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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1993
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _________ to
________
Commission File Number 1-9753
GEORGIA GULF CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 58-1563799
(State of Incorporation) (I.R.S. Employer
Identification No.)
400 Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 404- 395-4500
Securities registered pursuant to Section 12(b) of the
Securities Exchange Act of 1934:
Title of each class Name of each exchange on
which registered
Common Stock, $.01 par value New York Stock
Exchange, Inc.
15% Senior Subordinated Notes due 2000 New York Stock
Exchange, Inc.
Securities registered pursuant to Section 12(g) of the
Act: None
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
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Aggregate market value of the voting stock held by
non-affiliates of the Registrant, computed using the closing
price on the New York Stock Exchange for the Registrant's common
stock on March 1, 1994 was $1,169,000,000.
Indicate the number of shares outstanding of the
Registrant's common stock as of the latest practicable date.
Class Outstanding at March
1, 1994
Common Stock, $.01 par value 41,199,021
shares
DOCUMENTS INCORPORATED BY REFERENCE
(To the Extent Indicated Herein)
1993 Annual Report to Stockholders in Parts I, II and IV of this
Form 10-K.
Proxy Statement for the Annual Meeting of Stockholders to be
held on May 17, 1994 in Part III of this Form 10-K.
TABLE OF CONTENTS
PART I
ITEM PAGE
NUMBER
1) Business
General Development of Business 1
Electrochemical Products 1-3
Aromatic Chemical Products 3-4
Natural Gas Product 4
Great River Oil & Gas Corporation 4
Georgia-Pacific Contract 4
Marketing 5
Raw Materials 5
Competition 5
Employees 5
Environmental Regulation 5-6
2) Properties 7
3) Legal Proceedings 8
4) Submission of Matters to
a Vote of Security Holders 8
PART II
5) Market Price of and Dividends on
the Registrant's Common Equity and
Related Stockholder Matters 8
6) Selected Financial Data 8
7) Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
8) Financial Statements and Supplementary Data 9
9) Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure 9
PART III
10) Directors and Executive Officers of the
Registrant 9-10
11) Executive Compensation 10
12) Security Ownership of Certain Beneficial
Owners and Management 10
13) Certain Relationships and Related Transactions 10
PART IV
14) Exhibits, Financial Statement Schedules and
Reports on Form 8-K 11-13
SIGNATURES
PART I
Item 1. BUSINESS.
General Development of Business
Georgia Gulf Corporation (the "Company") is a leading
manufacturer and marketer of quality chemical and plastic
products. The Company's products are manufactured through three
highly integrated lines categorized into electrochemicals,
aromatic chemicals and methanol, a natural gas chemical. The
Company's electrochemical products include chlorine, caustic
soda, sodium chlorate, vinyl chloride monomer ("VCM"), vinyl
resins and compounds; the Company's aromatic chemical products
include cumene, phenol and acetone. The Company also owns a
small oil and gas exploration and production company.
The Company has operated as an independent corporation since
its acquisition on December 31, 1984, of a major portion of the
business and assets of the chemical division of Georgia-Pacific
Corporation ("Georgia-Pacific"). The Company's operations
include production units at five locations, several marketing
organizations responsible for the sale of the Company's
chemicals, a research and development laboratory and a purchasing
organization responsible for the acquisition of all major raw
materials. In most product areas, the Company's marketing
program is supported by an ongoing technical service effort. At
the Company's five manufacturing locations, it has twelve plants,
six of which are at Plaquemine, Louisiana. The Company also
leases storage terminals and warehouses from which a portion of
its products are distributed to customers.
The Company's major capital projects during 1993 were for
the vinyl resin plant expansion scheduled for completion in the
fourth quarter of 1994 and for the completion of a new sodium
chlorate plant, both located at the Plaquemine, Louisiana,
complex. On a normalized basis, the Company spends approximately
one-third of its capital budget on environmental and safety
programs, which enables the Company to continue to meet or exceed
various regulatory standards. The remaining expenditures are
typically used to modernize and/or improve the efficiency of
existing facilities. The Company has approved a vinyl rigid
compound plant expansion at its existing Gallman, Mississippi,
location. Completion of the first phase for approximately 50
percent of the expanded capacity is expected to be completed by
late 1995.
The Company's long-term strategy is to concentrate its
efforts on products and services in the chemical and plastic
industries. These efforts include the continuing investment in
maintaining and improving the Company's low cost position, as
well as selective and prudent capacity additions or expansions in
areas that could promote growth and diversity in its current or
related product lines. The ability of the Company to pursue such
transactions is somewhat restricted under the terms of the
Company's credit agreement. The credit agreement is further
described in Note 5 of the "Notes to Consolidated Financial
Statements" of the 1993 Annual Report to Stockholders, which
information is hereby incorporated by reference herein.
Electrochemical Products
Chlorine/Caustic Soda/Sodium Chlorate. The Company's
facility at Plaquemine, Louisiana, has the annual capacity to
produce 452 thousand tons of chlorine, 501 thousand tons of
caustic soda and 27 thousand tons of sodium chlorate.
The major raw materials for such products are salt and electric
power. The Company has a long-term lease on a salt dome near
Plaquemine, Louisiana, with sufficient reserves of salt to last
about 50 years at current rates of production. The lease grants
the Company the exclusive use of the salt dome for the production
of salt brine. The salt brine is a raw material for chlorine,
caustic soda and sodium chlorate.
Electric power is the most significant cost component in the
production of chlorine, caustic soda and sodium chlorate. The
Company's electrical requirements are supplied by Louisiana Power
and Light Company, pursuant to an agreement, which terminates
September 1998, at rates that recognize the lower cost of
supplying a very large, high load-factor customer.
Chlorine is used in the production of various chemicals,
including those used to make plastics and vinyl resins. Other
applications range from pulp and paper bleaching to agricultural
products and laundry aids to pharmaceuticals. Chlorine also is
widely used in drinking water purification and wastewater
disinfection.
Chlorine is used by the Company in the production of VCM,
which is then used to produce vinyl resins. In 1993, the amount
of chlorine consumed in the production of VCM represented a
majority of the Company's chlorine production. The Company sells
the remaining chlorine principally to the pulp and paper and
chemical industries.
The major uses of caustic soda are in the production of pulp
and paper, aluminum, oil, soaps and detergents. Caustic soda
also has significant applications in the production of other
chemicals and chemical processes where caustic is used to control
pH levels aiding in waste neutralization. Another use is in the
textile industry where it makes fabrics more absorbent and
improves the strength of dyes. Caustic soda is also used, to a
lesser extent, in food processing and electroplating. Sales to
Georgia-Pacific in 1993 represented approximately 22% of the
Company's caustic soda sales.
Sodium chlorate has major applications in the bleaching
process for pulp and paper. Sodium chlorate is also an
ingredient in blasting agents, explosives and solid rocket fuels.
During 1993, sales to Georgia-Pacific represented approximately
24% of the Company's sodium chlorate sales.
Vinyl Chloride Monomer. The Company produces VCM at its
Plaquemine, Louisiana, complex as the feedstock for the
production of vinyl resins. The major raw materials used in VCM
production are purchased ethylene and Company-produced chlorine.
The VCM plant's annual capacity is 1.26 billion pounds. A
majority of the VCM production in 1993 was used by the Company's
vinyl resins operations with the remainder being sold to other
vinyl resins producers.
Vinyl Suspension Resins. The Company operates a vinyl
suspension resins plant at Plaquemine, Louisiana. The plant is
located adjacent to its major raw material supplier, the
Company's VCM facility, thereby minimizing transportation and
handling costs. The annual production capacity is 840 million
pounds.
Vinyl suspension resins are one of the most widely used
plastics in the world today. After being formulated to desired
properties, vinyl resins are heated and shaped into finished
products by various extrusion, calendaring and molding processes.
Applications are diverse and include pipe, window frames, siding,
flooring, shower curtains, packaging, bottles, film, medical
tubing and business machine housings. These vinyl resins are
becoming more important to the automotive industry for use in
seats, trim, floormats and vinyl tops.
Vinyl Emulsion Resins. The Company's Delaware City,
Delaware, facility produces special purpose vinyl emulsion resins
with an annual capacity of 48 million pounds. Vinyl emulsion
resins, once compounded, are generally liquid and are processed
with heat. Typical applications include filter gaskets, battery
separators, caulking compounds, sealants, surgical gloves, bottle
cap liners and squeeze toys.
Vinyl Rigid Compounds. The Company's vinyl compounding
plants, which have an aggregate of 290 million pounds of annual
capacity, are located in Tiptonville, Tennessee; Gallman,
Mississippi; and Delaware City, Delaware. Vinyl compounds are
formulated to provide specific end-use properties that allow the
material to be thermoformed directly into a finished product.
All sales of vinyl compounds are to outside customers. The
product line can be segregated into three major product areas
according to the following fabrication methods:
Blow Molding -- The Company is a supplier of blow
molding compounds, which are primarily used for both
food-grade and general purpose bottles. Supplied in
both clear and opaque colors, the materials are used to
package edible oils, cosmetics, shampoos, charcoal
lighter fluid and bottled water.
Injection Molding -- The Company supplies compounds
used in the business machine market for computer
housings and keyboards. It also supplies compounds to
produce electrical outlet boxes. These proprietary
compounds, with extensive approval procedures by
customers or regulatory bodies, are sold to some of the
leading international producers of injection molded
products. The Company also manufactures compounds for
use in pipe and furniture fittings.
Profile Extrusion -- The Company supplies profile
extrusion markets, which have applications in window
and furniture profiles and extruded sheets for
household fixtures and decorative overlays. Profile
extrusions are an end-product for both pelletized and
powder compounds.
The entire vinyl product line, both resins and compounds, is
marketed through the Company's sales organization, which is
supported by a technical service group, a research and
development laboratory and an applications development team
working with fabricators and end-use designers of plastic
products.
Aromatic Chemical Products
Cumene. Cumene is produced at the Company's Pasadena,
Texas, facility located on the Houston ship channel. The
Company's cumene plant, the world's largest, has an annual
capacity of 1.42 billion pounds. Cumene is produced from benzene
and propylene, which are purchased from various suppliers under
supply agreements and obtained from the numerous petroleum
complexes located in the surrounding area. A majority of the
Company's 1993 cumene output was consumed internally in the
production of phenol and its co-product acetone.
Phenol/Acetone. Phenol and acetone are produced at the
Company's Plaquemine, Louisiana, plant, which has approximately
440 million pounds of annual phenol capacity and 270 million
pounds of annual acetone capacity, as well as at the Pasadena,
Texas, plant where annual capacity is 160 million pounds of
phenol and 100 million pounds of acetone.
Phenol is a major ingredient in phenolic resins, which are
used extensively as bonding agents and adhesives for wood
products such as plywood and granulated wood panels, as well as
in insulation and electrical parts. Phenol is also a precursor
to high performance plastics used in automobiles, household
appliances, electronics and protective coating applications.
Phenol also serves as an important building block for other
familiar products such as nylon carpeting, oil additives and
pharmaceuticals. The Company's largest phenol customer,
Georgia-Pacific, represented approximately 54% of phenol sales in
1993.
The largest use for acetone is as a precursor to methyl
methacrylate, which is used to produce acrylic sheeting and in
surface coating resins for automotive and architectural markets.
Acetone is also an intermediate for the production of engineering
plastics and several major industrial solvents. Other uses range
from wash solvents for automotive and industrial applications to
pharmaceuticals and cosmetics.
Also as a result of the phenol/acetone manufacturing
process, the Company produces a by-product, alpha-methylstyrene
("AMS"), which is primarily used as a polymer modifier and as a
chemical intermediate.
