                allows a company to bring before an arbitration panel claims

                against NAFTA governments for alleged violations of their

                obligations toward investors.  Before the claim is filed,

                there is a 90-day period for consultations between the Company

                and the Canadian Government.  The Company's management

                contends the proposed legislation would violate Canada's

                investment obligations by "expropriating" Ethyl's MMT business

                in Canada, which would significantly impact the Toronto-based

                subsidiary of Ethyl.

 

 

ITEM 6.         Exhibits and Reports on Form 8-K

 

                (a)     Exhibit - 3.1 Corrected Restated Articles of

                        Incorporation, together with explanatory letter.

 

                (b)     No reports on Form 8-K have been filed during the

                        quarter for which this report is filed.

 

 

 

 

 

 

 

 

 

 

 

 

                                     13

 

<PAGE>   14

 

 

 

 

                                  SIGNATURE

 

     Pursuant to the requirements of the Securities Exchange Act of 1934, the

 

registrant has duly caused this report to be signed on its behalf by the

 

undersigned there-unto duly authorized.

 

 

 

 

 

                                                  ETHYL CORPORATION

                                                   (Registrant)

 

 

 

 

 

 

 

Date:  November 1,  1996                         By: s/ Charles B. Walker

                                                 Charles B. Walker

                                                 Vice Chairman of the Board,

                                                 Chief Financial Officer

                                                 and Treasurer

                                                 (Principal Financial Officer)

 

 

 

Date:  November 1, 1996                          By: s/ Wayne C. Drinkwater

                                                 Wayne C. Drinkwater

                                                 Controller

                                                 (Principal Accounting Officer)

 

 

 

 

 

 

 

 

 

 

                                     14

<PAGE>  15

 

 

                                EXHIBIT INDEX

 

 

 

 

                                                             Page

                                                            Number

 

Number and Name of Exhibit

 

Exhibit 3.1     Corrected Restated Articles of

                Incorporation, together with explanatory

                letter.                                       16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                      15<PAGE>

<PAGE>  16

 

                                                                  Exhibit 3.1

                              Hunton & Williams

                        Riverfront Plaza, East Tower

                            951 East Byrd Street

                        Richmond, Virginia 23219-4074

                          Telephone (804) 788-8200

                          Facsimile (804) 788-8218

 

                               August 13, 1996

 

 

State Corporation Commission, Clerk's Office

1300 East Main Street

Richmond, Virginia 23219

Attention: Thomas J. Moore, Esq.

 

 

                              Ethyl Corporation

 

 

Dear Mr. Moore:

 

        Enclosed please find for filing Articles of Restatement and the

Restated Articles of Incorporation on behalf of Ethyl Corporation (the

"Company").  Our check in the amount of $25.00 is enclosed for your filing

fee.

 

        You will note that the Articles of Restatement are dated July 31,

1995.  As we discussed last week, in July 1995, the Company's Board of

Directors approved, and the Company filed, Articles of Restatement with your

office that erroneously omitted the number of shares that were designated

"Series B". The designation of these shares as Series B had been authorized in

the Articles of Amendment filed with your office in 1987.  In our view, the

enclosed Restated Articles of Incorporation, which correct this omission,

reflect the original intention of the Board.  The Restated Articles of

Incorporation are otherwise identical to those filed on July 31, 1995.

 

        Thank you very much for your assistance.  Please feel free to call me

should you have any questions.

 

 

 

 

 

                             Sincerely,

 

 

 

                                                       S/ Louanna O. Heuhsen

                                                          Louanna O. Heuhsen

 

LOH:trf

Enclosures

cc: E. Whitehead Elmore, Esq.

    Allen C. Goolsby, Esq.

    McAlister C. Marshall, II, Esq.

 

 

 

 

 

 

 

 

 

 

                                      16<PAGE>

 

<PAGE>  17

 

                       ARTICLES OF RESTATEMENT OF THE

 

               AMENDED AND RESTATED ARTICLES OF INCORPORATION

 

                           OF ETHYL CORPORATION

 

 

 

        1.      The name of the corporation is Ethyl Corporation (the

"Corporation").

 

        2.      The Articles of Incorporation of the Corporation shall be

restated in the form attached hereto as Exhibit A.

 

        3.      The Restatement was duly adopted by the Board of Directors

of the Corporation without shareholder action.  The Restatement does

not contain an amendment to the Articles of Incorporation requiring

shareholder approval.

 

 

        IN WITNESS WHEREOF, these Articles of Restatement have been

executed on behalf of the Corporation by its duly authorized officer this

31st day of July, 1995.

