<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
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 1-9753
--------------------
GEORGIA GULF CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 58-1563799
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 PERIMETER CENTER TERRACE, SUITE 595, ATLANTA, GEORGIA 30346
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (770) 395-4500
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 |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AS OF
CLASS MAY 11, 1999
----- ------------
<S> <C>
Common Stock, $0.01 par value..........................30,926,554 shares
</TABLE>
<PAGE>
GEORGIA GULF CORPORATION
FORM 10-Q
QUARTERLY PERIOD ENDED MARCH 31, 1999
INDEX
<TABLE>
<CAPTION>
PAGE
PART I. FINANCIAL INFORMATION NUMBERS
-------
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 1999
and December 31, 1998....................................................... 1
Condensed Consolidated Statements of Income for the Three
Months Ended March 31, 1999 and 1998........................................ 2
Condensed Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1999 and 1998........................................ 3
Notes to Condensed Consolidated Financial Statements as of
March 31, 1999.............................................................. 4-6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................... 7-9
Item 3. Quantitative and Qualitative Disclosures About Market Risk .................... 10
PART II.OTHER INFORMATION
Item 1. Legal Proceedings.............................................................. 11
Item 6. Exhibits and Reports on Form 8-K............................................... 11
SIGNATURES............................................................................. 12
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 1,500 $ 1,244
Receivables 64,253 61,203
Insurance receivable 33,311 9,030
Inventories 65,654 72,301
Prepaid expenses 2,922 3,562
Deferred income taxes 6,492 6,492
----------- -----------
Total current assets 174,132 153,832
----------- -----------
Property, plant and equipment, at cost 687,721 683,495
Less accumulated depreciation 293,225 282,346
----------- -----------
Property, plant and equipment, net 394,496 401,149
----------- -----------
Goodwill 84,534 85,154
----------- -----------
Other assets 32,672 29,626
----------- -----------
Total assets $ 685,834 $ 669,761
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 245,700 $ --
Accounts payable 69,664 66,459
Interest payable 4,178 2,272
Accrued compensation 4,612 6,814
Accrued pension 807 378
Other accrued liabilities 14,017 12,833
----------- -----------
Total current liabilities 338,978 88,756
----------- -----------
Long-term debt, net of current portion 224,925 459,475
----------- -----------
Deferred income taxes 92,770 92,649
----------- -----------
Stockholders' equity
Common stock - $0.01 par value 309 309
Additional paid-in capital 218 --
Retained earnings 28,634 28,572
----------- -----------
Total stockholders' equity 29,161 28,881
----------- -----------
Total liabilities and stockholders' equity $ 685,834 $ 669,761
----------- -----------
----------- -----------
Common shares outstanding 30,911,954 30,883,754
----------- -----------
----------- -----------
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 187,588 $ 232,705
------------ ------------
Operating costs and expenses
Cost of sales 165,932 187,699
Selling and administrative 10,342 10,745
------------ ------------
Total operating costs and expenses 176,274 198,444
------------ ------------
Operating income 11,314 34,261
Other income (expense)
Interest, net (7,323) (7,126)
------------ ------------
Income before income taxes 3,991 27,135
Provision for income taxes 1,457 10,179
------------ ------------
Net income $ 2,534 $ 16,956
------------ ------------
------------ ------------
Basic earnings per share $ 0.08 $ 0.52
------------ ------------
------------ ------------
Diluted earnings per share $ 0.08 $ 0.52
------------ ------------
------------ ------------
Weighted average common shares
Basic 30,898,728 32,438,607
------------ ------------
------------ ------------
Diluted 31,133,780 32,721,604
------------ ------------
------------ ------------
</TABLE>
2
<PAGE>
See notes to condensed consolidated financial statements.
3
<PAGE>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,534 $ 16,956
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 11,693 10,927
Change in operating assets, liabilities and other (18,641) 9,899
-------- --------
Net cash provided by (used in) operating activities (4,414) 37,782
-------- --------
Cash flows from financing activities:
Long-term debt proceeds 39,150 37,000
Long-term debt payments (28,000) (31,200)
Proceeds from issuance of common stock 218 981
Repurchase and retirement of common stock -- (30,884)
Dividends paid (2,472) (2,564)
-------- --------
Net cash provided by (used in) financing activities 8,896 (26,667)
-------- --------
Cash flows from investing activities:
Capital expenditures (4,226) (7,587)
-------- --------
Net change in cash and cash equivalents 256 3,528
Cash and cash equivalents at beginning of period 1,244 1,621
-------- --------
Cash and cash equivalents at end of period $ 1,500 $ 5,149
-------- --------
-------- --------
</TABLE>
4
<PAGE>
See notes to condensed consolidated financial statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included in the annual
report for the year ended December 31, 1998 for Georgia Gulf Corporation and its
subsidiaries (the "Company" or "Georgia Gulf").
