UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended April 1, 2001
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-81808
BUILDING MATERIALS CORPORATION OF AMERICA
(Exact name of registrant as specified in its charter)
Delaware 22-3276290
(State of Incorporation) (I. R. S. Employer
Identification No.)
1361 Alps Road, Wayne, New Jersey 07470
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (973) 628-3000
See table of additional registrants.
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 / /
As of May 11, 2001, 1,015,010 shares of Class A Common Stock, $.001 par value,
and 15,000 shares of Class B Common Stock, $.001 par value, of Building
Materials Corporation of America were outstanding. There is no trading market
for the common stock of Building Materials Corporation of America.
As of May 11, 2001, each of the additional registrants had the number of shares
outstanding which is shown on the table below. No shares were held by
non-affiliates.
ADDITIONAL REGISTRANTS
Address, including zip code
and telephone number,
State or other jurisdiction Registration No./I.R.S. including area code, of
Exact name of registrant as of incorporation or No. of Shares Employer Identification registrant's principal
specified in its charter organization Outstanding No. executive offices
- --------------------------- --------------------------- ------------- ----------------------- -----------------------
Building Materials Delaware 10 333-69749-01/ 1361 Alps Road
Manufacturing Corporation 22-3626208 Wayne, NJ 07470
(973) 628-3000
Building Materials Delaware 10 333-69749-02/ 300 Delaware Avenue
Investment Corporation 22-3626206 Suite 303
Wilmington, DE 19801
(302) 427-5960
BMCA Insulation Products Inc. Delaware 10 333-58442-10/ 1361 Alps Road
22-3275477 Wayne, NJ 07470
(973) 628-3000
Ductwork Manufacturing Delaware 10 333-58442-08/ 25 Central Industrial Row
Corporation 58-2507312 Purvis, MS 39475
(601) 794-5500
GAF Leatherback Corp. Delaware 10 333-58442-09/ 11 Hillcrest Road
22-3497242 Hollister, CA 95024-5050
(408) 636-5050
GAF Premium Products Inc. Delaware 10 333-58442-04/ 1361 Alps Road
22-3383680 Wayne, NJ 07470
(973) 628-3000
GAF Materials Corporation Delaware 10 333-58442-05/ 1361 Alps Road
(Canada) 22-3563280 Wayne, NJ 07470
(973) 628-3000
GAFTECH Corporation Delaware 10 333-58442-01/ 1361 Alps Road
22-2811609 Wayne, NJ 07470
(973) 628-3000
LL Building Products Inc. Delaware 10 333-58442-06/ 4501 Circle 75 Parkway
58-2394554 Atlanta, GA 30339
(770) 953-6366
Wind Gap Real Property Delaware 10 333-58442-07/ 1361 Alps Road
Acquisition Corp. 22-3383681 Wayne, NJ 07470
(973) 628-3000
2
Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Quarter Ended
--------------------------
April 2, April 1,
2000 2001
--------- ---------
(Thousands)
Net sales .................................... $ 289,815 $ 264,961
--------- ---------
Costs and expenses:
Cost of products sold ...................... 214,357 198,951
Selling, general and administrative ........ 60,150 55,982
Goodwill amortization ...................... 515 494
--------- ---------
Total costs and expenses ................. 275,022 255,427
--------- ---------
Operating income ............................. 14,793 9,534
Interest expense ............................. (12,445) (15,203)
Other expense, net ........................... (1,164) (1,483)
--------- ---------
Income (loss) before income taxes ............ 1,184 (7,152)
Income tax (provision) benefit ............... (438) 2,646
--------- ---------
Net income (loss) ............................ $ 746 $ (4,506)
========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
3
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS
April 1,
December 31, 2001
2000 (Unaudited)
------------ -----------
ASSETS (Thousands)
Current Assets:
Cash and cash equivalents ...................... $ 82,747 $ 30,084
Accounts receivable, trade, net ................ 19,474 22,569
Accounts receivable, other ..................... 51,843 97,776
Receivable from parent corporations ............ - 749
Tax receivable from parent corporations ........ 1,500 1,500
Inventories .................................... 101,702 125,092
Other current assets ........................... 3,925 5,825
--------- ---------
Total Current Assets ......................... 261,191 283,595
Property, plant and equipment, net ............... 362,464 356,359
Excess of cost over net assets of businesses
acquired, net .................................. 65,317 64,824
Deferred income tax benefits ..................... 42,897 45,822
Tax receivable from parent corporations .......... 7,500 7,500
Other assets ..................................... 31,800 31,915
--------- ---------
Total Assets ..................................... $ 771,169 $ 790,015
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current maturities of long-term debt ......... $ 5,908 $ 4,061
