UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended July 2, 2000
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 August 11, 2000, 1,016,536 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 August 11, 2000, 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
Registration Address, including zip
State or other No./I.R.S. code and telephone number,
jurisdiction of No. of Employer including area code, of
Exact name of registrant as incorporation Shares Identification registrant's principal
specified in its charter or organization Outstanding No. executive offices
- --------------------------- --------------- ----------- --------------- ----------------------------
Building Materials
Manufacturing Corporation.... Delaware 10 333-69749-01/ 1361 Alps Road
22-3626208 Wayne, NJ 07470
(973) 628-3000
Building Materials
Investment Corporation....... Delaware 10 333-69749-02/ 300 Delaware Avenue
22-3626206 Suite 303
Wilmington, DE 19801
(302) 427-5960
This Amendment on Form 10-Q/A amends and restates in its entirety Item 1 of
Part I of the Quarterly Report on Form 10-Q of the Registrants for the fiscal
quarter ended July 2, 2000 to amend for certain clerical errors contained in the
Guarantor Financial Information set forth in Note 7 to the Consolidated
Financial Statements.
Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Second Quarter Ended Six Months Ended
-------------------- ------------------
July 4, July 2, July 4, July 2,
1999 2000 1999 2000
--------- --------- -------- -------
(Thousands)
Net sales ............................. $310,494 $325,774 $573,422 $615,590
-------- -------- -------- --------
Costs and expenses:
Cost of products sold ............... 216,815 230,301 407,002 444,658
Selling, general and administrative 62,721 66,319 119,246 126,469
Goodwill amortization ............... 508 508 1,017 1,024
-------- -------- -------- --------
Total costs and expenses........... 280,044 297,128 527,265 572,151
-------- -------- -------- --------
Operating income ...................... 30,450 28,646 46,157 43,439
Interest expense ...................... (12,932) (12,534) (24,835) (24,979)
Other income(expense), net............. 7,067 (2,250) 6,557 (3,414)
-------- -------- -------- --------
Income before income taxes ............ 24,585 13,862 27,879 15,046
Income taxes .......................... (9,097) (5,129) (10,316) (5,567)
-------- -------- -------- --------
Net income ............................ $ 15,488 $ 8,733 $ 17,563 $ 9,479
========= ========= ======== ========
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
1
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS
July 2,
December 31, 2000
1999 (Unaudited)
------------ -----------
ASSETS (Thousands)
Current Assets:
Cash and cash equivalents......................... $ 55,952 $ 63,667
Investments in trading securities................. 687 164
Investments in available-for-sale securities...... 29,702 35,363
Other short-term investments...................... 1,590 -
Accounts receivable, trade, net................... 22,938 31,474
Accounts receivable, other........................ 62,892 77,750
Receivable from related parties .................. 59,132 75,310
Inventories....................................... 108,615 130,729
Other current assets.............................. 4,239 6,332
--------- ---------
Total Current Assets............................ 345,747 420,789
Property, plant and equipment, net.................. 410,703 416,758
Excess of cost over net assets of businesses
acquired, net .................................... 70,408 68,820
Deferred income tax benefits........................ 45,561 42,266
Other assets........................................ 22,693 20,715
--------- ---------
Total Assets........................................ $ 895,112 $ 969,348
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt.............. $ 6,149 $ 7,027
Accounts payable.................................. 84,334 112,366
Payable to related party.......................... 15,024 19,993
Accrued liabilities............................... 115,828 109,233
Reserve for product warranty claims............... 14,500 14,500
-------- ---------
Total Current Liabilities....................... 235,835 263,119
--------- ---------
Long-term debt less current maturities.............. 600,745 637,654
--------- ---------
Reserve for product warranty claims................. 19,814 16,180
--------- ---------
Other liabilities................................... 17,029 16,506
--------- ---------
Stockholders' Equity:
Series A Cumulative Redeemable Convertible
Preferred Stock, $.01 par value per
share; 200,000 and 400,000 shares authorized,
respectively; no shares issued.................. - -
Class A Common Stock, $.001 par value per share;
1,300,000 shares authorized; 1,019,621 and
1,016,536 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 ......................... - -
Additional paid-in capital........................ 40,632 39,743
Retained earnings ................................ - 9,479
Accumulated other comprehensive loss ............. (18,944) (13,334)
