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Share Name | Share Symbol | Market | Type |
---|---|---|---|
NYSE:GTI | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.05 | 0.00 | 01:00:00 |
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
for the transition period from
to
|
|
|
|
Delaware
|
27-2496053
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
|
Suite 300 Park Center I
|
44131
|
6100 Oak Tree Boulevard
|
(Zip code)
|
Independence, OH
|
|
(Address of principal executive offices)
|
|
|
Large Accelerated Filer
o
|
Accelerated Filer
o
|
Emerging Growth Company
o
|
Non-Accelerated Filer
o
|
Smaller Reporting Company
o
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.
o
|
|
|
PART I. FINANCIAL INFORMATION:
|
|
|
|
Item 1. Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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As of December 31, 2016
|
|
As of
March 31, 2017 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11,610
|
|
|
$
|
18,481
|
|
Accounts and notes receivable, net of allowance for doubtful accounts of
$326 as of December 31, 2016 and $365 as of March 31, 2017 |
80,568
|
|
|
74,659
|
|
||
Inventories
|
156,111
|
|
|
159,393
|
|
||
Prepaid expenses and other current assets
|
21,665
|
|
|
22,436
|
|
||
Current assets of discontinued operations
|
60,979
|
|
|
53,812
|
|
||
Total current assets
|
330,933
|
|
|
328,781
|
|
||
Property, plant and equipment
|
585,704
|
|
|
594,394
|
|
||
Less: accumulated depreciation
|
76,849
|
|
|
89,589
|
|
||
Net property, plant and equipment
|
508,855
|
|
|
504,805
|
|
||
Deferred income taxes
|
19,803
|
|
|
20,315
|
|
||
Goodwill
|
171,117
|
|
|
171,117
|
|
||
Other assets
|
141,568
|
|
|
138,609
|
|
||
Total assets
|
$
|
1,172,276
|
|
|
$
|
1,163,627
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
47,663
|
|
|
$
|
44,718
|
|
Short-term debt
|
8,852
|
|
|
10,356
|
|
||
Accrued income and other taxes
|
5,256
|
|
|
5,909
|
|
||
Other accrued liabilities
|
30,594
|
|
|
33,717
|
|
||
Current liabilities of discontinued operations
|
20,042
|
|
|
17,316
|
|
||
Total current liabilities
|
112,407
|
|
|
112,016
|
|
||
Long-term debt
|
356,580
|
|
|
369,246
|
|
||
Other long-term obligations
|
82,148
|
|
|
81,168
|
|
||
Deferred income taxes
|
42,906
|
|
|
44,276
|
|
||
Long-term liabilities of discontinued operations
|
850
|
|
|
1,040
|
|
||
Contingencies – Note 9
|
—
|
|
|
—
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, par value $.01, 10,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock, par value $.01, 225,000,000 shares authorized,
100 shares issued as of December 31, 2016 and March 31, 2017 |
—
|
|
|
—
|
|
||
Additional paid-in capital
|
854,337
|
|
|
854,337
|
|
||
Accumulated other comprehensive loss
|
(7,558
|
)
|
|
(2,718
|
)
|
||
Accumulated deficit
|
(269,394
|
)
|
|
(295,738
|
)
|
||
Total stockholders’ equity
|
577,385
|
|
|
555,881
|
|
||
|
|
|
|
||||
Total liabilities and stockholders’ equity
|
$
|
1,172,276
|
|
|
$
|
1,163,627
|
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
||||
Net sales
|
$
|
95,576
|
|
|
$
|
104,739
|
|
Cost of sales
|
97,014
|
|
|
102,357
|
|
||
Additions to lower of cost or
market inventory reserve |
11,537
|
|
|
1,297
|
|
||
Gross (loss) profit
|
(12,975
|
)
|
|
1,085
|
|
||
Research and development
|
651
|
|
|
829
|
|
||
Selling and administrative expenses
|
13,794
|
|
|
11,683
|
|
||
Operating loss
|
(27,420
|
)
|
|
(11,427
|
)
|
||
|
|
|
|
||||
Other expense (income), net
|
237
|
|
|
3,067
|
|
||
Interest expense
|
6,460
|
|
|
7,546
|
|
||
Interest income
|
(12
|
)
|
|
(123
|
)
|
||
Loss from continuing operations before
provision for income taxes |
(34,105
|
)
|
|
(21,917
|
)
|
||
|
|
|
|
||||
(Benefit from) Provision for income taxes
|
(295
|
)
|
|
361
|
|
||
Net loss from continuing operations
|
(33,810
|
)
|
|
(22,278
|
)
|
||
|
|
|
|
||||
Loss from discontinued operations, net of tax *
|
(2,565
|
)
|
|
(4,066
|
)
|
||
|
|
|
|
||||
Net loss
|
$
|
(36,375
|
)
|
|
$
|
(26,344
|
)
|
|
|
|
|
||||
STATEMENTS OF COMPREHENSIVE LOSS
|
|
|
|
||||
Net loss
|
$
|
(36,375
|
)
|
|
$
|
(26,344
|
)
|
Other comprehensive loss:
|
|
|
|
||||
Foreign currency translation adjustments
|
12,504
|
|
|
4,840
|
|
||
Commodities and foreign currency derivatives and other
|
133
|
|
|
—
|
|
||
Other comprehensive income, net of tax:
|
12,637
|
|
|
4,840
|
|
||
Comprehensive loss
|
$
|
(23,738
|
)
|
|
$
|
(21,504
|
)
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
Cash flow from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(36,375
|
)
|
|
$
|
(26,344
|
)
|
Adjustments to reconcile net loss to
cash provided by operations: |
|
|
|
||||
Depreciation and amortization
|
19,458
|
|
|
17,309
|
|
||
Impairments
|
—
|
|
|
2,500
|
|
||
Change in inventory lower-of-cost-or-market reserve
net of depreciation |
9,962
|
|
|
(1,282
|
)
|
||
Deferred income tax provision
|
(485
|
)
|
|
(761
|
)
|
||
Post-retirement and pension plan changes
|
1,046
|
|
|
739
|
|
||
Interest expense
|
1,576
|
|
|
1,686
|
|
||
Other charges, net
|
(750
|
)
|
|
2,048
|
|
||
Net change in working capital*
|
16,523
|
|
|
8,646
|
|
||
Change in long-term assets and liabilities
|
(1,231
|
)
|
|
(2,724
|
)
|
||
Net cash provided by operating activities
|
9,724
|
|
|
1,817
|
|
||
Cash flow from investing activities:
|
|
|
|
||||
Capital expenditures
|
(8,414
|
)
|
|
(7,996
|
)
|
||
Proceeds from the sale of assets
|
404
|
|
|
368
|
|
||
Other
|
(253
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(8,263
|
)
|
|
(7,628
|
)
|
||
Cash flow from financing activities:
|
|
|
|
||||
Short-term debt, net
|
5,001
|
|
|
(498
|
)
|
||
Revolving Facility borrowings
|
19,000
|
|
|
13,000
|
|
||
Revolving Facility reductions
|
(23,000