Natural Gas Product
Methanol. Methanol is produced at the Company's plant at
Plaquemine, Louisiana, with an annual capacity of 140 million
gallons. Natural gas represents the majority of the cost of
methanol. The Plaquemine facility is located in the center of
Louisiana's oil and gas producing region and has three separate
pipeline systems delivering gas to the plant. The natural gas is
purchased by the Company under long-term contracts at market
prices from gas pipeline companies and directly from gas
producers.
A key use for methanol is in the production of methyl
tertiary-butyl ether, or MTBE, a gasoline additive that promotes
cleaner burning by adding oxygen. Methanol is also used as a raw
material in the manufacture of formaldehyde, which is an
ingredient in bonding agents for building materials such as
granulated wood panels and plywood. Other applications for
methanol include windshield washer fluid, solvents, and
components of acrylic sheeting, coatings, fibers and household
adhesives. Approximately 43% of methanol sales during 1993 were
to Georgia-Pacific.
Great River Oil & Gas Corporation
The Company owns Great River Oil & Gas Corporation, a small
oil and gas exploration company, with activities centered in
southern Louisiana. This subsidiary enhances the reliability of
a small portion of the natural gas requirements at the Company's
Plaquemine, Louisiana, complex.
Georgia-Pacific Contract
The Company has a contract to supply, subject to certain
limitations, for a substantial percentage of Georgia-Pacific's
requirements for certain chemicals at market prices. This supply
contract has various expiration dates (depending on the product)
from 1994 through 1999 and may be extended year to year upon
expiration. The sales to Georgia-Pacific under this supply
contract for the years ended December 31, 1993, 1992 and 1991
amounted to approximately 15%, 14% and 15% of the Company's
sales, respectively.
Marketing
The Company markets its products primarily to industrial
customers throughout the United States. The Company's products
are sold by its sales force, which is organized by product line.
The sales organization, which is located predominantly in the
eastern and midwestern United States, is supported by the
Company's technical service staff.
The Company's marketing program has been aimed at expanding
and diversifying its customer base both domestically and
internationally. Other than Georgia-Pacific, no single customer
represents more than 10% of the Company's net sales. Export
sales accounted for approximately 14%, 15% and 17% of the
Company's net sales for the years ended December 31, 1993, 1992
and 1991, respectively. The principal international markets
served by the Company include Canada, Mexico, Latin America,
Europe and Asia.
Raw Materials
The most important raw materials purchased by the Company
are salt, electricity, ethylene, benzene, propylene and natural
gas. Raw materials used for production of the Company's products
are usually purchased from various suppliers under supply
contracts. Since raw materials account for a significant portion
of the Company's total production costs, the Company's ability to
pass on increases in these costs to its customers has a
significant impact on operating results which is, to a large
extent, related to market conditions. Management believes the
Company has a reliable supply base of raw materials under normal
market conditions. The impact of any future raw material
shortages cannot be accurately predicted.
Competition
The Company experiences competition from numerous
manufacturers in all of its product lines. In some product
areas, the Company's competitors have substantially greater
financial resources and are more highly diversified than the
Company. The Company competes on a variety of factors such as
price, product quality, delivery and technical service.
Management believes that the Company is well-positioned to
compete as a result of its integrated product lines and the
operational efficiency of its modern plants.
Employees
As of December 31, 1993, the Company had 1,124 full-time
employees. The Company also utilizes approximately 394 workers
supplied by outside contractors. The Company has one collective
bargaining agreement, which covered 56 employees at its
Tiptonville, Tennessee, facility as of December 31, 1993.
Environmental Regulation
The Company's operations are subject to various federal,
state and local laws and regulations relating to environmental
quality. These regulations, which are enforced principally by
the United States Environmental Protection Agency and comparable
state agencies, govern the management of solid and hazardous
waste; the discharge of pollutants into the air and into surface
and underground waters; and the manufacture of chemical
substances. All of the plants operated by the Company were built
or have been upgraded at least to meet current environmental
standards. In addition, Georgia-Pacific has agreed to indemnify
the Company for certain environmental liabilities. See Item 3 --
"Legal Proceedings."
Management believes that the Company is in material
compliance with all current environmental laws and regulations.
The Company estimates that any expenses incurred in maintaining
compliance with these requirements will not materially affect
earnings or cause the Company to exceed its level of anticipated
capital expenditures. However, there can be no assurance that
regulatory requirements will not change, and it is not possible
to accurately predict the aggregate cost of compliance resulting
from any such changes.
Item 2. PROPERTIES
The Company's asset base was established from 1971 to the
present with construction of the Plaquemine, Louisiana, complex,
the construction of the Pasadena, Texas, cumene plant; the
purchase of the three vinyl resin and/or compound plants and the
purchase of the Bound Brook, New Jersey, phenol/acetone facility
subsequently relocated to Pasadena, Texas, and modernized in
1990. The Company continues to explore ways to expand both its
plant capacities and product lines. The Company believes current
capacity adequately meets anticipated demand requirements. The
average capacity utilization percentage of the Company's
production facilities operating in 1993 was approximately 94%.
The following table sets forth the location of each chemical
manufacturing facility owned by the Company, the products
manufactured at each facility and the approximate processing
capability of each, assuming normal plant operation, as of
December 31, 1993:
Annual
Location Products Capacity
Delaware City, DE Vinyl Emulsion Resins,
in million pounds 48
Delaware City, DE Vinyl Rigid Compounds,
Gallman, MS in million pounds 290
Tiptonville, TN
Pasadena, TX Cumene, in billion pounds 1.42
Phenol, in million pounds 160
Acetone, in million pounds 100
Plaquemine, LA Chlorine, in thousand tons 452
Caustic Soda, in thousand tons 501
Sodium Chlorate, in thousand tons 27
Vinyl Chloride Monomer,
in billion pounds 1.26
Vinyl Suspension Resins,
in million pounds 840
Phenol, in million pounds 440
Acetone, in million pounds 270
Methanol, in million gallons 140
The Company's manufacturing facilities are located near
major water and rail transportation terminals facilitating
efficient delivery of raw materials and prompt shipment of
finished products. In addition, the Company has a fleet of 2,161
railcars of which 755 are owned and the remainder leased pursuant
to operating leases with varying terms through the year 2008.
The total lease expense for the Company's railcars and other
transportation equipment was approximately $9,646,000 for 1993.
The Company leases office space for its principal executive
offices in Atlanta, Georgia. The Company also leases office
space for data processing in Baton Rouge, Louisiana; sales
offices in Houston, Texas; Rolling Meadows, Illinois; and
Lawrenceville, New Jersey, as well as numerous storage terminals
located across the country.
Item 3. LEGAL PROCEEDINGS.
The Company is subject to claims and legal actions that
arise in the ordinary course of its business. Management
believes that the ultimate liability, if any, with respect to
these claims and legal actions, inclusive of those specifically
described below, will not have a material effect on the financial
position or on the results of operations of the Company.
Pursuant to the Company's acquisition agreement with
Georgia-Pacific, the Company is entitled to be indemnified by
Georgia-Pacific, generally for liabilities to third parties
relating to activities of the chemical division of
Georgia-Pacific prior to October 1, 1984, including environmental
liabilities, liabilities for antitrust claims and similar
liabilities. This indemnification extends to activities prior to
December 31, 1984, in the case of liabilities attributable to
claims, including certain claims for violation of environmental
and workplace laws, to the extent not covered by, or in excess
of, insurance coverage. Generally, indemnification under the
acquisition agreement is limited to claims with respect to which
notice was given to Georgia-Pacific before December 31, 1991.
On September 28, 1992, the Company received a Complaint,
Compliance Order and Notice of Opportunity for Hearing
("Complaint") from the United States Environmental Protection
Agency, Region 6 ("EPA"). The EPA sought to assess a fine of
$124,600 and to require the Company to take certain corrective
actions as a result of various alleged violations of the EPA'S
regulations pertaining to the treatment of hazardous wastes in
the boilers at the Company's Plaquemine, Louisiana, facility.
The Company entered a consent agreement and final order in
September 1993 that required the Company to pay a civil penalty
in the amount of $59,050 and install certain additional pollution
control equipment not required by regulations.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders
during the fourth quarter of 1993.
PART II
Item 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The
information set forth under the captions "Corporate
Information--Common Stock Data" and Notes 5 and 6 of
the "Notes to Consolidated Financial Statements" of the
Company's 1993 Annual Report to Stockholders is hereby
incorporated by reference herein in response to this
item.
Item 6. SELECTED FINANCIAL DATA. The information set forth
under the caption "Five-Year Selected Financial Data"
of the Company's 1993 Annual Report to Stockholders is
hereby incorporated by reference herein in response to
this item.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. The information
set forth under the caption "Management's Discussion
and Analysis" of the Company's 1993 Annual Report to
Stockholders is hereby incorporated by reference herein
in response to this item.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The
information set forth on pages 22 through 35 of the
Company's 1993 Annual Report to Stockholders is hereby
incorporated by reference herein in response to this
item.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. The Company has
not changed its independent public accountants and has
had no disagreements with its independent public
accountants on accounting and financial disclosure
during the Registrant's two most recent fiscal years
prior to, or in any period subsequent to, the date of
the most recent financial statements included herein.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information set forth under the caption "Election
of Directors" in the Company's Proxy Statement for the
Annual Meeting of Stockholders to be held May 17, 1994,
is hereby incorporated by reference in response to this
item.
The following is certain information regarding the
executive officers of the Company who are not
Directors:
Richard B. Marchese, 52, has served as Vice
President --Finance, Chief Financial Officer and
Treasurer of the Company since May 1989, and prior
thereto served as Controller from its inception.
Thomas G. Swanson, 52, has served as Vice
President -- Supply and Corporate Development
since August 1993. Mr. Swanson served as Vice
President -- Commodity Chemicals Group from
December 1989 to August 1993; as General Manager
-- Commodity Chemicals Group from November 1988
until December 1989, and as Director of Corporate
Development for the Company from July 1987. Prior
thereto, Mr. Swanson was Manager -- Supply and
Distribution for the Company since its inception.
Mark J. Seal, 42, has served as Vice President --
Polymer Group since August 1993. Mr. Seal served
as Business and Manufacturing Manager -- Vinyl
Resins from May 1992 until August 1993 and as
Business Manager PVC Resins and Compounds from May
1989 until May 1992. Prior thereto, Mr. Seal
served as Business Manager -- Electrochemicals
from January 1987 until May 1989 and as Midwest
Regional Sales Manager for the Company since its
inception.
Gary L. Elliott, 49, has served as Vice
President -- Marketing and Sales, Commodity
Chemicals Group since August 1993. Mr. Elliott
served as Business Manager -- Electrochemicals and
Midwest Regional Sales Manager from June 1989
until August 1993. Prior thereto, Mr. Elliott
served as Northeast Regional Sales Manager from
May 1987 until June 1989; as VCM Product Manager
from November 1985 to May 1987 and as a Sales
Representative for the Company since its
inception.
Edward A. Schmitt, 48, has served as Vice
President -- Operations, Commodity Chemicals Group
since August 1993. Mr. Schmitt served as General
Manager -- Chemical Operations from March 1992
until August 1993; as General Manager --
Plaquemine Division from May 1989 until March
1992; and as Plant Manager - Plaquemine Division
from February 1988 until May 1989. Prior thereto,
Mr. Schmitt served as Manufacturing Manager from
October 1985 until February 1988 and as VCM
Production Manager for the Company since its
inception.
Joel I. Beerman, 44, has served as Vice President
and Secretary since February 1994 and as General
Counsel since February 1992. Prior thereto, Mr.
Beerman served as Associate General Counsel for
the Company since its inception.
Executive officers are elected by, and serve at
the pleasure of, the Board of Directors.
