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 October 1, 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 November 10, 2000, 1,015,514 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 November 10, 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
Part I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Third Quarter Ended Nine Months Ended
--------------------- ---------------------
October 3, October 1, October 3, October 1,
1999 2000 1999 2000
--------- --------- --------- ----------
(Thousands)
Net sales ............................ $312,811 $330,882 $886,232 $946,471
-------- -------- -------- --------
Costs and expenses:
Cost of products sold .............. 219,271 242,460 626,273 687,117
Selling, general and administrative. 64,894 65,843 184,139 192,313
Goodwill amortization .............. 509 506 1,526 1,530
Gain on sale of assets.............. - (17,505) - (17,505)
Nonrecurring charges................ 2,650 - 2,650 -
-------- -------- -------- --------
Total costs and expenses.......... 287,324 291,304 814,588 863,455
-------- -------- -------- --------
Operating income ..................... 25,487 39,578 71,644 83,016
Interest expense ..................... (12,308) (13,369) (37,144) (38,348)
Other income(expense), net............ 556 (2,673) 7,113 (6,086)
-------- -------- -------- --------
Income before income taxes
and extraordinary losses ........... 13,735 23,536 41,613 38,582
Income taxes ......................... (5,082) (8,708) (15,397) (14,275)
-------- -------- -------- --------
Income before extraordinary losses.... 8,653 14,828 26,216 24,307
Extraordinary losses, net of income tax
benefits of $761 and $194,
respectively........................ (1,296) (330) (1,296) (330)
-------- -------- -------- --------
Net income ........................... $ 7,357 $ 14,498 $ 24,920 $ 23,977
======== ======== ======== ========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
1
BUILDING MATERIALS CORPORATION OF AMERICA
CONSOLIDATED BALANCE SHEETS
October 1,
December 31, 2000
1999 (Unaudited)
------------ -----------
(Thousands)
ASSETS
Current Assets:
Cash and cash equivalents......................... $ 55,952 $ 92,620
Investments in trading securities................. 687 163
Investments in available-for-sale securities...... 29,702 34,236
Other short-term investments...................... 1,590 -
Accounts receivable, trade, net................... 22,938 25,366
Accounts receivable, other........................ 62,892 71,920
Receivable from related parties .................. 59,132 -
Inventories....................................... 108,615 120,543
Other current assets.............................. 4,239 6,222
--------- ---------
Total Current Assets............................ 345,747 351,070
Property, plant and equipment, net.................. 410,703 417,493
Excess of cost over net assets of businesses
acquired, net .................................... 70,408 65,814
Deferred income tax benefits........................ 45,561 37,928
Other assets........................................ 22,693 22,766
--------- ---------
Total Assets........................................ $ 895,112 $ 895,071
========= =========
LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT)
Current Liabilities:
Current maturities of long-term debt.............. $ 6,149 $ 7,054
Accounts payable.................................. 84,334 92,991
Payable to related party.......................... 15,024 15,517
Accrued liabilities............................... 115,828 121,156
Reserve for product warranty claims............... 14,500 14,500
--------- ---------
Total Current Liabilities....................... 235,835 251,218
--------- ---------
Long-term debt less current maturities.............. 600,745 668,671
--------- ---------
Reserve for product warranty claims................. 19,814 14,963
--------- ---------
Other liabilities................................... 17,029 16,593
--------- ---------
Stockholders' Equity (Deficit):
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
1,015,514 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 -
Accumulated deficit............................... - (42,733)
Accumulated other comprehensive loss ............. (18,944) (13,642)
--------- ---------
Total Stockholders' Equity (Deficit)............ 21,689 (56,374)
--------- ---------
Total Liabilities and Stockholders'Equity (Deficit) $ 895,112 $ 895,071
========= =========
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)
Nine Months Ended
----------------------
October 3, October 1,
1999 2000
--------- ----------
(Thousands)
Cash and cash equivalents, beginning of period.............. $ 24,989 55,952
--------- --------
Cash provided by (used in) operating activities:
Net income................................................ 24,920 23,977
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Extraordinary losses.................................. 1,296 330