--------- ---------
Total Stockholders' Equity ..................... 21,689 35,889
--------- ---------
Total Liabilities and Stockholders' Equity ........ $ 895,112 $ 969,348
========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
2
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
-------------------
July 4, July 2,
1999 2000
-------- --------
(Thousands)
Cash and cash equivalents, beginning of period........... $ 24,989 $ 55,952
-------- --------
Cash provided by (used in) operating activities:
Net income............................................. 17,563 9,479
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation ...................................... 15,660 18,527
Goodwill and other amortization.................... 1,285 1,439
Deferred income taxes.............................. 9,900 -
Noncash interest charges........................... 2,290 966
Increase in working capital items...................... (84,485) (68,560)
Decrease in product warranty claims.................... (9,910) (3,634)
Purchases of trading securities........................ (124,696) (1,019)
Proceeds from sales of trading securities.............. 224,452 1,860
Change in net receivable from/payable to related
parties.............................................. (65,237) (11,209)
Other, net............................................. (6,213) 4,862
-------- --------
Net cash used in operating activities.................... (19,391) (47,289)
-------- --------
Cash provided by (used in) investing activities:
Capital expenditures................................... (26,662) (28,703)
Proceeds from sale of assets........................... - 4,607
Purchases of available-for-sale securities............. (56,469) (400)
Purchases of held-to-maturity securities............... (1,401) -
Proceeds from sales of available-for-sale securities... 59,493 3,643
Proceeds from held-to-maturity securities.............. 7,758 -
Proceeds from sales of other short-term investments.... 21,145 1,590
-------- --------
Net cash provided by (used in) investing activities...... 3,864 (19,263)
-------- --------
Cash provided by (used in) financing activities:
Proceeds from sale of accounts receivable.............. 43,494 41,593
Increase in short-term debt............................ 48 -
Proceeds from issuance of long-term debt............... 3,500 -
Increase in borrowings under revolving credit facility. - 40,000
Repayments of long-term debt........................... (2,865) (2,363)
Net repurchases of common stock........................ - (891)
Financing fees and expenses............................ (596) (4,072)
-------- --------
Net cash provided by financing activities................ 43,581 74,267
-------- --------
Net change in cash and cash equivalents.................. 28,054 7,715
-------- --------
Cash and cash equivalents, end of period................. $ 53,043 $ 63,667
======== ========
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capitalized)................. $ 22,870 $ 25,032
Income taxes......................................... 958 6,456
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
3
BUILDING MATERIALS CORPORATION OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Building Materials Corporation of America (the "Company") was formed on
January 31, 1994 and is a 99.9% owned subsidiary of BMCA Holdings Corporation
("BHC"), which is a 98.5% owned subsidiary of GAF Building Materials Corporation
("GAFBMC"), which is a wholly-owned subsidiary of GAF Fiberglass Corporation
("GFC"), which is a wholly-owned subsidiary of G Industries Corp., which is a
wholly-owned subsidiary of G-I Holdings Inc., which is a wholly-owned subsidiary
of GAF Corporation ("GAF"). 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 July 2, 2000, and the results of
operations and cash flows for the periods ended July 4, 1999 and July 2, 2000.
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, 1999 (the "Form 10-K").
Certain reclassifications have been made to conform to current year
presentation.
Note 1. Capital Contribution
Effective August 18, 1999, GFC, in a series of transactions,
contributed certain assets, including the glass fiber manufacturing facility
located in Nashville, Tennessee and certain related liabilities (the "Nashville
facility") to the Company. Accordingly, the Company's historical consolidated
financial statements have been restated to include the results of operations,
cash flows and assets and liabilities of the Nashville facility. For financial
reporting purposes, the contribution of the Nashville facility was recorded by
the Company at the historical cost of $9.3 million. The increase in net income
resulting from the contribution of the Nashville facility for the quarter and
six-month periods ended July 4, 1999 was $0.8 and $1.8 million, respectively.
Note 2. Comprehensive Income
For the Company, comprehensive income includes net income, unrealized gains
and losses from investments in available-for-sale securities, net of income tax
effect, and minimum pension liability adjustments.
