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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from to
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Commission file number 333-14913-01
ASTOR HOLDINGS II, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 25-1766332
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification number)
8521 SIX FORKS ROAD, RALEIGH, NORTH CAROLINA 27615
(Address of principal executive offices) (Zip code)
(919) 846-8011
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) 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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes /X/ No / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Shares of Common Stock outstanding as of August 11, 1997: 1,000.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
ASTOR HOLDINGS II, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands)
First Quarter Ended
June 30,
------------------------
1997 (1) 1996
--------- --------
Sales $66,757 $42,160
Cost of goods sold 49,179 32,255
-------- --------
Gross profit before depreciation 17,578 9,905
and amortization
Selling, general and administrative
expenses 7,088 4,433
Depreciation and amortization 2,327 1,553
Operating income -------- --------
8,163 3,919
Income from Rheochem Technologies, Inc. 83 216
Interest expense (3,685) (1,669)
--------- --------
Income before taxes 4,561 2,466
Provision for income taxes 1,829 1,052
--------- --------
Net income $2,732 $1,414
--------- --------
--------- --------
Operating income $8,163 $3,919
Add: Depreciation and amortization 2,327 1,553
Add: Income from Rheochem Technologies, Inc. 83 216
---------- --------
EBITDA $10,573 $5,688
---------- --------
---------- --------
(1) Astor Holdings II, Inc.'s consolidated income for the three months
ended June 30, 1997 includes the results of operations of Adco
Technologies Inc. ("ADCO"), acquired on October 8, 1996, and the
results of operations of Rheochem Technologies, Inc. ("Rheochem") for
the two months following its acquisition on April 30, 1997.
The accompanying notes are an integral part of these consolidated
condensed financial statements.
2
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ASTOR HOLDINGS II, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
(Unaudited)
June 30, March 31,
1997 1997
----------- -----------
Assets
Current assets:
Cash and cash equivalents $7,272 $12,972
Accounts receivable (net of allowance for
doubtful accounts of $1,148 and $1,058,
respectively) 35,936 29,979
Receivable from affiliates 740 1,043
Inventory 31,542 28,974
Prepaid expenses and other current assets 4,039 3,853
----------- -----------
Total current assets 79,529 76,821
Property, plant and equipment:
Land and improvements 8,754 8,400
Buildings and improvements 14,191 12,990
Machinery and equipment 63,529 60,838
----------- -----------
Total cost 86,474 82,228
Less accumulated depreciation (10,444) (8,998)
----------- -----------
Property, plant and equipment, net 76,030 73,230
Investment in affiliate 0 4,196
Goodwill 73,784 59,222
Other intangible assets 9,132 9,226
----------- -----------
Total assets $238,475 $222,695
----------- -----------
----------- -----------
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable $24,613 $21,195
Accrued interest payable 3,022 5,976
Accrued expenses 9,794 10,016
Current portion of long-term debt 1,898 1,492
----------- -----------
Total current liabilities 39,327 38,679
Long-term debt 142,766 131,418
Subordinated note due to affiliate 6,219 6,125
Deferred income taxes 5,598 4,176
Other long-term liabilities 3,070 3,398
Shareholder's equity:
Common stock:
Par value $.01 per share, authorized 10,000
shares, issued and outstanding 1,000 shares 0 0
Additional paid-in capital 36,671 36,671
Retained earnings - net of transfer of
$23,864 accumulated deficit as a result of
the March 31, 1996 quasi-reorganization 5,443 2,711
Foreign currency translation adjustment (619) (483)
----------- -----------
Total shareholder's equity 41,495 38,899
----------- -----------
Total liabilities and shareholder's equity $238,475 $222,695
----------- -----------
----------- -----------
The accompanying notes are an integral part of these consolidated condensed
financial statements.
3
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ASTOR HOLDINGS II, INC.