Operating results for Georgia Gulf for the three-month period
ended March 31, 1999, are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
NOTE 2: NEW ACCOUNTING PRONOUNCEMENT
During June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Statement establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at its
fair value and that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows derivative gains and losses to offset
related results on the hedged item in the income statement, and requires that a
company must formally document, designate and assess the effectiveness of
transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal
years beginning after June 15, 1999, although earlier adoption is permitted.
SFAS No. 133 can not be applied retroactively. Management has not yet quantified
the impacts of adopting SFAS No. 133 on the Company's financial statements.
NOTE 3: INVENTORIES
The major classes of inventories were as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- -----------
<S> <C> <C>
Raw materials and supplies $29,198 $26,462
Finished goods 36,456 45,839
------- -------
$65,654 $72,301
------- -------
------- -------
</TABLE>
6
<PAGE>
NOTE 4: DERIVATIVE FINANCIAL INSTRUMENTS
Georgia Gulf has two interest rate swap agreements for a total
notional amount of $100,000,000 maturing in June 2002 to fix the interest rate
on a term loan. Also, the Company has an interest rate swap agreement for a
notional amount of $100,000,000 as a cash flow hedge for a cogeneration facility
operating lease agreement. This interest rate swap agreement will mature August
2002.
Georgia Gulf does not use derivatives for trading purposes.
Interest rate swap agreements, a form of derivative, are used by the Company to
manage interest costs on certain portions of the Company's long-term debt. These
financial statements do not reflect temporary market gains and losses on
derivative financial instruments. Amounts paid or received on the interest rate
swap agreements are recorded to interest expense as incurred. As of March 31,
1999, and December 31, 1998, interest rate swap agreements were the only form of
derivative financial instruments outstanding. The fair value of these swap
agreements as of March 31, 1999 and December 31, 1998 was a payable of
$3,796,000 and $6,412,000, respectively.
NOTE 5: EARNINGS PER SHARE
The numerator in basic and diluted earnings per share
computations is reported net income.
The following table reconciles the denominator for the basic and
diluted earnings per share computations shown on the condensed consolidated
statements of income (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1999 1998
------ ------
<S> <C> <C>
Weighted average common shares - basic 30,899 32,439
Plus incremental shares from
assumed conversions:
Options 134 261
Employee stock purchase plan rights 101 22
------ ------
Weighted average common shares - diluted 31,134 32,722
------ ------
------ ------
</TABLE>
7
<PAGE>
NOTE 6: SEGMENT INFORMATION
SFAS No. 131 - "Disclosures about Segments of an Enterprise and
Related Information" became effective for fiscal year 1998 and for all
succeeding interim reporting periods. In accordance with the requirements of
SFAS No. 131, the Company has identified three reportable segments through which
it conducts its operating activities: chlorovinyls, aromatics and gas chemicals.
These three segments reflect the organization used by Company management for
internal reporting. The chlorovinyls segment is a highly integrated chain of
products which includes chlorine, caustic soda, vinyl chloride monomer and vinyl
resins and compounds. The aromatics segment is also vertically integrated and
includes cumene and the co-products phenol and acetone. The third product
segment, gas chemicals, includes methanol.
Earnings of industry segments exclude interest income and
expense, unallocated corporate expenses and general plant services, provision
for income taxes, and income and expense items reflected as "other income
(expense)" on the Company's consolidated statements of income. Intersegment
sales and transfers are insignificant.
<TABLE>
<CAPTION>
CORPORATE
AND
GENERAL
CHLORO- GAS PLANT
(In thousands) VINYLS AROMATICS CHEMICALS SERVICES TOTAL
-------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
QUARTER ENDED MARCH 31, 1999
Net sales $120,808 $ 58,456 $ 8,324 $ -- $187,588
Operating income (loss) 11,893 6,649 (4,023) (3,205) 11,314
- -------------------------------------------------------------------------------------
QUARTER ENDED MARCH 31, 1998
Net sales $126,824 $ 88,562 $ 17,319 $ -- $232,705
Operating income (loss) 16,285 20,347 1,379 (3,750) 34,261
</TABLE>
NOTE 7: ACQUISITION
On May 11, 1998, the Company acquired all the issued and
outstanding common stock (the "Stock") of North American Plastics, Inc. ("North
American Plastics"), a privately-held manufacturer of flexible polyvinyl
chloride ("PVC") compounds with a production capacity of 190,000,000 pounds.
