-----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, RyaLuBdXznAy39OOzi43m79bQNd8QIbZ/hp21Ag+3xS1SJSIru+AtzwlvgDUV1vr lYekAQsoGLArgbvEU4f01w== 0000805264-96-000007.txt : 19960513 0000805264-96-000007.hdr.sgml : 19960513 ACCESSION NUMBER: 0000805264-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEORGIA GULF CORP /DE/ CENTRAL INDEX KEY: 0000805264 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 581563799 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09753 FILM NUMBER: 96559197 BUSINESS ADDRESS: STREET 1: 400 PERIMETER CTR TERRACE STREET 2: STE 595 CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4043954500 10-Q 1 GEORGIA GULF CORP 1ST QUARTER 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-9753 GEORGIA GULF CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 58-1563799 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 400 Perimeter Center Terrace, Suite 595 Atlanta, Georgia 30346 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(770) 395-4500 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding as of Class May 6, 1996 Common Stock, $0.01 par value................36,554,642 shares GEORGIA GULF CORPORATION FORM 10-Q QUARTERLY PERIOD ENDED MARCH 31, 1996 INDEX Page Numbers PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1996 and December 31, 1995 1 Condensed Consolidated Statements of Income for the three months ended March 31, 1996 and 1995 2 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1996 and 1995 3 Notes to Condensed Consolidated Financial Statements as of March 31, 1996 4-5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-7 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 8 SIGNATURES 9 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) March 31, December 31, 1996 1995 Assets Current assets Cash and cash equivalents $ 3,450 $ 2,530 Receivables 67,870 89,414 Inventories 79,239 75,049 Prepaid expenses 13,181 12,108 Deferred income taxes 8,115 8,115 Total current assets 171,855 187,216 Property, plant and equipment, at cost 573,645 534,264 Less accumulated depreciation 230,291 221,728 Property, plant and equipment, net 343,354 312,536 Other assets 6,008 7,580 _________ ________ Total assets $521,217 $507,332 ========= ========= Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 92,515 $ 78,861 Interest payable 4,575 2,737 Accrued income taxes 10,408 3,296 Other accrued liabilities 19,167 28,952 Total current liabilities 126,665 113,846 Long-term debt 298,400 292,400 Deferred income taxes 50,458 50,458 Stockholders' equity Common stock - $0.01 par value 368 372 Additional paid-in capital 13,534 31,312 Retained earnings 31,792 18,944 Total stockholders' equity 45,694 50,628 _______ _______ Total liabilities and stockholders' equity $521,217 $507,332 ========= ======== Common shares outstanding 36,796,597 37,240,252 =========== ==========
See notes to condensed consolidated financial statements.
GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) Three Months Ended March 31, 1996 1995 Net sales $208,036 $314,026 ________ ___________ Operating costs and expenses Cost of sales 167,118 195,839 Selling and administrative 10,808 11,583 ___________ ___________ Total operating costs and expenses 177,926 207,422 ___________ ___________ Operating income 30,110 106,604 Other income (expense) Interest, net (4,642) (8,712) ___________ ___________ Income before income taxes 25,468 97,892 Provision for income taxes 9,662 37,735 ___________ ___________ Net income $15,806 $60,157 =========== =========== Net income per common share $0.42 $1.44 =========== =========== Weighted average common shares and equivalents outstanding 37,636,402 41,856,291 =========== ===========
See notes to condensed consolidated financial statements.
GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended March 31, 1,996 1,995 Cash flows from operating activities: Net income $15,806 $60,157 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,680 8,179 Change in assets, liabilities and other 31,905 25,124 Net cash provided by operating activities 56,391 93,460 Cash flows from financing activities: Net change in revolving credit loan 6,000 6,400 Proceeds from issuance of common stock 1,250 609 Purchase and retirement of common stock (20,382) (78,314) Dividends paid (2,958) (3,238) Net cash used in financing activities (16,090) (74,543) Cash flows from investing activities: Capital expenditures (39,381) (17,464) Net cash used in investing activities (39,381) (17,464) Net change in cash and cash equivalents 920 1,453 Cash and cash equivalents at beginning of period 2,530 1,216 Cash and cash equivalents at end of period $3,450 $2,669
See notes to condensed consolidated financial statements. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for Georgia Gulf Corporation and its subsidiaries ("the Company") for the three-month period ended March 31, 1996, are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report for the year ended December 31, 1995. NOTE 2: INVENTORIES The major classes of inventories were as follows (in thousands): March 31, December 31, 1996 1995 Raw materials and supplies $ 31,551 $ 23,973 Finished goods 47,688 51,076 $ 79,239 $ 75,049 NOTE 3: STOCKHOLDERS' EQUITY The Company purchased 607,100 shares of its common stock for $20,382,000 during the three months ended March 31, 1996. As of March 31, 1996, the Company had authorization to purchase of up to 2,192,100 additional shares under the current common stock repurchase program. NOTE 4: COMMITMENT In February 1996, the Company entered into an operating lease agreement for a 250 megawatt co-generation facility, which is being constructed at the Company's Plaquemine, LA complex. The total cost of assets to be covered by the lease is limited to $120,000,000. The co-generation facility, scheduled for completion during the third quarter of 1997, will supply essentially all electricity and steam requirements for the Plaquemine complex. Payments under the lease will be determined and will commence upon completion of construction and will continue through the initial lease term of three years. The Company has options to renew the lease for two one-year periods and to purchase the facility at its estimated fair market value at any time during the lease term. The lease provides for substantial residual value guarantees by the Company at the termination of the lease. NOTE 5: SUBSEQUENT EVENT - DISPOSITION In April 1996, the Company completed the sale of its Delaware City, DE facility, and its emulsion resin business. Under the terms of the sale agreement, the Company has the right to continue to operate its vinyl compound assets located at the Delaware City facility for an eighteen month period. During this period, the majority of the Delaware City vinyl compound production will be transitioned to the Company's recently expanded vinyl compound plant in Gallman, MS. The proceeds from the sale approximated the net book value of the disposed assets. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS First Quarter of 1996 Compared with the First Quarter of 1995: For the first quarter ended March 31, 1996, net income per common share was $0.42 on net income of $15.8 million and net sales of $208.0 million. This compares to net income per common share of $1.44, net income of $60.2 million and net sales of $314.0 million for the first quarter of 1995. Operating income for the first quarter of 1996 was $30.1 million, a decrease of 72 percent from $106.6 million for the same period in 1995. Substantial drops in pricing for methanol and vinyl products were largely responsible for the decline in sales and operating income. However, a combination of plant shutdowns resulting from freeze damage at the Company's Plaquemine, LA complex and scheduled plant shutdowns relating to the tie-in of the new cumene expansion and modernization project at the Pasadena, TX facility also significantly impacted the results for the first quarter of 1996. While prices for methanol and vinyl products were significantly lower, nearly all of the Company's products experienced declines in pricing when comparing the first quarter of 1996 to the prior year first quarter. Overall sales volumes were also down when comparing the two first quarter periods. Selling and administrative expenses were $10.8 million for the first quarter of 1996, compared to $11.6 million for the same period in 1995. The decrease resulted primarily from higher charges relating to the Company's profit sharing programs for the first quarter of 1995 as a result of higher profits, partially offset by costs associated with the revolving trade receivables sales program initiated during the second quarter of 1995. Net interest expense declined $4.1 million when comparing the first quarter of 1996 to the same period in 1995. This decline was attributable to a lower debt balance during the first quarter of 1996, as compared to the same period in 1995 and reduced interest rates in connection with the redemption of the Company's 15% Senior Subordinated Notes early in the second quarter of 1995. LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 1996, $56.4 million of cash was generated by operating activities as compared to $93.5 million for the three months ended March 31, 1995. Cash flow decreased due to lower net income in 1996, partially offset by working capital fluctuations. The majority of the change in working capital related to a decrease in receivables resulting from lower sales and an increase in accounts payable to suppliers. Debt increased by $6.0 million during the three months ended March 31, 1996, to a level of $298.4 million which consisted of a $100 million ten-year public bond issue, a $100 million seven-year term loan, a $350 million revolving credit loan with an outstanding balance of $76.0 million and two additional loans with an aggregate balance of $22.4 million. Capital expenditures for the three months ended March 31, 1996, were $39.4 million as compared to $17.5 million for the same 1995 period. The first half of the vinyl compound expansion in Gallman, MS was completed in early 1996 with production scheduled to come on-line during the second quarter. The second half of the expansion will be added as markets dictate. Also, the modernization and expansion of the Pasadena, TX cumene plant was completed in the second quarter of 1996. The vinyl chloride monomer ("VCM") expansion is scheduled for completion during the fourth quarter of 1996, while the expansion of the phenol\acetone plant is scheduled to be completed during 1997. The Company estimates that capital expenditures for 1996 will approximate $135.0 million. The Company declared a dividend of $0.08 per share or $3.0 million during the first quarter of 1996. The Company also purchased 607.1 thousand shares of its common stock at a cost of $20.4 million under the Company's current stock repurchase program. As of March 31, 1996, the Company had authorization to purchase of up to approximately 2.2 million additional shares under the current stock repurchase program. Management believes that cash provided by operations and the availability under the Company's current debt agreements will provide sufficient funds to support planned capital expenditures, dividends, stock repurchases, working capital fluctuations and debt service requirements. OUTLOOK Looking forward to the second quarter of 1996, management expects both sales and production volumes to increase as the Company's plants resume full operation and the new cumene capacity comes on- line. Demand for vinyl resins has begun to recover and pricing for vinyl products has increased from the very low levels of the first quarter of 1996. However, management does anticipate some continued weakness in certain product lines. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K a) No exhibits are filed as part of this Form 10-Q Quarterly Report. b) No reports on Form 8-K were filed with the Securities and Exchange Commission during the first quarter of 1996. SIGNATURES 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 thereunto duly authorized. GEORGIA GULF CORPORATION (Registrant) Date May 10, 1996 /s/ Jerry R. Satrum Jerry R. Satrum President and Chief Executive Officer (Principal Executive Officer) Date May 10, 1996 /s/ Richard B. Marchese Richard B. Marchese Vice President - Finance and Chief Financial Officer (Principal Financial Officer) EX-27 2 FDS FOR 1ST QUARTER 10-Q
5 This schedule contains summary information extracted from Georgia Gulf Corporation's form 10-Q for the quarter ended March 31, 1996 and is qualified in its entirety by reference to such financial statements. 1000 3-MOS DEC-31-1995 JAN-1-1996 MAR-31-1996 3,450 0 70,242 2,372 79,239 171,855 573,645 230,291 521,217 126,665 298,400 0 0 368 45,326 521,217 208,036 208,036 167,118 167,118 0 0 4,642 25,468 9,662 15,806 0 0 0 15,806 0.42 0.42
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