-----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, HNELLP/yu48S1tNxrUdIUZ6lVDSnZtxTlsoYKBO8F1+FAEXszTSehLpO9YgRrpRB zlwtGuzD5QSKQ8ao8m3pDA== /in/edgar/work/0000912057-00-050227/0000912057-00-050227.txt : 20001116 0000912057-00-050227.hdr.sgml : 20001116 ACCESSION NUMBER: 0000912057-00-050227 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEORGIA GULF CORP /DE/ CENTRAL INDEX KEY: 0000805264 STANDARD INDUSTRIAL CLASSIFICATION: [2810 ] IRS NUMBER: 581563799 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09753 FILM NUMBER: 768641 BUSINESS ADDRESS: STREET 1: 400 PERIMETER CTR TERRACE STREET 2: STE 595 CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 7703954500 10-Q 1 a2029527z10-q.txt 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, 2000 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, 30346 SUITE 595, ATLANTA, GEORGIA (Zip code) (Address of principal executive offices)
------------------------ 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 NOVEMBER 9, 2000 - ----- ----------------- Common Stock, $0.01 par value............................. 31,477,327 shares
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GEORGIA GULF CORPORATION FORM 10-Q QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 INDEX
PAGE NUMBERS ------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of 1 September 30, 2000 and December 31, 1999................................. Condensed Consolidated Statements of Income for the 2 Three and Nine Months Ended September 30, 2000 and 1999.................................................. Condensed Consolidated Statements of Cash Flows for the 3 Nine Months Ended September 30, 2000 and 1999......... Notes to Condensed Consolidated Financial Statements as 4-12 of September 30, 2000................................. Item 2. Management's Discussion and Analysis of Financial 13-17 Condition and Results of Operations..................... Item 3. Quantitative and Qualitative Disclosures About 17 Market Risk............................................. PART II. OTHER INFORMATION Item 1. Legal Proceedings and Environmental Matters....... 18 Item 6. Exhibits and Reports on Form 8-K.................. 18 SIGNATURES.................................................. 19
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, 2000 1999 ------------- ------------ ASSETS Cash and cash equivalents................................... $ 824 $ 4,424 Receivables................................................. 141,731 164,376 Inventories................................................. 132,758 112,844 Prepaid expenses............................................ 7,271 5,440 Deferred income taxes....................................... 6,172 6,172 ----------- ----------- Total current assets...................................... 288,756 293,256 ----------- ----------- Property, plant and equipment, at cost...................... 1,000,895 985,825 Less accumulated depreciation............................. 362,550 314,275 ----------- ----------- Property, plant and equipment, net...................... 638,345 671,550 ----------- ----------- Goodwill.................................................... 80,817 82,676 Other assets................................................ 48,826 50,083 Net assets of discontinued operation........................ -- 443 ----------- ----------- Total assets................................................ $ 1,056,744 $ 1,098,008 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt........................... $ 12,950 $ 22,000 Accounts payable............................................ 141,767 143,898 Interest payable............................................ 12,904 5,926 Accrued income taxes........................................ -- 494 Accrued compensation........................................ 10,237 7,682 Other accrued liabilities................................... 12,934 17,632 ----------- ----------- Total current liabilities................................. 190,792 197,632 ----------- ----------- Long-term debt, net of current portion...................... 634,107 749,194 ----------- ----------- Deferred income taxes....................................... 107,996 93,949 ----------- ----------- Stockholders' equity Common stock--$0.01 par value............................. 315 313 Additional paid-in capital................................ 7,719 5,250 Retained earnings......................................... 115,815 51,670 ----------- ----------- Total stockholders' equity.............................. 123,849 57,233 ----------- ----------- Total liabilities and stockholders' equity.................. $ 1,056,744 $ 1,098,088 =========== =========== Common shares outstanding................................... 31,477,327 31,290,862 =========== ===========
See notes to condensed consolidated financial statements. 1 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, ------------------------- ------------------------- 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Net sales................................. $ 352,728 $ 213,277 $ 1,169,805 $ 573,253 ----------- ----------- ----------- ----------- Operating costs and expenses Cost of sales........................... 313,864 175,302 968,644 487,122 Selling and administrative.............. 10,513 9,288 35,545 29,206 ----------- ----------- ----------- ----------- Total operating costs and expenses.... 324,377 184,590 1,004,189 516,328 ----------- ----------- ----------- ----------- Operating income.......................... 28,351 28,687 165,616 56,925 Other expense Interest, net........................... 16,646 7,037 53,606 21,719 ----------- ----------- ----------- ----------- Income from continuing operations before income taxes............................ 11,705 21,650 112,010 35,206 Provision for income taxes................ 4,214 7,903 40,330 12,850 ----------- ----------- ----------- ----------- Income from continuing operations......... 7,491 13,747 71,680 22,356 Discontinued operation Loss from discontinued operation, net... -- (520) -- (2,525) Loss on disposal of discontinued operation, net........................ -- (7,631) -- (7,631) ----------- ----------- ----------- ----------- Net income................................ $ 7,491 $ 5,596 $ 71,680 $ 12,200 =========== =========== =========== =========== Earnings / (loss) per share: Basic Continuing operations................. $ 0.24 $ 0.44 $ 2.28 $ 0.72 Discontinued operation................ $ -- $ (0.26) $ -- $ (0.33) ----------- ----------- ----------- ----------- $ 0.24 $ 0.18 $ 2.28 $ 0.39 =========== =========== =========== =========== Weighted average common shares-basic.... 31,484,399 30,936,764 31,383,914 30,919,368 =========== =========== =========== =========== Diluted Continuing operations................. $ 0.24 $ 0.44 $ 2.27 $ 0.72 Discontinued operation................ -- (0.26) -- (0.33) ----------- ----------- ----------- ----------- $ 0.24 $ 0.18 $ 2.27 $ 0.39 =========== =========== =========== =========== Weighted average common shares-diluted........................ 31,585,437 31,068,452 31,529,858 31,004,457 =========== =========== =========== ===========
