-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IMEpwjaVMtQ5KFtPSHkMmIqERBmAGN899h/hIj3XFCq6F9twgyMuBe2DYu6C12// oBO2HaCE5ix5Inf7aFmhLQ== 0000950152-94-000776.txt : 19940811 0000950152-94-000776.hdr.sgml : 19940811 ACCESSION NUMBER: 0000950152-94-000776 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940624 FILED AS OF DATE: 19940805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BORDEN CHEMICALS & PLASTICS LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000821202 STANDARD INDUSTRIAL CLASSIFICATION: 2821 IRS NUMBER: 311269627 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09699 FILM NUMBER: 94541959 BUSINESS ADDRESS: STREET 1: HIGHWAY 73 CITY: GEISMAR STATE: LA ZIP: 70734 BUSINESS PHONE: 5043875101 MAIL ADDRESS: STREET 1: HIGHWAY 73 CITY: GEISMAR STATE: LA ZIP: 70734 10-Q 1 BORDEN CHEMICAL & PLASTICS 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D. C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES --- EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 24, 1994 -------------------------------------------- Commission file number 1-9699 ---------------------------------------------------- BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) Delaware 31-1269627 - - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Highway 73, Geismar, Louisiana 70734 ------------------------------------------------------ (Address of principal executive offices) (504) 387-5101 ----------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable ----------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 --- --- --------------------------- Number of Common Units outstanding as of the close of business on July 22, 1994: 36,750,000 Page 1 of 12 2 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ---------------- CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands except per Unit data)
Three Months Three Months Ended Ended June 24, 1994 June 25, 1993 ------------- ------------- Revenues Net trade sales $ 119,661 $ 84,381 Net affiliated sales 30,010 21,590 --------- --------- Total revenues 149,671 105,971 --------- --------- Expenses Cost of goods sold Trade 88,831 81,505 Affiliated 22,906 20,131 Marketing, general and administrative expenses 5,059 4,805 Interest expense 4,108 4,119 General Partner incentive 2,654 Other (income) and expense, including minority interes 849 266 --------- --------- Total expenses 124,407 110,826 --------- --------- Net income (loss) 25,264 (4,855) Less 1% General Partner interest (253) 49 --------- --------- Net income (loss) applicable to Limited Partners' interest $ 25,011 $ (4,806) ========= ========= Net income (loss) per Unit $ 0.68 $ (.13) ========= ========= Average number of Units outstanding during the period 36,750 36,750 ========= ========= Cash distributions declared per Unit $ 0.65 $ .18 ========= =========
Page 2 of 12 3 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands except per Unit data)
Six Months Six Months Ended Ended June 24, 1994 June 25, 1993 ------------- ------------- Revenues Net trade sales $ 214,482 $ 158,263 Net affiliated sales 54,170 38,312 --------- --------- Total revenues 268,652 196,575 --------- --------- Expenses Cost of goods sold Trade 175,321 148,186 Affiliated 43,321 35,439 Marketing, general and administrative expenses 9,565 9,360 Interest expense 7,902 7,956 General Partner incentive 2,654 Other (income) and expense, including minority interest 997 223 --------- --------- Total expenses 239,760 201,164 --------- --------- Net income (loss) 28,892 (4,589) Less 1% General Partner interest (289) 46 --------- --------- Net income (loss) applicable to Limited Partners' interest $ 28,603 $ (4,543) ========= ========= Net income (loss) per Unit $ .78 $ (.12) ========= ========= Average number of Units outstanding during the period 36,750 36,750 ========= ========= Cash distributions declared per Unit $ .86 $ .48 ========= =========
Page 3 of 12 4 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Six Months Ended Ended June 24, 1994 June 25, 1993 -------------- -------------- Cash Flows From Operations Net income (loss) $ 28,892 $ (4,589) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 21,845 21,424 Increase in receivables (17,989) (1,949) Decrease (increase) in inventories 2,122 (2,234) Increase in payables 4,059 6,414 Increase in incentive distribution payable 2,654 Decrease in accrued interest (270) (225) Other, net 2,804 (2,826) --------- --------- 44,117 16,015 --------- --------- Cash Flows From Investing Activities Capital expenditures (9,451) (4,629) --------- --------- Cash Flows From Financing Activities Cash distributions paid (14,478) (22,644) --------- --------- Increase (decrease) in cash and equivalents 20,188 (11,258) Cash and equivalents at beginning of period 9,054 19,389 --------- --------- Cash and equivalents at end of period $ 29,242 $ 8,131 ========= ========= Supplemental Disclosure of Cash Flow Information Interest paid during the period $ 8,172 $ 8,181 ========= =========