 

 

 

 

 

                                                  ETHYL CORPORATION

 

 

                                                  By:  s/ Steven M. Mayer

 

                                                  Title: Vice President

 

 

 

 

 

 

 

 

 

 

 

                                      17<PAGE>

 

 

 

<PAGE>  18

                                                                 EXHIBIT A

 

                      RESTATED ARTICLES OF INCORPORATION

 

                                     of

 

                              ETHYL CORPORATION

 

 

                                 ARTICLE I

 

The name of the Corporation is

 

                              ETHYL CORPORATION

 

 

                                ARTICLE II

 

   The purposes of the Corporation are to develop, manufacture, produce,

improve, buy, sell and deal in any and all kinds of materials, chemicals,

plastics, petroleum, paper, machinery, metals, minerals and mineral products,

timber and wood products, and all ingredients, derivatives, products,

by-products, and compounds thereof or related in any way thereto and, without

limitation by reason of the foregoing, to engage in any business not required

to be stated in the articles of incorporation.

 

   The Corporation shall have the power to make accommodation guarantees or

endorsements of the obligations of any other person or corporation.

 

 

                                ARTICLE III

 

   The Corporation shall have authority to issue 400,000,000 shares of Common

Stock, $1 par value, and 10,000,000 shares of Cumulative Preferred Stock, with

a par value, if any, to be set forth hereinafter with respect to each series.

The Cumulative Preferred Stock may be issued in series as hereinafter

provided.   The description of the Cumulative Preferred Stock and the Common

Stock, and the designations, preferences and voting powers of such classes of

stock or restrictions or qualifications thereof, and the terms on which such

stock is to be issued (together with certain related provisions for the

regulation of the business and for the conduct of the affairs of the

Corporation) shall be as hereinafter set forth in Parts A, B and C of this

Article III.

 

                       PART A.  CUMULATIVE PREFERRED STOCK

 

   1.   Issuance in Series.  The Cumulative Preferred Stock may be

issued from time to time in one or more series, with such distinctive

 

 

                                      18<PAGE>

 

<PAGE>  19

 

 

serial designations, rights and preferences as shall be stated and expressed

herein or in the resolution or resolutions providing for the issue of shares

of a particular series, and in such resolution or resolutions providing for

the issue of shares of such series, the Board of Directors is expressly

authorized to fix:

 

        (a)     The annual dividend rate for such series, the dividend

payment dates, the date from which dividends on all shares of such

series issued shall be cumulative, and the extent of participation

rights, if any;

 

        (b)     The redemption price or prices, if any, for such series

and other terms and conditions on which shares of such series may be

retired or redeemed;

 

        (c)     The obligation, if any, of the Corporation to purchase and

retire or redeem shares of such series as a sinking fund, and the provisions

of any such sinking fund;

 

        (d)     The designation and maximum number of shares of such

series issuable;

 

        (e)     The right to vote, if any, with holders of shares of any

other series or class and any right to vote as a class, either generally

or as a condition to specified corporate action;

 

        (f)     The amount payable upon shares in event of involuntary

liquidation;

 

        (g)     The amount payable upon shares in event of voluntary

liquidation; and

 

        (h)     The rights, if any, of the holders of shares of such

series to convert such shares into other classes of stock of the

Corporation and the terms and conditions of such conversion.

 

   All shares of Cumulative Preferred Stock of any one series

shall be identical with each other in all respects except, if so

determined by the Board of Directors, as to the dates from which

dividends thereon shall be cumulative; and all shares of Cumulative

Preferred Stock shall be of equal rank with each other, regardless

of series, and shall be identical with each other in all respects

except as provided herein or in the resolution or resolutions

providing for the issue of a particular series.  In case dividends

on all shares of Cumulative Preferred Stock for any quarterly

dividend period are not paid in full, all such shares shall

participate ratably in any partial payment of dividends for such

period in proportion to the full amounts of dividends for such

period to which they are respectively entitled.

 

   If and whenever, from time to time, the Board of Directors

shall determine to issue Cumulative Preferred Stock of any

series hereinafter designated, the Board shall, prior to the

issue of any shares of such new series, cause provisions

respecting it to be set out in articles of amendment filed with

the State Corporation Commission of Virginia.  The Board of

Directors, in any such articles of amendment filed with the

State Corporation Commission of Virginia, may reclassify any of

 

                                      19<PAGE>

 

<PAGE>  20

 

the authorized but unissued shares of any particular series as

shares or additional shares of any other series, or, unless

otherwise provided in the articles of amendment establishing any

particular series, increase any maximum number of shares

theretofore established for a particular series to any greater

number then authorized by the articles of incorporation.