Gain on sale of assets................................ - (17,505)
Depreciation ......................................... 23,917 27,076
Goodwill and other amortization....................... 1,914 2,164
Deferred income taxes ................................ 14,782 4,713
Noncash interest charges.............................. 2,727 1,901
Increase in working capital items......................... (61,100) (51,837)
Decrease in product warranty claims....................... (12,341) (4,851)
Purchases of trading securities........................... (132,607) (794)
Proceeds from sales of trading securities................. 235,676 1,860
Change in net receivable from/payable to related parties.. (86,950) 59,625
Other, net................................................ (11,959) 4,276
-------- --------
Net cash provided by operating activities................... 275 50,935
-------- --------
Cash provided by (used in) investing activities:
Capital expenditures...................................... (36,854) (41,648)
Proceeds from sale of assets.............................. - 31,702
Purchases of available-for-sale securities................ (75,864) (850)
Purchases of held-to-maturity securities.................. (1,401) -
Proceeds from sales of available-for-sale securities...... 88,915 4,506
Proceeds from held-to-maturity securities................. 7,758 -
Proceeds from sales of other short-term investments....... 21,420 1,590
-------- --------
Net cash provided by (used in) investing activities......... 3,974 (4,700)
-------- --------
Cash provided by (used in) financing activities:
Proceeds from sale of accounts receivable................. 33,199 35,995
Increase in short-term debt............................... 91 -
Proceeds from issuance of long-term debt.................. 37,138 34,044
Increase in borrowings under revolving credit facility.... - 70,000
Repayments of long-term debt.............................. (35,627) (35,564)
Distributions to related parties.......................... - (106,161)
Net issuance(repurchase) of common stock.................. 436 (1,181)
Financing fees and expenses............................... (1,225) (6,700)
-------- --------
Net cash provided by (used in) financing activities......... 34,012 (9,567)
-------- --------
Net change in cash and cash equivalents..................... 38,261 36,668
-------- --------
Cash and cash equivalents, end of period.................... $ 63,250 $ 92,620
======== ========
Supplemental Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capitalized).................... $ 29,692 $ 36,982
Income taxes............................................ 922 9,527
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, as of October 1, 2000, was a 99.9% owned subsidiary of
BMCA Holdings Corporation ("BHC"), which is an indirect 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 October 1, 2000 and the results
of operations and cash flows for the periods ended October 3, 1999 and October
1, 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. Distribution to GAF
The Company has experienced a reduction in cash flow caused by increased
energy and raw material costs that it has been unable to fully recapture through
price adjustments. This reduction has limited the amount of funds available for
distribution to GAF to satisfy GAF's obligations, including its asbestos-related
claims and liabilities. In addition, as discussed in Note 6, GAF has stated that
recent trends in the asbestos litigation environment have negatively impacted
asbestos defendants. Accordingly, on October 1, 2000, the Company determined
that its receivable from related parties of $106.2 million was uncollectible,
and as a result, such amounts were written-off as a distribution against paid-in
capital in the amount of $39.5 million and as a charge to the accumulated
deficit in the amount of $66.7 million.
Note 2. Sale of Assets
On September 29, 2000, the Company sold certain manufacturing and other
assets related to the Compton, California based security products business of LL
Building Products Inc. for net cash proceeds of approximately $27.1 million,
which resulted in a pre-tax gain of $17.5 million. The security products
business did not have a significant impact on the Company's performance.
Note 3. Plant Closings
In response to current market conditions, to better service shifting
customer demand and to reduce costs, the Company has closed four manufacturing
facilities located in Monroe, Georgia, Port Arthur, Texas, Corvallis, Oregon,
and Albuquerque, New Mexico during the fourth quarter of 2000. As market growth
and customer demand improves, the Company may reinstate production at one or
more of these manufacturing facilities in the future. The effect of closing
these facilities is not expected to be significant to the Company's results of
operations.
4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. 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.
