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 September 26, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 for the transition period
from to
Commission File No. 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)
Registrant's telephone number, including area code: (203)573-2000
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
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of October 14, 1998:
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 ONE SERIES OF OUTSTANDING PUBLIC DEBT OF UNIROYAL
CHEMICAL CORPORATION AND ONE SERIES OF OUTSTANDING PUBLIC 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 QUARTER ENDED SEPTEMBER 26, 1998
INDEX
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Financial Statements and
Accompanying Notes
. Consolidated Statements of Earnings
(unaudited) - Quarters and nine months ended
September 26, 1998 and September 27, 1997
. Consolidated Balance Sheets - September 26, 1998
(unaudited) and December 27, 1997
Uniroyal Chemical Corporation
Uniroyal Chemical Company, Inc.
. Consolidated Statements of Cash Flows
(unaudited) - Nine months ended
September 26, 1998 and September 27, 1997
. Notes to Consolidated Financial
Statements - Quarter ended September 26, 1998
(unaudited)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
Signatures
*Exhibit 27 Financial Data Schedules
* Copies of these Exhibits are 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 and nine months ended September 26, 1998 and September 27, 1997
(In thousands of dollars)
Quarters ended Nine months ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
Net Sales $ 293,817 $ 289,801 $ 949,777 $ 921,497
Cost of products sold 176,126 172,129 563,281 554,856
Selling, general and
admininstrative 46,257 42,251 137,789 126,217
Depreciation and amortization 16,637 15,982 49,835 47,737
Research and development 10,191 9,863 30,755 29,555
Severance and other costs - 10,000 - 10,000
Special environmental provision - 13,500 - 13,500
Operating profit 44,606 26,076 168,117 139,632
Interest expense 21,532 23,377 65,983 72,713
Other income (789) (27,773) (2,106) (27,066)
Earnings before income
taxes and extraordinary loss 23,863 30,472 104,240 93,985
Provision for income taxes 9,156 11,605 39,056 35,740
Earnings before
extraordinary loss 14,707 18,867 65,184 58,245
Extraordinary loss on early
extinguishment of debt (5,674) (1,619) (21,651) (2,846)
Net earnings $ 9,033 $ 17,248 $ 43,533 $ 55,399
See accompanying notes to consolidated financial statements.
2
UNIROYAL CHEMICAL CORPORATION September 26, 1998 Unaudited
Consolidated Balance Sheets
September 26, 1998 and December 27, 1997
(In thousands of dollars)
September 26, December 27,
ASSETS 1998 1997
CURRENT ASSETS
Cash $ 2,798 $ 4,800
Accounts receivable 180,853 210,054
Inventories 232,695 221,249
Other current assets 52,023 65,388
Total current assets 468,369 501,491
NON-CURRENT ASSETS
Property, plant and equipment 372,548 374,421
Costs in excess of acquired net assets 124,936 127,784
Other assets 220,643 169,864
$ 1,186,496 $ 1,173,560
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 10,495 $ 1,770
Accounts payable 98,678 105,901
Accrued expenses 93,641 99,890
Income taxes payable 32,567 27,262
Total current liabilities 235,381 234,823
NON-CURRENT LIABILITIES
Long-term debt 474,638 864,648
Postretirement health care liability 140,630 141,660
Due to Parent 373,975 11,352
Other liabilities 139,904 155,219
STOCKHOLDERS' EQUITY (DEFICIT)
Additional paid-in capital 173,930 173,930
Accumulated deficit (320,580) (369,762)
Accumulated translation adjustment (28,622) (35,550)
Pension liability adjustment (2,760) (2,760)
Total stockholders' deficit (178,032) (234,142)
$ 1,186,496 $ 1,173,560
See accompanying notes to consolidated financial statements.
