-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KQ0v3fNV7ul9bka6ENrWa4t+rPAgQ9fL+ZcIZSgN4svhdnqjtYKcgO2iZkhLugEy viz03d+gSwCQBpyOaIRApg== 0001002664-98-000006.txt : 19980304 0001002664-98-000006.hdr.sgml : 19980304 ACCESSION NUMBER: 0001002664-98-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980302 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT LAKES CARBON CORP CENTRAL INDEX KEY: 0001002664 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PRODUCTS OF PETROLEUM & COAL [2990] IRS NUMBER: 133637043 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-98522 FILM NUMBER: 98554177 BUSINESS ADDRESS: STREET 1: 110 EAST 59TH ST CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2125273002 MAIL ADDRESS: STREET 1: 110 EAST 59TH ST CITY: NEW YORK STATE: NY ZIP: 10022 10-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1997 Commission File Number 33-98522 GREAT LAKES CARBON CORPORATION (Exact name of registrant as specified in its charter) Delaware 13-3637043 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 110 East 59th Street, New York, New York 10022 (Address of principal executive offices) (Zip Code) (212) 527-3002 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: 10% Senior Secured Notes due 2006 (Title of Class) Indicate by check mark whether the registrant (i) 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 regis- trant was required to file such reports), and (ii) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] There is no public market for registrant's common stock. As of February 20, 1998, the registrant had outstanding 100,000 shares of its Common Stock. DOCUMENTS INCORPORATED BY REFERENCE Part III of this report incorporates by reference portions of the Regis- trant's Proxy Statement for the 1998 annual meeting of stockholders. GREAT LAKES CARBON CORPORATION Annual Report on Form 10-K for the Year Ended December 31, 1997 Table of Contents
Page PART I Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 6 Item 4. Submission of Matters to Vote of Security Holders . . . . . . . . 6 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . 6 Item 6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . 8 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . 9 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. . . . . . . . . . . . . .10 PART III Item 10. Directors and Executive Officers of the Registrant. . . . . . . .10 Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . .10 Item 12. Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . . . . . . . . . . . . . . . .10 Item 13. Certain Relationships and Related Transactions. . . . . . . . . .11 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . .11 ____________________________ Consolidated Financial Statements . . . . . . . . . . . . . . . F-1
PART I Item 1. Business Introduction Great Lakes Carbon Corporation (the "Company" or "GLC") is the largest producer of calcined petroleum coke ("CPC") in the world. A majority of the Company's sales consist of anode grade CPC which is the principal raw material used in the production of carbon anodes for use in aluminum smelting. The Company also sells industrial grade CPC for use in the production of titanium dioxide, as a carbon additive in the manufacture of steel and foundry products and for use in other specialty materials and chemicals markets. The Company produces CPC from raw petroleum coke, a by-product of petroleum refining, utilizing a high-temperature, rotary-kiln process developed by the Company in the 1930's. The Company operates rotary kilns having a total capacity of 1.4 million tons at plant sites in Port Arthur, Texas; Enid, Oklahoma; and through a wholly-owned subsidiary, Copetro S. A. ("Copetro"), at the port of La Plata, Argentina. Copetro is in the process of constructing a 220,000 ton calcining kiln which will double the calcining capacity of this facility. Construction of the $21 million project is expected to be completed in the third quarter of 1998. The Company in its present form of organization was formed in 1991 as a subsidiary of Horsehead Industries, Inc. ("Horsehead"). In 1995 the Company sold $65,000,000 of 10% Senior Secured Notes due 2006 ("the Secured Notes"). Upon the sale of the Secured Notes the net proceeds to the Company were distributed by the Company as a dividend to Horsehead, all indebtedness of Horsehead owing to the Company was canceled, and 100% of the common stock of the Company was distributed on a pro rata basis to the holders of the common stock of Horsehead. Description of Principal Markets Anode Grade CPC Carbon anodes, which are manufactured utilizing anode grade CPC, are used by every primary aluminum smelter in the world as a key component in aluminum smelting pot lines. Carbon anodes act as conductors of electricity and as a source of carbon in the electrolytic cell that reduces alumina into aluminum metal. In this electrochemical aluminum smelting process, the carbon anodes, and hence the CPC, are consumed. Carbon anode manufacturers, predominantly captive operations of aluminum smelting companies, purchase anode grade CPC, mix it with pitch binders, press the mixture into blocks and then bake the mixture to form a finished, hardened carbon anode. The quality of the anode grade CPC, in terms of both its physical and chemical properties, has an effect on carbon anode life, which is an important economic factor in aluminum production, and on the amount of impurities in the finished aluminum metal. Anode grade CPC is approximately 97% pure carbon; however, anode grade CPC does vary based on the content of sulfur and other trace elements in the finished product as well as on its physical properties. GLC produces a full range of anode grade CPC tailored to the specific needs of its aluminum company customers. Worldwide demand for anode grade CPC is directly tied to the global production of primary aluminum. For the third year in a row, aluminum production increased primarily due to restarts of capacity that was idled in 1993 and 1994 and also due to expansion of existing smelting capacity. As a result of the strong demand for CPC, the Company operated at effective capacity in 1997. Industrial Grade CPC CPC is also used in a number of other (non-aluminum) applications, which the Company refers to as industrial grade CPC. These include sales of CPC for use in the production of titanium dioxide, as a recarburizer in the manufacture of steel and foundry products and for use in other specialty materials and chemicals markets. Titanium dioxide is a widely used brilliant white pigment, the primary applications for which are in paints, plastics and paper. Industrial grade CPC is used as an energy and carbon source in the production of titanium dioxide from titanium-bearing ores using the chloride process and is also used as a recarburizer, i.e., carbon additive, in the production of steel and foundry products and as a carbon source in certain chemical processes. Industrial grade CPC is generally similar to anode grade CPC in its physical characteristics, but typically has higher chemical impurities. In addition, industrial grade CPC is usually further processed to meet sizing specifications and packaged for sale to end users in smaller quantities than is anode grade CPC. Raw Materials and Suppliers CPC is sold in a world market. However, calcining and transportation economics dictate that producers of CPC are most efficiently located near petroleum refining operations, which are the source of raw petroleum coke, the raw material used to produce CPC. Raw petroleum coke is a by-product of the oil refining process, constituting the solid fraction remaining after the refinery has essentially removed all of the liquid petroleum products from the crude oil. Many, but not all, oil refineries produce raw petroleum coke. Because a substantial portion of worldwide petroleum refining capacity is based domestically, the United States has a majority of worldwide CPC production capacity. Sales of raw petroleum coke do not constitute a material portion of oil refiners' revenues. CPC quality, which is extremely important to aluminum smelters, is highly dependent upon the quality of the raw petroleum coke utilized in the calcining process. The raw petroleum coke produced by different oil refineries covers a range of physical and chemical properties depending upon both the types of crude oils being refined and the specific process being employed by the refinery. Only a portion of the raw petroleum coke produced by the world's oil refineries is of suitable quality for producing anode grade or industrial grade CPC, with anode grade requirements being generally more stringent than industrial grade requirements. If the raw petroleum coke produced by a refinery is not of sufficient quality for calcining, it is typically sold for its fuel value at a substantially lower price. The Company purchases a range of raw petroleum cokes from a number of domestic and international oil refineries with the objective of blending these cokes to meet the specific quality requirements of its customers at the lowest raw material cost. Raw petroleum coke is typically purchased by the Company under contracts with a term of one or more years, although the Company does make some spot purchases. In 1997 the Company purchased approximately 46% of its raw petroleum coke requirements from three petroleum refiners. Manufacturing Process The calcining process essentially drives off moisture, impurities and volatile matter from the raw petroleum coke at high temperatures, to produce a purer form of carbon in the resulting CPC. Both anode and industrial grade CPC are manufactured by the Company to specific customer specifications. The Company purchases raw petroleum cokes from a number of sources and has the capability to blend these raw cokes specifically to meet a customer's required chemical and physical properties. After blending, the raw coke is fed into the higher end of a rotating kiln, which is up to 12 feet in diameter and up to 220 feet long. The coke in the kiln is tumbled by rotation and moves down-kiln counter current to the heat produced by burning natural gas or oil at the lower, firing end of the kiln. Kiln temperatures range from 2200 to 2500 degrees fahrenheit. Typically, coke is retained in the kiln for approximately one hour, with the resident time and heating rates critical to the production of the proper quality CPC. The moisture, impurities and volatile matter in the coke are driven off in the kiln. As the coke is discharged from the kiln, it drops into a cooling chamber, where it is quenched with water, treated with dedusting agents and carried by conveyor to silos to be kept in covered storage until shipped to customers by truck, rail, barge or ocean-going vessel. In the case of certain industrial grade products, the CPC is also crushed and screened to meet proper sizing requirements. Marketing The Company sells its CPC to end users through its direct sales staff and exclusive sales representatives. Substantially all sales are shipped directly to end users. GLC's domestic sales activity is handled by the Company's direct sales staff. Internationally, GLC's direct sales staff is supplemented by exclusive sales representatives. The Company typically sells anode grade CPC under contracts with terms of one or more years, although a small percentage is sold on a spot basis. CPC is shipped by the Company in bulk quantities to its customers via truck, rail, barge or ocean-going vessel. Industrial grade CPC is generally sold to customers under annual contracts or on a purchase order basis and is shipped in smaller quantities in bulk or packaged to meet customer requirements. In 1997 approximately one third of the Company's net sales were to U.S.