<PAGE>
<PAGE>
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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 SEPTEMBER 30, 1996
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
THE GENERAL CHEMICAL GROUP INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 02-0423437
(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)
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
--- ---
The number of shares of Common Stock outstanding at November 12, 1996 was
22,236,842.
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<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
FORM 10-Q
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statements of Operations - Three Months and
Nine Months Ended September 30, 1995 and 1996......................... 1
Consolidated Balance Sheets - December 31, 1995 and
September 30, 1996.................................................... 2
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1995 and 1996..................................... 3
Notes to the Consolidated Financial Statements......................... 4-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 9-10
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings............................................... 11
Item 6. Exhibits and Reports on Form 8-K................................ 12
SIGNATURES............................................................... 13
EXHIBIT INDEX............................................................ 14
EXHIBITS................................................................. 15-16
</TABLE>
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ----------------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues................................... $ 142,457 $ 161,967 $414,180 $ 466,668
Cost of sales.................................. 97,270 110,237 288,363 320,360
Selling, general and administrative expense.... 14,446 14,646 41,505 56,178
--------- --------- -------- ---------
Operating profit............................... 30,741 37,084 84,312 90,130
Interest expense............................... 6,637 5,640 20,097 18,349
Interest income................................ 700 486 2,196 1,758
Foreign currency transaction (gains) losses.... (793) 26 (1,549) (113)
Other (income) expense, net.................... (151) (174) (167) 234
--------- --------- -------- ---------
Income before income taxes and minority interest 25,748 32,078 68,127 73,418
Minority interest.............................. 5,725 8,265 14,928 23,034
--------- --------- -------- ---------
Income before income taxes .................... 20,023 23,813 53,199 50,384
Income tax provision........................... 7,397 9,179 19,919 19,392
--------- --------- -------- ---------
Net income ........................... $ 12,626 $ 14,634 $ 33,280 $ 30,992
========= ========= ======== =========
Earnings per common and common
equivalent share.............................. $ .64 $ .63 $ 1.69 $ 1.44
========= ========= ======== =========
Dividends declared per share................... $ .28 $ .05 $ .72 $ .075
========= ========= ======== =========
Weighted average common and common
equivalent shares outstanding................. 19,736,842 23,165,745 19,736,842 21,476,637
========== ========== ========== ==========
</TABLE>
See the accompanying notes to consolidated financial statements.
-1-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30
------------ ------------
1995 1996
---- ----
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents..................................... $ 19,025 $ 48,018
Receivables, net.............................................. 93,231 108,914
Inventories................................................... 41,970 37,527
Deferred income taxes......................................... 14,041 13,432
Other current assets.......................................... 1,485 1,665
--------- ---------
Total current assets...................................... 169,752 209,556
Property, plant and equipment, net................................. 215,557 228,992
Other assets .................................................... 46,016 38,216
--------- ---------
Total assets.............................................. $ 431,325 $ 476,764
========= =========
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:
Accounts payable.............................................. $ 50,987 $ 52,512
Accrued liabilities........................................... 83,018 77,775
Income taxes payable.......................................... 4,238 6,872
Current portion of long-term debt............................. 21,892 17,392
--------- ---------
Total current liabilities................................. 160,135 154,551
Long-term debt..................................................... 269,603 221,565
Other liabilities.................................................. 188,645 194,628
--------- ---------
Total liabilities......................................... 618,383 570,744
--------- ---------
Minority interest.................................................. 28,278 40,516
--------- ---------
Equity (deficit):
Preferred Stock, $.01 par value; authorized:
10,000,000 shares; none issued or outstanding................ -- --
Common Stock, $.01 par value; authorized:
50,000,000 and 100,000,000 shares at December 31, 1995
and September 30, 1996; issued and outstanding:
19,736,842 and 7,925,375 shares at December 31, 1995
and September 30, 1996....................................... 197 79
Class B Convertible Common Stock, $.01 par value;
authorized 40,000,000 shares; issued and outstanding:
14,311,467 shares at September 30, 1996...................... -- 143
Capital deficit............................................... (237,140) (185,632)
Foreign currency translation adjustments...................... (1,362) (1,379)
Retained earnings ............................................ 22,969 52,293
--------- ---------
Total equity (deficit).................................... (215,336) (134,496)
--------- ---------
Total liabilities and equity (deficit).................... $ 431,325 $ 476,764
========= =========
</TABLE>
See the accompanying notes to the consolidated financial statements.