Accounts payable ............................... 57,520 68,092
Payable to related parties ..................... 10,052 16,347
Accrued liabilities ............................ 42,888 48,205
Reserve for product warranty claims ............ 14,900 14,900
--------- ---------
Total Current Liabilities .................... 131,268 151,605
--------- ---------
Long-term debt less current maturities ........... 674,698 680,542
--------- ---------
Reserve for product warranty claims .............. 28,756 25,837
--------- ---------
Other liabilities ................................ 14,312 14,402
--------- ---------
Stockholders' Equity (Deficit):
Series A Cumulative Redeemable Convertible
Preferred Stock, $.01 par value per share;
400,000 shares authorized; no shares issued .. - -
Class A Common Stock, $.001 par value per share;
1,300,000 shares authorized; 1,015,514 and
1,015,353 shares, issued and outstanding,
respectively ................................. 1 1
Class B Common Stock, $.001 par value per share;
100,000 shares authorized; 15,000 shares
issued and outstanding ....................... - -
Accumulated deficit ............................ (77,866) (82,372)
--------- ---------
Total Stockholders' Equity (Deficit) ......... (77,865) (82,371)
--------- ---------
Total Liabilities and Stockholders'
Equity (Deficit) ............................... $ 771,169 $ 790,015
========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
4
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Quarter Ended
---------------------
April 2, April 1,
2000 2001
-------- --------
(Thousands)
Cash and cash equivalents, beginning of period ....... $ 55,952 $ 82,747
-------- --------
Cash provided by (used in) operating activities:
Net income (loss) .................................. 746 (4,506)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation ............................... 9,147 8,640
Goodwill and other amortization ................ 722 843
Deferred income taxes .......................... 252 (2,925)
Noncash interest charges ....................... 477 1,141
Increase in working capital items .................. (64,857) (67,979)
Decrease in reserve for product warranty claims .... (1,290) (2,919)
Purchases of trading securities .................... (1,019) -
Proceeds from sales of trading securities .......... 1,860 -
Change in net receivable from/payable to related
parties/parent corporations ...................... (6,010) 5,546
Other, net ......................................... (579) (640)
-------- --------
Net cash used in operating activities ................ (60,551) (62,799)
-------- --------
Cash provided by (used in) investing activities:
Capital expenditures ............................... (14,175) (2,433)
Proceeds from sale of assets ....................... 4,607 -
Purchases of available-for-sale securities ......... (219) -
Proceeds from sales of available-for-sale securities 3,002 -
Proceeds from sales of other short-term investments 1,590 -
-------- --------
Net cash used in investing activities ................ (5,195) (2,433)
-------- --------
Cash provided by (used in) financing activities:
Proceeds from sale of accounts receivable .......... 26,816 9,550
Increase in borrowings under revolving
credit facilities ................................ 40,000 7,000
Repayments of long-term debt ....................... (1,113) (3,151)
Proceeds from issuance of common stock ............. 265 -
Financing fees and expenses ........................ (1,771) (830)
-------- --------
Net cash provided by financing activities ............ 64,197 12,569
-------- --------
Net change in cash and cash equivalents .............. (1,549) (52,663)
-------- --------
Cash and cash equivalents, end of period ............. $ 54,403 $ 30,084
======== ========
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capitalized) ............. $ 7,527 $ 8,302
Income taxes ..................................... 307 265
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
5
BUILDING MATERIALS CORPORATION OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Building Materials Corporation of America (the "Company" or the "Parent
Company") was formed on January 31, 1994 and is a 99.9% owned subsidiary of BMCA
Holdings Corporation ("BHC"), which is a wholly-owned subsidiary of G-I Holdings
Inc. ("G-I Holdings"). The consolidated financial statements of the Company
reflect, in the opinion of management, all adjustments necessary to present
fairly the financial position of the Company at April 1, 2001, and the results
of operations and cash flows for the periods ended April 2, 2000 and April 1,
2001. All adjustments are of a normal recurring nature. These financial
statements should be read in conjunction with the annual financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2000 (the "Form 10-K").
