Georgia Gulf Reports Third Quarter 2009 Financial Results

http://www.businesswire.com/news/home/20091104006504/en

ATLANTA--(Business Wire)--
Georgia Gulf Corporation (NYSE: GGC) today announced financial results for its
third quarter ended September 30, 2009.

Georgia Gulf reported net sales of $556.3 million for the third quarter of 2009
compared to net sales of $818.6 million for the third quarter of 2008. The
decrease in sales is primarily due to lower prices resulting from lower
feedstock and energy costs partially offset by higher volumes compared to the
third quarter of 2008, which was impacted by two gulf coast hurricanes.

Georgia Gulf reported net income of $230.2 million for the third quarter of
2009, compared to a net loss of $17.4 million during the same quarter in the
previous year. In the third quarter of 2009, Georgia Gulf successfully exchanged
$736 million of its outstanding notes for 1.3 million shares of its common stock
and 30.2 million shares of its convertible preferred stock. The debt exchange
resulted in a $400.8 million pre-tax gain.

The Company reported operating income of $38.6 million for the third quarter of
2009, compared to operating income of $14.2 million for the third quarter of
2008. The third quarter of 2009 includes a pre-tax net benefit of $1.8 million
primarily resulting from credit adjustments to true up restructuring costs
booked in prior quarters. The third quarter of 2008 includes a pre-tax asset
impairment and restructuring charge of $3.7 million. Excluding these items,
operating income for the third quarter of 2009 was $36.8 million compared to
operating income of $17.9 million in the third quarter of 2008.

"Our results for the quarter reflect our successful efforts to match our cost
structure to the market," commented Paul Carrico, Georgia Gulf's President and
CEO. "We generated stronger operating income compared to both the same quarter
last year and the second quarter of 2009 despite a dramatic decline in caustic
soda prices and continued softness in building and construction markets.
Completing the debt-for-equity exchange reduced our debt by more than 50 percent
and reduced our annual cash interest costs by nearly $70 million, and our
long-term bank amendment provides adjusted covenants until the end of 2011."

Chlorovinyls

In the Chlorovinyls segment, third quarter 2009 sales decreased to $229.1
million from $365.5 million during the third quarter of 2008. The segment posted
operating income of $30.6 million compared to operating income of $28.0 million
during the same quarter in the prior year. The increase in operating income was
primarily due to higher caustic and PVC sales volumes partially offset by lower
caustic and PVC prices compared to the same quarter in the prior year. The third
quarter of 2008 was impacted by two gulf coast hurricanes.

Window & Door Profiles and Mouldings

In the Window & Door Profiles and Mouldings segment, sales were $98.6 million
for the third quarter of 2009, compared to $124.0 million during the same
quarter in the prior year. Sales on a constant currency basis declined 18
percent. The decline in sales reflects extremely difficult conditions in the
North American housing and construction markets, particularly related to new
home construction. The segment's operating income was $2.0 million for the third
quarter of 2009, compared to an operating loss of $0.6 million during the same
quarter in the prior year. The increase in operating income is primarily due to
cost reduction actions, partially offset by lower sales volumes.

Outdoor Building Products

In the Outdoor Building Products segment, sales were $128.1 million for the
third quarter of 2009, compared to $163.6 million during the same quarter in the
prior year. Sales on a constant currency basis declined 19 percent. The decrease
in sales reflects the extremely difficult conditions in the North American
housing and construction markets. The segment reported operating income of $14.7
million for the third quarter of 2009, compared to operating income of $0.5
million during the same quarter in the prior year. The increase in operating
income is due to cost reduction actions, partially offset by lower sales
volumes.

Aromatics

In the Aromatics segment, sales decreased to $100.5 million for the third
quarter of 2009 from $165.5 million during the third quarter of 2008. The
decrease in sales was driven by a 31 percent decline in sales prices and lower
phenol and acetone sales volumes. The phenol and acetone sales volume decrease
is due to extremely difficult conditions in the North American housing and
construction markets. During the third quarter of 2009, the segment recorded
operating income of $9.3 million, compared to an operating loss of $4.5 million
during the same quarter last year. The increase in operating income was driven
by stronger margins resulting from raw material inventory holding gains and cost
reductions, partially offset by lower volumes than the same quarter last year.

Liquidity Update

As of September 30, 2009, the Company had $168.4 million of liquidity,
consisting of $28.3 million of cash on hand as well as $140.1 million of
borrowing capacity available under its revolving credit facility.

Conference Call

The Company will discuss third quarter 2009 financial results and business
developments via conference call and Webcast on Thursday, November 5, 2009 at
10:00 a.m. EST. To access the Company`s third quarter conference call, please
dial 888-552-7928 (domestic) or 706-679-6164 (international). To access the
conference call via Webcast, log on to
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=112207&eventID=2512740.
Playbacks will be available from 11:00 AM ET Thursday, November 5, to midnight
ET Thursday, November 12. Playback numbers are 800-642-1687 (domestic) or
706-645-9291 (international). The conference call ID number is 38134507.

