<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 JUNE 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 ___ NO X
The number of shares of Common Stock outstanding at August 9, 1996 was
22,236,842.
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<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
FORM 10-Q
QUARTERLY PERIOD ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1995 and 1996............................... 1
Consolidated Balance Sheets - December 31, 1995 and
June 30, 1996......................................................... 2
Consolidated Statements of Cash Flows - Six Months
Ended June 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 2. Changes in Securities........................................... 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues................................... $ 143,062 $ 160,130 $271,723 $ 304,701
Cost of sales.................................. 98,243 107,063 191,093 210,123
Selling, general and administrative expense.... 13,719 27,551 27,059 41,532
--------- --------- -------- ---------
Operating profit............................... 31,100 25,516 53,571 53,046
Interest expense............................... 6,658 6,245 13,460 12,709
Interest income................................ 685 664 1,496 1,272
Foreign currency transaction (gains) losses.... (614) (88) (756) (139)
Other (income) expense, net.................... (77) 494 (16) 408
--------- --------- -------- ---------
Income before income taxes and minority interest 25,818 19,529 42,379 41,340
Minority interest.............................. 5,064 8,311 9,203 14,769
--------- --------- -------- ---------
Income before income taxes .................... 20,754 11,218 33,176 26,571
Income tax provision........................... 7,990 4,176 12,522 10,213
--------- --------- -------- ---------
Net income ........................... $ 12,764 $ 7,042 $ 20,654 $ 16,358
========= ========= ======== =========
Earnings per common and common
equivalent share.............................. $ .65 $ .33 $ 1.05 $ .79
========= ========= ======== =========
Dividends declared per share................... $ .31 $ .025 $ .44 $ .025
========= ========= ======== =========
Weighted average common and common
equivalent shares outstanding................. 19,736,842 21,505,888 19,736,842 20,621,365
========== ========== ========== ==========
</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, JUNE 30,
1995 1996
----------- --------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash and cash equivalents..................................... $ 19,025 $ 28,037
Receivables, net.............................................. 93,231 113,009
Inventories................................................... 41,970 43,495
Deferred income taxes......................................... 14,041 13,637
Other current assets.......................................... 1,485 2,132
--------- ---------
Total current assets...................................... 169,752 200,310
Property, plant and equipment, net................................. 215,557 222,849
Other assets .................................................... 46,016 38,333
--------- ---------
Total assets.............................................. $ 431,325 $ 461,492
========= =========
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:
Accounts payable.............................................. $ 50,987 $ 50,982
Accrued liabilities........................................... 83,018 77,674
Income taxes payable.......................................... 4,238 4,286
Current portion of long-term debt............................. 21,892 17,392
--------- ---------
Total current liabilities................................. 160,135 150,334
Long-term debt..................................................... 269,603 230,912
Other liabilities.................................................. 188,645 192,008
--------- ---------
Total liabilities......................................... 618,383 573,254
Minority interest.................................................. 28,278 36,666
--------- ---------
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 June 30, 1996; issued and outstanding:
19,736,842 and 7,925,375 shares at December 31, 1995
and June 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 June 30, 1996........................... -- 143
Capital deficit............................................... (237,140) (186,036)
Foreign currency translation adjustments...................... (1,362) (1,385)
Retained earnings ............................................ 22,969 38,771
--------- ---------
Total equity (deficit).................................... (215,336) (148,428)
--------- ---------
Total liabilities and equity (deficit).................... $ 431,325 $ 461,492
========= =========
</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>
SIX MONTHS ENDED
JUNE 30,
---------------
1995 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................. $ 20,654 $ 16,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization............................... 14,396 15,151
Net (gain) loss on disposition of long-term assets.......... (60) 540
Unrealized exchange (gain) loss............................. (1,080) 11
Restricted unit plan costs.................................. -- 10,530
(Increase) in receivables................................... (7,189) (22,545)
(Increase) decrease in inventories.......................... 913 (1,534)
(Increase) decrease in other assets......................... 1,609 (4,384)
Increase (decrease) in accounts payable..................... 176 (9)
(Decrease) in accrued liabilities........................... (6,199) (5,345)
Increase in income taxes payable............................ 1,713 57
Increase in other liabilities............................... 462 2,805
Increase in minority interest............................... 2,454 8,388
--------- ----------
