-----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, PexfEnohg3/b+RkUUg6oByGVA8OOUhLTvKgTJ9wOvxFAO6Cd9cEAoOM+VlvsV8sZ LOX1zuTNVR5AhxvOxKAiQw== 0000912057-97-016193.txt : 19970509 0000912057-97-016193.hdr.sgml : 19970509 ACCESSION NUMBER: 0000912057-97-016193 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970508 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: 97598235 BUSINESS ADDRESS: STREET 1: 400 PERIMETER CTR TERRACE STREET 2: STE 595 CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4043954500 10-Q 1 10-Q (COVER,INDEX,1-10) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 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, 1997 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 5, 1997 ----- ------------------ Common Stock, $0.01 par value....................... 33,896,910 shares - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ GEORGIA GULF CORPORATION FORM 10-Q QUARTERLY PERIOD ENDED MARCH 31, 1997 INDEX PAGE NUMBERS ------------ PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 1 Condensed Consolidated Statements of Income for the three months ended March 31, 1997 and 1996 2 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996 3 Notes to Condensed Consolidated Financial Statements as of March 31, 1997 4 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) MARCH 31, DECEMBER 31, 1997 1996 ------------ ------------ ASSETS Cash and cash equivalents................... $ 4,042 $ 698 Receivables................................. 79,356 64,131 Inventories................................. 83,054 89,196 Prepaid expenses............................ 6,791 9,934 Deferred income taxes....................... 6,410 6,410 ------------ ------------ Total current assets................... 179,653 170,369 ------------ ------------ Property, plant and equipment, at cost...... 666,474 646,144 Less accumulated depreciation.......... 259,018 251,407 ------------ ------------ Property, plant and equipment, net... 407,456 394,737 ------------ ------------ Other assets................................ 22,929 22,893 ------------ ------------ Total assets................................ $610,038 $ 587,999 ------------ ------------ ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable............................ $103,843 $ 94,767 Interest payable............................ 4,951 2,910 Accrued income taxes........................ 6,855 2,039 Accrued compensation........................ 3,567 5,637 Accrued pension............................. 2,243 2,139 Other accrued liabilities................... 15,030 13,482 ------------ ------------ Total current liabilities.............. 136,489 120,974 ------------ ------------ Long-term debt.............................. 402,000 395,600 ------------ ------------ Deferred income taxes....................... 52,855 52,855 ------------ ------------ Stockholders' equity Common stock--$0.01 par value.......... 343 346 Retained earnings...................... 18,351 18,224 ------------ ------------ Total stockholders' equity........ 18,694 18,570 ------------ ------------ Total liabilities and stockholders' equity................... $610,038 $ 587,999 ------------ ------------ ------------ ------------ Common shares outstanding................... 34,267,550 34,584,800 ------------ ------------ ------------ ------------ 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, -------------------------------- 1997 1996 ------------ ------------ Net sales................................... $ 239,225 $ 208,036 ------------ ------------ Operating costs and expenses Cost of sales......................... 203,460 167,118 Selling and administrative............ 11,098 10,808 ------------ ------------ Total operating costs and expenses... 214,558 177,926 ------------ ------------ Operating income............................ 24,667 30,110 Other income (expense) Interest, net.......................... (5,262) (4,642) ------------ ------------ Income before income taxes.................. 19,405 25,468 Provision for income taxes.................. 7,344 9,662 ------------ ------------ Net income.................................. $ 12,061 $ 15,806 ------------ ------------ ------------ ------------ Net income per common share................. $ 0.35 $ 0.42 ------------ ------------ ------------ ------------ Weighted average common shares and equivalents outstanding............ 34,807,706 37,636,402 ------------ ------------ ------------ ------------ See notes to condensed consolidated financial statements. 2 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) THREE MONTHS ENDED MARCH 31, -------------------------------- 1,997 1,996 ------------ ------------ Cash flows from operating activities: Net income............................. $ 12,061 $ 15,806 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization..... 7,875 8,680 Change in assets, liabilities and other....................... 9,546 31,905 ------------ ------------ Net cash provided by operating activities... 29,482 56,391 ------------ ------------ Cash flows from financing activities: Long-term debt proceeds................ 45,000 26,000 Long-term debt payments................ (38,600) (20,000) Proceeds from issuance of common stock. 325 1,250 Purchase and retirement of common stock (9,783) (20,382) Dividends paid......................... (2,750) (2,958) ------------ ------------ Net cash used in financing activities....... (5,808) (16,090) ------------ ------------ Cash flows from investing activities: Capital expenditures................... (20,330) (39,381) ------------ ------------ Net cash used in investing activities....... (20,330) (39,381) ------------ ------------ Net change in cash and cash equivalents..... 3,344 920 Cash and cash equivalents at beginning of period.............................. 698 2,530 ------------ ------------ Cash and cash equivalents at end of period.. $ 4,042 $ 3,450 ------------ ------------ ------------ ------------ 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 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, 1997, are not necessarily indicative of the results that may be expected for the year ending December 31, 1997. 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, 1996. NOTE 2: INVENTORIES The major classes of inventories were as follows (in thousands): MARCH 31, DECEMBER 31, 1997 1996 ------------ ------------ Raw materials and supplies........... $ 36,041 $ 38,803 Finished goods....................... 47,013 50,393 ------------ ------------ $ 83,054 $ 89,196 ------------ ------------ ------------ ------------ NOTE 3: STOCKHOLDERS' EQUITY The Company purchased 359,000 shares of its common stock for $9,783,000 during the three months ended March 31, 1997. As of March 31, 1997, the Company had authorization to purchase up to 2,791,800 additional shares under the current common stock purchase program. 