|
)
|
|
—
|
|
||
Principal payments on long-term debt
|
(34
|
)
|
|
(36
|
)
|
||
Net cash provided by financing activities
|
967
|
|
|
12,466
|
|
||
Net change in cash and cash equivalents
|
2,428
|
|
|
6,655
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
477
|
|
|
216
|
|
||
Cash and cash equivalents at beginning of period
|
6,927
|
|
|
11,610
|
|
||
Cash and cash equivalents at end of period
|
$
|
9,832
|
|
|
$
|
18,481
|
|
* Net change in working capital due to the following components:
|
|
|
|
||||
Accounts and notes receivable, net
|
$
|
14,249
|
|
|
$
|
5,798
|
|
Inventories
|
4,871
|
|
|
2,718
|
|
||
Prepaid expenses and other current assets
|
(2,873
|
)
|
|
(758
|
)
|
||
Change in accounts payable and accruals
|
(4,586
|
)
|
|
(3,927
|
)
|
||
Increase in interest payable
|
4,862
|
|
|
4,815
|
|
||
Net change in working capital
|
$
|
16,523
|
|
|
$
|
8,646
|
|
(1)
|
Organization and Summary of Significant Accounting Policies
|
(2)
|
Discontinued Operations and Related Assets Held for Sale
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
|
||||||
Net sales
|
$
|
29,089
|
|
|
$
|
31,765
|
|
Cost of sales
|
25,985
|
|
|
28,412
|
|
||
Gross profit
|
3,104
|
|
|
3,353
|
|
||
Research and development
|
878
|
|
|
570
|
|
||
Selling and administrative expenses
|
4,455
|
|
|
3,693
|
|
||
Impairment
|
—
|
|
|
2,500
|
|
||
Operating loss
|
(2,229
|
)
|
|
(3,410
|
)
|
||
Other expense
|
9
|
|
|
32
|
|
||
Interest expense
|
719
|
|
|
607
|
|
||
Loss from discontinued operations
before income taxes
|
(2,957
|
)
|
|
(4,049
|
)
|
||
Provision for (benefit from) income
taxes on discontinued operations
|
392
|
|
|
(17
|
)
|
||
Loss from discontinued operations
|
$
|
(2,565
|
)
|
|
$
|
(4,066
|
)
|
|
|
|
|
|
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
|
|
|
||||
Depreciation and amortization
|
$
|
1,947
|
|
|
$
|
1,768
|
|
Impairment
|
—
|
|
|
2,500
|
|
||
Deferred income taxes
|
(393
|
)
|
|
17
|
|
||
Capital expenditures
|
715
|
|
|
228
|
|
|
As of
December 31, 2016
|
|
As of
March 31, 2017
|
||||
|
(dollars in thousands)
|
||||||
Assets of discontinued operations:
|
|
|
|
||||
Accounts receivable
|
$
|
17,094
|
|
|
$
|
18,899
|
|
Inventories
|
71,816
|
|
|
66,209
|
|
||
Prepaid expenses and other current assets
|
320
|
|
|
548
|
|
||
Net property plant and equipment
|
79,048
|
|
|
78,699
|
|
||
Other assets
|
12,608
|
|
|
11,864
|
|
||
Total assets of discontinued operations prior to impairment
|
180,886
|
|
|
176,219
|
|
||
|
|
|
|
||||
Impairment
|
(119,907
|
)
|
|
(122,407
|
)
|
||
|
|
|
|
||||
Total assets of discontinued operations
|
$
|
60,979
|
|
|
$
|
53,812
|
|
|
|
|
|
||||
Liabilities of discontinued operations:
|
|
|
|
||||
Accounts payable
|
$
|
7,253
|
|
|
$
|
7,316
|
|
Accrued income and other taxes
|
2,326
|
|
|
1,834
|
|
||
Other accrued liabilities
|
10,463
|
|
|
8,166
|
|
||
Total current liabilities of discontinued operations
|
20,042
|
|
|
17,316
|
|
||
|
|
|
|
||||
Other long-term obligations
|
850
|
|
|
1,040
|
|
||
|
|
|
|
||||
Total liabilities of discontinued operations
|
$
|
20,892
|
|
|
$
|
18,356
|
|
(3)
|
Segment Reporting
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Net sales to external customers:
|
|
|
|
||||
Industrial Materials
|
$
|
95,576
|
|
|
$
|
104,739
|
|
|
|
|
|
||||
Operating (loss) income:
|
|
|
|
||||
Industrial Materials
|
(20,247
|
)
|
|
(6,398
|
)
|
||
Corporate, R&D and Other expenses
|
(7,173
|
)
|
|
(5,029
|
)
|
||
Total operating loss
|
$
|
(27,420
|
)
|
|
$
|
(11,427
|
)
|
|
|
|
|
||||
Reconciliation of segment operating loss to
loss before provision for income taxes
|
|
|
|
||||
Other expense (income), net
|
$
|
237
|
|
|
$
|
3,067
|
|
Interest expense
|
6,460
|
|
|
7,546
|
|
||
Interest income
|
(12
|
)
|
|
(123
|
)
|
||
Loss from continuing operations before
provision for income taxes
|
$
|
(34,105
|
)
|
|
$
|
(21,917
|
)
|
(4)
|
Benefit Plans
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Service cost
|
$
|
508
|
|
|
$
|
496
|
|
Interest cost
|
1,498
|
|
|
1,385
|
|
||
Expected return on plan assets
|
(1,310
|
)
|
|
(1,389
|
)
|
||
Net cost
|
$
|
696
|
|
|
$
|
492
|
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Service cost
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
272
|
|
|
241
|
|
||
Net cost
|
$
|
273
|
|
|
$
|
242
|
|
(5)
|
Goodwill and Other Intangible Assets
|
Goodwill
|
|||
Balance as of December 31, 2016
|
$
|
171,117
|
|
Adjustments
|
—
|
|
|
Balance as of March 31, 2017
|
$
|
171,117
|
|
Intangible Assets
|
|||||||||||||||||||||||
|
As of December 31, 2016
|
|
As of March 31, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization & Impairment |
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization & Impairment
|
|
Net
Carrying
Amount
|
||||||||||||
|
(Dollars in Thousands)
|
||||||||||||||||||||||
Trade name
|
$
|
22,500
|
|
|
$
|
(3,235
|
)
|
|
$
|
19,265
|
|
|
$
|
22,500
|
|
|
$
|
(3,811
|
)
|
|
$
|
18,689
|
|
Technological know-how
|
55,300
|
|
|
(10,397
|
)
|
|
44,903
|
|
|
55,300
|
|
|
(12,173
|
)
|
|
43,127
|
|
||||||
Customer –related
intangible
|
64,500
|
|
|
(6,177
|
)
|
|
58,323
|
|
|
64,500
|
|
|
(7,295
|
)
|
|
57,205
|
|
||||||
Total finite-lived
intangible assets
|
$
|
142,300
|
|
|
$
|
(19,809
|
)
|
|
$
|
122,491
|
|
|
$
|
142,300
|
|
|
$
|
(23,279
|
)
|
|
$
|
119,021
|
|
(6)
|
Debt and Liquidity
|
|
As of
December 31, 2016
|
|
As of
March 31, 2017 |
||||
|
(Dollars in thousands)
|
||||||
Credit Facility (Revolving Facility and Term Loan Facility)
|
$
|
90,731
|
|
|
$
|
103,331
|
|
Senior Notes
|
274,132
|
|
|
275,732
|
|
||
Other Debt
|
569
|
|
|
539
|
|
||
Total Debt
|
365,432
|
|
|
379,602
|
|
||
Less: Short-term Debt
|
(8,852
|
)
|
|
(10,356
|
)
|
||
Long-term Debt
|
$
|