Second Quarter Ended Six Months Ended
-------------------- -----------------
July 4, July 2, July 4, July 2,
1999 2000 1999 2000
-------- ------- -------- -------
(Thousands)
Net income............................... $15,488 $ 8,733 $17,563 $ 9,479
-------- ------- ------- -------
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 $2,986, $2,546, $4,656,
and $3,495, respectively.............. 6,983 4,335 7,192 5,952
Less: Reclassification adjustment
for gains (losses) included in net
income, net of income taxes of $570,
$(57), $807 and $201, respectively ... 971 (97) 1,375 342
------- ------- ------- -------
Total other comprehensive income.......... 6,012 4,432 5,817 5,610
------- ------- ------- -------
Comprehensive income...................... $21,500 $13,165 $23,380 $15,089
======= ======= ======= =======
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Comprehensive Income (Continued)
Changes in the components of "Accumulated other comprehensive loss" for the
six months ended July 2, 2000 are as follows:
Unrealized
Losses on Minimum Accumulated
Available- Pension Other
for-Sale Liability Comprehensive
Securities Adjustment Loss
----------- ---------- -------------
(Thousands)
Balance, December 31, 1999 ... $(17,593) $ (1,351) $(18,944)
Change for the period,per above 5,610 - 5,610
-------- -------- --------
Balance, July 2, 2000......... $(11,983) $ (1,351) $(13,334)
======== ========= ========
Note 3. Inventories
Inventories consist of the following:
December 31, July 2,
1999 2000
------------ ---------
(Thousands)
Finished goods .................. $ 68,878 $ 83,813
Work in process ................. 13,974 16,045
Raw materials and supplies ...... 27,462 32,971
-------- --------
Total ........................... 110,314 132,829
Less LIFO reserve ............... (1,699) (2,100)
-------- --------
Inventories ..................... $108,615 $130,729
======== ========
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. Contingencies
Asbestos Litigation Against GAF
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, GAFBMC. As of March 30, 1997, the Company had paid all
of its assumed asbestos-related liabilities. G-I Holdings and GAFBMC have
jointly and severally agreed to indemnify the Company against any other existing
or future claims related to asbestos-related liabilities if asserted against the
Company.
GAF has advised the Company that, as of July 2, 2000, it is defending
approximately 135,700 pending alleged Asbestos Claims, having received notice of
approximately 27,500 new Asbestos Claims during the first six months of 2000.
GAF has advised that the Center for Claims Resolution ("CCR"), a non-profit
organization set up to administer and handle asbestos-related personal injury
claims against the participating companies and in which GAF was a member,
terminated GAF's membership, effective January 17, 2000. GAF has advised the CCR
that such termination was unauthorized and that it intends to take appropriate
measures to protect its rights to pursue claims against the CCR and its member
companies for reimbursement of amounts that GAF believes it has been overcharged
since 1995 in respect of asbestos-related liability payments made to the CCR,
for damages arising out of this improper termination and for other improper
actions. Currently, the disputes between GAF and the CCR are the subject of
pending Alternative Dispute Proceedings. GAF has advised that in judicial
proceedings in connection with pending underlying asbestos-related claims, other
than the pending claims referred to above, it is disputing its liability in
respect of settlements entered into by the CCR, including, among other things,
the propriety of the allocation by the CCR of GAF's liability payment shares in
respect of such settlements.
GAF has confirmed that it has experienced a significant increase in the
rate of new Asbestos Claims, principally involving claimants without any
asbestos-related impairment, and amounts demanded to settle these claims. GAF
anticipates that these trends will continue for the foreseeable future, and that
the percentage of Asbestos Claims filed by individuals with no physical
impairment will remain high. Additionally, GAF believes that the recent filing
for bankruptcy by two defendants in asbestos litigation, Babcox & Wilcox and
Pittsburgh Corning, as well as potential bankruptcy filings by other asbestos
defendants, could increase the amounts demanded to settle Asbestos Claims
brought against GAF. Moreover, GAF has advised that it is experiencing an
increasingly adverse litigation environment in particular jurisdictions,
including Mississippi and Texas. GAF believes that the trends referred to above
and the CCR's termination of GAF's membership resulted from, or were induced by,
in no small part, retaliatory actions taken by asbestos lawyers against GAF in
connection with GAF's active support of proposed legislation currently pending
in Congress to address the national asbestos litigation crisis.
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
GAF and G-I Holdings had available, as of July 2, 2000, $71.8 million
of aggregate insurance coverage relating to asbestos-related bodily injury
claims, which amount is reduced as asbestos-related liabilities are satisfied.
GAF expects to receive $60.1 million of these insurance proceeds by September
30, 2000. The insurance carriers responsible for making these payments have
agreed to make them, subject to the satisfaction of certain conditions. Although
GAF believes that these conditions will be satisfied, it cannot assure this
result. If these conditions are not satisfied, GAF has advised the Company that
it may be unable to meet its obligations with respect to previously committed
settlements of asbestos-related bodily injury claims.
