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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
For the Fiscal Year Ended December 31, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission File Number 1-9753
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GEORGIA GULF CORPORATION
(Exact name of Registrant as specified in its Charter)
DELAWARE 58-1563799
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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: (770) 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, $0.01 par value 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 nonaffiliates of the
Registrant, computed using the closing price on the New York Stock Exchange for
the Registrant's common stock on March 18, 1998, was $905,268,000.
Indicate the number of shares outstanding of the Registrant's common
stock as of the latest practicable date.
Class Outstanding at March 18, 1998
------ -----------------------------
Common Stock, $0.01 par value 32,187,322 shares
DOCUMENTS INCORPORATED BY REFERENCE
(To the Extent Indicated Herein)
1997 Annual Report to Stockholders in Parts II and IV of this Form 10-K.
Proxy Statement for the Annual Meeting of Stockholders to be held on May 19,
1998, in Part III of this Form 10-K.
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TABLE OF CONTENTS
PART I
PAGE
ITEM NUMBER
- ---- ---------
1) Business
General Description of Business ..................................... 1
Electrochemical Products ............................................ 2 - 3
Aromatic Chemical Products .......................................... 3
Methanol ............................................................ 4
Great River Oil & Gas Corporation ................................... 4
Georgia-Pacific Contract ............................................ 4
Marketing and Sales ................................................. 4
Raw Materials ....................................................... 4
Competition ......................................................... 5
Employees ........................................................... 5
Environmental Regulation ............................................ 5
Year 2000 Conversion ................................................ 5
Forward-Looking Statements .......................................... 5 - 6
2) Properties ..................................................................... 6 - 7
3) Legal Proceedings .............................................................. 7
4) Submission of Matters to a Vote of Security Holders ............................ 7
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
7A) Quantitative and Qualitative Disclosures about Market Risk ...................... 8
8) Financial Statements and Supplementary Data .................................... 8
9) Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure ............................................ 8
PART III
10) Directors and Executive Officers of the Registrant ............................. 9
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 Schedule and Reports on Form 8-K ................. 11 - 14
SIGNATURES ............................................................................ 15
PART I
Item 1. BUSINESS.
General Description of Business
Georgia Gulf Corporation (the "Company") is a major manufacturer and
worldwide marketer of quality chemical and plastic products. The Company
manufactures products through two highly integrated lines categorized into
electrochemicals and aromatic chemicals; and also a third product line,
methanol, a natural gas chemical. The Company's electrochemical products include
chlorine, caustic soda, sodium chlorate, vinyl chloride monomer ("VCM"), and
polyvinyl chloride ("PVC") resins and compounds; the Company's aromatic chemical
products include cumene, phenol, acetone and alpha-methylstyrene ("AMS").
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 four locations, several
marketing organizations responsible for the sale of the Company's products, a
technical service laboratory and a purchasing organization responsible for the
acquisition of all major raw materials. At the Company's four manufacturing
locations, there are ten plants, six of which are located in Plaquemine,
Louisiana. The Company also owns an air separation plant located in Plaquemine,
Louisiana, which supplies all of the oxygen and nitrogen requirements for the
complex. The Company leases a cogeneration facility that supplies essentially
all of the electricity and steam requirements for the Plaquemine, Louisiana,
complex and also leases storage terminals and warehouses from which a portion of
its products are distributed to customers.
The Company's products are generally intermediate chemicals that are
sold for further processing into a wide variety of end-use applications. Some of
the more significant end-use markets include plastic piping, siding and window
frames made from PVC resins and compounds; bonding agents for wood products and
high quality plastics made from phenol; acrylic sheeting for automotive and
architectural products made from acetone; and MTBE, a gasoline additive produced
from methanol. The following percentages of sales were made in 1997 to
manufacturers in the following industries: 30% housing and construction, 25%
plastics and fibers, 21% solvents and chemicals, 14% consumer products, 3% pulp
and paper and 7% miscellaneous.