Third Quarter Ended Nine Months Ended
------------------- --------------------
October 3, October 1, October 3, October 1,
1999 2000 1999 2000
--------- --------- --------- ---------
(Thousands)
Net income............................... $7,357 $14,498 $24,920 $23,977
------ ------- ------- -------
Other comprehensive income(loss)
net of tax:
Change in unrealized gains (losses) on
available-for-sale securities:
Unrealized holding gains (losses)
arising during the period, net of
income tax (provision) benefit of
$3,165, $170, $(1,491), and $(3,325)
respectively......................... (5,389) (289) 1,803 5,663
Less: Reclassification adjustment
for gains included in net
income, net of income taxes
of $118, $11, $925
and $212 respectively................ 201 19 1,576 361
------- ------- ------- -------
Total other comprehensive income (loss).. (5,590) (308) 227 5,302
------- ------- ------- -------
Comprehensive income..................... $ 1,767 $14,190 $25,147 $29,279
======= ======= ======= =======
Changes in the components of "Accumulated other comprehensive loss" for the
nine months ended October 1, 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 .. 5,302 - 5,302
-------- -------- --------
Balance, October 1, 2000........... $(12,291) $ (1,351) $(13,642)
======== ======== ========
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 5. Inventories
Inventories consist of the following:
December 31, October 1,
1999 2000
------------ ---------
(Thousands)
Finished goods .................. $ 68,878 $ 72,794
Work in process ................. 13,974 17,567
Raw materials and supplies ...... 27,462 32,831
-------- --------
Total ........................ 110,314 123,192
Less LIFO reserve ............... (1,699) (2,649)
-------- --------
Inventories ..................... $108,615 $120,543
======== ========
Note 6. 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, GAF Building Materials Corporation ("GAFBMC"). As of
March 30, 1997, the Company had paid all of its assumed asbestos-related
liabilities. G-I Holdings Inc. ("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 October 1, 2000, it is
defending approximately 148,867 pending alleged Asbestos Claims, having received
notice of approximately 41,718 new Asbestos Claims during the first nine 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 filings
for bankruptcy by three
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Contingencies (Continued)
defendants in asbestos litigation, Owens Corning, The Babcock & Wilcox Company,
and Pittsburgh Corning Corporation, as well as potential bankruptcy filings by
other asbestos defendants, could increase by a substantial factor the amounts
demanded to settle Asbestos Claims brought against, and thus the financial
burden on, the remaining asbestos defendants, including 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. GAF also believes that the October 5, 2000 filing by
Owens Corning for protection from creditors under the federal bankruptcy laws is
further evidence of how these trends in the asbestos litigation environment have
negatively impacted asbestos defendants.
GAF and G-I Holdings had available, as of October 1, 2000, an aggregate
of $9.8 million of remaining insurance coverage relating to asbestos-related
bodily injury claims, which amount is reduced as asbestos-related liabilities
are satisfied. In addition, the Company has experienced a reduction in its cash
flow which has been caused by increased energy and raw material costs that the
Company has been unable to recapture fully through price adjustments. This
reduction has limited the amount of funds available for distribution to GAF to
satisfy GAF's obligations, including its asbestos-related claims and
liabilities.
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.
As of October 1, 2000, 212 alleged Asbestos Claims have been filed against
the Company, with all such claims having been filed during September 2000. The
Company believes that it will not sustain any liability in connection with these
or any other asbestos-related claims. While the Company cannot predict whether
any additional 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. However, GAF
has advised the Company that the trends described above have continued and, as a
result, have had a material adverse effect on GAF's financial condition. 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.
7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Contingencies (Continued)
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 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, GAF Fiberglass
Corporation, 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 principally on the cash flows of the Company. 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, if and to the extent that the Company is severally liable for such
liability, 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 7. 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.
8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. New Accounting Standard (Continued)
SFAS No. 133, as amended by SFAS No. 137 and 138, is effective for fiscal
years beginning after June 15, 2000. If the Company had adopted SFAS No. 133 as
of October 1, 2000, the impact on the Company's Consolidated Financial
Statements would not have been significant.
Note 8. Debt Refinancing - Extraordinary Item
On July 5, 2000, the Company issued $35 million of 10 1/2% Senior Notes
due October 1, 2002 (the "2002 Notes") at 97.161% of the principal amount. 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, was recorded as an
extraordinary item.