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
First Quarter Ended June 30,
1997 1996
----------- -------------
OPERATING ACTIVITIES:
Net income $2,732 $1,414
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 2,327 1,553
Amortization of discount on bonds 14 0
Equity in income of affiliate (83) (216)
Changes in operating assets and liabilities
(net of business acquired on April 30, 1997)
Accounts receivable (1,015) (304)
Receivable from affiliates (274) (72)
Inventory (1,465) (2,501)
Prepaid and other current assets (142) (275)
Accounts payable 376 2,343
Deferred taxes - net 1,288 611
Accrued interest payable (2,954) 59
Accrued expenses (857) 915
Other long-term liabilities (317) (138)
------------ --------------
Subtotal (5,360) 638
------------ --------------
Net cash (used in) provided by operating
activities (370) 3,389
INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,626) (851)
Acquisition of business, net of cash acquired (14,058) 0
------------ --------------
Net cash used in investing activities (15,684) (851)
FINANCING ACTIVITIES:
Capital lease payments (15) 0
Proceeds from long-term debt 11,539 0
Payment of long-term debt (1,150) (2,760)
------------ --------------
Net cash provided by (used in) financing
activities 10,374 (2,760)
Effect of exchange rate changes on cash and
cash equivalents (20) 100
Net decrease in cash and cash equivalents (5,700) (122)
Cash and cash equivalents at beginning of
period 12,972 1,157
------------ --------------
Cash and cash equivalents at end of period $7,272 $1,035
------------ --------------
------------ --------------
The accompanying notes are an integral part of these consolidated condensed
financial statements.
4
<PAGE>
ASTOR HOLDINGS II, INC.
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements of Astor Holdings II, Inc.
(together with its subsidiaries, "Astor Holdings II" or the "Company") are
unaudited and have been prepared in accordance with generally accepted
accounting principles for interim financial information and with Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
audited financial statements. The unaudited financial statements should be
read in conjunction with the audited financial statements and footnotes for
the year ended March 31, 1997. In the opinion of management, all adjustments
and normal recurring accruals considered necessary for a fair presentation of
the results for the interim period have been included. The interim results
reflected in the accompanying unaudited financial statements are not
necessarily indicative of expected results for the full year.
EBITDA represents earnings before interest expense, income tax expense,
depreciation and amortization expense and extraordinary items. Information
concerning EBITDA is included as it is used by certain investors as a
measure of a company's ability to service its debt. EBITDA should not be used
as an alternative to, or be construed as more meaningful than, operating income
or cash flows or as an indicator of the operating performance or liquidity of
Astor Holdings II.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Environmental Remediation Costs
The Company accrues losses associated with environmental remediation obligations
when they are probable and reasonably estimable. These accruals are adjusted
as additional information is available or if circumstances change. Costs of
future expenditures for environmental remediation obligations are not discounted
to their present value.
Crude Oil Swap Contracts
The Company has entered into price swap contracts to fix the purchase price of
crude oil through March 1999. The contracts are intended to mitigate the impact
of market fluctuations related to the cost of crude oil on feedstock costs.
These contracts cover a notional amount of crude oil equivalent to 913,000
barrels as of June 30, 1997. Gains and losses on the contracts are deferred and
are recognized in income during the period affected. Gains during the
three-month periods ended June 30, 1997 and 1996 on crude oil swaps aggregating
$249,000 and $708,000, respectively, are included in cost of goods sold in the
statements of operations.
NOTE 3 - INVENTORY
June 30, 1997 March 31, 1997
Inventory consists of the following:
(In thousands)
Raw materials 13,600 12,586
Work-in-progress 5,764 4,844
Finished goods 13,181 12,568
Allowance for inventory obsolescence (1,003) (1,024)
------ ------
31,542 28,974
------ ------
NOTE 4 - INCOME TAXES
Income tax expenses recorded for the quarter ended June 30, 1997
and June 30, 1996 are greater than those computed by applying the U.S.
federal income tax rate to income before taxes primarily due to the
non-deductibility of the goodwill amortization.
5
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NOTE 5 - COMMITMENTS AND CONTINGENCIES
As is prevalent in the specialty chemical industry, Astor Holdings II has
environmental issues that it is addressing. There are issues related to the
remediation of contaminated soils and ground water at the U.S. wax manufacturing
plants. Quaker State Corporation ("QSC") is responsible for the vast majority
of the costs associated with such issues. Astor Holdings II's potential
liability is limited to sharing fifty percent of the first $5,500,000 of
non-ground water remediation with QSC. Astor Holdings II will pay for its share
of the above costs by issuing subordinated 9% notes payable to QSC which will be
due in equal quarterly installments commencing on July 1, 1999 through December
31, 2008. As of June 30, 1997, Astor Holdings II has incurred $251,477 of
shared costs and has issued notes in such principal amount to QSC. The future
cost to Astor Holdings II for non-ground water remediation, if any, is not known
at this time.