The Company's major capital projects during 1997 included the
completion of the expansions of the phenol/acetone and VCM plants in Plaquemine,
Louisiana; the completion of the air separation plant in Plaquemine, Louisiana;
and the completion of the second phase of the PVC compound expansion at Gallman,
Mississippi. The major planned capital expenditures for 1998 will be directed
toward certain environmental projects and increased efficiency of existing
operations.
In the commodity chemical industry, a company's cost position as well
as the balance of overall industry supply (i.e., capacity) and demand for
particular product lines significantly affect pricing of products, and
accordingly, the Company's earnings and cash flow. The Company has invested $608
million in the past five years to maintain, expand and/or improve the efficiency
of its operating facilities. Management believes that with its low-cost position
and integrated product lines, the Company is well-positioned to compete in its
various markets.
The Company's long-term strategy is to continue to concentrate its
efforts on products and services in the chemical and plastic industries,
particularly production additions or enhancements in its core product areas. The
Company will continue to make investments that will improve or maintain its
low-cost position, as well as selective and prudent capacity additions and
expansions, and will consider acquisitions, joint ventures or similar
transactions that management believes will promote profitable growth in present
and closely related product lines.
1
Electrochemical Products
Chlorine/Caustic Soda/Sodium Chlorate. The Company's facility at
Plaquemine, Louisiana, has the annual capacity to produce approximately 450
thousand tons of chlorine and 500 thousand tons of chlorine's co-product,
caustic soda, as well as 27 thousand tons of sodium chlorate.
The major raw materials for these products are salt and electric power.
The Company has a long-term lease on a salt dome near the Plaquemine, Louisiana,
facility with sufficient salt reserves to last over thirty years at current
rates of production. Electric power is the most significant cost component in
the production of chlorine, caustic soda and sodium chlorate. During 1997, the
Company completed the construction of a 250-megawatt cogeneration facility
located at the Plaquemine, Louisiana, complex, which supplies, under a long-term
lease agreement, essentially all the electricity and steam requirements for that
site. The primary cost component of producing electricity in the cogeneration
facility is natural gas.
Chlorine is used in the production of various chemicals, including
those used to make plastics and PVC resins. Other applications include water
purification, waste water disinfection, pulp and paper bleaching, agricultural
products, laundry aids and pharmaceuticals. In 1997, approximately 90 percent of
the Company's chlorine production was consumed by the Company in the production
of VCM, which was then used to produce PVC resins. 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 in chemical processes
where caustic soda 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.
Sodium chlorate is a key chemical used in the bleaching process for
pulp and paper and, to a lesser extent, as an ingredient in blasting agents,
explosives and solid rocket fuels.
Vinyl Chloride Monomer ("VCM"). The Company produces VCM at its
Plaquemine, Louisiana, complex. The major raw materials used to produce VCM are
purchased ethylene and Company-produced chlorine. The VCM plant's annual
capacity is approximately 1.6 billion pounds with the capability of also
producing an additional 400 million pounds of ethylene dichloride ("EDC"), the
precursor to VCM. Approximately 80 percent of the VCM production in 1997 was
used by the Company's PVC resins operations with the remainder being sold to
other PVC resins producers, particularly in the export market.
Polyvinyl Chloride ("PVC") Resins. The Company operates a world-scale
PVC resins plant in 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
approximately 1.12 billion pounds, of which approximately one-fourth was used
internally in 1997 to produce PVC compounds.
PVC resins are one of the most widely used plastics in the world today.
After being formulated to desired properties, PVC resins are heated and shaped
into finished products by various extrusion, calendaring and molding processes.
Applications are diverse and include pipe and fittings, window frames, siding,
flooring, shower curtains, packaging, bottles, film, medical tubing, business
machine housings and credit cards. Vinyl resins are also important to the
automotive industry for use in seats, trim, floormats and wire and cable
insulation.
