<PAGE> 1
UNITED STATES
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 June 30, 1996
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 Number: 0-22098
INSILCO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 06-0635844
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
(Address of principal executive offices) (Zip Code)
614-792-0468
(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. (X) Yes ( ) No
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. (X) Yes ( ) No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. As of August 8, 1996, 9,321,024
shares of common stock, $.001 par value, were outstanding.
<PAGE> 2
INSILCO CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
- June 30, 1996 (unaudited)
- December 31, 1995
Condensed Consolidated Statements of Income 4
- Six months ended June 30, 1996 (unaudited)
- Six months ended June 30, 1995 (unaudited)
- Three months ended June 30, 1996 (unaudited)
- Three months ended June 30, 1995 (unaudited)
Condensed Consolidated Statement of Stockholders' Equity 5
- Six months ended June 30, 1996 (unaudited)
Condensed Consolidated Statements of Cash Flows 6
- Six months ended June 30, 1996 (unaudited)
- Six months ended June 30, 1995 (unaudited)
Notes to Unaudited Condensed Consolidated Financial Statements 7
Independent Auditors' Review Report 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Part II. OTHER INFORMATION - Not Applicable
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
(unaudited)
June 30, December 31,
1996 1995
-------- --------
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,908 9,894
Trade receivables, net 86,511 86,086
Other receivables 6,998 8,452
Inventories, net 77,710 69,289
Deferred tax asset 8,581 7,228
Prepaid expenses and other current assets 8,576 6,395
-------- --------
Total current assets 199,284 187,344
Property, plant and equipment, net 93,516 91,235
Deferred tax asset 21,140 29,653
Investment in Thermalex 9,990 10,028
Excess of cost over assets acquired, net 2,696 --
Other assets 19,018 21,869
-------- --------
Total assets $345,644 340,129
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 21,656 18,642
Current portion of other long-term obligations 7,160 7,975
Accrued interest payable 2,265 4,089
Accounts payable 36,495 45,336
Accrued expenses and other 60,552 66,382
-------- --------
Total current liabilities 128,128 142,424
Long-term debt, excluding current portion 171,725 167,847
Other long-term obligations, excluding current portion 43,500 45,637
Stockholders' equity (deficit) 2,291 (15,779)
-------- --------
Total liabilities and stockholders' equity $345,644 340,129
======== ========
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1995 has been
derived from the audited balance sheet as of that date.
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE> 4
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Six Months Six Months Three Months Three Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 300,497 288,596 178,048 167,221
Cost of products sold 202,752 193,376 117,912 109,685
Depreciation 8,058 7,925 4,954 4,741
Selling, general and administrative expenses 56,773 52,406 35,580 32,819
Nonrecurring charges -- 6,200 -- 6,200
Amortization of intangibles 29 16,086 17 8,043
----------- ----------- ----------- -----------
Operating income 32,885 12,603 19,585 5,733
----------- ----------- ----------- -----------
Other income (expense):
Interest expense (9,400) (9,740) (4,888) (5,104)
Interest income 460 1,377 163 1,132
Other income (expense), net 3,104 8,376 2,799 6,879
----------- ----------- ----------- -----------
(5,836) 13 (1,926) 2,907
----------- ----------- ----------- -----------
Income before income taxes 27,049 12,616 17,659 8,640
Income tax expense (9,098) (9,225) (5,854) (5,319)
----------- ----------- ----------- -----------
Net income $ 17,951 3,391 11,805 3,321
=========== =========== =========== ===========
Net income per common share and common
share equivalent $ 1.81 0.34 1.20 0.33
=========== =========== =========== ===========
Weighted average number of common shares
outstanding and common share equivalents 9,908,973 10,101,216 9,859,412 10,122,418
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE> 5
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Stockholders' Equity
For the Six Months Ended June 30, 1996
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
Common Total
Stock Additional Stockholders'
Par Value Paid-in Accumulated Treasury Equity
$0.001 Capital Deficit Stock (Deficit)
--------- ---------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $ 10 67,192 (76,168) (6,813) (15,779)
Net income -- -- 17,951 -- 17,951
Purchase of treasury stock -- -- -- (3,353) (3,353)
Restricted stock -- 3,300 -- -- 3,300
Reserved shares -- (706) -- -- (706)
Shares issued upon exercise
of stock options -- 656 -- -- 656
Tax benefit from exercise of
stock options -- 222 -- -- 222
------- ------- ------- ------- -------
