Georgia Gulf Corp. has a market cap of $426.58 million; its shares were traded at around $12.93 with a P/E ratio of 1.98 and P/S ratio of 0.21. GGC is in the portfolios of Pioneer Investments, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:In 2010, we engaged a different third party firm of tax professionals to assist us with the preparation of our 2009 U.S. federal income tax return. During the preparation of that tax return we, with the support of our tax advisors, identified certain issues that caused us to re-evaluate the application of the relevant provisions of the IRC relating to the 2009 financial restructuring activities. Consequently, we determined that a manual input error to a spreadsheet used in the tax calculations relating to the tax impact of our 2009 financial restructuring activities had been made, and that certain applications of the relevant provisions of the IRC were incorrect. As a result, the reduction in various tax attributes resulting from the CODI we recognized in 2009 was understated. This adjustment does not, however, result in any additional tax liability payable by us to tax authorities in respect of 2009 or earlier periods. This error also caused our reported financial information for the three month and nine month periods ended September 30, 2009 to understate the provision for income taxes by $39.2 million, and our net income for such periods to be overstated by $39.2 million.
The incorrect statute of limitations period caused our long term liability for unrecognized income tax benefits to be overstated as of September 30, 2009 by $11.9 million and as of December 31, 2008 by $4.7 million, and also resulted in an overstatement of our income tax expense for the three months ended September 30, 2009 and 2008 of $0.4 million and $0.3 million, respectively, and for the nine months ended September 30, 2009 and 2008 of $6.3 million and $1.5 million, respectively.
into account approximately $9.0 million of uncertain tax positions that should have been evaluated in this analysis. As of September 30, 2009 and December 31, 2008, net deferred tax liabilities were overstated by $8.2 million and $7.3 million, respectively, as a result of this matter. The variance by periods is solely due to the foreign currency translation.
The other misapplications of ASC Topic 740 that occurred upon adoption on January 1, 2007 related to uncertain tax positions in connection with our acquisition of Royal Group and resulted in a net overstatement of our long-term liability for unrecognized income tax benefits of approximately $5.0 million as of December 31, 2008 and September 30, 2009. In addition, as a result of using the incorrect statute of limitations period described above, $0.8 million of reserves for uncertain tax positions should have been reversed in 2008, which would have resulted in a corresponding decrease in goodwill of the same amount. In the fourth quarter of 2008, we recorded impairment charges of $176.0 million to write our assets down to their estimated fair value. Consequently, the impairment charges in the fourth quarter of the year ended December 31, 2008 were overstated by $0.8 million.
As a result of the foregoing, as of September 30, 2009 and December 31, 2008, the liability for unrecognized income tax benefits was overstated by $16.7 million and $9.0 million, respectively. The deferred income tax liability was understated by $36.9 million as of September 30, 2009 and overstated by $2.7 million for year ended December 31, 2008. Retained Earnings (Accumulated deficit) as of September 30, 2009 was overstated by $20.0 million and were overstated by $13.0 million as of December 31, 2008. For the three months ended September 30, 2009 the provision for income taxes was understated by $38.7 million and net income was overstated by $38.7 million. Also reflecting the foregoing, the provision for income taxes was understated by $32.9 million for the nine months ended September 30, 2009 and net income was overstated by $32.9 million for the nine months ended September 30, 2009. For the three months ended September 30, 2008 the benefit from income taxes was understated by $0.3 million and net loss was overstated by $0.3 million. For the nine months ended September 31, 2008 the benefit from income taxes was understated by $1.5 million and net loss was overstated by $1.5 million.
Read the The complete Report