356,580
|
|
|
$
|
369,246
|
|
(7)
|
Inventories
|
|
As of
December 31, 2016
|
|
As of
March 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Inventories:
|
|
|
|
||||
Raw materials and supplies
|
$
|
54,469
|
|
|
$
|
51,037
|
|
Work in process
|
52,379
|
|
|
60,979
|
|
||
Finished goods
|
49,263
|
|
|
47,377
|
|
||
Total
|
$
|
156,111
|
|
|
$
|
159,393
|
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
(Dollars in thousands)
|
||||||
Interest incurred on debt
|
$
|
4,897
|
|
|
$
|
5,870
|
|
Accretion of fair value adjustment on
Senior Notes
|
1,563
|
|
|
1,599
|
|
||
Amortization of debt issuance costs
|
—
|
|
|
77
|
|
||
Total interest expense
|
$
|
6,460
|
|
|
$
|
7,546
|
|
(9)
|
Contingencies
|
(10)
|
Income Taxes
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
|
||||||
Tax (benefit) expense
|
$
|
(295
|
)
|
|
$
|
361
|
|
Pretax loss
|
(34,105
|
)
|
|
(21,917
|
)
|
||
Effective tax rates
|
0.9
|
%
|
|
(1.6
|
)%
|
||
|
|
|
|
(11)
|
Derivative Instruments
|
(12)
|
Guarantor Information
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
||||||||||||||||||||
As of December 31, 2016
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
Consolidating
|
|
|
||||||||||
|
|
|
|
|
|
Non-
|
|
Entries and
|
|
|
||||||||||
|
|
Parent
|
|
Guarantors
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
636
|
|
|
$
|
10,974
|
|
|
$
|
—
|
|
|
$
|
11,610
|
|
Accounts receivable - affiliates
|
|
51,592
|
|
|
3,624
|
|
|
19,643
|
|
|
(74,859
|
)
|
|
—
|
|
|||||
Accounts receivable - trade
|
|
—
|
|
|
7,518
|
|
|
73,050
|
|
|
—
|
|
|
80,568
|
|
|||||
Inventories
|
|
—
|
|
|
44,563
|
|
|
111,548
|
|
|
—
|
|
|
156,111
|
|
|||||
Prepaid and other current assets
|
|
1,350
|
|
|
4,853
|
|
|
15,462
|
|
|
—
|
|
|
21,665
|
|
|||||
Current assets of discontinued operations
|
|
—
|
|
|
51,160
|
|
|
14,296
|
|
|
(4,477
|
)
|
|
60,979
|
|
|||||
Total current assets
|
|
52,942
|
|
|
112,354
|
|
|
244,973
|
|
|
(79,336
|
)
|
|
330,933
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Investment in affiliates
|
|
844,379
|
|
|
601,597
|
|
|
—
|
|
|
(1,445,976
|
)
|
|
—
|
|
|||||
Property, plant and equipment
|
|
—
|
|
|
191,503
|
|
|
317,352
|
|
|
—
|
|
|
508,855
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
19,803
|
|
|
—
|
|
|
19,803
|
|
|||||
Goodwill
|
|
—
|
|
|
70,399
|
|
|
100,718
|
|
|
—
|
|
|
171,117
|
|
|||||
Notes receivable - affiliate
|
|
—
|
|
|
49,003
|
|
|
—
|
|
|
(49,003
|
)
|
|
—
|
|
|||||
Other assets
|
|
—
|
|
|
70,767
|
|
|
70,801
|
|
|
—
|
|
|
141,568
|
|
|||||
Long-term assets of discontinued operations
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total Assets
|
|
$
|
897,321
|
|
|
$
|
1,095,623
|
|
|
$
|
753,647
|
|
|
$
|
(1,574,315
|
)
|
|
$
|
1,172,276
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable - affiliate
|
|
$
|
806
|
|
|
$
|
71,243
|
|
|
$
|
2,810
|
|
|
$
|
(74,859
|
)
|
|
$
|
—
|
|
Accounts payable - trade
|
|
964
|
|
|
8,033
|
|
|
38,666
|
|
|
—
|
|
|
47,663
|
|
|||||
Short-term debt
|
|
—
|
|
|
3,062
|
|
|
5,790
|
|
|
—
|
|
|
8,852
|
|
|||||
Accrued income and other taxes
|
|
—
|
|
|
2,095
|
|
|
3,161
|
|
|
—
|
|
|
5,256
|
|
|||||
Other accrued liabilities
|
|
2,444
|
|
|
12,205
|
|
|
15,945
|
|
|
—
|
|
|
30,594
|
|
|||||
Short-term liabilities of discontinued operations
|
|
—
|
|
|
20,381
|
|
|
4,138
|
|
|
(4,477
|
)
|
|
20,042
|
|
|||||
Total current liabilities
|
|
4,214
|
|
|
117,019
|
|
|
70,510
|
|
|
(79,336
|
)
|
|
112,407
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt - affiliate
|
|
41,590
|
|
|
—
|
|
|
7,413
|
|
|
(49,003
|
)
|
|
—
|
|
|||||
Long-term debt - third party
|
|
274,132
|
|
|
81,695
|
|
|
753
|
|
|
—
|
|
|
356,580
|
|
|||||
Other long-term obligations
|
|
—
|
|
|
50,943
|
|
|
31,205
|
|
|
—
|
|
|
82,148
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
909
|
|
|
41,997
|
|
|
—
|
|
|
42,906
|
|
|||||
Long-term liabilities of discontinued operations
|
|
—
|
|
|
678
|
|
|
172
|
|
|
—
|
|
|
850
|
|
|||||
Stockholders' equity
|
|
577,385
|
|
|
844,379
|
|
|
601,597
|
|
|
(1,445,976
|
)
|
|
577,385
|
|
|||||
Total Liabilities and Stockholders' Equity
|
|
$
|
897,321
|
|
|
$
|
1,095,623
|
|
|
$
|
753,647
|
|
|
$
|
(1,574,315
|
)
|
|
$
|
1,172,276
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING BALANCE SHEETS
|
||||||||||||||||||||||
As of March 31, 2017
|
||||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
Consolidating
|
|
|
||||||||||||
|
|
|
|
|
|
Non-
|
|
Entries and
|
|
|
||||||||||||
|
|
Parent
|
|
Guarantors
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
663
|
|
|
$
|
17,818
|
|
|
$
|
—
|
|
|
$
|
18,481
|
|
||
Accounts receivable - affiliates
|
|
51,592
|
|
|
10,104
|
|
|
17,484
|
|
|
(79,180
|
)
|
|
—
|
|
|||||||
Accounts receivable - trade
|
|
—
|
|
|
6,775
|
|
|
67,884
|
|
|
—
|
|
|
74,659
|
|
|||||||
Inventories
|
|
—
|
|
|
44,198
|
|
|
115,195
|
|
|
|
|
|
159,393
|
|
|||||||
Prepaid and other current assets
|
|
1,440
|
|
|
4,260
|
|
|
16,736
|
|
|
—
|
|
|
22,436
|
|
|||||||
Current assets of discontinued operations
|
|
—
|
|
|
43,380
|
|
|
13,579
|
|
|
(3,147
|
)
|
|
53,812
|
|
|||||||
Total current assets
|
|
53,032
|
|
|
109,380
|
|
|
248,696
|
|
|
(82,327
|
)
|
|
328,781
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investment in affiliates
|
|
829,921
|
|
|
596,259
|
|
|
—
|
|
|
(1,426,180
|
)
|
|
—
|
|
|||||||
Property, plant and equipment
|
|
—
|
|
|
187,936
|
|
|
316,869
|
|
|
—
|
|
|
504,805
|
|
|||||||
Deferred income taxes
|
|
—
|
|
|
—
|
|
|
20,315
|
|
|
—
|
|
|
20,315
|
|
|||||||
Goodwill
|
|
—
|
|
|
70,399
|
|
|
100,718
|
|
|
—
|
|
|
171,117
|
|
|||||||
Notes receivable - affiliate
|
|
|
|
|
49,380
|
|
|
—
|
|
|
(49,380
|
)
|
|
—
|
|
|||||||
Other assets
|
|
—
|
|
|
67,706
|
|
|
70,903
