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 MARCH 31, 1998
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 March 31, 1998
CONTENTS
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Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997 . . . . . . . . . . . . . . 1
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1998 and 1997. . . . . . . . . . . .2
Condensed Consolidated Statement of Stockholders'
Equity - Three Months Ended March 31, 1998. . . . . . . . . . . .3
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997. . . . . . . . . . . .4
Notes to Condensed Consolidated Financial Statements. . . . . . .5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . .6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . .. .7
Item 2. Changes in Securities . . . . . . . . . . . . . . . . .. .7
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . .. .7
Item 4. Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . . . . . . .7
Item 5. Other Information . . . . . . . . . . . . . . . . . . . .7
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . .7
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<TABLE>
GREAT LAKES CARBON CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<CAPTION>
March 31, December 31,
1998 1997
---------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 53,865 $ 43,596
Accounts receivable, net 33,566 29,908
Inventories 30,905 32,455
Prepaid expenses and other current assets 5,127 4,349
------- -------
Total Current Assets 123,463 110,308
Property, Plant and Equipment - Net 61,852 59,165
Other Assets 5,204 5,438
------- -------
$190,519 $174,911
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 16,890 $ 13,601
Accrued expenses 10,378 14,057
Income taxes payable 5,286 1,796
Current portion of long-term debt 1,427 1,419
------- -------
Total Current Liabilities 33,981 30,873
Long-Term Debt, Less Current Portion 87,010 82,595
Other Long-Term Liabilities 4,208 4,190
Deferred Taxes 4,814 4,814
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 54,996 46,929
------- ------
60,506 52,439
------- -------
$190,519 $174,911
======= =======
<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 March 31,
1998 1997
-------- --------
<S> <C> <C>
Net Sales $62,070 $55,395
Cost of Goods Sold 45,683 42,236
-------- --------
Gross Profit 16,387 13,159
Selling, general and administrative expenses 2,684 4,385
-------- --------
Operating Income 13,703 8,774
Other income (expense):
Interest, net (1,157) (1,867)
Other, net (72) (67)
-------- --------
(1,229) (1,934)
Income Before Income Taxes 12,474 6,840
Provision for income taxes 4,407 2,492
-------- --------
Net Income $ 8,067 $ 4,348
======== ========
<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, 1997 $1 $5,509 $46,929 $52,439
Net income -- -- 8,067 8,067
Dividends -- -- -- --
-------- ---------- --------- -----------
Balance at
March 31, 1998 $1 $5,509 $54,996 $60,506
======== ========== ========= ===========
<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>
Three Months Ended March 31,
1998 1997
--------- ---------
<S> <C> <C>
Net Cash Provided (Used)By Operating Activities $10,788 $(8,208)
Net Cash Used In Investing Activities (4,942) (3,651)
Financing Activities:
Repayment of long-term debt (97) (90)
Additions to Long-term debt 4,520 --
Dividends -- (375)
--------- ---------
Net Cash Provided (Used)
By Financing Activities 4,423 (465)
Increase (Decrease) In Cash 10,269 (12,324)
Cash At Beginning Of Period 43.596 24,097
--------- ---------
Cash At End Of Period $53,865 $11,773
========= =========
<FN>
See notes to consolidated financial statements.
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GREAT LAKES CARBON CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31,1998
(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:
March 31, December 31,
1998 1997
(In thousands)
------- -------
Raw materials $20,524 $18,483
Finished goods 4,327 7,821
Supplies and spare parts 6,054 6,151
------- -------
$30,905 $32,455
======= =======
Note 3: Accrued Expenses
Accrued expenses included interest payable of $1,923,000 and $3,467,000 at
March 31, 1998 and December 31, 1997, respectively.
Note 4: Subsequent Events
On April 22, 1998, the Company issued a press release announcing that the
Company had entered into an agreement with an affiliate of American Industrial
Partners providing for the acquisition (by merger) of the Company by a company
organized by American Industrial Partners. The foregoing is qualified in its
entirety by reference to such press release, which was filed with the Company's
report on Form 8-K on April 23, 1998.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to
Three Months Ended March 31, 1997.
The Company's net sales for the quarter ended March 31, 1998 increased 12.0%
to $62.1 million from $55.4 million in the prior year's quarter. Net sales of
anode grade CPC increased from $44.5 million to $52.5 million, primarily as a
result of an increase in sales volume, which was partially offset by decreased
selling prices. Net sales of industrial grade CPC decreased from $10.5 million
to $9.1 million, primarily due to reduced sales volume (resulting primarily
from the scheduling of greater anode grade CPC shipments in the current year
quarter), which was partially offset by increased selling prices.
Gross profit for the first quarter increased to $16.4 million from $13.2
million in the prior year's quarter. The increase in gross profit was due to
the increase in sales discussed above which was only partially offset by an
increase in cost of sales. The higher cost of sales was mainly the result of
higher sales volume as the average cost per ton decreased due primarily to a
decrease in raw material costs.
Operating income for the quarter increased 56.2% to $13.7 million from $8.8
million in the prior year period. The improvement in operating income was due
to the increase in gross profit discussed above coupled with a decrease in
selling, general and administrative expenses. The decrease in selling, general
and administrative expenses was primarily the result of decreased compensation
and professional fee expenses.
Income before income taxes increased 82.4% to $12.5 million from $6.8
million in the prior year period. The increase was attributable to the
improved operating income discussed above and a $0.7 million decrease in net
interest expense primarily due to increased interest income from larger cash
balances in the current year quarter. As a result of the factors discussed
above, net income for first quarter 1998 increased to $8.1 million from $4.3
million for the comparable period in 1997.
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 1998 will be $15 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 facility
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 April 24, 1998, the Company had
no borrowings and had outstanding letters of credit of $3.4 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 three months ended March 31, 1998.
<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: April 24, 1998 /s/James D. McKenzie
-------------- James D. McKenzie
President and Chief Executive Officer
Date: April 24, 1998 /s/Ronald J. Statile
-------------- Ronald J. Statile
Vice President and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 53,865
<SECURITIES> 0
<RECEIVABLES> 34,327
<ALLOWANCES> 761
<INVENTORY> 30,905
<CURRENT-ASSETS> 123,463
<PP&E> 150,456
<DEPRECIATION> 88,604
<TOTAL-ASSETS> 190,519
<CURRENT-LIABILITIES> 33,981
<BONDS> 87,010
0
0
<COMMON> 1
<OTHER-SE> 60,505
<TOTAL-LIABILITY-AND-EQUITY> 190,519
<SALES> 62,070
<TOTAL-REVENUES> 62,070
<CGS> 45,683
<TOTAL-COSTS> 45,683
<OTHER-EXPENSES> 88
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,157
<INCOME-PRETAX> 12,474
<INCOME-TAX> 4,407
<INCOME-CONTINUING> 8,067
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,067
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
