EX-99.1 2 a5197417ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Georgia Gulf Reports Second Quarter Net Income of $1.15 Per Diluted Share; Includes Unrealized Loss of $.21 Per Share Related to Proposed Royal Acquisition ATLANTA--(BUSINESS WIRE)--July 27, 2006--Georgia Gulf Corporation (NYSE: GGC) today reported net income of $39.4 million or $1.15 per diluted share on sales of $602.2 million for the second quarter of 2006. These results include an unrealized loss of $.21 per share due to the Company's foreign exchange hedge for the proposed acquisition of Royal Group Technologies. Second quarter of 2006 net income increased significantly compared to the second quarter of 2005 net income of $10.2 million or $.30 per diluted share on sales of $584.2 million, which included the negative impact of the Company's chloralkali plant outages of $.50 per share. Compared to the second quarter of 2005, overall chlorovinyls sales prices and sales volumes increased during the second quarter of 2006 resulting in record quarterly operating income for this segment. "We are very pleased to report our highest ever quarterly chlorovinyls operating income of $83.7 million and one of our highest quarters for overall operating income of $75.4 million," said Ed Schmitt, chairman, president and CEO, Georgia Gulf Corporation. "The strong performance resulted from increased year-over-year sales prices and high operating rates for our vinyl resins and caustic soda businesses. "As for the third quarter of 2006, we expect continued strong performance in our chlorovinyls business even though increased raw materials costs are expected to lower our third quarter results compared to our second quarter results. In addition, we will be focusing on completing the acquisition of Royal Group Technologies, which we previously announced on June 9, 2006." Second quarter 2006 net income of $39.4 million or $1.15 per diluted share on sales of $602.2 million compares favorably to first quarter 2006 net income of $33.7 million or $.98 per diluted share on sales of $567.9 million. The improvement reflects higher sales volumes for vinyl resins and vinyl compounds and lower energy costs, which more than offset lower sales prices for vinyl resins and vinyl compounds and higher raw materials costs, specifically for benzene and propylene. For the six months ended June 30, 2006, net income compares favorably to the same period last year. Net income of $73.1 million or $2.12 per diluted share on sales of $1.2 billion compared to net income of $48.9 million or $1.43 per diluted share on sales of $1.2 billion for the first half of 2005. Higher sales prices and sales volumes in chlorovinyls more than offset declining performance in our aromatics business and higher natural gas, ethylene and propylene costs as well as the impact of our chloralkali plant outages in the second quarter of 2005. Chlorovinyls Georgia Gulf's chlorovinyls business provided record-setting second quarter of 2006 operating income of $83.7 million compared to second quarter of 2005 operating income of $36.0 million, which included the adverse impact from the Company's chloralkali plant outages in 2005. The improvement in chlorovinyls during the second quarter of 2006 compared to the second quarter of 2005 reflects higher sales volumes and sales prices for chlorovinyls products, which more than offset higher ethylene costs. Comparing sequential quarters, chlorovinyls operating income increased from $75.7 million to $83.7 million. This increase was the result of increased sales volumes for chlorovinyls products and lower energy costs, which outpaced lower chlorovinyls sales prices and higher ethylene costs. For the six months ended June 30, 2006, chlorovinyls operating income increased to $159.4 million from $95.0 million for the same period of 2005 as higher sales prices outpaced higher ethylene and natural gas costs and the impact of our chloralkali plant outages in the second quarter of 2005. Aromatics Georgia Gulf's aromatics business had a lower operating loss of $0.5 million for the second quarter of 2006 compared to an operating loss of $8.8 million for the second quarter of 2005. The improvement was the result of lower benzene costs, which more than offset overall lower aromatics sales volumes and higher propylene costs. Comparing sequential quarters, the aromatics business operating loss of $0.5 million for the second quarter of 2006 improved from the operating loss of $5.0 million for the first quarter of 2006 reflecting improved sales prices which outpaced higher raw materials costs. For the six months ended June 30, 2006, the aromatics business experienced an operating loss of $5.4 million, which was a decline from the operating income of $5.5 million in the same period of 2005. The decline was a result of significantly lower sales volumes and lower sales prices for all aromatics products. Conference Call Georgia Gulf will host a conference call to discuss second quarter results in more detail at 9:00 AM ET on Friday, July 28, 2006. 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/304668/. Playbacks will be available from 10:00 AM ET Friday, July 28, to midnight ET Friday, August 4. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 3144097. 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, 2005 and our subsequent reports on Form 10-Q. GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) June 30, Dec. 31, In Thousands 2006 2005 ------------ -------- ----------- ASSETS Cash and cash equivalents $4,052 $14,298 Receivables, net of allowance 117,976 118,193 Inventories 190,885 195,628 Prepaid expenses and other 10,440 13,306 Deferred income taxes 5,052 5,091 -------- ----------- Total current assets 328,405 346,516 Property, plant and equipment, net 398,954 401,412 Goodwill 77,720 77,720 Other assets, net 161,096 175,305 -------- ----------- Total assets $966,175 $1,000,953 ======== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $45,100 $49,300 Accounts payable 192,215 202,179 Interest payable 1,052 1,226 Accrued compensation 11,588 14,986 Income taxes payable 1,904 1,258 Accrued liabilities 29,017 15,237 -------- ----------- Total current liabilities 280,876 284,186 Long-term debt, less current portion 129,339 229,339 Deferred income taxes 99,378 107,959 Other non-current liabilities 17,459 16,457 Stockholders' equity 439,123 363,012 -------- ----------- Total liabilities and stockholders' equity $966,175 $1,000,953 ======== =========== Common shares outstanding 34,216 34,238 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------------- In Thousands (except per share data) 2006 2005 2006 2005 ------------------------ --------- --------- ----------- ----------- Net sales $602,159 $584,162 $1,170,032 $1,229,571 --------- --------- ----------- ----------- Operating costs and expenses Costs of sales 509,590 549,053 998,474 1,112,152 Selling, general and administrative 17,217 14,615 37,431 30,465 --------- --------- ----------- ----------- Total operating costs and expenses 526,807 563,668 1,035,905 1,142,617 --------- --------- ----------- ----------- Operating income 75,352 20,494 134,127 86,954 Interest expense, net (3,473) (5,379) (7,809) (10,826) Unrealized losses on derivative instruments (11,387) - (11,387) - --------- --------- ----------- ----------- Income before income taxes 60,492 15,115 114,931 76,128 Provision for income taxes 21,102 4,946 41,860 27,216 --------- --------- ----------- ----------- Net income $39,390 $10,169 $73,071 $48,912 ========= ========= =========== =========== Earnings per share: Basic $1.16 $0.30 $2.14 $1.45 Diluted $1.15 $0.30 $2.12 $1.43 Weighted average common shares: Basic 34,101 33,888 34,075 33,832 Diluted 34,397 34,220 34,387 34,275 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended Six Months Ended In Thousands June 30, June 30, ------------ ----------------- ------------------ 2006 2005 2006 2005 -------- -------- --------- -------- Cash flows from operating activities: Net income $39,390 $10,169 $73,071 $48,912 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,066 15,709 31,956 31,387 Deferred income taxes (4,333) (3,367) (8,541) (5,738) Tax (deficiency) benefit related to stock plans 71 324 (231) 1,677 Stock based compensation 2,505 1,016 8,075 1,831 Change in operating assets, liabilities and other 5,178 15,576 21,986 (65,460) -------- -------- --------- -------- Net cash provided by operating activities 58,877 39,427 126,316 12,609 -------- -------- --------- -------- Cash flows used in investing activities Capital expenditures (15,595) (7,712) (27,558) (13,418) -------- -------- --------- -------- Cash flows from financing activities: Net change in revolving line of credit (49,900) (29,800) (104,200) (13,900) Proceeds from issuance of common stock 291 236 301 2,646 Purchase and retirement of common stock - (272) (1,032) (1,682) Tax benefits from employee share-based exercises 2 - 1,424 - Dividends paid (2,749) (2,729) (5,497) (5,457) -------- -------- --------- -------- Net cash used in financing activities (52,356) (32,565) (109,004) (18,393) -------- -------- --------- -------- Net change in cash and cash equivalents (9,074) (850) (10,246) (19,202) Cash and cash equivalents at beginning of period 13,126 2,736 14,298 21,088 -------- -------- --------- -------- Cash and cash equivalents at end of period $4,052 $1,886 $4,052 $1,886 ======== ======== ========= ======== GEORGIA GULF CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) Three Months Ended Six Months Ended June 30, June 30, ------------------- ----------------------- In Thousands 2006 2005 2006 2005 ------------ --------- --------- ----------- ----------- Segment net sales: Chlorovinyls $464,865 $382,111 $906,465 $779,226 Aromatics 137,294 202,051 263,567 450,345 --------- --------- ----------- ----------- Net sales $602,159 $584,162 $1,170,032 $1,229,571 ========= ========= =========== =========== Segment operating income (loss): Chlorovinyls $83,734 $36,024 $159,434 $94,975 Aromatics (466) (8,771) (5,432) 5,505 Unallocated corporate expenses (7,916) (6,759) (19,875) (13,526) --------- --------- ----------- ----------- Total operating income $75,352 $20,494 $134,127 $86,954 ========= ========= =========== =========== CONTACT: Georgia Gulf Corporation, Atlanta Investor Relations Angie Tickle, 770-395-4520