 

   2.   Cumulative Preferred Stock, Convertible Series B.  A series

of Cumulative Preferred Stock is hereby designated "Series B,"

which series shall have 2,000,000 shares and the following description and

terms:

 

        (a)     Dividends and Distributions.

 

                (i)  The holders of shares of Series B shall be

        entitled to receive, when and as declared by the Board of

        Directors out offunds legally available therefor, dividends

        payable quarterly on the first day of each January, April,

        July and October (each such date being referred to herein

        as a "Quarterly Dividend Payment Date"), commencing on the

        first Quarterly Dividend Payment Date after the first

        issuance of a share or fraction of a share of Series B, in

        an amount per share (rounded to the nearest cent) equal to

        the greater of (a) $50.00 or (b) subject to the provision

        for adjustment hereinafter set forth, 1000 times the

        aggregate per share amount of all cash dividends, and

        1000 times the aggregate per share amount (payable in

        kind) of all non-cash dividends or other distributions

        other than a dividend payable in shares of Common Stock or

        a subdivision of the outstanding shares of Common Stock

        (by reclassification or otherwise), declared on the Common

        Stock, par value $1.00 per share, of the Corporation (the

        "Common Stock") since the immediately preceding Quarterly

        Dividend Payment Date, or, with respect to the first

        Quarterly Dividend Payment Date, since the first issuance

        of any share or fraction of a share of Series A Preferred

        Stock.  In the event the Corporation shall at any time

        after October 5, 1987 (the "Rights Declaration Date") (i)

        declare any dividend on Common Stock payable in shares of

        Common Stock, (ii) subdivide the outstanding Common Stock,

        or (iii) combine the outstanding Common Stock into a smaller

        number of shares, then in each such case the amount to which

        holders of shares of Series B were entitled immediately prior

        to such event under clause (b) of the preceding sentence shall

        be adjusted by multiplying such amount by a fraction the

        numerator of which is the number of shares of Common Stock

        outstanding immediately after such event and the denominator

        of which is the number of shares of Common Stock that were

        outstanding immediately prior to such event.

 

                (ii)  The Corporation shall declare a dividend or

        distribution on the Series B as provided in subsection

        (i) above immediately after it declares a dividend or

        distribution on the Common Stock (other than a dividend

        payable in shares of Common Stock); provided that, in

        the event no dividend or distribution shall have been

        declared on the Common Stock during the period between

 

                                      20<PAGE>

 

<PAGE>  21

 

        any Quarterly Dividend Payment Date and the next subsequent

        Quarterly Dividend Payment Date, a dividend of $50.00

        per share on the Series B Preferred Stock shall nevertheless

        be payable on such subsequent Quarterly Dividend Payment Date.

 

                (iii)  Dividends shall begin to accrue and be cumulative

        on outstanding shares of Series B from the Quarterly Dividend

        Payment Date next preceding the date of issue of such shares of

        Series B, unless the date of issue of such shares is prior to

        the record date for the first Quarterly Dividend Payment, in

        which case dividends on such shares shall begin to accrue from

        the date of issue of such shares, or unless the date of issue is

        a Quarterly Dividend Payment Date or is a date after the record

        date for the determination of holders of shares of Series B

        entitled to receive a quarterly dividend and before such

        Quarterly Dividend Payment Date, in either of which events such

        dividends shall begin to accrue and be cumulative from such

        Quarterly Dividend Payment Date.  Accrued but unpaid dividends

        shall not bear interest.  Dividends paid on the shares of Series

        B in an amount less than the total amount of such dividends at

        the time accrued and payable on such shares shall be allocated

        pro rata on a share-by-share basis among all such shares at the

        time outstanding.  The Board of Directors may fix a record date

        for the determination of holders of shares of Series B entitled

        to receive payment of a dividend or distribution declared

        thereon, which record date shall be no more than 70 days prior

        to the date fixed for the payment thereof.

 

                (iv)  Dividends in full shall not be declared or paid

        or set apart for payment on the Series B for a dividend period

        terminating on the Quarterly Dividend Payment Date unless

        dividends in full have been declared or paid or set apart for

        payment on the Cumulative Preferred Stock of all series (other

        than series with respect to which dividends are not cumulative

        from a date prior to such dividend date) for the respective

        dividend periods terminating on such dividend date.