See notes to condensed consolidated financial statements. 2 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED SEPTEMBER 30, ------------------------ 2000 1999 --------- -------- Cash flows from operating activities: Net income................................................ $ 71,680 $ 12,200 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization........................... 56,162 34,392 Provision for deferred income taxes..................... 14,047 1,196 Loss on disposal of discontinued operation, net......... -- 7,631 Loss from discontinued operation, net................... -- 2,525 Change in operating assets, liabilities and other....... (856) 24,053 --------- -------- Net cash provided by continuing operations................ 141,033 81,997 Net cash provided by (used in) discontinued operation..... 443 (369) --------- -------- Net cash provided by operating activities................. 141,476 81,628 --------- -------- Cash flows from financing activities: Long-term debt proceeds................................. 41,538 115,000 Long-term debt payments................................. (165,675) (177,950) Proceeds from issuance of common stock.................. 1,787 471 Purchase and retirement of common stock................. (121) -- Dividends paid.......................................... (7,535) (7,422) --------- -------- Net cash used in financing activities..................... (130,006) (69,901) --------- -------- Cash flows from investing activities: Capital expenditures.................................... (15,070) (9,758) --------- -------- Net change in cash and cash equivalents................... (3,600) 1,969 Cash and cash equivalents at beginning of period.......... 4,424 1,244 --------- -------- Cash and cash equivalents at end of period................ $ 824 $ 3,213 ========= ========
See notes to condensed consolidated financial statements. 3 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 1999. Our operating results for the three- and nine-month periods ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. NOTE 2: NEW ACCOUNTING PRONOUNCEMENT During June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows derivative gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. As amended, SFAS No. 133 is effective for fiscal quarters of all fiscal years beginning after June 15, 2000, although earlier adoption is permitted. SFAS No. 133 cannot be applied retroactively. We believe the only derivative instruments or hedging activities we have that are subject to SFAS No. 133 are the interest rate swap agreements disclosed in Note 7. At September 30, 2000, these swaps had a fair market value of $1,681,000 in our favor. Presently, we are evaluating our options with regards to these swap agreements which may include terminating these agreements prior to the effective date of SFAS No. 133. NOTE 3: ACQUISITION On November 12, 1999, we completed the acquisition of the assets of the vinyls business of CONDEA Vista Company. The purchase included substantially all of the assets and net working capital of the vinyls business as of the date of acquisition. The acquisition was accounted for as a purchase, and the results of the vinyls business's operations have been included in our consolidated financial statements from the date of acquisition. The initial purchase price, including related fees and expenses, consisted of $263,000,000 of cash and the issuance of a $10,000,000 two-year, non-interest-bearing note payable to CONDEA Vista Company. The note was recorded at its net present value of $7,750,000 at the date of acquisition. The initial purchase price was subject to an adjustment for actual working capital acquired. During the second quarter of 2000, we paid CONDEA Vista Company approximately $16,286,000 representing the adjustment for working capital. The purchase price approximated the fair market value of the net assets acquired. NOTE 4: DISCONTINUED OPERATION On September 2, 1999, we announced our decision to exit the methanol business at the end of 1999. In connection with the discontinuance of the methanol business, we incurred a one-time charge 4 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 4: DISCONTINUED OPERATION (CONTINUED) of $7,631,000, net of income tax benefits, related to the write-off of the methanol plant assets, net of expected proceeds, and an accrual for estimated losses during the phase-out period. The disposition of the methanol operation represented the disposal of a business segment under Accounting Principles Board ("APB") Opinion No. 30. Accordingly, results of the methanol operation were classified as discontinued, and prior periods were restated, including the reallocation of fixed overhead charges to other business segments. For business segment reporting purposes, the methanol business results were previously classified as the segment "Gas Chemicals." Net sales and income from the discontinued operation were as follows:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 ------------------ ------------------ IN THOUSANDS Net sales................................ $ 9,710 $ 26,181 ======== ======== Pretax loss from discontinued operation.............................. $ (819) $ (3,976) Loss on disposal of business segment..... (12,017) (12,017) Income tax benefit....................... 4,685 5,837 -------- -------- Net loss from discontinued operation..... $ (8,151) $(10,156) ======== ========
Assets and liabilities of the discontinued operation were as follows:
DECEMBER 31, 1999 ----------------- IN THOUSANDS Current assets.............................................. $ 3,553 Current liabilities......................................... (3,110) ------- Net assets of discontinued operation........................ $ 443 =======
NOTE 5: RECEIVABLES In May 2000, we amended our receivables transfer agreement pursuant to which we sell a percentage ownership interest in a defined pool of our trade receivables. As a result of this amendment, we increased the amount of participating interest in new receivables we sell from $50,000,000 to $75,000,000. NOTE 6: INVENTORIES The major classes of inventories were as follows:
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ IN THOUSANDS Raw materials and supplies.......................... $ 51,861 $ 48,868 Finished goods...................................... 80,897 63,976 -------- -------- $132,758 $112,844 ======== ========
5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7: DERIVATIVE FINANCIAL INSTRUMENTS We have two interest rate swap agreements for a total notional amount of $100,000,000 maturing in June 2002. We also have an interest rate swap agreement for a notional amount of $100,000,000 maturing August 2002. We have designated all of our interest rate swaps as hedges against our senior credit facility floating rate debt. We do not use derivatives for trading purposes. Interest rate swap agreements, a form of derivative, are used to manage interest costs on certain portions of our long-term debt. These financial statements do not reflect temporary market gains and losses on derivative financial instruments. Amounts paid or received on the interest rate swap agreements are recorded to interest expense as incurred. As of September 30, 2000, and December 31, 1999, interest rate swap agreements were the only form of derivative financial instruments outstanding. The fair values of these swap agreements as of September 30, 2000 and December 31, 1999 were $1,681,000 and $3,405,000 (in our favor), respectively. NOTE 8: EARNINGS PER SHARE There are no adjustments to "Net income" or "Income from continuing operations" for the diluted earnings per share computations. The following table reconciles the denominator for the basic and diluted earnings per share computations shown on the condensed consolidated statements of income:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- IN THOUSANDS Weighted average common shares--basic...... 31,484 30,936 31,384 30,919 Plus incremental shares from assumed conversions: Options.................................. -- 99 -- 61 Employee stock purchase plan rights...... 101 33 146 24 ------ ------ ------ ------ Weighted average common shares--diluted.... 31,585 31,068 31,530 31,004 ====== ====== ====== ======
NOTE 9: SEGMENT INFORMATION We have identified two reportable segments through which we conduct our operating activities: chlorovinyls and aromatics. These two segments reflect the organization which we use for internal reporting. The chlorovinyls segment is a highly integrated chain of products which includes chlorine, caustic soda, vinyl chloride monomer and vinyl resins and compounds. The aromatics segment is also vertically integrated and includes cumene and the co-products phenol and acetone. A third product segment, gas chemicals, which included methanol, was discontinued in the third quarter of 1999. See Note 4 for a discussion of the discontinuance of our methanol operation. Earnings of industry segments exclude interest income and expense, unallocated corporate expenses and general plant services, provision for income taxes, and income and expense items 6 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 9: SEGMENT INFORMATION (CONTINUED) reflected as "other income (expense)" on our consolidated statements of income. Intersegment sales and transfers are insignificant.
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------------- ----------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- IN THOUSANDS Segment net sales: Chlorovinyls............................ $275,587 $155,121 $ 943,525 $408,391 Aromatics............................... 77,141 58,156 226,280 164,862 -------- -------- ---------- -------- Net sales................................. $352,728 $213,277 $1,169,805 $573,253 ======== ======== ========== ======== Segment operating income: Chlorovinyls............................ $ 33,055 $ 28,414 $ 187,802 $ 52,796 Aromatics............................... (1,285) 3,682 (10,668) 12,899 Corporate and general plant services.... (3,419) (3,409) (11,518) (8,770) -------- -------- ---------- -------- Total operating income.................... $ 28,351 $ 28,687 $ 165,616 $ 56,925 ======== ======== ========== ========
NOTE 10: SUPPLEMENTAL GUARANTOR INFORMATION Our payment obligations under our 10 3/8% senior subordinated notes are guaranteed by GG Terminal Management Corporation, Great River Oil & Gas Corporation, North American Plastics, LLC, Georgia Gulf Lake Charles, LLC and Georgia Gulf Chemicals & Vinyls, LLC, some of our wholly owned subsidiaries (the "Guarantor Subsidiaries"). The guarantees are full, unconditional and joint and several. The following unaudited condensed consolidating balance sheets, statements of income and statements of cash flows present the financial statements of the parent company, and the combined financial statements of our Guarantor Subsidiaries and our remaining subsidiaries (the "Non-Guarantor Subsidiaries"). In connection with the acquisition of the vinyls business from CONDEA Vista Company on November 12, 1999, we essentially became a holding company by transferring our operating assets and employees to our wholly owned subsidiary, Georgia Gulf Chemicals & Vinyls LLC. Provisions in our senior credit facility limit payment of dividends, distributions, loans and advances to us by our subsidiaries. 7 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10: SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED) GEORGIA GULF CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET SEPTEMBER 30, 2000
PARENT GUARANTOR NON-GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------- ------------ ------------ (IN THOUSANDS) Cash and cash equivalents......... $ 646 $ 167 $ 11 $ -- $ 824 Receivables....................... 53,527 288,548 60,088 (260,432) 141,731 Inventories....................... -- 132,758 -- -- 132,758 Prepaid expenses.................. -- 7,014 257 -- 7,271 Deferred income taxes............. -- 6,172 -- -- 6,172 -------- ---------- ------- --------- ---------- Total current assets............ 54,173 434,659 60,356 (260,432) 288,756 -------- ---------- ------- --------- ---------- Plant, property and equipment, at cost............................ 1,418 999,477 -- -- 1,000,895 Less accumulated depreciation... 1,048 361,502 -- -- 362,550 -------- ---------- ------- --------- ---------- Plant, property and equipment, net......................... 370 637,975 -- -- 638,345 -------- ---------- ------- --------- ---------- Goodwill.......................... -- 80,817 -- -- 80,817 Other assets...................... 7,590 41,157 79 -- 48,826 Investment in subsidiaries........ 604,739 57,094 -- (661,833) -- -------- ---------- ------- --------- ---------- Total assets...................... $666,872 $1,251,702 $60,435 $(922,265) $1,056,744 ======== ========== ======= ========= ========== Current portion of long-term debt............................ $ -- $ 12,950 $ -- $ -- $ 12,950 Account payable................... 196,779 202,289 3,131 (260,432) 141,767 Interest payable.................. 12,512 392 -- -- 12,904 Accrued compensation.............. -- 10,237 -- -- 10,237 Other accrued liabilities......... -- 12,138 796 -- 12,934 -------- ---------- ------- --------- ---------- Total current liabilities....... 209,291 238,006 3,927 (260,432) 190,792 -------- ---------- ------- --------- ---------- Long-term debt.................... 333,732 300,375 -- -- 634,107 -------- ---------- ------- --------- ---------- Deferred income taxes............. -- 107,996 -- -- 107,996 -------- ---------- ------- --------- ---------- Stockholder's equity Common Stock.................... 315 6 20 (26) 315 Additional paid-in-capital...... 7,719 467,322 55,587 (522,909) 7,719 Retained earnings............... 115,815 137,997 901 (138,898) 115,815 -------- ---------- ------- --------- ---------- Total stockholders' equity...... 123,849 605,325 56,508 (661,833) 123,849 -------- ---------- ------- --------- ---------- Total liabilities and stockholders' equity............ $666,872 $1,251,702 $60,435 $(922,265) $1,056,744 ======== ========== ======= ========= ==========
8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10: SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED) GEORGIA GULF CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 1999
PARENT GUARANTOR NON-GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------- ------------ ------------ (IN THOUSANDS) Cash and cash equivalents......... $ 4,151 $ 252 $ 21 $ -- $ 4,424 Receivables....................... 70,008 239,225 125,453 (270,310) 164,376 Inventories....................... -- 112,844 -- -- 112,844 Prepaid expenses.................. -- 4,786 654 -- 5,440 Deferred income taxes............. -- 6,172 -- -- 6,172 -------- ---------- -------- --------- ---------- Total current assets............ 74,159 363,279 126,128 (270,310) 293,256 -------- ---------- -------- --------- ---------- Plant, property and equipment, at cost............................ -- 985,825 -- -- 985,825 Less accumulated depreciation... -- 314,275 -- -- 314,275 -------- ---------- -------- --------- ---------- Plant, property and equipment, net........................... -- 671,550 -- -- 671,550 -------- ---------- -------- --------- ---------- Goodwill.......................... -- 82,676 -- -- 82,676 Other assets...................... 7,906 42,128 49 -- 50,083 Investment in subsidiaries........ 513,000 55,588 -- (568,588) -- Net assets of discontinued operation....................... -- 443 -- -- 443 -------- ---------- -------- --------- ---------- Total assets...................... $595,065 $1,215,664 $126,177 $(838,898) $1,098,008 ======== ========== ======== ========= ========== Current portion of long-term debt............................ $ -- $ 22,000 $ -- $ -- $ 22,000 Accounts payable.................. 200,302 149,019 64,887 (270,310) 143,898 Interest payable.................. 4,336 1,590 -- -- 5,926 Accrued compensation.............. -- 7,682 -- -- 7,682 Other accrued liabilities......... -- 14,046 4,080 -- 18,126 -------- ---------- -------- --------- ---------- Total current liabilities....... 204,638 194,337 68,967 (270,310) 197,632 -------- ---------- -------- --------- ---------- Long-term debt, net of current portion......................... 333,194 416,000 -- -- 749,194 -------- ---------- -------- --------- ---------- Deferred income taxes............. -- 93,949 -- -- 93,949 -------- ---------- -------- --------- ---------- Stockholders' equity Common stock.................... 313 6 20 (26) 313 Additional paid-in capital...... 5,250 467,322 55,587 (522,909) 5,250 Retained earnings............... 51,670 44,050 1,603 (45,653) 51,670 -------- ---------- -------- --------- ---------- Total stockholders' equity...... 57,233 511,378 57,210 (568,588) 57,233 -------- ---------- -------- --------- ---------- Total liabilities and stockholders' equity............ $595,065 $1,215,664 $126,177 $(838,898) $1,098,008 ======== ========== ======== ========= ==========
9 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10: SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED) GEORGIA GULF CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING INCOME STATEMENT NINE MONTHS ENDED SEPTEMBER 30, 2000
PARENT GUARANTOR NON-GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------- ------------ ------------ (IN THOUSANDS) Revenues.......................... $ -- $1,170,242 $5,988 $ (6,425) $1,169,805 Operating costs and expenses Cost of sales................... -- 968,644 -- -- 968,644 Selling and administrative...... 4,678 33,649 3,643 (6,425) 35,545 -------- ---------- ------ -------- ---------- Total operating costs and expenses........................ 4,678 1,002,293 3,643 (6,425) 1,004,189 -------- ---------- ------ -------- ---------- Operating income.................. (4,678) 167,949 2,345 -- 165,616 Other income (expense) Interest expense, net........... (24,394) (29,212) -- -- (53,606) Equity in income of subsidiaries.................. 93,939 1,506 -- (95,445) -- -------- ---------- ------ -------- ---------- Income before taxes............... 64,867 140,243 2,345 (95,445) 112,010 Provision for income taxes........ (6,813) 46,296 847 -- 40,330 -------- ---------- ------ -------- ---------- Net income........................ $ 71,680 $ 93,947 $1,498 $(95,445) $ 71,680 ======== ========== ====== ======== ==========
GEORGIA GULF CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING INCOME STATEMENT NINE MONTHS ENDED SEPTEMBER 30, 1999
PARENT GUARANTOR NON-GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------- ------------ ------------ (IN THOUSANDS) Revenues........................... $506,672 $66,806 $2,558 $ (2,783) $ 573,253 Operating costs and expenses Cost of sales.................... 438,622 48,500 -- -- 487,122 Selling and administrative....... 27,980 1,737 2,272 (2,783) 29,206 -------- ------- ------ -------- ---------- Total operating costs and expenses......................... 466,602 50,237 2,272 (2,783) 516,328 -------- ------- ------ -------- ---------- Operating income................... 40,070 16,569 286 -- 56,925 Other income (expense) Interest expense, net............ (21,719) -- -- -- (21,719) Equity in income of subsidiaries..................... 12,934 -- -- (12,934) -- -------- ------- ------ -------- ---------- Income from continuing operations before taxes..................... 31,285 16,569 286 (12,934) 35,206 Provision for income taxes......... 8,929 3,921 -- -- 12,850 -------- ------- ------ -------- ---------- Income from continuing operations....................... 22,356 12,648 286 (12,934) 22,356 Loss from discontinued operation, net.............................. (2,525) -- -- -- (2,525) Loss on disposal of discontinued operation, net................... (7,631) -- -- -- (7,631) -------- ------- ------ -------- ---------- Net income......................... $ 12,200 $12,648 $ 286 $(12,934) $ 12,200 ======== ======= ====== ======== ==========