-2-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................. $ 33,280 $ 30,992
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................... 21,584 22,393
Net (gain) loss on disposition of long-term assets.......... (203) 379
Unrealized exchange (gain) loss............................. (2,085) 3
Restricted unit plan costs.................................. -- 10,932
(Increase) in receivables................................... (8,115) (18,504)
Decrease in inventories..................................... 66 4,430
Increase (decrease) in accounts payable..................... (1,909) 1,536
(Decrease) in accrued liabilities........................... (2,979) (6,359)
Increase in income taxes payable............................ 1,456 2,646
Increase (decrease) in other assets and liabilities......... (1,669) 2,071
Increase in minority interest............................... 3,211 12,238
--------- ---------
Net cash provided by operating activities................. 42,637 62,757
--------- ---------
Cash flows from investing activities:
Capital expenditures........................................ (22,564) (35,580)
Repayment of related party loans ........................... -- 14,000
Proceeds from sales or disposals of long-term assets....... 351 312
--------- ---------
Net cash (used for) investing activities................. (22,213) (21,268)
--------- ---------
Cash flows from financing activities:
Net proceeds from initial public offering................... -- 40,600
Proceeds from long-term debt................................ 6,200 20,000
Repayment of long-term debt................................. (15,305) (72,538)
Dividends................................................... (14,250) (556)
--------- ---------
Net cash (used for) financing activities.................. (23,355) (12,494)
--------- ---------
Effect of exchange rate changes on cash.......................... 485 (2)
--------- ---------
Increase (decrease) in cash and cash equivalents................ (2,446) 28,993
Cash and cash equivalents at beginning of period................. 28,701 19,025
--------- ---------
Cash and cash equivalents at end of period....................... $ 26,255 $ 48,018
========= =========
Supplemental information:
Cash paid for income taxes.................................. $ 16,437 $ 14,729
========= =========
Cash paid for interest...................................... $ 20,451 $ 18,464
========= =========
</TABLE>
See the accompanying notes to the consolidated financial statements.
-3-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of The General Chemical Group Inc. and its subsidiaries (the "Company"). On May
13, 1996 the Company authorized 40,000,000 shares of Class B Common Stock, $.01
par value, which has ten votes per share, is subject to significant restrictions
on transfer and is convertible at any time into Common Stock on a
share-for-share basis. The Company also increased the amount of authorized
Common Stock to 100,000,000 shares. Upon the filing of the Company's Amended and
Restated Certificate of Incorporation with the Secretary of State of Delaware on
such date, all of the then outstanding 19,736,842 shares of Common Stock held by
the Company's existing stockholders were automatically converted into a like
number of shares of the newly created Class B Common Stock. The Common Stock and
Class B Common Stock are substantially identical, except for the disparity in
voting power, restriction on transfer and conversion provisions.
The accompanying unaudited consolidated financial statements have been
prepared by the Company 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 of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. The Company's financial statements should be read in
conjunction with the financial statements and the notes thereto included in The
Company's Final Prospectus dated May 15, 1996 as filed with the Securities and
Exchange Commission.
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
The computation of primary earnings per common and common equivalent
share for the three and nine months ended September 30, 1995 and 1996 is based
on the weighted average number of common shares outstanding during the period
and assumes the exercise of all stock options and restricted units using the
treasury stock method. Fully diluted earnings per common and common equivalent
share does not differ from primary earnings per common and common equivalent
share and is therefore not presented.
NOTE 2 - INITIAL PUBLIC OFFERING
On May 21, 1996, the Company and a principal stockholder (the "Selling
Stockholder") completed an initial public offering (the "Offering") of 7,925,375
shares of Common Stock at $17.50 per share. Of the shares offered, 2,500,000
were issued and sold by the Company. The net proceeds to the Company from the
Offering, after deducting underwriter's discount and related fees and expenses,
were approximately $40,600.
Contemporaneous with the Offering, the Selling Stockholder converted
5,425,375 shares of Class B Common Stock to 5,425,375 shares of Common Stock,
which were then sold in the Offering. The Company did not receive any of the
proceeds from the sale of such shares by the Selling Stockholder.