Item 11. EXECUTIVE COMPENSATION. The information set forth
under the captions "Election of Directors" and
"Executive Compensation" in the Company's Proxy
Statement for the Annual Meeting of Stockholders to be
held on May 17, 1994, is hereby incorporated by
reference in response to this item.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT. The information set forth under the
captions "Principal Stockholders" and "Security
Ownership of Management" in the Company's Proxy
Statement for the Annual Meeting of Stockholders to be
held on May 17, 1994, is hereby incorporated by
reference in response to this item.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The
Company has not had any transactions required to be
reported under this item for the calendar year 1993, or
for the period from January 1, 1994, to the date of
this report.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as a part of this
Annual Report for Georgia Gulf Corporation:
(1) The Consolidated Financial Statements, the Notes
to Consolidated Financial Statements, the Report
of Management and the Report of Independent Public
Accountants listed below are incorporated herein
by reference from pages 22 through 35 of the
Company's 1993 Annual Report to Stockholders:
Consolidated Balance Sheets as of December
31, 1993 and 1992
Consolidated Statements of Income for the
years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991
Consolidated Statements of Changes in
Stockholders' Equity (Deficit) for the years
ended December 31, 1993, 1992 and 1991
Notes to Consolidated Financial Statements
Report of Management
Report of Independent Public Accountants.
(2) Financial Statement Schedules:
Report of Independent Public Accountants on
Financial Statement Schedules
The following financial statement schedules
are for the years ended December 31, 1993,
1992 and 1991:
V Property, Plant and Equipment
VI Accumulated Depreciation, Depletion and
Amortization of Property, Plant and
Equipment
VIII Valuation and Qualifying Accounts
X Supplementary Income Statement
Information
Schedules other than those listed above
are omitted because they are not
required, are inapplicable or the
information is otherwise shown in the
Consolidated Financial Statements or
notes thereto.
(3) Exhibits. Each management contract or
compensatory plan or arrangement is preceded by an
asterisk.
The following exhibits are filed as part of this Form 10-K Annual
Report:
EXHIBIT
NO. DESCRIPTION
10 Georgia Gulf Corporation 1994 Employee Stock
Purchase Plan
13 1993 Annual Report to Stockholders
24 Consent of Independent Public Accountants
The following exhibit is incorporated by reference to the
Company's 1992 Form 10-K Annual Report filed March 29, 1993.
EXHIBIT
NO. DESCRIPTION
10(a) Amended and Restated Credit Agreement, dated April
25, 1990, among the Company, the Lenders on the
signature pages thereto and The Chase Manhattan
Bank, (National Association) as administrative
agent.
The following exhibits are incorporated herein by reference to
the Company's 1991 Form 10-K Annual Report filed March 30, 1992.
EXHIBIT
NO. DESCRIPTION
22 Subsidiaries of the Registrant
3(a) Certificate of Amendment to Certificate of
Incorporation
3(b) Amended and Restated By-Laws
*10 Georgia Gulf Corporation 1990 Incentive Equity
Plan
The following exhibit is incorporated herein by reference to
Exhibit 2 to the Company's Registration Statement on Form 8-A
filed May 11, 1990, as amended:
EXHIBIT
NO. DESCRIPTION
4 Amended and Restated Rights Agreement effective as of
August 31, 1990
The following exhibit is incorporated herein by reference to
Amendment 6 to the Company's Rule 13e-3 Transaction Statement
filed May 7, 1990:
EXHIBIT
NO. DESCRIPTION
10 Credit Agreement, dated April 25, 1990, among the
Company and The Chase Manhattan Bank (National
Association), Security Pacific National Bank, Bankers
Trust Company, Citibank, N.A. and General Electric
Capital Corporation, as co-agents and The Chase
Manhattan Bank (National Association) as administrative
agent.
The following exhibit is incorporated herein by reference to
Amendment 3 to the Company's Rule 13e-3 Transaction Statement
filed March 16, 1990:
EXHIBIT
NO. DESCRIPTION
4 Indenture, dated April 25, 1990, between the Company
and LaSalle National Bank, as trustee.
The following exhibits are incorporated herein by reference to
the Company's Registration Statement on Form S-1 (file No.
33-9902) declared effective on December 17, 1986:
EXHIBIT
NO. DESCRIPTION
3(a) Certificate of Agreement of Merger, with Certificate of
Incorporation of Company as Exhibit A thereto, dated
December 31, 1984, and amendments thereto
10(e) Stock Purchase Agreement between the Company and
Georgia-Pacific dated December 31, 1984, and Letter
re: Stock Purchase Agreement dated December 31, 1984
10(f) Chemical Sales Agreement between the Company and
Georgia-Pacific dated December 31, 1984 and Letter
re: Chemical Sales Agreement dated December 31, 1984
10(g) Agreement re: Liabilities among Georgia-Pacific,
Georgia-Pacific Chemicals, Inc. and others dated
December 31, 1984
10(o) Georgia Gulf Savings and Capital Growth Plan
10(p) Georgia Gulf Salaried Employees Retirement Plan
10(q) Georgia Gulf Hourly Employees Retirement Plan
*10(u) Executive Retirement Agreements
10(v) Salt Contract
(b) Reports on Form 8-K
No report on Form 8-K was filed with the Securities and
Exchange Commission during the last quarter of 1993.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GEORGIA GULF CORPORATION
(Registrant)
Date: March 30, 1994 By: /s/ Jerry R. Satrum
Jerry R. Satrum, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
SIGNATURE TITLE DATE
/s/ Jerry R. Satrum
Jerry R. Satrum President, Chief March 30, 1994
Executive Officer
and Director
(Principal Executive
Officer)
/s/ Richard B. Marchese
Richard B. Marchese Vice President - March 30, 1994
Finance, Chief Financial
Officer and Treasurer
(Principal Financial and
Accounting Officer)
_________________
James R. Kuse Chairman of the Board March __, 1994
and Director
/s/ John D. Bryan
John D. Bryan Director March 30, 1994
/s/ Dennis M. Chorba
Dennis M. Chorba Director March 30, 1994
/s/ Alfred C. Eckert III
Alfred C. Eckert III Director March 30, 1994
/s/ Robert E. Flowerree
Robert E. Flowerree Director March 30, 1994
/s/ Holcombe T. Green, Jr.
Holcombe T. Green, Jr. Director March 30, 1994
/s/ Edward S. Smith
Edward S. Smith Director March 30, 1994
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULES
To Georgia Gulf Corporation:
We have audited in accordance with generally accepted
auditing standards, the financial statements included in Georgia
Gulf Corporation's Annual Report to Stockholders incorporated by
reference in this Form 10-K, and have issued our report thereon
dated February 15, 1994. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The
schedules listed in Item 14 of this Form 10-K are the
responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange
Commission's rules and are not part of the basic financial
statements. These schedules have been subjected to the auditing
procedures applied in the audit of the basic financial statements
and, in our opinion, fairly state in all material respects the
financial data required to be set forth therein in relation to
the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Atlanta, Georgia
February 15, 1994
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
(Dollars in Thousands)
Other
Balance at changes Balance
beginning of Additions add (deduct) at end
Classification Period at cost Retirements describe of period
1991
Land and
improvements $ 22,870 $ --- $ --- $ --- $ 22,870
Buildings 9,283 61 --- --- 9,344
Machinery,
equipment and
construction
in progress 289,660 27,460 (2,896) --- 314,224
$321,813 $27,521 $(2,896) $ --- $346,438
1992
Land and
improvements $ 22,870 $ 376 $ --- $ --- $ 23,246
Buildings 9,344 119 --- --- 9,463
Machinery,
equipment and
construction
in progress 314,224 17,428 (5,100) --- 326,552
$346,438 $17,923 $(5,100) $ --- $359,261
1993
Land and
improvements $ 23,246 $ --- $ --- $ --- $ 23,246
Buildings 9,463 305 --- --- 9,768
Machinery,
equipment and
construction
in progress 326,552 32,994 (3,716) --- 355,830
$359,261 $33,299 $(3,716) $ --- $388,844
NOTES:
(1) Property, plant and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. The estimated
useful lives of the assets are as follows:
Property Classification Estimated Useful Lives
Buildings and land improvements 20-30 years
Machinery and equipment 3-15 years
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
(Dollars In Thousands)
Additions Other
Balance at charged to changes Balance
beginning of costs and add (deduct) at end
Description Period expenses Retirements describe of period
1991
Land improvements $ 125 $ 21 $ --- $ --- $ 146
Buildings 1,742 356 --- --- 2,098
Machinery and
equipment 99,095 20,179 (1,826) --- 117,448
$100,962 $20,556 $(1,826) $ --- $119,692
1992
Land improvements $ 146 $ 34 $ --- $ --- $ 180
Buildings 2,098 360 --- --- 2,458
Machinery and
equipment 117,448 22,995 (1,601) --- 138,842
$119,692 $23,389 $(1,601) $ --- $141,480
1993
Land improvements $ 180 $ 40 $ --- $ --- $ 220
Buildings 2,458 363 --- --- 2,821
Machinery and
equipment 138,842 25,420 (1,294) --- 162,968
$141,480 $25,823 $(1,294) $ --- $166,009
GEORGIA GULF CORPORATION
SCHEDULE VIII --- VALUATION AND QUALIFYING ACCOUNTS
(Dollars In Thousands)
Balance at Charged to other Balance
beginning of costs and accounts - Deductions at end of
Description period expenses describe describe period
1991
Allowance for
doubtful accounts $3,300 $ 93 $ --- $ (193)(1) $3,200
1992
Allowance for
doubtful accounts $3,200 $ --- $ --- $ --- $3,200
1993
Allowance for
doubtful accounts $3,200 $1,900 $ --- $(1,900)(1) $3,200
NOTES:
(1) Accounts receivable balances written off during period.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SCHEDULE X --- SUPPLEMENTARY INCOME STATEMENT INFORMATION
(Dollars In Thousands)
Charged to
costs and
Item expenses
1991
Maintenance and Repairs $42,853
1992
Maintenance and Repairs $47,664
1993
Maintenance and Repairs $43,141
EXHIBIT 10
GEORGIA GULF CORPORATION
1994 Employee Stock Purchase Plan
1. The Plan. This Plan dated as of November 1, 1993
shall be known as the "1994 Employee Stock Purchase Plan."
The purpose of this Plan is to permit certain employees of
Georgia Gulf Corporation (the "Company") to obtain or
increase a proprietary interest in the Company by permitting
them to purchase shares of the Company's Common Stock on a
discount basis.
2. The Offering. The Company shall offer an aggregate
of 300,000 shares of its Common Stock, of the par value of
$0.01 each, for subscription in the manner and on the terms
hereinafter provided by those persons who are Eligible
Employees on November 1, 1993 (the "Offering Date"). The
purchase price per share shall be the lower of
(i) 85% of the mean between the high and low sales
prices of the Common Stock (as reported in the record of
Composite Transactions for New York Stock Exchange listed
securities and printed in The Wall Street Journal) on the
Offering Date (or on the next regular business date on which
shares of the Common Stock of the Company shall be traded in
the event that no shares of the Common Stock shall have been
traded on the Offering Date); or
(ii) 85% of the mean between the high and low sales
prices of the Common Stock (as reported in the record of
Composite Transactions for New York Stock Exchange listed
securities and printed in The Wall Street Journal) on
December 30, 1994 (or on the preceding regular business date
on which shares of the Common Stock shall be traded in the
event that no shares of the Common Stock shall have been
traded on such date).
The purchase price per share shall be subject to
adjustment in accordance with the provisions of Section
11(a). The shares of Common Stock that may be purchased
under this Plan may be authorized but unissued shares,
treasury shares or shares acquired on the open market.