Balance at June 30, 1996 $ 10 70,664 (58,217) (10,166) 2,291
======= ======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
5
<PAGE> 6
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 17,951 3,391
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 8,090 24,011
Deferred tax expense 7,187 7,499
Other noncash charges and credits 11 (1,067)
Change in operating assets and liabilities:
Receivables 1,920 (1,887)
Inventories (6,695) (9,083)
Payables and other (16,656) (11,370)
Other long-term liabilities (1,475) (2,482)
-------- --------
Net cash provided by operating activities 10,333 9,012
-------- --------
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired (5,129) --
Capital expenditures (9,266) (8,543)
Other investing activities 2,058 4,931
-------- --------
Net cash used in investing activities (12,337) (3,612)
-------- --------
Cash flows from financing activities:
Proceeds from debt borrowings 15,653 6,000
Retirement of long-term debt (8,287) (5,780)
Purchase of treasury stock (3,353) --
Payment of prepetition liabilities (1,651) (1,675)
Proceeds from sale of stock 656 183
-------- --------
Net cash provided by (used in) financing activities 3,018 (1,272)
-------- --------
Net increase in cash and cash equivalents 1,014 4,128
Cash and cash equivalents at beginning of period 9,894 8,690
-------- --------
Cash and cash equivalents at end of period $ 10,908 12,818
======== ========
Interest paid $ 8,858 9,722
======== ========
Income taxes paid $ 1,277 970
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
6
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INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 1996
(1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information in accordance with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all determinable
adjustments have been made which are considered necessary to present
fairly the financial position and the results of operations and cash
flows at the dates and for the periods presented. Certain
reclassifications have been made to the 1995 financial statements to
conform to the 1996 presentation.
(2) Inventories
Inventories consisted of the following at June 30, 1996 (in thousands):
<TABLE>
<S> <C>
Raw materials and supplies $28,791
Work-in-process 24,089
Finished goods 24,830
-------
Total inventories $77,710
=======
</TABLE>
(3) Earnings Per Share
Earnings per share for the three and six months ended June 30, 1996 and
1995 were determined using the weighted average of the shares issued
and reserved for issuance as of the Plan Effective Date and additional
shares issued since that date. When dilutive, stock options were
included as share equivalents using the treasury stock method. The
weighted average number of common shares and common share equivalents
used for calculation of the primary earnings per share for the quarter
and six months ended June 30, 1996 were 9,859,412 and 9,908,973,
respectively. The weighted average number of common shares and common
share equivalents used for calculation of earnings per share for both
the three and six months ended June 30, 1995 were 10,122,418 and
10,101,216, respectively.
(4) Contingencies
The Company's operations are subject to extensive federal, state and
local laws and regulations relating to the generation, storage,
handling, emission, transportation and discharge of materials into the
environment. The Company has a program for monitoring its compliance
with applicable environmental regulations, the interpretation of which
often is subjective. This program includes regular reviews of the
Company operations' obligations to comply with the environmental laws
and regulations in order to determine the adequacy of the recorded
liability for remediation activities.
7
<PAGE> 8
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 1996
The Company is also implicated in various claims and legal actions
arising in the ordinary course of business. Certain claims filed in the
bankruptcy court are in dispute. The Company has recorded these
disputed claims at the estimated settlement amounts ultimately expected
to be allowed following the bankruptcy court litigation. Those claims
or liabilities not subject to bankruptcy court litigation will be
addressed in the ordinary course of business and will be paid in cash
as expenses are incurred.
In the opinion of management, the ultimate disposition of these matters
will not have a material adverse effect on the Company's consolidated
financial position, results of operations or liquidity.
(5) Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(6) Acquisitions
On July 10, 1996, the Company acquired the automotive aluminum tube
business of Helmut Lingemann GmbH & Co. The transactions include the
purchase of stock of Lingemann's German subsidiary, ARUP Alu-Rohr
und-Profil GmbH, and the automotive aluminum tube business assets of
its Duncan, South Carolina based Helima-Helvetion International, Inc.