-4-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The Company has adopted a Restricted Unit Plan that authorizes the
issuance of 850,000 units, with each unit representing one share of Common Stock
to be issued to the participant upon the occurrence of certain conditions
("vesting") unless the participant elects to defer receipt thereof. All awards
are subject to a five year tiered vesting schedule under which a portion of each
participant's award vests annually over a five year period. Dividend equivalents
on outstanding units will accrue to the benefit of the participants and will be
paid at the time dividends are paid to Common Stock shareholders. These units
were awarded during the second quarter of 1996 replacing the rights earned by
participants beginning in 1989 under the Phantom Equity Plan and certain other
prior equity programs of the Company. These plans were then terminated. The
Company recorded a charge to income of $10,530 with a contra credit to capital
deficit, representing the amounts earned under the prior equity programs.
The Company has also adopted the 1996 Stock Option and Incentive Plan
which provides for the grant of awards covering a maximum of 2,200,000 shares of
Common Stock. During the second quarter of 1996, the Company granted 1,080,000
stock options which vest and are exercisable at the initial public offering
price of $17.50 per share on dates ranging from May 1997 through May 2006.
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Agreement
The Company is party to a management agreement with Latona Associates
Inc. (a management and advisory company which is controlled by a stockholder of
the Company). Pursuant to the agreement, the Company was charged $4,125 and
$4,217 for the nine months ended September 30, 1995 and 1996, respectively, for
corporate supervisory and administrative services and strategic advice and
guidance. The management agreement expires on December 31, 2004.
Notes Receivable
In 1994, the Company advanced $5,000 and $9,000, respectively, to a
stockholder and a former stockholder of the Company in the form of promissory
notes. During 1996 the promissory notes were prepaid in full.
NOTE 4 - ADDITIONAL FINANCIAL INFORMATION
The components of inventories were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
------------ -------------
1995 1996
---- ----
(unaudited)
<S> <C> <C>
Raw materials....................................... $ 10,447 $ 9,269
Work in process..................................... 4,602 6,024
Finished products................................... 19,061 14,444
Supplies and containers............................. 7,860 7,790
------- --------
$41,970 $ 37,527
======= ========
</TABLE>
-5-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MATURITIES DECEMBER 31, SEPTEMBER 30,
---------- ------------ -------------
1995 1996
---- ----
(unaudited)
<S> <C> <C> <C>
GCC Debt:
Bank Term Loan - floating rate............ 1996-2001 $100,000 $ 86,957
Senior Subordinated Notes - 9.25%......... 2003 100,000 100,000
Canada Senior Notes - 9.09%............... 1999 52,000 52,000
U.S. Revolving Credit Facility
- floating rate.......................... 1999 21,000 --
Toledo Debt:
Bank Term Loan - floating rate............ 1996-1998 8,250 --
Revolving Credit Facility - floating rate. 1998 3,300 --
PDI Debt:
Bank Term Loan - floating rate............ 1996-1998 6,945 --
-------- --------
Total Debt................................ 291,495 238,957
Less: Current Portion.................... 21,892 17,392
-------- ---------
Net Long-Term Debt........................ $269,603 $ 221,565
======== =========
</TABLE>
NOTE 6 - DIVIDENDS
On September 18, 1996, the Company's Board of Directors declared a
quarterly cash dividend of $.05 per share, payable October 17, 1996, to
shareholders of record on October 3, 1996.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Richmond Works July 26, 1993 Incident. On July 26,1993 a pressure relief
device on a railroad tank car containing oleum that was being unloaded at the
Company's Richmond, California, facility, ruptured during the unloading process,
causing the release of a significant amount of sulfur trioxide. Approximately
150 lawsuits seeking substantial amounts of damages were filed against the
Company on behalf of in excess of 60,000 claimants in municipal and superior
courts of California and in federal court. All state court cases were
coordinated before a coordination trial judge in Contra Costa County Superior
Court. The federal court cases were stayed until completion of the state court
cases.
On November 22, 1995, the court approved a comprehensive settlement
agreement pursuant to which the Company, with funds to be provided by its
insurers pursuant to the terms of the Company's insurance policies agreed to
make available a maximum of $180,000 to implement the settlement.
-6-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The settlement agreement provides, among other things, that while
claimants may "opt out" of the compensatory damages portion of the settlement
and pursue their own case separate and apart from the class settlement
mechanism, they have no right to opt out of the punitive damages portion of the
settlement. Consequently, under the terms of the settlement, no party may seek
punitive damages from the Company outside of those provided by the settlement.
