-----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, D1L+JTU9+V790Fip2x/VyYl5SnhExpWNHMvDEn6ADVuMMoM7wZSRLMsdRnz27y7t 02/xa9KJ3Hy/Q02VwyUuJQ== 0000805264-95-000013.txt : 19951020 0000805264-95-000013.hdr.sgml : 19951020 ACCESSION NUMBER: 0000805264-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951019 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: 95581716 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 2ND 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 September 30, 1995 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 October 9, 1995 Common Stock, $0.01 par value................ 37,736,137 shares GEORGIA GULF CORPORATION FORM 10-Q QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 INDEX Page Numbers PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of September 30, 1995 and December 31, 1994 1 Condensed Consolidated Statements of Income for the three and nine months ended September 30, 1995 and 1994 2 Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 3 Notes to Condensed Consolidated Financial Statements as of September 30, 1995 4-5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6-8 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 9 SIGNATURES 10 PART I. FINANCIAL INFORMATION Item 1. Financial Statements
GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) September 30, December 31, 1995 1994 Assets Current assets Cash and cash equivalents $ 3,328 $ 1,216 Receivables 107,102 157,085 Inventories 70,908 70,667 Prepaid expenses 7,954 13,882 Deferred income taxes 7,069 7,069 Total current assets 196,361 249,919 Property, plant and equipment, at cost 500,363 447,986 Less accumulated depreciation 213,504 192,378 Property, plant and equipment, net 286,859 255,608 Other assets 2,993 2,920 Total assets $486,213 $508,447 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 82,468 $ 73,771 Interest payable 1,869 6,424 Accrued income taxes 5,452 21,537 Other accrued liabilities 30,811 21,519 Total current liabilities 120,600 123,251 Long-term debt 275,700 314,081 Deferred income taxes 44,590 39,977 Stockholders' equity Common stock - $0.01 par value 378 420 Additional paid-in capital 54,090 185,984 Retained earnings (9,145) (155,266) Total stockholders' equity 45,323 31,138 Total liabilities and stockholders' equity $486,213 $508,447 Common shares outstanding 37,848,837 42,013,116
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 Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Net sales $270,877 $249,044 $860,736 $650,138 Operating costs and expenses Cost of sales 182,204 176,200 552,116 486,262 Selling and administrative 11,471 13,439 35,327 34,798 Total operating costs and expenses 193,675 189,639 587,443 521,060 Operating income 77,202 59,405 273,293 129,078 Other income (expense) Interest, net (4,880) (9,347) (20,565) (28,583) Income before income taxes 72,322 50,058 252,728 100,495 Provision for income taxes 27,840 18,228 97,296 35,983 Net income $ 44,482 $ 31,830 $155,432 $ 64,512 Net income per common share $ 1.15 $ 0.75 $ 3.90 $ 1.52 Weighted average common shares and equivalents outstanding 38,606,833 42,512,726 39,843,754 42,400,423
See notes to condensed consolidated financial statements.
GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income $155,432 $64,512 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23,921 20,778 Change in assets, liabilities and other 56,710 (11,661) Net cash provided by operating activities 236,063 73,629 Cash flows from financing activities: Net change in revolving credit loan 45,700 49,600 Proceeds from issuance of long-term debt 107,000 1,000 Principal payments on long-term debt (191,081) (83,125) Proceeds from issuance of common stock 1,703 6,180 Purchase and retirement of common stock (135,585) -- Dividends on common stock (9,311) -- Net cash used in financing activities (181,574) (26,345) Cash flows from investing activities: Capital expenditures (52,377) (46,842) Net cash used in investing activities (52,377) (46,842) Net change in cash and cash equivalents 2,112 442 Cash and cash equivalents at beginning of period 1,216 3,099 Cash and cash equivalents at end of period $ 3,328 $ 3,541
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- and nine- month periods ended September 30, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. 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, 1994. NOTE 2: RECEIVABLES On May 12, 1995, the Company entered into an agreement, which allows for the sale, without recourse, of fractional interests in a defined pool of trade receivables for up to $50,000,000. This agreement expires May 1996 but may be extended for additional one- year terms by the mutual consent of the Company and the receivables purchaser. At September 30, 1995, $50,000,000 had been sold under this agreement, and the sale is reflected as a reduction of receivables in the accompanying Condensed Consolidated Balance Sheet. The cash proceeds were reported as cash flows from operating activities in the accompanying Condensed Consolidated Statement of Cash Flows. The costs of this program, which were $1,261,000 for the nine-month period ended September 30, 1995, are charged to selling and administrative expense in the accompanying Condensed Consolidated Statement of Income. NOTE 3: INVENTORIES The major classes of inventories are as follows (in thousands): September 30, December 31, 1995 1994 Raw materials and supplies $ 29,401 $ 25,019 Finished goods 41,507 45,648 $ 70,908 $ 70,667 NOTE 4: LONG-TERM DEBT On April 15, 1995, the Company redeemed, at par, the $191,081,000 15% Senior Subordinated Notes ("Notes"), which would have been due April 2000. The redemption of the Notes was funded with availability under the Company's $350,000,000 revolving credit agreement dated March 1995. The write-off of the remaining unamortized debt issuance costs related to the Notes was not material. The Company entered into a $100,000,000 unsecured term loan agreement on June 29, 1995, (the "Term Loan"). The terms and conditions of the Term Loan are similar to the Company's revolving credit agreement. Required principal payments under the Term Loan are $25,000,000 to be paid in June 2001 and $75,000,000 to be paid in June 2002. The interest rate on the Term Loan has been fixed at a rate ranging from 6.71 to 7.04 percent using interest rate swap agreements. The costs incurred in connection with the term loan financing were not material. On September 28, 1995, the Company filed a Form S-3 Registration Statement with the Securities and Exchange Commission to provide for the issuance of $100,000,000 principal amount of its senior unsecured notes due 2005. Net proceeds from the anticipated sale of these notes will be used to reduce indebtedness under the Company's existing revolving credit facility. As of September 30, 1995, the Company had availability of up to $206,000,000 under the terms of its $350,000,000 revolving credit agreement. NOTE 5: STOCKHOLDERS' EQUITY The Company purchased 4,382,900 shares of common stock for $135,585,000 during the nine months ended September 30, 1995. As of September 30, 1995, the Company is authorized to purchase up to an additional 3,587,100 shares under the current common stock repurchase program announced in May 1995. NOTE 6: SUBSEQUENT EVENT In October 1995, the Company announced that a 250 megawatt co- generation facility will be constructed at the Plaquemine, Louisiana, complex which will supply, under a long-term lease agreement, essentially all electricity and steam requirements for six of the Company's manufacturing plants. Completion of the co- generation facility is scheduled for the third quarter of 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS Third Quarter of 1995 Compared with the Third Quarter of 1994: For the third quarter ended September 30, 1995, net income per common share was $1.15 on net income of $44.5 million and net sales of $270.9 million. This compares to net income per common share of $0.75, net income of $31.8 million and net sales of $249.0 million for the third quarter of 1994. Operating income for the third quarter of 1995 was $77.2 million, an increase of 30 percent from $59.4 million for the same period in 1994. The increase in operating income was a result of strong demand for caustic soda and aromatic chemicals, which pushed the average sales price of products up 6 percent despite a significant decline in methanol prices. Combining the strengths of caustic soda and aromatic chemicals with a 3 percent increase in overall sales volumes, the Company was able to overcome slightly higher raw material costs resulting in improved margins for the third quarter of 1995. Selling and administrative expenses were $11.5 million for the third quarter of 1995, compared to $13.4 million for the third