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 JUNE 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 JUNE 30, 1997
CONTENTS
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Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996 . . . . . . . . . . . . . . . 1
Condensed Consolidated Statements of Operations -
Six Months Ended June 30, 1997 and 1996 . . . . . . . . . . . . . 2
Condensed Consolidated Statements of Operations -
Three Months Ended June 30, 1997 and 1996 . . . . . . . . . . . . 3
Condensed Consolidated Statement of Stockholders'
Equity - Six Months Ended June 30, 1997 . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 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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<TABLE>
GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
ASSETS
June 30, December 31,
1997 1996
---------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 27,770 $ 24,097
Accounts receivable, net 27,339 28,934
Inventories 34,798 39,872
Prepaid expenses and other current assets 7,421 2,958
------- -------
Total Current Assets 97,328 95,861
Property, Plant and Equipment - Net 50,541 47,530
Other Assets 5,004 5,514
------- -------
$152,873 $148,905
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 15,014 $ 22,222
Accrued expenses 12,325 11,592
Income taxes payable 1,189 3,840
Current portion of long-term debt 1,404 1,389
------- -------
Total Current Liabilities 29,932 39,043
Long-Term Debt, Less Current Portion 74,551 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 34,741 26,445
------- ------
40,251 31,955
------- -------
$152,873 $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>
Six Months Ended June 30,
1997 1996
------- -------
<S> <C> <C>
Net Sales $113,610 $110,477
Cost of Goods 86,543 80,327
------- -------
Gross Profit 27,067 30,150
Selling, general and administrative expenses 8,987 7,596
------- -------
Operating Income 18,080 22,554
Other income (expense):
Interest, net (3,607) (3,543)
Other, net 117 176
------- -------
Income Before Income Taxes 14,590 19,187
Provision for Income Taxes 5,544 6,662
------- -------
Net Income $ 9,046 $ 12,525
======= =======
<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 June 30,
1997 1996
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<S> <C> <C>
Net Sales $58,215 $58,299
Cost of Goods 44,307 42,794
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Gross Profit 13,908 15,505
Selling, general and administrative expenses 4,602 4,137
------- -------
Operating Income 9,306 11,368
Other income (expense):
Interest, net (1,740) (1,800)
Other, net 184 252
------- -------
Income Before Income Taxes 7,750 9,820
Provision for Income Taxes 3,052 3,310
------- -------
Net Income $ 4,698 $ 6,510
======= =======
<FN>
See notes to consolidated financial statements.
</TABLE>
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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 -- -- 9,046 9,046
Dividends -- -- (750) (750)
-------- ---------- --------- -----------
Balance at
June 30, 1997 $1 $5,509 $34,741 $40,251
========= ========== ========= ===========
<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>
Six Months Ended June 30,
1997 1996
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<S> <C> <C>
Net Cash Provided By Operating Activities $ 9,097 $ 1,642
Net Cash Used In Investing Activities (7,744) (2,903)
Financing Activities:
Repayment of long-term debt (180) (195)
Additions to long-term debt 3,250 --
Dividends (750) (500)
-------- --------
Net Cash Provided (Used) By Financing Activities 2,320 (695)
Increase (Decrease) In Cash 3,673 (1,956)
Cash At Beginning Of Period 24,097 5,652
-------- --------
Cash At End Of Period $27,770 $ 3,696
======== ========
<FN>
See notes to consolidated financial statements.
</TABLE>
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GREAT LAKES CARBON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June, 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:
June 30, December 31,
1997 1996
-------- -----------
(In thousands)
Raw materials $22,716 $26,377
Finished goods 6,395 8,534
Supplies and spare parts 5,687 4,961
------- -------
$34,798 $39,872
======= =======
Note 3: Accrued Expenses
Accrued expenses included interest payable of $3,370,000 at June 30, 1997
and December 31, 1996, respectively.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996.
- -----------------------------------------------------------------------------
The Company's net sales for the second quarter of 1997 were essentially
unchanged at $58.2 million compared to $58.3 million in the prior year's
quarter. Anode grade CPC net sales increased to $49.5 million from $49.2
million, primarily as a result of higher sales volume, which was partially
offset by decreased selling prices. Industrial grade CPC net sales remained
unchanged at $8.0 million as increased selling prices offset lower sales
volume.
Gross profit for the second quarter decreased to $13.9 million from $15.5
million in the prior year's quarter. The decrease in gross profit margin
was the result of the increase in cost of sales which more than offset the
increase in net sales. The higher cost of sales was mainly the result of
higher raw material costs.
Operating income for the second quarter decreased to $9.3 million from
$11.4 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 $4.6 million from $4.1 million, primarily
related to higher compensation and professional fee expenses.
Income before income taxes decreased to $7.8 million from $9.8 million in
the prior year's quarter primarily as a result of the reduced operating income
discussed above.
Second quarter 1997 net income decreased to $4.7 million from $6.5 million
in the prior year's quarter, primarily due to the lower income before income
taxes described above.
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996.
- -------------------------------------------------------------------------
The Company's net sales for the firt half of 1997 increased to $113.6
million from $110.5 million in the prior year period. Anode grade CPC net
sales increased to $94.1 million from $89.7 million, primarily as a result of
higher sales volume, which was partially offset by decreased selling prices.
Industrial grade CPC net sales decreased to $18.5 million from $18.7 million,
due to lower sales volume, which was partially offset by increased selling
prices.
Gross profit for the first half decreased to $27.1 million from $30.2
million in the prior year period. The decrease in gross profit margin was
the result of the increase in cost of sales which more than offset the
increase in net sales. The higher cost of sales was mainly the result of
higher raw material costs.
Operating income for the first half decreased to $18.1 million from $22.6
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 $9.0 million from $7.6 million, primarily related
to higher compensation and professional fee expenses.
Income before income taxes decreased to $14.6 million from $19.2 million in
the prior year period, primarily as a result of the reduced operating income
discussed above.
First half 1997 net income decreased to $9.0 million from $12.5 million in
the prior year period, primarily due to the lower income before income taxes
described above.
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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 total
$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 August 8, 1997, the
Company had no borrowings and outstanding letters of credit of $2.6 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 June 30, 1997.
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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: ____8/15/97_____ /s/James D. McKenzie
--------------------
James D. McKenzie
President and Chief Executive Officer
Date: ____8/15/97_____ /s/Ronald J. Statile
--------------------
Ronald J. Statile
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 27,770
<SECURITIES> 0
<RECEIVABLES> 28,178
<ALLOWANCES> 839
<INVENTORY> 34,798
<CURRENT-ASSETS> 97,328
<PP&E> 132,007
<DEPRECIATION> 81,466
<TOTAL-ASSETS> 152,873
<CURRENT-LIABILITIES> 29,932
<BONDS> 74,551
0
0
<COMMON> 1
<OTHER-SE> 40,250
<TOTAL-LIABILITY-AND-EQUITY> 152,873
<SALES> 113,610
<TOTAL-REVENUES> 113,610
<CGS> 86,543
<TOTAL-COSTS> 86,543
<OTHER-EXPENSES> 214
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,607
<INCOME-PRETAX> 14,590
<INCOME-TAX> 5,544
<INCOME-CONTINUING> 9,046
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,046
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
