<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
------- OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
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 1-13404
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 22-3649282
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
LIBERTY LANE
HAMPTON, NEW HAMPSHIRE 03842
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (603) 929-2606
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 _____
================================================================================
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
FORM 10-Q
QUARTERLY PERIOD ENDED MARCH 31, 2000
INDEX
-----
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I. FINANCIAL INFORMATION:
<S> <C>
Item 1. Financial Statements
Consolidated Statements of Operations - Three Months
Ended March 31, 1999 and 2000............................................... 1
Consolidated Balance Sheets - December 31, 1999 and
March 31, 2000.............................................................. 2
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 1999 and 2000............................................... 3
Notes to Consolidated Financial Statements................................... 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................... 6
Item 3. Quantitative and Qualitative Disclosures about Market Risk............... 7
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K........................................ 8
SIGNATURES....................................................................... 9
EXHIBIT INDEX.................................................................... 10
EXHIBITS ....................................................................... 11
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1999 2000
---- ----
<S> <C> <C>
Net revenues......................................................... $ 61,472 $ 54,180
Cost of sales........................................................ 51,268 45,878
Selling, general and administrative expense.......................... 4,047 4,185
-------- ---------
Operating profit..................................................... 6,157 4,117
Interest expense..................................................... 2,526 3,881
Interest income...................................................... 280 306
Other expense, net................................................... 15 11
-------- ---------
Income before income taxes and minority interest..................... 3,896 531
Minority interest.................................................... 2,587 3,051
-------- ---------
Income (loss) before income taxes.................................... 1,309 (2,520)
Income tax provision (benefit)....................................... 330 (1,264)
-------- ---------
Net income (loss)....................................... $ 979 $ (1,256)
======== =========
</TABLE>
See the accompanying notes to consolidated financial statements.
-1-
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
ASSETS 1999 2000
---- ----
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................... $ 24,688 $ 26,233
Receivables, net............................................................ 57,970 54,148
Inventories................................................................. 25,291 26,089
Deferred income taxes....................................................... 6,089 6,089
Other current assets........................................................ 4,816 7,061
--------- ---------
Total current assets..................................................... 118,854 119,620
Property, plant and equipment, net................................................. 150,038 149,590
Other assets 22,322 22,918
--------- ---------
Total assets............................................................. $ 291,214 $ 292,128
========= =========
LIABILITIES AND EQUITY (DEFICIT)
Current liabilities:
Accounts payable............................................................. $ 27,625 $ 25,677
Accrued liabilities.......................................................... 31,778 32,616
--------- ---------
Total current liabilities................................................ 59,403 58,293
Long-term debt..................................................................... 150,919 150,845
Other liabilities.................................................................. 87,557 88,337
--------- ---------
Total liabilities........................................................ 297,879 297,475
Minority interest.................................................................. 42,079 44,684
--------- ---------
Equity (deficit):
Common Stock, $0.1 par value; authorized 1,000 shares; issued 1,000 shares
at March 31, 2000......................................................... -- --
Capital deficit.............................................................. (53,940) (53,885)
Accumulated other comprehensive income....................................... 36 (50)
Retained earnings............................................................ 5,160 3,904
---------- ---------
Total equity (deficit) .................................................. (48,744) (50,031)
---------- ---------
Total liabilities and equity (deficit)................................... $ 291,214 $ 292,128
========== =========
</TABLE>
See the accompanying notes to consolidated financial statements.
-2-
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------
1999 2000
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)..................................................... $ 979 $ (1,256)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization....................................... 4,243 4,976
Decrease in receivables............................................. 271 3,822
Decrease (increase) in inventories.................................. 3,259 (798)
Increase (decrease) in accounts payable............................. 1,558 (1,948)
Increase in accrued liabilities..................................... 619 838
Increase in other liabilities and assets, net....................... (490) (2,320)
Increase (decrease) in minority interest............................ 1,661 2,605
-------- --------
Net cash provided by operating activities....................... 12,100 5,919
-------- --------
Cash flows from investing activities:
Capital expenditures.................................................. (3,254) (4,429)
-------- --------
Net cash used for investing activities.......................... (3,254) (4,429)
-------- --------
Cash flows from financing activities:
Net transactions with The General Chemical Group Inc.................. (8,351) --
Other financing activities............................................ (373) 55
-------- --------
Net cash (used for) provided by financing activities............ (8,724) 55
-------- --------
Increase in cash and cash equivalents........................................ 122 1,545
Cash and cash equivalents at beginning of period............................. 1,127 24,688
-------- --------
Cash and cash equivalents at end of period................................... $ 1,249 $ 26,233
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................................ $ 1,616
Taxes .............................................................. $ --
</TABLE>
See the accompanying notes to consolidated financial statements.
