SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Numbers 0-25586 and 33-66740
UNIROYAL CHEMICAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1258925
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
UNIROYAL CHEMICAL COMPANY, INC.
(Exact name of registrant as specified in its charter)
NEW JERSEY 06-1148490
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
BENSON ROAD
MIDDLEBURY, CONNECTICUT 06749
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code - (203) 573-2000
Indicate by check mark whether the registrants (1) have 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 registrants were required to
file such reports), and (2) have been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuers'
classes of common stock, as of May 16, 1997:
Uniroyal Chemical Corporation: 100 shares of Common Stock;
Uniroyal Chemical Company, Inc.: 100 shares of No Class Common
Stock.
Registrants meet the conditions set forth in General Instruction
(H)(1)(a) and (b) of Form 10-Q and are therefore filing this Form
with the reduced disclosure format.
THE REGISTRANTS ARE NOT REQUIRED BY SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 TO FILE THIS REPORT, WHICH IS
BEING FILED TO COMPLY WITH CERTAIN PROVISIONS OF THE INDENTURES
APPLICABLE TO THREE SERIES OF OUTSTANDING PUBLIC DEBT OF UNIROYAL
CHEMICAL CORPORATION AND ONE SERIES OF SUCH DEBT OF UNIROYAL
CHEMICAL COMPANY, INC. UNIROYAL CHEMICAL CORPORATION IS A
WHOLLY-OWNED SUBSIDIARY OF CROMPTON & KNOWLES CORPORATION.
UNIROYAL CHEMICAL COMPANY, INC. IS A WHOLLY-OWNED SUBSIDIARY OF
UNIROYAL CHEMICAL CORPORATION.
* * * * * * * * * * * * * * *
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 29, 1997
INDEX
PART I - FINANCIAL INFORMATION
Item 1 -- Financial Statements and Accompanying Notes
Consolidated Statements of Earnings (unaudited) for the
Quarters Ended March 29, 1997 and March 31, 1996
Consolidated Balance Sheets - March 29, 1997 (unaudited)
and December 28, 1996
Uniroyal Chemical Corporation
Uniroyal Chemical Company, Inc.
Consolidated Statements of Cash Flows (unaudited) for the
Quarters Ended March 29, 1997 and March 31, 1996
Notes to Consolidated Financial Statements - Quarter ended
March 29, 1997 (unaudited)
Item 2 -- Management's Discussion and Analysis
of Financial Condition and Results of
Operations
PART II - OTHER INFORMATION
Item 6 -- Exhibits and Reports on Form 8-K
Signatures
*Exhibit 27 -- Financial Data Schedule
* A copy of this Exhibit is annexed to this report on Form 10-Q
provided to the Securities and Exchange Commission.
UNIROYAL CHEMICAL CORPORATION UNAUDITED
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Statements Of Earnings
Quarters ended March 29, 1997 and March 31, 1996
(In thousands of dollars)
Quarters Ended
----------------------
Mar. 29, Mar. 31,
1997 1996
---------- ----------
Net sales $307,883 $295,628
Cost of products sold 187,686 180,942
Selling, general and administrative 40,788 41,519
Depreciation and amortization 15,824 16,582
Research and development 9,821 9,582
---------- ----------
Operating profit 53,764 47,003
Interest expense 24,757 26,954
Other expense 73 572
---------- ----------
Earnings before income taxes
and extraordinary charge 28,934 19,477
Income taxes 10,995 7,791
---------- ----------
Earnings before extraordinary charge 17,939 11,686
Extraordinary loss on early
extinguishment of debt - (304)
---------- ----------
Net earnings $ 17,939 $ 11,382
========== ==========
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION
Consolidated Balance Sheets
March 29, 1997 and December 28, 1996
(In thousands of dollars)
(UNAUDITED)
Mar. 29, Dec. 28,
1997 1996
------------ ------------
ASSETS
Cash $ 13,528 $ 21,015
Accounts receivable 166,014 137,238
Inventories 210,825 202,762
Other current assets 59,933 60,848
------------ ------------
Total current assets 450,300 421,863
Property, plant and equipment 358,192 367,962
Costs in excess of acquired net
assets 127,133 128,155
Other intangible assets 87,819 91,782
Other assets 118,961 123,545
------------ ------------
$1,142,405 $1,133,307
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of long-term
debt $ 87 $ 731
