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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996. COMMISSION FILE NUMBER 1-11804
THE GEON COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 34-1730488
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Geon Center, Avon Lake, Ohio 44012-0122
(Address of principal executive offices) (Zip-Code)
Registrant's telephone number, including area code (216) 930-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, par value $.10 per share New York Stock Exchange
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, and (2) has been subject to such filing requirements
for the last 90 days. Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /x/
The aggregate market value of the voting stock, consisting solely of common
stock, held by non-affiliates of the registrant as of March 10, 1997 was
$519,521,490. On such date, 23,089,844 of such shares of the registrant's common
stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to stockholders for the year ended December 31,
1996 are incorporated by reference into Parts I and II.
Portions of the Proxy Statement dated and filed with the Securities and Exchange
Commission on March 21, 1997 are incorporated by reference into Part III.
The Exhibit Index is located herein beginning at page I-1.
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PART I
ITEM 1. BUSINESS.
GENERAL
The Geon Company, together with its subsidiaries (Company), is a
leading North American producer and marketer of polyvinyl chloride (PVC) resins
and compounds. The Company also produces and markets vinyl chloride monomer
(VCM), an intermediate precursor to PVC. PVC is the world's second most widely
used plastic. It is an attractive alternative to traditional materials such as
glass, metal and wood and other plastic materials because of its versatility,
durability and cost competitiveness. PVC's largest applications are associated
with infrastructure development, building products and consumer durable goods.
The Company operates in one business segment with operations primarily
located in the United States and Canada.
The Company sells its PVC resins to third parties who produce their own
compounds for use primarily in larger volume construction applications, such as
pipe and pipe fittings, vinyl house siding, flooring and wall coverings and
window components. The Company also manufactures its own PVC compounds for sale
to third parties who use such compounds in a variety of applications, such as
electrical conduits and wire insulation, packaging (including film, bottle and
specialty packaging), residential windows and, more recently, higher-performance
applications, such as business machine housings, application components and
medical devices. As of December 31, 1996 the Company's North American nameplate
PVC capacity was approximately 2.9 billion pounds, or approximately 19% of total
U.S. and Canadian PVC capacity.
PRODUCTS
In 1996, 57% of the Company's total revenues were attributable to PVC
resin sales, 39% to compound sales, and the remaining 4% primarily to VCM export
sales. Approximately 74% of the Company's PVC shipments (in pounds) in 1996 were
sold as PVC resins, with 26% sold as PVC compounds.
The Company's resin products can be categorized generally as
suspension/mass resins and dispersion resins. Suspension/mass resins can be
further categorized as general purpose resins and specialty resins. General
purpose resins comprise the largest segment of resins by volume and are
typically used in rigid applications such as pipe and exterior siding. Specialty
resins are a broad category of resins possessing unique characteristics such as
color and clarity and are used in a wide variety of applications such as film,
medical and automotive products. Dispersion resins are made from a process which
yields a fine particle-size resin and are generally used for vinyl flooring,
vinyl wall coverings and fabrics, marine floatation devices and toys.
The Company's PVC compound products can be either flexible or rigid and
are fabricated by customers of the Company by extrusion, calendaring,
injection-molding or blow-molding. Flexible compounds are used for wire and
cable insulation, automotive interior and exterior trim, packaging and medical
devices. Rigid extrusion compounds are commonly used in window frames, vertical
blinds and construction applications. Injection-molding compounds are used in
specialty parts such as business machine components, application parts and
bottles. The Company's development of new compounds that can be injection-molded
into thin-walled complex parts or that have other unique characteristics has
opened new applications and markets for PVC products.
The Company supports its compound products by providing service to
customers through enhanced customer support. The Company's sales force works
with engineering and marketing experts of original equipment manufacturers in
addition to purchasing agents to create new uses for PVC products and to replace
more costly plastics and other materials through the development of
cost-effective solutions that meet specific customer needs. In addition, the
Company uses a combination of material science, computer-aided design and
prototype part production capabilities to assist customers in the development
and application of new uses for higher-performance PVC compounds.
COMPETITION
The Company competes with major U.S. chemical manufacturers and
diversified companies, some of which have greater financial resources than the
Company. Competition in the industry is based upon factors, the importance of
which vary depending on the specific characteristics of the product and the
applicable market, ranging from price and availability to product performance
and customer and technical support.