Page 4 of 12 5 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ----------------- CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) ASSETS ------
June 24, 1994 December 31, 1993 -------------- ----------------- Cash and equivalents $ 29,242 $ 9,054 Accounts receivable (less allowance for doubtful accounts of $428 and $768, respectively) Trade 63,620 48,990 Affiliated 21,626 18,267 Inventories Finished goods 18,931 21,499 Raw materials 8,204 7,758 Other current assets 1,959 2,182 --------- --------- Total current assets 143,582 107,750 --------- --------- Investments in and advances to affiliated companies 3,642 3,623 Other assets 26,867 26,956 --------- --------- 30,509 30,579 --------- --------- Land 12,051 12,051 Buildings 36,332 35,955 Machinery and equipment 513,462 505,236 --------- --------- 561,845 553,242 Less accumulated depreciation (268,606) (247,267) --------- --------- 293,239 305,975 --------- --------- $ 467,330 $ 444,304 ========= ========= LIABILITIES AND PARTNERS' CAPITAL ----------------- Accounts and drafts payable $ 48,467 $ 44,408 Cash distributions payable 24,155 6,682 Incentive distribution payable to General Partner 2,654 Accrued interest 1,575 1,845 Other accrued liabilities 10,439 8,515 --------- --------- Total current liabilities 87,290 61,450 --------- --------- Long-term debt 150,000 150,000 Minority interest in consolidated subsidiary 1,764 1,795 Postretirement benefit obligation 1,130 854 --------- --------- 152,894 152,649 --------- --------- Partners' capital Common Unitholders 225,860 228,862 General Partner 1,286 1,343 --------- --------- Total partners' capital 227,146 230,205 --------- --------- $ 467,330 $ 444,304 ========= =========
Page 5 of 12 6 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ------------------------ CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (Unaudited) (In thousands)
PREFERENCE COMMON GENERAL UNITHOLDERS UNITHOLDERS PARTNER TOTAL ------------- ------------- ------------- ------------- Balances at December 31, 1992 $ 210,923 $ 48,025 $ 1,647 $ 260,595 Combination of preference and common Units (210,923) 210,923 Net loss (4,543) (46) (4,589) Cash distributions declared (17,640) (178) (17,818) ------------ ------------ ------------ ------------ Balances at June 25, 1993 $ -0- $ 236,765 $ 1,423 $ 238,188 ============ ============ ============ ============ Balances at December 31, 1993 $ 228,862 $ 1,343 $ 230,205 Net income 28,603 289 28,892 Cash distributions declared (31,605) (346) (31,951) ------------ ------------ ------------ Balances at June 24, 1994 $ 225,860 $ 1,286 $ 227,146 ============ ============ ============
Page 6 of 12 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (unaudited) 1. Interim Financial Statements ---------------------------- The accompanying unaudited interim consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, which in the opinion of the General Partner are necessary for a fair statement of the results for the interim periods. Results for the interim periods are not necessarily indicative of the results for the full years. 2. Combination of Preference and Common Units ------------------------------------------ With the payment of the 1992 fourth quarter distribution on February 12, 1993, all differences between the Preference and Common Units ceased and all units are now Common Units. 3. Contingencies ------------- State and federal environmental agencies have notified the Partnership of their determinations that certain materials and facilities at the Geismar facility should be subject to certain state and federal environmental regulations (see "Legal Proceedings"). While the outcome is uncertain, if these determinations are upheld, the Partnership could be required to incur significant expenditures which at this time cannot be estimated, and portions of which could be subject to the Environmental Indemnity Agreement (EIA) discussed below. Under the EIA, Borden has agreed, subject to certain specified limitations, to indemnify the Partnership in respect of environmental liabilities arising from facts or circumstances that existed and requirements in effect prior to the date of the initial public offering of Preference Units. The Partnership is responsible for environmental liabilities arising from facts or circumstances that existed and requirements that become effective on or after such date. With respect to certain environmental liabilities that may arise from facts or circumstances that existed and requirements in effect both prior to and after such date, Borden and the Partnership will share liabilities on an equitable basis. Page 7 of 12 8 PART I. FINANCIAL INFORMATION ------------------------------ Item 2. Management's Discussion and Analysis of Financial - - ------- ------------------------------------------------- Condition and Results of