Notes payable 6,270 8,595
Accounts payable 98,676 97,909
Accrued expenses 102,056 87,313
Income taxes payable 30,544 24,969
------------ ------------
Total current liabilities 237,633 219,517
Long-term debt 907,650 925,982
Postretirement healthcare
liability 173,704 174,025
Other liabilities 142,583 150,615
Stockholders' Equity (Deficit):
Additional paid-in capital 172,822 172,822
Accumulated deficit (462,468) (480,407)
Cumulative translation adjustment (26,759) (25,534)
Pension liability adjustment (2,760) (3,713)
------------ ------------
Total stockholders' deficit (319,165) (336,832)
------------ ------------
$1,142,405 $1,133,307
============ ============
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Balance Sheets
March 29, 1997 and December 28, 1996
(In thousands of dollars)
(UNAUDITED)
Mar. 29, Dec. 28,
1997 1996
------------ ------------
ASSETS
Cash $ 13,528 $ 21,015
Accounts receivable 166,014 137,238
Inventories 210,825 202,762
Other current assets 59,933 60,848
------------ ------------
Total current assets 450,300 421,863
Property, plant and equipment 358,192 367,962
Costs in excess of acquired net
assets 127,133 128,155
Other intangible assets 87,819 91,782
Other assets 118,961 123,545
------------ ------------
$1,142,405 $1,133,307
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of long-term
debt $ 87 $ 731
Notes payable 6,270 8,595
Accounts payable 98,676 97,909
Accrued expenses 102,056 87,313
Income taxes payable 30,544 24,969
------------ ------------
Total current liabilities 237,633 219,517
Long-term debt 907,650 925,982
Postretirement healthcare
liability 173,704 174,025
Other liabilities 142,583 150,615
Stockholders' Equity (Deficit):
Common stock 1 1
Additional paid-in capital 174,504 174,504
Accumulated deficit (464,151) (482,090)
Cumulative translation adjustment (26,759) (25,534)
Pension liability adjustment (2,760) (3,713)
------------ ------------
Total stockholders' deficit (319,165) (336,832)
------------ ------------
$1,142,405 $1,133,307
============ ============
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION UNAUDITED
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Statements of Cash Flows
For the Quarters Ended March 29, 1997 and March 31, 1996
(In thousands of dollars)
Quarters Ended
---------------------------
Mar. 29, Mar. 31,
1997 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 17,939 $ 11,382
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization 15,824 16,582
Non-cash interest 3,424 3,874
Deferred income taxes 3,836 731
Changes in assets and liabilities,
net (20,333) (19,870)
------------ ------------
Net cash provided by operations 20,690 12,699
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (4,621) (6,713)
Other investing activities (327) (1,852)
------------ ------------
Net cash used by investing
activities (4,948) (8,565)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term
borrowings (22,164) (18,782)
Proceeds (payments) on short-term
borrowings (1,860) 20,515
Other financing activities - 48
------------ ------------
Net cash provided (used) by financing
activities (24,024) 1,781
CASH
Effect of exchange rates on cash 795 (211)
------------ ------------
Change in cash (7,487) 5,704
Cash at beginning of period 21,015 16,043
------------ ------------
Cash at end of period $ 13,528 $ 21,747
============ ============
See accompanying notes to consolidated financial statements
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
Quarter Ended March 29, 1997
1. Presentation of Consolidated Financial Statements
Uniroyal Chemical Corporation ("UCC") is a wholly-owned
subsidiary of Crompton & Knowles Corporation. It is dependent on
cash flow from Uniroyal Chemical Company, Inc. ("Uniroyal
Chemical") and its subsidiaries. Accordingly, the consolidated
financial statements of Uniroyal Chemical set forth herein are
presented on a basis of accounting which reflects all of the
adjustments to account for the acquisition of Uniroyal Chemical
by UCC and all of the operations (primarily interest expense),
assets and liabilities of UCC. Herein, UCC and Uniroyal
Chemical, collectively, are referred to as the "Companies".