North American Plastics has two manufacturing locations in Mississippi, with
revenues for 1997 of approximately $90,000,000. Its PVC compounds are used in
wire and cable for construction, automobiles and appliances, as well as various
other consumer and industrial products.
The Stock was acquired in exchange for net cash consideration of
$99,902,000 plus the assumption of $500,000 in debt. The cash portion of the
acquisition was financed with proceeds from the Company's existing revolving
credit loan. The transaction was accounted for as a purchase and the
consideration exchanged exceeded the fair market value of the net tangible
assets of North American Plastics by approximately $87,000,000. This excess was
allocated to goodwill and is being amortized on a straight-line basis over a
period of 35 years. The results of operations of the acquired business have been
included in Georgia Gulf's condensed consolidated financial statements from the
date of acquisition.
8
<PAGE>
Pro forma results of operations have not been presented because the effect of
this acquisition was not significant.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
RESULTS OF OPERATIONS
INDUSTRY OVERVIEW
Georgia Gulf manufactures and markets products through two highly
integrated lines categorized as chlorovinyls and aromatic chemicals; and also a
third product line, methanol, a natural gas chemical. Georgia Gulf's chlorovinyl
products include chlorine, caustic soda, sodium chlorate, vinyl chloride monomer
("VCM"), and polyvinyl chloride ("PVC") resins and compounds; Georgia Gulf's
primary aromatic chemical products include cumene, phenol and acetone.
For chlorovinyls, increased domestic chlorine/caustic capacity,
together with weakness in the pulp and paper industry, has caused a significant
deterioration in caustic soda pricing. Georgia Gulf consumes most of its
chlorine capacity internally in the production of VCM, which is further
processed into PVC resins and compounds. The PVC resin market has begun to
tighten as increased demand for PVC resin has begun to absorb industry
overcapacity. Upward pricing trends are expected to continue as no new resin
capacity is expected for the next several years. The market demand for PVC
compounds, which are more specialized products, has remained strong in early
1999, benefitting from the continued good overall domestic business environment.
Aromatics industry operating rates were high in the early part of
1999. Although demand for phenol was strong due to continued strength in the
polycarbonate and phenolic resin markets, prices are declining in anticipation
of large capacity increases scheduled for 1999 and 2000. Prices for phenol's
co-product, acetone, have experienced downward pressure due to the industry's
high operating rates which has created an excess supply of acetone.
The methanol market continues to suffer from overcapacity as
significant increases in global supply have created an imbalance between supply
and demand. As a result, several domestic methanol producers, including Georgia
Gulf, have idled their methanol plants until such time as industry conditions
improve. While these shutdowns, which began in 1998, have resulted in a supply
contraction and an increase in spot prices during the first quarter of 1999,
several new overseas methanol plants are scheduled to start-up in 1999. This
additional supply will add further pressure on sales prices in the future.
FIRST QUARTER OF 1999 COMPARED WITH THE FIRST QUARTER OF 1998:
For the first quarter ended March 31, 1999, diluted earnings per
share were $0.08 on net income of $2.5 million and net sales of $187.6 million.
This compares with diluted earnings per share of $0.52, net income of $17.0
million and net sales of $232.7 million for the first quarter of 1998.
Operating income for the first quarter of 1999 was $11.3 million,
a decrease of 67 percent from $34.3 million for the same period in 1998. The
average sales price of Georgia Gulf's products declined 12 percent for the
period-to-period comparison as all products experienced lower pricing. Overall
sales volumes declined by 9 percent as maintenance turnarounds at the
chlorine/caustic soda and VCM plants during the first quarter of 1999 reduced
the products available for sale. The reduced production volumes related to the
maintenance turnarounds also resulted in higher fixed costs per unit which led
to a decline in the gross margin percentage, in spite of lower raw material
costs for the first quarter of 1999.
9
<PAGE>
In chlorovinyls, operating income for the first quarter of 1999
was $11.9 million, a decrease of 27 percent from $16.3 million for the same
period in 1998. This decrease was attributable to the maintenance turnarounds
and lower pricing throughout the chlorovinyl chain. This was partially offset by
improved results from vinyl resins and compounds and lower raw material costs in
the first quarter of 1999, as well as the impact of North American Plastics, a
manufacturer of flexible vinyl compounds which was acquired in May 1998.
Operating income from aromatics was $6.6 million for the first
quarter of 1999 compared to $20.3 million for the first quarter of 1998.
Although raw material costs were lower for the first quarter of 1999, this
benefit was more than offset by a significant decline in pricing, particularly
for phenol and acetone.