quarter of 1994. The decrease resulted primarily from lower charges relating to the Company's profit sharing program during the third quarter of 1995, which were partially offset by costs associated with a new revolving trade receivables sales program. Net interest expense declined $4.5 million when comparing the third quarter of 1995 to the third quarter 1994. This decline was attributable to $71.0 million of debt repayments over the past twelve months and reduced interest rates in connection with the redemption of the 15% Senior Subordinated Notes ("Notes") early in the second quarter of 1995. The effective income tax rate for the third quarter of 1995 was 38.5 percent, up from 36.4 percent in the third quarter of 1994. The effective income tax rate increased in 1995 primarily as a result of higher taxable income, which minimized the effect of permanent tax differences. Nine Months Ended September 30, 1995, Compared With Nine Months Ended September 30, 1994: For the nine months ended September 30, 1995, net income per common share was $3.90 on net income of $155.4 million and net sales of $860.7 million. This compares to net income per common share of $1.52, net income of $64.5 million and net sales of $650.1 million for the same period in 1994. Operating income for the nine months ended September 30, 1995, was $273.3 million, an increase of 112 percent from $129.1 million for the same period in 1994. For this period comparison, overall sales volumes improved 3 percent, while the average sales price of the Company's products rose 29 percent. Both of these factors helped to offset rising raw material costs, which occurred during the first half of 1995. Net interest expense declined $8.0 million when comparing the first nine months of 1995 to the same period in 1994. This decline was attributable to a lower debt balance during 1995 and reduced interest rates in connection with the redemption of the Company's Notes early in the second quarter of 1995. The effective income tax rate for the nine months ended September 30, 1995, was 38.5 percent, up from 35.8 percent for the same period in 1994 as a result of higher taxable income, which minimized the effect of permanent tax differences. LIQUIDITY AND CAPITAL RESOURCES During the nine months ended September 30, 1995, $236.1 million of cash was generated by operating activities as compared to $73.6 million for nine months ended September 30, 1994. Cash flow increased due to higher net income in 1995, along with a decrease in working capital. The majority of the decrease in working capital in 1995 was attributable to a $50.0 million sale of trade receivables under the revolving trade receivables sales program. Debt decreased by $38.4 million during the nine months ended September 30, 1995, to a level of $275.7 million, which consisted of revolving credit loans of $167.7 million, a term loan of $100.0 million and other debt of $8.0 million. On April 15, 1995, the Company used availability under its revolving credit facility to redeem, at par, the entire outstanding $191.1 million principal amount of the Notes, which would have been due April 2000. On June 29, 1995, the Company entered into a $100.0 million seven-year term loan agreement accompanied by interest rate swap agreements, which fix the interest rate on the term loan between 6.71 and 7.04 percent. Terms and conditions of the term loan are similar to the current revolving credit facility. Capital expenditures for the nine months ended September 30, 1995, were $52.4 million as compared to $46.8 million for the same 1994 period. Previously announced expansions to the Company's cumene, phenol/acetone, vinyl chloride monomer and vinyl compound plants are on schedule for completion in 1996. The Company repurchased approximately 4.4 million shares of common stock during the first nine months of 1995 at a cost of $135.6 million. The Company is presently authorized to retire an additional 3.6 million shares of common stock under its stock repurchase program. The Company declared an $0.08 per share dividend for each of the first, second and third quarters of 1995, which totalled $9.3 million. Management believes that cash provided by operations and the availability of cash 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 For the remainder of 1995, early indications point to continued softening in the demand for certain products, which would lead to a modest reduction in earnings. While anticipating lower fourth quarter earnings, management is encouraged by the recent pick-up in certain housing and automotive sectors of the economy, which will hopefully strengthen demand for several key products. 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 third quarter of 1995. 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 October 19, 1995 /s/ Jerry R. Satrum Jerry R. Satrum President and Chief Executive Officer (Principal Executive Officer) Date October 19, 1995 /s/ Richard B. Marchese Richard B. Marchese Vice President - Finance and Chief Financial Officer (Principal Financial Officer) EX-27 2 FDS FOR 2ND QUARTER 10-Q
5 This schedule contains summary information extracted from Georgia Gulf Corporation's Form 10-Q for the quarter ended September 30, 1995 and is qualified in tis entirety by reference to such financial statements. 9-MOS DEC-31-1994 JAN-1-1995 SEP-30-1995 3,328 0 109,474 2,372 70,908 196,361 500,363 213,504 486,213 120,600 275,700 378 0 0 44,945 486,213 860,736 860,736 552,116 552,116 0 0 20,565 252,728 97,296 155,432 0 0 0 155,432 3.90 3.90
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