|
|
|
—
|
|
|
138,609
|
|
|||||||
Total Assets
|
|
$
|
882,953
|
|
|
$
|
1,081,060
|
|
|
$
|
757,501
|
|
|
$
|
(1,557,887
|
)
|
|
$
|
1,163,627
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable - affiliate
|
|
$
|
1,184
|
|
|
$
|
68,734
|
|
|
$
|
9,262
|
|
|
$
|
(79,180
|
)
|
|
$
|
—
|
|
||
Accounts payable - trade
|
|
964
|
|
|
8,372
|
|
|
35,382
|
|
|
—
|
|
|
44,718
|
|
|||||||
Short-term debt
|
|
—
|
|
|
4,362
|
|
|
5,994
|
|
|
—
|
|
|
10,356
|
|
|||||||
Accrued income and other taxes
|
|
—
|
|
|
1,097
|
|
|
4,812
|
|
|
—
|
|
|
5,909
|
|
|||||||
Other accrued liabilities
|
|
7,225
|
|
|
8,930
|
|
|
17,562
|
|
|
—
|
|
|
33,717
|
|
|||||||
Liabilities of discontinued operations
|
|
—
|
|
|
16,137
|
|
|
4,326
|
|
|
(3,147
|
)
|
|
17,316
|
|
|||||||
Total current liabilities
|
|
9,373
|
|
|
107,632
|
|
|
77,338
|
|
|
(82,327
|
)
|
|
112,016
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Long-term debt - affiliate
|
|
41,967
|
|
|
—
|
|
|
7,413
|
|
|
(49,380
|
)
|
|
—
|
|
|||||||
Long-term debt - third party
|
|
275,732
|
|
|
92,737
|
|
|
777
|
|
|
—
|
|
|
369,246
|
|
|||||||
Other long-term obligations
|
|
—
|
|
|
48,869
|
|
|
32,299
|
|
|
—
|
|
|
81,168
|
|
|||||||
Deferred income taxes
|
|
—
|
|
|
1,037
|
|
|
43,239
|
|
|
—
|
|
|
44,276
|
|
|||||||
Long-term liabilities of discontinued operations
|
|
—
|
|
|
864
|
|
|
176
|
|
—
|
|
—
|
|
—
|
|
1,040
|
|
|||||
Stockholders' equity
|
|
555,881
|
|
|
829,921
|
|
|
596,259
|
|
|
(1,426,180
|
)
|
|
555,881
|
|
|||||||
Total Liabilities and Stockholders' Equity
|
|
$
|
882,953
|
|
|
$
|
1,081,060
|
|
|
$
|
757,501
|
|
|
$
|
(1,557,887
|
)
|
|
$
|
1,163,627
|
|
||
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
||||||||||||||||||||
For the Three Months Ended March 31, 2016
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
Consolidating
|
|
|
||||||||||
|
|
|
|
|
|
Non-
|
|
Entries and
|
|
|
||||||||||
|
|
Parent
|
|
Guarantors
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales - affiliates
|
|
$
|
—
|
|
|
$
|
40,899
|
|
|
$
|
19,643
|
|
|
$
|
(60,542
|
)
|
|
$
|
—
|
|
Sales - third party
|
|
—
|
|
|
20,820
|
|
|
74,756
|
|
|
—
|
|
|
95,576
|
|
|||||
Net sales
|
|
—
|
|
|
61,719
|
|
|
94,399
|
|
|
(60,542
|
)
|
|
95,576
|
|
|||||
Cost of sales
|
|
—
|
|
|
61,602
|
|
|
95,954
|
|
|
(60,542
|
)
|
|
97,014
|
|
|||||
Additions to lower cost or market inventory reserve
|
|
—
|
|
|
2,073
|
|
|
9,464
|
|
|
—
|
|
|
11,537
|
|
|||||
Gross profit (loss)
|
|
—
|
|
|
(1,956
|
)
|
|
(11,019
|
)
|
|
—
|
|
|
(12,975
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and development
|
|
—
|
|
|
651
|
|
|
—
|
|
|
—
|
|
|
651
|
|
|||||
Selling and administrative expenses
|
|
—
|
|
|
6,074
|
|
|
7,720
|
|
|
—
|
|
|
13,794
|
|
|||||
Operating (loss) income
|
|
—
|
|
|
(8,681
|
)
|
|
(18,739
|
)
|
|
—
|
|
|
(27,420
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense (income), net
|
|
6
|
|
|
270
|
|
|
(39
|
)
|
|
—
|
|
|
237
|
|
|||||
Interest expense - affiliate
|
|
198
|
|
|
—
|
|
|
—
|
|
|
(198
|
)
|
|
—
|
|
|||||
Interest expense - third party
|
|
6,344
|
|
|
41
|
|
|
75
|
|
|
—
|
|
|
6,460
|
|
|||||
Interest income - affiliate
|
|
—
|
|
|
(198
|
)
|
|
—
|
|
|
198
|
|
|
—
|
|
|||||
Interest income - third party
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||||
Income (Loss) from
continuing operations before
provision for income taxes
|
|
(6,548
|
)
|
|
(8,794
|
)
|
|
(18,763
|
)
|
|
—
|
|
`
|
(34,105
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Provision for income taxes
|
|
—
|
|
|
17
|
|
|
(312
|
)
|
|
—
|
|
|
(295
|
)
|
|||||
Equity in loss from
continuing operations of subsidiary |
|
(27,262
|
)
|
|
(18,451
|
)
|
|
—
|
|
|
45,713
|
|
|
—
|
|
|||||
Net loss from
continuing operations |
|
(33,810
|
)
|
|
(27,262
|
)
|
|
(18,451
|
)
|
|
45,713
|
|
|
(33,810
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Loss from discontinued
operations, net of tax
|
|
—
|
|
|
(1,578
|
)
|
|
(987
|
)
|
|
—
|
|
|
(2,565
|
)
|
|||||
Equity in loss from discontinued operations of subsidiary
|
|
(2,565
|
)
|
|
(987
|
)
|
|
—
|
|
|
3,552
|
|
|
—
|
|
|||||
Net loss from
discontinued operations |
|
(2,565
|
)
|
|
(2,565
|
)
|
|
(987
|
)
|
|
3,552
|
|
|
(2,565
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net loss
|
|
$
|
(36,375
|
)
|
|
$
|
(29,827
|
)
|
|
$
|
(19,438
|
)
|
|
$
|
49,265
|
|
|
$
|
(36,375
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(36,375
|
)
|
|
$
|
(29,827
|
)
|
|
$
|
(19,438
|
)
|
|
$
|
49,265
|
|
|
$
|
(36,375
|
)
|
Other comprehensive income
|
|
12,637
|
|
|
12,637
|
|
|
12,637
|
|
|
(25,274
|
)
|
|
12,637
|
|
|||||
Comprehensive loss
|
|
$
|
(23,738
|
)
|
|
$
|
(17,190
|
)
|
|
$
|
(6,801
|
)
|
|
$
|
23,991
|
|
|
$
|
(23,738
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
||||||||||||||||||||
For the Three Months Ended March 31, 2017
|
||||||||||||||||||||
(in thousands)
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
Consolidating
|
|
|
||||||||||
|
|
|
|
|
|
Non-
|
|
Entries and
|
|
|
||||||||||
|
|
Parent
|
|
Guarantors
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales - affiliates
|
|
$
|
—
|
|
|
$
|
25,344
|
|
|
$
|
12,085
|
|
|
$
|
(37,429
|
)
|
|
$
|
—
|
|
Sales - third party
|
|
—
|
|
|
21,881
|
|
|
82,858
|
|
|
—
|
|
|
104,739
|
|
|||||
Net sales
|
|
—
|
|
|
47,225
|
|
|
94,943
|
|
|
(37,429
|
)
|
|
104,739
|
|
|||||
Cost of sales
|
|
—
|
|
|
46,470
|
|
|
93,316
|
|
|
(37,429
|
)
|
|
102,357
|
|
|||||
Additions to lower of cost or
market inventory reserve |
|
—
|
|
|
725
|
|
|
572
|
|
|
—
|
|
|
1,297
|
|
|||||
Gross profit
|
|
—
|
|
|
30
|
|
|
1,055
|
|
|
—
|
|
|
1,085
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and development
|
|
—
|
|
|
829
|
|
|
—
|
|
|
—
|
|
|
829
|
|
|||||