As a result of continued excess capacity and weakening demand in
the global methanol market, Georgia Gulf's methanol plant remained idle during
the first quarter of 1999. Georgia Gulf continues to supply customers with
purchased methanol. The operating loss for gas chemicals was $4.0 million for
the first quarter of 1999 compared with an operating profit of $1.4 million for
the same period last year. This loss is attributable to ongoing fixed costs
associated with the idled methanol plant and losses related to the buy/resell
program.
Interest expense increased to $7.3 million for the first quarter
of 1999, compared with $7.1 million for the same period in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Many of Georgia Gulf's commodity products are expected to face
continued pricing pressure during 1999. As management anticipates lower cash
flow from operations, investment in capital projects and stock repurchases will
be curtailed in order to maintain debt and available credit at manageable
levels. Management believes that cash provided by operations and the
availability under Georgia Gulf's revolving credit facility will provide
sufficient funds to support planned capital expenditures, dividends, working
capital fluctuations and debt service requirements.
For the three months ended March 31, 1999, Georgia Gulf used $4.4
million of cash flow for operating activities as compared with $37.8 million
generated during the three months ended March 31, 1998. The "change in operating
assets, liabilities and other" category for the first quarter of 1999 included
the payment of $24 million in litigation expenses which will be reimbursed by
Georgia Gulf's insurance carriers in the second quarter of 1999. Other
significant working capital changes included a reduction of inventory
attributable in large part to the maintenance turnarounds and an increase in
payables due to the timing of payments. Changes in working capital during the
first three months of 1998 were primarily attributable to a decrease in
inventories offset in part by a lower accounts payable balance and higher
accrued income taxes payable due to the timing of payments.
Debt increased by $11.2 million during the three months ended
March 31, 1999, to a level of $470.6 million. This increase resulted from a
timing issue related to the payment and reimbursement of certain litigation
expenses by Georgia Gulf's insurance carriers. Georgia Gulf had approximately
$120.0 million of availability under its $350.0 million revolving credit loan as
of March 31, 1999. The revolving credit loan is scheduled to mature March 30,
2000. Management does not anticipate any difficulty in refinancing this debt
before its maturity date.
Capital expenditures for the three months ended March 31, 1999
were down to $4.2 million as compared to $7.6 million for the same 1998 period.
Capital expenditures for 1999 will be directed toward certain environmental
projects and increased efficiency of existing operations. Georgia Gulf estimates
that total capital expenditures for 1999 will approximate $20.0 million.
10
<PAGE>
Georgia Gulf declared dividends of $0.08 per share or $2.5
million during the first quarter of 1999. As of March 31, 1999, Georgia Gulf had
authorization to repurchase up to 5.5 million shares under the current common
stock repurchase program.
YEAR 2000 COMPUTER SYSTEMS COMPLIANCE
Georgia Gulf has recognized the need to ensure its operations
will not be adversely impacted by the Year 2000 date conversion situation common
in many data processing systems. All of Georgia Gulf's financial reporting
systems have been acquired or developed within the past seven years. The
installation of these systems is complete, and testing indicates these systems
are Year 2000 compliant. Process control software also controls the operation of
many of Georgia Gulf's plants; this process control software was updated to Year
2000 compliant versions during 1998.
Georgia Gulf believes its remaining Year 2000 exposure exists
primarily in the areas of personal computers and with external partners. The
remaining exposure related to the personal computers will be addressed before
the end of the first half of 1999. Third parties critical to Georgia Gulf, both
suppliers and customers, were contacted during the first quarter of 1999 in
order to develop appropriate contingency plans, if necessary. The remaining Year
2000 conversion costs are not expected to be material.
FORWARD-LOOKING STATEMENTS
This form 10-Q and other communications to stockholders, as well
as oral statements made by representatives of Georgia Gulf, may contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements relate to, among other things,
Georgia Gulf's outlook for future periods, supply and demand, pricing trends and
market forces within the chemical industry, cost reduction strategies and their
results, planned capital expenditures, long-term objectives of management and
other statements of expectations concerning matters that are not historical
facts.
Predictions of future results contain a measure of uncertainty
and, accordingly, actual results could differ materially due to various factors.
Factors that could change forward-looking statements are, among others:
- - changes in the general economy;
- - changes in demand for Georgia Gulf's products or increases in overall
industry capacity that could affect production volumes and/or pricing;
- - changes and/or cyclicality in the industries to which Georgia Gulf's
products are sold;
- - availability and pricing of raw materials;
- - technological changes affecting production;
- - difficulty in plant operations and product transportation;
- - governmental and environmental regulations; and
- - other unforseen circumstances.