-based customers and approximately two thirds were to customers in international markets. Approximately 62% of the Company's 1997 net sales were made to five customers with Aluminum Company of America and Alusaf Limited accounting for 23.7% and 15.5% of the Company's net sales, respectively. Competition The Company is the largest producer of CPC in the world and competes with domestic and foreign calciners in a worldwide market with respect to both anode and industrial grade CPC sales. Marketing of CPC to both anode and industrial grade customers is based primarily on price and quality. Worldwide demand for anode grade CPC is tied directly to the global production of primary aluminum. Sales of industrial grade CPC are dependent on the particular demands of the titanium dioxide, steel and foundry, and certain chemical markets. Employees As of December 31, 1997 the Company employed 254 persons. The Company is a party to collective bargaining agreements at two of its three facilities, covering approximately one-third of its employees. A collective bargaining agreement with the international Association of Machinists and Aerospace Workers covers hourly employees at the Enid, Oklahoma facility. Certain employees at the La Plata, Argentina facility of Copetro are covered by an annual labor contract with an Argentine government union. The Port Arthur plant is operated with a non-union workforce. Patents, Trademarks None of the Company's business is dependent upon any patents or other intellectual property. Environmental Matters The Company's facilities and operations are subject to various federal, state and local and foreign governmental laws and regulations with respect to the protection of the environment, including regulations relating to air and water quality. The Company believes that it possesses all of the permits required for the conduct of its operations and that it is currently in material compliance with all relevant environmental regulations. The Company spent approximately $3.5 million on capital expenditures related to pollution control facilities in 1997 and anticipates spending approximately $3.5 million and $1.9 million in 1998 and 1999, respectively. Approximately half of the environmental expenditures in 1997 and 1998 will be in conjunction with the facility expansion at Copetro. The Clean Air Act was amended in 1990. While the Company believes that its facilities meet current regulatory standards applicable to air emissions, some of its facilities may be required to comply with new standards for air emissions to be adopted by the United States Environmental Protection Agency and state environmental agencies over the next several years. At this time, the Company cannot estimate when new standards will be imposed or what control technologies or changes in processes the Company may be required to install or undertake. Based on information currently available to it, the Company believes that attaining compliance with such regulations will not have a material adverse effect on the financial position or results of operations of the Company. Executive Officers of the Company The following table sets forth certain information concerning the executive officers of the Company: - ------------------------------------------------------------------------------ Name and Age as Period of Service as an Executive Officer and of February 20, 1998 Business Experience During Past Five or More Years - ------------------------------------------------------------------------------ William E. Flaherty Chairman of the Board of the Company and its 64 predecessor company since 1985. Chairman of the Board and Chief Executive Officer of Horsehead since 1989. James D. McKenzie President and Chief Executive Officer of the Company 53 since 1995. Executive Vice President of the Company and President of the Calcined Petroleum Coke business of the Company and its predecessor company from 1989 to 1995. A. Frank Baca Senior Vice President, Operations and Administration of 54 the Company since 1995. Vice President, Operations of the Company from 1991 to 1995. Robert C. Dickie Vice President, Sales of the Company since 1995 and 49 Director of Sales from 1992 to 1995. Plant Manager of Enid Oklahoma facility from 1989 to 1992. James W. Betts Vice President, Raw Materials of the Company and its 60 predecessor company since 1986. Patrick E. Valentine Vice President, Commercial Development of the Company 43 since 1997. Ronald J. Statile Vice President and Treasurer of the Company and its 50 predecessor company since 1986. Vice President of Horsehead since 1988. Item 2. Properties The Port Arthur facility has four kilns which have the capacity to produce 680,000 tons per year of CPC. Port Arthur is also the site of the Company's primary laboratory and testing facility. Port Arthur has substantial CPC storage capacity and the capability to receive and ship product by truck, rail, barge or ocean-going vessel. The 115-acre Port Arthur property is leased by the Company under a long-term lease, which was originally executed in the 1930's and the most recent renewal of which expires at the end of 2004. A waste heat recovery facility, owned by a third party, is located at the plant site under a sublease arrangement with the Company under which terms the Company receives revenue from the delivery of flue gas from its kilns to the facility. The Enid facility has three kilns which have the capacity to produce 490,000 tons per year of CPC. The Enid plant has the capability to receive and ship material by truck or rail and is located on 160 acres of property that is owned by the Company. The La Plata, Argentina facility operated by Copetro has a single kiln with the capacity to produce 220,000 tons per year of anode grade CPC. The Copetro capacity will be doubled when the second kiln expansion is completed in 1998. The plant is located on 30 acres of land at the port of La Plata. The plant has the capability to receive raw petroleum coke by rail or truck and to ship CPC by truck or ocean-going vessel. The Company's principal business office is located at 4 Greenspoint Plaza, Suite 2200, 16945 Northchase Drive, Houston, TX 77060 under a lease expiring in January, 2001. The Company's executive office is located in leased space at 110 East 59th Street, New York, NY 10022. Item 3. Legal Proceedings The Company is a party to legal proceedings which are in various stages of resolution. Management, after discussion with legal counsel, is of the opinion that the ultimate resolution of these matters will not have a material adverse effect on the results of operations or financial position of the Company. Item 4. Submission of Matters to Vote of Security Holders No matters were submitted for vote of security holders of the Company during the three months ended December 31, 1997. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters (a) There is no established market in which the Company's Common Stock, par value $.01 per share (the "Common Stock"), is publicly traded, because all of such Common Stock is privately held. (b) As of the date of this annual report, there were fourteen holders of record of the Company's Common Stock. (c) During 1997 the Board of Directors declared cash dividends of $3.75 per share which were paid to shareholders of record on each of March 31, 1997, June 30, 1997, September 30, 1997, and December 31, 1997. Any future determination as to the payment of dividends will depend upon the Company's financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant. The Company's debt instruments limit the conditions under which the Company may pay a cash dividend on its outstanding Common Stock. Item 6. Selected Financial Data The following table sets forth selected financial data of the Company at and for the five years ended December 31, 1997. The financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 and the consolidated financial statements of the Company and the related notes thereto included elsewhere herein. Year Ended December 31, 1997 1996 1995 1994 1993 --------- --------- --------- --------- -------- Results of Operations - ---------------------------- Net sales $231,911 $242,744 $178,628 $130,797 $149,225 Gross Profit 59,521 66,373 36,440 20,914 24,465 Operating income 41,011 51,052 26,753 12,688 14,564 Total other income (expense) (6,336) (8,345) (5,302) (12,633) (9,686) Income before income taxes 34,675 42,707 21,451 55 4,878 Net income (loss) 21,984 27,559 13,818 (134) 2,870 Balance sheet data (at end of period): Total assets $174,911 $148,905 $113,930 $105,390 $106,483 Total long-term debt 84,014 72,885 74,291 11,907 17,986 - ---------------------------- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Year Ended December 31, 1997 Versus Year Ended December 31, 1996 The Company's net sales for the year ended December 31, 1997 decreased to $231.9 million from $242.7 million in the corresponding period of 1996. Anode grade CPC net sales decreased to $189.9 million from $199.4 million, primarily as a result of decreased selling prices, which were partially offset by higher sales volume. Industrial grade CPC net sales increased to $40.2 million from $38.6 million, due to increased selling prices, which were partially offset by lower sales volume. Gross profit for the year decreased to $59.5 million from $66.4 million in the prior year. The decrease in gross profit margin was the result of the decrease in net sales which was partially offset by the decrease in cost of sales. The lower cost of sales was mainly the result of lower raw material costs. Operating income for 1997 decreased to $41.0 million from $51.1 million in 1996. The decrease in operating income was the result of the reduced gross profit and an increase in selling, general and administrative expenses to $18.5 million from $15.3 million, primarily related to higher compensation and professional fees expenses. Income before income taxes decreased to $34.7 million from $42.7 million in the prior year as a result of the reduced operating income that was partially offset by a $2.0 million positive change in other income (expense). The change in other income (expense) was primarily the result of greater interest income from larger cash reserves in 1997. Net income for 1997 decreased to $22.0 million from $27.6 million in 1996 primarily due to the lower income before income taxes described above. Year Ended December 31, 1996 Versus Year Ended December 31, 1995 The Company's net sales for the year ended December 31, 1996 increased to $242.7 million from $178.6 million in the corresponding period of 1995. Anode grade CPC net sales increased to $199.4 million from $147.9 million, primarily as a result of increased selling prices, which were partially offset by lower sales volume. The lower sales volume was primarilly attributable to the unavailability of third party production, which the Company had been able to purchase for resale in 1995. Industrial grade CPC net sales increased to $38.6 million from $27.6 million, due to both higher sales volume and increased selling prices. Gross profit for the year increased to $66.4 million from $36.4 million in the prior year. The increase in gross profit margin was the result of the increase in net sales which more than offset the increase in cost of sales. The higher cost of sales was mainly the result of higher raw material costs. Operating income for 1996 increased to $51.1 million from $26.8 million in 1995. The increase in operating income was the result of the improved gross profit that was partially offset by an increase in selling, general and administrative expenses to $15.3 million from $9.7 million, primarily related to higher compensation, benefits, professional fees and office overhead expenses. Income before income taxes increased to $42.7 million from $21.5 million in the prior year as a result of the improvement in operating income that was partially offset by a $3.0 million negative change in other income (expense),primarily resulting from a non recurring income item in 1995. The increase in net interest expense, arising