-----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, LO0kmaazdR4zzCZh7/azC04/GTleGHxrq1fyrvRph+k6FgfyENOPaJif2WZ6BtxU IRc7MmrltIHJVonrrIKsUA== 0000950152-94-000463.txt : 19940601 0000950152-94-000463.hdr.sgml : 19940601 ACCESSION NUMBER: 0000950152-94-000463 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940325 FILED AS OF DATE: 19940506 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: 94526441 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 CHEMICALS AND PLASTICS 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 MARCH 25, 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 April 26, 1994: 36,750,000 Page 1 of 10 2 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ----------------- CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (In thousands except per Unit data)
Three Months Three Months Ended Ended March 25, 1994 March 26, 1993 -------------- -------------- Revenues Net trade sales $ 94,821 $ 73,882 Net affiliated sales 24,160 16,722 --------- --------- Total revenues 118,981 90,604 --------- --------- Expenses Cost of goods sold Trade 86,490 66,681 Affiliated 20,415 15,308 Marketing, general and administrative expenses 4,506 4,555 Interest expense 3,794 3,837 Other (income) and expense, including minority interest 148 (43) --------- --------- Total expenses 115,353 90,338 --------- --------- Net income 3,628 266 Less 1% General Partner interest (36) (3) --------- --------- Net income applicable to Limited Partners' interest $ 3,592 $ 263 ========= ========= Net income per Unit $ .10 $ .01 ========= ========= Average number of Units outstanding during the period 36,750 36,750 ========= ========= Cash distributions declared per Unit $ .21 $ .30 ========= =========
Page 2 of 10 3 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ----------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Three Months Three Months Ended Ended March 25, 1994 March 26, 1993 -------------- -------------- Cash Flows From Operations Net income $ 3,628 $ 266 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 10,887 10,677 (Increase) decrease in receivables (10,022) 3,747 Decrease (increase) in inventories 3,007 (4,888) Increase in payables 3,675 1,052 Increase in accrued interest 3,780 3,825 Other, net 237 (5,735) --------- --------- 15,192 8,944 --------- --------- Cash Flows From Investing Activities Capital expenditures (6,458) (1,354) --------- --------- Cash Flows From Financing Activities Cash distributions paid (6,682) (11,508) --------- --------- Increase (decrease) in cash and equivalents 2,052 (3,918) Cash and equivalents at beginning of period 9,054 19,389 --------- --------- Cash and equivalents at end of period $ 11,106 $ 15,471 ========= ========= Supplemental Disclosure of Cash Flow Information Interest paid during the period $ 14 $ 12 ========= =========
Page 3 of 10 4 BORDEN CHEMICALS AND PLASTICS LIMITED PARTNERSHIP ------------------- CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) ASSETS ------
March 25, 1994 December 31, 1993 -------------- ----------------- Cash and equivalents $ 11,106 $ 9,054 Accounts receivable (less allowance for doubtful accounts of $388 and $768, respectively) Trade 57,517 48,990 Affiliated 19,762 18,267 Inventories Finished goods 18,933 21,499 Raw materials 7,317 7,758 Other current assets 1,749 2,182 --------- --------- Total current assets 116,384 107,750 --------- --------- Investments in and advances to affiliated companies 3,651 3,623 Other assets 26,708 26,956 --------- --------- 30,359 30,579 --------- --------- Land 12,051 12,051 Buildings 35,955 35,955 Machinery and equipment 511,694 505,236 --------- --------- 559,700 553,242 Less accumulated depreciation (258,154) (247,267) --------- --------- 301,546 305,975 --------- --------- $ 448,289 $ 444,304 ========= ========= LIABILITIES AND PARTNERS' CAPITAL ----------------- Accounts and drafts payable $ 48,083 $ 44,408 Cash distributions payable 7,796 6,682 Accrued interest 5,625 1,845 Other accrued liabilities 8,005 8,515 --------- --------- Total current liabilities 69,509 61,450 --------- --------- Long-term debt 150,000 150,000 Minority interest in consolidated subsidiary 1,752 1,795 Postretirement benefit obligation 991 854 --------- --------- 152,743 152,649 --------- --------- Partners' capital Common Unitholders 224,736 228,862 General Partner 1,301 1,343 --------- --------- Total partners' capital 226,037 230,205 --------- --------- $ 448,289 $ 444,304 ========= =========