 

        (b)     Voting Rights.  The holders of shares of Series B shall

        have the following voting rights:

 

                (i)  Subject to the provision for adjustment hereinafter

        set forth, each share of Series B shall entitle the holder thereof

        to 1000 votes on all matters submitted to a vote of the shareholders

        of the Corporation.  In the event the Corporation shall at any time

        after the Rights Declaration Date (i) declare any dividend on

        Common Stock payable in shares of Common Stock, (ii) subdivide

        the outstanding Common Stock, or (iii) combine the outstanding

        Common Stock into a smaller number of shares, then in each

        such case the number of votes per share to which holders

        of shares of Series B were entitled immediately prior to

        such event shall be adjusted by multiplying such number by a

        fraction the numerator of which is the number of shares of

        Common Stock outstanding immediately after such event and the

        denominator of which is the number of shares of Common Stock

        that were outstanding immediately prior to such event.

 

                (ii)  Except as otherwise provided herein or in the Bylaws,

        the holders of shares of Series B and the holders of shares of

        Common Stock shall vote together as one voting group on all

        matters submitted to a vote of stockholders of the Corporation.

 

                                      21<PAGE>

 

<PAGE>  22

 

                (iii)  In addition, in the event that at any time or from

        time to time while any shares of the Series B are outstanding,

        six or more quarterly dividends, whether consecutive or not, on

        any shares of the Series B shall be in arrears and unpaid,

        whether or not earned or declared, then the holders of all of

        the outstanding shares of the Series B together with any other

        series of Cumulative Preferred Stock then entitled to such a

        vote under the terms of the Articles of Incorporation of the

        Corporation, voting as a single class, shall be entitled to

        elect two members of the Board of Directors of the Corporation.

        Immediately after the occurrence of such event, the Corporation

        shall cause the number of directors of the Corporation to be

        increased by two and (unless a regular meeting of stockholders

        of the Corporation is to be held within sixty (60) days for the

        purpose of electing directors) shall give prompt notice to the

        holders of all of the outstanding shares of the Cumulative

        Preferred Stock then so entitled to such a vote of a special

        meeting of such holders to take place within sixty (60) days

        after the occurrence of such event.  If such meeting shall not

        have been called as so provided, such meeting may be called at

        the expense of the Corporation by the holders of not less than

        five percent (5%) of such Cumulative Preferred Stock at the time

        outstanding, on written notice specifying the time and place of

        the meeting given by mail not less than ten (10) days or more

        than thirty (30) days before the date of such meeting specified

        in such notice.  At such meeting the holders of all of such

        Cumulative Preferred Stock at the time outstanding, voting as a

        single class, shall have the right to elect two (2) members of

        the Board of Directors of the Corporation.

 

                If a regular meeting of the stockholders of the Corporation

        for the purpose of electing directors is to be held within sixty

       (60) days after the occurrence of such event then at such

       meeting, and, in any event, at each subsequent meeting of the

       stockholders of the Corporation called for the purpose of

       electing directors, the holders of such Cumulative Preferred

       Stock at the time outstanding, voting as a single class, shall

       have the right to elect two (2) members of the Board of

       Directors on the same conditions as stated above.

 

                At any special or regular meeting provided for in the next

       two preceding subsections, each outstanding share of such

       Cumulative Preferred Stock shall be entitled to one vote for the

       election of the directors provided for herein; the holders of a

       majority of the shares of such Cumulative Preferred Stock at the

       time outstanding shall constitute a quorum; and a plurality vote

       of such quorum shall govern.

 

                The directors elected by the holders of such Cumulative

       Preferred Stock shall hold office until their successors shall

       be elected; provided that their term of office shall

       automatically expire at such time as all dividends on all

       outstanding shares of such Cumulative Preferred Stock in arrears

       shall have been paid in full.

 

                                      22<PAGE>

 

<PAGE>  23

 

                (iv)  Except as otherwise provided in the Articles of

       Incorporation, holders of Series B shall have no special voting

       rights and their consent shall not be required (except to the

       extent they are entitled to vote with holders of Common Stock as

       set forth herein) for taking any corporate action.

 

       (c)      Certain Restrictions.