Net cash provided by operating activities................. 27,849 20,023
--------- ----------
Cash flows from investing activities:
Capital expenditures........................................ (15,117) (22,377)
Repayment of related party loans ........................... -- 14,000
Proceeds from sales or disposals of long-term assets....... 112 --
--------- ---------
Net cash (used for) investing activities................. (15,005) (8,377)
--------- ----------
Cash flows from financing activities:
Net proceeds from initial public offering................... -- 40,600
Proceeds from long-term debt................................ 4,000 20,000
Repayment of long-term debt................................. (15,305) (63,191)
Dividends................................................... (8,750) --
--------- ---------
Net cash (used for) financing activities.................. (20,055) (2,591)
--------- ----------
Effect of exchange rate changes on cash.......................... 267 (43)
--------- ----------
Increase (decrease) in cash and cash equivalents................ (6,944) 9,012
Cash and cash equivalents at beginning of period................. 28,701 19,025
--------- ----------
Cash and cash equivalents at end of period....................... $ 21,757 $ 28,037
========= ==========
Supplemental information:
Cash paid for income taxes.................................. $ 11,741 $ 10,604
========= ==========
Cash paid for interest...................................... $ 8,782 $ 8,725
========= ==========
</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 SIX MONTHS ENDED JUNE 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 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 six months ended June 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 six months ended June 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 SIX MONTHS ENDED JUNE 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 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 $2,750 and
$2,812 for the six months ended June 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, JUNE 30,
1995 1996
---- ----
<S> <C> <C>
Raw materials....................................... $ 10,447 $ 9,846
Work in process..................................... 4,602 6,710
Finished products................................... 19,061 18,730
Supplies and containers............................ 7,860 8,209
------- --------
$41,970 $ 43,495
======= ========
</TABLE>
-5-
<PAGE>
<PAGE>
THE GENERAL CHEMICAL GROUP INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
NOTE 5 - LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
MATURITIES 1995 1996
---------- ----------- --------
(unaudited)
<S> <C> <C> <C>
GCC Debt:
Bank Term Loan - floating rate............ 1996-2001 $100,000 $ 91,304
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 5,000
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................................ 291,495 248,304
Less: Current Portion.................... (21,892) (17,392)
-------- ---------
Net Long-Term Debt........................ $269,603 $ 230,912
======== =========
</TABLE>
NOTE 6 - DIVIDENDS
On June 12, 1996, the Company's Board of Directors declared a quarterly
cash dividend of $.025 per share, payable July 12, 1996, to shareholders of
record on June 28, 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 SIX MONTHS ENDED JUNE 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.
Notices of appeal of all or portions of the settlement approved by the
court had been 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 are 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 the trial court
erroneously applied a state statute that governs unclaimed residuals remaining
from class action settlements.
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.
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 have
filed a petition for review with the California Supreme Court, which has not yet
decided whether to hear the appeals. If the dismissals by the Court of Appeals
are allowed to stand, it is possible that one or more of the 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 SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS)
(UNAUDITED)
While there can be no assurances regarding how the California Superior
Court might rule, 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.
June 30, 1996 Compared with December 31, 1995
Financial Condition
Cash and cash equivalents were $28.0 million at June 30, 1996 as
compared with $19.0 million at December 31, 1995. During the first six months of
1996 the Company generated cash flow from operating activities of $20.0 million,
received proceeds from the initial public offering of $40.6 million and used
cash of $43.2 million for net repayment of long-term debt and $22.4 million for
capital expenditures.
The Company had working capital of $50.0 million at June 30, 1996 as
compared with $9.6 million at December 31, 1995. This increase in working
capital reflects higher accounts receivable and cash balances coupled with lower
accrued liabilities and current portion of long-term debt.
Results of Operations
Net revenues for the three and six month periods ended June 30, 1996
increased 12 percent and 12 percent to $160.1 million and $304.7 million,
respectively, from $143.1 million and $271.7 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 improved
performance 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 six month periods ended June 30, 1996
increased 18.4 percent and 17.3 percent to $53.1 million and $94.6 million,
respectively, from $44.8 million and $80.6 million for the comparable prior year
periods.
Gross profit as a percentage of sales increased to 33 percent and 31
percent for the three and six months ended June 30, 1996, respectively, from 31
percent and 30 percent for the same periods in 1995. Favorable soda ash pricing
and product mix improvements, partially offset by higher manufacturing expenses
account for this improvement.