principally from $65 million in outstanding 10% Senior Secured Notes issued in December 1995, was offset by the reduction in asset utilization fee to parent, which was terminated in December 1995. Net income for 1996 increased to $27.6 million from $13.8 million in 1995 primarily due to the higher income before income taxes described above. Liquidity and Capital Resources In 1997 net cash provided by operating activities of $31.3 million and $12.5 million of loan proceeds were used to fund $21.4 million of capital expenditures (including a major expansion of the Company's La Plata, Argentina facility), $1.4 million in repayment of long-term debt and $1.5 million of dividends. The 1996 net cash provided by operating activities of $27.7 million was used to fund $6.4 million of capital expenditures, $1.4 million in repayment of long-term debt and $1.5 million of dividends. In 1995 net cash provided by operating activities of $17.2 million was used to fund $5.8 million of capital expenditures, $2.6 million in repayment of long-term debt and $8.1 million of cash transfers to parent. Also, the net proceeds from the sale of Secured Notes were used to fund a cash distribution to Horsehead. The Secured Notes are secured by first priority liens on all material property and equipment of the Company and certain other assets. Interest on the Secured Notes is payable semi-annually each year on January 1 and July 1. The Secured Notes will mature on January 1, 2006 and are subject to early redemption as set forth under the terms of the Secured Notes. The Company has in place a Revolving Credit Facility pursuant to agreements with certain financial institutions. The facility, which expires in December, 1998, provides borrowings of up to $15 million, including a $10 million sub-limit for letter of credit, which are subject to borrowing base limitations. At February 20, 1998 the Company had no borrowings under the facility and had outstanding letters of credit of $1.7 million. Historically, the Company's liquidity requirements have been primarily for debt service, capital expenditures and general working capital needs. The timing of inventory receipts and product shipments, all of which transactions are entirely U.S. dollar denominated, can have a substantial impact on the Company's working capital requirements. Capital investments generally relate to facility maintenance and projects to improve plant throughput and product quality. In 1998 the Company's capital investments, which will continue to include amounts for a major facility expansion at Copetro, are anticipated to total approximately $15 million. The Company expects to fund its liquidity needs through cash from operations, its revolving credit line and a credit facility arranged to finance the Copetro facility expansion. Item 8. Financial Statements and Supplementary Data The following consolidated financial statements of the Company and its subsidiaries, together with the report of independent auditors thereon, are filed as part of this report: Consolidated Financial Statements: Report of Independent Auditors Consolidated Balance Sheets as of December 31, 1997 and 1996 Consolidated Statements of Operations for the years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995, 1996 and 1997 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 Notes to Consolidated Financial Statements Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant The information required in response to Item 10 is incorporated in this report by reference from the Proxy Statement to be prepared in connection with the 1998 Annual Meeting of Stockholders. Item 11. Executive Compensation The information required in response to Item 11 is incorporated in this report by reference from the Proxy Statement to be prepared in connection with the 1998 Annual Meeting of Stockholders. Item 12. Security Ownership of Certain Beneficial Owners and Management The information required in response to Item 12 is incorporated in this report by reference from the Proxy Statement to be prepared in connection with the 1998 Annual Meeting of Stockholders. Item 13. Certain Relationships and Related Transactions The information required in response to Item 13 is incorporated in this report by reference from the Proxy Statement to be prepared in connection with the 1998 Annual Meeting of Stockholders. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a)(1) List of Financial Statements: Report of Independent Auditors..................................... F-1 Consolidated Balance Sheets as of December 31, 1997 and 1996....... F-2 Consolidated Statements of Operations for the years ended December 31, 1997, 1996 and 1995.................................. F-4 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1995, 1996 and 1997............. F-5 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995............................F-6 Notes to the Consolidated Financial Statements......................F-7 (a)(2) List of Financial Statement Schedules: None All schedules for which provision is made in the applicable accounting regulations of the Commission are not required under the related instructions or are not applicable and, therefore, have been omitted. (a)(3) List of Exhibits: Exhibit Number Description 3.1 Restated Certificate of Incorporation [1] 3.2 By-Laws [1] 4.1 Form of Indenture governing the 10% Senior Secured Notes due 2005 of the Company, including the form of 10% Senior Secured Note due 2005 [1] 4.2 Form of Mortgage from the Company to The Bank of New York [1] 4.3 Form of Security Agreement between the Company and The Bank of New York [1] 4.4 Form of Pledge Agreement between the Company and The Bank of New York [1] 4.5 Form of Patent Security Agreement between the Company and The Bank of New York [1] 4.6 Form of Trademark Security Agreement between the Company and The Bank of New York [1] 10.1 Distribution Agreement between the Company and Horsehead Industries, Inc. [1] 10.2 Tax Separation Agreement between the Company and Horsehead Industries, Inc. [1] 10.3 Lease Agreement between the Company and Rice-Carden Corpora- tion (as successor to Kansas City Southern Industries, Inc.), as amended [1] 10.4 Calcined Coke Supply Agreement between the Company and Aluminum Company of America [1] 10.5 Green Anode Coke Sales Agreement between the Company and Conoco Inc. [*] 10.7 Petroleum Coke Sales Agreement between Copetro S.A. and YPF S.A. [1] 10.7A Petroleum Coke Sales Agreement between Copetro S.A. and YPF S.A. [2] 10.8 Form of Revolving Credit Facility among the Company, Chemical Bank, as agent and lender, and the several lenders party there- to [1] 10.9 Coke Supply Agreement between the Company and Exxon Company, U.S.A. [2] 21 Subsidiaries of the Registrant [1] [1] Incorporated by reference to the Company's Registration Statement on Form S-1 (33-98522) [2] Incorporated by reference to the Company's Form 10-K/A for the year ended December 31, 1996 [*] The Company has amended its request for confidential treatment to include this Exhibit. (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. GREAT LAKES CARBON CORPORATION By: /s/JAMES D. MCKENZIE --------------------- James D. McKenzie, President and Chief Executive Officer (Principal Executive Officer) February 27, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacities and as of the date indicated. Signature Title Date - --------- ----- ---- /s/JAMES D. MCKENZIE President and - --------------------- Chief Executive Officer February 27, 1998 James D. McKenzie (Principal Executive Officer) /s/WILLIAM E. FLAHERTY Chairman of the Board February 27, 1998 - --------------------- William E. Flaherty /s/RONALD J. STATILE Vice President and Treasurer February 27, 1998 - --------------------- (Principal Financial Officer) Ronald J. Statile /s/ADELA I. ROBLES Controller February 27, 1998 - --------------------- (Principal Accounting Officer) Adela I. Robles /s/DAVID O. CARPENTER Director February 27, 1998 - --------------------- David O. Carpenter /s/DAVID N. JUDELSON Director February 27, 1998 - --------------------- David N. Judelson /s/TINKHAM VEALE II Director February 27, 1998 - --------------------- Tinkham Veale II Report of Independent Auditors The Board of Directors Great Lakes Carbon Corporation We have audited the accompanying consolidated balance sheets of Great Lakes Carbon Corporation and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the oveall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Great Lakes Carbon Corporation and subsidiaries at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, NY February 13, 1998 Great Lakes Carbon Corporation and Subsidiaries Consolidated Balance Sheets
December 31 1997 1996 --------------------------------- (In thousands, except share data) Assets Current assets: Cash and cash equivalents $ 43,596 $ 24,097 Accounts receivable -- net of allowance for doubtful accounts of $600 in 1997 and 1996 29,908 28,934 Inventories 32,455 39,872 Other current assets 4,349 2,958 --------------------------------- Total current assets 110,308 95,861 Property, plant and equipment, net 59,165 47,530 Other assets 5,438 5,514 --------------------------------- Total assets $174,911 $148,905 ================================= See accompanying notes.
Great Lakes Carbon Corporation and Subsidiaries Consolidated Balance Sheets
December 31 1997 1996 --------------------------------- (In thousands, except share data) Liabilities and stockholders' equity Current liabilities: Accounts payable $ 13,601 $ 22,222 Accrued expenses 14,057 11,592 Income taxes payable 1,796 3,840 Current portion of long-term debt 1,419 1,389 --------------------------------- Total current liabilities 30,873 39,043 Long-term debt, less current portion 82,595 71,496 Other long-term liabilities 4,190 3,857 Deferred taxes 4,814 2,554 Stockholders' equity: Common Stock, par value $0.01 per share, 100,000 shares authorized and outstanding 1 1 Additional paid-in capital 5,509 5,509 Retained earnings 46,929 26,445 --------------------------------- Total stockholders' equity 52,439 31,955 --------------------------------- Total liabilities and stockholders' equity $174,911 $148,905 ================================= See accompanying notes.
Great Lakes Carbon Corporation and Subsidiaries Consolidated Statement of Operations
Year ended December 31 1997 1996 1995 ------------------------------- (In thousands) Net Sales $231,911 $242,744 $178,628 Cost of goods sold 172,390 176,371 142,188 ------------------------------- Gross profit 59,521 66,373 36,440 Selling, general and administrative expenses 18,510 15,321 9,687 ------------------------------- Operating income 41,011 51,052 26,753 Other income (expense): Interest expense, net (6,287) (7,573) (1,127) Asset utilization fee to parent -- -- (6,286) Other, net (49) (772) 2,111 ------------------------------- (6,336) (8,345) (5,302) ------------------------------- Income before income taxes 34,675 42,707 21,451 Income tax expense 12,691 15,148 7,633 ------------------------------- Net income $ 21,984 $ 27,559 $ 13,818 =============================== See accompanying notes.
Great Lakes Carbon Corporation and Subsidiaries Consolidated Statements of Stockholders' Equity
Additional Total Common Paid-in Retained Stockholders' Stock Capital Earnings Equity ------------------------------------------- (In thousands) Balance at January 1, 1995 $ 1 $ 53,637 $ 15,019 $ 68,657 Net income 13,818 13,818 Distributions (48,128) (28,451) (76,579) ------------------------------------------- Balance at December 31, 1995 1 5,509 386 5,896 Net income 27,559 27,559 Dividends (1,500) (1,500) ------------------------------------------- Balance at December 31, 1996 1 5,509 26,445 31,955 Net income 21,984 21,984 Dividends (1,500) (1,500) ------------------------------------------- Balance at December 31, 1997 $ 1 $ 5,509 $ 46,929 $ 52,439 =========================================== See accompanying notes.