The cash transaction, financed principally from borrowings under the
Company's Bank Credit Agreement, is valued at approximately
$31,000,000, plus transaction fees and expenses, and is subject to
certain adjustments.
The Company filed a Form 8-K dated July 10, 1996 reporting the
acquisition of Helmut Lingemann GmbH & Co. At that time, it was
impracticable to provide the financial statements of the business
acquired and pro forma financial information. Such information will be
filed as soon as practicable, but not later than sixty days after the
date upon which the Form 8-K was filed.
8
<PAGE> 9
INDEPENDENT AUDITORS' REVIEW REPORT
THE BOARD OF DIRECTORS
INSILCO CORPORATION:
We have reviewed the condensed consolidated balance sheet of Insilco Corporation
and subsidiaries as of June 30, 1996, the related condensed consolidated
statements of income for the three-month periods and six-month periods ended
June 30, 1996 and 1995, the related condensed consolidated statement of
stockholders' equity (deficit) for the six-month period ended June 30, 1996, and
the related condensed consolidated statements of cash flows for the six-month
periods ended June 30, 1996 and 1995. These condensed consolidated financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Insilco Corporation and
subsidiaries as of December 31, 1995, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the year then
ended (not presented herein); and in our report dated February 12, 1996, we
expressed an unqualified opinion on those consolidated financial statements. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet, from which it
has been derived.
Columbus, Ohio
July 30, 1996 KPMG Peat Marwick LLP
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
On April 1, 1993, Insilco Corporation (the "Company") and certain of its
subsidiaries (collectively with the Company, the "Debtors") emerged from Chapter
11 bankruptcy proceedings pursuant to an Amended and Restated Plan of
Reorganization dated November 23, 1992 (the "Plan of Reorganization"). The Plan
of Reorganization resulted in a change of control of the Company and a
substantial reduction in the Company's liabilities.
March 31, 1993 was the effective date (the "Plan Effective Date ") of the Plan
of Reorganization for financial reporting purposes, and as of that date the
Company adopted the "fresh start" reporting principles prescribed by Statement
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code", issued by the American Institute of Certified Public Accountants. The
"fresh start" accounting principles required the Company to value its assets and
liabilities at fair values and eliminate its accumulated deficit. The total
reorganization value of assets at the Plan Effective Date was approximately
$562,011,000, or approximately $218,026,000 in excess of the aggregate fair
value of the tangible and identified intangible assets (classified as
"Reorganization Goodwill"). The most notable impact of "fresh start" accounting
on the financial statements is the negative impact on the reported operating
income of each business segment and the consolidated net income resulting from
the noncash amortization of the Reorganization Goodwill. Such amortization
expense totaled $8,043,000 and $16,086,000 in the three months and six months
ended June 30, 1995, respectively. At December 31, 1995, the Reorganization
Goodwill was fully amortized.
RESULTS OF OPERATIONS
The Company is a diversified manufacturer of automotive component products,
telecommunications/ electronics and a variety of specialty consumer products.
The Company's Automotive Components Group serves primarily the automotive
markets through Thermal Components and Steel Parts Corporation operating units.
The Technologies Group serves primarily the telecommunications and components
markets through its Stewart Connector Systems, Stewart Stamping, Signal
Transformer and Escod Industries operating units. The Office Products and
Specialty Publishing Group includes Rolodex, Curtis Manufacturing and Taylor
Publishing (a school yearbook publisher).