GAF has stated that it is committed to effecting a comprehensive
resolution of Asbestos Claims and that it is exploring options to accomplish
such resolution, including the support of the proposed Congressional
legislation, but there can be no assurance that these efforts will be
successful.
The Company believes that it will not sustain any additional liability
in connection with asbestos-related claims. While the Company cannot predict
whether any asbestos-related claims will be asserted against it or its assets,
or the outcome of any litigation relating to those claims, the Company believes
that it has meritorious defenses to any claim that could be so asserted. In
addition, G-I Holdings and GAFBMC have jointly and severally indemnified the
Company with respect to asbestos-related claims, and G-I Holdings has advised
the Company that it believes it has and will have sufficient resources to enable
it to satisfy any indemnification obligations. However, GAF has advised the
Company that depending upon whether the trends described above continue, whether
other retaliatory actions are taken, the ultimate resolution of the disputes
between GAF and the CCR, the impact of the bankruptcies referred to above, the
receipt of the insurance proceeds referred to above, and whether the proposed
legislation currently pending in Congress is enacted into law, its financial
condition (particularly, its liquidity) could be materially adversely affected
by one or more of these factors. Should GAF or GAFBMC be unable to satisfy
judgments against it in asbestos-related lawsuits, its judgment creditors might
seek to enforce their judgments against the assets of GAF, including its
holdings of G-I Holdings common stock, or GAFBMC, including its indirect
holdings of the Company's common stock. This enforcement could result in a
change of control with respect to the Company.
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, 10 and 15 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
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 GAF
On September 15, 1997, GAF received a notice from the Internal Revenue
Service (the "Service") 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 a subsidiary of GAF, GFC, held an
interest. The claim of the Service for interest and penalties, after taking into
account the effect on the use of net operating losses and foreign tax credits,
could result in GAF incurring liabilities significantly in excess of the
deferred tax liability of $131.4 million that it recorded in 1990 in connection
with this matter. GAF has advised the Company that it believes that it will
prevail in this matter, although there can be no assurance in this regard.
However, if GAF is unsuccessful in challenging its tax deficiency notice, the
ability of GAF to satisfy its tax obligation would be dependent on the cash
flows of the Company and GFC. 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. GAF, G-I Holdings and certain
subsidiaries of GAF have agreed to jointly and severally indemnify the Company
against any tax liability associated with the surfactants partnership, which the
Company would be severally liable for, together with GAF and several current and
former subsidiaries of GAF, should GAF be unable to satisfy such liability. For
the possible consequences to the Company of the failure of GAF to satisfy this
liability and other information relating to GAF, see the penultimate paragraph
of " - Asbestos Litigation Against GAF" above.
Note 5. New Accounting Standard
In 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards requiring that every derivative instrument be recorded in
the balance sheet as either an asset or liability measured at its fair value.
SFAS No. 133 requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains and losses to
offset related results on the hedged item in the income statement.
SFAS No. 133, as amended by SFAS No. 137 and 138, is effective for fiscal
years beginning after June 15, 2000, but may be adopted earlier. The Company has
not yet determined the effect of adoption of SFAS No. 133.
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Subsequent Event
On July 5, 2000, the Company issued $35 million of its 10 1/2% Senior
Notes due 2002 (the "2002 Notes") at 97.161% of the principal amount. Building
Materials Investment Corporation and Building Materials Manufacturing
Corporation guaranteed the Company's obligations under the 2002 Notes. The net
proceeds were used to repay the Company's $31.85 million bank term loan due 2004
with the remaining net proceeds used for general corporate purposes. In
connection with the extinguishment of such debt, the remaining unamortized
financing fees of approximately $0.3 million, net of tax, will be recorded as an
extraordinary item in the third quarter of 2000.
Note 7. Guarantor Financial Information
Effective January 1, 1999, Building Materials Corporation of America ("the
Company" or "Parent Company") transferred all of its investment assets and
intellectual property assets to Building Materials Investment Corporation
("BMIC"), a newly-formed, wholly-owned subsidiary. In connection with this
transfer, BMIC agreed to guarantee all of the Company's obligations under the
Company's then existing bank credit facility, the Company's 7 3/4% Senior Notes
due 2005, the 8 5/8% Senior Notes due 2006, the 8% Senior Notes due 2007 (the
"2007 Notes"), the 8% Senior Notes due 2008 and the then outstanding 11 3/4%
Senior Deferred Coupon Notes due 2004 (collectively, the "Senior Notes"). The
Company also transferred all of its manufacturing assets, other than those
located in Texas, to Building Materials Manufacturing Corporation ("BMMC"),
another newly-formed, wholly-owned subsidiary. In connection with this transfer,
BMMC agreed to become a co-obligor on the 2007 Notes and to guarantee the
Company's obligations under its then existing credit facility and the other
Senior Notes. In addition, BMIC and BMMC guaranteed the Company's obligations
under its three-year bank credit facility and the Company's term loan entered
into in August 1999. The guarantees of BMIC and BMMC are full, unconditional and
joint and several.