Note 9. 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 then outstanding 11 3/4%
Senior Deferred Coupon Notes due 2004, 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") and the 8% Senior Notes due 2008(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, in August 1999, BMIC and BMMC guaranteed the
Company's obligations under its three-year bank credit facility and the
Company's then outstanding term loan, and in July 2000, BMIC and BMMC guaranteed
the Company's obligations under the 2002 Notes. 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 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Third Quarter Ended October 3, 1999
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 253,719 $ - $ 59,092 $ - $ 312,811
Intercompany net sales................ 1,793 196,876 21,409 (220,078) -
--------- --------- --------- --------- ---------
Total net sales....................... 255,512 196,876 80,501 (220,078) 312,811
--------- --------- --------- --------- ---------
Costs and expenses:
Cost of products sold............... 191,125 179,951 68,273 (220,078) 219,271
Selling, general and administrative. 43,086 11,191 10,617 64,894
Goodwill amortization............... 160 349 509
Nonrecurring charges ............... 2,650 2,650
--------- --------- --------- --------- ---------
Total costs and expenses.............. 237,021 191,142 79,239 (220,078) 287,324
--------- --------- --------- --------- ---------
Operating income...................... 18,491 5,734 1,262 - 25,487
Equity in earnings of subsidiaries.... 7,689 (7,689) -
Intercompany licensing income
(expense), net...................... (7,611) 7,611 -
Interest expense, net................. (7,408) (1,721) (3,179) (12,308)
Other income (expense), net........... (1,942) 2,497 1 556
--------- --------- --------- --------- ---------
Income (loss) before income taxes
and extraordinary losses........... 9,219 14,121 (1,916) (7,689) 13,735
Income tax (provision) benefit........ (566) (5,224) 708 (5,082)
Income (loss) before --------- --------- --------- --------- ---------
extraordinary losses............... 8,653 8,897 (1,208) (7,689) 8,653
Extraordinary losses, net of income
tax benefit of $761................ (1,296) (1,296)
--------- --------- --------- --------- ---------
Net income (loss)..................... $ 7,357 $ 8,897 $ (1,208) $ (7,689) $ 7,357
========= ========= ========= ========= =========
10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Third Quarter Ended October 1, 2000
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 276,529 $ - $ 54,353 $ - $ 330,882
Intercompany net sales................ 2,837 194,109 27,101 (224,047) -
--------- --------- --------- -------- ---------
Total net sales....................... 279,366 194,109 81,454 (224,047) 330,882
--------- --------- --------- -------- ---------
Costs and expenses:
Cost of products sold............... 217,038 179,247 70,222 (224,047) 242,460
Selling, general and administrative. 44,653 9,209 11,981 65,843
Goodwill amortization............... 160 346 506
Gain on Sale of Assets ............. (17,505) (17,505)
--------- --------- --------- -------- ---------
Total costs and expenses.............. 261,851 188,456 65,044 (224,047) 291,304
--------- --------- --------- -------- ---------
Operating income...................... 17,515 5,653 16,410 - 39,578
Equity in earnings of subsidiaries.... 15,638 (15,638) -
Intercompany licensing income
(expense), net...................... (8,296) 8,296 -
Interest expense, net................. (7,478) (1,910) (3,981) (13,369)
Other income (expense), net........... (3,027) 354 (2,673)
--------- --------- --------- -------- ---------
Income before income taxes
and extraordinary losses............ 14,352 12,393 12,429 (15,638) 23,536
Income tax (provision) benefit........ 476 (4,585) (4,599) (8,708)
--------- --------- --------- -------- ---------
Income before
extraordinary losses................ 14,828 7,808 7,830 (15,638) 14,828
Extraordinary losses, net of
income tax benefit of $194.......... (330) (330)
--------- --------- --------- -------- ---------
Net income ........................... $ 14,498 $ 7,808 $ 7,830 $ (15,638) $ 14,498
========= ========= ========= ========= =========
11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Nine Months Ended October 3, 1999
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ----------- ------------ ------------ ------------
Net sales................................. $ 713,405 $ - $ 172,827 $ - $ 886,232
Intercompany net sales.................... 5,585 506,455 55,597 (567,637) -
--------- --------- --------- --------- ---------
Total net sales........................... 718,990 506,455 228,424 (567,637) 886,232
--------- --------- --------- --------- ---------
Costs and expenses:
Cost of products sold................... 539,540 459,941 194,429 (567,637) 626,273
Selling, general and administrative..... 120,928 31,263 31,948 184,139