Selling and administrative expenses
|
|
—
|
|
|
3,299
|
|
|
8,384
|
|
|
—
|
|
|
11,683
|
|
|||||
Operating (loss)
|
|
—
|
|
|
(4,098
|
)
|
|
(7,329
|
)
|
|
—
|
|
|
(11,427
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other expense (income), net
|
|
7
|
|
|
215
|
|
|
2,845
|
|
|
—
|
|
|
3,067
|
|
|||||
Interest expense - affiliate
|
|
659
|
|
|
—
|
|
|
—
|
|
|
(659
|
)
|
|
—
|
|
|||||
Interest expense - third party
|
|
6,380
|
|
|
1,052
|
|
|
114
|
|
|
—
|
|
|
7,546
|
|
|||||
Interest income - affiliate
|
|
—
|
|
|
(659
|
)
|
|
—
|
|
|
659
|
|
|
—
|
|
|||||
Interest income - third party
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
(123
|
)
|
|||||
Loss from continuing operations
before provision for income taxes |
|
(7,046
|
)
|
|
(4,706
|
)
|
|
(10,165
|
)
|
|
—
|
|
`
|
(21,917
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Provision for income taxes
|
|
—
|
|
|
131
|
|
|
230
|
|
|
—
|
|
|
361
|
|
|||||
Equity in loss from continuing
operations of subsidiary
|
|
(15,232
|
)
|
|
(10,395
|
)
|
|
—
|
|
|
25,627
|
|
|
—
|
|
|||||
Net loss from
continuing operations |
|
(22,278
|
)
|
|
(15,232
|
)
|
|
(10,395
|
)
|
|
25,627
|
|
|
(22,278
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) income from discontinued
operations, net of tax
|
|
—
|
|
|
(4,142
|
)
|
|
76
|
|
|
—
|
|
|
(4,066
|
)
|
|||||
Equity in (loss) income from
discontinued operations of
subsidiary
|
|
(4,066
|
)
|
|
76
|
|
|
—
|
|
|
3,990
|
|
|
—
|
|
|||||
Net (loss) income from
discontinued operations |
|
(4,066
|
)
|
|
(4,066
|
)
|
|
76
|
|
|
3,990
|
|
|
(4,066
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(26,344
|
)
|
|
$
|
(19,298
|
)
|
|
$
|
(10,319
|
)
|
|
$
|
29,617
|
|
|
$
|
(26,344
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net loss
|
|
$
|
(26,344
|
)
|
|
$
|
(19,298
|
)
|
|
$
|
(10,319
|
)
|
|
$
|
29,617
|
|
|
$
|
(26,344
|
)
|
Other comprehensive income
|
|
4,840
|
|
|
4,840
|
|
|
4,840
|
|
|
(9,680
|
)
|
|
4,840
|
|
|||||
Comprehensive loss
|
|
$
|
(21,504
|
)
|
|
$
|
(14,458
|
)
|
|
$
|
(5,479
|
)
|
|
$
|
19,937
|
|
|
$
|
(21,504
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|||||||||||||||||||
For the Three Months Ended March 31, 2016
|
|||||||||||||||||||
(in thousands)
|
|||||||||||||||||||
|
|
|
|
|
|
|
Consolidating
|
|
|
||||||||||
|
|
|
|
|
Non-
|
|
Entries and
|
|
|
||||||||||
|
Parent
|
|
Guarantors
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash (used in) provided by operating activities:
|
$
|
(6
|
)
|
|
$
|
8,007
|
|
|
$
|
1,723
|
|
|
$
|
—
|
|
|
$
|
9,724
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loans to) repayments from affiliates
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
6
|
|
|
—
|
|
|||||
Capital expenditures
|
—
|
|
|
(3,828
|
)
|
|
(4,586
|
)
|
|
—
|
|
|
(8,414
|
)
|
|||||
Other
|
—
|
|
|
—
|
|
|
(253
|
)
|
|
—
|
|
|
(253
|
)
|
|||||
Proceeds from sale of fixed assets
|
—
|
|
|
391
|
|
|
13
|
|
|
—
|
|
|
404
|
|
|||||
Net cash (used in) provided by
investing activities
|
—
|
|
|
(3,443
|
)
|
|
(4,826
|
)
|
|
6
|
|
|
(8,263
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans from (Repayments to) affiliates
|
6
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|||||
Short-term debt, net
|
—
|
|
|
1
|
|
|
5,000
|
|
|
—
|
|
|
5,001
|
|
|||||
Revolving Facility borrowings
|
—
|
|
|
19,000
|
|
|
—
|
|
|
—
|
|
|
19,000
|
|
|||||
Revolving Facility reductions
|
—
|
|
|
(23,000
|
)
|
|
—
|
|
|
—
|
|
|
(23,000
|
)
|
|||||
Principal payments on long term debt
|
—
|
|
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||
Net cash provided by (used in)
financing activities
|
6
|
|
|
(4,033
|
)
|
|
5,000
|
|
|
(6
|
)
|
|
967
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Net change in cash and
cash equivalents
|
—
|
|
|
531
|
|
|
1,897
|
|
|
—
|
|
|
2,428
|
|
|||||
Effect of exchange rate changes
on cash and cash equivalents
|
—
|
|
|
—
|
|
|
477
|
|
|
—
|
|
|
477
|
|
|||||
Cash and cash equivalents at
beginning of period
|
—
|
|
|
646
|
|
|
6,281
|
|
|
—
|
|
|
6,927
|
|
|||||
Cash and cash equivalents
at end of period
|
$
|
—
|
|
|
$
|
1,177
|
|
|
$
|
8,655
|
|
|
$
|
—
|
|
|
$
|
9,832
|
|
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
|
|||||||||||||||||||
For the Three Months Ended March 31, 2017
|
|||||||||||||||||||
(in thousands)
|
|||||||||||||||||||
|
|
|
|
|
|
|
Consolidating
|
|
|
||||||||||
|
|
|
|
|
Non-
|
|
Entries and
|
|
|
||||||||||
|
Parent
|
|
Guarantors
|
|
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash (used in) provided by operating activities:
|
$
|
(96
|
)
|
|
$
|
(11,077
|
)
|
|
$
|
12,990
|
|
|
$
|
—
|
|
|
$
|
1,817
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans to affiliates
|
—
|
|
|
(96
|
)
|
|
—
|
|
|
96
|
|
|
—
|
|
|||||
Capital expenditures
|
—
|
|
|
(1,069
|
)
|
|
(6,927
|
)
|
|
—
|
|
|
(7,996
|
)
|
|||||
Proceeds from sale of assets
|
—
|
|
|
4
|
|
|
364
|
|
|
—
|
|
|
368
|
|
|||||
Net cash (used in) provided by
investing activities
|
—
|
|
|
(1,161
|
)
|
|
(6,563
|
)
|
|
96
|
|
|
(7,628
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Loans from affiliates
|
96
|
|
|
—
|
|
|
—
|
|
|
(96
|
)
|
|
—
|
|
|||||
Short-term debt, net
|
—
|
|
|
(699
|
)
|
|
201
|
|
|
—
|
|
|
(498
|
)
|
|||||
Revolving Facility borrowings
|
—
|
|
|
13,000
|
|
|
—
|
|
|
—
|
|
|
13,000
|
|
|||||
Principal payments on long term debt
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|||||
Net cash provided by (used in)
financing activities
|
96
|
|
|
12,265
|
|
|
201
|
|
|
(96
|
)
|
|
12,466
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net change in cash and
cash equivalents
|
—
|
|
|
27
|
|
|
6,628
|
|
|
—
|
|
|
6,655
|
|
|||||
Effect of exchange rate changes
on cash and cash equivalents