Certain reclassifications have been made to conform to current year
presentation.
Note 1. Comprehensive Income (Loss) Quarter Ended
------------------------
April 2, April 1,
2000 2001
--------- ---------
(Thousands)
Net income (loss) ................................ $ 746 $ (4,506)
--------- ---------
Other comprehensive income, net of tax:
Change in unrealized gains (losses) on
available-for-sale securities:
Unrealized holding gains
arising during the period, net of
income taxes of $949 and $0, respectively .... 1,617 -
Less: Reclassification adjustment
for gains included in net income,
net of income taxes of $258 and $0,
respectively ................................. 439 -
--------- ---------
Total other comprehensive income ................. 1,178 -
--------- ---------
Comprehensive income (loss) ...................... $ 1,924 $ (4,506)
========= =========
Note 2. Inventories
Inventories consist of the following:
December 31, April 1,
2000 2001
--------- ---------
(Thousands)
Finished goods .......................... $ 61,606 $ 85,333
Work-in-process ......................... 16,938 14,191
Raw materials and supplies .............. 27,743 30,153
--------- ---------
Total ................................... 106,287 129,677
Less LIFO reserve ....................... (4,585) (4,585)
--------- ---------
Inventories ............................. $ 101,702 $ 125,092
========= =========
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3. Contingencies
Asbestos Litigation Against G-I Holdings
In connection with its formation, the Company contractually assumed and
agreed to pay the first $204.4 million of liabilities for asbestos-related
bodily injury claims relating to the inhalation of asbestos fiber ("Asbestos
Claims") of its parent, G-I Holdings. As of March 30, 1997, the Company had paid
all of its assumed asbestos-related liabilities. In January 2001, G-I Holdings
filed a voluntary petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code due to its Asbestos Claims. This proceeding is in a preliminary
stage.
Claimants in the G-I Holdings bankruptcy, including judgment creditors,
might seek to satisfy their claims by asking the bankruptcy court to require the
sale of G-I Holdings' assets, including its holdings of BHC's common stock and
its indirect holdings of the Company's common stock. Such action could result in
a change of control of the Company. In addition, those claimants may seek to
file Asbestos Claims against the Company (with 1,511 alleged Asbestos Claims
pending against the Company as of April 1, 2001). The Company believes that it
will not sustain any liability in connection with these or any other
asbestos-related claims. Furthermore, on February 2, 2001, the United States
Bankruptcy Court for the District of New Jersey issued a temporary restraining
order enjoining any existing or future claimant from bringing Asbestos Claims
against the Company. The temporary restraining order will continue in place
until the court determines G-I Holdings' request for the entry of a preliminary
injunction. On February 7, 2001, G-I Holdings filed a defendant class action in
the United States Bankruptcy Court for the District of New Jersey seeking a
declaratory judgment that the Company has no successor liability for Asbestos
Claims against G-I Holdings and that it is not the alter ego of G-I Holdings.
This action is in a preliminary stage and no trial date has been set by the
court. As a result, it is not possible to predict the outcome of this
litigation. While the Company cannot predict whether any additional Asbestos
Claims will be asserted against it, or the outcome of any litigation relating to
those claims, the Company believes that it has meritorious defenses to any claim
that it has asbestos-related liability, although there can be no assurances in
this regard.
On February 8, 2001, a creditors committee established in G-I Holdings'
bankruptcy case filed a complaint in the United States Bankruptcy Court for the
District of New Jersey against G-I Holdings and the Company. The complaint
requests substantive consolidation of the Company with G-I Holdings or an order
directing G-I Holdings to cause the Company to file for bankruptcy protection.
The Company and G-I Holdings intend to vigorously defend the lawsuit. The
Company believes that no basis exists for the court to grant the relief
requested. The plaintiffs also filed for interim relief absent the granting of
their requested relief described above. On February 21, 2001, G-I Holdings moved
to dismiss the complaint. On March 21, 2001, the bankruptcy court refused to
grant the requested interim relief.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3. Contingencies (continued)
For a further discussion with respect to the history of the foregoing
litigation and asbestos-related matters, see Item 3,"Legal Proceedings," and
Notes 3, 11 and 16 to Consolidated Financial Statements contained in the
Company's Form 10-K.