 

                (i)   Whenever quarterly dividends or other dividends or

       distributions payable on the Series B as provided in subsection

       (a) are in arrears, thereafter and until all accrued and unpaid

       dividends and distributions, whether or not declared, on shares

       of Series B outstanding shall have been paid in full, the

       Corporation shall not

 

                      (1)  declare or pay or set apart for payment any

                dividends (other than dividends payable in shares of

                any class or classes of stock of the Corporation ranking

                junior to the Series B) or make any other distributions

                on, any class of stock of the Corporation ranking junior

                (either as to dividends or upon liquidation, dissolution

                or winding up) to the Series B and shall not redeem,

                purchase or otherwise, acquire, directly or indirectly,

                whether voluntarily, for a sinking fund, or otherwise

                any shares of any class of stock of the Corporation

                ranking junior (either as to dividends or upon liquidation,

                dissolution or winding up) to the Series B, provided that,

                notwithstanding the foregoing, the Corporation may at any time

                redeem, purchase or otherwise acquire shares of stock of any

                such junior class in exchange for, or out of the net cash

                proceeds from the concurrent sale of other shares of stock of

                any such junior class;

 

                      (2)  declare or pay dividends on or make any other

                distributions on any shares of stock ranking on a parity

                (either as to dividends or upon liquidation, dissolution

                or winding up) with the Series B, except dividends paid

                ratably on the Series B and all such parity stock on which

                dividends are payable or in arrears in proportion to the

                total amounts to which the holders of all such shares are

                then entitled;

 

                      (3)  redeem or purchase or otherwise acquire for

                consideration shares of any stock ranking on a parity (either

                as to dividends or upon liquidation, dissolution or winding

                up) with the Series B, provided that the Corporation may at

                any time redeem, purchase or otherwise acquire shares of

                any such parity stock in exchange for shares of any stock

                of the Corporation ranking junior (either as to dividends

                or upon dissolution, liquidation or winding up) to the

                Series B;

 

                      (4)  purchase or otherwise acquire for consideration any

                shares of Series B, or any shares of stock ranking on a parity

 

                                      23<PAGE>

 

<PAGE>  24

                with the Series B, except in accordance with a purchase offer

                made in writing or by publication (as determined by the Board

                of Directors) to all holders of such shares upon such terms

                as the Board of Directors, after consideration of the

                respective annual dividend rates and other relative rights

                and preferences of the respective series and classes, shall

                determine in good faith will result in fair and equitable

                treatment among the respective series or classes.

 

                (ii)  The Corporation shall not permit any subsidiary of the

       Corporation to purchase or otherwise acquire for consideration

       any shares of stock of the Corporation unless the Corporation

       could, under subsection (i) of this subsection (c), purchase or

       otherwise acquire such shares at such time and in such manner.

 

       (d)     Reacquired Shares.  Any shares of Series B purchased or

otherwise acquired by the Corporation in any manner whatsoever

shall be retired and canceled promptly after the acquisition

thereof.  All such shares shall upon their cancellation become

authorized but unissued shares of Cumulative Preferred Stock and

may be reissued as part of a new series of Cumulative Preferred

Stock to be created by resolution or resolutions of the Board of

Directors, subject to the conditions and restrictions on

issuance set forth herein.

 

       (e)     Liquidation, Dissolution or Winding Up.

 

               (i)  Upon any voluntary or involuntary liquidation,

        dissolution or winding up of the Corporation, no distribution

        shall be made to the holders of shares of stock ranking junior

        (either as to dividends or upon liquidation, dissolution or

        winding up) to the Series B unless, prior thereto, the holders

        of shares of Series B shall have received $3,000.00 per share,

        plus an amount equal to accrued and unpaid dividends and

        distributions thereon, whether or not declared, to the date of

        such payment (the "Series B Liquidation Preference").  Following

        the payment of the full amount of the Series B Liquidation

        Preference, no additional distributions shall be made to the

        holders of shares of Series B unless, prior thereto, the holders

        of shares of Common Stock shall have received an amount per

        share (the "Common Adjustment") equal to the quotient obtained

        by dividing (1) the Series B Liquidation Preference by (2) 1000

        (as appropriately adjusted as set forth in subsection (iii)

        below to reflect such events as stock splits, stock dividends

        and recapitalizations with respect to the Common Stock) (such

        number in clause (ii) being hereinafter referred to as the

        "Adjustment Number").  Following the payment of the full amount

        of the Series B Liquidation Preference and the Common Adjustment

        in respect of all outstanding shares of Series B and Common

        Stock, respectively, holders of Series B and holders of shares

        of Common Stock shall receive their ratable and proportionate

        share of the remaining assets to be distributed in the ratio of

        the Adjustment Number to 1 with respect to such Series B and

        Common Stock, on a per share basis, respectively.

 

                                      24<PAGE>

 

<PAGE>  25

 

               (ii)  In the event, however, that there are not sufficient

        assets available to permit payment in full of the Series B

        Liquidation Preference and the liquidation preferences of all

        other series of Cumulative Preferred Stock, if any, that rank on

        a parity with the Series B, then such remaining assets shall be

        distributed ratably to the holders of such parity shares in

        proportion to their respective liquidation preferences.  In the

        event, however, that there are not sufficient assets available

        to permit payment in full of the Common Adjustment, then such

        remaining assets shall be distributed ratably to the holders of

        Common Stock.