|
—
|
|
|
—
|
|
|
216
|
|
|
—
|
|
|
216
|
|
|||||
Cash and cash equivalents at
beginning of period
|
—
|
|
|
636
|
|
|
10,974
|
|
|
—
|
|
|
11,610
|
|
|||||
Cash and cash equivalents
at end of period
|
$
|
—
|
|
|
$
|
663
|
|
|
$
|
17,818
|
|
|
$
|
—
|
|
|
$
|
18,481
|
|
•
|
the possibility that additions to capacity for producing EAF steel, increases in overall EAF steel production capacity, and increases or other changes in steel production may not occur or may not occur at the rates that we anticipate or may not be as geographically disbursed as we anticipate;
|
•
|
the possibility that increases or decreases in graphite electrode manufacturing capacity (including growth by producers in developing countries), competitive pressures (including changes in, and the mix, distribution, and pricing of, competitive products), reduction in specific consumption rates, increases or decreases in customer inventory levels, or other changes in the graphite electrode markets may occur, which may impact demand for, prices or unit and dollar volume sales of graphite electrodes and growth or profitability of our graphite electrodes business;
|
•
|
the possible failure of changes in EAF steel production or graphite electrode production to result in stable or increased, or offset decreases in, graphite electrode demand, prices, or sales volume;
|
•
|
the possibility that a determination that we have failed to comply with one or more export controls or trade sanctions to which we are subject with respect to products or technology exported from the United States or other jurisdictions could result in civil or criminal penalties, denial of export privileges and loss of revenues from certain customers;
|
•
|
the possibility that, for all of our product lines, capital improvement and expansion in our customers
'
operations or increases in demand for their products may not occur or may not occur at the rates that we anticipate or the demand for their products may decline, which may affect their demand for the products we sell to them, which could affect our profitability and cash flows as well as the recoverability of our assets;
|
•
|
the possibility that assumptions related to future expectations of financial performance materially change and impact our goodwill and long-lived asset carrying values;
|
•
|
the possibility that our financial assumptions and expectations materially change as a result of government or state-owned government subsidies, incentives and trade barriers;
|
•
|
the possibility that current economic disruptions or other conditions may result in idling or permanent closing of blast furnace capacity or delay of blast furnace capacity additions or replacements which may affect demand and prices for our refractory products;
|
•
|
the possibility that continued global consolidation of the world
'
s largest steel producers could impact our business or industry;
|
•
|
the possibility that average graphite electrode revenue per metric ton in the future may be different than current spot or market prices due to changes in product mix, changes in currency exchange rates, changes in competitive market conditions or other factors;
|
•
|
the possibility that price increases, adjustments or surcharges may not be realized or that price decreases may occur;
|
•
|
the possibility that current challenging economic conditions and economic demand reduction may continue to impact our revenues and costs;
|
•
|
the possibility that U.S., European, Chinese, or other governmental monetary or fiscal policy may adversely affect global economic activity and demand for our products;
|
•
|
the possibility that potential future cuts in defense spending by the United States government as a part of efforts to reduce federal budget deficits could reduce demand for certain of our products and associated revenue;
|
•
|
the possibility that decreases in prices for energy and raw materials may lead to downward pressure on prices for our products and delays in customer orders for our products as customers anticipate possible future lower prices;
|
•
|
the possibility that customers may delay or cancel orders;
|
•
|
the possibility that we may not be able to reduce production costs or delay or cancel raw material purchase commitments;
|
•
|
the possibility that economic, political and other risks associated with operating globally, including national and international conflicts, terrorist acts, political and economic instability, civil unrest, community activism and natural or nuclear calamities might interfere with our supply chains, customers or activities in a particular location;
|
•
|
the possibility that reductions in customers
'
production, increases in competitors
'
capacity, competitive pressures, or other changes in other markets we serve may occur, which may impact demand for, prices of or unit and dollar volume sales of, our other products, or growth or profitability of our other product lines, or change our position in such markets;
|
•
|
the possibility that we will not be able to hire and retain key personnel, maintain appropriate relations with unions, associations and employees or to renew or extend our collective bargaining or similar agreements on reasonable terms as they expire or do so without a work stoppage or strike;
|
•
|
the possibility that an adverse determination in litigation pending in Brazil involving disputes related to the proper interpretation of certain collectively bargained wage increase provisions applicable to both us and other employers in the Bahia region might result in the filing of claims against our Brazilian subsidiary;
|
•
|
the possibility that a Brazilian graphite electrode antitrust investigation could result in material fines or penalties;
