UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
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: 33-98522
GREAT LAKES CARBON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3637043
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 East 59th Street, New York, New York 10022
(Address of principal executive office) (Zip Code)
(212) 527-3002
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ].
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GREAT LAKES CARBON CORPORATION
FORM 10-Q September 30, 1996
CONTENTS
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995. . . . . . . . .1
Condensed Consolidated Statements of Operations -
Nine Months Ended September 30, 1996 and 1995 . . . . . .2
Condensed Consolidated Statement of Operations -
Three Months Ended September 30, 1996 and 1995. . . . .. .3
Condensed Consolidated Statement of Stockholders'
Equity - Nine Months Ended September 30, 1996 . . . . .. .4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 . . . . .. .5
Notes to Condensed Consolidated Financial Statements. .. .6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . .. .7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . .. .9
Item 2. Changes in Securities . . . . . . . . . . . . . . . . .. .9
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . .. .9
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . .. .9
Item 5. Other Information . . . . . . . . . . . . . . . . . . . .9
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . .9
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GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
September 30, December 31,
1996 1995
---------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 15,415 $ 5,652
Accounts receivable, net 30,089 22,083
Inventories 32,963 26,171
Prepaid expenses and other current assets 3,819 3,264
------- -------
Total Current Assets 82,286 57,170
Property, Plant and Equipment - Net 48,483 50,255
Other Assets 5,902 6,505
------- -------
$136,671 $113,930
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 17,747 $ 15,779
Accrued expenses 11,042 9,877
Income taxes payable 3,339 3,097
Current portion of long-term debt 1,391 1,406
------- -------
Total Current Liabilities 33,519 30,159
Long-Term Debt, Less Current Portion 71,841 72,885
Other Long-Term Liabilities 3,129 2,898
Deferred Taxes 2,737 2,092
Stockholders' Equity
Common stock, par value $0.01 per share,
authorized,issued and outstanding 100,000 shares 1 1
Additional paid-in capital 5,509 5,509
Retained earnings 19,935 386
------- ------
25,445 5,896
------- -------
$136,671 $113,930
<FN>
See notes to consolidated financial statements.
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GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
<CAPTION>
Nine Months Ended September 30,
1996 1995
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<S> <C> <C>
Net Sales $179,362 $127,198
Cost of Goods 130,553 102,150
------- -------
Gross Profit 48,809 25,048
Selling, general and administrative expenses 11,535 6,675
------- -------
Operating Income 37,274 18,373
Other income (expense):
Interest, net (5,269) (763)
Asset utilization fee to parent -- (4,781)
Other, net 167 (483)
------- -------
(5,102) (6,027)
Income Before Income Taxes 32,172 12,346
Provision for income taxes 11,623 3,975
------- -------
Net Income $ 20,549 $ 8,371
<FN>
See notes to consolidated financial statements.
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GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands)
<CAPTION>
Three Months Ended September 30,
1996 1995
------- -------
<S> <C> <C>
Net Sales $68,885 $49,524
Cost of Goods Sold 50,226 37,805
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Gross Profit 18,659 11,719
Selling, general, and administrative expenses 3,939 2,331
------- -------
Operating Income 14,720 9,388
Other income (expense):
Interest, net (1,726) (226)
Asset utilization fee to parent -- (1,651)
Other, net (9) (675)
------- -------
(1,735) (2,552)
Income Before Income Taxes 12,985 6,836
Provision for income taxes 4,961 2,450
------- -------
Net Income $ 8,024 $ 4,386
<FN>
See notes to consolidated financial statements.
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GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS'EQUITY
(Unaudited)
(In thousands)
<CAPTION>
Additional Total
Common Paid-In Retained Stockholders'
Stock Capital Earnings Equity
-------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Balance at
December 31, 1995 $ 1 $ 5,509 $ 386 $ 5,896
Net income -- -- 20,549 20,549
Dividends paid -- -- 1,000 1,000
-------- ---------- --------- -----------
Balance at
September 30, 1996 $ 1 $ 5,509 $ 19,935 $ 25,445
<FN>
See notes to consolidated financial statements.
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GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Nine Months Ended September 30,
1996 1995
-------- --------
<S> <C> <C>
Net Cash Provided By Operating Activities $ 16,873 $ 8,116
Net Cash Used In Investing Activities (5,051) (3,600)
Net Cash Used By Financing Activities (2,059) (3,362)
Increase In Cash 9,763 1,154
Cash At Beginning Of Period 5,652 310
-------- --------
Cash At End Of Period $ 15,415 $ 1,464
<FN>
See notes to consolidated financial statements.
</TABLE>
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GREAT LAKES CARBON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER, 30 1996
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Article 10 of Regulation S-X and, therefore,
do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations, and cash flows
in conformity with generally accepted accounting principles. The information
furnished reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
summary of the results of operations.
Note 2: Inventories
Inventories are as follows:
September 30, December 31,
1996 1995
(In Thousands)
------- -------
Raw materials $20,518 $16,358
Finished goods 7,431 5,573
Supplies and spare parts 5,014 4,240
------- -------
$32,963 $26,171
Note 3: Accrued Expenses
Accrued expenses included interest payable of $1,708,000 and $359,000 at
September 30, 1996 and December 31, 1995, respectively.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended September 30, 1996 Compared to
Three Months Ended September 30, 1995.