10 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10: SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED) GEORGIA GULF CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2000
PARENT GUARANTOR NON-GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED -------- ------------ ------------- ------------ ------------ (IN THOUSANDS) Cash flows from operating activities: Net income........................ $71,680 $ 93,947 $ 1,498 $(95,445) $ 71,680 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization................ 917 55,163 82 -- 56,162 Equity in net income of subsidiaries................ (93,939) (1,506) -- 95,445 -- Change in operating assets, liabilities and other....... 21,886 (9,305) 610 -- 13,191 ------- --------- ------- -------- --------- Net cash (used in) provided by continuing operations........... 544 138,299 2,190 -- 141,033 Net cash used in discontinued operation....................... -- 443 -- -- 443 ------- --------- ------- -------- --------- Net cash (used in) provided by operating activities.............. 544 138,742 2,190 -- 141,476 ------- --------- ------- -------- --------- Cash flows from financing activities: Long-term debt proceeds........... -- 41,538 -- -- 41,538 Long-term debt payments........... -- (165,675) -- -- (165,675) Purchase and retirement of common stock........................... (121) -- -- -- (121) Proceeds from issuance of common stock........................... 1,787 -- -- -- 1,787 Dividends paid.................... (7,535) -- (2,200) 2,200 (7,535) ------- --------- ------- -------- --------- (5,869) (124,137) (2,200) 2,200 (130,006) ------- --------- ------- -------- --------- Cash flows from investing activities: Capital expenditures.............. (380) (14,690) -- -- (15,070) Dividends received from subsidiary...................... 2,200 -- -- (2,200) -- ------- --------- ------- -------- --------- Net cash flow used in investing activities........................ 1,820 (14,690) -- (2,200) (15,070) ------- --------- ------- -------- --------- Net change in cash and cash equivalents....................... (3,505) (85) (10) -- (3,600) Cash and cash equivalents at beginning of period............... 4,151 252 21 -- 4,424 ------- --------- ------- -------- --------- Cash and cash equivalents at end of period............................ $ 646 $ 167 $ 11 $ -- $ 824 ======= ========= ======= ======== =========
11 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 10: SUPPLEMENTAL GUARANTOR INFORMATION (CONTINUED) GEORGIA GULF CORPORATION AND SUBSIDIARIES SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1999
PARENT GUARANTOR NON-GUARANTOR COMPANY SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED --------- ------------ ------------- ------------ ------------ (IN THOUSANDS) Cash flows from operating activities: Net income...................... $ 12,200 $ 12,648 $ 286 $(12,934) $ 12,200 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.............. 33,904 488 -- -- 34,392 Loss on discontinued operation, net............ 2,525 -- -- -- 2,525 Loss on disposal of discontinued operation, net....................... 7,631 -- -- -- 7,631 Equity in net income of subsidiaries.............. (12,934) -- -- 12,934 -- Change in operating assets, liabilities and other..... 34,597 (11,748) 2,400 -- 25,249 --------- -------- ------ -------- --------- Net cash (used in) provided by continuing operations......... 77,923 1,388 2,686 -- 81,997 Net cash used in discontinued operation..................... (369) -- -- -- (369) --------- -------- ------ -------- --------- Net cash (used in) provided by operating activities............ 77,554 1,388 2,686 -- 81,628 --------- -------- ------ -------- --------- Cash flows from financing activities: Long-term debt proceeds......... 115,000 -- -- -- 115,000 Long-term debt payments......... (177,450) (500) -- -- (177,950) Proceeds from issuance of common stock......................... 471 -- -- -- 471 Dividends paid.................. (7,422) -- (2,694) 2,694 (7,422) --------- -------- ------ -------- --------- (69,401) (500) (2,694) 2,694 (69,901) --------- -------- ------ -------- --------- Cash flows from investing activities: Capital expenditures............ (9,030) (728) -- -- (9,758) Dividends received from subsidiary.................... 2,694 -- -- (2,694) -- --------- -------- ------ -------- --------- Net cash flow used in investing activities...................... (6,336) (728) -- (2,694) (9,758) --------- -------- ------ -------- --------- Net change in cash and cash equivalents..................... 1,817 160 (8) -- 1,969 Cash and cash equivalents at beginning of period............. 788 428 28 -- 1,244 --------- -------- ------ -------- --------- Cash and cash equivalents at end of period....................... $ 2,605 $ 588 $ 20 $ -- $ 3,213 ========= ======== ====== ======== =========
12 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. RESULTS OF OPERATIONS Georgia Gulf manufactures and markets products through two highly integrated lines categorized into chlorovinyls and aromatic chemicals. Our chlorovinyl products include chlorine, caustic soda, sodium chlorate, vinyl chloride monomer ("VCM"), and polyvinyl chloride ("PVC") resins and compounds; our primary aromatic chemical products include cumene, phenol and acetone. During 1999, we announced our decision to exit the methanol business and had ceased operations at the end of the year. Additionally, on November 12, 1999, we completed the purchase of all the assets of the vinyls business of CONDEA Vista Company. The vinyls business is an integrated producer of VCM, PVC resins and PVC compounds. We have included the results of operations for the vinyls business in our consolidated financial statements since the date of acquisition. THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1999 NET SALES. Net sales for the quarter ended September 30, 2000 were $352.7 million, an increase of 65 percent compared to $213.3 million for the same period in 1999. This increase was due to 24 percent higher sales volumes, largely attributable to the acquisition of the vinyls business, and an increase in the overall average selling price of 33 percent. Net sales of chlorovinyls for the