Polyvinyl Chloride ("PVC") Compounds. The Company's PVC compounding
plants have an aggregate annual capacity of approximately 380 million pounds and
are located in Gallman, Mississippi, and Tiptonville, Tennessee. During the last
half of 1997, the Company completed the second phase of the PVC compound
expansion at Gallman, Mississippi.
2
PVC compounds are formulated to provide specific end-use properties
that allow the material to be processed directly into a finished product. All
sales of PVC compounds are to outside customers. The product line can be
segregated into four major product areas according to the following process
applications:
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 cosmetics, shampoos, charcoal lighter fluid, bottled
water and edible oils.
Injection Molding -- The Company supplies various PVC compounds, which
are used in the business machine market for computer housings and
keyboards. It also supplies PVC 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 PVC compounds for use in pipe fittings.
Extrusion -- The Company supplies extrusion markets, which have
applications in window and furniture profiles and extruded sheets for
household fixtures and decorative overlays. Extrusions are an
end-product for both pelletized and powder compounds.
Chlorinated Polyvinyl Chloride ("CPVC") -- The Company supplies
Protherm-Registered Trademark- CPVC compounds to the extrusion and
injection molding markets, mainly for pipe and pipe fittings.
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, one of the
world's largest, has an annual stated capacity of approximately 1.5 billion
pounds. Cumene is produced from benzene and propylene, which are purchased from
various suppliers in the surrounding area. Slightly more than 50 percent of the
Company's 1997 cumene output was consumed internally in the production of phenol
and its co-product, acetone, with the balance being sold into the merchant
market to other phenol and acetone manufacturers.
Phenol/Acetone. Phenol and acetone are produced at the Company's
Plaquemine, Louisiana, facility, which has approximately 500 million pounds of
annual phenol capacity and 308 million pounds of annual acetone capacity, as
well as at the Pasadena, Texas, facility, where annual capacity is 160 million
pounds of phenol and 100 million pounds of acetone. During 1997, the Plaquemine,
Louisiana, phenol/acetone plant was upgraded for product quality and expanded by
sixty million pounds of phenol and thirty-eight million pounds of acetone. The
Company does not consume any phenol or acetone internally.
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, electrical parts, nylon
carpeting, oil additives and pharmaceuticals. Phenol is also a precursor to high
performance plastics used in automobiles, household appliances, electronics and
protective coating applications.
The primary uses for acetone are as a key ingredient to methyl
methacrylate, which is used to produce acrylic sheeting, and as an ingredient
for 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.
As a result of the phenol/acetone manufacturing process, the Company
also produces and markets small amounts of a by-product, AMS, which is primarily
used as a polymer modifier and as a chemical intermediate.
3
Methanol
Methanol is produced at the Company's facility at Plaquemine,
Louisiana, which has an annual capacity of approximately 160 million gallons.
Natural gas represents the majority of the cost of the production of methanol.
The Plaquemine facility is in the center of Louisiana's oil and gas producing
region and has two separate pipeline systems delivering gas to the plant.
Natural gas is purchased by the Company under contracts at market prices from
both producers and gas pipeline suppliers.
A key use for methanol is in the production of methyl tertiary-butyl
ether, or MTBE, an additive that promotes cleaner burning gasoline 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.
Great River Oil & Gas Corporation
In July 1997, the Company completed the sale of certain oil and gas
properties representing substantially all of the assets of Great River Oil & Gas
Corporation ("GROG"), a subsidiary of the Company. Net proceeds from this sale
were $16,477,000, on which the Company recorded a pretax gain of $8,600,000
($5,300,000, net of income taxes). GROG is a small oil and gas exploration
company with activities centered in southern Louisiana. Historically, the
operating results for this subsidiary have not been material to the operating
results or financial condition of the Company.