The deadline for claimants electing to opt out of the compensatory damages
portion of the settlement was October 5, 1995. Fewer than 3,000 claimants, which
constitutes approximately 5 percent of the total number of claimants, have
elected to so opt out.
Under the terms of the settlement agreement, settling claimants may
receive payment of their claims prior to the resolution of any appeal of the
settlement upon providing, among other things, a signed release document
containing language which fully releases the Company from any further claims,
either for compensatory or punitive damages, arising out of the July 26, 1993
incident. Plaintiffs' liaison counsel are currently undertaking to obtain signed
releases from the approximately 95 percent of claimants who have elected to
participate in the settlement.
Notices of appeal of all or portions of the settlement approved by the
court were filed by five law firms representing approximately 2,750 claimants,
with approximately 2,700 of these claimants represented by the same law firm.
Based on papers filed by the appellants in the California Court of Appeals, the
primary grounds for the appeal were that the settlement is not "fair, reasonable
and adequate" under California law, that the trial court erred in certifying a
class action for purposes of settlement and in certifying a mandatory punitive
damage class, that the trial court awarded excessive attorneys' fees to the
plaintiffs' management committee and plaintiffs' class counsel, that the trial
court exceeded its authority in reducing contingent fees payable to attorneys
for representing individual claimants, and that the trial court erroneously
applied a state statute that governs unclaimed residuals remaining from class
action settlements.
On May 8, 1996, the California Court of Appeals dismissed each of the
appeals that have been filed challenging the trial court's approval of the class
action settlement. The Court of Appeals dismissed the appeal relating to the
trial court's rulings on plaintiffs' attorney's fees on the ground that the
appealing attorneys lacked standing to appeal. The Court of Appeals also
dismissed each of the other pending appeals ruling that the trial court's orders
and rulings approving the settlement were not presently appealable, if at all,
by the appealing claimants since they had all elected to opt out of the
settlement. The appealing attorneys and some of the appealing claimants then
filed a petition for review with the California Supreme Court which on August
15, 1996 elected not to review the Court of Appeals' decision. Notwithstanding
this decision, it is possible that one or more of the appealing claimants, once
their cases are finally litigated through trial, may attempt to refile all or a
portion of the appeals that have now been dismissed.
-7-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONCLUDED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
While there can be no assurances regarding how the California Supreme
Court might rule in the event of such a refiling, the Company believes that the
settlement will be upheld on appeal. If the settlement is upheld on appeal, the
Company believes that any further liability in excess of the amounts made
available under the settlement agreement will not exceed the available insurance
coverage, if at all, by an amount that could be material to its financial
condition or results of operations. In the event of a reversal or modification
of the settlement on appeal, with respect to lawsuits by any then remaining
claimants (opt-outs and settling claimants who have not signed releases) the
Company believes that, whether or not it elects to terminate the settlement in
the event it is overturned or modified on appeal, it will have adequate
resources from its available insurance coverage to vigorously defend these
lawsuits through their ultimate conclusion, whether by trial or settlement.
However, in the event the settlement is reversed or modified on appeal, there
can be no assurance that the Company's ultimate liability resulting from the
July 26, 1993 incident would not exceed the available insurance coverage by an
amount which could be material to its financial condition or results of
operations, nor is the Company able to estimate or predict a range of what such
ultimate liability might be, if any.
-8-
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
September 30, 1996 Compared with December 31, 1995
Financial Condition
Cash and cash equivalents were $48.0 million at September 30, 1996 as
compared with $19.0 million at December 31, 1995. During the first nine months
of 1996 the Company generated cash flow from operating activities of $62.8
million, received proceeds from the initial public offering of $40.6 million,
received $14.0 million from the repayment of related party loans and used cash
of $52.5 million for net repayment of long-term debt and $35.6 million for
capital expenditures.
The Company had working capital of $55.0 million at September 30, 1996
as compared with $9.6 million at December 31, 1995. This increase in working
capital reflects higher cash and accounts receivable coupled with lower accrued
liabilities and current portion of long-term debt, partially offset by higher
income taxes payable and lower inventory balances.
Results of Operations
Net revenues for the three and nine month periods ended September 30,
1996 increased 14 percent and 13 percent to $162.0 million and $466.7 million,
respectively, from $142.5 million and $414.2 million for the comparable periods
in 1995. The increase in both periods is the result of increases in both the
Chemical and Manufacturing Segments. The increase in the Chemical Segment for
both periods is primarily due to favorable soda ash pricing, as well as
continued performance improvements in all other product lines. The increase for
both periods in the Manufacturing Segment reflects higher volumes and product
mix improvements.