Great Lakes Carbon Corporation and Subsidiaries Consolidated Statements of Cash Flows
Year ended December 31 1997 1996 1995 ------------------------------- (In thousands) Operating activities Net income $21,984 $27,559 $13,818 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,220 9,551 8,420 Deferred taxes 2,260 462 4,181 Changes in operating assets and liabilities: Accounts receivables (974) (6,851) (8,418) Inventories 7,417 (13,701) (7,167) Other current assets (1,391) 306 621 Income taxes payable (2,044) 743 3,523 Accounts payable and accrued expenses (6,156) 8,158 4,103 Other, net (55) 1,495 (1,846) ------------------------------- Net cash provided by operating activities 31,261 27,722 17,235 Investing activities Capital expenditures (21,391) (6,371) (5,774) ------------------------------- Net cash used in investing activities (21,391) (6,371) (5,774) Financing activities Repayment of long-term debt (1,389) (1,406) (2,616) Additions to long-term debt 12,518 -- 65,000 Transfers to parent -- -- (68,503) Dividends (1,500) (1,500) -- ------------------------------- Net cash provided (used) by financing activities 9,629 (2,906) (6,119) Increase in cash 19,499 18,445 5,342 Cash at beginning of year 24,097 5,652 310 ------------------------------- Cash at end of year $43,596 $24,097 $ 5,652 =============================== See accompanying notes.
Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements December 31, 1997 1. Significant Accounting Policies Basis of Presentation Great Lakes Carbon Corporation (the Company) is a producer of calcined coke principally for customers in the aluminum industry. The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts have been eliminated in consolidation. On December 20, 1995, the Company, formerly a wholly-owned subsidiary of Horsehead Industries, Inc. ("Horsehead"), sold $65,000,000 of 10% Senior Secured Notes due 2006. Immediately upon the completion of the sale, the net proceeds therefrom were distributed by the Company as a cash dividend to Horsehead, all indebtedness of Horsehead owing to the Company was canceled and 100% of the common stock of the Company was distributed by Horsehead on a pro rata basis to the holders of the common stock of Horsehead. Through December 20, 1995 a monthly asset utilization fee was charged by Horsehead equal to 1% of the Company's net assets, adjusted for intercompany balances and tax assets and liabilities. A portion of this fee ($1,400,000 in 1995) is included in selling, general and administrative expenses, as it represents estimates of various ongoing management services provided to the Company by Horsehead. The balance is included in other income (expense). Management believes that the allocation method is reasonable and that, after giving affect to such allocation, selling, general and administrative expenses in 1995 approximate what the costs would have been for the Company if it had operated as an unaffiliated entity. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 1. Significant Accounting Policies (continued) Cash Equivalents Investments with maturities of less than 90 days when purchased are considered the equivalent of cash. Inventories Inventories are stated at the lower of cost (principally average cost method) or market. Property, Plant and Equipment Property, plant and equipment are stated on the basis of cost. Enhancements are capitalized and depreciated over the period benefited. The provision for depreciation is determined by the straight-line method over the estimated useful lives of the related assets. Impairment of Long-Lived Assets The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" effective January 1, 1996, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The adoption did not have an effect on the financial condition of the Company. Significant Customers The Company had two customers which represented 23.7% and 15.5% of net sales in 1997 and 22% and 15.3% of net sales in 1996, and one customer which represented 15.1% of net sales in 1995. 2. Inventories Inventories consist of the following: December 31 1997 1996 -------------------- (In thousands) Raw materials $18,483 $26,377 Finished goods 7,821 8,534 Supplies and spare parts 6,151 4,961 -------------------- $32,455 $39,872 ==================== Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 3. Property, Plant and Equipment Property, plant and equipment consists of the following: December 31 1997 1996 -------------------- (In thousands) Land and improvements $ 2,718 $ 2,449 Buildings 9,193 8,835 Machinery, equipment and other 116,786 110,955 Construction in progress 16,866 2,175 -------------------- 145,563 124,414 Accumulated depreciation (86,398) (76,884) -------------------- $ 59,165 $ 47,530 ==================== 4. Accrued Expenses Accrued expenses included interest payable of $3,467,000 and $3,370,000 at December 31, 1997 and 1996, respectively. 5. Long-Term Debt Long-term debt and capital lease obligations consist of the following: December 31 1997 1996 -------------------- (In thousands) 10% Senior Secured Notes due January 1, 2006 $ 65,000 $ 65,000 Various pollution control and industrial revenue bonds bearing interest at rates from 6.75% to 7.125% due in varying amounts at various dates through 2002 4,834 5,919 Facility expansion credit line bearing interest at LIBOR plus 4% (9.90% at December 31, 1997) due in varying amounts semi-annually from June, 1999 through June, 2002 11,850 -- Capital lease obligation, bearing interest of 9.3% 1,662 1,966 Other 668 -- -------------------- 84,014 72,885 Current portion (1,419) (1,389) -------------------- $ 82,595 $ 71,496 ==================== Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 5. Long-Term Debt (continued) The Senior Secured Notes are secured by essentially all property, plant and equipment not otherwise pledged and certain other assets of the Company. At the option of the Company, the Senior Secured Notes may be redeemed, in whole or in part, commencing January 1, 2001 at various redemption prices ranging from 105% in 2001 to par in 2004 and beyond. The Senior Secured Notes indenture imposes limitations on restricted payments, including dividends. The pollution control and industrial development revenue bonds were issued by various state and local governmental authorities. Under agreements with these authorities, the Company has either leased (with nominal value purchase options) or purchased on an installment basis the facilities constructed with the funds financed. The Company has the option of redeeming the bonds in whole or in part at par. The facility expansion credit line provides for credit of up to $20,000,000 for use in connection with a major facility expansion at the Company's La Plata, Argentina plant operated by its wholly-owned subsidiary, Copetro S.A. (Copetro). The loan is secured by the property, plant and equipment of Copetro, including, upon completion, the assets constructed with the funds financed. The agreement requires that Copetro satisfy certain financial ratios and imposes limitations on the payment of dividends. The Company's revolving credit agreement, which is in effect until December 1998, provides for borrowings, subject to borrowing base limitations, of up to $15,000,000 (with a $10,000,000 sublimit for letters of credit). The agreement is secured by substantially all domestic accounts receivable and inventory of the Company and requires that the Company satisfy certain financial ratios. At December 31, 1997 and 1996, there were no borrowings under this credit agreement and outstanding letters of credit were $3,420,000 and $6,153,000, respectively. The fair market value of the Company's long-term debt obligations approximated $89,000,000 and $77,400,000 at December 31, 1997 and 1996, respectively. Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 5. Long-Term Debt (continued) Maturities of long-term debt, for the succeeding five years and thereafter are as follows: Long-Term Capital Debt Leases Total ------------------------------- (In thousands) 1998 $ 1,085 $ 334 $ 1,419 1999 3,568 367 3,935 2000 4,768 403 5,171 2001 4,906 442 5,348 2002 2,869 116 2,985 Thereafter 65,156 0 65,156 ------------------------------- $ 82,352 $ 1,662 $84,014 =============================== Interest paid amounted to $7,773,000, $4,989,000, and $1,223,000 for the years ended December 31, 1997, 1996 and 1995, respectively. The Company capitalized interest in construction in progress of $808,000 for the year ended December 31, 1997. 6. Leases The Company leases various production equipment under capital leases, some of which contain renewal options and/or options to purchase. Amortization under capital leases is included in depreciation expense. Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 6. Leases (continued) Future minimum payments as of December 31, 1997, by year and in the aggregate, under capital leases and noncancelable operating leases with initial or remaining terms of one year or more consist of the following: Capital Operating Leases Leases -------------------- (In thousands) 1998 $ 615 $1,622 1999 615 892 2000 615 857 2001 615 648 2002 154 633 Thereafter 0 2,085 -------------------- Total minimum lease payments 2,614 $6,737 Amounts representing interest (952) ====== ------ Present value of net minimum lease payments $1,662 ====== Rental expense for all operating leases was $2,770,000, $2,685,000, and $2,691,000 for the years ended December 31, 1997, 1996 and 1995, respectively. 7. Pension Plans The Company has various defined benefit retirement plans which cover substantially all employees. Benefits are based upon the number of years of service and the employee's compensation under varying formulas. The funding policy is generally to contribute at least the minimum amount that is acceptable under federal law for tax purposes. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. As of December 31, 1997 the assets of the plan were invested principally in listed stocks, bonds, money market certificates and cash. Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 7. Pension Plans (continued) Pension expense for the plans included the following: 1997 1996 1995 ------------------------------- (In thousands) Service cost $ 501 $ 545 $ 481 Interest cost 571 483 411 Actual return on assets (1,595) (889) (905) Net amortization and deferral 1,010 498 541 ------------------------------- $ 487 $ 637 $ 528 =============================== The following table sets forth the plans' funded status and amounts recognized in the Company's balance sheets: 1997 1996 -------------------- (In thousands) Actuarial present value of benefit obligations: Vested benefit obligation $(6,781) $(5,310) ==================== Accumulated benefit obligation $(7,146) $(5,673) ==================== Projected benefit obligation $(8,538) $(7,041) Plan assets, at fair value 9,003 6,763 -------------------- Projected benefit obligation less than (in excess of) plan assets 465 (278) Unrecognized net gain (542) (45) Prior service cost 80 (9) -------------------- Pension asset (liability) recognized in the balance sheet $ 3 $ (332) ==================== The expected long-term rate of return on plan assets was 9% for 1997, 1996 and 1995. The weighted average discount rate and weighted average rate of increase in future compensation levels used were 7.5% and 5% for 1997, 8% and 5% for 1996, and 7.25% and 4.25% for 1995. 8. Postretirement Obligations The Company provides certain health care and life insurance benefits to all full time employees who satisfy certain eligibility requirements and reach retirement age while employed by the Company. The Company does not fund these benefits and accrues for the related cost generally over the employees' service period. Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 8. Postretirement Obligations (continued) Net periodic postretirement benefit cost includes the following components: 1997 1996 1995 ------------------------------ (In thousands) Service cost $204 $198 $196 Interest cost 223 184 175 Amortization of transition obligation 68 68 68 ------------------------------ $495 $450 $439 ============================== Postretirement benefit obligations at December 31, 1997 and 1996 were as follows: 1997 1996 -------------------- (In thousands) Accumulated Postretirement Benefit Obligation ("APBO"): Retirees $ (653) $ (544) Active fully-eligible (1,459) (1,106) Other active (1,265) (1,145) -------------------- Total APBO (3,377) (2,795) Unrecognized net loss 267 50 Unamortized transition obligation 1,020 1,088 ------------------- Accrued postretirement benefit liability $(2,090) $(1,657) ==================== The health care cost trend used in determining the APBO was 6.31% grading down to 5.0% in three years. That assumption may have a significant effect on the amounts reported. To illustrate, increasing the assumed trend by 1% for all years would increase the APBO as of December 31, 1997 by $478,000 and the service and interest cost components of net periodic postretirement benefit cost for the year then ended by $71,000. Assumptions used to develop net periodic postretirement benefit cost and the actuarial present value of accumulated benefit obligations include the weighted average rate of increase in future compensation levels and the weighted average discount rate of 5% and 7.5% for 1997, 5% and 8% for 1996, and 5% and 7.25% for 1995. Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 9. Other Income (Expense) Other income (expense) consists of the following: 1997 1996 1995 ------------------------------- (In thousands) Department of Energy refund $ -- $ -- $2,390 Other (49) (772) (279) ------------------------------- $(49) $(772) $2,111 =============================== 10. Income Taxes The Company was included in the consolidated federal income tax return of Horsehead through December 20, 1995. Income taxes have been provided in the Company's 1995 statement of operations as if the Company was a separate taxable entity. Components of the Company's deferred tax liabilities and assets are as follows: 1997 1996 -------------------- (In thousands) Deferred tax liabilities: Book over tax depreciable basis $4,460 $ 3,601 Other - net 2,315 605 -------------------- Total deferred tax liabilities 6,775 4,206 Deferred tax assets: Accrued liabilities 1,571 1,333 Other - net 390 319 -------------------- Total deferred tax assets 1,961 1,652 -------------------- Net deferred tax liability $4,814 $ 2,554 ==================== Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 10. Income Taxes (continued) The differences between tax expense computed at the statutory federal income tax rate and actual tax expense are as follows: 1997 1996 1995 ------------------------------- (In thousands) Tax expense at statutory rates applied to pretax earnings $12,143 $14,947 $7,508 State income tax, net of federal tax effects 1,020 1,029 428 Tax exempt earnings (938) (480) (371) Effects of foreign operations (91) (657) 45 Other 557 309 23 ------------------------------- $12,691 $15,148 $7,633 =============================== Income taxes consist of the following: 1997 1996 1995 ------------------------------ (In thousands) Current: Federal $ 7,229 $ 9,252 $ 1,934 State 1,481 1,465 240 Foreign 2,852 3,969 1,278 ------------------------------ 11,562 14,686 3,452 Deferred: Federal 1,001 564 3,763 State 88 118 418 Foreign 40 (220) -- ------------------------------ 1,129 462 4,181 ------------------------------ Total $12,691 $15,148 $7,633 ============================== Income taxes paid were approximately $12,485,000, $13,723,000 and $161,000 in 1997, 1996 and 1995, respectively. U.S. income taxes have not been provided on the undistributed earnings of Copetro ($23,415,000 as of December 31, 1997) because such earnings are expected to be reinvested. Upon distribution of those earnings, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits and withholding taxes, if any). Great Lakes Carbon Corporation and Subsidiaries Notes to Consolidated Financial Statements (continued) 10. Income Taxes (continued) Income before income taxes attributable to domestic operations (which included results from export sales) was $25,723,000, $30,601,000 and $16,356,000 for the years ended December 31, 1997, 1996 and 1995, respectively, while income before income taxes attributable to foreign operations was $8,952,000, $12,106,000 and $5,095,000 for the years ended December 31, 1997, 1996 and 1995, respectively. 11. Operations by Geographic Area The following is a summary of the Company's operations by geographic area: 1997 1996 1995 ------------------------------- (In thousands) Net Sales United States $189,730 $197,296 $146,819 Foreign 42,181 45,448 31,809 ------------------------------- $231,911 $242,744 $178,628 =============================== Operating income United States $ 32,358 $ 38,266 $ 21,841 Foreign 8,653 12,786 4,912 ------------------------------- $ 41,011 $ 51,052 $ 26,753 =============================== Assets United States $125,448 $114,864 $ 90,153 Foreign 49,463 34,041 23,777 ------------------------------- $174,911 $148,905 $113,930 =============================== Exports of U.S. produced products were approximately $104,826,000, $111,482,000 and $87,287,000 for the years ended December 31, 1997, 1996 and 1995, respectively. Export sales as a percentage of United States net sales represented 22.9%, 23.0% and 25.6% to Western Europe in 1997, 1996 and 1995, respectively, and 18.9%, 18.8% and 11.1% to Africa in 1997, 1996 and 1995, respectively. The Company's foreign operations are conducted principally in South America. 12. Litigation and Contingencies The Company is a party to several proceedings which are in various stages of resolution. Management of the Company, after discussion with legal counsel, is of the opinion that the ultimate resolution of these matters will not have a material effect upon the financial condition of the Company. EX-10 2 GREEN ANODE COKE SALES AGREEMENT BETWEEN CONOCO INC. AND GREAT LAKES CARBON CORPORATION CONOCO INC., a corporation organized under the laws of the State of Delaware ("Seller"), and GREAT LAKES CARBON CORPORATION, a corporation also organized under the laws of the state of Delaware ("Buyer"), enter into this Agreement for the sale and purchase of green anode coke ("Coke"), pursuant to the following terms and conditions. 1.0. Term ---- Subject to the provisions of Sections 4.3. and 8.2. hereof, the initial term of this Agreement shall be from January 1, 1998 through CONFIDENTIAL TREATMENT. Upon the expiration of the initial term, this Agreement shall be automatically renewed on a year-to-year basis, from anniversary date to anniversary date, unless terminated pursuant to the provisions of Sections 4.4., 8.2. or 18.0. hereof. 2.0. QUANTITY -------- 2.1. Subject to the provisions of Sections 3.0., 4.4., 8.2 and 12.5. hereof, Seller shall sell and Buyer shall purchase a base quantity of CONFIDENTIAL TREATMENT short dry tons of Coke during each calendar year during the term of this Agreement. These sales/purchases shall be at a rate of CONFIDENTIAL TREATMENT short dry tons per calendar quarter. 2.2. As specified below, for each six-calendar month period of January 1 - June 30 and July 1 - December 31 ("six-month period") which occurs during the term of this Agreement, Buyer may give Seller written notice that Buyer wishes to purchase from Seller an additional quantity of up to CONFIDENTIAL TREATMENT short dry tons of Coke. Seller will use commercially reasonable efforts to supply the additional quantity of Coke requested by Buyer but will not be obligated to sell or deliver any additional quantity of Coke to Buyer. (a) Except for the first six-month period, Buyer shall submit its notice to Seller not less than thirty (30) days prior to the first day of the relevant six-month period. (b) Upon receipt of Buyer's notice, Seller will promptly evaluate Buyer's request in light of Seller's Coke production schedule and Seller's other Coke marketing obligations/opportunities. Seller will then notify Buyer of the additional quantity of Coke, if any, which Seller could make available to Buyer during each calendar quarter of the relevant six-month period. If Buyer wishes to purchase any or all of Seller's available additional Coke, Seller and Buyer will enter good faith negotiations to establish (i) the exact additional quantity of Coke which Seller will sell and Buyer will purchase during each calendar quarter of the relevant six-month period, and (ii) the pricing terms for the Coke to be sold/purchased during the relevant six-month period. Seller and Buyer shall complete these negotiations during the thirty (30) days immediately prior to the first day of the relevant six-month period. (c) If the Seller and Buyer reach agreement on the quantity and pricing terms for an additional quantity of Coke, such additional quantity will be sold and purchased during the relevant six-month period pursuant to those negotiated terms and the other applicable terms and conditions of this Agreement. If the Seller and Buyer do not reach agreement on the quantity or pricing terms for an additional quantity of Coke, then only the base quantity specified in Subsection 2.1. will b sold and purchased pursuant to this Agreement during the relevant six-month period. 