Georgia-Pacific Contract
The Company has supply contracts, subject to certain limitations, for
substantial percentages of Georgia-Pacific's requirements for caustic soda,
methanol and phenol at prices approximating the market. These supply contracts
have various expiration dates (depending on the product) from 1998 through 2003
and may be extended year-to-year upon expiration. Total sales to Georgia-Pacific
for the years ended December 31, 1997, 1996 and 1995 amounted to approximately
12%, 15% and 14% of the Company's sales, respectively.
Marketing and Sales
The Company's marketing program is 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 15%, 12% and 15% of the
Company's net sales for the years ended December 31, 1997, 1996 and 1995,
respectively. The principal international markets served by the Company include
Canada, Mexico, Latin America, Europe and Asia.
The Company markets its products primarily to industrial customers. The
Company's products are sold by its sales force, which is organized by product
line. The sales organization, located predominantly in the southeastern and
midwestern United States, is supported by the Company's technical service staff.
Raw Materials
The most important raw materials purchased by the Company are natural
gas, ethylene, benzene, propylene, electricity and salt. Raw materials used for
production of the Company's products are usually purchased from various
suppliers at market prices under supply contracts, some of which are long-term
take or pay agreements. Since raw materials account for a significant portion of
the Company's total production cost, 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 industry capacity and market demand.
Additionally, due to the completion of the cogeneration plant in 1997, the
Company substantially increased its natural gas requirements. 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.
4
Competition
The Company experiences competition from numerous manufacturers in all
of its product lines. Some of 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 integrated product lines, the operational efficiency of its plants and
the location of its facilities near major water and/or rail transportation
terminals.
Employees
As of December 31, 1997, the Company had 1,041 full-time employees. The
Company has one collective bargaining agreement, which covered fifty-six
employees at the Tiptonville, Tennessee, facility as of December 31, 1997.
Environmental Regulation
The Company's operations are subject to increasingly stringent 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
hazardous waste, emissions into the air and discharges into surface and
underground waters, and the manufacture of chemical substances.
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 effect 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 therefore it is not possible to
accurately predict the aggregate cost of compliance resulting from any such
changes.
Year 2000 Conversion
The Company recognizes the need to ensure its operations will not be
adversely impacted by the year 2000 date conversion problem common in many
processing systems. Georgia Gulf's information processing systems are believed
to be year 2000 compliant. The Company continues to review and analyze other
areas with exposure to potential year 2000 risks, including operational process
control systems. Based upon current information, the Company believes all
significant software systems within its control will be year 2000 compliant by
the end of 1998. The costs associated with compliance with year 2000 conversion
are not expected to be material.
Forward-Looking Statements
This Form 10-K and other communications to stockholders, as well as
oral statements made by representatives of the Company, may contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to, among other things,
the Company's outlook for future periods, supply and demand, pricing trends and
market forces within the chemical industry, cost reduction strategies and their
results, planned capital expenditures, long-term objectives of management and
other statements of expectations concerning matters that are not historical
facts.
5
Predictions of future results contain a measure of uncertainty and,
accordingly, actual results could differ materially due to various factors.
Factors that could change forward-looking statements are, among others, changes
in the general economy, changes in demand for the Company's products or
increases in overall industry capacity that could affect production volumes
and/or pricing, changes and/or cyclicality in the industries to which the
Company's products are sold, availability and pricing of raw materials,
technological changes affecting production, difficulty in plant operations and
product transportation, governmental and environmental regulations and other
unforseen circumstances. A number of these factors are discussed in this Form
10-K.
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 PVC compound plants and the
purchase of the Bound Brook, New Jersey, phenol/acetone facility subsequently
relocated to Pasadena, Texas, and modernized in 1990. In 1996, the Company sold
its vinyl emulsion business including the property and buildings at the Delaware
City location. In 1997, the Company completed construction of cogeneration and
air separation plants in Plaquemine, Louisiana, in order to supply all of its
requirements for electricity, oxygen and nitrogen at that location. The
cogeneration plant is leased under an operating lease agreement. The Company
continues to explore ways to expand both its plant capacities and product lines.