Georgia Gulf

Georgia Gulf Corporation is a leading, integrated North American manufacturer of
two chemical lines, chlorovinyls and aromatics, and manufactures vinyl-based
building and home improvement products. The Company's vinyl-based building and
home improvement products, marketed under Royal Group brands, include window and
door profiles, mouldings, siding, pipe and pipe fittings, and deck, fence and
rail products. Georgia Gulf, headquartered in Atlanta, Georgia, has
manufacturing facilities located throughout North America to provide
industry-leading service to customers.

Safe Harbor

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 our products are sold, uncertainties regarding asset sales, synergies,
potential sale-leaseback arrangements, operating efficiencies and competitive
conditions, industry production capacity, raw materials 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, 2008 and our quarterly report on Form 10-Q for the quarter
ended June 30, 2009.

GEORGIA GULF CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data) September 30, December 31,
2009 2008
ASSETS
Cash and cash equivalents $ 28,339 $ 89,975
Receivables, net of allowance for doubtful accounts of $15,922 in 2009 172,350 117,287
and $12,307 in 2008
Inventories 238,715 240,199
Prepaid expenses 31,544 21,360
Income tax receivables 3,796 2,264
Deferred income taxes 21,009 22,505
Total current assets 495,753 493,590
Property, plant and equipment, net 701,205 760,760
Goodwill 201,331 189,003
Intangible assets, net of accumulated amortization of $10,745 in 2009 15,420 15,905
and $9,988 in 2008
Other assets, net 132,639 150,643
Non-current assets held for sale 14,227 500
Total assets $ 1,560,575 $ 1,610,401
LIABILITIES AND STOCKHOLDERS` DEFICIT
Current portion of long-term debt $ 23,609 $ 56,843
Accounts payable 121,339 105,052
Interest payable 5,052 16,115
Income taxes payable 1,635 3,476
Accrued compensation 14,525 9,890
Liability for unrecognized income tax benefits and other tax reserves 9,448 27,334
Other accrued liabilities 52,025 49,693
Total current liabilities 227,633 268,403
Long-term debt 478,318 1,337,307
Liability for unrecognized income tax benefits 61,613 34,592
Deferred income taxes 237,065 70,141
Other non-current liabilities 36,075 39,886
Total liabilities 1,040,704 1,750,329

Stockholders` equity:
Preferred stock-$0.01 par value; 75,000,000 shares authorized; no - -
shares issued
Common stock-$0.01 par value; 100,000,000 shares authorized; shares 330 14
issued and outstanding: 32,967,546 in 2009 and 1,379,273 in 2008
Additional paid-in capital 472,028 105,815
Retained earnings (accumulated deficit) 56,981 (218,502 )
Accumulated other comprehensive loss, net of tax (9,468 ) (27,255 )
Total stockholders` equity (deficit) 519,871 (139,928 )
Total liabilities and stockholders` equity (deficit) $ 1,560,575 $ 1,610,401

GEORGIA GULF CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands, except per share data) 2009 2008 2009 2008
Net sales $ 556,342 $ 818,564 $ 1,488,016 $ 2,380,868
Operating costs and expenses:
Cost of sales 472,643 756,503 1,313,924 2,217,656
Selling, general and administrative expenses 46,864 44,095 129,724 130,459
Long-lived asset impairment charges 4,167 2,516 20,357 18,695
Restructuring (gain) costs, net (5,928 ) 1,169 5,927 8,758
Loss (gain) on sale of assets, net - 33 62 (27,282 )
Total operating costs and expenses 517,746 804,316 1,469,994 2,348,286
Operating income 38,596 14,248 18,022 32,582
Gain on substantial modification of debt - - 121,033 -
Gain on debt exchange 400,835 - 400,835 -
Interest expense, net (30,709 ) (32,280 ) (107,229 ) (98,157 )
Foreign exchange loss (48 ) (1,864 ) (981 ) (585 )
Income (loss) before income taxes 408,674 (19,896 ) 431,680 (66,160 )
Provision (benefit) for income taxes 178,523 (2,494 ) 156,196 (7,205 )
Net income (loss) $ 230,151 $ (17,402 ) $ 275,484 $ (58,955 )
Earnings (loss) per share:
Basic $ 9.21 $ (14.64 ) $ 29.49 $ (48.86 )
Diluted $ 9.20 $ (14.64 ) $ 29.47 $ (48.86 )
Weighted average common shares:
Basic 23,355 1,379 8,788 1,378
Diluted 25,006 1,379 9,349 1,378