Gross profit for the three and nine month periods ended September 30,
1996 increased 14 percent and 16 percent to $51.7 million and $146.3 million,
respectively, from $45.2 million and $125.8 million for the comparable prior
year periods.
Gross profit as a percentage of sales remained constant at 32 percent for
the three months ended September 30, 1995 and 1996 with favorable soda ash
pricing being offset by higher manufacturing expenses. Gross profit as a
percentage of sales for the nine months ended September 30, 1996 increased to 31
percent from 30 percent for the same period in 1995. Favorable soda ash pricing
and product mix improvement, partially offset by higher manufacturing expenses,
account for this improvement.
Selling, general and administrative expense as a percentage of net
revenues was 9 percent and 12 percent for the three and nine month periods ended
September 30, 1996, respectively, versus 10 percent for both comparable prior
year periods. The increase over the prior year for the nine month period is due
to the recording of a one-time charge of $12.5 million related primarily to a
new Restricted Unit Plan created by the Company which replaces certain prior
equity programs. The decrease for the three month period ended September 30,
1996 was due to the higher sales level.
Interest expense for the three and nine month periods ended September 30,
1996 was $5.6 million and $18.3 million, respectively, which was $1.0 million
and $1.7 million lower, respectively, than the comparable prior year levels as a
result of lower outstanding debt balances.
Interest income for the three and nine month periods ended September 30,
1996 was $1.8 million and $.5 million, respectively, which approximated the
prior year levels.
-9-
<PAGE>
<PAGE>
The foreign currency transaction (gains) losses for the three and nine
month periods ended September 30, 1996 were $.03 million and $(.1) million,
respectively, versus gains of $(.8) million and $(1.6) million for the
comparable periods in 1995, principally due to the impact of exchange rate
fluctuations on a $52 million U.S. denominated loan of the Company's Canadian
subsidiary. The impact of these foreign currency transaction gains on this loan
is noncash.
Minority interest for the three and nine month periods ended September
30, 1996 was $8.3 million and $23.0 million, respectively, versus $5.7 million
and $14.9 million for the comparable periods in 1995. The increase in both
periods reflect the higher earnings of General Chemical (Soda Ash) Partners.
Net income was $14.6 million and $31.0 million for the three and nine
month periods ended September 30, 1996, respectively, versus $12.6 million and
$33.3 million for the comparable periods in 1995, for the foregoing reasons and
in particular, the one-time charge related to the Restricted Unit Plan for the
nine months ended September 30, 1996.
-10-
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The following developments have occurred with respect to this matter
since the filing of the Company's Quarterly Report on Form 10-Q for the period
ended June 30, 1996:
Richmond Works July 26, 1993 Incident. In connection with efforts by
plaintiffs' liaison counsel to obtain signed releases from the approximately 95
percent of claimants who have elected to participate in the settlement, as of
September 30, 1996 the Company had already received releases from approximately
94 percent of the settling claimants. Final payments to the plaintiffs'
management committee on behalf of these settling claimants have been made with
funds provided principally by the Company's insurers pursuant to the terms of
the insurance policies described in the Company's Final Prospectus, and further
payments will be made as additional releases are received and reviewed.
With respect to the notices of appeal of all or portions of the
settlement approved by the court which have been filed by five law firms
representing approximately 2,750 claimants (2,700 represented by the same law
firm), these claimants have not specified the amount of their claims in court
documents, although the Company believes that their alleged injuries are no
different in nature or extent than those alleged by the settling claimants.
Based on papers filed by the appellants with the California Court of Appeals,
the primary grounds for appeal were that the settlement is not "fair, reasonable
and adequate" under California law, that the trial court erred in certifying a
class action for purposes of settlement and in certifying a mandatory punitive
damage class, that the trial court awarded excessive attorneys' fees to the
plaintiffs' management committee and plaintiffs' class counsel, that the trial
court exceeded its authority in reducing contingent fees payable to attorneys
for representing individual claimants, and that the trial court erroneously
applied a state statute that governs unclaimed residuals remaining from class
action settlements.