Environmental Litigation
The Company, together with other companies, is a party to a variety of
proceedings and lawsuits involving environmental matters ("Environmental
Claims"), in which recovery is sought for the cost of cleanup of contaminated
sites, a number of which Environmental Claims are in the early stages or have
been dormant for protracted periods. At most sites, the Company anticipates that
liability will be apportioned among the companies found to be responsible for
the presence of hazardous substances at the site. The Company believes that the
ultimate disposition of such matters will not, individually or in the aggregate,
have a material adverse effect on the liquidity, financial position or results
of operations of the Company.
For further information regarding environmental matters and other
litigation, reference is made to Item 3, "Legal Proceedings" contained in the
Company's Form 10-K.
Tax Claim Against G-I Holdings
On September 15, 1997, G-I Holdings received a notice from the Internal
Revenue Service (the "IRS") of a deficiency in the amount of $84.4 million
(after taking into account the use of net operating losses and foreign tax
credits otherwise available for use in later years) in connection with the
formation in 1990 of Rhone-Poulenc Surfactants and Specialties, L.P. (the
"surfactants partnership"), a partnership in which G-I Holdings held an
interest. The claim of the IRS for interest and penalties, after taking into
account the effect on the use of net operating losses and foreign tax credits,
could result in G-I Holdings incurring liabilities significantly in excess of
the deferred tax liability of $131.4 million that it recorded in 1990 in
connection with this matter. G-I Holdings has advised the Company that it
believes that it will prevail in this matter, although there can be no assurance
in this regard. The Company believes that the ultimate disposition of this
matter will not have a material adverse effect on its business, financial
position or results of operations. For the possible consequences to the Company
of the failure of G-I Holdings to satisfy this liability and other information
relating to G-I Holdings, see "Asbestos Litigation Against G-I Holdings" above.
Note 4. Guarantor Financial Information
All of the Company's subsidiaries, other than BMCA Receivables
Corporation,are guarantors under the new $100 million secured bank credit
facility, the amended and restated existing $110 million secured bank credit
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. Guarantor Financial Information (continued)
facility, the 10 1/2% Senior Notes due 2003, the 7 3/4% Senior Notes due 2005,
the 8 5/8% Senior Notes due 2006, the 8% Senior Notes due 2007 (the "2007
Notes"), and the 8% Senior Notes due 2008. These guarantees are full,
unconditional and joint and several. In addition, Building Materials
Manufacturing Corporation ("BMMC") a wholly-owned subsidiary of the Company, is
a co-obligor on the 2007 Notes.
The Company and BMMC entered into license agreements, effective January
1, 1999, for the right to use intellectual property, including patents,
trademarks, know-how, and franchise rights owned by Building Materials
Investment Corporation, a wholly-owned subsidiary of the Company, for a license
fee stated as a percentage of net sales. These license agreements are for a
period of one year and are subject to automatic renewal unless either party
terminates with 60 days written notice. Also, effective January 1, 1999, BMMC
sells all finished goods to the Company at a manufacturing profit.
In January 2001, certain subsidiaries of the Company were merged into
BMMC.
Presented below is condensed consolidating financial information for
the Company, the guarantor subsidiaries and the non-guarantor subsidiary
prepared on a basis which retroactively reflects the formation of such companies
for all periods presented. This financial information should be read in
conjunction with the Consolidated Financial Statements and other notes related
thereto. Separate financial information for the Company's guarantor subsidiaries
and non-guarantor subsidiary is not included herein because management has
determined that such information is not material to investors.