2.3. Buyer acknowledges that the Coke sold hereunder is a by- product of the manufacturing operations at Seller's Ponca City, Oklahoma Refinery ("Refinery"), Buyer further acknowledges that Seller may change the feedstocks or raw materials which are used at the Refinery or alter Seller's method of manufacture of Coke without liability even though such changes may alter the quality and/or quantity of Coke produced there. Seller will give buyer 30 days notice if seller anticipates changes in feedstocks, raw materials or method of manufacture, that will adversely affect the quality of coke produced such that it does not meet the specifications as provided in attachment A. In the event Refinery does not produce ample quantities of Coke to meet the needs of Seller's customers, Seller shall have the right to proportionately allocate Coke. Buyer shall not be obligated to purchase any Coke which does not have physical properties that conform to those listed in the "Specifications" column of Exhibit A hereto. 3.0. QUALITY ------- 3.1. Subject to Section 2.3, Seller shall deliver Coke which has been produced at Seller's Refinery and which has physical properties that conform to those listed in the "Specifications" column of Exhibit A hereto. 3.2. The quality of each quantity of delivered Coke will be determined as follows. (a) Immediately after the Coke is unloaded at Buyer's facility, Buyer will obtain a representative sample of the Coke which it will divide into two equal portions. Seller will have the right to witness the sampling. Sampling of trucked material will be by a mutually agreeable method. (b) Buyer will promptly test one portion of the sample and, based upon the test results, notify Seller of the Coke's physical properties. Buyer will retain the second portion of the sample as a referee sample. (c) If Buyer's test results show that the Coke's physical properties do not conform to those listed in the "Specifications" column of Exhibit A hereto, and Seller so requests, the second portion of the sample will be tested by a mutually acceptable independent testing laboratory which will use mutually acceptable testing procedures. The parties will equally share the costs of the independent testing laboratory and its quality determination will be binding on the parties. (d) If the independent testing laboratory's test results show that the Coke's physical or chemical properties exceed the average monthly maximum as set forth in Exhibit A hereto, the parties will use good faith efforts to devise a mutually satisfactory remedy, subject to the provisions of Section 10.0 hereof. (e) If the coke's physical or chemical properties exceed the reject maximum as set forth in Exhibit A hereto, buyer will make best efforts to utilize such coke but reserves the right to reject any coke deemed unsuitable for calcining. 4.0. PRICE ----- 4.1. The price for Coke delivered by Seller to Buyer pursuant to this Agreement will be FOB freight prepaid buyers facility at Enid, OK and will be established by the parties in accordance with the following provisions. 4.2. Each Coke price will be based upon the assumption that the moisture content of the delivered Coke will be 9.5 wt% and Seller's initial invoice for each Coke delivery will be based upon that assumption. However, if the actual moisture of the delivered Coke is not 9.5 wt%, then the price of the delivered Coke shall be adjusted according to Section 4.4. hereof. 4.3. The price for Coke delivered to Buyer during each six-month period during the term of this Agreement will be negotiated in good faith during the thirty (30) days immediately prior to the first day of the relevant six-month period. If a price agreement cannot be reached by the end of the thirty (30) day price negotiation period, then this Agreement will automatically terminate at the end of the calendar quarter immediately following the thirty (30) day price negotiation period. The price for Coke delivered during that final calendar quarter will be the last price established pursuant to this Agreement or if no agreement on price is reached for the first six-month period under this Agreement then the price to be paid will be the last prevailing price under the prior Green Coke Sales Agreement between Conoco and Great Lakes Carbon Corporation. 4.4. In the calendar month following the calendar quarter of delivery, the actual moisture content of the delivered Coke, as determined by Buyer, shall be averaged to determine a quarterly average moisture content ("Average Moisture Content"). The Average Moisture Content shall be deemed to be the actual moisture content for each delivery of Coke during the specified calendar quarter. The price of the delivered Coke shall be adjusted to compensate for the difference between the Average Moisture Content and 9.5 wt%. 5.0. DELIVERY -------- 5.1. Seller shall deliver and Buyer shall receive CONFIDENTIAL TREATMENT short dry tons of Coke per calendar quarter. By the 28th day of each month, the parties will agree upon the quantity of Coke that will be delivered during the following month. 5.2. Except as otherwise agreed by the parties in writing, all Coke will be delivered FOB Buyer's facility at Enid, OK, freight prepaid. Seller will choose method of transport, arrange for trucks or railcars and will be responsible for loading material into such vehicles. 6.0. TITLE AND RISK OF LOSS ---------------------- Title to and risk of loss of the Coke delivered during this Agreement shall pass to Buyer at the time the coke is delivered into buyer's facility at Enid, OK. 7.0. MEASUREMENT ----------- The quantity of Coke delivered shall be determined (i) by the use of mutually acceptable railroad weigh station scales, or (ii) by Buyer's certified railroad scales in Kremlin, Oklahoma, or (iii) by Seller's certified belt scales in Ponca City, Oklahoma. Any measurement made by the above methods will be final for both parties. 8.0. PAYMENT ------- 8.1. Seller shall promptly invoice Buyer for each delivery of Coke. Subject to the adjustment specified in Section 4.5 hereof, Buyer shall pay Seller's invoices in full, not later than the fifteenth (15) day of the month following the month of the bill of lading date, without any adjustments, discounts or set-offs by telegraphic transfer to: Morgan Guaranty Trust Company Conoco Inc., Account Number: 73900006 Buyer shall include, in the telegraphic transfer details, the invoice number and a statement that payment is for the purchase of coke. If the payment date falls on a day when Seller's bank is closed (Saturday, Sunday, New York bank holiday, or other nonworking day), payment shall be due on the succeeding New York banking day. 8.2. Seller reserves the right to withhold delivery of Coke to Buyer at any time Buyer's payments become past due. If buyer fails to pay in full all amounts owed to Seller within five (5) days after receipt of Seller's notice that such amounts are past due, Seller shall have the right to immediately cancel or terminate this Agreement, without prejudice to any rights, claims or causes of action arising from the Agreement. 8.3. Buyer shall pay interest on all past due invoices at the prime rate as quoted by Citibank N.A. from its New York offices on the date the invoice is due, plus two percentage points above the announced rate. In addition, Buyer shall pay all costs and expenses, including reasonable attorneys's fees, incurred by Seller in collecting past due payments. 9.0. WARRANTIES ---------- Seller warrants that it has title to the Coke delivered under this Agreement, that the Coke will be free from all liens, encumbrances and security interests and that the Coke will have physical properties that conform to those listed in the "Specifications" column of Exhibit A hereto. THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY OR FITNESS OF THE COKE FOR A PARTICULAR PURPOSE, EVEN IF SUCH PURPOSE IS KNOWN TO SELLER. SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE COKE DELIVERED HEREUNDER SHALL HAVE THE PHYSICAL PROPERTIES LISTED IN THE "TYPICAL" COLUMN OF EXHIBIT A TO THIS AGREEMENT. 10.0. LIMITATION OF LIABILITY ----------------------- 10.1. Seller's liability to the Buyer for a breach of warranty under this Agreement shall be limited to (i) replacing, at the point of delivery, the particular quantity of Coke affected by the breach or (ii) crediting to Buyer's account an amount not to exceed the purchase price of the particular quantity of Coke affected by the breach, at Seller's option. 10.2. Neither party shall be liable on any claim under or arising out of or for breach of this Agreement unless such action is brought no later than one year from the date the cause of action arose. 10.3. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES. 11.0. TAXES ----- 11.1 Seller agrees to pay any and all property taxes, fees, or other charges imposed or assessed by governmental or regulatory bodies, the taxable incident of which occurs prior to the transfer of title to Buyer. 11.2 Buyer agrees to pay any and all property taxes, fees, or other charges imposed or assessed by governmental or regulatory bodies, the taxable incident of which occurs after transfer of title to Buyer. 11.3. Any applicable sales, use, gross receipt, superfund, hazardous waste, gross income or any other excise tax or inspection fee imposed by any taxing jurisdiction on any transaction covered by this Agreement shall be paid by the party who is liable for the tax according to the laws of the jurisdiction involved. However, if the tax is imposed by law on Seller, such tax shall be reimbursed to Seller by Buyer. This section shall not apply to any federal, state, or local income, franchise, or excess profits taxes imposed as a result of the transactions contemplated by this Agreement. 11.4. Buyer shall furnish Seller with an exemption or resale certificate or other documents necessary to comply with any applicable sales and use tax laws. 11.5. When applicable, Buyer shall furnish Seller in duplicate with a notice of exportation or articles with benefit of drawback and other forms required by governmental authorities covering each batch of Coke sold to and exported by Buyer or any of Buyer's subsidiaries or licensees. Each notice of exportation of articles with benefit of drawback shall be fully completed and properly executed by all necessary parties and endorsed to Seller. 