3. Eligible Employees. The "Eligible Employees" shall
be those persons, and only those persons, who are employees
of the Company on the Offering Date, and whose customary
employment is more than 20 hours per week, with the
exception of any person who immediately prior to the
Offering Date would be deemed for purposes of Section
423(b)(3) of the Internal Revenue Code of 1986 (the "Code")
to own stock possessing 5% or more of the total combined
voting power or value of all classes of stock of the
Company. The term "employees of the Company" in the
immediately preceding sentence shall include employees of
any corporation in which the Company owns, directly or
indirectly, 50% or more of the combined voting power of all
classes of stock and which has been designated by the Board
of Directors of the Company as a corporation whose employees
may participate in the Plan. Notwithstanding anything to
the contrary in this Section 3, no officer of the Company
subject to Section 16 of the Securities Exchange Act of 1934
who is a "highly compensated employee" within the meaning of
Section 414(q) of the Code shall be eligible to participate
in this Plan.
4. Subscriptions. (a) As soon as practicable after
the Company has satisfied the requirements of the applicable
federal and state securities laws relating to the offer and
sale of Common Stock to Eligible Employees pursuant to this
Plan, each Eligible Employee shall (subject to the terms of
this Plan) be entitled to subscribe, in the manner and on
the terms herein provided, for the number of whole shares of
Common Stock of the Company designated by him which can be
purchased, at the purchase price on the Offering Date, with
equal installments of not less than $10 nor more than 15% of
his periodic rate of compensation (weekly or semi-monthly,
as the case may be), determined as hereinafter provided.
(b) In the case of all Eligible Employees, the
periodic rate of compensation (excluding any bonus or other
special compensation) shall be computed on the basis of the
rate of compensation in effect immediately prior to the
Offering Date.
(c) This Plan shall be submitted for approval by the
stockholders of the Company prior to September 1, 1994.
Subscriptions shall be subject to the condition that prior
to such date this Plan shall be approved by the stockholders
of the Company in the manner contemplated by Section
423(b)(2) of the Internal Revenue Code of 1986. If not so
approved prior to such date, this Plan shall terminate, all
subscriptions hereunder shall be canceled and be of no
further force and effect, and all persons who shall have
subscribed for shares pursuant to this Plan shall be
entitled to the prompt refund in cash of all sums withheld
from or paid by them pursuant to this Plan and subscriptions
hereunder, together with simple interest, also in cash, on
the amount of such refund computed from the respective dates
of withholding, at the rate of 6% per annum.
(d) Subscriptions pursuant to this Plan shall be
evidenced by the completion and execution of a subscription
agreement in the form provided by the Company and the
delivery thereof to the Company, at the place designated by
the Company, prior to December 31, 1993. Subscription
agreements shall not be subject to termination or reduction
after the full purchase price of all shares covered by such
agreement has been withheld or paid as provided herein.
(e) In the event that upon the termination of the
subscription period under this Plan the aggregate number of
shares subscribed for pursuant to this Plan shall exceed
300,000, then all subscriptions shall be reduced
proportionately, but disregarding fractions of shares, to
the extent necessary so that the aggregate number of shares
covered by all such subscriptions pursuant to this Plan will
not exceed 300,000.
5. Payment of Purchase Price. Except to the extent
provided in Sections 7, 8, 9, and 10, the purchase price of
all shares purchased pursuant to this Plan shall be paid in
equal installments withheld from the subscribing employee's
compensation (weekly or semi-monthly, as the case may be)
during the period of 12 consecutive calendar months
commencing with January 1994.
In the event of a change in an employee's payment
schedule, an appropriate change shall be made in the
schedule of installments to be withheld so that the portion
of the purchase price not theretofore withheld will be
withheld in equal installments over the remainder of such 12
month period. No amount shall be withheld or paid after
December 30, 1994.
6. Issuance of Shares; Delivery of Stock Certificates.
Shares covered by a subscription agreement entered into
pursuant to this Plan shall, except to the extent set forth
in Section 8(a), be deemed to have been issued and sold on
December 30, 1994. Prior to that time, no person shall have
any rights as a holder of any shares covered by such a
subscription agreement. No adjustment shall be made for
dividends or other rights for which the record date is prior
to that time except as provided in Section 11(a). Promptly
after the full purchase price of all shares covered by a
subscription agreement shall have been so withheld or paid,
the Company shall issue and deliver a stock certificate or
certificates therefor. In the event the amount of
accumulated payroll deductions is greater than the full
purchase price of all shares covered by a subscription
agreement, such excess shall be promptly returned in cash
(without interest) to the subscribing employee.
7. Right to Terminate Subscription or to Reduce Number
of Shares Subscribed For. (a) Subject to the provisions of
Section 4(d), each subscribing employee shall have the
right, at any time before the full purchase price of all
shares then covered by his subscription agreement shall have
been withheld or paid, to terminate his subscription
agreement or to reduce the number of shares covered thereby
by notice in writing delivered to the Company.
(b) A subscribing employee who shall terminate his
subscription agreement shall be entitled to request the
prompt refund, in cash, of the full amount theretofore
withheld from and paid by him pursuant to this Plan and such
subscription agreement.
(c) A subscribing employee who shall reduce the number
of shares covered by his subscription agreement shall be
entitled, at his option (i) to the prompt refund, in cash,
of the amount by which the amount theretofore withheld from
and paid by him pursuant to this Plan and such subscription
agreement exceeds that which would have been so withheld and
paid if the number of shares originally subscribed for had
been the number to which he has reduced his subscription or
(ii) to apply such excess in equal amounts to the reduction
of future installments of the purchase price of the reduced
number of shares covered by the subscription agreement.
8(a). Retirement. If a subscribing employee shall
retire from the employ of his employer and be eligible at
such time to commence, and actually commences, receiving
early or normal retirement benefits from the employer's
qualified defined benefit plan covering such employee (if no
employer-sponsored qualified defined benefit plan covers the
employee, then a qualified defined contribution plan), he
shall have, during the period of three months following the
date of termination (but in no event after December 30,
1994), the right provided in Section 7(b), and if the Plan
shall have been approved by the stockholders of the Company
pursuant to Section 4(c) prior to the expiration of such
three month period, the additional right to receive the
number of whole shares which can be purchased at the
purchase price on the Offering Date with the full amount
theretofore withheld from and paid by him pursuant to this
Plan and his subscription agreement, together with cash in
an amount equal to any balance of the amount so withheld and
paid (without interest on such cash). Such shares shall be
delivered to the employee within a reasonable period of time
after the employee has notified the Company of his election
to exercise this right. Any such retired employee who shall
not make a timely election to exercise the foregoing rights
shall be deemed to have elected to receive cash in an amount
equal to the full amount theretofore withheld pursuant to
his subscription agreement.
8(b). Death or Disability. In the event of the death
or disability of a subscribing employee prior to the payment
in full of the purchase price of the shares subscribed for
by him pursuant to this Plan, the disabled employee or the
personal representative of the decedent, as the case may be,
shall have the rights provided or referred to in Section
8(a). Any such disabled employee or personal representative
who shall not make a timely election to exercise such rights
shall be deemed to have elected to exercise the right to
receive cash as described in Section 8(a). For purposes of
this subsection (b), a subscribing employee shall be deemed
"disabled" if the
employee would be "disabled" pursuant to the standards set
forth in the Georgia Gulf Corporation Salaried Long-Term
Disability Plan whether or not he or she is covered under
that plan.
8(c). Termination of Employment Other Than by Reason
of Retirement, Death or Disability. In the event of the
voluntary or involuntary termination of employment with the
Company of a subscribing employee other than by reason of
retirement, death or disability, the employee shall be
entitled only to the prompt refund, in cash, of the full
amount theretofore withheld from and paid by him pursuant to
this Plan (without interest on such cash).
9. Temporary Layoff and Authorized Leave of Absence.
(a) Installment payments shall be suspended during a period
of inactive service due to temporary layoff or authorized
leave of absence without pay. If the subscribing employee
shall return to active service prior to December 30, 1994,
installment payments shall be commenced or resumed, and he
shall be entitled to elect, within 10 days after return to
active service but in no event after December 30, 1994,
either (i) to make up the deficiency in his account by an
immediate lump sum cash payment equal to the aggregate of
the installments which would have been withheld had he not
been absent, or (ii) to have future installments uniformly
increased (to the maximum possible extent) to adjust for
such deficiency, or (iii) not to make up such deficiency and
to reduce the number of shares under subscription by the
number (increased to the next highest whole number) arrived
at by dividing the amount of the deficiency by the purchase
price per share on the Offering Date. An employee who does
not make a timely election pursuant to this Section 9(a)
shall be deemed to have elected the alternative described in
clause (iii) hereof.
(b) For the purpose of this Plan, a subscribing
employee shall be deemed to be terminated from his or her
employment with the Company if such layoff or leave of
absence exceeds a period of 90 consecutive days, and, in
such case, such employee shall have, effective as of the
expiration of such 90-day period, only those rights provided
in Section 8(c) hereof.
10. Insufficiency of Pay to Permit Withholding of
Installment. (a) If in any payroll period, for any reason
other than temporary layoff or authorized leave of absence
without pay, a subscribing employee shall receive no pay or
his pay shall be insufficient (after all other proper
deductions) to permit withholding of his installment
payment, the employee may make payment of such installment
in cash when due.
(b) In the event of any failure by a subscribing
employee to make timely payment in cash of any installment
which cannot be withheld because of the circumstances
contemplated by Section 10(a), the Company shall mail a
notice of deficiency to such employee at his last known
business or home address. If the employee does not make
payment in cash of such deficiency within 10 days after the
mailing of such notice, such employee shall forfeit his
right to make cash payment of installments under Section
10(a) and his rights thereafter shall be limited to the
right to receive the number of whole shares which can be
purchased at the purchase price on the Offering Date with
the full amount of payroll withholdings (including the
amount theretofore withheld and any amounts subsequently
withheld from available earnings), together with cash in the
amount of the balance of such employee's withholdings
(without interest on such cash).
11. Definition of Common Stock; Effect of Certain
Transactions. (a) The term "Common Stock" as used in this
Plan refers to shares of the Common Stock of the Company as
presently constituted and any shares of Common Stock which
may be issued by the Company in exchange for or
reclassification thereof. If, and whenever, at any time
after the Offering Date and prior to the issue and sale by
the Company of all of the shares of Common Stock covered by
subscription agreements entered into pursuant to this Plan,
the Company shall effect a subdivision of shares of Common
Stock or other increase (by stock dividend or otherwise) of
the number of shares of Common Stock outstanding, without
the receipt of consideration by the Company or another
corporation in which the Company is financially interested
and otherwise than in discharge of the Company's obligation
to make further payment for assets theretofore acquired by
it or such other corporation or upon conversion of stock or
other securities issued for consideration, or shall reduce
the number of shares of Common Stock outstanding by a
consolidation of shares, then (i) in the event of such an
increase in the number of shares outstanding, the number of
shares of Common Stock then subject to subscription
agreements entered into pursuant to this Plan shall be
proportionately increased and the purchase price per share
shall be proportionately reduced, and (ii) in the event of
such a reduction in the number of such shares outstanding,
the number of shares of Common Stock then subject to
subscription agreements entered into pursuant to this Plan
shall be proportionately reduced and the purchase price per
share shall be proportionately increased. Except as
provided in this Section 11(a), no adjustment shall be made
under this Plan or any subscription agreement entered into
pursuant to this Plan by reason of any dividend or other
distribution declared or paid by the Company.