On May 8, 1996, the California Court of Appeals dismissed each of the
appeals that had been filed challenging the trial court's approval of the class
action settlement. The Court of Appeals dismissed the appeal relating to the
trial court's rulings on plaintiffs' attorneys' fees on the ground that the
appealing attorneys lacked standing to appeal. The Court of Appeals also
dismissed each of the other pending appeals ruling that the trial court's orders
and rulings approving the settlement were not presently appealable, if at all,
by the appealing claimants since they had all elected to opt out of the
settlement. The appealing attorneys and some of the appealing claimants filed a
petition for review with the California Supreme Court which on August 15, 1996
elected not to review the court of Appeals' decision. Notwithstanding this
decision, it is possible that one or more of the opt-out claimants, once their
opt-out cases are finally litigated through trial, may attempt to refile all or
a portion of the appeals that have now been dismissed.
For additional information, refer to the Company's Final Prospectus dated
May 15, 1996 and Quarterly Report on Form 10-Q for the quarter ended June 30,
1996 as filed with the Securities and Exchange Commission.
-11-
<PAGE>
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
(11) Computation of Earnings per Common and Common Equivalent Share.
(27) Financial Data Schedule
b) No report on Form 8-K has been filed during the period covered by
this report.
-12-
<PAGE>
<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.
THE GENERAL CHEMICAL GROUP INC.
-------------------------------
(Registrant)
Date November 11, 1996 /s/Richard R. Russell
----------------------- ---------------------------------
RICHARD R. RUSSELL
Director, President and Chief Executive
Officer (Principal Executive Officer)
Date November 11, 1996 /s/Ralph M. Passino
----------------------- ---------------------------------
RALPH M. PASSINO
Vice President and Chief Financial Officer
(Principal Financial Officer)
-13-
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
<S> <C> <C>
11 Computation of Net Earnings per Common and 15
common equivalents shares for the three and nine
months ended September 30, 1995 and 1996
27 Financial Date Schedule (EDGAR filings only) 16
</TABLE>
-14-
<PAGE>
<PAGE>
EXHIBIT 11
THE GENERAL CHEMICAL GROUP INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
Earnings per share were calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ -----------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Primary
Total income used for primary
earnings per share........................... $ 12,626 $ 14,634 $ 33,280 $ 30,992
======== ======== ======== ========
Weighted average common shares
outstanding.................................. 19,737 22,237 19,737 20,996
Weighted average common
equivalents shares........................... -- 929 -- 480
-------- -------- -------- --------
Weighted average common and
common equivalent shares..................... 19,737 23,166 19,737 21,476
======== ======== ======== ========
Primary earnings per common share
and common equivalent share ................. $ .64 $ .63 $ 1.69 $ 1.44
======== ======== ======== ========
Fully Diluted
Total income used for fully diluted
earnings per share........................... $ 12,626 $ 14,634 $ 33,280 $ 30,992
======== ======== ======== ========
Weighted average common shares
outstanding.................................. 19,737 22,237 19,737 20,996
Weighted average common
equivalent shares............................ -- 1,009 -- 572
-------- -------- -------- --------
Weighted average common and
common equivalent shares..................... 19,737 23,246 19,737 21,568
======== ======== ======== ========
Fully diluted earnings per common share
and common equivalent share.................. $ .64 $ .63 $ 1.69 $ 1.44
======== ======== ======== ========
</TABLE>
-15-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from Form 10-Q for
the period ended September 30, 1996 and is
qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<PERIOD-TYPE> 9-MOS
<CASH> 48,018
<SECURITIES> 0
<RECEIVABLES> 114,517
<ALLOWANCES> 5,657
<INVENTORY> 37,527
<CURRENT-ASSETS> 209,556
<PP&E> 400,020
<DEPRECIATION> 171,028
<TOTAL-ASSETS> 476,764
<CURRENT-LIABILITIES> 154,551
<BONDS> 221,565
0
0
<COMMON> 222
<OTHER-SE> (134,718)
<TOTAL-LIABILITY-AND-EQUITY> 476,764
<SALES> 466,668
<TOTAL-REVENUES> 466,668
<CGS> 320,360
<TOTAL-COSTS> 320,360
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 117
<INTEREST-EXPENSE> 18,349
<INCOME-PRETAX> 50,384
<INCOME-TAX> 19,392
<INCOME-CONTINUING> 30,992
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,992
<EPS-PRIMARY> 1.44
<EPS-DILUTED> 1.44
</TABLE>
