Exhibit 99.1
Georgia Gulf Reports Fourth Quarter Net
Income of $.55 Per Diluted Share
ATLANTA--(BUSINESS WIRE)--Feb. 2, 2006--Georgia Gulf Corporation
(NYSE: GGC) today reported net income of $18.7 million or $.55 per
diluted share on sales of $518.9 million for the fourth quarter of
2005. This compares to net income of $24.1 million or $.71 per diluted
share on sales of $590.9 million for the fourth quarter of 2004. The
fourth quarter 2005 results include a negative impact of approximately
$.22 per diluted share due to operational disruptions caused by
Hurricane Rita early in the fourth quarter. In addition, the Company
experienced significantly higher energy and raw materials costs.
Despite the disruptions and increased costs, the chlorovinyls business
performed well as sales prices increased for vinyl resins, vinyl
compounds and caustic soda. Sales volumes were down in the
chlorovinyls business primarily due to lost production as a result of
hurricane-related outages. Sales volumes were down in the aromatics
business due to hurricane-related lost production early in the quarter
and decreased demand throughout the quarter.
"The chlorovinyls business performed well following a period of
lost production at the beginning of the fourth quarter of 2005 due to
Hurricane Rita," said Ed Schmitt, Chairman, President and CEO, Georgia
Gulf Corporation. "Limited production and low industry inventories
resulted in higher sales prices for vinyl resins, vinyl compounds and
caustic soda. Our aromatics business experienced an operating loss for
the fourth quarter due to weak demand in some end-use markets,
increased Asian capacity and plant downtime.
"As for the first quarter of 2006, we expect the aromatics
business to improve from the fourth quarter of 2005 but to continue to
struggle overall. However, we are more optimistic that our
chlorovinyls business will continue to perform well, as projections
for high operating rates, good demand and declining natural gas prices
should allow for continued improvement."
Fourth quarter 2005 net income of $18.7 million declined compared
to third quarter 2005 net income of $27.9 million or $.82 per diluted
share on sales of $525.2 million. The decline reflects overall higher
raw materials and energy costs and lower sales volumes, which more
than offset increased sales prices for vinyl resins, vinyl compounds
and caustic soda.
For the year ended December 31, 2005, the Company had record sales
of $2.3 billion, which is a 3 percent increase compared to 2004 sales
of $2.2 billion. Net income of $95.5 million or $2.79 per diluted
share declined compared to net income of $105.9 million or $3.17 per
diluted share for 2004. This decline in net income was due to lower
sales volumes for all products primarily as a result of the
chloralkali plant turnaround in the second quarter of 2005 as well as
Hurricanes Katrina and Rita in the third and fourth quarters of 2005.
The negative impact of the chloralkali plant planned turnaround and an
unplanned outage in the second quarter was about $.50 per diluted
share and the negative impact associated with Hurricanes Katrina and
Rita during the third and fourth quarters was approximately $.45 per
diluted share. The effective tax rate for 2005 decreased to 32.9% from
36.5% in 2004 due to the favorable impact of changes in state tax
apportionment rules and tax deductions created by the American Jobs
Creation Act of 2004.
Chlorovinyls
Georgia Gulf's chlorovinyls business provided strong fourth
quarter operating income of $54.5 million, an increase of 57 percent
compared to fourth quarter of 2004 operating income of $34.7 million
and an increase of 3 percent compared to the third quarter of 2005
operating income of $53.1 million. These improvements compared to both
the fourth quarter of 2004 and third quarter of 2005 were due to
increased sales prices for vinyl resins, vinyl compounds and caustic
soda as supply remained tight and industry inventories were at
historically low levels for a significant portion of the fourth
quarter following outages caused by Hurricane Rita. These increased
sales prices more than offset lower chlorovinyls sales volumes and
higher raw materials and energy costs.