 

               (iii)  In the event the Corporation shall at any time after

        the Rights Declaration Date (1) declare any dividend on Common

        Stock payable in shares of Common Stock, (2) subdivide the

        outstanding Common Stock, or (3) combine the outstanding Common

        Stock into a smaller number of shares, then in each such case

        the Adjustment Number in effect immediately prior to such event

        shall be adjusted by multiplying such Adjustment Number by a

        fraction the numerator of which is the number of shares of

        Common Stock outstanding immediately after such event and the

        denominator of which is the number of shares of Common Stock

        that were outstanding immediately prior to such event.

 

        (f)     Consolidation, Merger, etc.  In case the Corporation shall

enter into any consolidation, merger, combination or other transaction

in which the shares of Common Stock are exchanged for or changed into

other stock or securities, cash and/or any other property, then in any

such case the shares of Series B shall at the same time be similarly

exchanged or changed in an amount per share (subject to the provision

for adjustment hereinafter set forth) equal to 1000 times the aggregate

amount of stock, securities, cash and/or any other property (payable in

kind), as the case may be, into which or for which each share of

Common Stock is changed or exchanged.  In the event the Corporation

shall at any time after the Rights Declaration Date (i) declare any

dividend on Common Stock payable in shares of Common Stock, (ii)

subdivide the outstanding Common Stock, or (iii) combine the outstanding

Common Stock into a smaller number of shares, then in each such case

the amount set forth in the preceding sentence with respect to the

exchange or change of shares of Series B shall be adjusted by multiplying

such amount by a fraction the numerator of which is the number of shares of

Common Stock outstanding immediately after such event and the denominator

of which is the number of shares of Common Stock that were outstanding

immediately prior to such event.

 

        (g)     Redemption.  The outstanding shares of Series B may be

redeemed at the option of the Board of Directors as a whole, but not in

part, at any time, at which no person beneficially owns more than 20%

of the outstanding Common Stock of the Corporation at a cash price per

share equal to (i) 100% of the product of the Adjustment Number times

the Average Market Value (as such term is hereinafter defined) of the

Common Stock, plus (ii) all dividends which on the redemption date have

 

                                      25<PAGE>

 

<PAGE>  26

 

accrued on the shares to be redeemed and have not been paid or

declared and a sum sufficient for the payment thereof set apart,

without interest; provided, however, that if and whenever any

quarterly dividend shall have accrued on the Series B that has not

been paid or declared and a sum sufficient for the payment thereof

set apart, the Corporation may not purchase or otherwise acquire

any shares of Series B unless all shares of such stock at the

time outstanding are so purchased or otherwise acquired.  The

"Average Market Value" is the average of the closing sale prices

of a share of the Common Stock during the 30 day period

immediately preceding the date before the redemption date on the

Composite Tape for New York Stock Exchange Listed Stocks, or, if

such stock is not quoted on the Composite Tape, on the New York

Stock Exchange, or, if such stock is not listed on such

Exchange, on the principal United States securities exchange

registered under the Securities Exchange Act of 1934, as

amended, on which such stock is listed, or, if such stock is not

listed on any such exchange, the average of the closing bid

quotations with respect to a share of Common Stock during such

30-day period on the National Association of Securities Dealers,

Inc. Automated Quotations System or any system then in use, or

if no such quotations are available, the fair market value of a

share of the Common Stock as determined by the Board of Directors

in good faith.

 

        (h)     Ranking.  The Series B shall rank junior to all other

series of the Corporation's Cumulative Preferred Stock as to the

payment of dividends and the distribution of assets, unless the

terms of any such series shall provide otherwise.

 

        (i)     Amendment.  The Corporation shall not create any other

class or classes of stock ranking prior to the Series B either as to

dividends or liquidation, or increase the authorized number of shares

of any such other class of stock, or amend, alter, or repeal any of

the provisions of the Articles of Incorporation or the resolution

or resolutions adopted by the Board of Directors authorizing the

Series B so as to adversely affect the preferences, rights or

powers of the Series B without the affirmative vote of the holders of

more than two-thirds of the outstanding shares of the Series B, voting

separately as one voting group.

 

        (j)     Fractional Shares.  Series B may be issued in fractions

of a share which shall entitle the holder, in proportion to such

holder's fractional shares, to exercise voting rights, receive

dividends, participate in distributions and to have the benefit

of all other rights of holders of Series B.