Operations ----------------------------------- Liquidity and Capital Resources - - ------------------------------- Cash flows from operations for the first six months of 1994 were $44.1 million compared to $16.0 million for 1993. The increase is the result of higher net income partially offset by increased working capital requirements. Capital expenditures for the first six months of 1994 and 1993 were $9.5 million and $4.6 million, respectively. Total capital expenditures for 1994 are expected to be approximately $20 million. Cash distributions paid during the first six months of 1994 for fourth quarter 1993 and first quarter 1994 were $14.5 million while cash distributions paid during the first six months of 1993 for fourth quarter 1992 and first quarter 1993 were $22.6 million. On July 19, 1994, a cash distribution of $.65 per Common Unit was declared for the second quarter, payable August 8, 1994 to Unitholders of record July 29, 1994. A cash distribution of $.18 per Unit was paid for second quarter 1993. Cash available for distribution was $27.1 million and $6.8 million for second quarter 1994 and 1993, respectively. Of the available cash for second quarter 1994, $23.9 million will be paid to the Unitholders and the remainder will be distributed to the General Partner for its ownership interest and incentive payment. Of the available cash for second quarter 1993, $6.6 million was distributed to the Unitholders and the remainder was distributed to the General Partner for its ownership interest. The Partnership has signed a letter of intent with Dallas-based Occidental Chemical Corporation to purchase Occidental's Addis, Louisiana, PVC manufacturing facility. A conclusion of this acquisition is contingent on negotiation of a definitive agreement, FTC approval and other conditions. Results of Operations - - --------------------- Quarter Ended June 24, 1994 versus Quarter Ended June 25, 1993 Net sales for second quarter 1994 were $149.7 million, an increase of 41.2% from $106.0 million a year earlier. Net income for second quarter 1994 was $25.3 million compared to a net loss of $4.9 million for second quarter 1993. The increase in net income reflects both higher selling prices and increased volume. Net sales for PVC Polymers Products increased 33.0% to $83.8 million in 1994 from $63.1 million in 1993. The increase in sales was the result of substantial increases in both selling price and volume for PVC resins. Gross margin for this product group increased versus the prior year as a result of the increased sales partially offset by substantially higher chlorine costs. Page 8 of 12 9 Net sales for Methanol and Derivatives increased 72.5% to $47.2 million in 1994 from $27.3 million in 1993 as a result of higher selling prices and increased volume for methanol. Gross margin for this group increased significantly from second quarter 1993 reflecting both the higher sales and lower natural gas costs. Net sales for Nitrogen Products were $18.7 million for second quarter 1994 compared to $15.6 million for second quarter 1993, a 19.9% increase. The increase was primarily the result of a significant increase in selling prices for ammonia and slightly higher selling prices for urea, partially offset by decreased volume for both products. Gross margin increased to a moderately profitable position from a slightly negative position in 1993. The Partnership expects the favorable price and volume trends from the second quarter to continue in the third quarter. Six Months Ended June 24, 1994 Versus Six Months Ended June 25, 1993 Net sales for the first six months of 1994 increased 36.7% to $268.7 million compared to $196.6 million in 1993. Net income for the first six months of 1994 was $28.9 million compared to a net loss for 1993 of $4.6 million. Net sales for PVC Polymer Products increased 30.9% to $153.0 million in 1994 from $116.8 million in 1993 as a result of substantial increases in both volume and selling prices for PVC resins. Gross margin for the group doubled as a result of the increased sales partially offset by substantially higher chlorine costs. Net sales for Methanol and Derivatives increased 60.2% to $83.8 million in 1994 from $52.3 million in 1993 primarily as a result of higher selling prices and volume for methanol. Gross margin for the group increased substantially as a result of the increased sales partially offset by slightly higher natural gas costs. Net sales for Nitrogen Products increased 16.3% to $31.9 million in 1994 from $27.5 million in 1993 as a result of significantly higher selling prices for ammonia, slightly higher selling prices and volume for urea, partially offset by decreased volume for ammonia. Gross margin for the group increased from a slightly negative position in 1993 to a moderately profitable position in 1994. Page 9 of 12 10 PART II. OTHER INFORMATION --------------------------- Item 1. Legal Proceedings - - ------- ----------------- Environmental Proceedings - - ------------------------- In January 1994, the Louisiana Department of Environmental Quality determined that a production unit at the Geismar facility should be subject to regulation under Louisiana's hazardous waste statutes and regulations. The Operating Partnership maintains that the production unit is not subject to such regulation and has filed appeals in Louisiana State Courts. In April 1994, the U.S. Department of Justice, at the request of the U.S. Environmental Protection Agency ("EPA"), notified the Partnership that it intends to bring an action in federal court against the Partnership, seeking corrective action and penalties for alleged violations of the Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental Response, Compensation and Liability Act, ("CERCLA") and the Clean Air Act at the Geismar facility. The EPA's allegations include claims that a partially-depleted mecuric chloride catalyst used in the manufacture of vinyl chloride is a hazardous waste, even though it is recycled for reuse; and that materials from a vinyl chloride manufacturing process are hazardous wastes even though they are continually processed and never become waste. The Partnership believes that it has meritorious defenses to these allegations and in May 1994, filed a Complaint for Declaratory Judgment in U.S. District Court in Baton Rouge seeking a determination that certain materials and facilities are not subject to regulation under RCRA. If the Partnership is unsuccessful, management believes, based upon information currently available to it, that the realistic range of liability for penalties would not be material to the financial position of the Partnership but could have an adverse effect on any quarter's results of operations. In February 1993, an EPA Administrative Law Judge held that the Illiopolis facility had violated CERCLA and the Emergency Planning and Community Right to Know Act ("EPCRA") by failing to report certain relief valve releases that the Partnership believes are exempt from CERCLA and EPCRA reporting. The Partnership's petition for reconsideration was denied, a penalty hearing has been scheduled, and further appeals are possible if the parties cannot reach an agreement. The Government is seeking penalties in an amount which would not have a material adverse effect on the financial position or operating results of the Partnership. Under an Environmental Indemnity Agreement, Borden has agreed, subject to certain conditions, to indemnify the Partnership and the Operating Partnership (the Partnerships) in respect of environmental liabilities arising from facts or circumstances that existed and requirements in effect prior to November 30, 1987. The Partnerships are responsible for environmental liabilities arising from facts or circumstances that existed and requirements in effect on or after such date. With respect to certain environmental liabilities that may arise from facts or circumstances that existed and requirements in effect both prior to and after such date, Borden and the Partnerships will share liabilities on an equitable basis. No claim can be made under the Environmental Indemnity Agreement after 15 years from November 30, 1987 and in any year no claim can, with certain exceptions, be made with respect to the first $500,000 of liabilities which Borden would otherwise be responsible for thereunder in such year, but such excluded amounts may not exceed $3.5 million in the aggregate. Page 10 of 12 11 Other Legal Proceedings - - ----------------------- In addition, the Partnership is subject to various other legal proceedings and claims which arise in the ordinary course of business. The management of the Partnership believes, based upon the information it presently possesses, the realistic range of liability of these other matters, taking into account its insurance coverage, including its risk retention program and the Environmental Indemnity Agreement with Borden, would not have a material adverse effect on the financial position and results of operations of the Partnership. Page 11 of 12 12 Item 6. Exhibits and Reports on Form 8-K - - ------- -------------------------------- (a) Exhibits None (b) Reports on Form 8-K On May 12, 1994 the Registrant filed a Form 8-K announcing the filing of a lawsuit against the U.S. Environmental Protection Agency seeking a ruling that certain materials and facilities are not subject to regulation under the Resource Conservation and Recovery Act. 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 thereunto duly authorized. BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP By BCP Management, Inc., General Partner Date: July 29, 1994 By /s/ D. A. Kelly ------------------------- D. A. Kelly Director and Treasurer (Principal Financial Officer and duly authorized signing officer) Page 12 of 12 -----END PRIVACY-ENHANCED MESSAGE-----