9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Operations
Quarter Ended April 2, 2000
(Thousands)
Parent Guarantor
Company Subsidiaries Eliminations Consolidated
------- ------------ ------------ ------------
Net sales ............................ $ 259,787 $ 30,028 $ - $ 289,815
Intercompany net sales ............... 2,220 172,727 (174,947) -
--------- --------- --------- ---------
Total net sales ...................... 262,007 202,755 (174,947) 289,815
--------- --------- --------- ---------
Costs and expenses:
Cost of products sold .............. 208,123 181,181 (174,947) 214,357
Selling, general and administrative 43,713 16,437 60,150
Goodwill amortization .............. 326 189 515
--------- --------- --------- ---------
Total costs and expenses ............. 252,162 197,807 (174,947) 275,022
--------- --------- --------- ---------
Operating income ..................... 9,845 4,948 - 14,793
Equity in earnings of subsidiaries ... 4,057 (4,057) -
Intercompany licensing income
(expense), net ..................... (8,792) 8,792 -
Interest expense, net ................ (4,309) (8,136) (12,445)
Other income (expense), net .......... (2,001) 837 (1,164)
--------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary loss ............ (1,200) 6,441 (4,057) 1,184
Income tax (provision) benefit ....... 1,946 (2,384) (438)
--------- --------- --------- ---------
Net income (loss) .................... $ 746 $ 4,057 $ (4,057) $ 746
========= ========= ========= =========
10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Operations
Quarter Ended April 1, 2001
(Thousands)
Parent Guarantor
Company Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------
Net sales............................. $ 241,395 $ 23,566 $ - $ 264,961
Intercompany net sales................ 24,230 188,375 (212,605) -
--------- --------- --------- ---------
Total net sales....................... 265,625 211,941 (212,605) 264,961
--------- --------- --------- ---------
Costs and expenses:
Cost of products sold............... 212,083 199,473 (212,605) 198,951
Selling, general and administrative. 40,537 15,445 55,982
Goodwill amortization............... 314 180 494
--------- --------- --------- --------
Total costs and expenses.............. 252,934 215,098 (212,605) 255,427
--------- --------- --------- --------
Operating income (loss)............... 12,691 (3,157) - 9,534
Equity in earnings of subsidiaries.... 213 (213) -
Intercompany licensing income
(expense), net...................... (7,242) 7,242 -
Interest expense, net................. (11,455) (3,748) (15,203)
Other income (expense), net........... (1,485) 2 (1,483)
--------- --------- --------- --------
Income (loss) before income taxes..... (7,278) 339 (213) (7,152)
Income tax (provision) benefit........ 2,772 (126) 2,646
--------- --------- --------- --------
Net income (loss)..................... $ (4,506) $ 213 $ (213) $ (4,506)
======== ========= ========== ========
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Balance Sheet
December 31, 2000
(Thousands)
Non-
Parent Guarantor Guarantor Elim-
Company Subsidiaries Subsidiary inations Consolidated
--------- ------------- ------------ ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents............ $ 9,741 $ 73,006 $ - $ - $ 82,747
Accounts receivable, trade.............. 10,093 9,381 19,474
Accounts receivable, other.............. 5,027 2,947 43,869 51,843
Tax receivable from parent corporations. 1,500 1,500
Inventories............................. 55,891 45,811 101,702
Other current assets.................... 1,105 2,820 3,925
------- --------- --------- --------- --------
Total Current Assets.................. 83,357 133,965 43,869 - 261,191
Investment in subsidiaries................ 356,726 (356,726) -
Intercompany loans including accrued
interest................................ 188,945 (184,531) (4,414) -
Due from(to)subsidiaries, net............. (244,829) 240,866 3,963 -
Property, plant and equipment, net........ 46,928 315,536 362,464
Excess of cost over net assets of
businesses acquired, net................ 41,562 23,755 65,317
Deferred income tax benefits.............. 42,897 42,897
Tax receivable from parent corporations... 7,500 7,500
Other assets.............................. 16,026 15,774 31,800
--------- --------- --------- --------- ---------
Total Assets.............................. $ 539,112 $ 545,365 $ 43,418 $(356,726) $ 771,169
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current maturities of long-term debt.... $ 153 $ 5,755 $ - $ - $ 5,908
Accounts payable........................ 19,871 37,649 57,520
Payable to related parties.............. 7,522 2,530 10,052
Accrued liabilities..................... 18,865 24,023 42,888
Reserve for product warranty claims..... 13,400 1,500 14,900