(b) Anything in this Plan or in any subscription
agreement entered into pursuant hereto to the contrary
notwithstanding (except as provided in Section 12), each
subscribing employee shall have the right immediately prior
to any merger or consolidation of which the Company is not
to be the survivor, or the liquidation or dissolution of the
Company, to elect (i) to receive the number of whole shares
which can be purchased at the purchase price under this Plan
with the full amount theretofore withheld from or paid by
him pursuant to this Plan and his subscription agreement,
together with cash in an amount equal to any balance of the
amount so withheld and paid (without interest on such cash),
(ii) to prepay in cash in a lump sum the unpaid balance of
the purchase price of the shares covered by his subscription
agreement or (iii) to receive a refund, in cash, of the full
amount theretofore withheld, together with simple interest,
also in cash, on the amount of such refund computed from the
respective dates of withholding, at the rate of 6% per
annum. The subscription agreement of any subscribing
employee who shall not make such an election shall terminate
upon such merger, consolidation, liquidation or dissolution
and his rights shall be those provided in clause (i) of this
Section 11(b), unless the surviving corporation in its
absolute and uncontrolled discretion shall offer such
subscribing employee the right to purchase its shares in
substitution for his rights under such subscription and he
shall accept such offer.
12. Limitation on Right to Purchase. Anything in this
Plan to the contrary notwithstanding, (i) no shares may be
purchased under this Plan to the extent not permitted by
Section 423(b)(8) of the Internal Revenue Code of 1986, (ii)
if at any time when any person is entitled to complete the
purchase of any shares pursuant to this Plan, after taking
into account such person's rights, if any, to purchase
Common Stock of the Company under all other stock purchase
plans of the Company, the result would be that during the
then current calendar year, such person would have become
entitled to purchase during such calendar year under this
Plan and all such other plans a number of shares of Common
Stock which would exceed the maximum number of shares
permitted by the provisions of Section 423(b)(8) of the
Internal Revenue Code of 1986, then the number of shares
which such person shall be entitled to purchase pursuant to
this Plan shall be reduced by the number which is one more
than the number of shares which represents such excess, and
(iii) if any person entitled to subscribe for shares
hereunder would be deemed for the purposes of Section
423(b)(3) of the Code to own stock (including the maximum
number of shares for which such person would be entitled to
subscribe pursuant to the foregoing formula) possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Company which are issued and
outstanding immediately after the Offering Date, the maximum
number of shares which such person shall be entitled to
subscribe for, pursuant to this Plan shall be reduced to
that number which, when added to the number of shares of
Common Stock of the Company which such person is so deemed
to own (excluding the maximum number of shares for which
such person would be entitled to subscribe pursuant to the
foregoing formula), is one less than such 5%.
13. Non-Assignability; Personal Representative of
Deceased Employees. (a) None of the rights of an employee
under this Plan or any subscription agreement entered into
pursuant thereto shall be transferable by such employee
otherwise than by will or the laws of descent and
distribution and, during the lifetime of such employee, such
rights shall be exercisable only by him. Any such attempted
transfer not permitted by this Plan or by the subscription
agreements shall be void, and the Company shall treat such
transfer as cause for termination of the subscription
agreements of the transferor and, if the transferee is then
a participant in the Plan, the transferee. Notice of
termination shall be effected as provided in paragraph
10(b), and the rights of such transferees and transferors
shall be limited the right to the prompt refund, in cash, of
the full amounts theretofore withheld and paid by them
pursuant to this Plan and their subscription agreements.
(b) References herein, other than in Section 3,
hereof, to employees shall be deemed to include the personal
representative of a deceased employee.
14. Shares not Subscribed for During the Offering
Period or Subscribed for but not Purchased. Shares referred
to herein which shall not be subscribed for, and shares
which were subscribed for but thereafter cease to be subject
to a subscription agreement hereunder, shall be free from
any reservation for use in connection with this Plan and
shall have the same status as all other unreserved
authorized but unissued shares.
15. Construction; Administration. All questions with
respect to the construction and application of the Plan and
subscription agreements entered into pursuant thereto and
the administration of this Plan shall be settled by the
determination of the Board of Directors of the Company or of
one or more other persons designated by it, which
determinations shall be final, binding and conclusive on the
Company and all employees and other persons.
16. Notice. Any election or other notice required to
be given by a subscribing employee under this Plan shall be
in writing and shall be delivered personally or by mail,
postage prepaid, addressed to the place designated by the
Company for delivery of the subscription agreement. If an
election is made which requires the payment of a sum of
money, such sum shall accompany the written election.
17. Amendment. The Plan may be amended by the Board
of Directors in any way which shall not adversely affect the
rights of employees under subscription agreements
theretofore entered into pursuant hereto.
Exhibit 13
Five-Year Selected Financial Data
Georgia Gulf Corporation
and Subsidiaries
Year Ended December 31
1993 1992 1991 1990 1989
Results of Operations
(In Thousands, except per share data)
Net Sales $ 768,902 $ 779,455 $ 838,336 $ 932,104 $1,104,468
Cost of Sales 619,540 616,802 626,672 661,448 753,255
Selling and administrative expenses 38,901 33,827 41,129 42,087 52,204
Operating Income 110,461 128,826 170,535 228,569 299,009
Recapitalization expense - - - (17,869) -
Interest expense (44,779) (61,216) (80,772) (63,161)
(961)
Interest income 106 73 492 2,505 2,045
Income before income taxes, extraordinary
charge and cumulative effect of
accounting change 65,788 67,683 90,255 150,044 300,093
Provision for income taxes 23,560 21,346 28,782 54,700 108,103
Income before extraordinary charge and
cumulative effect of accounting change 42,228 46,337 61,473 95,344 191,990
Extraordinary charge on early retirement
of debt (net of tax benefit of $6,834) (13,267) - - - -
Cumulative effect of accounting change
for income taxes 12,973 - - - -
Net income $ 41,934 $ 46,337 $ 61,473 $ 95,344 $ 191,990
Net income per common share $ 1.01 $ 1.18 $ 1.75 $ 3.07 $ 7.58
Dividends declared per common share $ - $ - $ - $ - $ 1.00
Financial Position (In Thousands)
Working capital $ 67,674 $ 57,465 $ 20,676 $ 50,131 $ 132,097
Property, plant and equipment, net 222,835 217,781 226,746 220,851 215,182
Total assets 405,287 419,420 415,585 456,657 472,989
Total debt 379,206 444,416 639,153 726,481 856
Stockholders' equity (deficit) (110,577) (161,165) (357,512) (424,476) 330,341
Cash provided by operating activities 88,268 60,385 112,148 127,752 225,255
Depreciation and amortization 27,062 29,583 26,447 19,834 18,667
Capital expenditures 29,583 14,261 28,273 58,111 54,159
Maintenance expenditures 43,141 47,664 42,853 42,985 40,400
Sales per employee 684 691 760 868 818
Other Selected Data
Current ratio 1.6 1.4 1.1 1.3 2.2
Return on assets 10.2% 11.1% 14.1% 20.5%
41.3%
Return on sales 5.5% 5.9% 7.3% 10.2%
17.4%
Ratio of operating income to
interest expense 2.5 2.1 2.1 3.6 311.1
Weighted average common shares and
equivalents outstanding (in thousands) 41,672 39,227 35,143 31,069 25,327
Employees 1,124 1,128 1,103 1,074 1,350
All years subsequent to 1989 include the effect of the Recapitalization, which occurred in
April 1990. (See note 6 to the consolidated financial statements.) Certain
reclassifications of prior years' amounts have been made to conform with the 1993
presentation.
Management's Discussion and Analysis
Georgia Gulf Corporation
and Subsidiaries
Results of Operations
The financial results for 1993 reflect the continuation of the
depressed global economies and the resulting impact on key
markets requiring the use of our products. Despite record sales
volumes, net sales decreased $10.6 million primarily as a result
of substantial reductions in the selling price of caustic soda.
The pulp and paper and aluminum markets for caustic soda
continued to lag behind the recovery taking place in the
construction and automobile industries. Notwithstanding
reductions in selling prices and margins, the Company still
generated operating income of $110.5 million and cash provided by
operating activities of $88.3 million, enabling the Company to
reduce debt by $65.2 million during the year.
This discussion of the Company's financial condition and
results of operations should be read in conjunction with the
letter to stockholders and the Company's consolidated financial
statements and related notes presented in other sections of this
Annual Report.
1993 Compared With 1992
Net sales decreased 1.4 percent to $768.9 million in 1993 from
$779.5 million in 1992 despite overall record sales volume in
1993. The decrease in net sales resulted primarily from a
significant decline in the selling price of caustic soda
throughout the year, which more than offset sales price increases
for other products.
Operating income of $110.5 million in 1993 reflects a decrease
of $18.4 million from the amount reported in 1992. This decrease
was primarily attributable to the declining selling price for
caustic soda. Raw material costs were down slightly for 1993;
however, overall cost of sales increased $2.7 million as a result
of the higher sales volumes. Selling and administrative expenses
increased to $38.9 million in 1993 from $33.8 million in 1992.
This increase was largely attributable to a bad debt write-off of
$1.9 million and to the fact that in 1992, selling and
administrative expenses were reduced by approximately $1.0
million due to non-recurring claim settlements received during
that year.
Interest expense in 1993 was $44.8 million as compared with
$61.2 million in 1992. This 27 percent decline was the result of
lower interest rates achieved from a first quarter 1993 debt
refinancing and a further $65.2 million reduction in debt during
the year.
As a result of the debt refinancing, the Company incurred an
extraordinary charge of $13.3 million, net of an income tax
benefit of $6.8 million, in the first quarter of 1993. The
extraordinary charge was related to the recording of interest
swap agreements at fair value and the write-off of deferred
financing costs and interest rate cap agreements associated with
the previous credit agreement.
The fiscal 1993 results were also affected by the Company's
adoption effective January 1, 1993, of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes"
("SFAS 109"), which changed the method of accounting for income
taxes from the deferred method to the liability method. The
adoption of SFAS 109 resulted in a cumulative one-time benefit of
$13.0 million in the first quarter of 1993.
The effective federal and state income tax rate was 35.8
percent in 1993, as compared to 31.5 percent in 1992. The higher
effective rate for 1993 was primarily attributable to the
increase in the federal income tax rate of 1 percent and the
resulting one-time charge of $800,000 to revalue deferred income
tax balances.
Net income of $41.9 million in 1993 decreased from $46.3
million in 1992. This 10 percent decline is primarily
attributable to the lower operating income offset partially by
the reduction in interest expense.
Net income per common share decreased to $1.01 per share in
1993 from $1.18 per share in 1992. The earnings per share
calculations were impacted by the lower net income and the
greater number of shares outstanding, which resulted after the
May 1992 common stock offering of 6.1 million shares.
1992 Compared With 1991
Net sales for 1992 were $779.5 million, down 7 percent from
$838.3 million in 1991. Sales prices declined for most products
during 1992 as a result of a weak economy, both in the United
States and abroad. International sales declined to 15 percent of
net sales in 1992, compared with 17 percent of net sales in 1991,
as a result of both lower sales prices and reduced volume.
Raw material costs were down for 1992 but not enough to offset
the decline in sales prices. As a result, operating income
decreased 24 percent in 1992 to $128.8 million from $170.5
million in 1991.
Selling and administrative expenses were $33.8 million for
1992 as compared to $41.1 million in 1991. The $7.3 million
decrease resulted primarily from lower compensation expense
related to employee stock options and incentive programs.
Interest expense declined $19.6 million in 1992 to $61.2
million. The Company benefited from lower interest rates and the
reduced debt balance resulting from the secondary common stock
offering completed in May 1992.
Net income for 1992 was $46.3 million, down 25 percent from
$61.5 million in 1991. This decrease resulted from the decline in
operating income, which was partially offset by the reduction in
interest expense. Net income per common share decreased to $1.18
per share in 1992 from $1.75 per share in 1991 as a result of
lower net income and the increased number of shares outstanding.