With respect to PVC resins, the Company competes primarily with six
major North American PVC producers: Borden Chemicals and Plastics Limited
Partnership; CONDEA Vista Chemical Company (a subsidiary of RWE-DEA Hamburg,
Germany); Formosa Plastics Corporation U.S.A. (a subsidiary of Formosa Plastic
Group, Taipei, Taiwan); Georgia Gulf Corporation; Occidental Chemical
Corporation (a subsidiary of Occidental Petroleum Corporation) and Shintech,
Inc. (a subsidiary of Shin Etsui Chemical Co., Ltd., Tokyo, Japan). The key
competitive factors are price, product availability and performance. In 1996,
the seven largest resin producers (one of which is the Company) accounted for
approximately 87% of the total estimated resin capacity. None of the producers
had more than 20% of total resin capacity. With respect to PVC compounds, the
Company competes with certain of the foregoing entities along with many
independent custom compounders.
Because there is no single PVC compound market, the manner in which the
Company competes varies from market to market, although in each market the
Company competes primarily on the basis of product consistency and customer
service in addition to price. In certain PVC compound markets, such as pipe
fittings, wire and cable, and bottles, the Company competes with other PVC
manufacturers. In the markets for higher performance PVC
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compounds, such as extrusion and injection molding compounds for business
equipment, appliances, telecommunications and construction, the Company competes
less with traditional PVC manufacturers and more with other non-PVC plastic
manufacturers, such as General Electric Company, Bayer AG and The Dow Chemical
Company. Manufacturing margins and prices in these markets tend to be higher and
more stable than PVC resin and other compound markets, although such areas have
higher support costs comprised of sales, marketing, technical service, customer
support and research and development. In the other PVC compound markets (rigid
extrusion compounds for custom profiles, window lineals and vertical blinds),
the Company competes with other PVC manufacturers and custom compounders.
RAW MATERIALS
The Company produces the majority of the VCM it requires for the
manufacture of PVC at its plant in LaPorte, Texas. In April 1996, the Company
began production at an 800 million pound expansion of the LaPorte facility,
bringing its annual capacity of VCM up to 2.4 billion pounds. In addition, the
Company has a long-term Canadian VCM supply contract providing substantially
all VCM requirements for the Company's Canadian PVC resin production located in
Scotford, Alberta. The Canadian supply contract remains effective through the
year 2000.
The two principal raw materials used by the Company to manufacture VCM
are ethylene and chlorine. The Company's ethylene requirements are provided
under long-term supply agreements, the largest supply being provided under an
agreement with an initial term through December 31, 2000, and continuing
thereafter unless two years prior notice of termination is given by either
party. An Intermediates Supply Agreement with The B.F.Goodrich Company (BFG)
also provides for ethylene purchases and swaps from the Calvert Facilities (BFG
chlor-alkali, ethylene and utility operations located at Calvert City,
Kentucky) through February 2000. These two agreements represent 80% of the
Company's ethylene requirements.
The Company's chlorine requirements are provided pursuant to long-term
supply agreements and spot-market purchases. The Company's long-term chlorine
supply agreements, which cover 70% of requirements, are with four different
domestic suppliers. One of the supply agreements, which provides 50% of the
requirements, is being extended through 1999. The Company does not anticipate
any problem in completing the agreement. The additional 20% of the Company's
long-term supply is provided under agreements which expire in 1999 or later. The
existing agreements generally contain volume commitments and various pricing
mechanisms which management believes provide a cost-effective sourcing of
chlorine. The Company has a 50% participation in a joint venture to construct
and operate a chlor-alkali plant. In the initial phase, the plant will have an
annual capacity of 250,000 tons of chlorine and 275,000 tons of caustic soda.
Mechanical completion is expected in late 1997. Geon will receive all chlorine
produced by the plant owned by the joint venture.
Historically, chlorine and ethylene have been produced in the United
States at a lower cost than elsewhere in the world. This cost advantage has
resulted in U.S. producers of PVC having lower raw materials costs than their
counterparts in many other parts of the world. In addition to the raw materials
for VCM, the Company purchases a variety of additives to manufacture its
compound products. These materials generally have adequate alternative sources
of supply and are not purchased under multi-year contracts.