3
UNIROYAL CHEMICAL COMPANY, INC. September 26, 1998 Unaudited
Consolidated Balance Sheets
September 26, 1998 and December 27, 1997
(In thousands of dollars)
September 26, December 27,
ASSETS 1998 1997
CURRENT ASSETS
Cash $ $2,798 $ $4,800
Accounts receivable 180,853 210,054
Inventories 232,695 221,249
Other current assets 52,023 65,388
Total current assets 468,369 501,491
NON-CURRENT ASSETS
Property, plant and equipment 372,548 374,421
Costs in excess of acquired net assets 124,936 127,784
Other assets 220,643 169,864
$ 1,186,496 $ 1,173,560
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 10,495 $ 1,770
Accounts payable 98,678 105,901
Accrued expenses 93,641 99,890
Income taxes payable 32,567 27,262
Total current liabilities 235,381 234,823
NON-CURRENT LIABILITIES
Long-term debt 474,638 864,648
Postretirement health care liability 140,630 141,660
Due to Parent 373,975 11,352
Other liabilities 139,904 155,219
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 1 1
Additional paid-in capital 175,612 175,612
Accumulated deficit (322,263) (371,445)
Accumulated translation adjustment (28,622) (35,550)
Pension liability adjustment (2,760) (2,760)
Total stockholders' deficit (178,032) (234,142)
$ 1,186,496 $ 1,173,560
See accompanying notes to consolidated financial statements.
4
UNIROYAL CHEMICAL CORPORATION UNAUDITED
UNIROYAL CHEMICAL COMPANY, INC.
Consolidated Statements of Cash Flows
Nine months ended September 26, 1998 and September 27, 1997
(In thousands of dollars)
Sept. 26, Sept. 27,
Increase (decrease) to cash 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 43,533 $ 55,399
Adjustments to reconcile net earnings
to net cash provided by operations:
Extraordinary loss on early extinguishment of debt 21,651 2,846
Depreciation and amortization 49,835 47,737
Noncash interest 5,076 10,541
Deferred taxes 6,442 21,305
Changes in assets and liabilities, net (25,366) (4,360)
Net cash provided by operations 101,171 133,468
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (33,083) (19,650)
Purchase of Parent inventories (66,957) -
Sales (purchases) of Parent receivables 50,000 (50,000)
Other investing activities 607 675
Net cash used by investing activities (49,433) (68,975)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings with Parent 358,787 -
Redemption of 11% and 12% notes and other
payments on long-term borrowings (398,951) (66,743)
Proceeds (payments) on short-term borrowings 8,725 (5,901)
Premium paid on early extinguishment of debt (23,177) (4,123)
Net cash used by financing activities (54,616) (76,767)
CASH
Effect of exchange rates on cash 876 (236)
Change in cash (2,002) (12,510)
Cash at beginning of period 4,800 21,015
Cash at end of period $ 2,798 $ 8,505
See accompanying notes to consolidated financial statements.
5
UNIROYAL CHEMICAL CORPORATION
UNIROYAL CHEMICAL COMPANY, INC.
Notes to Unaudited Consolidated Financial Statements
Quarter Ended September 26, 1998
PRESENTATION ON CONSOLIDATED FINANCIAL STATEMENTS
Uniroyal Chemical Corporation ("UCC") was incorporated in
Delaware in December 1988 for the sole purpose of acquiring
Uniroyal Chemical Company, Inc. ("Uniroyal Chemical") in October
1989. Uniroyal Chemical, a New Jersey corporation, is a direct
wholly-owned subsidiary of UCC. Herein, UCC and Uniroyal
Chemical, collectively, are referred to as the "Company".
On August 21, 1996, Crompton & Knowles Corporation ("Parent")
acquired all of the issued and outstanding capital stock of UCC,
at which time UCC became a wholly-owned subsidiary of the Parent.
Uniroyal Chemical remained a direct wholly-owned subsidiary of
UCC.
UCC is dependent on cash flow from Uniroyal Chemical and its
subsidiaries to service its debt and meet its other cash needs.
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 substantially all of
the operations (primarily interest expense), assets and
liabilities of UCC.