The Company's net sales for the third quarter of 1996 increased to $68.9
million from $49.5 million in the prior year's quarter. Anode grade CPC net
sales increased to $57.8 million from $42.2 as a result of increased selling
prices that were partially offset by lower sales volume. Industrial grade CPC
net sales increased to $9.9 million from $6.7 million, due to both increased
selling prices and higher sales volume.
Gross profit for the third quarter increased to $18.7 million from $11.7
million in the prior year's quarter. The increase in gross profit margin
was the result of the increase in net sales which more than offset the
increase in cost of sales. The higher cost of sales was mainly the result
of higher raw material costs.
Operating income for the third quarter increased to $14.7 million from
$9.4 million in the prior year's quarter. The increase in operating income
was the result of the improved gross profit that was partially offset by an
increase in selling, general and administrative expenses to $3.9 million
from $2.3 million, primarily related to higher compensation, professional
fees and office overhead expenses.
Income before income taxes increased to $13.0 million from $6.8 million
in the prior year's quarter primarily as a result of the improvement in
operating income discussed above. Other expenses decreased to $1.7 million
from $2.5 million primarily due to a non-recurring relocation reserve booked
in the prior year's quarter. The other major components of other income
(expense) were essentially unchanged from the prior year's quarter since the
increase in net interest expense arising from the outstanding $65 million,
10% Senior Secured Notes, issued in December 1995, was offset by the effects
of the decrease in asset utilization fee to parent, which was terminated in
December 1995.
Third quarter 1996 net income increased to $8.0 million from $4.4 million
in the prior year's quarter, primarily due to the higher income before income
taxes described above.
Nine Months Ended September 30, 1996
Compared to Nine Months Ended September 30, 1995.
The Company's net sales for the nine months of 1996 increased to $179.4
million from $127.2 million in the corresponding period of 1995. Anode grade
CPC net sales increased to $147.5 million from $104.7 million, primarily as a
result of increased selling prices, which were partially offset by lower sales
volume. Industrial grade CPC net sales increased to $28.7 million from $20.5
million, due to both higher sales volume and increased selling prices.
Gross profit for the nine months increased to $48.8 million from $25.0
million in the prior year period. The increase in gross profit margin was
the result of the increase in net sales which more than offset the increase
in cost of sales. The higher cost of sales was mainly the result of higher
raw material costs.
<PAGE>
Operating income for the nine months increased to $37.3 million from $18.4
million in the prior year period. The increase in operating income was the
result of the improved gross profit that was partially offset by an increase
in selling, general and administrative expenses to $11.5 million from $6.7
million, primarily related to higher compensation, professional fees and
office overhead expenses.
Income before income taxes increased to $32.2 million from $12.3 million
in the prior year period primarily as a result of the improvement in operating
income discussed above. Other expense decreased to $5.1 million from $6.0
million primarily due to a non-recurring relocation reserve booked in the
prior year's period. The other major components of other income (expense)
were essentially unchanged from the prior year period since the increase in
net interest expense arising from the outstanding $65 million, 10% Senior
Secured Notes, issued in December 1995, was offset by the effects of the
decrease in asset utilization fee to parent, which was terminated in December
1995.
Net income for the nine months of 1996 increased to $20.5 million from $8.4
million in the prior year primarily due to the higher income before income
taxes described above.
Liquidity and Capital Resources
The Company's liquidity requirements are primarily for debt service,
capital expenditures and general working capital needs. The Company expects
to meet its liquidity needs through cash from operations and its revolving
credit facility. The timing of inventory receipts and product shipments, all
of which transactions are entirely U.S. dollar denominated, can have a
substantial impact on the Company's working capital requirements. Capital
investments generally relate to facility maintenance and projects to improve
plant throughput and product quality. It is anticipated that capital
investments for 1996 will be $6.0 million.
The $15.0 million revolving credit facility referred to above includes a
$10.0 million sub-limit for letters of credit and is subject to borrowing
base limitations. As of November 11, 1996, the Company had no borrowings and
outstanding letters of credit of $2.7 million under this facility.
<PAGE>
GREAT LAKES CARBON CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Change in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits:
Not applicable.
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K with the Commission
during the six months ended September 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT LAKES CARBON CORPORATION
Date: ___11/14/96_____ /s/James D. McKenzie
James D. McKenzie
President and Chief Executive Officer
Date: ___11/14/96_____ /s/Ronald J. Statile
Ronald J. Statile
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 15,415
<SECURITIES> 0
<RECEIVABLES> 31,145
<ALLOWANCES> 1,056
<INVENTORY> 32,963
<CURRENT-ASSETS> 82,286
<PP&E> 123,108
<DEPRECIATION> 74,625
<TOTAL-ASSETS> 136,671
<CURRENT-LIABILITIES> 33,519
<BONDS> 71,841
0
0
<COMMON> 1
<OTHER-SE> 25,444
<TOTAL-LIABILITY-AND-EQUITY> 136,671
<SALES> 179,362
<TOTAL-REVENUES> 179,362
<CGS> 130,553
<TOTAL-COSTS> 130,553
<OTHER-EXPENSES> 157
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,269
<INCOME-PRETAX> 32,172
<INCOME-TAX> 11,623
<INCOME-CONTINUING> 20,549
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,549
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