For the full year ended December 31, 2005, chlorovinyls operating
income increased to $202.6 million from $165.9 million, an increase of
22 percent, compared to the full year 2004. This was a result of
higher sales prices for all products outpacing higher raw materials
and energy costs and lower sales volumes, as well as the adverse
impacts of the Company's chloralkali planned turnaround and unplanned
outage in the second quarter of 2005 and the hurricanes in the third
and fourth quarters of 2005.
Aromatics
Georgia Gulf's aromatics business had an operating loss of $14.1
million for the fourth quarter of 2005 compared to operating income of
13.2 million for the fourth quarter of 2004 and declined compared to
the operating loss of $1.9 million for the third quarter of 2005. The
fourth quarter 2005 decrease compared to the fourth quarter of 2004
reflects significantly lower sales volumes and sales prices for all
products as a result of hurricane-related lost production, decreased
demand in certain end-use markets such as polycarbonates and increased
Asian capacity.
Comparing the fourth quarter of 2005 to the third quarter of 2005,
the decrease in operating income is a result of lower sales volumes
for all products, which were not offset by slightly higher sales
prices and lower benzene costs.
For the year ended December 31, 2005, the aromatics operating loss
of $10.5 million represented a significant decrease compared to
operating income of $50.6 million in the full year 2004. This decline
is the result of significantly lower sales volumes for all aromatics
products as a result of decreased demand, specifically in end-use
markets such as polycarbonates, start-ups of additional Asian
capacity, which resulted in reduced export opportunities, as well as
fewer opportunistic cumene sales. In addition, the decline was also
attributable to lost production in the third and fourth quarters of
2005 due to Hurricanes Katrina and Rita and raw materials costs
increases. All of these factors more than offset higher sales prices
for all aromatics products.
Conference Call
Georgia Gulf will host a conference call to discuss fourth quarter
results in more detail at 10:00 AM ET on Friday, February 3, 2006. 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://audioevent.mshow.com/281491/. Playbacks will
be available from 11:00 AM ET Friday, February 3, to midnight ET
Friday, February 10. Playback numbers are 800-642-1687 (domestic) or
706-645-9291 (international). The conference call ID number is
3807955.
Other
Georgia Gulf, headquartered in Atlanta, is a major manufacturer
and marketer of two integrated product lines, chlorovinyls and
aromatics. Georgia Gulf's chlorovinyls 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, 2004 and
our subsequent reports on Form 10-Q.
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, December 31,
In Thousands 2005 2004
- ------------ ------------ -------------
ASSETS
Cash and cash equivalents $ 14,298 $ 21,088
Receivables, net of allowance 118,193 134,852
Inventories 195,628 186,313
Prepaid expenses and other 13,306 5,186
Deferred income taxes 5,091 10,097
---------- ----------
Total current assets 346,516 357,536
Property, plant and equipment, net 401,412 425,734
Goodwill 77,720 77,720
Other assets, net 175,305 102,840
---------- ----------
Total assets $1,000,953 $ 963,830
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 49,300 $ 189,900
Accounts payable 202,179 205,365
Interest payable 1,226 1,557
Accrued compensation 14,986 18,293
Accrued liabilities 16,495 11,779
---------- ----------
Total current liabilities 284,186 426,894
Long-term debt, less current portion 229,339 128,583
Deferred income taxes 107,959 128,032
Other non-current liabilities 16,457 12,052
Stockholders' equity 363,012 268,269
---------- ----------
Total liabilities and stockholders'
equity $1,000,953 $ 963,830
========== ==========
Common shares outstanding 34,238 33,925