third quarter of 2000 were $275.6 million, 78 percent higher than net sales for third quarter of 1999 of $155.1 million. This increase was the result of a 41 percent increase in sales volume and a 26 percent increase in sales prices. Sales volume increases were primarily attributable to the vinyls business acquired during the fourth quarter of 1999, which nearly doubled our sales of vinyl resins. The higher sales prices resulted from stronger demand for vinyl products, particularly vinyl resins and compounds. Net sales of aromatics for the third quarter of 2000 were $77.1 million, an increase of 33 percent compared to $58.2 million for the same period in 1999. This increase was the result of a 44 percent improvement in sales prices, offset in part by 8 percent lower sales volumes. Sales prices for aromatic products all increased primarily as a result of continued strong demand. COST OF SALES. Cost of sales for the third quarter of 2000 was $313.9 million, an increase of 79 percent compared to $175.3 million for the third quarter of 1999. The primary reason for this increase was the additional sales volumes from the acquired vinyls business. Also contributing to the increase were higher costs for all major raw materials and energy. As a percentage of sales, cost of sales increased to 89 percent in the third quarter of 2000 compared to 82 percent in the third quarter of 1999. This increase was caused by higher raw material and energy costs outpacing overall sales price increases and also a decrease in overall capacity utilization rates. SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses were $10.5 million for the three months ended September 30, 2000, an increase of 13 percent from the same period in 1999. This increase is primarily attributable to an increase in the ongoing costs of a revolving trade receivables sales program after we sold an additional $25.0 million of trade receivables during the second quarter of 2000. Additionally, we incurred expenses of approximately $0.5 million to terminate certain contracts for services during the third quarter of 2000. OPERATING INCOME. Operating income in the third quarter of 2000 was $28.4 million, a slight decrease from $28.7 million in the third quarter of 1999. Higher operating income in chlorovinyls was more than offset by decreased operating income in aromatics. As a percentage of net sales, operating profit decreased to 8 percent of net sales in the third quarter of 2000 compared to 13 percent for the same period in 1999. This decrease in operating profit as a percentage of net sales was the result of increases in raw material costs outpacing overall sales price increases. 13 Our chlorovinyls operating profit for the third quarter of 2000 was $33.1 million, an increase of 16 percent compared to $28.4 million for the same period in 1999. The most significant factors in this increase were higher selling prices for caustic soda and vinyl resins and compounds, and additional profits and sales volume from the acquisition, which more than offset higher energy and raw material costs. Our aromatics operating loss for the third quarter of 2000 was $1.3 million, a decrease of 135 percent compared to operating profit of $3.7 million in the third quarter 1999. Aromatic sales price increases were unable to compensate for the significantly higher raw material costs of benzene and propylene. NET INTEREST EXPENSE. Interest expense increased to $16.6 million for the quarter ended September 30, 2000 compared with $7.0 million for the same period in 1999. This increase was primarily attributable to higher debt balances related to both the acquisition of the vinyls business and the purchase of the previously leased cogeneration facility during the fourth quarter of 1999. PROVISION FOR INCOME TAXES. Provision for income taxes was $4.2 million for the third quarter of 2000 compared to $7.9 million for the third quarter of 1999. Our effective tax rate in the second quarter of 2000 was 36.0 percent compared to 36.5 percent for the same period in 1999. INCOME FROM CONTINUING OPERATIONS. Income from continuing operations for the three months ended September 30, 2000 was $7.5 million, a decrease of 46 percent compared to $13.7 million for the three months ended September 30, 1999. Income from continuing operations decreased as a result of higher interest expense. LOSS FROM DISCONTINUED OPERATION. The discontinued methanol operation incurred a net loss of $0.5 million in the third quarter of 1999. Additionally, during the third quarter of 1999, we recognized a one-time charge of $7.6 million, net of taxes, in connection with the write-off of certain methanol assets and estimated future losses on servicing the remaining methanol contracts through the end of 1999. NET INCOME. Net income for the third quarter of 2000 was $7.5 million, a 34 percent increase from $5.6 million in the third quarter of 1999. This increase was due to the one time charge in 1999 discussed above, offset in part by higher interest expense in the third quarter of this year. NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1999 NET SALES. For the nine months ended September 30, 2000, net sales were $1,169.8 million, an increase of 104 percent compared to $573.3 million for the same period in 1999. This increase was due to a 41 percent increase in sales volumes, largely attributable to the acquisition of the vinyls business, and also a 45 percent higher overall average selling price. Net sales of chlorovinyls for the first nine months of 2000 were $943.5 million, 131 percent higher than net sales for first nine months of 1999 of $408.4 million. Sales volume increased by 65 percent primarily as a result of the vinyls business acquired during the fourth quarter of 1999, which more than doubled our sales of vinyl resins from the prior year period. Higher average sales prices of 40 percent resulted from stronger demand for vinyl products, particularly VCM and vinyl resins and compounds. Net sales of aromatics for the first nine months of 2000 were $226.3 million, an increase of 37 percent compared to $164.9 million for the same period in 1999. This increase was primarily the result of a 40 percent improvement in sales prices as overall sales volumes remained basically the same. Aromatic sales prices increased primarily as a result of continued strong demand. COST OF SALES. Cost of sales for the first nine months of 2000 was $968.6 million, an increase of 99 percent compared to $487.1 million for the first nine months of 1999. Increased sales volumes from 14 the acquired vinyls business were the primary cause of this increase. Also contributing to the increase were higher costs for