|
•
|
the possibility that we will fail to retain or develop new customers or applications for our Engineered Solutions products or such new product applications will not be adopted by the market place;
|
•
|
the possibility that our manufacturing capabilities may not be sufficient or that we may experience delays in expanding or fail to expand our manufacturing capacity to meet demand for existing, new or improved products;
|
•
|
the possibility that we may propose acquisitions or divestitures in the future, that we may not complete the acquisitions or divestitures, and that investments and acquisitions that we may make in the future may not be successfully integrated into our business or provide the performance or returns expected or that divestitures may not generate the proceeds anticipated;
|
•
|
the possibility that challenging conditions or changes in the capital markets will limit our ability to undertake refinancing activities or obtain financing for growth and other initiatives, on acceptable terms or at all;
|
•
|
the possibility that conditions or changes in the global equity markets may have a material impact on our future pension funding obligations and liabilities on our balance sheet;
|
•
|
the possibility that the amount or timing of our anticipated capital expenditures may be limited by our financial resources or financing arrangements or that our ability to complete capital projects may not occur timely enough to adapt to changes in market conditions or changes in regulatory requirements;
|
•
|
the possibility that the actual outcome of uncertainties associated with assumptions and estimates using judgment when applying critical accounting policies and preparing financial statements may have a material impact on our results of operations or financial position;
|
•
|
the possibility that we may be unable to protect our intellectual property or may infringe the intellectual property rights of others, resulting in damages, limitations on our ability to produce or sell products or limitations on our ability to prevent others from using that intellectual property to produce or sell products;
|
•
|
the occurrence of unanticipated events or circumstances or changing interpretations and enforcement agendas relating to legal proceedings or compliance programs;
|
•
|
the occurrence of unanticipated events or circumstances or changing interpretations and enforcement agendas relating to health, safety or environmental compliance or remediation obligations or liabilities to third parties or relating to labor relations;
|
•
|
the possibility that new or expanded regulatory initiatives with respect to greenhouse gas emissions could increase the capital intensive nature of our business and add to our costs of production;
|
•
|
the possibility that our provision for income taxes and effective income tax rate or cash tax rate may fluctuate significantly due to (i) changes in applicable tax rates or laws, (ii) changes in the sources of our income, (iii) changes in tax planning, (iv) new or changing interpretations of applicable regulations, (v) changes in profitability, (vi) changes in our estimate of our future ability to use foreign tax credits or other tax attributes, and (vii) other factors;
|
•
|
the possibility of changes in interest or currency exchange rates or in inflation or deflation;
|
•
|
the possibility that our outlook could be significantly impacted by, among other things, developments in North Africa, the Middle East, North Korea, and other areas of concern, the occurrence of further terrorist acts and developments resulting from the war on terrorism;
|
•
|
the possibility that interruption in our major raw material, energy or utility supplies due to, among other things, natural or nuclear disasters, process interruptions, actions by producers and capacity limitations, may adversely affect our ability to manufacture and supply our products or result in higher costs;
|
•
|
the possibility that the magnitude of changes in the cost of major raw materials, energy or utility suppliers by reason of shortages, changes in market pricing, pricing terms in applicable supply contracts, or other events may adversely affect our ability to manufacture and supply our products or result in higher costs;
|
•
|
the possibility of interruptions in production at our facilities due to, among other things, critical equipment failure, which may adversely affect our ability to manufacture and supply our products or result in higher costs;
|
•
|
the possibility that we may not achieve the earnings or other financial or operational metrics that we provide as guidance from time to time;
|
•
|
the possibility that the anticipated benefits from rationalizations and other cost savings initiatives may be delayed or may not occur, may vary in cost or may result in unanticipated disruptions;
|
•
|
the possibility of security breaches affecting our information technology systems;
|
•
|
the possibility that our disclosure or internal controls may become inadequate because of changes in conditions or personnel or that those controls may not operate effectively and may not prevent or detect misstatements or errors;
|
•
|
the possibility that severe economic conditions may adversely affect our business, liquidity or capital resources;
|
•
|
the possibility that delays may occur in the financial statement closing process;
|
•
|
the possibility of changes in performance that may affect financial covenant compliance or funds available for borrowing; and
|
•
|
other risks and uncertainties, including those described elsewhere in this Report or our other SEC filings, as well as future decisions by us.