The U.S. Wax Division has environmental issues related to ground
contamination at its Titusville, Pennsylvania facility. Under the terms of the
L1,450,988 of 8% subordinated debt issued to ABI's former shareholders by Astor
Holdings II's parent corporation, Astor Holdings, Inc. (the "Parent"), the
Parent is entitled to set-off costs in excess of $350,000 relating to this site
against the principal and interest otherwise payable, so long as the Parent
notifies the shareholders by June 28, 1999 of the existence of a condition that
could give rise to a set-off claim. Astor Holdings II believes it has provided
for probable losses with respect to these issues and does not anticipate a
material impact on future operating results.
The Michigan Department of Natural Resources has identified the property on
which ADCO's plant is located as a site of environmental contamination.
Management has recorded a reserve of approximately $148,000 at June 30, 1997
included in other accrued liabilities, as an estimate of the amount of loss that
is reasonably possible to be incurred for this site. Management does not
believe it is reasonably possible that an adverse outcome on the issue, greater
than the amount recorded, would have a material effect on Astor Holdings II's
financial condition, operations or liquidity. ADCO has notified Nalco Chemical
Company ("Nalco"), the previous owner of ADCO, that Nalco may be responsible for
indemnifying ADCO for expenditures made for the above matter. Pursuant to the
terms of an agreement entered into in connection with ADCO's acquisition of Adco
Products, Inc., ADCO is indemnified to a limited extent against certain
environmental liabilities by Nalco. In certain instances, the indemnification
is limited by a $100,000 deductible and a limitation on the amount of
indemnification ranging from $341,600 to $3.5 million depending upon the type of
claim made, with an aggregate limitation of $3.5 million for all such claims
made.
NOTE 6 - BUSINESS SEGMENT INFORMATION
Astor Holdings II operates in two industries: Specialty Waxes, and Adhesives
and Sealants. Prior to the acquisition of ADCO in the year ended March 31,
1997, Astor Holdings II operated primarily in one industry, Specialty Waxes. A
summary of segment information for the three months ended June 30, 1997 is shown
below (in thousands):
Corporate
(includes
Specialty Adhesives goodwill
Waxes and Sealants amortization) Consolidated
Sales to unaffiliated
customers $ 47,912 $ 18,845 $ 0 $ 66,757
Intersegment sales 0 0 0 0
-------- --------- -------- --------
Total revenue $ 47,912 18,845 0 66,757
-------- --------- -------- --------
Operating income $ 7,242 $ 2,607 $ (1,686) $ 8,163
-------- --------- -------- --------
Income from Rheochem
Technologies, Inc. $ 83
Interest expense (3,685)
--------
Income before taxes $ 4,561
--------
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NOTE 7 - SUMMARY FINANCIAL INFORMATION
The following represents summarized financial information of Astor
Holdings II and its wholly-owned subsidiary Astor Corporation for the three
months ended June 30, 1997 (in thousands):
Astor
Holdings II, Astor
Inc. Corporation Eliminations Consolidated
----------- ----------- ------------ ------------
Current assets $10,032 $ 79,529 $(10,032) $ 79,529
Non-current assets 37,918 158,931 (37,903) 158,946
----------- ----------- ------------ ------------
Total assets $47,950 $238,460 $(47,935) $238,475
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Current liabilities $ 0 $ 39,327 $ 0 $ 39,327
Non-current liabilities 6,455 161,230 (10,032) 157,653
Preferred stock of
subsidiary 0 1,745 (1,745) 0
Shareholder's equity 41,495 36,158 (36,158) 41,495
----------- ----------- ------------ ------------
Total liabilities and
shareholder's equity $47,950 $238,460 $(47,935) $238,475
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
Sales $ 0 $ 66,757 $ 0 $ 66,757
Operating income (1) 8,164 0 8,163
Net income $ (1) $ 2,733 $ 0 $ 2,732
NOTE 8 - RHEOCHEM ACQUISITION
On April 30, 1997, Astor Corporation acquired for $14.1 million the 50% joint
venture interest in Rheochem that was previously held by Rheochem, Inc. To
finance this acquisition, Astor Corporation borrowed $12.5 million under the
Senior Bank Facility and paid $1.6 million from available cash. Rheochem
operates as a division of Astor Corporation.