Page 4 of 10 5 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 income 263 3 266 Cash distributions declared (11,025) (111) (11,136) ------------ ------------ ------------ ------------ Balances at March 26, 1993 $ -0- $ 248,186 $ 1,539 $ 249,725 ============ ============ ============ ============ Balances at December 31, 1993 $ 228,862 $ 1,343 $ 230,205 Net income 3,592 36 3,628 Cash distributions declared (7,718) (78) (7,796) ------------ ------------ ------------ Balances at March 25, 1994 $ 224,736 $ 1,301 $ 226,037 ============ ============ ============
Page 5 of 10 6 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 a production unit 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 6 of 10 7 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 three months of 1994 were $15.2 million compared to $8.9 million for 1993. The increase is the result of higher net income and reduced working capital requirements. Capital expenditures for the first three months of 1994 and 1993 were $6.5 million and $1.4 million, respectively. Total capital expenditures for 1994 are expected to be approximately $20 million. Cash distributions paid during the first three months of 1994 for fourth quarter 1993 were $6.7 million while cash distributions paid during the first three months of 1993 for fourth quarter 1992 were $11.5 million. On April 19, 1994, a cash distribution of $.21 per Common Unit was declared for the first quarter, payable May 9, 1994 to Unitholders of record April 29, 1994. A cash distribution of $.30 per Unit was paid for first quarter 1993. Cash available for distribution was $7.9 million and $11.3 million for first quarter 1994 and 1993, respectively. Of the available cash for first quarter 1994, $7.7 million will be paid to the Unitholders and the remainder will be distributed to the General Partner for its ownership interest. Of the available cash for first quarter 1993, $11.0 million was distributed to the Unitholders and the remainder was distributed to the General Partner for its ownership interest. Results of Operations - - --------------------- Quarter Ended March 25, 1994 versus Quarter Ended March 26, 1993 Net sales for first quarter 1994 were $119.0 million, an increase of 31.3% from $90.6 million a year earlier. Net income for first quarter 1994 was $3.6 million compared to net income of $0.3 million for first quarter 1993. The increase in net income reflects volume increases and higher selling prices, partially offset by higher raw material costs. Net sales for PVC Polymers Products increased 28.6% to $69.1 million in 1994 from $53.8 million in 1993. The increase in sales was the result of increased volume and higher selling prices. Notwithstanding the increase in sales, gross margin for this product group decreased 39.8% versus the prior year due to substantially higher chlorine costs. Page 7 of 10 8 Net sales for Methanol and Derivatives increased 46.7% to $36.6 million in 1994 from $24.9 million in 1993 due to higher selling prices and increased volume. Gross margin for this group increased significantly from first quarter 1993 reflecting the higher sales, partially offset by higher natural gas costs. Net sales for Nitrogen Products were $13.3 million for first quarter 1994 compared to $11.9 million for first quarter 1993, an 11.5% increase. The increase was the result of higher selling prices for ammonia and urea as well as increased volume for urea, partially offset by decreased volume for ammonia. Gross margin was slightly negative versus a slightly positive position in 1993. The Partnership expects the favorable price and volume trends from the first quarter to continue in the second quarter. Page 8 of 10 9 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 Operating Partnership has 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. 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. A petition for reconsideration has been filed. 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. 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 affect on the financial position and results of operations of the Partnership. Page 9 of 10 10 Item 6. Exhibits and Reports on Form 8-K - - ------- -------------------------------- (a) Exhibits None (b) Reports on Form 8-K None 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: May 6, 1994 By /s/ D. A. Kelly ------------------------------- D. A. Kelly Director and Treasurer (Principal Financial Officer and duly authorized signing officer) Page 10 of 10 -----END PRIVACY-ENHANCED MESSAGE-----