 

                           PART B.  COMMON STOCK

 

   1.  Voting Rights.  The holders of the Common Stock shall, to

the exclusion of the holders of any other class of stock of the

Corporation, have the sole and full power to vote for the

election of directors and for all other purposes without

limitation except only as provided in sections 1 and 2 of Part

A, and as otherwise expressly provided by the then existing

statutes of the Commonwealth of Virginia.  The holders of the

Common Stock shall have one (1) vote for each share of Common

Stock held by them.

 

   2.  Dividends.  Subject to the provisions hereinabove set forth

with respect to Cumulative Preferred Stock, the holders of shares

 

                                      26<PAGE>

 

<PAGE>  27

 

of Common Stock shall be entitled to receive dividends if, when and as

declared by the Board of Directors out of funds legally available therefor.

 

                          PART C.  PRE-EMPTIVE RIGHTS

 

   1.   No holder of Cumulative Preferred Stock shall as such holder

have any pre-emptive or preferential right to purchase or subscribe

to (i) any shares of any class of stock of the Corporation, whether

now or hereafter authorized, (ii) any warrants, rights or options to

purchase any such stock, or (iii) any obligations convertible into

any such stock or into warrants, rights or options to purchase any

such stock.

 

   2.   The holders of Common Stock shall have no pre-emptive rights

to purchase or subscribe to any shares of Cumulative Preferred Stock

or to any shares of any class of stock of the Corporation that may be

issued on conversion of any shares of Cumulative Preferred Stock.

 

 

                                 ARTICLE IV

 

   1.   Number of Directors.  Unless otherwise fixed in the By-Laws,

the number of directors of the Corporation shall be eighteen (18),

but in no event shall such number be less than three (3).

 

   2.   Indemnification of Directors and Officers.

 

        (a)   To the full extent that the Virginia Stock Corporation

   Act, as it existed on May 27, 1988, the effective date of this

   section, or as hereafter amended, permits the limitation or

   elimination of the liability of Directors and officers, no

   Director or officer of the Corporation made a party to any

   proceeding shall be liable to the Corporation or its

   stockholders for monetary damages arising out of any

   transaction, occurrence or course of conduct, whether occurring

   prior or subsequent to the effective date of this section.

 

        (b)   To the full extent permitted by the Virginia Stock

   Corporation Act, as it existed on May 28, 1988, the effective

   date of this section, or as hereafter amended, the Corporation

   shall indemnify any person who is or was a party to any

   proceeding by reason of the fact that (i) he is or was a

   Director or officer of the Corporation, or (ii) he is or was

   serving at the request of the Corporation as a director,

   trustee, partner or officer of another corporation, partnership,

   joint venture, trust, employee benefit plan or other enterprise,

   against any liability incurred by him in connection with such

   proceeding.  A person is considered to be serving an employee

   benefit plan at the Corporation's request if his duties to the

   Corporation also impose duties on, or otherwise involve services

   by, him to the plan or to participants in or beneficiaries of

   the plan.  The Board of Directors is hereby empowered, by a

   majority vote of a quorum of the disinterested Directors, to

   enter into a contract to indemnify any Director or officer in

   respect of any proceeding arising from any act or omission,

   whether occurring before or after the execution of such contract.

 

                                      27<PAGE>

 

<PAGE>  28

 

        (c)   The Board of Directors is hereby empowered, by majority

   vote of a quorum of the disinterested Directors, to cause the

   Corporation to indemnify or contract to indemnify any person not

   specified in subsection (a) or (b) of this section who was, is

   or may become a party to any proceeding, by reason of the fact

   that he is or was an employee, agent or consultant of the

   Corporation, or is or was serving at the request of the

   Corporation as an employee, agent or consultant of another

   corporation, partnership, joint venture, trust, employee benefit

   plan or other enterprise, to the same extent as if such person

   were specified as one to whom indemnification is granted in

   subsection (b) of this section.

 

        (d)   The provisions of this section shall be applicable to all

   proceedings commenced after the effective date hereof arising

   from any act or omission, whether occurring before or after such

   effective date.  No amendment or repeal of this section shall

   have any effect on the rights provided under this section with

   respect to any act or omission occurring prior to such amendment

   or repeal.  The Corporation shall promptly take all such

   actions, and make all such determinations, as shall be necessary

   or appropriate to comply with its obligation to make any

   indemnity under this section and shall pay or reimburse promptly

   all reasonable expenses, including attorneys' fees, incurred by

   such Director or officer in connection with such actions and

   determinations or proceedings of any kind arising therefrom.