The acquisition has been accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets purchased
and the liabilities assumed based upon the fair values at the date of
acquisition. The operating results of the acquired business have been included
in the consolidated statement of operations from the date of acquisition.
NOTE 9 - SUBSEQUENT EVENT
On July 1, 1997, Astor Corporation purchased from Tremco Incorporated the assets
of its automobile replacement glass business for $4 million. Additional
consideration of $1 million will be paid on July 31, 1999 contingent on certain
future events.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 1997 WITH THE THREE MONTHS ENDED
JUNE 30, 1996.
SALES. Sales of Astor Holdings II, Inc. (together with its subsidiaries,
"Astor Holdings II" or the "Company") increased by $24.6 million or 58% from
$42.2 million for the three months ended June 30, 1996 to $66.8 million for the
three months ended June 30, 1997. Of this sales increase, $14.5 million is
related to the acquisition of Adco Technologies, Inc.("ADCO") on October 8, 1996
(the "ADCO Acquisition") and $6.2 million is attributable to the acquisition of
the remaining 50% equity interest in the Rheochem Technologies, Inc. joint
venture (the "Rheochem Acquisition"). Excluding the impact of ADCO and
Rheochem, sales increased $3.9 million or 9% as a result of strong specialty wax
demand in the United States.
GROSS PROFIT. Gross profit increased by $7.7 million from $9.9 million for
the three months ended June 30, 1996 to $17.6 million for the three months ended
June 30, 1997. Gross profit as a percentage of sales increased from 23.5% to
26.3% as a result of the ADCO Acquisition and improved margins in the Company's
specialty wax business. Approximately $4.4 million of the increase is
attributable to the ADCO Acquisition and $1.5 million is attributable to
Rheochem Acquisition. Excluding the effect of the ADCO and Rheochem
Acquisitions, gross profit increased 18% and gross profit as a percentage of
sales improved from 23.5% for the three months ended June 30, 1996 to 25.4% for
the three months ended June 30, 1997 owing to higher specialty wax volumes and
prices realized in the U.S. and lower unit costs achieved through the capital
spending program.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased by $2.7 million from $4.4 million for the
three months ended June 30, 1996 to $7.1 million for the three months ended June
30, 1997. The ADCO and Rheochem Acquisitions accounted for $1.7 million of the
increase. Selling, general and administrative expenses as a percentage of sales
increased from 10.5% for the three months ended June 30, 1996 to 10.6% for the
three months ended June 30, 1997. The increase is primarily associated with
the higher selling and research and development expenses associated with ADCO's
adhesive and sealants business.
INCOME FROM RHEOCHEM. Astor's share of equity earnings from Rheochem
decreased $0.1 million from $0.2 million for the three months ended June 30,
1996 to $0.1 million for the three months ended June 30, 1997. The decrease was
attributable to Astor's purchase of the remaining 50% interest in Rheochem that
was previously held by Rheochem Inc.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense
increased by $0.7 million from $1.6 million for the three months ended June 30,
1996 to $2.3 million for the three months ended June 30, 1997, primarily due to
the ADCO and Rheochem Acquisitions.
INTEREST EXPENSE, NET. Interest expense, net, increased by $2.0 million
from $1.7 million for the three months ended June 30, 1996 to $3.7 million
for the three months ended June 30, 1997. This increase was due to the
increased debt level of the Company related to the ADCO and Rheochem
Acquisitions. During the three months ended June 30, 1997, the Company had
an average amount of debt outstanding of $144.5 million, with the average
interest rate during this period equal to 10.2%. During the three months
ended June 30, 1996, the Company had an average amount of debt outstanding of
$74.9 million, with the average interest rate during this period equal to
8.9%.
