EX-99.1 2 a4814900ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Georgia Gulf Reports 2004 Net Income of $3.17 Per Diluted Share; Net Income Eight Times 2003 Earnings; Company Reports Record Annual Revenues ATLANTA--(BUSINESS WIRE)--Feb. 3, 2005--Georgia Gulf Corporation (NYSE: GGC) today reported record sales of $2.2 billion for the year ended December 31, 2004, an increase of 53 percent compared to 2003 annual sales of $1.4 billion. Net income of $105.9 million or $3.17 per diluted share for the full year of 2004 increased significantly compared to net income of $12.5 million or $.38 per diluted share for the full year of 2003. This $93.4 million increase in net income was the result of overall higher sales prices and sales volumes, most significantly in vinyl resins, where the company set annual production and sales volumes records, and in cumene, where annual sales volumes and prices increased substantially. Strong performance in both business segments during 2004 more than offset a 28 percent increase in raw materials and energy costs compared to 2003. "Our 2004 earnings were a significant improvement from our 2003 earnings. Strong demand and very limited capacity additions allowed us to produce at nearly full capacity and increase sales prices," said Ed Schmitt, chairman, president and CEO of Georgia Gulf. "All industry forecasts project improving performance for our chemical businesses in 2005 compared to 2004 as demand is expected to remain strong and industry operating rates are expected to remain high. These continued strong fundamentals should allow Georgia Gulf to expand gross margins and increase profitability in 2005." The company also reported net income of $24.1 million or $.71 per diluted share on sales of $590.9 million for the fourth quarter of 2004. This compares to a net loss of $2.0 million or $.06 per diluted share for the fourth quarter of 2003, which included an after tax charge of $8.6 million or $.26 per diluted share related to the early retirement of debt, on sales of $372.5 million. These substantial increases in net income and sales were the result of significant increases in overall sales prices and sales volumes compared to the fourth quarter of 2003. Comparing sequential quarters, fourth quarter net income of $24.1 million or $.71 per diluted share decreased compared to the third quarter 2004 net income of $33.4 million or $1.00 per diluted share. Although Georgia Gulf experienced better performance in most areas of its business compared to the normal seasonally slow fourth quarter, overall increases in raw materials and natural gas costs outpaced increases in sales prices and sales volumes. Chlorovinyls For the year ended December 31, 2004, chlorovinyls operating income increased 92 percent from $86.3 million in 2003 to $165.9 million in 2004 as chlorovinyls sales prices and sales volumes were up 15 percent and 9 percent, respectively. The performance of vinyl resins was the primary contributor to this improvement as annual sales prices increased 19 percent and annual sales volumes were up 16 percent despite substantially higher raw materials and natural gas costs. The chlorovinyls segment operating income posted strong results in the fourth quarter. Fourth quarter operating income of $34.7 million increased compared to the fourth quarter 2003 operating income of $25.1 million. This $9.6 million improvement was primarily the result of a 32 percent increase in vinyl resins sales prices and a 20 percent increase in vinyl resins sales volumes, which more than offset higher ethylene, chlorine and natural gas costs. Comparing sequential quarters, chlorovinyls operating income decreased to $34.7 million in the fourth quarter of 2004 from $39.8 million in the third quarter of 2004. The lower operating income was the result of higher raw materials costs outpacing higher chlorovinyls sales prices. Aromatics For the year ended December 31, 2004, aromatics operating income increased $48.9 million from $1.7 million in 2003 to $50.6 million in 2004, primarily as a result of a substantial increase in cumene sales volumes and sales prices. While the entire aromatics segment performed well in 2004 compared to 2003, the improvement was primarily a result of the increase in cumene sales volumes and also reflected an increase in overall aromatics sales prices that outpaced higher aromatics raw materials prices. The aromatics business performed well in the fourth quarter of this year. Aromatics operating income increased to $13.2 million in the fourth quarter of 2004 from about breakeven in the fourth quarter of 2003 as higher aromatics sales prices and sales volumes outpaced higher benzene and propylene costs. Fourth quarter 2004 aromatics operating income of $13.2 million decreased from the third quarter 2004 operating income of $27.5 million. This decrease primarily reflects higher aromatics raw materials costs and lower aromatics sales volumes despite higher aromatics sales prices. Conference Call Georgia Gulf will host a conference call to discuss fourth quarter results in more detail at 9:00 AM ET on Friday, February 4, 2005. To access the teleconference, please dial 888-552-7928 (domestic) or 706-679-3718 (international). To access the teleconference via Webcast, log on to http://audioevent.mshow.com/205717/. Playbacks will be available from noon ET Friday, February 4, to midnight ET Friday, February 11. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 3200212. Other Georgia Gulf, headquartered in Atlanta, is a major manufacturer and marketer of two integrated product lines, chlorovinyls and aromatics. Georgia Gulf's chlorovinyls products include chlorine, caustic soda, vinyl chloride monomer and vinyl resins and compounds. Georgia Gulf's primary aromatic products include cumene, phenol and acetone. This news release contains forward-looking statements subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's assumptions regarding business conditions, and actual results may be materially different. Risks and uncertainties inherent in these assumptions include, but are not limited to, future global economic conditions, economic conditions in the industries to which the company sells, industry production capacity, raw material and energy costs and other factors discussed in the Securities and Exchange Commission filings of Georgia Gulf Corporation, including our annual report on Form 10-K for the year ended December 31, 2003 and our subsequent reports on Form 10-Q. GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, December 31, In Thousands 2004 2003 ------------ --------------- --------------- ASSETS Cash and cash equivalents $ 21,088 $ 1,965 Receivables, net of allowance 134,852 86,914 Inventories 186,313 124,616 Prepaid expenses and other 5,186 7,043 Deferred income taxes 10,097 8,368 ------------ ----------- Total current assets 357,536 228,906 Property, plant and equipment, net 425,734 460,808 Goodwill 77,720 77,720 Other assets 102,840 89,351 ------------ ----------- Total assets $ 963,830 $ 856,785 ============ =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 189,900 $ 1,000 Accounts payable 205,365 135,680 Interest payable 1,557 1,812 Accrued compensation 18,293 15,058 Accrued liabilities 11,779 9,614 ------------ ----------- Total current liabilities 426,894 163,164 Long-term debt, less current portion 128,583 426,872 Deferred income taxes 128,032 122,617 Other non-current liabilities 12,052 7,693 Stockholders' equity 268,269 136,439 ------------ ----------- Total liabilities and stockholder's equity $ 963,830 $ 856,785 ============ =========== Common shares outstanding 33,925 32,736 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, --------------------- ----------------------- In Thousands (except per share data) 2004 2003 2004 2003 ------------------------ --------- --------- ---------- ---------- Net Sales $ 590,907 $ 372,523 $2,206,239 $1,444,483 --------- --------- ---------- ---------- Operating costs and expenses Costs of sales 534,322 334,235 1,955,095 1,319,094 Selling and administrative 14,777 20,458 60,721 55,691 --------- --------- ---------- ---------- Total operating costs and expenses 549,099 354,693 2,015,816 1,374,785 --------- --------- ---------- ---------- Operating income 41,808 17,830 190,423 69,698 Interest expense, net (5,465) (8,910) (23,663) (38,142) Cost Related to early retirement of debt - (13,816) - (13,816) --------- --------- ---------- ---------- Income (loss) before income taxes 36,343 (4,896) 166,760 17,740 Provision (benefit) for (from) income taxes 12,285 (2,900) 60,868 5,245 --------- --------- ---------- ---------- Net income (loss) $ 24,058 $ (1,996) $ 105,892 $ 12,495 ========= ========= ========== ========== Earnings (loss) per share: Basic $ 0.72 $ (0.06) $ 3.21 $ 0.39 Diluted $ 0.71 $ (0.06) $ 3.17 $ 0.38 Weighted average common shares: Basic 33,436 32,359 32,965 32,267 Diluted 34,091 32,359 33,439 32,502 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended Twelve Months Ended In Thousands December 31, December 31, ------------ -------------------- -------------------- 2004 2003 2004 2003 --------- --------- --------- --------- Cash Flows from operating activities: Net income (loss) $ 24,058 $ (1,996) $ 105,892 $ 12,495 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 16,670 15,893 64,554 63,932 Cost related to early retirement of debt - 13,816 - 13,816 Deferred income taxes 3,807 (4,758) 3,686 (6,344) Tax benefit related to stock plans 3,569 476 5,912 1,107 Other noncash items 1,360 666 3,926 1,779 Change in operating assets, liabilities and other (31,901) 33,612 (48,003) (1,708) Net cash provided by operating activities: 17,563 57,709 135,967 85,077 -------- --------- --------- --------- Cash flows used in investing activities: Capital expenditures (7,719) (8,892) (23,441) (24,046) -------- --------- --------- --------- Cash flows from financing activities: Net change in revolving line of credit 89,900 (8,000) 89,900 - Long-term debt proceeds - 300,666 - 300,666 Long-term debt payments (59,510) (309,330) (135,000) (324,780) Debt payments related to asset securitization (30,000) (25,000) (65,000) (25,000) Redemption premium and fees paid to retire notes - (10,760) - (10,760) Fees paid to issue debt - (2,239) - (2,239) Proceeds from issuance of common stock 11,331 4,948 27,948 5,857 Purchase and retirement of common stock - (190) (602) (435) Dividends paid (2,704) (2,607) (10,649) (10,394) -------- --------- --------- --------- Net cash provided by (used in) financing activities: 9,017 (52,512) (93,403) (67,085) Net change in cash and cash equivalents 18,861 (3,695) 19,123 (6,054) Cash and cash equivalents at beginning of period 2,227 5,660 1,965 8,019 Cash and cash equivalents at end of period $ 21,088 $ 1,965 $ 21,088 $ 1,965 GEORGIA GULF CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) Three Months Ended Twelve Months Ended December 31, December 31, --------------------- ------------------------ In Thousands 2004 2003 2004 2003 ------------ --------- --------- ---------- ---------- Segment net sales: Chlorovinyls $ 375,756 $ 283,700 $1,452,404 $1,159,035 Aromatics 215,151 88,823 753,835 285,448 --------- --------- ---------- ---------- Net sales $ 590,907 $ 372,523 $2,206,239 $1,444,483 ========= ========= ========== ========== Segment operating income (loss): Chlorovinyls $ 34,746 $ 25,128 $ 165,910 $ 86,289 Aromatics 13,247 (62) 50,556 1,673 Corporate and general plant services (6,185) (7,236) (26,043) (18,264) --------- --------- ---------- ---------- Total operating income$ 41,808 $ 17,830 $ 190,423 $ 69,698 ========= ========= ========== ========== CONTACT: Georgia Gulf Corporation, Atlanta Investor Relations Angie Tickle, 770-395-4520