EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact: Dick Marchese
VP Finance and CFO
770-395-4531
GEORGIA GULF REPORTS FIRST QUARTER LOSS OF $.05 PER DILUTED SHARE
ATLANTA, May 1, 2003 - Georgia Gulf Corporation (NYSE: GGC) reported a
net loss of $1.7 million or $.05 per diluted share on sales of $364.0 million
for the first quarter of 2003. This loss compares to net income of $0.6 million
or $.02 per diluted share on sales of $260.9 million for the first quarter 2002.
Sales increased $103.1 million primarily as a result of higher sales prices. The
increase in sales revenue was more than offset by price increases of
approximately $30 million for purchases of natural gas as well as an increase of
approximately $77 million in other manufacturing costs, primarily for raw
materials that are derived from natural gas or crude oil.
When compared to the fourth quarter 2002, the first quarter 2003 net
loss was a decline from net income of $9.7 million or $.30 per diluted share on
sales of $318.8 million. Sales increased by $45.2 million as a result of
increases in sales prices and higher sales volumes. The increase in sales
revenue was more than offset by price increases of approximately $18 million for
purchases of natural gas as well as an increase of approximately $44 million in
other manufacturing costs, primarily for raw materials.
CHLOROVINYLS
When compared to the first quarter of last year, demand for vinyl
resins improved and shipments increased approximately four percent. Georgia Gulf
began the first quarter of 2003 with vinyl resins sales prices approximately 40
percent higher than in the first quarter of 2002 and realized price increases
totaling approximately $.05 per pound during the first quarter 2003. However,
the significant increase in vinyl resins sales prices was not enough to offset
the extreme run-up in the purchase prices of ethylene, natural gas and chlorine.
In addition, costs increased due to the loss of
production at the company's vinyl resin plant in Plaquemine, Louisiana, as a
result of downtime to upgrade the computer control systems. As a result,
operating income for chlorovinyls in the first quarter 2003 was $14.5 million, a
decline from first quarter 2002 operating income of $18.1 million.
Compared to the sequential quarter, operating income decreased
significantly from $24.5 million in the fourth quarter to $14.5 million in the
first quarter. Higher vinyl resins sales prices and volumes did not offset the
significantly higher purchase prices for ethylene and natural gas, as well as an
increase in other manufacturing costs, including the impact from the loss of
production as a result of the vinyl resins plant downtime.
AROMATICS
In the first quarter of 2003, the aromatics segment operating loss
increased to $1.8 million compared to a loss of $0.9 million for the same
quarter last year. While the aromatics segment loss was slightly worse, the
average sales price was 57 percent higher compared to the first quarter of 2002.
However, the higher sales prices did not keep pace with the substantial increase
in purchase prices for raw materials, particularly for benzene which is a crude
oil derivative, the cost of which increased approximately 95 percent from the
first quarter last year.
The first quarter 2003 operating loss of $1.8 million compares
unfavorably to fourth quarter 2002 operating income of $5.3 million. The decline
reflects significantly higher purchase prices for aromatics raw materials and
natural gas and level sales volumes, with only slightly higher sales prices.
Commenting on the results, Edward A. Schmitt, president and CEO, said,
"While we expected purchase prices for natural gas to increase seasonally in the
first quarter, we did not foresee that the increases would be so extreme. In
addition, our purchase prices for raw materials ethylene, benzene and propylene
increased significantly and we had to absorb those increases as well. In spite
of dealing with higher purchase prices for natural gas and raw materials, vinyl
resins experienced a strong quarter with overall higher sales prices and sales
volumes versus the same quarter last year.
"As we look at the second quarter of 2003, we expect to see a decline
in purchase prices for natural gas and raw materials and anticipate an
improvement in average sales prices for all products resulting in an improvement
over our losses in the first quarter."
Georgia Gulf will host a conference call to discuss first quarter
results in more detail at 9:00 AM EST on Friday, May 2, 2003. To access the
teleconference, please dial 888-552-7928 (domestic) or 706-679-3718
(international). To access the teleconference via Webcast, log on to
http://www.firstcallevents.com/service/ajwz377565900gf12.html. Playbacks will be
available from 12 PM EST Friday, May 2, to 5 PM EST Friday, May 9. Playback
numbers are 800-642-1687 (domestic) or 706-645-9291 (international). The
conference call ID number is 9530980.
In addition to the results prepared in accordance with Generally
Accepted Accounting Principles (GAAP) provided throughout this release, Georgia
Gulf may discuss non-GAAP financial measures on the conference call.