NET INCOME. As a result of the factors discussed above, net income
increased by $1.3 million from $1.4 million for the three months ended June
30, 1996 to $2.7 million for the three months ended June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities for the three months ended June 30,
1997 was $0.4 million compared to $3.4 million of net cash provided by
operating activities for the three months ended June 30, 1996. The $0.4 million
of net cash used by operating activities for the three months ended June 30,
1997 was the result of a $6.7 million use of cash from working capital changes
offsetting $6.3 million of cash flow from operating profits. The $6.7 million
used by working capital was due to (i) a $3.0 million decrease in accrued
interest payable attributable to the $5.8 million payment of semi-annual
interest due in April and October on
<PAGE>
the $110.0 million of 10 1/2% Senior Subordinated Notes (the "Notes") ; (ii)
a $0.8 million decrease in accrued liabilities and payables which included
$2.4 million payment of employee bonuses related to the fiscal year ended
March 31, 1997 financial performance; and (iii) a $2.9 million increase in
current assets due to higher sales. The $3.4 million of net cash provided in
the three months ended June 30, 1996 was primarily due to cash flow from
operating profits of $2.8 million and $0.6 million of working capital changes.
Cash used in investing activities for the three months ended June 30, 1997
and 1996, respectively, was $15.7 million and $0.9 million. Cash used in
investing activities for the three months ended June 30, 1997 comprised the
Rheochem Acquisition cost of $14.1 million (net of cash acquired) and capital
expenditures of $1.6 million. The Company expects capital expenditures to be
approximately $6.5 million for fiscal year 1998. The Company expects to fund
such capital expenditures primarily from cash generated from operating
activities.
Cash provided by financing activities for the three months ended June 30,
1997 was $10.4 million due to increased borrowings under the revolving credit
facility for the Rheochem Acquisition. Cash used in financing activities for
the three months ended June 30, 1996 was $2.8 million due to debt repayments.
On July 1, 1997, the Company purchased from Tremco Incorporated the assets of
its automobile replacement glass business for $4 million. Additional
consideration of $1 million will be paid on July 31, 1999 contingent on certain
future events. The autoglass business manufactures and distributes adhesive
products primarily for the North American market. The acquisition was financed
through revolving credit borrowings under the Company's Senior Bank Facility.
The Company's primary capital requirements consist of debt service and
capital expenditures. The required debt amortization payments under the
current Senior Bank Facility for the next five fiscal years are: (i) $1.4
million in fiscal year 1998, (ii) $1.8 million in fiscal year 1999, (iii)
$3.1 million in fiscal year 2000, (iv) $4.7 million for fiscal year 2001 and
(iv) $5.1 million for fiscal year 2002. The term loan and revolving credit
borrowings under the Senior Bank Facility bear interest, at the election of
the Company, at an interest rate determined either by the prime rate plus an
initial margin of 1.25% or the eurodollar rate specified in the Senior Bank
Facility plus an initial margin of 2.5%. The Senior Bank Facility and the
Notes impose various restrictions and covenants on the Company, including,
among other things, financial covenants relating to the maintenance of
minimum fixed charge coverage ratios and interest coverage ratios, as well as
restrictions on indebtedness, guarantees, acquisitions, capital expenditures,
investments, loans, liens and other restricted payments, and asset sales. In
addition, the Senior Bank Facility and the Notes limit the ability of the
Company and its subsidiaries to declare or pay any dividend on, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of their capital
stock or any warrants or options to purchase such shares. The Company
estimates that approximately $4.0 million is required annually for
maintenance and improvements of its facilities. The Company's principal
source of cash to fund these capital requirements is net cash provided by
operating activities. As of July 31, 1997, the Company had available $10.1
million under its existing borrowing facilities, subject to certain borrowing
base limitations.
SEASONALITY. Revenues and earnings of the Company's two business segments,
specialty waxes and adhesives and sealants, tend to be seasonal due to the
decline in candle wax sales in December resulting from customer purchase
patterns and the decline of roofing and building construction projects in winter
months. Both segments are also impacted by fewer work and shipping days because
of scheduled plant shutdowns during the winter holidays. These factors have
historically resulted in seasonal fluctuations in the Company's performance with
the summer and fall quarters being the stronger.