|
(in thousands)
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
Net sales
|
$
|
95,576
|
|
|
$
|
104,739
|
|
Cost of sales
|
97,014
|
|
|
102,357
|
|
||
Additions to lower of cost or
market inventory reserve |
11,537
|
|
|
1,297
|
|
||
Gross profit (loss)
|
(12,975
|
)
|
|
1,085
|
|
||
Research and development
|
651
|
|
|
829
|
|
||
Selling and administrative expenses
|
13,794
|
|
|
11,683
|
|
||
Operating loss
|
(27,420
|
)
|
|
(11,427
|
)
|
||
Other expense (income), net
|
237
|
|
|
3,067
|
|
||
Interest expense
|
6,460
|
|
|
7,546
|
|
||
Interest income
|
(12
|
)
|
|
(123
|
)
|
||
Loss from continuing operations before
provision for income taxes |
(34,105
|
)
|
|
(21,917
|
)
|
||
Provision for (benefit from) income taxes
|
(295
|
)
|
|
361
|
|
||
Net loss from continuing operations
|
(33,810
|
)
|
|
(22,278
|
)
|
||
Loss from discontinued operations, net of tax
|
(2,565
|
)
|
|
(4,066
|
)
|
||
Net loss
|
$
|
(36,375
|
)
|
|
$
|
(26,344
|
)
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
|
||||||
Industrial Materials
|
$
|
(20,247
|
)
|
|
$
|
(6,398
|
)
|
Corporate, R&D and Other Expenses
|
(7,173
|
)
|
|
(5,029
|
)
|
||
Total operating loss
|
$
|
(27,420
|
)
|
|
$
|
(11,427
|
)
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
|
||||||
Tax expense (benefit)
|
$
|
(295
|
)
|
|
$
|
361
|
|
Pretax loss
|
(34,105
|
)
|
|
(21,917
|
)
|
||
Effective tax rates
|
0.9
|
%
|
|
(1.6
|
)%
|
|
For the Three Months Ended March 31, 2016
|
|
For the Three Months Ended March 31, 2017
|
||||
|
in millions
|
||||||
Cash flow provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
9.7
|
|
|
$
|
1.8
|
|
Investing activities
|
$
|
(8.3
|
)
|
|
$
|
(7.6
|
)
|
Financing activities
|
$
|
1.0
|
|
|
$
|
12.5
|
|
•
|
Non-cash items such as depreciation and amortization; post retirement obligations, severance and pension plan changes; and stock-based compensation charges;
|
•
|
Gains and losses attributed to investing and financing activities such as gains and losses on the sale of assets and unrealized currency transaction gains and losses;
|
•
|
Changes in operating assets and liabilities which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations.
|
•
|
net cash inflows in accounts receivable of $14.2 million from the decrease in accounts receivable due to the collection of customer sales;
|
•
|
net cash inflows from decreases in accounts payable and accruals of $4.9 million, due primarily to changes in tax accruals and payables; and
|
•
|
net cash outflows from increased prepaid expense of $2.9 million due to value added tax payments.
|
•
|
net cash inflows due to increased interest payable of
$4.9 million
primarily resulting from our Senior Notes.
|
•
|
net cash inflows in accounts receivable of
$5.8 million
from the decrease in accounts receivable due to the collection of customer sales;
|
•
|
net cash inflows from decreases in inventory of
$2.7 million
, due primarily to inventory management initiatives;
|
•
|
cash inflows resulting from increased interest payable of
$4.8 million
primarily resulting from our Senior Notes;
|
•
|
net cash outflows from increased prepaid expense of
$0.8 million
due to advanced payments;
|
•
|
net cash outflows due to decrease in accounts payable and accruals of
$3.9 million
primarily resulting from timing of payments.
|
•
|
sales made by our subsidiaries in currencies other than local currencies;
|
•
|
raw material purchases made by our foreign subsidiaries in currencies other than local currencies; and
|
•
|
investments in and intercompany loans to our foreign subsidiaries and our share of the earnings of those subsidiaries, to the extent denominated in currencies other than the dollar.
|
Exhibit
Number
|
Description of Exhibit
|
|
|
31.1
|
Certification pursuant to Rule 13a-14(a) under the Exchange Act by Jeffrey C. Dutton, President and Chief Executive Officer (Principal Executive Officer).
|
|
|
31.2
|
Certification pursuant to Rule 13a-14(a) under the Exchange Act by Quinn J Coburn, Vice President and Chief Financial Officer (Principal Financial Officer).
|
|
|
32.1
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Jeffrey C. Dutton, President and Chief Executive Officer (Principal Executive Officer).
|
|
|
32.2
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Quinn J Coburn, Vice President and Chief Financial Officer (Principal Financial Officer).
|
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
GRAFTECH INTERNATIONAL LTD.
|
Date:
|
April 27, 2017
|
By:
|
/s/ Quinn J Coburn
|
|
|
|
Quinn J Coburn
|
|
|
|
Vice President and Chief Financial
Officer (Principal Financial Officer)
|
1 Year Graftech Chart |
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