--------- --------- --------- --------- --------
Total Current Liabilities............. 59,811 71,457 - - 131,268
Long-term debt less current maturities.... 514,880 159,818 674,698
Reserve for product warranty claims....... 28,187 569 28,756
Other liabilities......................... 14,099 213 14,312
--------- --------- --------- --------- --------
Total Liabilities......................... 616,977 232,057 - - 849,034
Total Stockholders' Equity (Deficit), net. (77,865) 313,308 43,418 (356,726) (77,865)
Total Liabilities and --------- --------- --------- --------- --------
Stockholders' Equity (Deficit) ......... $ 539,112 $ 545,365 $ 43,418 $(356,726) $ 771,169
========= ========= ========= ========== =========
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Balance Sheet
April 1, 2001
(Thousands)
Non-
Parent Guarantor Guarantor Elim-
Company Subsidiaries Subsidiary inations Consolidated
--------- ------------- ------------ ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents............ $ 14 $ 30,070 $ - $ - $ 30,084
Accounts receivable, trade.............. 22,569 22,569
Accounts receivable, other.............. 3,293 1,357 93,126 97,776
Receivable from parent corporations..... 749 749
Tax receivable from parent corporations. 1,500 1,500
Inventories............................. 82,278 42,814 125,092
Other current assets.................... 2,855 2,970 5,825
--------- -------- --------- --------- ---------
Total Current Assets.................. 90,689 99,780 93,126 - 283,595
Investment in subsidiaries................ 408,596 (408,596) -
Intercompany loans including accrued
interest................................ 73,786 (69,371) (4,415) -
Due from(to)subsidiaries, net............. (168,902) 162,538 6,364 -
Property, plant and equipment, net........ 46,281 310,078 356,359
Excess of cost over net assets of
businesses acquired, net................ 41,069 23,755 64,824
Deferred income tax benefits.............. 45,822 - 45,822
Tax receivable from parent corporations... 7,500 7,500
Other assets.............................. 15,572 16,343 31,915
--------- --------- --------- --------- ---------
Total Assets.............................. $ 560,413 $ 543,123 $ 95,075 $(408,596) $ 790,015
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current maturities of long-term debt.... $ 111 $ 3,950 $ - $ - $ 4,061
Accounts payable........................ 26,678 41,414 68,092
Payable to related parties.............. 3,682 12,665 16,347
Accrued liabilities..................... 35,058 13,147 48,205
Reserve for product warranty claims..... 14,900 - 14,900
--------- --------- --------- --------- ---------
Total Current Liabilities............. 80,429 71,176 - - 151,605
Long-term debt less current maturities.... 521,997 158,545 680,542
Reserve for product warranty claims....... 26,161 (324) 25,837
Other liabilities......................... 14,197 205 14,402
--------- --------- --------- --------- ---------
Total Liabilities......................... 642,784 229,602 - - 872,386
Total Stockholders' Equity (Deficit), net. (82,371) 313,521 95,075 (408,596) (82,371)
--------- --------- --------- --------- ---------
Total Liabilities and Stockholders'
Equity (Deficit) ..................... $ 560,413 $ 543,123 $ 95,075 $(408,596) $ 790,015
========= ========= ======== ========= =========
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Cash Flows
Quarter Ended April 2, 2000
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiary Consolidated
--------- ------------ ---------- ------------
Cash and cash equivalents, beginning of period....... $ 203 $ 55,749 $ - $ 55,952
--------- --------- --------- --------
Cash provided by(used in)operating activities:
Net income(loss)..................................... (3,311) 4,057 746
Adjustments to reconcile net income(loss)to net
cash provided by(used in)operating activities:
Depreciation..................................... 1,175 7,972 9,147
Goodwill and other amortization.................. 533 189 722
Deferred income taxes............................ 252 252
Noncash interest charges......................... 477 477
(Increase) decrease in working capital items......... (33,417) (4,099) (27,341) (64,857)
Decrease in product warranty claims.................. (4,435) 3,145 (1,290)
Purchases of trading securities...................... (1,019) (1,019)
Proceeds from sales of trading securities............ 1,860 1,860
Change in net receivable from/payable to
related parties/parent corporations................ (34,411) 1,060 27,341 (6,010)
Other, net........................................... 7,148 (7,727) (579)
--------- --------- --------- --------
Net cash provided by(used in)operating activities.... (65,989) 5,438 - (60,551)
--------- --------- --------- --------