Liquidity and Capital Resources
For 1993, Georgia Gulf generated $88.3 million from operating
activities, up from $60.4 million in 1992. The major sources of
funds for 1993 were net income of $41.9 million and a reduction
of $11.0 million in working capital (excluding cash and cash
equivalents and the current portion of long-term debt).
Contributing to this decrease in working capital was a
significant reduction of inventories resulting generally from
lower inventory levels in all business areas.
Cash used for capital expenditures totaled $29.6 million, up
from $14.3 million in 1992. The increase resulted primarily from
$12.1 million spent on a vinyl resin plant expansion and $4.9
million for the construction of a new sodium chlorate plant with
the balance being used to modernize and improve the efficiency of
existing facilities.
Cash used for financing activities was $58.5 million for 1993,
an increase of $12.8 million over 1992. The Company received $6.7
million of proceeds in 1993 from the issuance of common stock
under various stock purchase and option plans. During 1993,
outstanding debt was reduced by $65.2 million to $379.2 million
at year-end.
In February 1993, the Company refinanced its credit agreement
to replace the $90.0 million revolving credit facility and the
$227.3 million term loan with a revolving credit facility
permitting borrowings of up to $150.0 million and a $150.0
million term loan. As of December 31, 1993, the Company had
availability of $35.0 million under the revolving credit
facility. The refinanced credit agreement provides for reduced
interest rates, more favorable maturities on the term loan and
less restrictive covenants.
As of December 31, 1993, the Company has planned capital
projects of approximately $70.0 million, which includes $43.0
million for the vinyl resin plant expansion scheduled for
completion at the end of 1994 and $5.4 million for a methanol
plant expansion to be completed by the third quarter of 1994.
Management believes that cash provided by operations of the
Company and the availability of borrowings under the Company's
revolving credit facility will provide sufficient funds to
support working capital fluctuations, debt service requirements
and planned capital expenditures.
Inflation
The most significant components of the Company's cost of sales
are raw materials and energy, which consist of basic commodity
items. The cost of raw materials and energy are based primarily
on market forces and have not been significantly affected by
inflation. Also, inflation has not had a material impact on the
Company's sales or income from operations.
Environmental
The Company's operations are subject to various federal, state
and local laws and regulations relating to environmental quality.
These regulations, which are enforced principally by the United
States Environmental Protection Agency and comparable state
agencies, govern the management of solid and hazardous waste; the
discharge of pollutants into the air and into surface and
underground waters; and the manufacture of chemical substances.
All of the plants operated by the Company were built or have been
upgraded at least to meet current environmental standards.
Management believes that the Company is in material compliance
with all current environmental laws and regulations. The Company
estimates that any expenses incurred in maintaining compliance
with these requirements will not materially affect earnings or
cause the Company to exceed its level of anticipated capital
expenditures. However, there can be no assurance that regulatory
requirements will not change, and it is not possible to
accurately predict the aggregate cost of compliance resulting
from any such changes.
Consolidated Balance Sheets
Georgia Gulf Corporation
and Subsidiaries
December 31
(In thousands, except share data) 1993 1992
Assets
Current assets
Cash and cash equivalents $ 3,099 $ 2,904
Receivables, net of allowance for doubtful
accounts of $3,200 in 1993 and 1992 96,068 101,868
Inventories 58,261 71,265
Prepaid expenses 10,350 11,055
Deferred income taxes 9,759 -
Total current assets 177,537 187,092
Property, plant and equipment, at cost 388,844 359,261
Less accumulated depreciation 166,009 141,480
Property, plant and equipment, net 222,835 217,781
Other assets 4,915 14,547
Total assets $ 405,287 $ 419,420
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Current portion of long-term debt $ 14,049 $ 35,030
Accounts payable 59,911 67,167
Interest payable 16,824 9,906
Accrued income taxes 3,129 177
Accrued pension 4,670 6,088
Other accrued liabilities 11,280 11,259
Total current liabilities 109,863 129,627
Long-term debt 365,157 409,386
Deferred income taxes 40,844 41,572
Stockholders' equity (deficit)
Preferred stock - $.01 par value; 75,000,000 shares
authorized; no shares issued - -
Common stock - $.01 par value; 75,000,000 shares
authorized; shares issued: 40,951,571 in 1993
and 40,293,639 in 1992 410 403
Additional paid-in capital 166,439 157,792
Retained earnings (deficit) (277,426) (319,360)
Total Stockholders' equity (deficit) (110,577) (161,165)
Total liabilities and stockholders' equity (deficit) $ 405,287 $ 419,420
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Income
Georgia Gulf Corporation
and Subsidiaries
Year Ended December 31
(In thousands, except share data) 1993 1992 1991
Net sales $768,902 $779,455 $838,336
Operating costs and expenses
Cost of sales 619,540 616,802 626,672
Selling and administrative 38,901 33,827 41,129
Total operating costs and expenses 658,441 650,629 667,801
Operating Income 110,461 128,826 170,535
Other income (expense)
Interest expense (44,779) (61,216) (80,772)
Interest income 106 73 492
Income before income taxes, extraordinary
charge and cumulative effect of accounting
change 65,788 67,683 90,255
Provision for income taxes 23,560 21,346 28,782
Income before extraordinary charge and
cumulative effect of accounting change 42,228 46,337 61,473
Extraordinary charge on early retirement
of debt, net of tax benefit of
$6,834 (Note 4) (13,267) - -
Cumulative effect of accounting change
for income taxes (Note 9) 12,973 - -
Net income $ 41,934 $ 46,337 $ 61,473
Primary and fully diluted net income per
common share:
Before extraordinary charge and cumulative
effect of accounting change $ 1.01 $ 1.18 $ 1.75
Extraordinary charge on early
retirement of debt (0.32) - -
Cumulative effect of accounting change
for income taxes 0.32 - -
Net income per common share $ 1.01 $ 1.18 $ 1.75
Weighted average common shares and
equivalents outstanding 41,671,903 39,226,832 35,142,652
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Cash Flows
Georgia Gulf Corporation
and Subsidiaries
Year Ended December 31
(In thousands) 1993 1992 1991
Cash flows from operating activities:
Net income $ 41,934 $ 46,337 $ 61,473
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 27,062 29,583 26,447
Deferred income taxes 2,486 4,379 4,067
Cost associated with early
retirement of debt 20,101 - -
Cumulative effect of accounting
change for income taxes (12,973) - -
Compensation and tax benefits
related to stock plans 1,934 1,002 5,052
Change in assets and liabilities:
Receivables 5,800 (13,218) 28,991
Inventories 13,004 (2,588) 11,233
Prepaid expenses 705 (1,325) (1,240)
Accounts payable (7,256) 3,637 (11,471)
Interest payable (2,678) (699) 1,704
Accrued income taxes 2,952 (1,823) (6,276)
Accrued pension (1,418) (332) (1,057)
Accrued liabilities 21 (3,957) (3,562)
Other (3,406) (611) (3,213)
Net cash provided by operating activities 88,268 60,385 112,148
Cash flows from financing activities:
Net increase (decrease) in revolving
credit loan 79,000 4,000 (22,400)
Proceeds from issuance of long-term debt 150,000 - -
Principal payments on long-term debt (294,210) (198,737) (64,928)
Proceeds from issuance of common stock 6,720 149,008 439
Net cash used in financing activities (58,490) (45,729) (86,889)
Cash flows from investing activities:
Capital expenditures (29,583) (14,261) (28,273)
Net cash used in investing activities (29,583) (14,261) (28,273)
Net increase (decrease) in cash and
cash equivalents 195 395 (3,014)
Cash and cash equivalents at beginning
of year 2,904 2,509 5,523
Cash and cash equivalents at end
of year $ 3,099 $ 2,904 $ 2,509
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Changes in Stockholders' Equity (Deficit)
Georgia Gulf Corporation
and Subsidiaries
Total
Stock-
Additional Retained holders'
Common Stock Paid-in Earnings Equity
(In thousands, except share data) Shares Amount Capital (Deficit) (Deficit)
Balance, December 31, 1990 33,607,634 $336 $ 2,358 $(427,170) $(424,476)
Net income - - - 61,473 61,473
Compensation related to
stock option plans - - 5,052 - 5,052
Common stock issued upon
exercise of stock options 102,960 1 438 - 439
Balance, December 31, 1991 33,710,594 337 7,848 (365,697)
(357,512)
Net income - - - 46,337 46,337
Tax benefit realized from
stock option plans - - 1,002 - 1,002
Common stock issued in
public offering 6,095,000 61 143,875 - 143,936
Common stock issued upon
exercise of stock options 278,125 3 2,002 - 2,005
Common stock issued under
stock purchase plan 209,920 2 3,065 - 3,067
Balance, December 31, 1992 40,293,639 403 157,792 (319,360)
(161,165)
Net income - - - 41,934 41,934
Tax benefit realized from
stock option plans - - 1,934 - 1,934
Common stock issued upon
exercise of stock options 450,425 5 3,474 - 3,479
Common stock issued under
stock purchase plan 207,507 2 3,239 - 3,241
Balance, December 31, 1993 40,951,571 $410 $166,439 $(277,426)
$(110,577)
The accompanying notes are an integral part of these consolidated financial statements.
Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Georgia Gulf Corporation
and Subsidiaries
Note 1: Summary of Significant
Accounting Policies
Principles of Consolidation - The consolidated financial
statements include the accounts of Georgia Gulf Corporation and
its subsidiaries ("the Company"). All significant intercompany
balances and transactions are eliminated in consolidation.
Cash and Cash Equivalents - The Company considers all highly
liquid investment instruments with an original maturity of three
months or less to be cash and cash equivalents for the purposes
of the balance sheet and statement of cash flow presentations.
The carrying amount approximates fair value because of the short
original maturity of these instruments.
Inventories - Inventories are valued at the lower of cost (first-
in, first-out) or market. Costs include raw materials, direct
labor and manufacturing overhead. Market is based on current
replacement cost for raw materials and supplies and on net
realizable value for finished goods.
Property, Plant and Equipment - Property, plant and equipment are
stated at cost. Maintenance and repairs are charged to expense as
incurred, and major renewals and improvements are capitalized.
Interest attributable to funds used in financing the construction
of major plant and equipment is capitalized. Depreciation is
computed using the straight-line method over the estimated useful
lives of the assets for book purposes, with accelerated methods
being used for income tax purposes.
The estimated useful lives of the assets are as follows:
Estimated
Useful Lives
Buildings and land improvements 20 - 30 years
Machinery and equipment 3 - 15 years
Other Assets - Other assets consist primarily of debt issuance
costs which are amortized to expense using the effective interest
method over the term of the related indebtedness. The amount of
debt issuance costs amortized to interest expense during 1993,
1992, and 1991 was $961,000, $5,191,000 and $4,729,000,
respectively. Debt issuance costs of $10,169,000 were written off
as part of the extraordinary charge on the early retirement of
debt during the first quarter of 1993 (see note 4).
Other Postemployment Benefits - The Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," which became
effective for fiscal years beginning after December 1992. The
FASB also issued SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," which becomes effective for fiscal
years beginning after December 1993. The Company does not offer
any postemployment or postretirement benefits under its present
benefit structure.
Environmental Expenditures - Environmental expenditures that
pertain to current operations or relate to future revenues are
expensed or capitalized consistent with the Company's
capitalization policy. Expenditures that relate to an existing
condition caused by past operations and do not contribute to
future revenues are expensed. Liabilities are recognized when
environmental assessments and/or cleanups are probable and the
costs can be reasonably estimated.
Net Income Per Common Share - Primary and fully diluted net
income per common share is computed by dividing the weighted
average of common shares and equivalents outstanding during the
year into net income. Common stock equivalents consist of the
shares issuable under various stock plans less the number of
shares deemed to be repurchased under application of the treasury
stock method.
Reclassifications - Certain reclassifications of prior years'
amounts have been made to conform with the 1993 presentation.