RESEARCH AND DEVELOPMENT
The Company has developed substantial research and development
capability. The Company's efforts are devoted to (i) providing support to its
manufacturing plants for cost reduction, productivity and quality improvement
programs, (ii) providing quality technical services to assure the continued
success of its products for its customers' applications, (iii) providing
technology for improvements to its products, processes and applications and (iv)
developing new products to satisfy defined market needs. The Company operates a
research and development center in Avon Lake, Ohio. The laboratory is equipped
with modern analytical, synthesis, polymer characterization and testing
equipment and pilot plant and polymer compounding operations which simulate the
production facilities for rapid translation of new technology into new products.
A sophisticated application engineering and design capability assists customers
in designing and prototyping new applications for the Company's PVC compounds.
Expenditures for Company sponsored product research and product
development in 1996, 1995 and 1994 were $17.5 million, $18.0 million and $16.8
million, respectively. Expenditures in 1997 are anticipated to remain at
approximately the same level as in 1996.
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EMPLOYEES
As of December 31, 1996, the Company had approximately 1,683 full-time
employees of whom 130 employees are covered by collective bargaining agreements
which expire in May 1998 and July 2001. The bargaining unit employees are
employed at the Company's plants in Louisville, Kentucky and Altona, Australia.
The Company considers its employee relations to be good.
ENVIRONMENTAL, HEALTH AND SAFETY
The Company is subject to various federal, state and local
environmental laws and regulations concerning emissions to the air, discharges
to waterways, the release of materials into the environment, the generation,
handling, storage, transportation, treatment and disposal of waste materials or
otherwise relating to the protection of the environment. The Company endeavors
to ensure the safe and lawful operation of its facilities in manufacturing and
distribution of products and believes it is in compliance in all material
respects with applicable laws and regulations.
The Company maintains a disciplined environmental and occupational
safety and health compliance program and conducts internal and external
regulatory audits at its plants in order to identify and categorize potential
environmental exposures and to ensure compliance with applicable environmental,
health and safety laws and regulations. This program is an effort which has
required and may continue to require process or operational modifications, the
installation of pollution control devices and cleanups.
The Company's capital expenditures related to the limiting and
monitoring of hazardous and non-hazardous wastes totaled $3 million, $7 million
and $1 million in 1996, 1995, and 1994, respectively. The Company estimates
capital expenditures for future environmental improvement programs to
approximate $2 million to $4 million in 1997. The projected future capital
expenditures are associated with a wide variety of environmental projects, such
as compliance with anticipated new regulations, achievement of internal company
programs and improved operating efficiencies. The primary areas for future
environmental capital expenditures can be broadly categorized as solid waste,
air quality, waste water and ground water improvements. Expenditures for
remediating various sites were $6.1 million, $3.0 million and $2.9 million in
1996, 1995 and 1994, respectively. 1997 expenditures for remediation of these
sites are projected to be $4 million to $7 million.
The Company has been notified by the United States Environmental
Protection Agency (EPA), a state agency, or a private party that it may be a
potentially responsible party (PRP) in connection with seven active and inactive
non-Company owned sites. The Company believes that it has potential continuing
liability with respect to only four such sites. In addition, the Company
initiates corrective and preventive environmental projects of its own to ensure
safe and lawful activities at its operations. The Company believes that
compliance with current governmental regulations will not have a material
adverse effect on its capital expenditures, earnings, cash flow or liquidity.
The Company has accrued $27 million to cover these future environmental
remediation expenditures which are projected to be $19 million over the next
five years. Of this amount, approximately $16 million is attributable to future
remediation expenditures at the Calvert Facilities and less than $.2 million is
attributable to offsite environmental liabilities, including the four sites
mentioned above. The balance is primarily attributable to other environmental
remediation projects at Company-owned facilities. Pursuant to consent orders
signed with both the EPA and the Commonwealth of Kentucky Department of
Environmental Protection and the terms of a Resource Conservation and Recovery
Act (RCRA) post-closure permit, the Company is required to provide for a
site-wide remediation program at the Calvert Facilities, the cost of which is
included in the $27 million accrual as of December 31, 1996.