all major raw materials and energy. As a percentage of sales, cost of sales decreased to 83 percent in the first nine months of 2000 compared to 85 percent in the first nine months of 1999. This decrease was a result of overall sales price increases outpacing higher raw material costs and our plants operating at higher capacity utilization rates. SELLING AND ADMINISTRATIVE EXPENSES. Selling and administrative expenses were $35.5 million for the nine months ended September 30, 2000, an increase of 22 percent from the same period in 1999. This increase is primarily attributable to the effects of the acquired vinyls business and higher profit sharing expense. During the first quarter of 2000, we incurred transition charges associated with the acquisition of approximately $0.8 million. OPERATING INCOME. Operating income in the first nine months of 2000 was $165.6 million, an increase of 191 percent compared to $56.9 million in the first nine months of 1999. Higher operating income in chlorovinyls was offset in part by decreased operating profit in aromatics. As a percentage of net sales, operating profit increased to 14 percent of net sales in the first nine months of 2000 compared to 10 percent for the same period in 1999. Overall sales price increases outpaced increases in raw material costs which caused the increase in operating profit as a percentage of net sales. Our chlorovinyls operating profit for the first nine months of 2000 was $187.8 million, an increase of 256 percent compared to $52.8 million for the same period in 1999. The most significant factors in this increase are operating income from the acquired vinyls business and the improvements in VCM and vinyl resin profit margins. Our aromatics operating loss for the first nine months of 2000 was $10.7 million, a decrease of 183 percent compared to operating profit of $12.9 million in the first nine months 1999. This decrease was a result of significant increases in the cost of benzene and propylene that outpaced selling price increases for aromatic products. NET INTEREST EXPENSE. Interest expense for the nine months ended September 30, 2000 was $53.6 million compared with $21.7 million for the same period in 1999. This increase was primarily attributable to higher debt balances related to both the acquisition of the vinyls business and the purchase of the previously leased cogeneration facility during the fourth quarter of 1999. PROVISION FOR INCOME TAXES. Provision for income taxes was $40.3 million for the first nine months of 2000 compared to $12.9 million for the same period of 1999. This increase was caused by higher taxable income. Our effective tax rate for the nine months ended September 30, 2000 was 36.0 percent compared to 36.5 percent for the same period in 1999. INCOME FROM CONTINUING OPERATIONS. Income from continuing operations for the nine months ended September 30, 2000 was $71.7 million, an increase of 221 percent compared to $22.4 million for the nine months ended September 30, 1999. Income from continuing operations increased significantly as a result of both overall sales volume and price increases that more than offset higher raw material costs and additional interest expense. LOSS FROM DISCONTINUED OPERATION. The discontinued methanol operation incurred a net loss of $2.5 million in the nine months ended September 30, 1999. Additionally, during the third quarter of 1999, we recognized a one-time charge of $7.6 million, net of taxes, in connection with the write-off of certain methanol assets and estimated future losses on servicing the remaining methanol contracts through the end of 1999. NET INCOME. Net income for the first nine months of 2000 was $71.7 million, an increase of 488 percent from $12.2 million in the first nine months of 1999. This increase was due to the factors discussed above. 15 LIQUIDITY AND CAPITAL RESOURCES For the nine months ended September 30, 2000, we generated $141.5 million in cash flow from operating activities as compared to $81.6 million generated during the same 1999 period. Major sources of cash flow for the first nine months of 2000 were net income of $71.7 million and non-cash provisions of $56.2 for depreciation and amortization. Total working capital at September 30, 2000 was $98.0 million versus $95.6 million at December 31, 1999. Significant changes in working capital for the first nine months of 2000 included a decrease in accounts receivable, higher inventories, a lower current portion of long-term debt, an increase in interest payable and a decrease in other accrued liabilities. The decrease in accounts receivable was primarily attributable to the sale of $25.0 million of trade receivables under a revolving trade receivables sales program. Inventories increased as a result of higher raw material costs and quantities. Increases in accounts payable were attributable to the timing of certain payments and higher trade payable balances related to increased raw material prices. Accounts payable increases were partially offset by the payment of $16.3 million to CONDEA Vista Company representing a working capital adjustment related to our acquisition in November 1999. Decreases in other accrued liabilities were attributable to the timing of certain payments. Significant working capital changes for the first nine months of 1999 included the net receipt of $8.6 million for litigation expenses which were reimbursed by our insurance carriers and an increase in accounts payable and accrued liabilities due to the timing of payments. Debt decreased by $124.1 million during the nine months ended September 30, 2000 to $647.1 million. As of September 30, 2000, we had availability to borrow an additional $89.1 million under the revolving credit facility. Capital expenditures for the nine months ended September 30, 2000 were $15.1 million as compared to $9.8 million for the same 1999 period. Capital expenditures for 2000 are being directed toward normal repairs and maintenance, certain environmental projects and increased efficiency of existing operations. We estimate total capital expenditures for 2000 will approximate $20.0 million to $25.0 million. We declared dividends of $0.24 per share or $7.5 million during the first nine months of 2000. As of September 30, 2000, we had authorization to repurchase up to 5.2 million shares under a common stock repurchase program. Our ability to satisfy our debt obligations and to pay principal and interest on our debt, fund working capital, and make anticipated capital expenditures will depend on our future performance, which is subject to general economic conditions and other factors, some of which are beyond our control. We believe that based