In addition, in connection with the above transactions, 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 BMIC for a license fee charged as a percentage of net
sales. The license agreements are subject to annual renewal, unless terminated
by either party to the agreements with 60 days written notice. Also, effective
January 1, 1999, BMMC sells all finished goods to the Company at a manufacturing
profit.
Presented below is condensed consolidating financial information for BMIC
and BMMC. This financial information should be read in conjunction with the
Consolidated Financial Statements and other notes related thereto. Separate
financial information for BMIC and BMMC is not included herein because
management has determined that such information is not material to investors.
9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Second Quarter Ended July 4, 1999
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 248,731 $ - $ 61,763 $ - $ 310,494
Intercompany net sales................ 2,791 165,045 18,144 (185,980) -
--------- --------- --------- --------- ---------
Total net sales....................... 251,522 165,045 79,907 (185,980) 310,494
--------- --------- --------- --------- ---------
Costs and expenses:
Cost of products sold............... 185,938 149,595 67,262 (185,980) 216,815
Selling, general and administrative. 41,542 10,354 10,825 62,721
Transition service agreement
(income) expense.................. (250) 250 -
Goodwill amortization............... 160 348 508
--------- --------- --------- --------- --------
Total costs and expenses.............. 227,390 160,199 78,435 (185,980) 280,044
--------- --------- --------- --------- --------
Operating income...................... 24,132 4,846 1,472 - 30,450
Equity in earnings of subsidiaries.... 10,323 (10,323) -
Intercompany licensing income
(expense), net...................... (7,462) 7,462 -
Interest expense, net................. (6,280) (3,629) (3,023) (12,932)
Other income (expense), net........... (2,188) 9,255 7,067
--------- --------- --------- ---------- --------
Income (loss) before income taxes..... 18,525 17,934 (1,551) (10,323) 24,585
Income tax (provision) benefit........ (3,037) (6,633) 573 (9,097)
--------- --------- --------- ---------- --------
Net income (loss)..................... $ 15,488 $ 11,301 $ (978) $ (10,323) $ 15,488
======== ======== ========= ========== ========
10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Second Quarter Ended July 2, 2000
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 262,811 $ - $ 62,963 $ - $325,774
Intercompany net sales................ 2,057 177,868 25,763 (205,688) -
--------- --------- --------- --------- --------
Total net sales....................... 264,868 177,868 88,726 (205,688) 325,774
--------- --------- --------- --------- --------
Costs and expenses:
Cost of products sold............... 200,223 161,250 74,516 (205,688) 230,301
Selling, general and administrative. 43,591 11,437 11,291 66,319
Goodwill amortization............... 160 348 508
--------- --------- --------- --------- --------
Total costs and expenses.............. 243,974 172,687 86,155 (205,688) 297,128
--------- --------- --------- --------- --------
Operating income...................... 20,894 5,181 2,571 - 28,646
Equity in earnings of subsidiaries.... 6,735 (6,735) -
Intercompany licensing income
(expense), net...................... (7,884) 7,884 -
Interest expense, net................. (6,336) (2,108) (4,090) (12,534)
Other income (expense), net........... (2,511) 261 - (2,250)
--------- --------- --------- --------- ---------
Income (loss) before income taxes..... 10,898 11,218 (1,519) (6,735) 13,862
Income tax (provision) benefit........ (2,165) (3,526) 562 (5,129)
--------- --------- --------- --------- --------
Net income (loss)..................... $ 8,733 $ 7,692 $ (957) $ (6,735) $ 8,733
========= ========= ========= ========= ========
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Six Months Ended July 4, 1999
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 459,686 $ - $ 113,736 $ - $573,422
Intercompany net sales................ 3,792 309,668 34,188 (347,648) -
--------- --------- --------- --------- --------
Total net sales....................... 463,478 309,668 147,924 (347,648) 573,422
--------- --------- --------- --------- --------
Costs and expenses:
Cost of products sold............... 348,504 279,990 126,156 (347,648) 407,002
Selling, general and administrative. 77,842 20,072 21,332 119,246
Goodwill amortization............... 320 697 1,017
Transition service agreement
(income) expense................. (500) 500 -
--------- --------- --------- --------- --------
Total costs and expenses.............. 426,166 300,562 148,185 (347,648) 527,265
--------- --------- --------- --------- --------
