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, 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: 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, 1997
CONTENTS
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 30, 1997 and December 31, 1996. . . . . . . . .1
Condensed Consolidated Statements of Operations -
Nine Months Ended September 30, 1997 and 1996 . . . . . .2
Condensed Consolidated Statement of Operations -
Three Months Ended September 30, 1997 and 1996. . . . .. .3
Condensed Consolidated Statement of Stockholders'
Equity - Nine Months Ended September 30, 1997 . . . . .. .4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997 and 1996 . . . . .. .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,
1997 1996
---------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 38,334 $ 24,097
Accounts receivable, net 23,775 28,934
Inventories 34,839 39,872
Prepaid expenses and other current assets 6,047 2,958
------- -------
Total Current Assets 102,995 95,861
Property, Plant and Equipment - Net 53,823 47,530
Other Assets 4,792 5,514
------- -------
$161,610 $148,905
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 14,863 $ 22,222
Accrued expenses 12,358 11,592
Income taxes payable 1,599 3,840
Current portion of long-term debt 1,411 1,389
------- -------
Total Current Liabilities 30,231 39,043
Long-Term Debt, Less Current Portion 77,680 71,496
Other Long-Term Liabilities 4,059 3,857
Deferred Taxes 4,080 2,554
Stockholders' Equity
Common stock, par value $0.01 per share;
100,000 shares authorized and outstanding 1 1
Additional paid-in capital 5,509 5,509
Retained earnings 40,050 26,445
------- ------
45,560 31,955
------- -------
$161,610 $148,905
======= =======
<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,
1997 1996
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<S> <C> <C>
Net Sales $170,736 $179,362
Cost of Goods Sold 128,728 130,553
------- -------
Gross Profit 42,008 48,809
Selling, general and administrative expenses 13,421 11,535
------- -------
Operating Income 28,587 37,274
Other income (expense):
Interest, net (4,985) (5,269)
Other, net 1 167
------- -------
Income Before Income Taxes 23,603 32,172
Provision for income taxes 8,873 11,623
------- -------
Net Income $ 14,730 $ 20,549
======= =======
<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,
1997 1996
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<S> <C> <C>
Net Sales $57,126 $68,885
Cost of Goods Sold 42,185 50,226
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Gross Profit 14,941 18,659
Selling, general, and administrative expenses 4,434 3,939
------- -------
Operating Income 10,507 14,720
Other income (expense):
Interest, net (1,378) (1,726)
Other, net (116) (9)
------- -------
Income Before Income Taxes 9,013 12,985
Provision for income taxes 3,329 4,961
------- -------
Net Income $ 5,684 $ 8,024
======= =======
<FN>
See notes to consolidated financial statements.
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<TABLE>
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, 1996 $1 $5,509 $26,445 $31,955
Net income -- -- 14,730 14,730
Dividends -- -- (1,125) (1,125)
-------- ---------- --------- -----------
Balance at
September 30, 1997 $1 $5,509 $40,050 $45,560
======== ========== ========= ==========
<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,
1997 1996
-------- --------
<S> <C> <C>
Net Cash Provided By Operating Activities $22,731 $16,873
Net Cash Used In Investing Activities (13,575) (5,051)
Financing Activities:
Repayment of long-term debt (1,044) (1,059)
Additions to Long-term debt 7,250 --
Dividends (1,125) (1,000)
------- --------
Net Cash Provided (Used)
By Financing Activities 5,081) (2,059)
Increase (Decreasr) In Cash 14,237 9,763
Cash At Beginning Of Period 24,097 5,652
-------- ---------
Cash At End Of Period $38,334 $15,415
======== =========
<FN>
See notes to consolidated financial statements.
</TABLE>
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GREAT LAKES CARBON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER, 30 1997
(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,
1997 1996
(In thousands)
------- -------
Raw materials $19,336 $26,377
Finished goods 9,573 8,534
Supplies and spare parts 5,930 4,961
------- -------
$34,839 $39,872
======= =======
Note 3: Inventories
Accrued expenses included interest payable of $1,695,000 and $3,370,000 at
September 30, 1997 and December 31, 1996, respectively.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended September 30, 1997 Compared to
Three Months Ended September 30, 1996.