The Company believes current and additional planned capacity will adequately
meet anticipated demand requirements. Average capacity utilization of the
Company's production facilities in 1997 was 93%.
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 operations, as of December 31, 1997:
Locations Products Annual Capacity
- --------- ------------ ----------------
Gallman, MS Polyvinyl Chloride Compounds 380 million pounds
Tiptonville, TN
Pasadena, TX Cumene 1.5 billion pounds
Phenol 160 million pounds
Acetone 100 million pounds
Plaquemine, LA Chlorine 450 thousand tons
Caustic Soda 500 thousand tons
Sodium Chlorate 27 thousand tons
Vinyl Chloride Monomer 1.6 billion pounds
Polyvinyl Chloride Resins 1.12 billion pounds
Phenol 500 million pounds
Acetone 308 million pounds
Methanol 160 million gallons
The Company's manufacturing facilities are located near major water
and/or rail transportation terminals, facilitating efficient delivery of raw
materials and prompt shipment of finished products. In addition, the Company has
a fleet of 2,348 railcars of which 713 are owned and the remainder leased
pursuant to operating leases with varying terms through the year 2010. The total
lease expense for the Company's railcars and other transportation equipment was
approximately $9,849,000 for 1997.
In October 1997, the Company began making lease payments under an
operating lease agreement for the 250-megawatt cogeneration facility at the
Company's Plaquemine, Louisiana, complex. The lease expense under the operating
lease agreement for 1997 was $3,025,000.
6
The Company leases office space for its principal executive offices in
Atlanta, Georgia, and for information services in Baton Rouge, Louisiana. Space
is leased for sales and marketing offices in Houston, Texas, Schaumburg,
Illinois, and Lawrenceville, New Jersey. Space for numerous storage terminals is
leased throughout the United States, and in the Netherlands, Canada and New
Zealand.
Item 3. LEGAL PROCEEDINGS .
The Company is a party to numerous individual and several class-action
lawsuits filed against the Company, among other parties, arising out of an
incident that occurred in September 1996 in which workers were exposed to a
chemical substance on the Company's premises in Plaquemine, Louisiana. The
substance was later identified to be a form of mustard agent, a chemical which
is not manufactured as part of the Company's ordinary operations and which
apparently resulted from the unexpected introduction into the Company's
feedstocks of one or more impurities from sources unknown.
The lawsuits are pending in the 18th Judicial District, Iberville
Parish. The Company has filed answers in the cases in which it has been served.
Discovery also has been served in the cases. All of the actions claim one or
more forms of compensable damages, including past and future lost wages and past
and future physical and emotional pain and suffering.
At the present time, the Company does not know, and it is not possible
to estimate, the number of persons making claims, the merit of any such claims,
the nature or extent of damages that will be sought, the defenses available to
the Company, or the liability of other persons, or to make a factual or legal
assessment of the Company's ultimate exposure. Notwithstanding the foregoing,
the Company believes it has meritorious defenses to the claims asserted and
intends to assert and pursue those defenses vigorously; further, the Company
believes any liability ultimately imposed would be covered by its liability
insurance.
In addition, the Company is subject to other claims and legal actions
that arise in the ordinary course of business. Management believes that the
ultimate liability, if any, with respect to these other claims and legal
actions, will not have a material effect on the financial position or on results
of operations of the Company.
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 1997.
7
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 Dividend Policy" and in Notes 6, 7, 8 and 16
of the "Notes to Consolidated Financial Statements" of the Company's 1997 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 "Ten-Year Selected
Financial Data" of the Company's 1997 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 1997 Annual Report to Stockholders is hereby
incorporated by reference herein in response to this item.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information for this item will be required for the Company
commencing in the fiscal year ending December 31, 1998, due to the Company's
market capitalization being below $2.5 billion.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information set forth on pages 23 through 37 of the Company's 1997
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.