A number of these factors are discussed in this Form 10-Q and in
Georgia Gulf's other periodic filings with the Securities and Exchange
Commission, including Georgia Gulf's annual report on Form 10-K for the year
ended December 31, 1998.
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market
Risk.
For a discussion of certain market risks related to Georgia Gulf,
see Part I, Item 7A, "Quantitative and Qualitative Disclosures About Market
Risk", in the Company's Annual Report on Form 10-K for the year ended December
31, 1998. There have been no significant developments with respect to the
Company's exposure to market risk except for the change in the fair value of
interest rate swaps disclosed in note 4 to the financial statements included
herein.
12
<PAGE>
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings.
Georgia Gulf is a party to numerous individual and several
class-action lawsuits filed against Georgia Gulf, among other parties, arising
out of an incident that occurred in September 1996 in which workers were exposed
to a chemical substance on Georgia Gulf's premises in Plaquemine, Louisiana. The
substance was later identified to be a form of mustard agent, a chemical which
is not manufactured as part of Georgia Gulf's ordinary operations, but instead
occurred as a result of an unforeseen chemical reaction. Georgia Gulf presently
believes there are approximately 2,000 plaintiffs, of which approximately 650
are workers claiming to have been on-site at the time of the incident. All of
the actions claim one or more forms of compensable damages, including past and
future wages, past and future physical and emotional pain and suffering, and
medical monitoring. The lawsuits were originally filed in Louisiana State Court
in Iberville Parish.
In September 1998, the plaintiffs filed amended petitions that
added the additional allegations that Georgia Gulf had engaged in intentional
conduct against the plaintiffs. These additional allegations raised a coverage
issue under Georgia Gulf's general liability insurance policies. In December
1998, as required by the terms of the insurance policies, the insurers demanded
arbitration to determine whether coverage is required for the alleged
intentional conduct in addition to the coverage applicable to the other
allegations of the case. The date for the arbitration has not yet been
established.
As a result of the arbitration relating to the insurance issue,
as permitted by federal statute, the insurers removed the cases to United States
District Court in December 1998. By order entered March 2, 1999, the federal
court denied the plaintiff's motion to remand the cases back to state court and
retained federal jurisdiction.
Settlements have been reached with a majority of the original
workers, including those claimants believed to be the most severely injured, and
the settled cases have been or will be dismissed. Additionally, settlements have
been reached or are being negotiated with other parties named as defendants
whereby such parties have made, or are being requested to make, contributions to
the recoveries made by the plaintiffs. Negotiations for the resolution of the
remaining claims are continuing.
Notwithstanding the foregoing, Georgia Gulf is asserting and
pursuing defenses to the claims. Based on the present status of the proceedings,
Georgia Gulf believes the liability ultimately imposed will not have a material
effect on the financial position or on results of operations of Georgia Gulf.
In addition, Georgia Gulf is subject to other claims and legal
actions that may arise in the ordinary course of business. Management believes
that the ultimate liability, if any, with respect to these other claims and
legal actions, will not have a material effect on the financial position or on
results of operations of Georgia Gulf.
Item 6. Exhibits and Reports on Form 8-K.
a) No exhibits are required to be filed as part of this Form
10-Q.
b) No reports on Form 8-K were filed with the Securities and
Exchange Commission during the first quarter of 1999.
13
<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.
GEORGIA GULF CORPORATION
------------------------
(Registrant)
Date May 13, 1999 /s/ Edward A. Schmitt
------------------------------- ------------------------------
Edward A. Schmitt
President and Chief
Executive Officer
(Principal Executive Officer)
Date May 13, 1999 /s/ Richard B. Marchese
------------------------------- ----------------------------
Richard B. Marchese
Vice President Finance,
Chief Financial Officer and
Treasurer
(Principal Financial Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GEORGIA GULF
CORPORATION FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,500
<SECURITIES> 0
<RECEIVABLES> 99,964
<ALLOWANCES> 2,400
<INVENTORY> 65,654
<CURRENT-ASSETS> 174,132
<PP&E> 687,721
<DEPRECIATION> 293,225
<TOTAL-ASSETS> 685,834
<CURRENT-LIABILITIES> 338,978
<BONDS> 224,925
0
0
<COMMON> 309
<OTHER-SE> 28,852
<TOTAL-LIABILITY-AND-EQUITY> 685,834
<SALES> 187,588
<TOTAL-REVENUES> 187,588
<CGS> 165,932
<TOTAL-COSTS> 165,932
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,323
<INCOME-PRETAX> 3,991
<INCOME-TAX> 1,457
<INCOME-CONTINUING> 2,534
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