Goodwill amortization................... 480 1,046 1,526
Transition service agreement (income)
expense............................... (500) 500 -
Nonrecurring charges ................... 2,650 2,650
--------- --------- --------- --------- --------
Total costs and expenses.................. 663,098 491,704 227,423 (567,637) 814,588
--------- --------- --------- --------- --------
Operating income ......................... 55,892 14,751 1,001 - 71,644
Equity in earnings of subsidiaries........ 21,481 (21,481) -
Intercompany licensing income (expense),
net..................................... (21,402) 21,402 -
Interest expense, net..................... (20,978) (7,346) (8,820) (37,144)
Other income (expense), net............... (5,996) 13,108 1 7,113
--------- --------- --------- --------- --------
Income (loss) before income taxes
and extraordinary losses................ 28,997 41,915 (7,818) (21,481) 41,613
Income tax (provision) benefit............ (2,781) (15,508) 2,892 (15,397)
--------- --------- --------- --------- --------
Income (loss) before
extraordinary losses.................... 26,216 26,407 (4,926) (21,481) 26,216
Extraordinary losses, net of
income tax benefit of $761.............. (1,296) (1,296)
--------- --------- --------- --------- --------
Net income (loss)......................... $ 24,920 $ 26,407 $ (4,926) $ (21,481) $ 24,920
========= ========= ========= ========= ========
12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Income
Nine Months Ended October 1, 2000
(Thousands)
Non-
Parent Guarantor Guarantor
Company Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------ -----------
Net sales............................. $ 776,117 $ - $ 170,354 $ - $ 946,471
Intercompany net sales................ 7,115 544,703 78,415 (630,233) -
--------- --------- --------- --------- ---------
Total net sales....................... 783,232 544,703 248,769 (630,233) 946,471
--------- --------- --------- --------- ---------
Costs and expenses:
Cost of products sold............... 607,822 497,337 212,191 (630,233) 687,117
Selling, general and administrative. 126,892 31,501 33,920 192,313
Gain on sale of assets.............. (17,505) (17,505)
Goodwill amortization............... 481 1,049 1,530
--------- --------- --------- --------- ---------
Total costs and expenses.............. 735,195 528,838 229,655 (630,233) 863,455
--------- --------- --------- --------- ---------
Operating income...................... 48,037 15,865 19,114 - 83,016
Equity in earnings of subsidiaries.... 26,058 (26,058) -
Intercompany licensing income
(expense), net...................... (23,284) 23,284 -
Interest expense, net................. (19,995) (6,729) (11,624) (38,348)
Other income (expense), net........... (7,538) 1,452 (6,086)
--------- --------- --------- --------- ---------
Income before income taxes and
extraordinary losses................ 23,278 33,872 7,490 (26,058) 38,582
Income tax (provision) benefit........ 1,029 (12,533) (2,771) (14,275)
--------- --------- --------- --------- ---------
Income before
extraordinary losses................ 24,307 21,339 4,719 (26,058) 24,307
Extraordinary losses, net of
income tax benefit of $194.......... (330) (330)
--------- --------- --------- --------- ---------
Net income............................ $ 23,977 $ 21,339 $ 4,719 $ (26,058) $ 23,977
========= ========= ========= ========= =========
13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. 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, net....... 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 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Balance Sheet
October 1, 2000
(Thousands)
Non-
Parent Guarantor Guarantor Elim-
Company Subsidiaries Subsidiaries inations Consolidated
--------- ------------ ------------ ----------- ------------
ASSETS
Current Assets:
Cash and cash equivalents .............. $ 13 $ 89,982 $ 2,625 $ - $ 92,620
Investments in trading securities....... 163 163
Investments in available-for-sale
securities............................ 34,236 34,236
Accounts receivable, trade, net......... 25,366 25,366
Accounts receivable, other.............. 67,031 1,965 2,924 71,920
Inventories............................. 54,716 28,849 36,978 120,543
Other current assets.................... 2,238 2,946 1,038 6,222
-------- --------- --------- -------- ---------
Total Current Assets.................. 123,998 158,141 68,931 - 351,070
Investment in subsidiaries................ 307,668 (307,668) -
Intercompany loans including accrued
interest................................ 180,964 (180,964) -
Due from(to)subsidiaries, net............. (127,688) 113,644 14,044 -
Property, plant and equipment, net........ 28,512 277,586 111,395 417,493
Excess of cost over net assets of
businesses acquired, net................ 18,259 47,555 65,814
Deferred income tax benefits.............. 37,928 37,928
Other assets.............................. 9,497 12,930 339 22,766