 

        (e)   In the event there has been a change in the composition of

   a majority of the Board of Directors after the date of the

   alleged act or omission with respect to which indemnification is

   claimed, any determination as to indemnification and advancement

   of expenses with respect to any claim for indemnification made

   pursuant to this section shall be made by special legal counsel

   agreed upon by the Board of Directors and the applicant.  If the

   Board of Directors and the applicant are unable to agree upon

   such special legal counsel, the Board of Directors and the

   applicant each shall select a nominee, and the nominees shall

   select such special legal counsel.

 

        (f)   Every reference herein to Directors, officers, trustees,

   partners, employees, agents or consultants shall include former

   Directors, officers, trustees, partners, employees, agents or

   consultants and their respective heirs, executors and

   administrators.  The indemnification hereby provided and

   provided hereafter pursuant to the power hereby conferred by

   this section on the Board of Directors shall not be exclusive of

   any other rights to which any person may be entitled, including

   any right under policies of insurance that may be purchased and

   maintained by the Corporation or others, with respect to claims,

   issues or matters in relation to which the Corporation would not

   have the power to indemnify such person under the provisions of

   this section.  Such rights shall not prevent or restrict the

   power of the Corporation to make or provide for any further

   indemnity, or provisions for determining entitlement to

   indemnity, pursuant to one or more indemnification agreements,

   bylaws, or other arrangements (including, without limitation,

   creation of trust funds or security interests funded by letters

 

                                      28<PAGE>

 

<PAGE>  29

 

   of credit or other means) approved by the Board of Directors

   (whether or not any of the Directors of the Corporation shall be

   a party to or beneficiary of any such agreements, bylaws or

   arrangements); provided, however, that any provision of such

   agreements, bylaws or other arrangements shall not be effective

   if and to the extent that it is determined to be contrary to

   this section or applicable laws of the Commonwealth of Virginia.

 

        (g)   Each provision of this section shall be severable and an

   adverse determination as to any such provision shall in no way

   affect the validity of any other provision.

 

        (h)   Unless otherwise defined, terms used in this section shall

   have the definitions assigned to them in the Virginia Stock

   Corporation Act, as it exists on the date hereof or as hereafter

   amended.

 

                                  ARTICLE V

 

        Any amendment or restatement of these Articles other than an

amendment or restatement that amends or affects the shareholder vote

required by the Virginia Stock Corporation Act to approve a merger,

statutory share exchange, sale of all or substantially all of the

Corporation's assets or the dissolution of the Corporation shall be

approved by a majority of the votes entitled to be cast by each

shareholder voting group that is entitled to vote on the matter.

 

 

 

 

 

                                     29

 

</TEXT>

</DOCUMENT>

<DOCUMENT>

<TYPE>EX-27

<SEQUENCE>2

<DESCRIPTION>ARTICLE 5 FDS 3RD QUARTER 10-Q

<TEXT>

 

<TABLE> <S> <C>

 

<ARTICLE> 5

<MULTIPLIER> 1,000

      

<S>                             <C>

<PERIOD-TYPE>                   9-MOS

<FISCAL-YEAR-END>                          DEC-31-1996

<PERIOD-END>                               SEP-30-1996

<CASH>                                           32630

<SECURITIES>                                         0

<RECEIVABLES>                                   172398

<ALLOWANCES>                                      2340

<INVENTORY>                                     212943

<CURRENT-ASSETS>                                437641

<PP&E>                                          763750

<DEPRECIATION>                                  319141

<TOTAL-ASSETS>                                 1102553

<CURRENT-LIABILITIES>                           188694

<BONDS>                                         353129

<COMMON>                                        118444

<PREFERRED-MANDATORY>                                0

<PREFERRED>                                          0

<OTHER-SE>                                      312136

<TOTAL-LIABILITY-AND-EQUITY>                   1102553

<SALES>                                         845674

<TOTAL-REVENUES>                                845674

<CGS>                                           592386

<TOTAL-COSTS>                                   720389

<OTHER-EXPENSES>                                 (1258)

<LOSS-PROVISION>                                     0

<INTEREST-EXPENSE>                               18650

<INCOME-PRETAX>                                 107893

<INCOME-TAX>                                     40266

<INCOME-CONTINUING>                              67627

<DISCONTINUED>                                       0

<EXTRAORDINARY>                                      0

<CHANGES>                                            0

<NET-INCOME>                                     67627

<EPS-PRIMARY>                                      .57

<EPS-DILUTED>                                      .57

       

 

</TABLE>

</TEXT>

</DOCUMENT>

</SEC-DOCUMENT>

-----END PRIVACY-ENHANCED MESSAGE-----