Reconciliations of these non-GAAP financial measures to Georgia Gulf's GAAP
results are available at the Investor Relations link at www.ggc.com.
Georgia Gulf, headquartered in Atlanta, is a major manufacturer and
marketer of two integrated product lines, chlorovinyls and aromatics. Georgia
Gulf's chlorovinyl products include chlorine, caustic soda, vinyl chloride
monomer and vinyl resins and compounds. Georgia Gulf's primary aromatic products
include cumene, phenol and acetone.
This news release contains forward-looking statements subject to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are based on management's assumptions
regarding business conditions, and actual results may be materially different.
Risks and uncertainties inherent in these assumptions include, but are not
limited to, future global economic conditions, economic conditions in the
industries to which the company sells, industry production capacity, raw
material and energy costs and other factors discussed in the Securities and
Exchange Commission filings of Georgia Gulf Corporation, including our annual
report on Form 10-K for the year ended December 31, 2002.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2003 2002
----------- -----------
ASSETS
Cash and cash equivalents $ 3,777 $ 8,019
Receivables 118,181 59,603
Inventories 122,322 114,575
Prepaid expenses 9,257 10,393
Deferred income taxes 6,500 5,657
----------- ----------
Total current assets 260,037 198,247
Property, plant and equipment, net 511,430 521,326
Goodwill 77,720 77,720
Other assets 80,455 78,266
----------- ----------
Total assets $929,642 $875,559
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 600 $ 600
Accounts payable 140,609 107,943
Interest payable 11,804 4,650
Accrued compensation 8,551 14,325
Accrued liabilities 9,736 12,733
----------- ----------
Total current liabilities 171,300 140,251
Long-term debt 503,086 476,386
Deferred income taxes 126,237 126,250
Other non-current liabilities 7,098 6,872
Stockholders' equity 121,921 125,800
----------- ----------
Total liabilities and stockholders' equity $929,642 $875,559
=========== ==========
Common shares outstanding 32,431 32,319
=========== ==========
</Table>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2003 2002
---------- ---------
Net Sales $ 364,010 $ 260,881
--------- ---------
Operating costs and expenses
Costs of sales 342,826 235,628
Selling and administrative 13,907 11,439
--------- ---------
Total operating costs and expenses 356,733 247,067
--------- ---------
Operating income 7,277 13,814
Interest, net 9,892 12,867
--------- ---------
(Loss) income before income taxes (2,615) 947
(Benefit) provision (from) for income taxes (941) 339
--------- ---------
Net (loss) income $ (1,674) $ 608
========= =========
(Loss) earnings per share
Basic $ (0.05) $ 0.02
Diluted $ (0.05) $ 0.02
Weighted average common shares
Basic 32,210 31,946
Diluted 32,210 32,142
</Table>
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2003 2002
--------- ---------
Cash Flows from operating activities:
Net (loss) income $ (1,674) $ 608
Adjustments to reconcile net (loss)
income to net cash provided
by operating activities
Depreciation and amortization 16,193 17,276
Benefit from deferred
income taxes (857) (262)
Tax benefit related to stock plans 179 34
Change in operating assets,
liabilities and other (36,979) 507
-------- --------
Net cash (used in) provided by
operating activities (23,138) 18,163
-------- --------
Cash flows from investing activities:
Capital expenditures (5,122) (3,939)
-------- --------
Cash flows from financing activities:
Long-term debt proceeds 36,700 522
Long-term debt payments (10,000) (14,159)
Proceeds from issuance of
common stock 8 832
Purchase and retirement of
common stock (96) --
Dividends paid (2,594) (2,560)
-------- --------
Net cash provided by (used in) financing
activities 24,018 (15,365)
-------- --------
Net change in cash and cash
equivalents (4,242) (1,141)
Cash and cash equivalents at
beginning of period 8,019 10,030
-------- --------
Cash and cash equivalents at
end of period $ 3,777 $ 8,889
======== ========
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
---------------------------
2003 2002
--------- ---------
Segment net sales:
Chlorovinyls $ 304,422 $ 214,766
Aromatics 59,588 46,115
--------- ---------
Net sales $ 364,010 $ 260,881
========= =========
Segment operating income (loss):
Chlorovinyls $ 14,457 $ 18,064
Aromatics (1,770) (851)
Corporate and general plant
services (5,410) (3,399)
--------- ---------
Total operating income $ 7,277 $ 13,814
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