Summarized sales and operating income (loss) by business segment and the
significant other components of net income for the three months and six months
ended June 30, 1996 compared to the corresponding periods in 1995 are set forth
in the following table (in thousands) and discussed below:
10
<PAGE> 11
<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
-------------- --------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
SALES
Automotive Components Group $ 101,480 93,217 52,179 45,827
Technologies Group 92,181 86,470 47,998 44,342
Office Products/Specialty Publishing Group 106,836 108,909 77,871 77,052
--------- --------- --------- ---------
300,497 288,596 178,048 167,221
--------- --------- --------- ---------
OPERATING INCOME (LOSS)
Automotive Components Group 12,278 10,638 6,658 5,166
Technologies Group 13,403 10,476 7,245 6,109
Office Products/Specialty Publishing Group 7,246 (8,481) 5,703 (5,527)
Unallocated Corporate (42) (30) (21) (15)
--------- --------- --------- ---------
32,885 12,603 19,585 5,733
--------- --------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL INFORMATION: EFFECTS OF "FRESH START
ACCOUNTING" ON OPERATING INCOME (LOSS) COMPARABILITY
AMORTIZATION OF REORGANIZATION GOODWILL
Automotive Components Group -- 1,702 -- 851
Technologies Group -- 3,588 -- 1,794
Office Products/Specialty Publishing Group -- 10,796 -- 5,398
--------- --------- --------- ---------
-- 16,086 -- 8,043
--------- --------- --------- ---------
- -----------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (9,400) (9,740) (4,888) (5,104)
Interest income 460 1,377 163 1,132
Other income (expense), net 3,104 8,376 2,799 6,879
--------- --------- --------- ---------
(5,836) 13 (1,926) 2,907
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 27,049 12,616 17,659 8,640
INCOME TAX EXPENSE (9,098) (9,225) (5,854) (5,319)
--------- --------- --------- ---------
NET INCOME $ 17,951 3,391 11,805 3,321
========= ========= ========= =========
</TABLE>
11
<PAGE> 12
SALES AND OPERATING INCOME. Total net sales in the second quarter of 1996
increased by approximately 6% ($10,827,000) over the corresponding period in
1995. In the second quarter of 1996, the Automotive Components Group and
Technologies Group had solid increases over the corresponding period of 1995 of
approximately 14% ($6,352,000) and 8% ($3,656,000), respectively, while sales in
the Office Products/Specialty Publishing Group were relatively flat compared to
the prior year period. In the first half of 1996, sales increased 4%
($11,901,000) over the same period of 1995 due to increased sales in the
Automotive Components Group and Technologies Group of 9% ($8,263,000) and 7%
($5,711,000), respectively, partially offset by a decline in sales in the Office
Products/Specialty Publishing Group of 2% ($2,073,000).
In the Automotive Components Group, sales of aftermarket automotive heat
exchanger related products manufactured by the Company's Thermal Components unit
increased over the first half and second quarter of 1995. Sales for the second
quarter and first half of 1996 included $2,195,000 and $3,393,000, respectively,
in sales from its recently acquired radiator aftermarket businesses. For the
second quarter and first half of 1996, Steel Parts reported gains in sales of
transmissions and other stamped steel parts due to higher content per car of
Steel Parts' transmission components and diversification of its steel parts
product line. Partially offsetting these gains was a drop in sales of stainless
steel tubing for non-automotive applications for both the second quarter and
first half of 1996.
Sales in the Technologies Group for the quarter ended June 30, 1996 increased 8%
($3,656,000) due to double digit growth of the segment's wire and cable
assemblies by Escod Industries and growth in the sales of precision stampings by
Stewart Stamping. Stewart Connector's modular data interconnect product sales
grew modestly, up 3%. Partially offsetting these improvements was a decline in
the sales of power transformers by Signal Transformer due to a slowdown in
orders from a few higher volume customers. For the first half of 1996, compared
to the same period in 1995, Escod's double digit growth led the Group as all
units contributed to 7% ($5,711,000) year over year growth.
Sales of office and computer accessory products, within the Office
Products/Specialty Publishing Group, increased 3% ($558,000) in the second
quarter of 1996 over the same period in 1995, due to increased sales of Rolodex'
traditional products and paper-based organizers and Curtis Manufacturing's
computer accessories products partially offset by the expected decreased sales
of electronic organizers at Rolodex. For the first half of 1996, sales of office
and computer accessory products decreased 5% ($2,476,000) from the same period
in 1995 due to decreased sales of electronic organizers at Rolodex and decreased
sales of Curtis Manufacturing's computer accessories products due to a slow
first quarter of 1996. Taylor Publishing sales for the second quarter and first
half of 1996 were relatively flat compared to the same periods of the prior
year. (See Seasonality for additional information regarding Taylor Publishing
sales.)