Note 2: Inventories
The major classes of inventories were as follows (in thousands):
December 31,
1993 1992
Raw materials and
supplies $20,819 $22,746
Finished goods 37,442 48,519
$58,261 $71,265
Note 3: Property, Plant and Equipment
Property, plant and equipment consisted of the following (in
thousands):
December 31,
1993 1992
Machinery and equipment $334,175 $318,943
Land and improvements 23,246 23,246
Buildings 9,768 9,463
Construction
in progress 21,655 7,609
Property, plant and
equipment, at cost $388,844 $359,261
Note 4: Extraordinary Charge - Early Retirement of Debt
The Company refinanced its senior debt on February 10, 1993,
replacing an existing $90,000,000 revolving credit facility and a
$227,335,000 term loan with a revolving credit facility
permitting borrowings of up to $150,000,000 through January 1998
and a $150,000,000 term loan. As a result of the refinancing, the
Company incurred an extraordinary charge in the first quarter of
1993 of $13,267,000, net of an income tax benefit of $6,834,000.
The extraordinary charge was related to the recording of interest
rate swap agreements at their fair value and the writeoff of debt
issuance costs and interest rate cap agreements associated with
the previous credit agreement. The recording of the interest swap
agreements at fair value was reflected as an increase to interest
payable.
Note 5: Long-term Debt
Long-term debt consisted of the following (in thousands):
December 31,
1993 1992
Revolving credit loan, average
rates of 4.84% and
7.78% for 1993 and
1992, respectively $105,000 $ 26,000
Term loan, average rates
of 5.14% and 6.43% for
1993 and 1992,
respectively 83,125 227,335
15% Senior Subordinated
Notes 191,081 191,081
379,206 444,416
Less current maturities 14,049 35,030
Long-term debt $365,157 $409,386
The Company has entered into a credit agreement ("Credit
Agreement") with a group of financial institutions providing for
a revolving credit facility permitting borrowings of up to
$150,000,000 and a term loan. The revolving credit facility
terminates and any related outstanding loans are due in January
1998. Payments under the term loan are due in quarterly
installments through January 1998. Maturities of long-term debt
for each of the next five years are as follows: 1994-$14,049,000;
1995-$17,562,000; 1996-$22,245,000; 1997-$23,415,000; 1998-
$5,854,000. In addition, a prepayment is required for each year
the term loan is outstanding based on a percentage of the excess
cash flow generated in the preceding year as defined in the
Credit Agreement. The required prepayment for 1993 was satisfied
by an optional prepayment made during 1993. The Credit Agreement
is secured by substantially all of the Company's assets.
As of December 31, 1993, the Company had availability of up to
$35,000,000 under the terms of the revolving credit facility. An
annual commitment fee of .375 percent is required to be paid on
the unused portion.
The 15 percent Senior Subordinated Notes ("Notes") are due
April 2000 with interest payable semi-annually. The Notes are
redeemable at par, subject to restrictions in the Credit
Agreement, in whole or in part at the option of the Company at
any time on or after April 15, 1995.
Under the Credit Agreement and Note indenture, the Company is
subject to certain restrictive covenants, the most significant of
which require the Company to maintain certain financial ratios,
limit the amount the Company can pay in dividends, limit the
amount of Note prepayments and limit the issuance and sale of
additional common stock.
Cash payments for interest during 1993, 1992 and 1991 were
$48,391,000, $56,474,000 and
$73,972,000, respectively.
Note 6: Stockholders' Equity (Deficit)
In April 1990, the Company's stockholders approved a Plan of
Recapitalization (the "Recapitalization"), which resulted in an
increase of 9,158,660 in the number of outstanding common shares,
a net cash distribution to stockholders of $673,652,000 and a
distribution to stockholders of Notes with an aggregate face
value of $191,081,000. The net distribution for the
Recapitalization was charged against retained earnings.
In May 1992, the Company issued an additional 6,095,000 shares
of common stock in a public offering. The net proceeds of
approximately $143,936,000 were used to retire a portion of the
Company's senior debt.
In connection with the stock purchase rights described below,
30,000,000 of the authorized shares of preferred stock are
designated Junior Participating Preferred Stock. If issued, the
Junior Participating Preferred Stock would be entitled, subject
to the prior rights of any senior preferred stock, to a dividend
equal to the greater of $.01 or that which is paid on the common
shares.
Each outstanding share of common stock is accompanied by a
preferred stock purchase right, which entitles the holder to
purchase from the Company 1/100th of a share of Junior
Participating Preferred Stock for $45, subject to adjustment in
certain circumstances. The rights become exercisable only after a
person or group acquires beneficial ownership of 15 percent or
more of the Company's outstanding shares of common stock, or
commences a tender or exchange offer that would result in such
person or group beneficially owning 15 percent or more of the
Company's outstanding shares of common stock. The rights expire
on April 27, 2000, and may be redeemed by the Company for $0.01
per right until 10 days following the earlier to occur of the
announcement that a person or group beneficially owns 15 percent
or more of the Company's outstanding shares of common stock, or
the commencement, or announcement by any person or group of an
intent to commence, a tender offer that would result in any
person or group beneficially owning 15 percent or more of the
Company's outstanding shares of common stock. Subject to certain
conditions, if a person or group becomes the beneficial owner of
15 percent or more of the Company's outstanding shares of common
stock, each right will entitle its holder (other than certain
acquiring persons) to receive, upon exercise, common stock having
a value equal to two times the right's exercise price. In
addition, subject to certain conditions, if the Company is
involved in a merger or certain other business combination
transactions, each right will entitle its holder (other than
certain acquiring persons) to receive, upon exercise, common
stock of the acquiring company having a value equal to two times
the right's exercise price.
Note 7: Stock Option and Purchase Plans
Stock Option Plans - During 1987, the Board of Directors approved
a non-qualified stock option plan that provided for granting key
employees options to purchase up to 484,820 shares of common
stock. All options were granted with related cash awards payable
upon exercise to compensate for tax consequences. All stock
options related to this plan have vested and expire no more than
10 years after grant. Compensation expense related to the options
and accompanying cash awards was $7,097,000 for the year ended
December 31, 1991. No compensation expense was recorded in 1993
or 1992.
The 1990 Incentive Equity Plan was approved by the
stockholders of the Company as a part of the Recapitalization.
This plan authorized the issuance of non-qualified stock options
for up to 2,763,027 shares with options for 1,880,600 shares
outstanding as of December 31, 1993. The option price per share
may not be less than the fair market value of a share of the
Company's common stock on the dates the options are granted.
Outstanding options vest over a three-year period ending in 1994
and expire no more than 10 years after grant. The following is a
summary of all stock option information:
Year Ended December 31,
1993 1992 1991
Stock options:
Outstanding at
beginning of
year 2,504,015 2,873,840 3,083,600
Granted at $17.00-
$18.25 per share 179,650 - -
Exercised (450,425) (278,125) (102,960)
Forfeited or
canceled (62,440) (91,700) (106,800)
Outstanding at end
of year 2,170,800 2,504,015 2,873,840
Option exercise price
range per share $3.07-$18.25 $3.07-$9.25 $2.61-$9.25
Options exercisable 1,242,250 913,615 366,740
Options available
for grant 221,877 347,627 255,927
Stock Purchase Plan - During 1993, the Board of Directors
authorized, subject to stockholder approval, a 1994 Employee
Stock Purchase Plan. In connection with the stock purchase plan,
approximately 266,000 shares of common stock are reserved for
issuance at a subscription price equal to 85 percent of the fair
market value of the Company's common stock on either November 1,
1993, or December 30, 1994, whichever is lower. The subscription
price is paid through payroll deductions over a twelve-month
period ending December 1994. Under similar employee stock
purchase plans, 207,507 and 209,920 shares of common stock were
issued at $15.62 and $14.61 per share during 1993 and 1992,
respectively.
Note 8: Pension Plans
The Company has several pension, savings and profit sharing plans
that cover substantially all of its salaried and hourly
employees. The expense incurred for these plans was approximately
$5,263,000, $5,061,000 and $5,524,000, for the years ended
December 31, 1993, 1992 and 1991, respectively.
Salaried and hourly employees are covered by defined
contribution plans under which the Company makes contributions to
individual employee accounts and by defined benefit plans for
which the benefits are based on years of service and the
employee's compensation or for which the benefit is a specific
monthly amount for each year of service. The Company's policy on
funding the defined benefit plans is to contribute an amount
within the range of the minimum required and the maximum tax
deductible contribution.
The net pension costs for the defined benefit plans include the following components
(in thousands):
Year Ended December 31,
1993 1992 1991
Service cost for
benefits earned
during the year $1,530 $1,513 $1,445
Interest cost on
projected benefit
obligation 2,043 1,818 1,760
Actual return on
assets (1,783) (2,013) (2,649)
Net amortization
and deferrals 434 1,008 2,338
Net pension cost $2,224 $2,326 $2,894
The pension expense was calculated using an assumed discount
rate of 8 percent in 1993, 1992 and 1991; an assumed long-term
compensation increase rate of 6.5 percent in 1993, 1992 and 1991;
and an assumed long-term rate of return on plan assets of 8
percent in 1993, 1992 and 1991.
The funded status of the defined benefit plans is as follows (in thousands):
December 31,
1993 1992
Actuarial present value of:
Vested benefit obligation $18,757 $13,584
Non-vested benefit obligation 438 281
Accumulated benefit
obligation $19,195 $13,865
Projected benefit
obligation $30,443 $24,280
Plan assets at fair value (24,576) (19,579)
Unfunded projected
benefit obligation 5,867 4,701
Unrecognized net gains and
losses 2,027 5,029
Unrecognized prior
service cost (35) (50)
Unrecognized transition
obligation (3,945) (4,288)
Additional minimum liability 756 696
Pension liability recognized
in the consolidated
balance sheets $ 4,670 $ 6,088
The projected benefit obligation for the defined benefit plans
was determined using assumed discount rates of 7 and 8 percent in
1993 and 1992, respectively, and assumed long-term compensation
increase rates of 5.5 and 6.5 percent in 1993 and 1992,
respectively. The assumed long-term rate of return on plan assets
was 8 percent for 1993 and 1992. The plan assets are invested in
a diversified portfolio that consists primarily of equity and
debt securities.
Note 9: Income Taxes
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes," which changes the Company's method
of accounting for income taxes from the deferred method to the
liability method. Under the liability method, deferred tax
balances are determined based on the estimated future tax effects
of differences between the financial statement and tax bases of
assets and liabilities under enacted tax laws. As a result of the
adoption of SFAS No. 109, the Company recorded a cumulative
adjustment at January 1, 1993, of $12,973,000. This adjustment
represents a net decrease in the deferred tax liability as of
that date and is reflected in the accompanying consolidated
statement of income as the cumulative effect of accounting
change.
After having given effect to SFAS No. 109, the Company's net deferred tax liability
consisted of the following major items (in thousands):
December 31, January 1,
1993 1993
Deferred tax assets
Receivables $ 1,203 $ 1,168
Inventories 980 1,153
Vacation accruals 1,288 1,172
Pension accruals 1,144 1,397
Stock options 2,990 2,975
Interest rate
agreements 2,662 -
Other 2,406 3,436
Total deferred tax
assets 12,673 11,301
Deferred tax liability
Property, plant
and equipment (43,758) (39,900)
Net deferred tax
liability $ (31,085) $ (28,599)
The Company has determined, based on its history of operating
earnings and expectations for the future, that it is more likely
than not that future taxable income will be sufficient to fully
utilize the deferred tax assets at December 31, 1993.
