-----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, SlaDxeoASFyd9LTwixQqZNO2XwfgMdDAwi7a7xKVQeUq95GTbVKOyOMGSSMNvE1P Yfp4q6Ypl0tiuFHgtPQDbg== 0001157523-06-010467.txt : 20061027 0001157523-06-010467.hdr.sgml : 20061027 20061027105542 ACCESSION NUMBER: 0001157523-06-010467 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061026 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061027 DATE AS OF CHANGE: 20061027 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09753 FILM NUMBER: 061167661 BUSINESS ADDRESS: STREET 1: 115 PERIMETER CENTER PLACE STREET 2: STE. 460 CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 7703954500 MAIL ADDRESS: STREET 1: 115 PERIMETER CENTER PLACE STREET 2: STE. 460 CITY: ATLANTA STATE: GA ZIP: 30346 8-K 1 a5259896.txt GEORGIA GULF CORPORATION 8-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of report (Date of earliest event reported): October 26, 2006 (October 26, 2006) GEORGIA GULF CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 1-9753 58-1563799 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification Number) 115 Perimeter Center Place, Suite 460, Atlanta, GA 30346 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including area code: (770) 395-4500 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. The following information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. On October 26, 2006, Georgia Gulf Corporation issued a press release announcing expectations regarding financial and operating results for the third quarter 2006. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated into Item 2.02 of this Form 8-K by reference. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. 99.1 Press Release Dated October 26, 2006 SIGNATURE 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 hereunto duly authorized. Dated: October 26, 2006 Georgia Gulf Corporation By: /s/ JOEL I. BEERMAN ------------------------------------------ Name: Joel I. Beerman Title: Vice President, General Counsel and Secretary - -------------------------------------------------------------------------------- EXHIBIT INDEX 99.1 Press Release dated October 26, 2006 EX-99.1 2 a5259896ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Georgia Gulf Reports Third Quarter Earnings of $.66 Per Diluted Share ATLANTA--(BUSINESS WIRE)--Oct. 26, 2006--Georgia Gulf Corporation (NYSE: GGC) today announced its financial results for the third quarter of 2006. Since Georgia Gulf completed its acquisition of Royal Group on October 3, 2006, Georgia Gulf's third quarter financial results do not include Royal Group. For the third quarter of 2006, Georgia Gulf's net sales were $576.3 million compared to $525.2 million for the third quarter of 2005. Georgia Gulf's net income was $22.7 million or $.66 per diluted share for the third quarter of 2006, compared to net income of $27.9 million or $.82 per diluted share for the same quarter last year. The decline in earnings is primarily a result of higher average raw materials costs, which more than offset higher overall sales prices and lower natural gas costs. The results for the third quarter of 2006 also include an unrealized loss of $.08 per diluted share related to Georgia Gulf's foreign exchange hedge related to the purchase price for the Royal Group acquisition, which was in Canadian dollars. In addition, during the third quarter of 2005, Georgia Gulf was able to sell lower cost inventory in a significantly increasing raw materials costs environment as prices drastically escalated at the end of the third quarter of 2005 due to Hurricanes Katrina and Rita. This resulted in a favorable impact of $.37 per diluted share for the third quarter of 2005 as compared to a minimal impact during the third quarter of 2006. Also during the third quarter of 2005, results included a negative impact of $.24 per diluted share due to the hurricanes and favorable tax adjustments of $.09 per diluted share. Compared to the second quarter of 2006, Georgia Gulf realized reduced net income in the third quarter of 2006 as a result of higher raw materials costs as well as lower vinyl resins and vinyl compounds sales volumes, which more than offset higher sales prices and lower natural gas costs. In addition, the second quarter of 2006 earnings results included a favorable impact of about $.13 per diluted share related to selling lower cost inventory in an increasing raw materials cost environment compared to a minimal impact during the third quarter of 2006. During the second quarter of 2006, Georgia Gulf reported net earnings of $39.4 million, or $1.15 per diluted share. "Although our businesses experienced much higher average raw materials