-3-
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
General Chemical Industrial Products Inc. (the "Company" or "GCIP") is
a leading North American supplier of soda ash and calcium chloride to a broad
range of industrial and municipal customers. The primary end markets for soda
ash include glass production, sodium-based chemicals, powdered detergents, water
treatment and other industrial end uses. Calcium chloride is mainly used for
dust control and roadbed stabilization during the summer and melting ice during
the winter.
The Company is a wholly-owned subsidiary of The General Chemical Group Inc
("GCG"). The Company was formed on April 30, 1999 as part of the separation by
GCG of its Manufacturing and Performance Products business from its soda ash and
calcium chloride business through a distribution of stock of GenTek Inc.
("GenTek") to stockholders of GCG (the "Spinoff"). In connection with the
Spinoff, GCG transferred its soda ash and calcium chloride business to GCIP and
transferred its Manufacturing and Performance Products business to a
wholly-owned subsidiary, GenTek and distributed the stock of GenTek to
shareholders of GCG. On April 30, 1999, GCG and GenTek became separate
publicly-traded companies on the New York Stock Exchange. GCG continues to trade
using the GCG symbol. GCG owns and operates the Company, and GenTek owns and
operates the businesses comprising the Manufacturing and Performance Products
segments.
These unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. The financial
statements do not include certain information and footnotes required by
generally accepted accounting principles. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. The Company's
financial statements should be read in conjunction with the financial statements
and the notes thereto for the year ended December 31, 1999 included in the Form
10-K.
Certain prior-period amounts have been reclassified to conform with the
current-year presentation.
NOTE 2 - COMPREHENSIVE INCOME (LOSS)
Total comprehensive income (loss) is comprised of net income (loss) and
foreign currency translation gains and (losses). Total comprehensive income
(loss) for the three months ended March 31, 1999 and 2000 was $1,901 and
($1,340), respectively.
NOTE 3 - ADDITIONAL FINANCIAL INFORMATION
The components of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
---- ----
<S> <C> <C>
Raw materials...................................... $ 3,603 $ 1,978
Work in process.................................... 1,301 3,218
Finished products.................................. 12,704 12,756
Supplies and containers............................ 7,683 8,137
--------- --------
$ 25,291 $ 26,089
========= ========
</TABLE>
-4-
<PAGE>
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONCLUDED)
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 4 - RELATED PARTY TRANSACTIONS
MANAGEMENT AGREEMENT
The Company is party to a management agreement with Latona Associates
(which is controlled by a stockholder of the Company) under which the Company
receives corporate supervisory and administrative services and strategic
guidance for a quarterly fee. GCG's management fee is $146 and $386 for the
three months ended March 31, 1999 and 2000, respectively.
TRANSITION SUPPORT AGREEMENT
GCG and GenTek have entered into various transition agreements that
provide mechanisms for an orderly transition after the Spinoff. For the three
months ended March 31, 2000, GenTek charged GCG $477 related to these transition
agreements.
OTHER TRANSACTIONS
The Company continues to supply soda ash to GenTek. For the three
months ended March 31, 1999 and 2000, sales to GenTek amounted to $1,109 and
$1,183, respectively.
NOTE 5 - GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
TOTAL REVENUES OPERATING PROFIT
MARCH 31, MARCH 31,
-------- ---------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
United States............................. $ 47,337 $ 47,360 $ 5,664 $ 5,985
Foreign ................................. 21,933 14,080 493 (1,868)
Elimination .............................. (7,798) (7,260) -- --
-------- -------- ------- --------
$ 61,472 $ 54,180 $ 6,157 $ 4,117
======== ======== ======= ========
</TABLE>
-5-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially from
those set forth in the forward-looking statements. Certain factors that might
cause such a difference include those discussed in the section entitled
'Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Forward-Looking Statements' contained in the Company's Form 10-K
for the year ended December 31, 1999.