--------- -------- --------- --------- ---------
Total Assets.............................. $ 579,138 $ 562,301 $ 61,300 $(307,668) $ 895,071
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT)
Current Liabilities:
Current maturities of long-term debt.... $ 1,540 $ 5,426 $ 88 $ - $ 7,054
Accounts payable........................ 47,458 30,283 15,250 92,991
Payable to related party................ 9,708 5,702 107 15,517
Accrued liabilities..................... 29,351 81,227 10,578 121,156
Reserve for product warranty claims..... 13,400 1,100 14,500
--------- --------- --------- --------- ---------
Total Current Liabilities............. 101,457 122,638 27,123 - 251,218
Long-term debt less current maturities.... 507,806 160,765 100 668,671
Reserve for product warranty claims....... 11,677 3,286 14,963
Other liabilities......................... 14,572 2,021 16,593
--------- --------- --------- --------- ---------
Total Liabilities......................... 635,512 283,403 32,530 - 951,445
Total Stockholders' Equity (Deficit), net (56,374) 278,898 28,770 (307,668) (56,374)
--------- --------- --------- --------- ---------
Total Liabilities and Stockholders'
Equity (Deficit)....................... $ 579,138 $ 562,301 $ 61,300 $(307,668) $ 895,071
========= ========= ========= ========= =========
15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Cash Flows
Nine Months Ended October 3, 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)..................................... 3,439 26,407 (4,926) 24,920
Adjustments to reconcile net income(loss)to net
cash provided by(used in)operating activities:
Extraordinary losses............................. 1,296 1,296
Depreciation..................................... 1,953 14,103 7,861 23,917
Goodwill amortization and other amortization..... 868 1,046 1,914
Deferred income taxes............................ 14,782 14,782
Noncash interest charges......................... 2,727 2,727
Increase in working capital items.................... (29,977) (13,657) (17,466) (61,100)
Decrease in product warranty claims.................. (12,007) (334) (12,341)
Purchases of trading securities...................... (132,607) (132,607)
Proceeds from sales of trading securities............ 235,676 235,676
Change in net receivable from/payable to
related parties.................................... (12,118) (100,370) 25,538 (86,950)
Other, net........................................... (2,163) (10,014) 218 (11,959)
--------- --------- --------- --------
Net cash provided by(used in)operating activities.... (31,200) 19,538 11,937 275
--------- --------- --------- --------
Cash provided by(used in)investing activities:
Capital expenditures............................... 197 (24,187) (12,864) (36,854)
Purchases of available-for-sale securities......... (75,864) (75,864)
Purchases of held-to-maturity securities........... (1,401) (1,401)
Proceeds from sales of available-for-sale
securities....................................... 88,915 88,915
Proceeds from held-to-maturity securities.......... 7,758 7,758
Proceeds from sales of other short-term
investments...................................... 21,420 21,420
--------- --------- --------- --------
Net cash provided by(used in)investing activities.... 197 16,641 (12,864) 3,974
--------- --------- --------- --------
Cash provided by(used in)financing activities:
Proceeds from sale of accounts receivable.......... 33,199 33,199
Increase in short-term debt........................ 91 91
Proceeds from issuance of long-term debt........... 31,850 5,288 37,138
Repayments of long-term debt....................... (32,982) (2,590) (55) (35,627)
Issuance of common stock........................... 436 436
Financing fees and expenses........................ (1,054) (171) (1,225)
--------- --------- --------- --------
Net cash provided by (used in) financing activities.. 31,449 2,618 (55) 34,012
--------- --------- --------- --------
Net change in cash and cash equivalents.............. 446 38,797 (982) 38,261
--------- --------- --------- --------
Cash and cash equivalents, end of period............. $ 449 $ 60,545 $ 2,256 $ 63,250
========= ========= ========= ========
16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Guarantor Financial Information - (Continued)
Building Materials Corporation of America
Condensed Consolidating Statement of Cash Flows
Nine Months Ended October 1, 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)..................................... (2,081) 21,339 4,719 23,977
Adjustments to reconcile net income(loss)to net
cash provided by(used in)operating activities:
Extraordinary losses............................. 330 330
Gain on sale of assets........................... (17,505) (17,505)
Depreciation..................................... 2,149 17,093 7,834 27,076
Goodwill and other amortization.................. 1,115 1,049 2,164