The information included in the foregoing consolidated
financial statements is unaudited but reflects all adjustments
(consisting only of normal, recurring adjustments) which are, in
the opinion of management, necessary for a fair statement of the
results for the interim periods presented. It is suggested that
the interim consolidated financial statements be read in
conjunction with the consolidated financial statements and notes
included in the Companies' fiscal 1996 Form 10-K.
Certain amounts in the accompanying consolidated financial
statements have been reclassified to conform with the current
year presentation.
Included in accounts receivable are allowances for doubtful
accounts of $4.6 million in 1997 and $3.7 million at December 28,
1996.
Accumulated depreciation amounted to $271.3 million in 1997
and $262.4 million December 28, 1996.
Accumulated amortization of costs in excess of acquired net
assets was $27.6 and $26.5 million and accumulated amortization
of other intangible assets was $110.3 and $106.7 million at March
29, 1997 and December 28, 1996, respectively.
Cash payments for the quarters ended March 29, 1997 and March
31, 1996 include interest payments of $13.4 and $17.9 million and
income tax payments of $3.1 and $2.2 million, respectively.
2. Inventories
Components of inventories are as follows:
Mar. 29, Dec. 28,
1997 1996
------------ ------------
(In thousands)
Finished goods $157,718 $148,552
Work in process 10,106 9,296
Raw materials and
supplies 43,001 44,914
------------ ------------
$210,825 $202,762
============ ============
3. Environmental and Other Matters
The Companies are involved in claims, litigation,
administrative proceedings and investigations of various types in
a number of jurisdictions. A number of such matters involve
claims for a material amount of damages and relate to or allege
environmental liabilities, including clean-up costs associated
with hazardous waste disposal sites, natural resource damages,
property damage and personal injury. Uniroyal Chemical and some
of its subsidiaries have been identified by federal, state or
local governmental agencies, and by other potentially responsible
parties (each a "PRP") under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, or
comparable state statutes, as a PRP with respect to costs
associated with waste disposal sites at various locations in the
United States. In addition, Uniroyal Chemical is involved with
environmental remediation and compliance activities at some of
its current and former sites in the United States and abroad.
Each quarter, Uniroyal Chemical evaluates and reviews
estimates for future remediation and other costs to determine
appropriate environmental reserve amounts. For each site, a
determination is made of the specific measures that are believed
to be required to remediate the site, the estimated total cost to
carry out the remediation plan, the portion of the total
remediation costs to be borne by Uniroyal Chemical and the
anticipated time frame over which payments toward the remediation
plan will occur. As of March 29, 1997, Uniroyal Chemical's
reserves for environmental remediation activities totaled $92.1
million. These estimates may subsequently change should
additional sites be identified, circumstances change with respect
to any site, the interpretation of current laws and regulations
be modified or additional environmental laws and regulations be
enacted.
Uniroyal Chemical intends to assert all meritorious legal
defenses and all other equitable factors which are available to
it with respect to the above matters. Uniroyal Chemical believes
that the resolution of these environmental matters will not have
a material adverse effect on its consolidated financial position.
While Uniroyal Chemical believes it is unlikely, the resolution
of these environmental matters could have a material adverse
effect on its consolidated results of operations in any given
year if a significant number of these matters are resolved
unfavorably.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
The response to this item has been limited to an analysis of
the results of operations for the quarter ended March 29, 1997 as
compared with the quarter ended March 31, 1996 as Registrants
meet the conditions set forth in General Instruction (H)(1)(a)
and (b) of Form 10-Q.
First Quarter Results
Overview
Net sales for the quarter ended March 29, 1997 increased by 4%
to $307.9 million from $295.6 million for the quarter ended March
31, 1996. The increase was primarily due to higher unit volume
of 6% offset equally by lower prices and the impact of foreign
currency translation. Net earnings of $17.9 million increased by
54% versus earnings before extraordinary items in the comparable
period of 1996. Gross margin as a percentage of net sales
increased slightly to 39.0% from 38.8% in the comparable 1996
period. Operating profit increased 14% to $53.8 million
primarily as a result of higher unit volume and lower operating
costs.