8
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information set forth under the captions "Election of Directors"
and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held May 19, 1998,
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, 56, has served as Vice President Finance, Chief
Financial Officer and Treasurer of the Company since May 1989, and
prior thereto served as Corporate Controller from its inception.
Joel I. Beerman, 48, has served as Vice President, General Counsel 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.
Gary L. Elliott, 53, 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 from its inception until November 1985.
Mark J. Seal, 46, has served as Vice President, Polymer Group since
August 1993. Mr. Seal served as Business and Manufacturing Director --
PVC 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 from its inception until January 1987.
Thomas G. Swanson, 56, 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; as Director of Corporate Development for the
Company from July 1987; and prior thereto, was Manager -- Supply and
Distribution for the Company since its inception.
Executive officers are elected by, and serve at the pleasure of, the
Board of Directors.
9
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 19, 1998, 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 19, 1998, 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 1997, or for the period from January 1, 1998, to
the date of this report.
10
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 1997 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 23 through 37
of the Company's 1997 Annual Report to Stockholders:
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Income for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1997, 1996 and 1995
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 Schedule
The following financial statement schedule is for the years
ended December 31, 1997, 1996 and 1995:
II Valuation and Qualifying Accounts
Schedules other than the one listed above are omitted
because they are not required and 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.
11
The following exhibits are filed as part of this Form 10-K Annual Report:
EXHIBIT
NO. DESCRIPTION
-------- -----------
13 1997 Annual Report to Stockholders
21 Subsidiaries of the Registrant
23 Consent of Independent Public Accountants
The following exhibit is incorporated herein by reference to the Company's 1996
Form 10-K Annual Report filed March 28, 1997:
EXHIBIT
NO. DESCRIPTION
-------- -----------
10(i) Receivables Transfer Agreement dated December 4, 1996,
between the Company, as Transferor, and Dynamic Funding
Corporation.
The following exhibits are incorporated herein by reference to the Company's
1995 Form 10-K Annual Report filed March 28, 1996:
EXHIBIT
NO. DESCRIPTION
-------- -----------
The following exhibits relate to the Company's operating lease agreement
for its cogeneration project:
10(a) Trust Agreement dated February 6, 1996, between NationsBanc
Leasing Corporation of North Carolina and First Security
Bank of Utah, N.A.
10(b) Leasehold Mortgage, Assignment of Leases, Security Agreement
and Financing Statement dated February 16, 1996, between the
Company, First Security Bank of Utah, N.A., and Val T.
Orton.
10(c) Participation Agreement dated February 6, 1996, between the
Company, First Security Bank of Utah, N.A., NationsBanc
Leasing Corporation of North Carolina, NationsBank, N.A.
(South), ABN AMRO Bank N.V., Bank of Montreal, Bank of New
York, Bank of Nova Scotia, Bank of Tokyo Trust Company,
Chase Manhattan Bank, The Dai-Ichi Kangyo Bank, Limited,
Atlanta Agency, The Fuji Bank, Ltd., The Industrial Bank of
Japan, Limited, the Sakura Bank Limited, Atlanta Agency,
Rabobank Nederland, New York Branch, The Tokai Bank,
Limited, Atlanta Agency, Wachovia Bank of Georgia, N.A., and
Val T. Orton.
10(d) Lease Agreement (Tax Retention Operating Lease) dated
February 6, 1996, between the Company and First Security
Bank of Utah, N.A.
10(e) Credit Agreement dated February 6, 1996, between First
Security Bank of Utah, N.A. and NationsBank, N.A. (South).
12
10(f) Security Agreement dated February 6, 1996, between First
Security Bank of Utah, N.A., Val T. Orton, NationsBank, N.A.
(South), and NationsBanc Leasing Corporation of North
Carolina.
10(g) Ground Lease Agreement dated February 16, 1996, between the
Company and First Security Bank of Utah, N.A.