on current and anticipated levels of operations and conditions in our markets, cash flow from operations will be adequate for the foreseeable future to make required payments of principal and interest on our debt and fund our working capital and capital expenditure requirements. We are essentially a holding company and, accordingly, must rely on distributions, loans and other intercompany cash flows from our wholly owned subsidiaries to generate the funds necessary to satisfy the repayment of our existing debt. Provisions in our senior credit facility limit payments of dividends, distributions, loans or advances to us by our subsidiaries. OUTLOOK For the fourth quarter, we are seeing an increase in sales volumes for vinyl products over the depressed third quarter levels; however, not to the levels seen in the first half of 2000. Raw material costs have begun to fall, but not as rapidly as selling prices resulting in lower margins. This, coupled with the continuing high costs for energy, is expected to result in lower earnings for the fourth quarter when compared to the third quarter. 16 YEAR 2000 ISSUE UPDATE We did not experience any significant malfunctions or errors in our operating or business systems when the date changed from 1999 to 2000. Based on operations since January 1, 2000, we do not expect any significant impact to our ongoing business as a result of the year 2000 issue. However, it is possible that the full impact of the date change has not been fully recognized. We believe that any such problems are likely to be minor and correctable. In addition, we could still be negatively affected if year 2000 or similar issues adversely affect our customers or suppliers. Currently we are not aware of any significant year 2000 or similar problems that have arisen for our customers and suppliers. Expenditures related to year 2000 compliance efforts were not material. FORWARD-LOOKING STATEMENTS This Form 10-Q and other communications to stockholders may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to, among other things, our outlook for future periods, supply and demand, pricing trends and market forces within the chemical industry, cost reduction strategies and their results, planned capital expenditures, long-term objectives of management and other statements of expectations concerning matters that are not historical facts. Predictions of future results contain a measure of uncertainty and, accordingly, actual results could differ materially due to various factors. Factors that could change forward-looking statements are, among others: - changes in the general economy; - changes in demand for our products or increases in overall industry capacity that could affect production volumes and/or pricing; - changes and/or cyclicality in the industries to which our products are sold; - availability and pricing of raw materials; - technological changes affecting production; - difficulty in plant operations and product transportation; - governmental and environmental regulations; and - other unforeseen circumstances. A number of these factors are discussed in this Form 10-Q and in our other periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 1999. Item 3. Quantitative and Qualitative Disclosures About Market Risk. For a discussion of certain market risks related to Georgia Gulf, see Part I, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk", in our Annual Report on Form 10-K for the year ended December 31, 1999. There have been no significant developments with respect to our exposure to market risk except for the change in the fair value of interest rate swaps disclosed in Note 7 to the financial statements included herein. 17 PART II. OTHER INFORMATION. Item 1. Legal Proceedings and Environmental Matters. On June 22, 2000, the United States Environmental Protection Agency, Region 6 (the "EPA") issued an Administrative Complaint against Georgia Gulf, alleging we had violated parts of the United States Clean Water Act by discharging pollutants in quantities in excess of amounts allowed under our permit and had violated certain conditions of our water discharge permit at our Pasadena, TX facility. We have settled the claim by entering into a Consent Agreement and Final Order, which required us to pay a penalty of $101,250. On July 31, 2000, Georgia Gulf Lakes Charles, LLC, received a Complaint, Compliance Order and Notice of Opportunity for a Hearing from the EPA, which arose from an inspection conducted by the EPA at the Lake Charles facility on December 6-8, 1999. The EPA is seeking to assess a fine of $701,605 and to require certain corrective actions to be taken as a result of various alleged violations of the United States Resource Conservation and Recovery Act, including failure to make adequate hazardous waste determinations, failure to adequately characterize wastes before disposal, and failure to obtain permits for operations of alleged hazardous waste facilities. We have filed an Answer and Request for Hearing, and we are participating in ongoing settlement discussions with the EPA. We have accrued a liability in prior periods for these and other environmental matters. We are also involved in certain legal proceedings that are described in our 1999 Annual Report on Form 10-K and our quarterly report on Form 10-Q for the period ending March 31, 2000. During the three months ended September 30, 2000, there were no material developments in the status of those legal proceedings that have not been previously disclosed in our 1999 Annual Report on Form 10-K or in our quarterly report on Form 10-Q for the period ending March 31, 2000. Item 6. Exhibits and Reports on Form 8-K. a) No exhibits are required to be filed as part of this Form 10-Q. b) No reports on Form 8-K were filed with Securities and Exchange Commission during the third quarter of 2000. 18 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 November 14, 2000 /s/ EDWARD A. SCHMITT ------------------------ ------------------------------------------- Edward A. Schmitt President and Chief Executive Officer (Principal Executive Officer) Date November 14, 2000 /s/ RICHARD B. MARCHESE ------------------------ ------------------------------------------- Richard B. Marchese Vice President Finance, Chief Financial Officer and Treasurer (Principal Financial Officer)
19 EX-27 2 a2029527zex-27.txt EXHIBIT 27
5 1,000 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 824 0 144,131 2,400 132,758 288,756 1,000,895 362,550 1,056,744 190,792 634,107 0 0 315 123,534 1,056,744 1,169,805 1,169,805 968,644 968,644 0 0 53,606 112,010 40,330 71,680 0 0 0 71,680 2.28 2.27
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