The Company participates in the EPA Compliance Audit Program (CAP)
under Section 8(e) of the Toxic Substances Control Act. That section requires
reporting of information indicating a substantial risk of injury to health or
the environment from a chemical substance or mixture. Under the CAP, the Company
conducts an audit of its files and reports any information that should have been
reported previously. The total potential maximum liability of the Company and
its subsidiaries under the CAP is $1 million. The first part of the CAP required
reporting of substantial risk information concerning health effects. The
remaining part of the CAP involves substantial risk information concerning the
environment. The Company will perform its obligations under this portion of the
CAP after the EPA issues guidance concerning the kinds of environmental
information that it believes are reportable. The Company does not believe that
its portion of any civil penalties arising from this portion of the CAP will
exceed $.2 million.
The risk of additional costs and liabilities is inherent in certain
plant operations and certain products produced at the Company's plants, as is
the case with other companies involved in the PVC industry. There can be no
assurance that additional costs and liabilities will not be incurred by the
Company in the future. It is also possible that other developments, such as
increasingly strict environmental, safety and health laws, regulations and
enforcement policies thereunder and claims for damages to property or persons
resulting from plant emissions or products, could result in additional costs and
liabilities to the Company. A number of foreign countries and domestic local
communities have enacted, or have under consideration, laws and regulations
relating to the use and disposal of plastic materials. Widespread adoption of
such laws and regulations, or public perception, may have an adverse impact on
plastic materials. Although many of the Company's major markets are in durable,
longer-life applications which could reduce the impact of any such environmental
regulation, there is no assurance that
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possible future legislation or regulation would not have an adverse effect on
the Company's business.
In previous years, there have been efforts by environmental groups to
ban chlorine - one of the Company's key raw materials. Proposed legislation to
ban chlorine has garnered little support in Congress. Research does not support
categorizing all uses of chlorine as harmful to the environment. Although the
Company believes that PVC is not harmful to the consumer or the environment due
to the stability of its chemical structure, PVC could not be produced if
chlorine and chlorine-based products were prohibited. Another issue being
addressed is the presence of dioxins in the environment. Dioxins are produced by
many types of combustion and the EPA has cited municipal, medical and industrial
incinerators as major sources of dioxin. Data generated to date by the American
Society of Mechanical Engineers and The Vinyl Institute indicate that vinyl and
vinyl production processes are at most minor contributors to overall dioxin
emissions.
The Company does not believe that there are any new laws which will
have a material impact on the industry or the Company's capital expenditures,
cash flow or liquidity.
The Company conducts a comprehensive occupational safety and health
program. Industry data shows that the Company's safety record is among the best
in the chemical industry.
ITEM 2. PROPERTIES.
The information required by this item appears on page 34 of the
Company's 1996 Annual Report to Stockholders and is incorporated herein by
reference thereto
ITEM 3. LEGAL PROCEEDINGS.
In addition to the matters regarding the environment described above
under the heading "Business - Environmental, Health and Safety", there are
pending or threatened against the Company various claims, lawsuits and
administrative proceedings, all arising from the ordinary course of business
with respect to commercial, product liability and environmental matters, which
seek remedies or damages. The Company believes that any liability that may be
finally determined should not have a material effect on the Company's financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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EXECUTIVE OFFICERS OF THE COMPANY. (INCLUDED PURSUANT TO INSTRUCTION 3 TO
PARAGRAPH (b) OF ITEM 401 OF REGULATION S-K)
Executive officers of the Company are elected by and serve at the
discretion of the Board of Directors. Except as otherwise noted, the executive
officers of the Company were elected to their respective positions immediately
following the formation of the Company. Their ages and positions are as follows:
Name Age Position with Company
- ---- --- ---------------------
William F. Patient 62 Chairman of the Board, President and Chief Executive Officer
Donald P. Knechtges 55 Senior Vice President, Technology/Engineering
Louis M. Maresca 46 Vice President, Operations
Edward C. Martinelli 55 Senior Vice President, Commercial
Gregory L. Rutman 54 Vice President, General Counsel & Secretary
Thomas A. Waltermire 47 Chief Financial Officer, Senior Vice President, Human Resources
William F. Patient
Mr. Patient received a degree in chemical engineering from Washington
University, St. Louis. Prior to the April 1993 Geon Initial Public Offering
(IPO) by BFG, Mr. Patient served as Senior Vice President of BFG and as
President of BFG's Geon Vinyl Division since May 1989. Prior to joining BFG,
Mr. Patient had been associated with Borg-Warner Chemicals since 1962, most
recently as Vice President.