Operating income increased from $5,733,000 in the second quarter of 1995 to
$19,585,000 in the second quarter of 1996 primarily due to the effect of the
1995 noncash amortization of Reorganization Goodwill on the comparability of the
periods and certain nonrecurring charges totaling $6,200,000 related to
uncollectible accounts receivable, sales returns and obsolete inventory recorded
at Rolodex/Curtis in the second quarter of 1995. In the second quarter of 1996,
there was no Reorganization Goodwill amortization expense compared to $8,043,000
in the second quarter of 1995. Excluding the second quarter 1995 Reorganization
Goodwill amortization expense and nonrecurring charges, operating income for the
second quarter of 1996 decreased $391,000 or 2% from the corresponding period in
1995.
On a year-to-date basis, operating income increased from $12,603,000 in the
first half of 1995 to $32,885,000 in the first half of 1996 primarily due to the
effect of the noncash amortization of Reorganization Goodwill and nonrecurring
charges recorded in 1995 on the comparability of the periods. In 1996 there was
no Reorganization Goodwill amortization expense compared to $16,086,000 in 1995.
Excluding the 1995 Reorganization Goodwill amortization expense and nonrecurring
charges, operating income for the first half of 1996 decreased $2,004,000 or 6%
from the corresponding period in 1995.
The Automotive Components Group's operating income in the second quarter of 1996
compared to the corresponding period of 1995 increased from $5,166,000 to
$6,658,000. Excluding the second quarter 1995 Reorganization Goodwill
amortization expense of $851,000, the segment's operating income increased
$641,000 due to increased
12
<PAGE> 13
sales in the Company's heat exchanger related units partially offset by
decreased operating margins at the Company's non-automotive stainless steel
tubing business. For the first half of 1996, the Automotive Components Group's
operating income was $12,278,000 compared to $10,638,000 in the corresponding
period of 1995. Excluding the 1995 Reorganization Goodwill amortization expense
of $1,702,000, the segment's operating income was relatively flat as a result of
lower margins reported in the stainless steel tubing business and the product
mix of heat exchanger sales.
The Technologies Group's operating income increased from $6,109,000 in the
second quarter of 1995 to $7,245,000 in the second quarter of 1996. Excluding
the Reorganization Goodwill amortization expense of $1,794,000 in the second
quarter of 1995, the segment's operating income decreased $658,000 from the
second quarter of 1995 due to the sales mix shift to lower margin products at
the Company's connector business, competitive pricing pressures and lower power
transformer sales. For the first half of 1996, the Technologies Group's
operating income was $13,403,000 compared to $10,476,000 in the corresponding
period of 1995. Excluding the Reorganization Goodwill amortization expense of
$3,588,000 in the first half of 1995, the segment's operating income decreased
$661,000 from the first half of 1995 due to the sales mix shift to lower margin
products at the Company's connector business and competitive pricing pressures.
The Office Products/Specialty Publishing Group's operating income in the second
quarter of 1996 was $5,703,000 compared to an operating loss of $5,527,000 in
the corresponding period of 1995. Excluding the Reorganization Goodwill
amortization expense of $5,398,000 in the second quarter of 1995, the Group's
operating income increased $5,832,000 due to the $6,200,000 in nonrecurring
expenses recorded in 1995 and improved productivity at Taylor Publishing
partially offset by the increased costs associated with restructuring Rolodex'
administrative support structure. In the first half of 1996, the Office
Products/Specialty Publishing Group's operating income was $7,246,000 compared
to an operating loss of $8,481,000 in the corresponding period of 1995.
Excluding the Reorganization Goodwill amortization expense of $10,796,000 in the
first half of 1995, the Group's operating income increased $4,931,000 due to the
same reasons discussed above for the second quarter increase.
OTHER INCOME (EXPENSE). Other income for the second quarter and first half of
1996 decreased $4,833,000 and $5,849,000, respectively, from the corresponding
periods in 1995 due to proceeds from noncurrent assets and miscellaneous other
income recorded in 1995. In the second quarter and first half of 1995, other
income included a net favorable adjustment of $1,494,000 related to the
resolution of several legal disputes dating to prior years, a favorable
adjustment to its environmental liabilities of $3,600,000 following a review of
the Company's liability related to previously divested operations and a
$1,599,000 gain on the sale of idle corporate assets. For the second quarter and
first half of 1996, other income included equity in income from the Company's
unconsolidated joint venture, which manufactures extruded aluminum tubing
primarily for automotive air conditioning condensers, of $750,000 and
$1,363,000, respectively, compared to $509,000 and $1,075,000 in the
corresponding periods of 1995, respectively. Interest expense decreased 4%
($216,000) and 3% ($340,000) in the second quarter and first half of 1996,
respectively, from the corresponding periods of the prior year.