Cash provided by(used in)investing activities:
Capital expenditures............................... (821) (13,354) (14,175)
Proceeds from sale of assets....................... 4,607 4,607
Purchases of available-for-sale securities......... (219) (219)
Proceeds from sales of available-for-sale
securities....................................... 3,002 3,002
Proceeds from sales of other short-term
investments...................................... 1,590 1,590
--------- --------- --------- --------
Net cash used in investing activities................ (821) (4,374) - (5,195)
--------- --------- --------- --------
Cash provided by(used in)financing activities:
Proceeds from sale of accounts receivable.......... 26,816 26,816
Increase in borrowings under revolving
credit facility.................................. 40,000 40,000
Repayments of long-term debt....................... (321) (792) (1,113)
Financing fees and expenses........................ (146) (1,625) (1,771)
Stock Issuance..................................... 265 265
---------- --------- --------- --------
Net cash provided by (used in) financing activities.. 66,614 (2,417) - 64,197
--------- --------- --------- --------
Net change in cash and cash equivalents.............. (196) (1,353) - (1,549)
--------- --------- --------- --------
Cash and cash equivalents, end of period............. $ 7 $ 54,396 $ - $ 54,403
========= ========= ========= ========
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 4. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Cash Flows
Quarter Ended April 1, 2001
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiary Consolidated
------- ------------ ----------- ------------
Cash and cash equivalents, beginning of period....... $ 9,741 $ 73,006 $ - $ 82,747
-------- --------- --------- --------
Cash provided by (used in) operating activities:
Net income(loss)..................................... (4,719) 213 (4,506)
Adjustments to reconcile net income(loss)to net
cash provided by(used in)operating activities:
Depreciation..................................... 677 7,963 8,640
Goodwill and other amortization.................. 663 180 843
Deferred income taxes............................ (2,925) (2,925)
Noncash interest charges......................... 891 250 1,141
Increase in working capital items.................... (2,861) (15,862) (49,256) (67,979)
Decrease in product warranty claims.................. (526) (2,393) (2,919)
Change in net receivable from/payable to
related parties/parent corporations................ (17,012) (26,698) 49,256 5,546
Other, net........................................... 57 (697) (640)
-------- -------- --------- --------
Net cash used in operating activities................ (25,755) (37,044) - (62,799)
-------- -------- --------- --------
Cash provided by(used in)investing activities:
Capital expenditures............................... (29) (2,404) (2,433)
-------- -------- --------- --------
Net cash used in investing activities................ (29) (2,404) - (2,433)
-------- -------- --------- --------
Cash provided by (used in) financing activities:
Proceeds from sale of accounts receivable.......... 9,550 9,550
Increase in borrowings under revolving
credit facility.................................. 7,000 7,000
Repayments of long-term debt....................... (55) (3,096) (3,151)
Financing fees and expenses........................ (438) (392) (830)
-------- --------- --------- ---------
Net cash provided by (used in) financing activities.. 16,057 (3,488) - 12,569
-------- --------- --------- ---------
Net change in cash and cash equivalents.............. (9,727) (42,936) - (52,663)
-------- --------- --------- ---------
Cash and cash equivalents, end of period............. $ 14 $ 30,070 $ - $ 30,084
======== ========= ========= =========
15
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - First Quarter 2001 Compared With
First Quarter 2000
The Company recorded a first quarter 2001 net loss of $4.5 million
compared with net income of $0.7 million in the first quarter of 2000. The
decline in net earnings was primarily the result of lower operating income and
higher interest expense.
The Company's net sales for the first quarter of 2001 were $265.0
million, an 8.6% decrease from last year's first quarter net sales of $289.8
million, with the decrease primarily due to lower net sales in low slope roofing
products and the sale of the security products business of LL Building Products
Inc. which was sold in September 2000. Excluding the impact of the sale of the
security products business of LL Building Products Inc., net sales were lower by
6.5% for the first quarter of 2001. The decrease in net sales of low slope
roofing products reflected lower unit volumes, partially offset by higher
selling prices.