Deferred income taxes............................ 4,713 4,713
Noncash interest charges......................... 1,901 1,901
Increase in working capital items.................... (31,763) (11,867) (8,207) (51,837)
Decrease in product warranty claims.................. (4,450) (401) (4,851)
Purchases of trading securities...................... (794) (794)
Proceeds from sales of trading securities............ 1,860 1,860
Change in net receivable from/payable to
related parties.................................... 23,002 51,135 (14,512) 59,625
Other, net........................................... 9,238 (5,225) 263 4,276
--------- --------- --------- ---------
Net cash provided by(used in)operating activities.... 4,154 73,541 (26,760) 50,935
--------- --------- --------- ---------
Cash provided by(used in)investing activities:
Capital expenditures............................... (373) (36,323) (4,952) (41,648)
Proceeds from sale of assets....................... 31,702 31,702
Purchases of available-for-sale securities......... (850) (850)
Proceeds from sales of available-for-sale
securities....................................... 4,506 4,506
Proceeds from sales of other short-term
investments...................................... 1,590 1,590
--------- --------- --------- ---------
Net cash provided by(used in)investing activities.... (373) (31,077) 26,750 (4,700)
--------- --------- --------- ---------
Cash provided by(used in)financing activities:
Proceeds from sale of accounts receivable.......... 35,995 35,995
Proceeds from issuance of long-term debt........... 34,044 34,044
Increase in borrowings under revolving
credit facility.................................. 70,000 70,000
Repayments of long-term debt....................... (32,780) (2,732) (52) (35,564)
Distributions to related parties .................. (106,161) (106,161)
Financing fees and expenses........................ (3,766) (2,934) (6,700)
Net repurchase of common stock..................... (1,181) (1,181)
--------- --------- --------- ---------
Net cash used in financing activities................ (3,849) (5,666) (52) (9,567)
--------- --------- --------- ---------
Net change in cash and cash equivalents.............. (68) 36,798 (62) 36,668
--------- --------- --------- ---------
Cash and cash equivalents, end of period............. $ 13 $ 89,982 $ 2,625 $ 92,620
========= ========= ========= =========
17
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Third Quarter 2000 Compared With
Third Quarter 1999
The Company recorded third quarter 2000 net income of $14.5 million
compared with $7.4 million in the third quarter of 1999. The net income for the
quarter included an $11.0 million after-tax gain ($17.5 million pre-tax) from
the sale of certain assets of the security products business of LL Building
Products Inc. and an after-tax extraordinary loss of $0.3 million, resulting
from the extinguishment of debt. Net income for the same period last year
included an after-tax nonrecurring charge of $1.7 million related to the
settlement of a legal matter and an after-tax extraordinary loss of $1.3 million
resulting from the extinguishment of debt. Excluding the extraordinary and
nonrecurring items in both periods, net income would have been $3.8 million in
2000 compared with $10.4 million in the third quarter of 1999, with the decrease
primarily the result of lower operating income, lower investment income, and
higher interest expense.
The Company's net sales for the third quarter of 2000 were $330.9
million, a 5.8% increase over third quarter 1999 net sales of $312.8 million,
with the increase due to net sales gains in steep slope roofing products
(previously referred to as the residential roofing products line), partially
offset by lower net sales of low slope roofing products (previously referred to
as the commercial roofing products line). The increase in net sales of steep
slope roofing products reflected higher average selling prices and unit volumes,
while the decrease in net sales of low slope roofing products resulted from
lower unit volumes, partially offset by higher average selling prices.
Operating income for the third quarter of 2000 was $22.1 million
compared with $28.2 million in 1999, excluding nonrecurring items in both
periods. The lower operating results were primarily attributable to the higher
cost of energy and raw material purchases, principally the cost of asphalt due
to high oil prices and increased demand for asphalt, partially offset by higher
average selling prices and volumes.
Interest expense for the third quarter of 2000 increased to $13.4
million from $12.3 million recorded in the same period in 1999, with the
increase primarily attributable to increased borrowing. Other expense, net was
$2.7 million for the third quarter of 2000 compared to other income, net of $0.6
million in the third quarter of 1999, with the decrease primarily attributable
to lower investment income.