4 NOTE 4: NEW ACCOUNTING PRONOUNCEMENT The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share," which becomes effective for both interim and annual periods ending after December 15, 1997. SFAS No. 128 established, among other things, new accounting and reporting standards for computing and presenting earnings per share. The Company will adopt the new standard in the fourth quarter of 1997, but does not anticipate any material impact to the financial statements. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS First Quarter of 1997 Compared with the First Quarter of 1996: For the first quarter ended March 31, 1997, net income per common share was $0.35 on net income of $12.1 million and net sales of $239.2 million. This compares to net income per common share of $0.42, net income of $15.8 million and net sales of $208.0 million for the first quarter of 1996. Operating income for the first quarter of 1997 was $24.7 million, a decrease of 18 percent from $30.1 million for the same period in 1996. This decline resulted from a substantial drop in caustic soda pricing which more than offset improvements in aromatic chemicals, methanol and vinyl compounds. Caustic soda pricing decreased as industry supply exceeded demand for much of the first quarter of 1997. Overall results for aromatic chemicals improved in spite of lower acetone prices and higher raw material costs. Methanol profits increased as a result of stronger demand and slightly lower natural gas costs. Vinyl compounds achieved good results, although the remainder of the vinyl chain continued to be disappointing as a result of higher raw material costs. Overall production and sales volumes were both up 17 percent from the first quarter of 1996, primarily as a result of prior year weather-related plant shutdowns. The overall average sales price of the Company's products declined slightly. Interest expense increased to $5.3 million for the first quarter of 1997, compared to $4.6 million for the same period in 1996. This increase was primarily attributable to a higher debt balance for the first quarter of 1997, which helped fund the Company's capital expenditure and stock purchase programs. Net income per common share for the first quarter of 1997 was favorably impacted by a reduction in the number of outstanding common shares from the first quarter of 1996, as a result of the Company's stock purchase programs. 6 LIQUIDITY AND CAPITAL RESOURCES During the three months ended March 31, 1997, Georgia Gulf generated $29.5 million of cash flow from operating activities as compared to $56.4 million for the three months ended March 31, 1996. This reduction in cash flow resulted from lower net income in 1997 and working capital fluctuations in both periods. For the first three months of 1997, $9.5 million was generated by working capital fluctuations, primarily resulting from a higher accounts payable balance due to the timing of raw material purchases. However, for the first quarter of 1996, $31.9 million was generated from working capital fluctuations which were attributable to changes in trade receivables and accounts payable, offset in part by a decrease in accrued compensation relating to the Company's profit sharing plan. Debt increased by $6.4 million during the three months ended March 31, 1997, to a level of $402.0 million. The Company presently has approximately $165 million of availability under its $350 million revolving credit loan. Capital expenditures for the three months ended March 31, 1997, were $20.3 million as compared to $39.4 million for the same 1996 period. The air separation plant was completed during the first quarter of 1997 and began suppling oxygen and nitrogen to the Company's Plaquemine, Louisiana complex. The expansion and modernization of the vinyl chloride monomer ("VCM") plant was also completed during the latter part of the first quarter of 1997, raising the Company's annual VCM capacity to approximately 1.6 billion pounds. Major capital projects underway in 1997 include the expansion of the phenol/acetone plant in Plaquemine, Louisiana, scheduled to be completed during the second quarter of 1997, and the second phase of the vinyl compound expansion at Gallman, Mississippi, scheduled to be completed by the end of the third quarter of 1997. The Company estimates that total capital expenditures for 1997 will approximate $70.0 million. In addition, although not part of the Company's capital expenditure program, a 250 megawatt co-generation facility is under construction at the Plaquemine, Louisiana complex. The co-generation facility, which will be leased by the Company under an operating lease agreement, is scheduled to be completed by the end of the second quarter of 1997. The Company declared dividends of $0.08 per share or $2.8 million during the first three months of 1997. The Company also purchased 359,000 shares of its common stock at a cost of $9.8 million during the same period. As of March 31, 1997, 7 the Company had authorization to purchase up to 2.8 million additional shares under the current common stock purchase 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 and debt service requirements. OUTLOOK The current capital expansion and modernization program is nearing completion, which will enable the Company to return to a more normalized production schedule with fewer disruptions. Thus, the Company is anticipating an increase in production and a reduction in costs as it begins to realize the benefits of the capital improvement program. Although the Company's vinyl resin business continued to struggle in the first quarter of 1997, strengthening has occurred in the second quarter. Methanol margins are also improving as a result of stronger demand and lower natural gas costs. Accordingly, management is hopeful that this stronger demand will result in a significant increase in earnings for the second quarter of 1997. 8 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 1997. 9 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 7, 1997 /S/ JERRY R. SATRUM ------------- -------------------------------------- JERRY R. SATRUM PRESIDENT AND CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER) DATE MAY 7, 1997 /S/ RICHARD B. MARCHESE -------------- -------------------------------------- RICHARD B. MARCHESE VICE PRESIDENT--FINANCE AND CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL OFFICER) 10 EX-27 2 EXHIBIT 27
5 3-MOS DEC-31-1996 MAR-30-1997 4,042 0 81,728 2,372 83,054 179,653 666,474 259,018 610,038 136,489 402,000 0 0 343 18,351 610,038 239,225 239,225 203,460 203,460 0 0 5,262 19,405 7,344 12,061 0 0 0 12,061 0.35 0.35
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