Sales by Major Product Line
Chemicals and Polymers sales of $127.8 million rose 2% from
the 1996 first quarter. Sales of rubber chemicals, EPDM and
nitrile rubber increased as higher unit volume of 5% was
partially offset by lower selling prices and the impact of
foreign currency translation.
Crop Protection sales of $104.6 million were 7% higher versus
the first quarter of 1996 primarily attributable to higher unit
volume. Improved sales in Europe and increased seed treatment
business contributed to the improvement.
Specialties sales of $75.4 million increased 5% from the 1996
first quarter primarily due to increased unit volume for urethane
prepolymers and additives for plastics and lubricants.
Other
Selling, general and administrative expenses of $40.8 million
decreased 2% versus the quarter ending March 31, 1996 primarily
due to planned cost reductions partially offset by inflation and
increased spending to support a higher sales level. Depreciation
and amortization of $15.8 million decreased 5% versus the first
quarter of 1996 primarily as a result of certain assets becoming
fully amortized or depreciated. Research and development costs
of $9.8 million increased 2% from the quarter ended March 31,
1996.
Interest expense for the quarter ended March 29, 1997 of $24.8
million decreased 8% from the first quarter of 1996 primarily due
to lower levels of indebtedness. Other expense of $73 thousand
decreased $499 thousand versus the prior year as a result of one-time
losses incurred in 1996. The effective tax rate of 38%
decreased from 40% in the comparable 1996 period.
PART II - OTHER INFORMATION
Item 6 - Exhibits and reports on Form 8-K
(a) Exhibits
27. Financial data schedule
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, each Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
(Registrants)
Date: May 23, 1997 By /s/ Charles J. Marsden
------------ ------------------
Vice President and
Chief Financial Officer
and Director
(Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Form 10-Q for the period ended March 29, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000858905
<NAME> UNIROYAL CHEMICAL CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 13,528
<SECURITIES> 0
<RECEIVABLES> 170,655
<ALLOWANCES> 4,641
<INVENTORY> 210,825
<CURRENT-ASSETS> 450,300
<PP&E> 629,509
<DEPRECIATION> 271,317
<TOTAL-ASSETS> 1,142,405
<CURRENT-LIABILITIES> 237,633
<BONDS> 907,650
0
0
<COMMON> 0
<OTHER-SE> (319,165)
<TOTAL-LIABILITY-AND-EQUITY> 1,142,405
<SALES> 307,883
<TOTAL-REVENUES> 307,883
<CGS> 187,686
<TOTAL-COSTS> 254,119
<OTHER-EXPENSES> 73
<LOSS-PROVISION> 469
<INTEREST-EXPENSE> 24,757
<INCOME-PRETAX> 28,934
<INCOME-TAX> 10,995
<INCOME-CONTINUING> 17,939
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,939
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Form 10-Q for the period ended March 29, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000862612
<NAME> UNIROYAL CHEMICAL COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1997
<PERIOD-END> MAR-29-1997
<CASH> 13,528
<SECURITIES> 0
<RECEIVABLES> 170,655
<ALLOWANCES> 4,641
<INVENTORY> 210,825
<CURRENT-ASSETS> 450,300
<PP&E> 629,509
<DEPRECIATION> 271,317
<TOTAL-ASSETS> 1,142,405
<CURRENT-LIABILITIES> 237,633
<BONDS> 907,650
0
0
<COMMON> 1
<OTHER-SE> (319,166)
<TOTAL-LIABILITY-AND-EQUITY> 1,142,405
<SALES> 307,883
<TOTAL-REVENUES> 307,883
<CGS> 187,686
<TOTAL-COSTS> 254,119
<OTHER-EXPENSES> 73
<LOSS-PROVISION> 469
<INTEREST-EXPENSE> 24,757
<INCOME-PRETAX> 28,934
<INCOME-TAX> 10,995
<INCOME-CONTINUING> 17,939
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,939
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