During 1992 and 1991, deferred income taxes were provided for
significant timing differences between revenue and expenses for
tax and financial statement purposes. Following is a summary of
the significant components of the deferred tax provision (in
thousands):
Year Ended December 31,
1992 1991
Depreciation and
amortization $2,844 $5,714
Stock compensation 862 (1,838)
Other 673 191
Deferred tax provision $4,379 $4,067
The provision for income taxes is as follows (in thousands):
Year Ended December 31,
1993 1992 1991
Current $21,074 $16,967 $24,715
Deferred 2,486 4,379 4,067
Provision for income
taxes $23,560 $21,346 $28,782
The difference between the statutory federal income tax rate and the Company's
effective income tax rate is summarized as follows:
Year Ended December 31,
1993 1992 1991
Statutory federal
income tax rate 35.0% 34.0% 34.0%
State income taxes,
net of federal benefit 2.5 2.4 2.5
Percentage depletion (2.9) (2.3) (1.9)
Revalue deferred tax
balances for increase
in federal statutory
rate 1.2 - -
Other(2.6)(2.7)
Effective income
tax rate 35.8% 31.5% 31.9%
Cash payments for income taxes during 1993, 1992 and 1991 were $9,355,000, $16,591,000
and $35,104,000, respectively.
Note 10: Commitments and Contingencies
Leases - The Company leases railcars and other transportation
equipment, storage terminals, warehouse and office space under
non-cancelable operating leases with varying maturities through
the year 2008.
Future minimum payments under non-cancelable operating leases
as of December 31, 1993, are as follows (in thousands):
1994 $10,878
1995 7,448
1996 5,687
1997 3,939
1998 2,522
1999 and thereafter 10,638
Total $41,112
Total lease expense was approximately $12,316,000, $12,979,000
and $11,423,000 for the years ended December 31, 1993, 1992 and
1991, respectively.
Capital Expenditures - As of December 31, 1993, the Company had
purchase commitments of approximately $29.0 million for various
capital projects.
Legal Proceedings - The Company is subject to claims and legal
actions that arise in the ordinary course of its business.
Management believes that the ultimate liability, if any, with
respect to these claims and legal actions, will not have a
material effect on the financial position or on the results of
operations for the Company.
Note 11: Significant Customer and Export Sales
Significant Customer - The Company has a supply contract, subject
to certain limitations, for a substantial percentage of Georgia-
Pacific Corporation's requirements for certain chemicals at
market prices. This supply contract has various expiration dates
(depending on the product) from 1994 through 1999 and may be
extended year to year upon expiration. The sales to Georgia-
Pacific Corporation under this supply contract for the years
ended December 31, 1993, 1992 and 1991 amounted to approximately
15 percent, 14 percent and 15 percent of net sales, respectively.
Receivables outstanding from these sales were $12,661,000,
$10,850,000 and $11,077,000 at December 31, 1993, 1992 and 1991,
respectively.
Export Sales - Export sales were approximately 14 percent, 15
percent and 17 percent of the Company's net sales for the years
ended December 31, 1993, 1992 and 1991, respectively. The
principal international markets served by the Company include
Canada, Mexico, Latin America, Europe and Asia.
Note 12: Fair Value of Financial Instruments
At December 31, 1993, the Company had two outstanding interest
rate swap agreements with a commercial bank, totaling a notional
amount of $100,000,000. The agreements require the Company to pay
an average fixed rate of 9.16 percent and receive a floating
London Interbank Offered Rate ("LIBOR"), which averaged 3.32
percent for 1993 on the notional amount. The interest rate swap
agreements mature in July 1995.
The Company's off-balance sheet risk from nonperformance by
the counterparties is minimal under the interest rate agreements
due to the counterparties' financial strength. Credit loss from
counterparty nonperformance is not anticipated.
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments:
Debt - The fair value of the Company's Notes is based on a quoted
market price and the term loan on an estimate of fair value
obtained from financial industry sources. The carrying amount for
the revolving credit loan is assumed to approximate fair value
due to the floating market interest rates to which the loan is
subject.
Interest rate Agreements - The fair value of interest rate
agreements is estimated by obtaining quotes from brokers. In
connection with the early retirement of debt in 1993 (see Note
4), these interest rate swaps were recorded in the financial
statements at their fair market value.
The estimated fair value of financial instruments is as follows (in thousands):
December 31, December 31,
1993 1992
Carrying Fair Carrying Fair
Amount Value Amount Value
Debt:
Revolving
credit loan $105,000 $105,000 $ 26,000 $ 26,000
Notes 191,081 212,339 191,081 217,832
Term loan 83,125 83,125 227,335 227,335
Liabilities for
interest rate
agreements 7,548 7,548 (416) 9,596
Note 13: Quarterly Financial Data (Unaudited)
The following table sets forth certain quarterly financial data
for the periods indicated (in thousands, except per share data):
First Second Third Fourth
Quarter Quarter Quarter Quarter
1993
Net sales $181,906 $195,202 $199,635 $192,159
Gross margin 36,826 37,940 37,227 37,369
Operating income 27,109 28,648 28,087 26,617
Net income 9,826 11,476 10,147 10,485
Net income per
common share 0.24 0.28 0.24 0.25
1992
Net sales $189,637 $192,969 $199,690 $197,159
Gross margin 45,262 44,582 39,686 33,123
Operating income 36,106 35,406 30,338 26,976
Net income 12,950 13,503 10,904 8,980
Net income per
common share 0.37 0.35 0.26 0.22
During the first quarter of 1993, the Company recorded an
extraordinary charge on the early retirement of debt of
$(13,267,000), or $(0.32) per share, and also recorded a benefit
from the cumulative effect of accounting change for income taxes
of $12,973,000, or $0.32 per share.
Report of Management
Georgia Gulf Corporation
and Subsidiaries
To the Stockholders of
Georgia Gulf Corporation:
The accompanying consolidated financial statements of Georgia
Gulf Corporation and subsidiaries are the responsibility of and
have been prepared by the Company in conformity with generally
accepted accounting principles. The financial information
displayed in other sections of this Annual Report is consistent
with the consolidated financial statements.
The integrity and the objectivity of the data in these
consolidated financial statements, including estimates and
judgments relating to matters not concluded by year-end, are the
responsibility of management. The Company and its subsidiaries
maintain accounting systems and related internal controls,
including a detailed budget and reporting system, to provide
reasonable assurance that financial records are reliable for
preparing the consolidated financial statements and for
maintaining accountability for assets. The system of internal
controls also provides reasonable assurance that assets are
safeguarded against loss from unauthorized use or disposition,
and that transactions are executed in accordance with
management's authorization. Periodic reviews of the systems and
of internal controls are performed by the internal audit
department.
The Audit Committee of the Board of Directors, composed solely
of outside directors who are not officers or employees of the
Company, has the responsibility of meeting periodically with
management, the Company's internal auditors and Arthur Andersen &
Co., the Company's independent auditors that are approved by the
stockholders, to review the scope and results of the annual
audit, quarterly reviews and the general overall effectiveness of
the internal accounting control system. The independent auditors
and the Company's internal auditors have direct access to the
Audit Committee, with or without the presence of management, to
discuss the scope and results of their audits as well as any
comments they may have related to the adequacy of the internal
accounting control system and the quality of financial reporting.
RICHARD B. MARCHESE
Vice President - Finance,
Chief Financial Officer and
Treasurer
February 15, 1994
Report of Independent Public Accountants
Georgia Gulf Corporation
and Subsidiaries
To the Stockholders and Board of Directors
of Georgia Gulf Corporation:
We have audited the accompanying consolidated balance sheets of
Georgia Gulf Corporation (a Delaware Corporation) and
subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in stockholders'
equity (deficit) and cash flows for each of the three years in
the period ended December 31, 1993. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Georgia Gulf Corporation and subsidiaries as of December 31,
1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Note 9 of the Notes to Consolidated Financial
Statements, effective January 1, 1993, the Company changed its
method of accounting for income taxes.
ARTHUR ANDERSEN & CO.
Atlanta, Georgia
February 15, 1994
Corporate Information
Georgia Gulf Corporation
and Subsidiaries
Directors Corporate Headquarters
James R. Kuse 400 Perimeter Center Terrace
Chairman of the Board Suite 595
Retired Chief Executive Officer Atlanta, Georgia 30346
Georgia Gulf Corporation 404-395-4500
Jerry R. Satrum Auditors
President and Chief Executive Arthur Andersen and Co.
Officer Atlanta, Georgia
Georgia Gulf Corporation
John D. Bryan Transfer Agent and Registrar
Retired Vice President - Wachovia Bank of North
Operations Carolina, N.A.
Georgia Gulf Corporation P. O. Box 3001
Winston-Salem, NC 27102
Dennis M. Chorba 1-800-633-4236
Vice President - Administration
Georgia Gulf Corporation (Changes of address, questions
regarding lost certificates,
Alfred C. Eckert III* requests for changes in
President - Greenwich Street registration and other general
Capital correspondence concerning
Partners, Inc. stockholder accounts should be
directed to the Transfer
Agent)
Robert E. Flowerree*
Retired Chairmand of the Board Annual Meeting
Georgia-Pacific Corporation The Annual Meeting of
Stockholders of Georgia Gulf
Holcombe T. Green, Jr.* Corporation will be held in
Chairman and Chief Executive the Conference Center of the
Officer South Terraces Building, 115
WestPoint Stevens, Inc. Perimeter Center Place,
Atlanta
Georgia, on Tuesday, May 17,
Edward S. Smith* 1994 at 1:30 p.m.
Stockholders
Retired Chairman and Chief are cordially invited to
attend.
Executive Officer
Omark Industries Annual Report on Form 10-K
Form 10K is a report filed
*Audit Committee annually with the Securities
and Exchange Commission. Much
of the information contained
therein is included in this
Officers Annual Report, though Form 10-
K
includes some supplementary
Jerry R. Satrum material.
President and Chief Executive Upon receipt of a written
Officer request froma stockholder to
the
Financial Relations
Department,
Joel I. Beerman Georgia Gulf Corporation, 400
Vice President, General Perimeter Center Terrace,
Suite
Counsel and Secretary 595, Atlanta, Georgia 30346,
Georgia Gulf will furnish a
Dennis M. Chorba copy of its Form 10-K,
excluding
Vice President - exhibits, without charge.
Administration
Common Stock Data
Gary L. Elliott Georgia Gulf Corporation's
Vice President - Marketing Common Stock is listed on the
and Sales New York Stock Exchange under
Commodity Chemicals Group the symbol GGC.
At December 31, 1993, there
Richard B. Marchese were 1,143 common stockholders
Vice President - Finance, of record.
Chief Financial Officer
and Treasurer
Edward A. Schmitt
Vice President - Operations
Commodity Chemicals Group
Mark J. Seal
Vice President - Polymer Group
Thomas G. Swanson
Vice President - Supply and
Corporate Development
The following table sets forth the New York Stock Exchange high,
low and closing stock prices for the Company's common stock for
the years 1993 and 1992.
1993 (in dollars) High Low Close
First Quarter 23 1/2 17 5/8 17 5/8
Second Quarter 21 1/4 16 1/2 18 1/4
Third Quarter 20 1/4 18 19 3/8
Fourth Quarter 23 3/4 17 1/4 22 3/8
1992 (in dollars) High Low Close
First Quarter 28 5/8 21 5/8 26 1/4
Second Quarter 27 3/8 18 3/4 21 1/8
Third Quarter 21 1/8 15 3/4 17 3/8
Fourth Quarter 23 1/4 16 3/4 22 3/8
EXHIBIT 24
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports included and incorporated by
reference in this Form 10-K, into the Company's previously filed
Registration Statements on Form S-8, file no. 33-14696, file no.
33-27365, file no. 33-40952, file no. 33-42008 and file no. 33-
42190.
ARTHUR ANDERSEN & CO.
Atlanta, Georgia
March 29, 1994