INCOME TAX EXPENSE. The Company's actual income tax payments were, and are
expected to be, substantially less than the total financial statement tax
expense as the benefits of net deferred tax assets are realized.
CASH FLOWS FROM OPERATING ACTIVITIES. Operations provided $10,333,000 cash in
the first half of 1996 as compared to providing $9,012,000 in the first half of
1995. Cash flows from operations improved due to improved working capital
management, primarily inventory and accounts receivable.
CASH FLOWS USED IN INVESTING ACTIVITIES. In the first half of 1996, the
Company's investing activities used $12,337,000 compared to $3,612,000 in the
first half of 1995. In early 1996 the Company acquired businesses serving the
automotive, heavy truck and industrial manufacturing radiator replacement market
for a net purchase price of $5,129,000. The Company's other current investments
consist principally of capital expenditures which totaled $9,266,000 during the
first half of 1996. In the first half of 1996, the Company received $1,000,000
from Thermalex relating to the partial repayment of a 1994 loan and a $400,000
dividend distribution from Thermalex. In 1995, the
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<PAGE> 14
Company received $1,918,000 on the sale of idle assets, $1,750,000 from
Thermalex relating to the partial repayment of a 1994 loan, net proceeds of
$726,000 from an escrow deposit following settlement of certain environmental
claims that had been pending against the Company in the Chapter 11 cases and a
$400,000 dividend distribution from Thermalex.
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES. Financing activities provided
$3,018,000 in the first half of 1996 compared to using $1,272,000 in the
corresponding period of 1995. In the first half of 1996, the Company made
payments totaling $8,000,000 on its term loan and borrowed a net amount of
$15,400,000 on its revolving credit facility. The Company also repurchased an
additional 79,500 shares of its common stock for $2,539,000 bringing the total
purchases under the Company's $15.0 million buyback program to 277,000 shares or
$9,178,000. In addition, the Company paid $1,651,000 of prepetition liabilities
in the first half of 1996. In the first half of 1995, the Company made payments
totaling $5,750,000 on its term loan and borrowed a net amount of $6,000,000 on
its revolving credit facility. The Company paid $1,675,000 of prepetition
liabilities in the first half of 1995.
SEASONALITY. The Company's yearbook publishing business, Taylor Publishing, is
highly seasonal, with a majority of sales occurring in the second and third
quarters of the year. Taylor receives significant customer advance deposits in
the second half of the year. The Company's other businesses are not highly
seasonal.
IMPACT OF INFLATION AND CHANGING PRICES. Inflation and changing prices have not
significantly affected the Company's operating results or markets.
LIQUIDITY. At June 30, 1996, the Company's cash and cash equivalents and net
working capital amounted to $10,908,000 and $71,156,000, respectively,
representing increases in cash and cash equivalents of approximately 10%
($1,014,000) and in net working capital of 58% ($26,236,000) from the December
31, 1995 levels. The borrowing ability under the Company's revolving credit
facility at June 30, 1996 was $58,705,000, including $38,705,000 available for
letters of credit.
The July 10, 1996 acquisition of Helmut Lingemann GmbH & Co. (see Note 6 to the
Unaudited Condensed Consolidated Financial Statements) was principally financed
with borrowings under the Company's Bank Credit Agreement. Such borrowings
reduced the Company's revolving credit availability by approximately
$31,000,000.
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSILCO CORPORATION
-------------------------------
Registrant
Date: August 13, 1996 By: /s/ James D. Miller
-------------------------------
James D. Miller
Executive Vice President and
Chief Financial Officer
By: /s/ Philip K. Woodlief
-------------------------------
Philip K. Woodlief
Controller and Principal
Accounting Officer
15
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
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