costs, we generally maintained higher sales prices and respectable sales volumes during the quarter until demand softened in September," said Ed Schmitt, Chairman, President and CEO of Georgia Gulf Corporation. "For the fourth quarter, we are experiencing continued softening in demand as we enter into the seasonally slow part of the year." Chlorovinyls For the third quarter of 2006, Georgia Gulf's chlorovinyls business performed well with operating income of $56.4 million, an increase from $53.1 million in the third quarter of 2005. This increase was the result of increased sales prices outpacing increased raw materials costs. Sales volumes were strong in July and August for vinyl resins and vinyl compounds but declined in September. Compared to the second quarter of 2006, operating income declined from a record setting quarterly operating income of $83.7 million as the Company experienced lower sales volumes for vinyl resins and vinyl compounds, higher ethylene costs and lower caustic soda sales prices. Aromatics For the third quarter of 2006, Georgia Gulf reported an aromatics operating loss of $2.2 million, compared to an operating loss of $1.9 million during the third quarter of 2005. Higher aromatics sales prices and increased phenol and acetone sales volumes were offset by higher benzene and propylene costs as well as lower cumene sales volumes. During the third quarter of 2006, the aromatics business experienced an operating loss of $2.2 million compared to an operating loss of $0.5 million during the second quarter of 2006, primarily as a result of higher benzene costs offset higher aromatics sales prices and sales volumes. Royal Group Since completion of the acquisition of Royal Group on October 3, 2006, Georgia Gulf has been implementing its transition plan to integrate the two companies and begun to take steps to enhance Royal Group's financial performance. Georgia Gulf continues to finalize divestitures previously initiated by Royal Group, with proceeds of approximately $98 million expected in the fourth quarter. These divestitures include the sale of Royal Group's distribution center in Canada, its US window coverings manufacturing plants and its Polish operations. Georgia Gulf has also announced its intentions to exit certain unprofitable businesses, including certain segments of Royal Group's window coverings operations, and Royal Building System operations in China and Mexico. Georgia Gulf anticipates annual costs savings and operational efficiencies of $64 million in 2007 and increasing to a running rate of $157 million by the end of 2008. "We have made good progress on costs savings initiatives and, at this point, expect to stay on target going forward," said Mr. Schmitt. "We will continue to move quickly and remain excited about this opportunity." Conference Call Georgia Gulf will discuss its third quarter earnings via teleconference and Webcast on Friday, October 27, 2006, at 9:00 AM ET. 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/311005. Playbacks will be available from 10:00 AM ET Friday, October 27, to midnight ET Friday, November 3. Playback numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The conference call ID number is 8771813. Georgia Gulf Corporation is a leading North American manufacturer and international marketer of two integrated chemical product lines, chlorovinyls and aromatics. Under Royal Group's brands, Georgia Gulf manufactures vinyl-based building and home improvement products including custom window profiles, siding, pipe and pipe fittings, mouldings, decking, fencing, railing, and window coverings. Georgia Gulf Corporation's chemical products can be found in high performance plastics, pulp and paper production, packaging, chemical intermediates, pharmaceuticals and medical applications. Headquartered in Atlanta, the Company has nearly 50 manufacturing facilities primarily in North America as well as a facility in China. GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) In Thousands September 30, December 31, 2006 2005 - ------------------------------------- ------------- ---------------- ASSETS Cash and cash equivalents $ 11,231 $ 14,298 Receivables, net of allowance 109,333 118,193 Inventories 191,967 195,628 Prepaid expenses and other 3,819 13,306 Deferred income taxes 5,222 5,091 ------------- ---------------- Total current assets 321,572 346,516 Property, plant and equipment, net 406,310 401,412 Goodwill 77,720 77,720 Other assets, net 173,023 175,305 ------------- ---------------- Total assets $ 978,625 $ 1,000,953 ============= ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current portion of long-term debt $ 34,000 $ 