Financial Condition
- -------------------
March 31, 2000 Compared with December 31, 1999
- ----------------------------------------------
Cash and cash equivalents were $26.2 million at March 31, 2000 compared
with $24.7 million at December 31, 1999. During the first three months of 2000,
the Company generated cash flow from operating activities of $5.9 million, and
used cash of $4.4 million for capital expenditures.
The Company had working capital of $61.3 million at March 31, 2000 as
compared with $59.5 million at December 31, 1999. This increase in working
capital principally reflects higher cash balances and other current assets
partially offset by lower receivables.
Results of Operations
- ---------------------
March 31, 2000 Compared with March 31, 1999
- -------------------------------------------
Net revenues for the three month period ended March 31, 2000 decreased
$7.3 million to $54.2 million from $61.5 million in the comparable prior year
period. Net revenues were negatively affected by lower calcium chloride volumes
due to the warm winter weather as well as lower soda ash prices.
Gross profit for the three month period ended March 31, 2000 decreased
$1.9 million to $8.3 million from $10.2 million in the comparable prior year
period. Gross profit as a percentage of net revenues for the three month period
ended March 31, 2000 decreased to 15 percent from 17 percent for the same period
in 1999. These decreases were primarily due to the above-mentioned lower calcium
chloride volumes and lower soda ash prices, partially offset by lower operating
costs.
Selling, general and administrative expense as a percentage of net
revenues for the three month period ended March 31, 2000 increased to 8 percent
from 7 percent for the same period in 1999, primarily due to the decrease in net
revenues.
Interest expense for the three month period ended March 31, 2000
increased $1.4 million to $3.9 million, from $2.5 million in the comparable
prior year period. The increase is a result of the issuance of the Senior
Subordinated Notes and borrowings under the Credit Facility.
Minority interest for the three month period ended March 31, 2000
increased $0.5 million to $3.1 million from $2.6 million in the comparable prior
year period. The increase reflects higher earnings due to reductions in
operating costs, partially offset by lower soda ash prices at General Chemical
(Soda Ash) Partners.
Net loss was ($1.3) million for the three month period ended March 31,
2000, versus net income of $1.0 million for the comparable period in 1999, for
the foregoing reasons, net of available income tax benefits.
-6-
<PAGE>
ITEM 3. QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not expect to enter into financial instruments for
trading purposes. The Company anticipates periodically entering into interest
rate swap agreements to effectively convert all or a portion of its
floating-rate debt to fixed-rate debt in order to reduce its exposure to
movements in interest rates. Such agreements would involve the exchange of fixed
and floating interest rate payments over the life of the agreement without the
exchange of the underlying principal amounts. The Company also anticipates
periodically entering into currency agreements to partially reduce its exposure
to movements in currency exchange rates. Swap agreements will only be entered
into with strong creditworthy parties.
-7-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27.01 Financial Data Schedule
(b) No reports were filed on Form 8-K.
-8-
<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.
GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
-----------------------------------------
Registrant
<TABLE>
<S> <C> <C>
Date May 12, 2000 /s/ De Lyle W. Bloomquist
--------------------------- -------------------------
DE LYLE W. BLOOMQUIST
President and Chief Executive Officer
(Principal Executive Officer) and Director
Date May 12, 2000 /s/ David S. Graziosi
--------------------------- -----------------------------------------
DAVID S. GRAZIOSI
Vice President-Finance
(Principal Financial and Accounting Officer)
</TABLE>
-9-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
27 Financial Data Schedule..................................................... 11
</TABLE>
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Form 10-Q for the period
ended March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 001088382
<NAME> GENERAL CHEMICAL INDUSTRIAL PRODUCTS INC.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<CASH> 26,233
<SECURITIES> 0
<RECEIVABLES> 56,802
<ALLOWANCES> (2,654)
<INVENTORY> 26,089
<CURRENT-ASSETS> 119,620
<PP&E> 325,673
<DEPRECIATION> (176,083)
<TOTAL-ASSETS> 292,128
<CURRENT-LIABILITIES> 58,293
<BONDS> 150,845
0
0
<COMMON> 0
<OTHER-SE> (50,031)
<TOTAL-LIABILITY-AND-EQUITY> 292,128
<SALES> 54,180
<TOTAL-REVENUES> 54,180
<CGS> 45,878
<TOTAL-COSTS> 45,878
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,881
<INCOME-PRETAX> (2,520)
<INCOME-TAX> (1,264)
<INCOME-CONTINUING> (1,256)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,256)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