12.0. FORCE MAJEURE ------------- 12.1 No failure or omission by either party to carry out or observe any of the terms or conditions of this Agreement, including, but not limited to, either party's delay or failure to perform as a result of such party's failure to manufacture, deliver, receive, transport, use, or consume Coke due to occurrences set forth below, shall, except in relation to obligations to make payments under this Agreement, give rise to any claim against the party in question or be deemed a breach of the Agreement if such failure or omission arises from any cause reasonably beyond the control of that party, to the extent that such failure of delay may be due to: (a) Compliance (voluntary or involuntary) with laws, decrees, guidelines, requests, or the like of any government or person purporting to act therefor, or of international organizations of which the United States is a member including without limitation the International Energy Agency. (b) Restriction or cessation of production of Coke by reason of the imposition of any government or person purporting to act under the color or claim of any governmental authority of conditions or requirements which make it necessary to cease or to reduce the production of the Coke. (c) Hostilities of war (declared or undeclared), embargoes, blockades, civil unrest, riots or disorders, terrorism, or sabotage. (d) Fires, explosions, lightning, maritime peril, collisions, storms, landslides, earthquakes, floods, and other acts of nature. (e) Strikes, lockouts, or other labor difficulties (whether or not involving employees of Seller or Buyer). (f) Disruption or breakdown of production or transportation facilities, equipment, labor, or materials. (g) Closing or restrictions on the use of harbors, railroads or pipelines. (h) Any reduction in availability of crude petroleum or crude petroleum products and/or other materials necessary to make Coke. (i) Any other cause whether or not of the same class or kind, beyond the control of either party which prevents or interferes with the performance of this Agreement. 12.2. Notwithstanding the provisions of Section 12.1. hereof, nothing contained in this Agreement shall relieve Buyer of the obligation to pay in full the purchase price or any other amounts due for the Coke actually delivered hereunder. 12.3. Upon the occurrence of any of the Force Majeure events described in Section 12.1. hereof, the party claiming Force Majeure shall notify the other party promptly in writing of such event and, to the extent possible, inform the other party of the expected duration of the Force Majeure event and the volumes of Coke to be affected by the suspension or curtailment of performance under this Agreement. 12.4. No curtailment or suspension of deliveries or acceptance of deliveries pursuant to this Section shall operate to extend the period of this Agreement or to terminate this Agreement. 12.5. Buyer acknowledges that the Coke delivered hereunder is to be produced by Seller at its Refinery. Seller shall have no obligation to acquire Coke from any other source to meet its obligations under this Agreement. If Seller's production of Coke at this Refinery is stopped or disrupted by an event of Force Majeure, (i) Seller shall have the right to allocate its available supplies of Coke, if any, among any or all of its existing customers in a fair and equitable manner, whether or not such customers are under contract, and (ii) Seller may, with mutual consent, make up deliveries of Coke to Buyer which have been prevented by a Force Majeure event, and/or (iii) to the extent that Seller does not make up such deliveries, then Buyer's annual quantity obligation shall be reduced accordingly. 13.0. WARNING ------- 13.1. The Material Safety Data Sheet attached hereto as Exhibit B, which is made a part of this Agreement, contains information regarding health risks and recommendations for the safe use and handling of Coke. 13.2. THE COKE SOLD BY SELLER MAY BEAR OR CONTAIN HAZARDOUS CHEMICALS, RESIDUES OR OTHER HAZARDOUS MATERIALS WHICH MAY BE, OR MAY BECOME BY CHEMICAL REACTION OR OTHERWISE, DIRECTLY OR INDIRECTLY HAZARDOUS TO LIFE, TO HEALTH, OR TO PROPERTY BY REASON OF TOXICITY, FLAMMABILITY, EXPLOSIVENESS, OR FOR OTHER SIMILAR OR DIFFERENT REASONS DURING TRANSPORTATION, USE HANDLING, REMOVAL, REFINING, CLEANING, RECONDITIONING, DISPOSAL OR OTHER SIMILAR EVENTS. 13.3 Buyer acknowledges and represents that it has read and understands the Material Safety Data Sheet and the above warning and will read and undertake to understand any subsequent Material Safety Data Sheets or written warnings provided by Seller from time to time an undertakes to exercise the degree of care required to protect persons and properties from all hazards of the Coke disclosed in the Material Safety Data Sheets or warnings including but no limited to (i) warning the employees of Buyer and its affiliates who may become exposed to the Coke of the said hazards of the Coke, providing such employees with necessary and appropriate safety equipment and taking appropriate measures to assure that such safety equipment is adequately maintained and properly used, and (ii) warning third parties who may purchase or come into contact with the Coke or who handle or transport the Coke on the behalf of Buyer of the aforesaid hazards of the Coke. 14.0. INDEMNITY --------- The Buyer shall indemnify and hold harmless the Seller, its parent, subsidiaries, successors and assigns, and other officers, directors, employees, subcontractors, and agents against any and all liabilities, claims, demands and/or suits (including attorneys' fees and all costs), which arise out of or are related in any way to the possession, handling, use, or resale of the Coke after title to the Coke passes to the Buyer. The Buyer shall, at the option of the Seller, defend the Seller at the Buyer's sole expense against any claims, demands and/or suits which are covered by this Indemnity/ Hold Harmless clause. 15.0. WAIVER ------ No waiver, either express, or by course of dealing or course of performance, of any of the terms and conditions contained in this Agreement, or waiver of any breach of any of the terms and conditions contained in this Agreement, shall be construed as a subsequent waiver of any of the terms and conditions of this Agreement or as a waiver of any subsequent breach of the same or any other term or condition of this Agreement. 16.0. ASSIGNMENT ---------- Neither party may assign this Agreement without the prior written consent of the other party; except that, either party may assign this Agreement to any of its affiliates, in which event the assignor shall remain responsible for the assignee's complete performance. 17.0. NOTICES ------- All notices required or permitted by the terms of this Agreement shall be deemed sufficient if given by personal delivery, telegram, telex, or telecopier, or by prepaid, certified mail and addressed to the Seller and to the Buyer as follows: TO SELLER: CONOCO INC. 600 North Dairy Ashford P.O. Box 2197 Houston, Texas 77252 Telex No: 775347 Attention: Manager North American Petroleum Coke Moran Building, Room 3030 TO BUYER: Great Lakes Carbon Corporation 4 Greenspoint Plaza, Suite 2200 16945 Northchase Drive Houston, Texas 77060 Fax No: (281) 775-4744 Attention: V.P., Raw Materials 18.0. TERMINATION ----------- Unless terminated earlier pursuant to Sections 4.3. or 8.2., either party may terminate this Agreement upon completion of the initial term, by giving written notice to the other party on or before CONFIDENTIAL TREATMENT. In addition, either party may terminate this Agreement as of December 31 of any subsequent year by giving written notice to the other party on or before July 1 of that year. 19.0. GOVERNING LAW ------------- This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, U.S.A. 20.0. MISCELLANEOUS PROVISIONS ------------------------ 20.1. The section headings contained in this Agreement are for the convenience of the parties only and shall not be interpreted as part of this Agreement. 20.2. To the extent it can legally do so, the Buyer hereby waives all causes of action and remedies to which the Buyer is or may be entitled under the Texas Deceptive Trade Practices Act. 21.0. MODIFICATION ------------ This agreement shall not be modified except by written instrument executed by duly authorized representatives of the respective parties. 22.0. ENTIRE AGREEMENT ---------------- This Agreement, including all Exhibits, contains the full and complete understanding of the parties with respect to the purchase and sale of Coke. This Agreement shall not be affected by the acknowledgment or acceptance by the Seller of purchase orders, acknowledgments, sales orders, releases or any other form submitted by the Buyer, which contain other or different terms and conditions from those included in this Agreement. IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be executed in duplicate originals by their duly authorized representatives this ____ day of ____________, 19__. WITNESS: CONOCO INC. By: /s/FD Bell 10/28/97 - ------------------------ ------------------------------- Title: Manager, Global Carbon ------------------------------- WITNESS: GREAT LAKES CARBON CORPORATION By: /s/Jim Betts - ------------------------ ------------------------------- Title: Vice President, Raw Materials ------------------------------- EXHIBIT A CONFIDENTIAL TREATMENT GREEN ANODE COKE SALES AGREEMENT BETWEEN CONOCO INC. AND GREAT LAKES CARBON CORPORATION EFFECTIVE CONFIDENTIAL TREATMENT
PRODUCT SPECIFICATIONS PROPERTY TYPICAL AVERAGE REJECT TEST METHOD MONTHLY MAXIMUM MEAN Moisture, wt% CONFIDENTIAL TREATMENT Conoco Method TSL-19-80 and/or GLC Method C-1B Volatile Matter, wt% CONFIDENTIAL TREATMENT ASTM D-4421 Sulfur, wt% CONFIDENTIAL TREATMENT ASTM D-1552 Ash, wt% CONFIDENTIAL TREATMENT ASTM D-4422 Metals, ppm: ASTM D-5600-94 Iron CONFIDENTIAL TREATMENT Vanadium CONFIDENTIAL TREATMENT Nickel CONFIDENTIAL TREATMENT Silicon CONFIDENTIAL TREATMENT Sodium CONFIDENTIAL TREATMENT Calcium CONFIDENTIAL TREATMENT Nickel + Vanadium CONFIDENTIAL TREATMENT Individually NI and VA may exceed monthly average as long as the combined NI and VA do not exceed CONFIDENTIAL TREATMENT on a monthly average.