Donald P. Knechtges
Mr. Knechtges received a B.A. in Chemistry from Marietta College in
1963 and a B.S. in Chemical Engineering from Case Institute of Technology in
1965. Mr. Knechtges joined BFG as an engineer in June 1965 and became Senior
Vice President, Commercial in December 1991. In August 1995, Mr. Knechtges was
named Senior Vice President, Technology/Engineering.
Louis M. Maresca
Dr. Maresca received a B.S. in Chemistry from Brooklyn College in 1972,
a Ph.D. in Physical/Organic Chemistry from Columbia University in 1976 and an
M.B.A. from the Weatherhead School at Case Western Reserve University in 1995.
Dr. Maresca joined BFG as Vice President, Research and Development for the Geon
Vinyl Division in April 1991. In August 1995 he became Vice President,
Operations. Prior to joining BFG, Dr. Maresca served General Electric Company in
several capacities, most recently General Manager, America's Product Technology.
Edward C. Martinelli
Mr. Martinelli received a B.S. in Chemical Engineering from the
University of Delaware in 1963 and, in 1985, completed the Harvard Business
School Advanced Management Program. He joined BFG in September 1963. In June
1987, Mr. Martinelli became Senior Vice President of BFG's Geon Vinyl Division
Operations and was named Senior Vice President, Commercial in August 1995.
Gregory L. Rutman
Mr. Rutman received a B.A. in Business Management from Baldwin-Wallace
College in 1964 and a J.D. degree from Cleveland Marshall College of Law in
1969. In 1987, he completed the Executive Program at the Darden Graduate School
of Business Administration, University of Virginia. Mr. Rutman joined BFG in
October 1974. Since 1985 he functioned as Staff Vice President of BFG and
Counsel to the BFG Geon Vinyl Division. Mr. Rutman was elected Secretary and
Assistant Treasurer of the Company after the completion of the IPO.
Thomas A. Waltermire
Mr. Waltermire received a B.S. in Biology from Ohio State University in
1971 and an M.B.A. from Harvard University in 1974. Mr. Waltermire joined BFG in
June 1974. In April 1993, he became Senior Vice President and Treasurer of the
Company, and in October 1993, became Chief Financial Officer. His duties also
include strategic planning, human resources, communication and information
technology.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock, $.10 par value per share, is reported on
the New York Stock Exchange. The information appearing under the captions
"Financial Highlights" on page 1 and "Quarterly Data" on page 31 of the
Company's 1996 Annual Report to Stockholders is incorporated herein by
reference thereto.
ITEM 6. SELECTED FINANCIAL DATA.
The Company has declared and paid cash dividends per share of common
stock in the amounts noted in each of the following years:
1993 1994 1995 1996
---- ---- ---- ----
Dividend paid per Share of Common Stock $.375 $.50 $.50 $.50
The additional information required by this item appears on pages 31
and 32 of the Company's 1996 Annual Report to Stockholders and is incorporated
herein by reference thereto.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The information appearing under the captions "Management's Analysis"
on pages 16, 18 and 20 and "Cautionary Note on Forward-Looking Statements" on
page 33 of the Company's 1996 Annual Report to Stockholders is incorporated
herein by reference thereto.
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA.
The information required by this item appears on pages 17, 19 and 21
through 31 of the Company's 1996 Annual Report to Stockholders and is
incorporated herein by reference thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT.
The information regarding the Directors of the Company appearing
under the heading "Election of Directors" on pages 2 through 6 of the Company's
Proxy Statement for the 1997 Annual Meeting of Stockholders is incorporated
herein by reference thereto. Information concerning executive officers of the
Company is contained in Part I of this Report under the heading "Executive
Officers of the Company".
ITEM 11. EXECUTIVE COMPENSATION.
The information regarding Director and executive compensation appearing
under the headings "Compensation of Directors" on page 6 and "Executive
Compensation" on pages 10 through 20 of the Company's Proxy Statement for the
1997 Annual Meeting of Stockholders is incorporated herein by reference
thereto.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.