Operating income (loss)............... 37,312 9,106 (261) - 46,157
Equity in earnings of subsidiaries.... 13,849 (13,849) -
Intercompany licensing income
(expense), net...................... (13,791) 13,791 -
Interest expense, net................. (13,570) (5,625) (5,640) (24,835)
Other income (expense), net........... (4,054) 10,611 - 6,557
--------- --------- --------- --------- ---------
Income (loss) before income taxes..... 19,746 27,883 (5,901) (13,849) 27,879
Income tax (provision) benefit........ (2,183) (10,316) 2,183 (10,316)
--------- --------- --------- --------- --------
Net income (loss)..................... $ 17,563 $ 17,567 $ (3,718) $(13,849) $ 17,563
========= ========= ========= ========= ========
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Cash Flows
Six Months Ended July 4, 1999
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Consolidated
------- ------------ ------------- ------------
Cash and cash equivalents, beginning of period....... $ 3 $ 21,748 $ 3,238 $ 24,989
--------- --------- --------- --------
Cash provided by (used in) operating activities:
Net income(loss)..................................... 3,714 17,567 (3,718) 17,563
Adjustments to reconcile net income(loss)to net
cash provided by(used in)operating activities:
Depreciation..................................... 1,281 10,299 4,080 15,660
Goodwill and other amortization.................. 588 697 1,285
Deferred income taxes............................ 9,900 9,900
Noncash interest charges......................... 2,290 2,290
Increase in working capital items.................... (53,454) (7,740) (23,291) (84,485)
Decrease in product warranty claims.................. (9,803) (107) (9,910)
Purchases of trading securities...................... (124,696) (124,696)
Proceeds from sales of trading securities............ 224,452 224,452
Change in net receivable from/payable to
related parties.................................... 3,495 (101,260) 32,528 (65,237)
Other, net........................................... (315) (6,366) 468 (6,213)
------- -------- -------- --------
Net cash provided by(used in)operating activities.... (42,304) 12,256 10,657 (19,391)
--------- --------- --------- --------
Cash provided by(used in)investing activities:
Capital expenditures............................... 120 (18,747) (8,035) (26,662)
Purchases of available-for-sale securities......... (56,469) (56,469)
Purchases of held-to-maturity securities .......... (1,401) (1,401)
Proceeds from sales of available-for-sale
securities........................................ 59,493 59,493
Proceeds from held-to-maturity securities.......... 7,758 7,758
Proceeds from sales of other short-term
investments....................................... 21,145 21,145
--------- --------- --------- -------
Net cash provided by(used in)investing activities.... 120 11,779 (8,035) 3,864
--------- --------- --------- -------
Cash provided by (used in) financing activities:
Proceeds from sale of accounts receivable.......... 43,494 43,494
Increase in short-term debt........................ 48 48
Proceeds from issuance of long-term debt........... 3,500 3,500
Repayments of long-term debt....................... (614) (2,208) (43) (2,865)
Financing fees and expenses........................ (425) (171) (596)
--------- --------- ---------- --------
Net cash provided by (used in) financing activities.. 42,455 1,169 (43) 43,581
--------- --------- --------- -------
Net change in cash and cash equivalents.............. 271 25,204 2,579 28,054
--------- --------- --------- -------
Cash and cash equivalents, end of period............. $ 274 $ 46,952 $ 5,817 $ 53,043
========= ========= ========= ========
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Balance Sheet
December 31, 1999
(Thousands)
Non-
Parent Guarantor Guarantor Elim-
Company Subsidiaries Subsidiaries inations Consolidated
--------- ------------- ------------ ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents ..............$ 81 $ 53,184 $ 2,687 $ - $ 55,952
Investments in trading securities....... 687 687
Investments in available-for-sale
securities............................ 29,702 29,702
Other short-term investments............ 1,590 1,590
Accounts receivable, trade.............. 1,590 21,348 22,938
Accounts receivable, other.............. 57,200 348 5,344 62,892
Receivable from related parties......... 59,132 59,132
Inventories............................. 52,903 23,210 32,502 108,615
Other current assets.................... 1,208 2,199 832 4,239
------- --------- --------- --------- --------
Total Current Assets.................. 172,114 110,920 62,713 - 345,747
Investment in subsidiaries................ 273,195 (273,195) -
Intercompany loans including accrued
interest................................ 166,762 (166,762) -