GEORGIA GULF CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 2009 2008 2009 2008
Cash flows from operating activities:
Net (loss) income $ 230,151 $ (17,402 ) $ 275,484 $ (58,955 )
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 29,695 36,471 89,147 112,495
Loan fair value gain amortization 4,288 - 8,888 -
Gain on substantial modification of debt - - (121,033 ) -
Gain on debt exchange (400,835 ) - (400,835 ) -
Foreign exchange gain (1,293 ) - (627 ) -
Deferred income taxes 179,329 (13,336 ) 154,938 (13,089 )
Tax deficiency related to stock plans (23 ) (15 ) (1,414 ) (861 )
Stock based compensation 8,813 804 10,212 2,493
Long-lived asset impairment charges and loss on sale of assets 4,167 2,444 20,419 21,872
Net gain on sale of property, plant and equipment, and assets - (825 ) - (27,125 )
held for sale
Payment of Quebec trust tax settlement - - - (20,073 )
Other non-cash items (533 ) 3,813 1,844 1,608
Change in operating assets, liabilities and other 15,138 60,575 11,845 (25,752 )
Net cash provided by (used in) operating activities 68,897 72,529 48,868 (7,387 )
Cash flows from investing activities:
Capital expenditures (6,573 ) (12,344 ) (24,958 ) (44,023 )
Proceeds from sale of property, plant and equipment, and assets 1,022 301 1,900 78,095
held-for sale
Proceeds from insurance recoveries related to property, plant and equipment - - 1,980 -
Net cash (used in) provided by investing activities (5,551 ) (12,043 ) (21,078 ) 34,072
Cash flows from financing activities:
Net change in revolving line of credit (127,561 ) (7,649 ) (29,411 ) 107,718
Repayment of long-term debt (909 ) (1,016 ) (19,727 ) (73,094 )
Purchases and retirement of common stock - - (25 ) (110 )
Fees paid to amend and exchange debt (13,595 ) (9,823 ) (43,256 ) (9,823 )
Dividends paid - (2,790 ) - (8,379 )
Net cash (used in) provided by financing activities (142,065 ) (21,278 ) (92,419 ) 16,312
Effect of exchange rate changes on cash and cash equivalents 2,758 927 2,993 496
Net change in cash and cash equivalents (75,961 ) 40,136 (61,636 ) 43,493
Cash and cash equivalents at beginning of period 104,300 12,585 89,975 9,227
Cash and cash equivalents at end of period $ 28,339 $ 52,720 $ 28,339 $ 52,720

GEORGIA GULF CORPORATION AND SUBSIDARIES
SEGMENT INFORMATION
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
In Thousands 2009 2008 2009 2008

Segment net sales:
Chlorovinyls $ 229,132 $ 365,501 $ 702,915 $ 1,108,471
Window and door profiles and mouldings
products 98,617 124,027 241,691 328,104
Outdoor building products 128,071 163,579 315,431 428,175
Aromatics 100,521 165,457 227,979 516,118
Net Sales $ 556,341 $ 818,564 $ 1,488,016 $ 2,380,868

Segment operating income (loss):
Chlorovinyls $ 30,573 1) $ 27,982 5) $ 75,466 $ 64,673 11)
Window and door profiles and mouldings
products 2,008 2) (561 ) 6) (31,528 ) 8) (15,943 ) 12)
Outdoor building products 14,650 3) 516 7) 6,304 9) (14,295 )
Aromatics 9,347 (4,547 ) 17,709 (7,373 )
Unallocated corporate (17,982 ) 4) (9,142 ) (49,929 ) 10) 5,520 13)
Total operating income (loss) $ 38,596 $ 14,248 $ 18,022 $ 32,582

1) Includes income of $3.8 million primarily from a $4.0 million credit from the wind up of the Canadian pension plans.
2) Includes $4.1 million related to plant closing costs and restructuring costs
3) Includes $1.0 million of severance costs and income of $3.1 million associated with the favorable settlement of a legal claim for less than the reserved amount.

4) Includes $7.7 million of additional stock compensation expense related to the 2009 Equity and Performance Incentive Plan. Also includes $2.0 million in legal and professional fees related to the debt amendments, contingency planning and process improvement initiatives.

5) Includes $1.4 million in severance, restructuring and other exit costs primarily related to the closure of the Oklahoma City facility

6) Includes $2.0 million related to plant closing costs and severance costs and $1.8 million for asset impairments.
7) Includes $0.3 million related to plant closing costs and severance costs
8) Includes $3.0 million of severance, restructuring and other exit costs and $20.2 million of asset impairments.
9) Includes $1.7 million of severance costs offset by income of $1.2 million associated with other exit costs, including income of $3.1 million associated with the favorable settlement of a legal claim.

10) Includes $2.5 million in consulting fees related to process improvement initiatives.
11) Includes $20.0 million in costs related to the shutdown of the Oklahoma City facility, writedowns and other exit costs and a $2.2 million gain related to the sale and lease back of equipment

12) Includes $1.9 million for asset impairments.
13) Includes $28.8 million gain on sale of idle land in Pasadena, Texas.

Georgia Gulf Corporation
Investor Relations:
Martin Jarosick, 770-395-4524

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