The information included in the foregoing consolidated financial
statements is unaudited but reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of
the results for the interim periods presented. Certain amounts
in the accompanying consolidated financial statements have been
reclassified to conform to the current year presentation. It is
suggested that the interim consolidated financial statements be
read in conjunction with the consolidated financial statements
and notes thereto included in the Company's 1997 Form 10-K.
Included in accounts receivable are allowances for doubtful
accounts of $9.5 million in 1998 and $6.1 million at December 27,
1997. Accounts receivable at December 27, 1997 includes $50
million of receivables purchased from the Parent. The accounts
receivable purchase agreement with the Parent was terminated and
replaced with an inventory purchase agreement in September, 1998.
Accumulated depreciation amounted to $348.5 million in 1998 and
$315.9 million at December 27, 1997.
Accumulated amortization of cost in excess of acquired net assets
amounted to $34.8 million in 1998 and $31.4 million at December
27, 1997.
Accumulated amortization of patents, unpatented technology,
trademarks and other intangibles included in other assets
amounted to $132.5 million in 1998 and $121.4 million at December
27, 1997.
Cash payments for the nine months ended September 26, 1998 and
September 27, 1997 included interest of $54.8 million and $55.6
million and income taxes of $10.9 million and $10.8 million,
respectively.
INVENTORIES
Components of inventories are as follows:
Sept. 26, Dec. 27,
(In thousands) 1998 1997
Finished goods $174,045 $151,229
Work in process 10,564 14,786
Raw materials and supplies 48,086 55,234
$232,695 $221,249
RELATED PARTY TRANSACTION
In September 1998, the Company entered into an inventory purchase
agreement in which the Company may purchase an undivided interest
of up to $150 million in inventories from the Parent. Interest is
paid to the Company by the Parent equal to the interest rate
charged under the Company's credit agreement. The amount
outstanding under the inventory purchase agreement was $67
million and is included in other assets.
COMPREHENSIVE INCOME
Effective in the first quarter of 1998, the Company adopted
Financial Accounting Standards Board Statement No. 130 "Reporting
Comprehensive Income". The statement establishes standards for
reporting "comprehensive income" and its components in financial
statements and notes thereto. An analysis of the Company's
comprehensive income follows:
Third Quarter Nine Months
Ended Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
(In thousands) 1998 1997 1998 1997
Net earnings $ 9,033 $ 17,248 $ 43,533 $ 55,399
Other comprehensive
(income) expense:
Foreign currency
translation adjustments (10,998) 1,303 (6,928) 4,361
Minimum pension liability
adjustments, net - - - (953)
(10,998) 1,303 (6,928) 3,408
Comprehensive income $20,031 $ 15,945 $ 50,461 $ 51,991
LONG TERM DEBT
On March 31, 1998, the Parent amended its $600 million revolving
credit agreement with a syndicate of banks. The termination date
was extended to September 2003 from August 2001. Borrowings
under the credit agreement were amended as follows: Tranche I
provides a maximum of $375 million (up from $300 million)
available to the Parent for working capital and general corporate
purposes. Tranche II provides a maximum of $75 million (down
from $150 million) available to Uniroyal Chemical for working
capital and general corporate purposes. Tranche III continues to
provide up to $150 million available to the European and Canadian
subsidiaries of the Parent and Company.
On May 8, 1998, UCC redeemed the outstanding 11% Senior
Subordinated Notes at a price of 105.5% of the principal amount
thereof plus accrued and unpaid interest and the 12% Subordinated
Discount Notes at a price of 100% of the principal amount thereof
plus accrued and unpaid interest. The payment for the redemption
including premium and accrued interest amounted to $372.3 million
and was funded primarily through the issuance of two intercompany
notes to the Parent. The intercompany notes bear the same
principal, interest, maturity, and subordination as the notes
redeemed in accordance with terms of the Company's remaining
public indebtedness.
RECENT EVENTS
On September 17, 1998, the Parent and Bayer AG, Germany announced
an agreement in principle to form a joint venture to serve the
agricultural seed treatment market in North America. The basis
of the joint venture will be the Gustafson seed treatment
business. Gustafson currently operates as a unit of the Company.