49,300 Accounts payable 182,164 202,179 Interest payable 3,429 1,226 Accrued compensation 16,221 14,986 Income taxes payable - 1,258 Unrealized losses on foreign exchange derivatives 15,846 - Accrued liabilities 23,063 15,237 ------------- ---------------- Total current liabilities 274,723 284,186 Long-term debt, less current portion 129,339 229,339 Deferred income taxes 95,345 107,959 Other non-current liabilities 18,997 16,457 Stockholders' equity 460,221 363,012 ------------- ---------------- Total liabilities and stockholders' equity $ 978,625 $ 1,000,953 ============= ================ Common shares outstanding 34,219 34,238 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ----------------------- In Thousands (except per share data) 2006 2005 2006 2005 - -------------------------- --------- --------- ----------- ----------- Net sales $576,288 $525,223 $1,746,320 $1,754,794 --------- --------- ----------- ----------- Operating costs and expenses Costs of sales 513,402 464,884 1,511,876 1,577,036 Selling, general and administrative 18,699 16,917 56,130 47,382 --------- --------- ----------- ----------- Total operating costs and expenses 532,101 481,801 1,568,006 1,624,418 --------- --------- ----------- ----------- Operating income 44,187 43,422 178,314 130,376 Interest expense, net (2,779) (5,148) (10,588) (15,975) Unrealized losses on foreign exchange derivatives (4,459) - (15,846) - --------- --------- ----------- ----------- Income before income taxes 36,949 38,274 151,880 114,401 Provision for income taxes 14,288 10,341 56,148 37,556 --------- --------- ----------- ----------- Net income $22,661 $27,933 $95,732 $76,845 ========= ========= =========== =========== Earnings per share: Basic $0.66 $0.82 $2.81 $2.27 Diluted $0.66 $0.82 $2.78 $2.24 Weighted average common shares: Basic 34,110 33,900 34,087 33,855 Diluted 34,392 34,150 34,389 34,234 GEORGIA GULF CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Nine Months Ended Ended In Thousands September 30, September 30, - ------------------------------ ----------------- ------------------ 2006 2005 2006 2005 -------- -------- --------- -------- Cash flows from operating activities: Net income $22,661 $27,933 $95,732 $76,845 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 16,060 15,848 48,016 47,235 Unrealized loss on foreign exchange derivatives 4,459 - 15,846 - Deferred income taxes (4,203) (9,175) (12,745) (14,914) Tax benefit (deficiency) related to stock plans 36 254 (194) 1,930 Stock based compensation 2,506 964 10,581 2,795 Change in operating assets, liabilities and other (622) 3,431 9,977 (62,027) -------- -------- --------- -------- Net cash provided by operating activities 40,897 39,255 167,213 51,864 -------- -------- --------- -------- Cash flows used in investing activities Capital expenditures (19,939) (5,623) (47,497) (19,041) -------- -------- --------- -------- Cash flows from financing activities: Net change in revolving line (11,100) (23,900) (115,300) (37,800) of credit Proceeds from issuance of common stock 63 79 365 2,724 Purchase and retirement of common stock - - (1,032) (1,682) Tax benefits from employee share-based exercises 7 - 1,430 - Dividends paid (2,749) (2,729) (8,246) (8,185) -------- -------- --------- -------- Net cash used in financing activities (13,779) (26,550) (122,783) (44,943) -------- -------- --------- -------- Net change in cash and cash equivalents 7,179 7,082 (3,067) (12,120) Cash and cash equivalents at beginning of period 4,052 1,886 14,298 21,088 -------- -------- --------- -------- Cash and cash equivalents at end of period $11,231 $8,968 $11,231 $8,968 ======== ======== ========= ======== GEORGIA GULF CORPORATION AND SUBSIDIARIES SEGMENT INFORMATION (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------- ----------------------- In Thousands 2006 2005 2006 2005 - ------------------------ --------- --------- ----------- ----------- Segment net sales: Chlorovinyls $415,362 $388,247 $1,321,827 $1,167,473 Aromatics 160,926 136,976 424,493 587,321 --------- --------- ----------- ----------- Net sales $576,288 $525,223 $1,746,320 $1,754,794 ========= ========= =========== =========== Segment operating income (loss): Chlorovinyls $56,373 $53,115 $215,807 $148,090 Aromatics (2,217) (1,878) (7,649) 3,627 Unallocated corporate expenses (9,969) (7,815) (29,844) (21,341) --------- --------- ----------- ----------- Total operating income $44,187 $43,422 $178,314 $130,376 ========= ========= =========== =========== CONTACT: Georgia Gulf Corporation Angie Tickle Investor Relations 770-395-4520 or Royal Group Mark Badger Investor Relations 905-264-0701 -----END PRIVACY-ENHANCED MESSAGE-----