The information regarding security ownership of certain beneficial
owners and management appearing under the heading "Ownership of Common Stock" on
pages 7 through 9 of the Company's Proxy Statement for the 1997 Annual Meeting
of Stockholders is incorporated herein by reference thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS.
The information regarding certain relationships and related
transactions appearing under the heading "Compensation Committee Interlocks and
Insider Participation; Certain Other Relationships" on pages 20 through 23 of
the Company's Proxy Statement for the 1997 Annual Meeting of Stockholders is
incorporated herein by reference thereto.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) and (2) and (d) - The response to these portions of Item 14 are
submitted as a separate section of this Report beginning on page F-1 of this
Report.
(a)(3) and (c) - An index of Exhibits filed as part of this Report is
located beginning on page I-1 of this Report.
(b) Reports on Form 8-K Filed in the Fourth Quarter of 1996:
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on March 27, 1997.
THE GEON COMPANY
By: /s/GREGORY L. RUTMAN
--------------------
Gregory L. Rutman
Vice President, General Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities indicated
on March 27, 1997.
Signature Title
- --------- -----
/s/WILLIAM F. PATIENT Chairman of the Board, President, Chief Executive Officer
- --------------------------- and Director (Principal Executive Officer)
William F. Patient
/s/THOMAS A. WALTERMIRE Chief Financial Officer, Senior Vice President, Human Resources
- --------------------------- (Principal Financial Officer)
Thomas A. Waltermire
/s/GREGORY P. SMITH Controller (Principal Accounting Officer)
- ---------------------------
Gregory P. Smith
/s/JAMES K. BAKER Director /s/HARRY A. HAMMERLY Director
- --------------------------- --------------------------
James K. Baker Harry A. Hammerly
/s/GALE DUFF-BLOOM Director /s/D. LARRY MOORE Director
- --------------------------- --------------------------
Gale Duff-Bloom D. Larry Moore
/s/JOHN A. BROTHERS Director /s/JOHN D. ONG Director
- --------------------------- --------------------------
John A. Brothers John D. Ong
/s/ J. DOUGLAS CAMPBELL Director /s/R. GEOFFREY P. STYLES Director
- --------------------------- --------------------------
J. Douglas Campbell R. Geoffrey P. Styles
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ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) AND (2) AND (d)
INDEX OF FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1996
THE GEON COMPANY
F-1
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ITEM 14(a)(1) AND (2) and (d).
-----------------------------
THE GEON COMPANY AND SUBSIDIARIES
- ---------------------------------
INDEX OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following consolidated financial statements of The Geon Company and
subsidiaries, included in the Annual Report of the Registrant to its
Stockholders for the year ended December 31, 1996, are incorporated by
reference in Item 8.
Consolidated balance sheets - December 31, 1996 and 1995
Consolidated statements of income - Years ended December 31, 1996,
1995 and 1994.
Consolidated statements of stockholders' equity - Years ended
December 31, 1996, 1995 and 1994.
Consolidated statements of cash flows - Years ended December 31, 1996,
1995 and 1994.
Notes to consolidated financial statements - December 31, 1996.
Quarterly data (unaudited) - Years ended December 31, 1996 and 1995.