FOREIGN EXCHANGE EXPOSURE. The functional currency for the majority of the
Company's foreign operations is the applicable local currency. The bulk of the
Company's foreign sales, raw materials, expenses, assets, and liabilities
(including bank debt) are denominated in the local currency, providing for a
natural hedge for currency exposure. For a small portion of foreign sales
transactions, the Company uses forward foreign exchange contracts to mitigate
exposure. There were no significant contracts outstanding at June 30, 1997.
The translation from the applicable foreign currency to U.S. dollars is
performed for balance sheet accounts using current exchange rates in effect
at the balance sheet date and for revenue and expense accounts using a
weighted average exchange rate during the period. Translation adjustments
resulting from such translation were $0.6 million at June 30, 1997 and $0.5
million at June 30, 1996.
HEDGING ACTIVITIES. The Company is currently not a party to any interest
rate swap contracts relating to any of its outstanding debt. As of June 30,
1997, $109.9 million of the Company's outstanding debt of $144.7 million was
subject to a fixed rate. In order to mitigate the impact of fluctuations in the
market price of crude oil, the Company has entered into a series of price swap
contracts that fix the cost of a portion of the Company's crude oil purchases
through March 31, 1999. In addition, the prices of certain byproducts from the
Company's production processes also track crude oil prices, acting to hedge
volatility in the Company's raw material costs.
<PAGE>
FORWARD LOOKING STATEMENTS
The foregoing "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contains "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, which
represent the Company's expectations or beliefs concerning future events,
including, but not limited to, the following: statements regarding future
capital expenditures and the source of funding for future capital
expenditures; statements regarding the Company's primary capital
requirements; statements regarding the Company's required debt amortization
payments under the Senior Bank Facility; statements regarding the amounts
required annually for maintenance and improvements of the Company's
facilities and the source of cash to fund such capital requirements; and
statements regarding seasonal fluctuations in the Company's future
performance. The Company cautions that these statements are further
qualified by important factors that could cause actual results to differ
materially from those in the forward looking statements, including without
limitation, the following: growth in the business, as a result of
acquisitions or internal growth, affecting future capital expenditures;
technological change in equipment used in developing and manufacturing the
Company's products; damage, destruction or other casualty loss with respect
to the Company's fixed plant or equipment; insufficient cash flow from
operations to fund anticipated capital expenditures and scheduled debt
payments; changes in the Company's debt and capital structure, including
amendments to the Senior Bank Facility; and shifts in product mix changing
the effect of seasonality on the Company's future performance. Results actually
achieved thus may differ materially from expected results included in these
and other forward looking statements.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
27. Financial Data Schedule.
(b) Reports on Form 8-K
A report on Form 8-K dated June 30, 1997 was filed during the
quarter for which this report is filed, reporting the acquisition of
the 50% equity interest in Rheochem Technologies, Inc. not already
owned by the registrant and including the following financial
statements:
(1) Financial statements of acquired business.
Financial Statements of Rheochem Technologies, Inc. for the years
ended December 31, 1996 and 1995
Report of Independent Auditors
Balance Sheets
Statements of Operations and Retained Earnings
Statements of Cash Flows
Notes to Financial Statements
(ii) Pro forma financial information.
Unaudited Pro Forma Financial Statements
Astor Holdings II, Inc. and Rheochem Technologies, Inc.
Unaudited Pro Forma Consolidated Statement of Income for the Twelve
Months Ended March 31, 1997
Notes to Unaudited Pro Forma Consolidated Statement of Income
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 1997
Notes to Unaudited Pro Forma Consolidated Balance Sheet
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report on Form 10-Q to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: August 11, 1997
ASTOR HOLDINGS II, INC.
By: /s/ BOYD D. WAINSCOTT
--------------------------------
Boyd D. Wainscott
Chief Executive Officer
Dated: August 11, 1997
By: /s/ JOHN F. GOTTSHALL
--------------------------------
John F. Gottshall
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,272
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<PP&E> 86,474
<DEPRECIATION> 10,444
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<CURRENT-LIABILITIES> 39,327
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0
0
<COMMON> 0
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<SALES> 66,757
<TOTAL-REVENUES> 66,757
<CGS> 49,179
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<OTHER-EXPENSES> 816
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<INTEREST-EXPENSE> 3,685
<INCOME-PRETAX> 4,561
<INCOME-TAX> 1,829
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<CHANGES> 0
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<EPS-PRIMARY> 0
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</TABLE>