The transaction is anticipated to close in November, 1998.
On November 12, 1998, the Parent announced the formation of a
joint venture with GIRSA, a subsidiary of DESC, S.A. de C.V. to
produce nitrile rubber products in Mexico. The Company will
contribute its nitrile rubber technology and business, and will
continue to provide sales and technical service support through
its existing organization. GIRSA will contribute its process and
manufacturing technology and will be primarily responsible for
the construction of a new plant in Mexico. The Company's
production facility in Painesville, Ohio, will close by mid-1999.
The Company anticipates a fourth quarter pre-tax write-off of
approximately $30 million associated with the shutdown.
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 nine months ended September 26,
1998 as compared with the nine months ended September 27, 1997 as
Registrants meet the conditions set forth in the General
Instruction (H)(1)(a) and (b) of Form 10-Q.
YEAR TO DATE RESULTS
Overview
The Company's results for the nine months ended September 26,
1998 includes the operations of the European and Asian colors
business transferred from the Parent on December 27, 1997. Net
sales of these operations for the nine months of 1998 and 1997
amounted to $57.3 million and $62.5 million respectively, and net
earnings for the same periods amounted to $2.1 million and $2.4
million, respectively. The financial statements have not been
restated for the first nine months of 1997 as the impact was not
considered material.
Net sales of $949.8 million for the nine months ended September
26, 1998 increased by 3% from $921.5 million for the comparable
period in 1997. All of the increase was attributable to the
sales of the transferred operations partially offset by lower
sales in other operations. Net earnings before extraordinary
losses on early extinguishment of debt increased 12% to $65.2
million versus $58.2 million in 1997. Net earnings of $43.5
million (including $2.1 million from transferred operations)
compared to $55.4 million in the first nine months of 1997.
Gross margin as a percentage of net sales increased to 40.7% from
39.8% in the comparable 1997 period. The increase was
attributable primarily to lower raw material costs and improved
pricing. Operating profit increased 3% to $168.1 million from
$163.1 million before special charges of $23.5 million in 1997.
Sales by Major Product Line
Chemicals and polymers sales of $360.2 million decreased 4% from
the first nine months of 1997. The decrease was primarily
attributable to lower unit volume of 3% and lower foreign
currency translation of 1%. Sales of rubber chemicals were 9%
lower than 1997 primarily due to lower pricing, unfavorable sales
mix and unit volume. EPDM sales increased 8% primarily due to
improved pricing. Nitrile rubber sales decreased 8% primarily as
a result of lower unit volume.
Crop protection sales of $295.3 million decreased 5% from the
comparable 1997 period primarily as a result of lower unit
volume. Unfavorable weather, low commodity prices and lack of
grower financing impacted demand for insecticide and other
products in the United States, and international sales were
negatively impacted by economic conditions in Russia, Asia and
Central Europe.
Specialty sales of $234.9 million were comparable to the prior
year. Improved pricing of 1% was offset by the impact of lower
foreign currency translation.
Colors sales of $59.4 million were $58.4 million higher than the
first nine months of 1997 due to the transfer of the European and
Asian colors business from the Parent.
Other
Selling, general and administrative expenses of $137.8 million
increased 9%, depreciation and amortization of $49.8 million
increased 4%, and research and development costs of $30.8 million
increased 4% from the first nine months of 1997. These increases
were primarily due to the impact of transferring the European and
Asian colors business from the Parent.
Interest expense for the nine months ended September 26, 1998 of
$66.0 million decreased 9% from the first nine months of 1997
primarily due to lower levels of indebtedness. The effective tax
rate of 37.5% decreased from 38.0% in the comparable 1997 period.
YEAR 2000 ISSUES
The Company has assessed and continues to assess its Information
Technology (IT) infrastructures including those systems that are
typically viewed as non-IT systems to determine and address any
potential problems that may result from the Year 2000 compliance
issues. As generally known, the Year 2000 compliance issues
pertain to the ability of computerized systems to recognize and
process date sensitive information beyond January 1, 2000. The
Company has performed this assessment over the last two years and
has implemented steps to be Year 2000 compliant in both its IT
and non-IT systems.