Results of Operations - Nine Months 2000 Compared With
Nine Months 1999
For the first nine months of 2000, the Company recorded net income of
$24.0 million compared with $24.9 million for the first nine months of 1999.
Excluding the impact of an after-tax gain from the sale of certain assets of
$11.0 million and an after-tax extraordinary loss of $0.3 million in 2000 and
the after-tax nonrecurring charge of $1.7 million and an after-tax extraordinary
loss of $1.3 million in 1999, net income for the first nine months of 2000 was
$13.3 million compared with $27.9 million for the same
18
period last year, with the decrease primarily the result of lower investment
income, lower operating income, and higher interest expense.
The Company's net sales for the first nine months of 2000 were $946.5
million, a 6.8% increase over last year's net sales of $886.2 million, with the
increase due to net sales gains in steep slope roofing products. The increase in
net sales of steep slope roofing products resulted from higher average selling
prices and unit volumes.
Operating income for the first nine months of 2000 was $65.5 million
compared with $74.3 million reported in the same period of 1999, excluding
nonrecurring items in both periods. Lower operating results were primarily
attributable to the higher cost of energy and raw material purchases,
principally the cost of asphalt due to high oil prices and increased demand for
asphalt, partially offset by higher average selling prices and lower
manufacturing costs.
Interest expense was $38.3 million for the first nine months of 2000
versus $37.1 million reported in the same period of 1999, and other expense, net
was $6.1 million compared to other income, net of $7.1 million in 1999, with the
decrease primarily attributable to lower investment income.
Liquidity and Financial Condition
Net cash inflow during the first nine months of 2000 was $46.2 million
before financing activities, and included $50.9 million of cash generated from
operations, the reinvestment of $41.6 million for capital programs, the
generation of $5.2 million from net sales of available-for-sale securities and
other short-term investments, and $31.7 million in proceeds from the sale of
certain assets of the security products business of LL Building Products Inc.
Cash invested in additional working capital totaled $51.8 million
during the first nine months of 2000, primarily reflecting seasonal increases in
inventories of $15.5 million and $47.9 million in receivables, including a $47.3
million increase in the receivable from the trust which purchases certain of the
Company's trade accounts receivable, partially offset by a $8.7 million increase
in accounts payable. The net cash from operating activities also reflected a
$59.6 million cash inflow from related party transactions due to the write-off
as a distribution of the receivable from related parties.
Net cash used in financing activities totaled $9.6 million during the first
nine months of 2000, mainly reflecting distributions to related parties of
$106.2 million, $35.6 million in repayments of long-term debt and $6.7 million
of financing fees and expenses (related to plants substantially completed in
Michigan City, Indiana, and Shafter, California), partially offset by $70.0
million in borrowings under the Company's bank revolving credit facility, $34.0
in proceeds from the issuance of long-term debt and $36.0 million in proceeds
from the sale of the Company's trade receivables.
19
As a result of the foregoing factors, cash and cash equivalents
increased by $36.7 million during the first nine months of 2000 to $92.6
million, excluding $34.4 million of trading and available-for-sale securities.
See Note 6 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 of similar import. 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. Important factors that could cause such differences
are discussed in the Company's filings with the U.S. Securities and Exchange
Commission. 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 such 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 October 1, 2000.
20
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
As of October 1, 2000, 212 alleged asbestos-related bodily injury claims
relating to the inhalation of asbestos fiber have been filed against Building
Materials Corporation of America, with all such claims having been filed during
September 2000. See Note 6 to Consolidated Financial Statements above.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule for the nine months ended October 1, 2000,
which is submitted electronically to the Securities and Exchange
Commission for information only.
(b) The registrants filed a report on Form 8-K, dated October 5, 2000,
reporting events under Item 5 thereof.
21
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: November 15, 2000 BY: /s/William C. Lang
----------------- ----------------------
William C. Lang
Executive Vice President,
Chief Administrative Officer
and Chief Financial Officer
(Principal Financial Officer)
DATE: November 15, 2000 BY: /s/James T. Esposito
----------------- ------------------------
James T. Esposito
Vice President and Controller
(Principal Accounting Officer)
22
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: November 15, 2000 BY: /s/William C. Lang
----------------- ----------------------
William C. Lang
Executive Vice President,
Chief Administrative Officer
and Chief Financial Officer
(Principal Financial and Accounting Officer)
23