EXHIBIT B CONOCO MATERIAL SAFETY DATA SHEET - -------------------------------------------------------------------------- COKC0020 Revised 7-APR-1997 Printed 1-MAY-1997 Green Petroleum Coke - -------------------------------------------------------------------------- CHEMICAL PRODUCT/COMPANY IDENTIFICATION Material Identification CAS Number 64741-79-3 ---------------------------------------------------------- Tradenames and Synonyms Green Anode Coke, Green Anode Code PC Green Fuel Coke Green Premium Coke Needle Coke Graphite Petroleum Coke 8950, 8942, 8940, 8971, 8977, 8982 ---------------------------------------------------------- Company Identification MANUFACTURER/DISTRIBUTOR Conoco, Inc. P.O. Box 2197 Houston, TX 77252 ---------------------------------------------------------- PHONE NUMBERS Product Information 1-281-293-5550 Transport Emergency CHEMTREC 1-800-424-9300 Medical Emergency 1-800-441-3637 ---------------------------------------------------------- - -------------------------------------------------------------------------- COMPOSITION/INFORMATION ON INGREDIENTS Components Material CAS Number % ---------------------------------------------------------- Thermocracked Coke, Green 64741-79-3 100 ---------------------------------------------------------- Components (Remarks) If workplace exposure monitoring indicates detectable levels of polynuclear aromatic hydrocarbons, refer to the Exposure Controls/Personal Protection Section. ---------------------------------------------------------- (Continued) - -------------------------------------------------------------------------- HAZARDS IDENTIFICATION Potential Health Effects Primary Routes of Exposure/Entry: Skin Inhalation Signs and Symptoms of Exposure/Medical Conditions Aggravated by Exposure: The product is a relatively nontoxic material. The "nuisance dust" exposure values are listed but they apply to any inert substance capable of producing airborne particulates. Excessive concentrations of nuisance dusts may reduce visibility, cause unpleasant deposits in the eyes, ears, and nasal passages, or irritate the skin or mucous membranes by mechanical means. However, the workplace exposure is not known or expected to cause a significant health effect. The product, as with many petroleum products, may cause minor skin, eye, or lung irritation, but good hygienic practices can minimize these effects. ------------------------------------------------------------------ Carcinogenicity Information None of the components present in this material at concentrations equal to or greater than 0.1% are listed by IARC, NTP, OSHA or ACGIM as a carcinogen. ------------------------------------------------------------------ - -------------------------------------------------------------------------- FIRST AID MEASURES First Aid INHALATION If inhaled, remove to fresh air. If not breathing, give artificial respiration. If breathing is difficult, give oxygen. Call a physician. SKIN CONTACT Wash thoroughly with soap and water after contact. If irritation develops, consult a physician. EYE CONTACT In case of contact, immediately flush eyes with plenty of water for at least 15 minutes. Call a physician INGESTION No specific intervention is indicated as compoind is not likely to be hazardous by ingestion. Consult a physician if necessary. ---------------------------------------------------------- - -------------------------------------------------------------------------- (Continued) FIRE FIGHTING MEASURES Flammable Properties Flash Point: No Applicable Test. ---------------------------------------------------------- Fire and Explosion Hazards: May burn if exposed to temperatures above 700 deg F (370 deg C.) ---------------------------------------------------------- Extinguishing Media Water Spray, Water Fog. The most effective method of extinguishment is drenching with water or water fog. Though other forms of extinguishing agent may be used, they are considered less effective for deep seated smoldering fires. Burning green coke has similar characteristics to burning coal -- may be readily extinguished using water fog after spreading the burning material. ---------------------------------------------------------- Fire Fighting Instructions Most reported coke fires have occurred when freshly produced coke is inadequately cooled and stored in a manner that allows the movement of air through the coke bed. Coke should be well quenched or cooled before it is stored in a pile out of doors or placed in silos or bins. Storage should be arranged to prevent movement of air through the coke. Should a fire occur, its location and extent should be determined as quickly as possible. The best procedure is to dig out and remove the coke in the heated zone. The hot coke should be drenched with water as it is exposed. Because of the possibility of a steam explosion, great care should be used in introducing water into confined storage such as a silo. Whenever possible, bulk material in silos should be removed and the material drenched in an open area. Products of combustion may contain carbon monoxide, carbon dioxide, and other toxic materials. Do not enter enclosed or confined space without proper protective equipment including respiratory protection. ---------------------------------------------------------- - -------------------------------------------------------------------------- ACCIDENTAL RELEASE MEASURES Safeguards (Personnel) NOTE: Review FIRE FIGHTING MEASURES and HANDLING (PERSONNEL) sections before proceeding with clean-up. Use appropriate PERSONAL PROTECTIVE EQUIPMENT during clean-up. ---------------------------------------------------------- Spill Clean Up Recover undamaged and minimally contaminated material for reuse and reclamation. Shovel or sweep up. ---------------------------------------------------------- (Continued) - -------------------------------------------------------------------------- HANDLING AND STORAGE Handling (Personnel) Wash thoroughly after handling. Wash clothing after use. ---------------------------------------------------------- Storage Store in accordance with National Fire Protection Association recommendations. ---------------------------------------------------------- - -------------------------------------------------------------------------- EXPOSURE CONTROLS/PERSONAL PROTECTION Engineering Controls Ventilation: Keep area well ventilated and avoid inhalation of dust. ---------------------------------------------------------- Personal Protective Equipment Respiratory Protection: Select appropraite NIOSH-approved respiratory protection where necessary to maintain exposure below the acceptable limits. Proper respiratory selection should be determined by adequately trained personnel and based on the containment(s), the degree of potential exposure and published respirator protection factors. Protective Gloves: Wear impervious gloves. Eye Protection: Use close fitting goggles. Other Protective Equipment: Sufficient protective clothing to minimize skin exposure. Launder contaminated clothing before reuse. Other Precautions: Coke can contain very low ppm levels of polynuclear aromatic hydrocarbons. OSHA has a coal-tar pitch volatile exposure standard (permissible exposure limit) of 0.2 mg/m3 (benzene-soluble fraction of total particulates) that applies if the workplace has DETECTABLE levels of any of six polynuclear aromatic hydrocarbons (anthracene, benz-a-pyrene, phenanthrene, acridine, chrysene, and pyrene). ---------------------------------------------------------- Exposure Guidelines Exposure Limits Green Petroleum Coke PEL (OSHA) Particulates (Not Otherwise Regulated) 15 mg/m3, 8Hr. TWA, total dust 5 mg/m3, 8 Hr. TWA, respirable dust ---------------------------------------------------------- - -------------------------------------------------------------------------- PHYSICAL AND CHEMICAL PROPERTIES Physical Data Boiling Point Solid Melting Point Nonmelting solid % Volatiles (volume %) Approximately 5-15% Solubility in Water Insoluble Odor Slight hydrocarbon Form Solid Color Black Bulk Density (Loose) Approximately 52 lb/cu ft. ---------------------------------------------------------- - -------------------------------------------------------------------------- (Continued) STABILITY AND REACTIVITY Chemical Stability Stable. Not reactive under normal conditions. ---------------------------------------------------------- Incompatibility with Other Materials Incompatible with strong oxidizers. ---------------------------------------------------------- Decomposition Combustion may produce oxides of sulfur and carbon. Incomplete combustion can produce carbon monoxide. ---------------------------------------------------------- Polymerization Polymerization will not occur. ---------------------------------------------------------- - -------------------------------------------------------------------------- TOXICOLOGICAL INFORMATION Animal Data Monkeys and rats were exposed six (6) hours a day for 24 months to green petroleum coke dust (10 or 31 mg/mg3). No tissue effects occurred in monkeys, but the rats showed lung inflammation. PNAs (polynuclear aromatic hydrocarbons) have caused cancer involving skin and internal organs of laboratory animals. This animal data should be interpreted cautiously since these studies involved repeated exposure of shaved skin which was never washed free of test material; the resulting skin effects (irritation, cell damage, etc.) may play a role in the tumorigenic response. Also, limited studies of carcinogenic oils have shown that washing the animals' skin with soap and water between applications greatly reduces tumor formation. These studies demonstrate the effectiveness of cleansing the skin after contact. ---------------------------------------------------------- - -------------------------------------------------------------------------- DISPOSAL CONSIDERATIONS Waste Disposal Treatment, storage, transportation, and disposal must be in accordance with applicable Federal, State/Provincial, and Local regulations. Remove nonusable solid material and/or contaminated soil, for disposal in an approved and permitted landfill. ---------------------------------------------------------- - -------------------------------------------------------------------------- TRANSPORTATION INFORMATION Shipping Information DOMESTIC HM-181 Not regulated in packaged or containerized shipments. Regulated only in bulk water shipments by U.S. Coast Guard in 46 CFR. - -------------------------------------------------------------------------- (Continued) TRANSPORTATION INFORMATION (Continued) Must not be loaded in cargo vessels when temperatures exceed 225 deg F. See Coast Guard Special Permit 3.86 (which supercedes 46 CFR 148.04-15) and 46 CFR 148.04-17. INTERNATIONAL/HM-181: Regulated by IMO as "material hazardous only in bulk". See IMO Bulk Code Nos. 40/45 for loading requirements. ICAO: Not regulated under ICAO. ------------------------------------------------------------------ - -------------------------------------------------------------------------- REGULATORY INFORMATION U.S. Federal Regulations OSHA HAZARD DETERMINATION This material is not known to be hazardous as defined by OSHA's Hazard Communication Standard, 29 CFR 1910.1200. CERCLA/SUPERFUND Not applicable; this material is covered by the CERCLA petroleum exclusion. Releases are not reportable. SARA, TITLE III 302/304 This material is not known to contain extremely hazardous substances. TITLE III HAZARD CLASSIFICATIONS SECTIONS 311, 312 Acute : No Chronic : No Fire : No Reactivity : No Pressure : No SARA, TITLE III, 313 This material is not known to contain any chemical(s) at a level of 1.0% or greater (0.1% for carcinogens) on the list of Toxic Chemicals and subject to release reporting requirements. TSCA This material is in the TSCA Inventory of Chemical Substances (40 CFR 710) and/or is otherwise in compliance with TSCA. RCRA This material, when discarded or disposed of, is not specifically listed as a hazardous waste in Federal regulations; however, it could be considered hazardous if it meets criteria for being toxic, corrosive, ignitable, or reactive according to U.S. definitions (40 CFR 261). This material could also become a hazardous waste if it is mixed with or comes in contact with a listed hazardous waste. If it is a hazardous waste, regulations 40 CFR 262-266 and 268 may apply. ---------------------------------------------------------- (Continued) REGULATORY INFORMATION (Continued) CLEAN WATER ACT This material is not known to contain any ingredient(s) subject to the Act. State Regulations (U.S.) CALIFORNIA "PROP 65" The material contains ingredient(s) known to the State of California to cause cancer, birth defects, or other reproductive harm. Read and follow all label directions. Ingredient Nickel (<0.1%) PENNSYLVANIA WORKER & COMMUNITY RIGHT TO KNOW ACT This material may contain the following ingredient(s) subject to the Pennsylvania Worker and Community Right to Know Hazardous Substances List. Ingredient Nickel CAS Number 7442-02-0 Category Environmental Hazard, Special Hazardous Substance Ingredient Sulfur CAS Number 7704-34-9 Category Hazardous Substance ---------------------------------------------------------- Canadian Regulations This is not a WHMIS Controlled Product. ---------------------------------------------------------- - -------------------------------------------------------------------------- OTHER INFORMATION NFPA, NPCA-HMIS NPCA-HMIS Rating Health 1 Flammability 1 Reactivity 0 Personal Protection rating to be supplied by user depending on use conditions. ---------------------------------------------------------- - -------------------------------------------------------------------------- The data in this Material Safety Data Sheet relates only to the specific material designated herein and does not relate to use in combination with any other material or in any process. Responsibility for MSDS : MSDS Coordinator Address : Conoco Inc. > : P.O. Box 2197 > : Houston, TX 77252 Telephone : 1-281-293-5550 ---------------------------------------------------------- End of MSDS EX-27 3
5 12-MOS DEC-31-1997 DEC-31-1997 43,596 0 30,588 680 32,455 110,308 145,563 86,398 174,911 30,873 82,595 0 0 1 52,438 174,911 231,911 231,911 172,390 172,390 630 0 6,287 34,675 12,691 21,984 0 0 0 21,984 0 0
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