Under the Company's current environment, IT systems include
mission critical applications that directly support the Company's
operations. These IT systems also include networked personal
computers running desktop applications. A typical non-IT system
within the Company's environment includes process controls and
other microcontrollers containing imbedded computer chips.
Assessment of non-IT systems is an ongoing activity and to the
extent that any existing non-IT system has Year 2000 compliance
issues, the Company is aggressively undertaking measures to
remedy such systems. The Company believes that existing non-IT
systems will continue to function without significant problems
beyond January 1, 2000.
The Company employs a number of major mission critical IT systems
in its Specialty Chemical business. These systems are currently
being upgraded to address the Year 2000 compliance issues and the
Company expects this to be completed by mid-1999.
The Company has operations in Europe, Asia Pacific, and Latin
America supported by IT systems operating on mid-range computers.
The Company is presently upgrading these IT systems to address
Year 2000 compliance. The Company expects to complete this
upgrade by mid-1999.
The Company is actively looking into the overall Year 2000
readiness of its major business partners including vendors,
suppliers, and service providers in order to determine that the
Company's operations will not be disrupted in the event that any
such third party failed to have Year 2000 compliant systems. The
Company has received assurances from nearly all of the major
business entities that it conducts business with that these
entities will be able to conduct business beyond January 1, 2000
without any disruption. The Company continues to provide status
information of its Year 2000 compliance effort to its customers
and assures its customers that the Company's IT infrastructure
will continue to function properly beyond January 1, 2000.
The Company has spent approximately $3.0 million to assess and
correct Year 2000 compliance issues in its IT infrastructure
through September 26, 1998. The Company estimates that it will
spend an additional $1.5 million to complete the remediation of
Year 2000 compliance issues in its IT infrastructure. The
Company is committed to allocate funds to remediate any other
Year 2000 compliance issues in the course of its ongoing
assessment of its IT infrastructure. Year 2000 compliance costs
are not expected to have a material effect on the Company's
results of operations.
The Company does not expect to have any material risk exposure
emanating from its internal IT infrastructure. While it is not
expected to occur, failures of the Company's supplier's vendors,
and key customers to address the Year 2000 compliance could have
a material adverse impact on the Company's operations. In
particular, failures of the Company's energy and
telecommunication suppliers to address Year 2000 compliance could
have an immediate impact on the Company's operations. The
Company is continuing to assess and focus its efforts to mitigate
any potential risk associated with the Year 2000 compliance.
The Company does not have any formal contingency plan at this
time. The Company continually monitors the need to develop a
formal contingency plan.
ACCOUNTING STANDARD CHANGES
In June 1997 the Financial Accounting Standards Board issued
Statement No. 131 "Disclosures about Segments of an Enterprise
and Related Information", which is effective for fiscal years
beginning after 1997. In June 1998, the Financial Accounting
Standards Board issued Statement No. 133 "Accounting for
Derivative Instruments and Hedging Activities", which is
effective for fiscal years beginning after 1999. The Company is
currently evaluating the statements and plans to adopt Statement
No. 131 in the fourth quarter of 1998 and Statement No. 133 in
the first quarter of 2000.
ENVIRONMENTAL MATTERS
Uniroyal Chemical is 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
September 26, 1998, Uniroyal Chemical's reserves for
environmental remediation activities totaled $94.4 million.
These estimates may change in the future should additional sites
be identified, further remediation measures be required or
undertaken, 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 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 operation in any given year
if a significant number of these matters are resolved
unfavorably.
FORWARD-LOOKING STATEMENTS
The information in this Form 10-Q contains forward-looking
statements and estimates which are based on currently available
information. The Company's actual results may differ
significantly from the results discussed. Investors are
cautioned that there can be no assurance that the actual results
will not differ materially from those suggested in such forward-
looking statements and estimates.