The following consolidated financial statements schedule of the Registrant and
its subsidiaries is included in Item 14(d)
Schedule II Page F-3 Valuation and qualifying accounts
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
F-2
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SCHEDULE II
THE GEON COMPANY AND SUBSIDIARIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN MILLIONS)
Charged
Balance at to Costs Charged Balance
Beginning and to Other at End of
of Period Expenses Accounts Deductions Period
----------- ---------- --------- ---------- ---------
(C)
Year Ended December 31, 1996
Reserves for doubtful accounts $ 2.1 $ .7 $ -- $ .1 (A) $ 2.7
Accrued liabilities for environmental matters 29.1 4.2 -- 6.1 (B) 27.2
Year Ended December 31, 1995
Reserves for doubtful accounts $ 1.7 $ .5 $ -- $ .1 (A) $ 2.1
Accrued liabilities for environmental matters 28.7 2.7 .7 3.0 (B) 29.1
Year Ended December 31, 1994
Reserves for doubtful accounts $ 1.5 $ .5 $ -- $ .3 (A) $ 1.7
Accrued liabilities for environmental matters 31.6 -- .1 3.0 (B) 28.7
Notes:
- -----
(A) - Accounts charged off
(B) - Represents cash payments during the year
(C) - Translation adjustments and other accrued expenses
F-3
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THE GEON COMPANY
INDEX TO EXHIBITS
(Item 14(a)(3))
Exhibit Description Page
- ------- ----------- ----
3(i) Restated Certificate of Incorporation _____
3(ii) Amended and Restated By-Laws (a)
4 Instruments defining rights of security holders, including indentures: _____
4.1 Specimen Common Stock Certificate _____
4.2 Rights Agreement, dated May 28, 1993, between the Company and Bank of New York, as Rights Agent _____
4.3 Indenture dated as of December 1, 1995 between the Company and NBD Bank, Trustee _____
10 Material Contracts:
10.1 Incentive Stock Plan (1) _____
10.2 1995 Incentive Stock Plan (1) _____
10.3 Benefit Restoration Plan (Section 415) (1) _____
10.4 Benefit Restoration Plan (Section 401(a)(17)) (1) _____
10.5 Senior Executive Management Incentive Plan (1) _____
10.6 Non-Employee Directors Deferred Compensation Plan effective December 9, 1993 (1) _____
10.7 Form of Management Continuity Agreement (1) _____
10.8 U.S. $130 million Credit Agreement dated as of August 16, 1994 among the Company and Citibank, N.A.
as Agent and NationsBank of North Carolina, N.A. as Co-Agent _____
10.8a Amendment to the aforesaid Credit Agreement dated as of December 8, 1994 _____
10.8b Amendment Number 2 to the aforesaid Credit Agreement dated as of November 9, 1995 _____
10.8c Amendment Number 3 to the aforesaid Credit Agreement dated as of December 19, 1996 _____
10.9 U.S. $65 million Second Amended and Restated Trade Receivables Purchase and Sale Agreement among
the Company, CIESCO, L.P., Corporate Receivables Corporation and Citicorp N.A., Inc. as Agent
10.9a Amendment to the aforesaid Second Amended and Restated Trade Receivables Purchase and Sale Agreement _____
dated as of December 8, 1994
10.10 Second Amended and Restated Lease Dated December 19, 1996 between 1994 VCM Inc. and the
Company _____
10.11 Second Amended and Restated Participation Agreement Dated December 19, 1996 among the Company,
1994 VCM Inc., State Street Bank and Trust Company of Connecticut, National Association and Citibank,
N.A. as Agent. _____
10.12 Amended and Restated Instrument Guaranty dated as of December 19, 1996 _____
10.13 Amended and Restated Plant Services Agreement between the Company and The B.F. Goodrich Company
10.14 Amended and Restated Assumption of Liabilities and Indemnification Agreement dated _____
March 1, 1993 and amended and restated April 27, 1993
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Exhibit Description Page
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10.15 Intermediates Supply Agreement ____
10.16 Put Agreement dated April 27, 1993 ____
10.17 Partnership Agreement, by and between 1997 Chloralkali Venture Inc., and Olin Sunbelt, Inc. (b)
dated August 23, 1996
10.18 Chlorine Sales Agreement, by and between Sunbelt Chlor Alkali Partnership and the Company (b)
dated August 13, 1996
10.19 Intercompany Guarantee Agreement between the Company on the one hand and Olin Corporation and (b)
Sunbelt Chlor Alkali Partnership on the other hand
10.20 Rate Swap Transaction as amended between the Company and NationsBank, N.A. (b)
11 Statement re computation of per share earnings ____
13 Annual Report to Stockholders For the Year Ended December 31, 1996
21 Subsidiaries ____
23 Consent of Independent Auditors ____
27 Financial Data Schedule ____
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(1) Indicates management contract or compensatory plan, contract or
arrangement in which one or more directors or executive officers of the
Registrants may be participants.
(a) Incorporated by reference to the corresponding Exhibit filed with the
Registrant's Form 10-Q for the Quarter Ended June 30, 1996
(b) Incorporated by reference to the corresponding Exhibit filed with the
Registrant's Form 10-Q for the Quarter Ended September 30, 1996
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