Due from(to)subsidiaries, net............. (146,942) 161,660 (14,718) -
Property, plant and equipment, net........ 32,821 256,542 121,340 410,703
Excess of cost over net assets of
businesses acquired, net................ 18,739 51,669 70,408
Deferred income tax benefits.............. 45,561 45,561
Other assets.............................. 15,454 6,901 338 22,693
--------- --------- --------- --------- ---------
Total Assets.............................. $ 577,704 $ 536,023 $ 54,580 $(273,195) $ 895,112
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt.... $ 2,333 $ 3,729 $ 87 $ - $ 6,149
Accounts payable........................ 41,799 28,146 14,389 84,334
Payable to related party................ 12,382 2,583 59 15,024
Accrued liabilities..................... 19,695 87,228 8,905 115,828
Reserve for product warranty claims..... 13,400 1,100 14,500
--------- --------- --------- --------- --------
Total Current Liabilities............. 89,609 121,686 24,540 - 235,835
Long-term debt less current maturities.... 435,398 165,194 153 600,745
Reserve for product warranty claims....... 16,127 3,687 19,814
Other liabilities......................... 14,881 2,148 17,029
--------- --------- --------- --------- --------
Total Liabilities......................... 556,015 286,880 30,528 - 873,423
Total Stockholders' Equity, net........... 21,689 249,143 24,052 (273,195) 21,689
--------- --------- --------- --------- --------
Total Liabilities and Stockholders' Equity $ 577,704 $ 536,023 $ 54,580 $(273,195) $ 895,112
========= ========= ========= ========== =========
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Six Months Ended July 2, 2000
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 499,588 $ - $ 116,002 $ - $615,590
Intercompany net sales................ 4,278 350,595 51,313 (406,186) -
--------- --------- --------- --------- --------
Total net sales....................... 503,866 350,595 167,315 (406,186) 615,590
--------- --------- --------- --------- --------
Costs and expenses:
Cost of products sold............... 390,784 318,091 141,969 (406,186) 444,658
Selling, general and administrative. 82,238 22,292 21,939 126,469
Goodwill amortization............... 321 703 1,024
--------- --------- --------- --------- --------
Total costs and expenses.............. 473,343 340,383 164,611 (406,186) 572,151
--------- --------- --------- --------- --------
Operating income...................... 30,523 10,212 2,704 - 43,439
Equity in earnings of subsidiaries.... 10,420 (10,420) -
Intercompany licensing income
(expense), net...................... (14,988) 14,988 -
Interest expense, net................. (12,517) (4,818) (7,644) (24,979)
Other income (expense), net........... (4,512) 1,098 - (3,414)
--------- --------- --------- --------- ---------
Income (loss) before income taxes..... 8,926 21,480 (4,940) (10,420) 15,046
Income tax (provision) benefit........ 553 (7,948) 1,828 (5,567)
--------- --------- --------- --------- --------
Net income (loss)..................... $ 9,479 $ 13,532 $ (3,112) $(10,420) $ 9,479
========= ========= ========= ========= ========
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Balance Sheet
July 2, 2000
(Thousands)
Non-
Parent Guarantor Guarantor Elim-
Company Subsidiaries Subsidiaries inations Consolidated
--------- ------------- ------------ ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents ..............$ 13 $ 58,439 $ 5,215 $ - $ 63,667
Investments in trading securities....... 164 164
Investments in available-for-sale
securities............................ 35,363 35,363
Accounts receivable, trade.............. 31,474 31,474
Accounts receivable, other.............. 71,003 3,027 3,720 77,750
Receivable from related parties......... 75,310 - - 75,310
Inventories............................. 65,235 25,513 39,981 130,729
Other current assets.................... 2,089 2,861 1,382 6,332
------- --------- --------- --------- --------
Total Current Assets.................. 213,650 125,367 81,772 - 420,789
Investment in subsidiaries................ 292,520 (292,520) -
Intercompany loans including accrued
interest................................ 174,872 (174,872) -
Due from(to)subsidiaries, net............. (127,723) 146,950 (19,227) -
Property, plant and equipment, net........ 31,581 268,758 116,419 416,758
Excess of cost over net assets of
businesses acquired, net................ 18,420 50,400 68,820
Deferred income tax benefits.............. 42,266 42,266
Other assets.............................. 9,612 10,771 332 20,715
--------- --------- --------- --------- ---------
Total Assets.............................. $ 655,198 $ 551,846 $ 54,824 $(292,520) $ 969,348
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt.... $ 1,806 $ 5,116 $ 105 $ - $ 7,027
Accounts payable........................ 62,283 33,565 16,518 112,366