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings
(a) Reference is made to Item 1(i) of Part II of the
Registrants' Quarterly Report on Form 10-Q for the quarterly
period ended June 28, 1997, and to page 5 (Other Environmental
Matters) of the Registrants' Annual Report on Form 10-K for the
fiscal year ended December 27, 1997, for information relating to
Uniroyal Chemical's Painesville, Lake County, Ohio facility and
to the facility's litigation with the Lake County Board of
Commissioners. In September 1998, the parties entered into a
settlement agreement pursuant to which Uniroyal agreed to comply
with certain interim and final limits pertaining to the discharge
of certain substances from its wastewater to the Lake County
sanitary sewer system and paid an administrative fine of
$176,000, and Lake County dismissed all of its present and past
claims against Uniroyal Chemical with prejudice.
(b) Reference is made to Item 3 of the Registrants' Annual
Report on Form 10-K for the fiscal year ended December 27, 1997,
for information pertaining to the Vertac Chemical Corporation
site in Jacksonville, Arkansas ("Vertac Site") allegedly
contaminated by dioxins. On October 23, 1998, the United States
District Court for the Eastern District of Arkansas, Western
Division, entered an order granting the United States of
America's motion for summary judgment against the Registrants'
Canadian subsidiary, Uniroyal Chemical Co./Cie. and Hercules
Incorporated ("Hercules") as to the amount of its claimed removal
and remediation costs of $102.9 million at the Vertac Site.
Trial on the allocation of these costs as between Uniroyal
Chemical Co./Cie. and Hercules was concluded on November 6, 1998,
and how much, if any, of the costs will ultimately be imposed on
Uniroyal Chemical Co./Cie. cannot be determined at this time
although Uniroyal Chemical Co./Cie continues to believe that its
share of liability will be small in comparison to that of
Hercules.
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
(27)* Financial Data Schedules
(b) No reports on Form 8-K were filed during the quarter for
which this report is filed.
* Copies of these Exhibits are annexed to this report on Form
10-Q provided to the Securities and Exchange Commission.
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: November 19, 1998 By /s/ Charles J. Marsden
Vice President and
Chief Financial Officer and
Director
(Principal Financial Officer)
<TABLE> <S> <C>
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<LEGEND>
This schedule contains summary financial information extracted from Form
10-Q for the period ended September 26, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
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<NAME> UNIROYAL CHEMICAL CORPORATION
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<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> SEP-26-1998
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<SALES> 949,777
<TOTAL-REVENUES> 949,777
<CGS> 563,281
<TOTAL-COSTS> 781,660
<OTHER-EXPENSES> (2,106)
<LOSS-PROVISION> 2,864
<INTEREST-EXPENSE> 65,983
<INCOME-PRETAX> 104,240
<INCOME-TAX> 39,056
<INCOME-CONTINUING> 65,184
<DISCONTINUED> 0
<EXTRAORDINARY> (21,651)
<CHANGES> 0
<NET-INCOME> 43,533
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
for the period ended September 26, 1998 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> 9-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> SEP-26-1998
<CASH> 2,798
<SECURITIES> 0
<RECEIVABLES> 180,853
<ALLOWANCES> 9,495
<INVENTORY> 232,695
<CURRENT-ASSETS> 468,369
<PP&E> 372,548
<DEPRECIATION> 348,468
<TOTAL-ASSETS> 1,186,496
<CURRENT-LIABILITIES> 235,381
<BONDS> 474,638
0
0
<COMMON> 1
<OTHER-SE> (178,033)
<TOTAL-LIABILITY-AND-EQUITY> 1,186,496
<SALES> 949,777
<TOTAL-REVENUES> 949,777
<CGS> 563,281
<TOTAL-COSTS> 781,660
<OTHER-EXPENSES> (2,106)
<LOSS-PROVISION> 2,864
<INTEREST-EXPENSE> 65,983
<INCOME-PRETAX> 104,240
<INCOME-TAX> 39,056
<INCOME-CONTINUING> 65,184
<DISCONTINUED> 0
<EXTRAORDINARY> (21,651)
<CHANGES> 0
<NET-INCOME> 43,533
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