Operating income for the first quarter of 2001 was $9.5 million
compared with $14.8 million in the first quarter of 2000. Lower operating
results were primarily attributable to the higher cost of energy together with a
decrease in low slope roofing products sales volumes, partially offset by higher
average selling prices for both steep slope and low slope roofing products and
lower selling, general and administrative expenses.
Interest expense for the first quarter of 2001 increased to $15.2
million from $12.4 million recorded in the same period of 2000, primarily due to
higher average borrowings and a higher average interest rate. Other expense, net
was $1.4 million for the first quarter of 2001 compared to $1.2 million in the
first quarter of 2000, with the increase primarily due to lower investment
income.
Liquidity and Financial Condition
Net cash outflow during the first quarter of 2001 was $65.2 million
before financing activities, and included the use of $62.8 million of cash for
operations and the reinvestment of $2.4 million for capital programs.
Cash invested in additional working capital totaled $68.0 million
during the first quarter of 2001, primarily reflecting seasonal net increases in
inventories of $23.4 million and $58.6 million in accounts receivable, including
a $58.8 million increase in the receivable from the trust which purchases
certain of the Company's trade accounts receivable, partially offset by a $15.9
million increase in accounts payable and accrued liabilities. The net cash used
for operating activities also included a $5.5 million net increase in the
payable to related parties/parent corporations.
Net cash provided by financing activities totaled $12.6 million during
the first quarter of 2001, mainly reflecting $7.0 million in net borrowings
under the Company's bank revolving credit facilities, and $9.6 million in
proceeds from the sale of the Company's trade receivables, partially offset by
$3.2 million in repayments of long-term debt.
16
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
As a result of the foregoing factors, cash and cash equivalents
decreased by $52.7 million during the first quarter of 2001 to $30.1 million.
See Note 3 to Consolidated Financial Statements for information
regarding contingencies.
* * *
Forward-looking Statements
This Quarterly Report on Form 10-Q contains both historical and
forward-looking statements. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements within the meaning
of section 27A of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are only predictions and
generally can be identified by use of statements that include phrases such as
"believe," "expect," "anticipate," "intend," "plan," "foresee" or other words or
phrases. Similarly, statements that describe the Company's objectives, plans or
goals also are forward-looking statements. The Company's operations are subject
to certain risks and uncertainties that could cause actual results to differ
materially from those contemplated by the relevant forward-looking statement.
The forward-looking statements included herein are made only as of the date of
this Quarterly Report on Form 10-Q and the Company undertakes no obligation to
publicly update forward-looking statements to reflect subsequent events or
circumstances. No assurances can be given that projected results or events will
be achieved.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Reference is made to Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Form 10-K for a discussion of
"Market-Sensitive Instruments and Risk Management." There were no material
changes in such information as of April 1, 2001.
17
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
As of April 1, 2001, 1,511 alleged asbestos-related bodily injury
claims relating to the inhalation of asbestos fiber are pending against Building
Materials Corporation of America. See Note 3 to Consolidated Financial
Statements above.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Certain of the registrants filed a report on Form 8-K, dated January 5,
2001 reporting events under Item 5 thereof.
18
SIGNATURES
-----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, each Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BUILDING MATERIALS CORPORATION OF AMERICA
BUILDING MATERIALS MANUFACTURING CORPORATION
GAF LEATHERBACK CORP.
WIND GAP REAL PROPERTY ACQUISITION CORP.
GAF MATERIALS CORPORATION (CANADA)
DATE: May 16, 2001 BY: /s/John F. Rebele
----------------- ----------------------
John F. Rebele
Vice President
and Chief Financial Officer
(Principal Financial Officer)
DATE: May 16, 2001 BY: /s/James T. Esposito
----------------- ------------------------
James T. Esposito
Vice President and Controller
(Principal Accounting Officer)
19
SIGNATURES
-----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, each Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
BUILDING MATERIALS INVESTMENT CORPORATION
BMCA INSULATION PRODUCTS INC.
DUCTWORK MANUFACTURING CORPORATION
GAF PREMIUM PRODUCTS INC.
GAFTECH CORPORATION
LL BUILDING PRODUCTS INC.
DATE: May 16, 2001 BY: /s/John F. Rebele
----------------- ----------------------
John F. Rebele
Vice President
and Chief Financial Officer
(Principal Financial and
and Accounting Officer)
20