Payable to related party................ 14,957 4,884 152 19,993
Accrued liabilities..................... 24,129 74,682 10,422 109,233
Reserve for product warranty claims..... 13,400 1,100 14,500
--------- --------- --------- --------- --------
Total Current Liabilities............. 116,575 118,247 28,297 - 263,119
Long-term debt less current maturities.... 475,523 162,020 111 637,654
Reserve for product warranty claims....... 12,665 3,515 16,180
Other liabilities......................... 14,546 1,960 16,506
--------- --------- --------- --------- --------
Total Liabilities......................... 619,309 280,267 33,883 - 933,459
Total Stockholders' Equity, net........... 35,889 271,579 20,941 (292,520) 35,889
--------- --------- --------- --------- --------
Total Liabilities and Stockholders' Equity $ 655,198 $ 551,846 $ 54,824 $(292,520) $ 969,348
========= ========= ========== ========== =========
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Note 7. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Cash Flows
Six Months Ended July 2, 2000
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Consolidated
--------- ------------ ------------ ------------
Cash and cash equivalents, beginning of period....... $ 81 $ 53,184 $ 2,687 $ 55,952
--------- --------- --------- --------
Cash provided by(used in)operating activities:
Net income(loss)..................................... (941) 13,532 (3,112) 9,479
Adjustments to reconcile net income(loss)to net
cash provided by(used in)operating activities:
Depreciation..................................... 1,418 12,124 4,985 18,527
Goodwill and other amortization.................. 735 704 1,439
Noncash interest charges......................... 966 966
Increase in working capital items ................... (42,101) (12,771) (13,688) (68,560)
Decrease in product warranty claims.................. (3,462) (172) (3,634)
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.................................... (40,933) 17,011 12,713 (11,209)
Other, net........................................... 7,212 (2,801) 451 4,862
--------- --------- --------- --------
Net cash provided by(used in)operating activities.... (77,106) 27,936 1,881 (47,289)
--------- --------- --------- --------
Cash provided by(used in)investing activities:
Capital expenditures............................... (186) (24,581) (3,936) (28,703)
Proceeds from sale of assets....................... 4,607 4,607
Purchases of available-for-sale securities......... (400) (400)
Proceeds from sales of available-for-sale
securities....................................... 3,643 3,643
Proceeds from sales of other short-term
investments...................................... 1,590 1,590
--------- --------- --------- --------
Net cash provided by(used in)investing activities.... (186) (19,748) 671 (19,263)
--------- --------- --------- --------
Cash provided by(used in)financing activities:
Proceeds from sale of accounts receivable.......... 41,593 41,593
Increase in borrowings under revolving
credit facility.................................. 40,000 40,000
Repayments of long-term debt....................... (552) (1,787) (24) (2,363)
Financing fees and expenses........................ (2,926) (1,146) (4,072)
Stock repurchases.................................. (891) (891)
--------- --------- -------- ---------
Net cash provided by (used in) financing activities.. 77,224 (2,933) (24) 74,267
--------- --------- -------- ---------
Net change in cash and cash equivalents.............. (68) 5,255 2,528 7,715
---------- --------- -------- ---------
Cash and cash equivalents, end of period............. $ 13 $ 58,439 $ 5,215 $ 63,667
========= ========= ========= =========
17
SIGNATURES
-----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants listed below have duly caused this report
to be signed on their behalf by the undersigned, thereunto duly authorized.
BUILDING MATERIALS CORPORATION OF AMERICA
BUILDING MATERIALS MANUFACTURING CORPORATION
DATE: October 10, 2000 BY: /s/ William C. Lang
----------------- -----------------------
William C. Lang
Executive Vice President,
Chief Administrative Officer
and Chief Financial Officer
(Principal Financial Officer)
DATE: October 10, 2000 BY: /s/James T. Esposito
----------------- ------------------------
James T. Esposito
Vice President and Controller
(Principal Accounting Officer)
18
SIGNATURES
-----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant listed below has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
BUILDING MATERIALS INVESTMENT CORPORATION
DATE: October 10, 2000 BY: /s/William C. Lang
----------------- ------------------------
William C. Lang
Executive Vice President,
Chief Administrative Officer
and Chief Financial Officer
(Principal Financial and Accounting
Officer)
19