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------ ---------------------
In Thousands
(except per share data) 2005 2004 2005 2004
- ----------------------- --------- --------- ---------- ----------
Net sales $ 518,925 $ 590,907 $2,273,719 $2,206,239
---------- ---------- ---------- ----------
Operating costs and expenses
Costs of sales 472,474 534,322 2,049,510 1,955,095
Selling, general and
administrative 14,061 14,777 61,444 60,721
---------- ---------- ---------- ----------
Total operating costs and
expenses 486,535 549,099 2,110,954 2,015,816
---------- ---------- ---------- ----------
Operating income 32,390 41,808 162,765 190,423
Interest expense, net (4,433) (5,465) (20,407) (23,663)
---------- ---------- ---------- ----------
Income before income taxes 27,957 36,343 142,358 166,760
Provision for income taxes 9,299 12,285 46,855 60,868
---------- ---------- ---------- ----------
Net income $ 18,658 $ 24,058 $ 95,503 $ 105,892
========== ========== ========== ==========
Earnings per share:
Basic $ 0.55 $ 0.72 $ 2.82 $ 3.21
Diluted $ 0.55 $ 0.71 $ 2.79 $ 3.17
Weighted average common
shares:
Basic 33,902 33,436 33,867 32,965
Diluted 34,071 34,091 34,193 33,439
GEORGIA GULF CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended Twelve Months Ended
In Thousands December 31, December 31,
- ------------ ------------------ --------------------
2005 2004 2005 2004
-------- ------- -------- ----------
Cash flows from operating
activities:
Net income $ 18,658 $ 24,058 $ 95,503 $ 105,892
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization 15,866 16,670 63,101 64,554
Deferred income taxes (155) 3,807 (15,067) 3,686
Tax benefit related to
stock plans 242 3,569 2,172 5,912
Stock based Compensation 966 649 3,761 3,215
Other noncash items 439 711 1,759 711
Change in operating
assets, liabilities
and other (15,919) (31,901) (80,084) (48,003)
--------- -------- --------- ---------
Net cash provided by operating
activities 20,097 17,563 71,145 135,967
--------- -------- --------- ---------
Cash flows used in investing
activities
Capital expenditures (13,003) (7,719) (32,044) (23,441)
Proceeds from sale of
property, plant and
equipment 545 - 1,362 -
--------- -------- --------- ---------
Net cash used in investing
activities (12,458) (7,719) (30,682) (23,441)
Cash flows from financing
activities:
Net change in revolving
line of credit 97,200 89,900 59,400 89,900
Payments of long-term debt (100,000) (89,510) (100,000) (200,000)
Proceeds from issuance of
common stock 3,220 11,331 5,944 27,948
Purchase and retirement of
common stock - - (1,682) (602)
Dividends paid (2,729) (2,704) (10,915) (10,649)
--------- -------- --------- ---------
Net cash (used in) provided by
financing activities (2,309) 9,017 (47,253) (93,403)
--------- -------- --------- ---------
Net change in cash and cash
equivalents 5,330 18,861 (6,790) 19,123
Cash and cash equivalents at
beginning of period 8,968 2,227 21,088 1,965
--------- -------- --------- ---------
Cash and cash equivalents at
end of period $ 14,298 $ 21,088 $ 14,298 $ 21,088
========= ======== ========= =========
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
---------------------- ----------------------
In Thousands 2005 2004 2005 2004
- ------------ ----------- ---------- ---------- ----------
Segment net sales:
Chlorovinyls $ 425,277 $ 375,756 $1,592,749 $1,452,404
Aromatics 93,648 215,151 680,970 753,835
---------- ---------- ---------- ----------
Net sales $ 518,925 $ 590,907 $2,273,719 $2,206,239
========== ========== ========== ==========
Segment operating income
(loss):
Chlorovinyls $ 54,466 $ 34,746 $ 202,555 $ 165,910
Aromatics (14,080) 13,247 (10,453) 50,556
Corporate and general
plant services (7,996) (6,185) (29,337) (26,043)
---------- ---------- ---------- ----------
Total operating income $ 32,390 $ 41,808 $ 162,765 $ 190,423
========== ========== ========== ==========
CONTACT: Georgia Gulf, Atlanta
Investor Relations
Angie Tickle, 770-395-4520