The following exhibit is incorporated herein by reference to the Company's Form
S-8 (File No. 33-64749) filed December 5, 1995:
EXHIBIT
NO. DESCRIPTION
-------- -----------
10 Georgia Gulf Corporation Employee Stock Purchase Plan
The following exhibit is incorporated herein by reference to the Company's Form
S-3 (File No. 33-63051) filed September 28, 1995:
EXHIBIT
NO. DESCRIPTION
-------- -----------
4 Indenture, dated as of November 15, 1995, between the
Company and LaSalle National Bank, as trustee (including
form of Notes).
The following exhibit is incorporated by reference to the Company's 1995 Form
10-Q Quarterly Report for the period ending June 30, 1995, filed August 2, 1995.
EXHIBIT
NO. DESCRIPTION
-------- -----------
10(i) Term Loan Agreement, dated June 29, 1995, between the
Company and The Industrial Bank of Japan, Limited as
Administrative Agent.
The following exhibit is incorporated by reference to the Company's 1995 Form
10-Q Quarterly Report for the period ending March 31, 1995, filed May 15, 1995.
EXHIBIT
NO. DESCRIPTION
-------- -----------
10 Credit Agreement, dated March 30, 1995, between the Company
and The Chase Manhattan Bank (National Association) as
Administrative Agent.
13
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
-------- -----------
3(a) Certificate of Amendment of 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 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(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 1997.
14
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 20, 1998 By: /s/ Jerry R. Satrum
-------------------- --------------------
Jerry R. Satrum,
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 Chief Executive Officer and Director March 20, 1998
(Principal Executive Officer)
/s/ Edward A. Schmitt
- -----------------------------
Edward A. Schmitt President, Chief Operating Officer March 20, 1998
and Director
/s/ Richard B. Marchese
- -----------------------------
Richard B. Marchese Vice President Finance, Chief Financial March 20, 1998
Officer and Treasurer (Principal Financial
and Accounting Officer)
/s/ James R. Kuse
- -----------------------------
James R. Kuse Chairman of the Board and Director March 20, 1998
/s/ John D. Bryan
- -----------------------------
John D. Bryan Director March 20, 1998
/s/ Dennis M. Chorba
- -----------------------------
Dennis M. Chorba Director March 20, 1998
/s/ Alfred C. Eckert III
- -----------------------------
Alfred C. Eckert III Director March 20, 1998
/s/ Robert E. Flowerree
- -----------------------------
Robert E. Flowerree Director March 20, 1998
/s/ Edward S. Smith
- -----------------------------
Edward S. Smith Director March 20, 1998
15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
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 12, 1998. Our audit was made for
the purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 of this Form 10-K is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states 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 LLP
Atlanta, Georgia
February 12, 1998
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SCHEDULE II --- VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Additions
-----------------------
Charged
Balance at Charged to to other Balance at
beginning costs and accounts-- Deductions end of
Description of period expenses describe --describe period
- ----------- --------- ----------- ---------- ----------- ----------
1995
Allowance for
doubtful accounts $2,400 $1,000 $-- $(1,000)(1) $2,400
------- ------ --- ----------- ------
------- ------ --- ----------- ------
1996
Allowance for
doubtful accounts $2,400 $ 300 $-- $(300)(1) $2,400
------- ------ --- ----------- ------
------- ------ --- ----------- ------
1997
Allowance for
doubtful accounts $2,400 $ 184 $-- $(184)(1) $2,400
------- ------ --- ----------- ------
------- ------ --- ----------- ------
NOTES:
(1) Accounts receivable balances written off during the period.
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION PAGE(1)
- ------- ------------ -------
13 1997 Annual Report to Stockholders ___
21 Subsidiaries of the Registrant ___
23 Consent of Independent Public Accountants ___
(1) Page numbers appear on the manually signed Form 10-K's only.