Selling, general and administrative expense as a percentage of net
revenues was 17 percent and 14 percent for the three and six month periods ended
June 30, 1996, respectively, versus 10 percent for both comparable prior year
periods. The increase over the prior year 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.
Interest expense for the three and six month periods ended June 30, 1996
was $6.2 million and $12.7 million, respectively, which was $.4 million and $.8
million lower, respectively, than the comparable prior year levels as a result
of lower outstanding debt balances.
Interest income for the three and six month periods ended June 30, 1996
was $.7 million and $1.3 million, respectively, which approximated the prior
year levels.
The foreign currency transaction gain for the three and six month periods
ended June 30, 1996 were $.1 million and $.1 million, respectively, versus $.6
million and $.7 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.
-9-
<PAGE>
<PAGE>
Minority interest for the three and six month periods ended June 30, 1996
was $8.3 million and $14.8, respectively, versus $5.1 million and $9.2 million
for the comparable periods in 1995. The increase in both periods reflect higher
earnings of General Chemical (Soda Ash) Partners.
Net income was $7.0 million and $16.4 million for the three and six month
periods ended June 30, 1996, respectively, versus $12.8 million and $20.6
million for the comparable periods in 1995, for the foregoing reasons, in
particular, the one-time charge related to the Restricted Unit Plan.
-10-
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Richmond Works July 26, 1993 Incident. The following developments have
occurred with respect to this matter since the filing of the Company's Final
Prospectus dated May 15, 1996 as filed with the Securities and Exchange
Commission:
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 July 1, 1996 the Company had already
received releases from approximately 91 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 are 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 have
filed a petition for review with the California Supreme Court, which has not yet
decided whether to hear the appeals. If the dismissals by the Court of Appeals
are allowed to stand, 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 as filed with the Securities and Exchange Commission.
ITEM 2. CHANGES IN SECURITIES
On May 13, 1996, the Company created a new class of securities called
Class B Common Stock, $.01 par value, 40,000,000 shares authorized, which has
ten votes per share, is subject to significant restrictions on transfer and is
convertible at any time into the Common Stock on a share for share basis. See
Part I, Item 1. Financial Statements - "Note 1 to Notes to the Consolidated
Financial Statements".
-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 August 12, 1996 /s/Richard R. Russell
------------------------------------------
RICHARD R. RUSSELL
Director, President and Chief Executive
Officer (Principal Executive Officer)
Date August 12, 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 15
Common and common equivalent shares
for the three and six months ended
June 30, 1995 and 1996
27 Financial Data 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)
Primary earnings per share were calculated as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1995 1996 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total income used for primary
earnings per share........................... $ 12,764 $ 7,042 $ 20,654 $ 16,358
======== ======== ======== ========
Weighted average common shares
outstanding.................................. 19,737 21,001 19,737 20,369
Weighted average common
equivalents shares........................... -- 505 -- 252
-------- -------- -------- --------
Weighted average common and
common equivalent shares..................... 19,737 21,506 19,737 20,621
======== ======== ======== ========
Primary earnings per common share
and common equivalent shares ................ $ .65 $ .33 $ 1.05 $ .79
======== ======== ======== ========
</TABLE>
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.
-15-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information
extracted from Form 10-Q for the period ended June 30, 1996
and is qualified in its entirety by reference to such
financial statements.
<S> <C>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> $28,037
<SECURITIES> 0
<RECEIVABLES> 118,615
<ALLOWANCES> 5,606
<INVENTORY> 43,495
<CURRENT-ASSETS> 200,310
<PP&E> 387,911
<DEPRECIATION> 165,062
<TOTAL-ASSETS> 461,492
<CURRENT-LIABILITIES> 150,334
<BONDS> 230,912
0
0
<COMMON> 222
<OTHER-SE> (148,650)
<TOTAL-LIABILITY-AND-EQUITY> 461,492
<SALES> 304,701
<TOTAL-REVENUES> 304,701
<CGS> 210,123
<TOTAL-COSTS> 210,123
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 310
<INTEREST-EXPENSE> 12,709
<INCOME-PRETAX> 26,571
<INCOME-TAX> 10,213
<INCOME-CONTINUING> 16,358
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,358
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