The Company's net sales for the third quarter of 1997 decreased to $57.1
million from $68.9 million in the prior year's quarter. Anode grade CPC net
sales decreased to $46.0 million from $57.8 million, primarily as a result of
lower sales volume due in part to the timing of shipments as compared to the
prior year period and decreased selling prices. Industrial grade CPC net
sales increased to $10.7 million from $9.9 million, due to both increased
selling prices and higher sales volume.
Gross profit for the third quarter decreased to $14.9 million from $18.7
million in the prior year's quarter. The decrease in gross profit margin
was the result of the decrease in net sales which was partially offset by the
decrease in cost of sales. The lower cost of sales was mainly the result
of lower raw material costs.
Operating income for the third quarter decreased to $10.5 million from
$14.7 million in the prior year's quarter. The decrease in operating income
was the result of the reduced gross profit and an increase in selling, general
and administrative expenses to $4.4 million from $3.9 million, primarily
related to higher compensation and professional fee expenses.
Income before income taxes decreased to $9.0 million from $13.0 million in
in the prior year's quarter primarily as a result of the reduced operating
income.
Third quarter 1997 net income decreased to $5.7 million from $8.0 million
in the prior year's quarter, primarily due to the lower income before income
taxes described above.
Nine Months Ended September 30, 1997
Compared to Nine Months Ended September 30, 1996.
The Company's net sales for the nine months of 1997 decreased to $170.7
million from $179.4 million in the prior year period. Anode grade CPC net
sales decreased to $140.1 million from $147.5 million, primarily as a result
of decreased selling prices. Sales volume of anode grade CPC was essentially
unchanged from the prior year period. Industrial grade CPC net sales increased
to $29.2 million from $28.7 million, due primarily to increased selling prices.
Gross profit for the nine months decreased to $42.0 million from $48.8
million in the prior year period. The decrease in gross profit margin was the
result of the decrease in net sales which was partially offset by the decrease
in cost of sales. The lower cost of sales was mainly the result of lower raw
material costs.
Operating income for the nine months decreased to $28.6 million from $37.3
million in the prior year period. The decrease in operating income was the
result of the reduced gross profit and an increase in selling, general and
administrative expenses to $13.4 million from $11.5 million, primarily related
to higher compensation and professional fee expenses.
Income before income taxes decreased to $23.6 million from $32.2 million in
the prior year period, primarily as a result of the reduced operating income.
<PAGE>
Net income for the three quarters of 1997 decreased to $14.7 million from
$20.5 million in the prior year period, primarily due to the lower 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 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 1997 will be $23
million and include amounts for a major expansion of the Company's La Plata,
Argentina facility operated by its wholly-owned subsidiary, Copetro S.A. The
Company expects to meet its liquidity needs through cash from operations, its
revolving credit line and a credit facility arranged to finance the Copetro
expansion.
The revolving credit line referred to above provides for borrowings of up
to $15.0 million, including a $10.0 million sub-limit for letters of credit,
and is subject to borrowing base limitations. As of October 31, 1997, the
Company had no borrowings and outstanding letters of credit of $4.3 million
under this credit line.
<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, 1997.
<PAGE>
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: 10/31/97 /s/James D. McKenzie
-------- James D. McKenzie
President and Chief Executive Officer
Date: 10/31/97 /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-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 38,334
<SECURITIES> 0
<RECEIVABLES> 24,455
<ALLOWANCES> 680
<INVENTORY> 34,839
<CURRENT-ASSETS> 102,995
<PP&E> 137,838
<DEPRECIATION> 84,015
<TOTAL-ASSETS> 161,610
<CURRENT-LIABILITIES> 30,231
<BONDS> 77,680
0
0
<COMMON> 1
<OTHER-SE> 45,559
<TOTAL-LIABILITY-AND-EQUITY> 161,610
<SALES> 170,736
<TOTAL-REVENUES> 170,736
<CGS> 128,728
<TOTAL-COSTS> 128,728
<OTHER-EXPENSES> 340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,985
<INCOME-PRETAX> 23,603
<INCOME-TAX> 8,873
<INCOME-CONTINUING> 14,730
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,730
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
