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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: OCTOBER 23, 1997
INSILCO CORPORATION
(Exact Name of Registrant as specified in its charter)
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Delaware 0-22098 06-0635844
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(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification Number)
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425 Metro Place North
Fifth Floor
Dublin, Ohio 43017
(614) 792-0468
(Address, including zip code, and telephone number
including area code of Registrant's
principal executive offices)
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ITEM 5. OTHER EVENTS.
On October 22, 1997 Insilco Corporation (the "Company") issued its third quarter
earnings release. The Company reported net income of $3.6 million, or $0.62 per
share, for its third quarter ended September 30, 1997, on sales of $131.4
million. The third quarter 1997 net income included an extraordinary charge of
$0.7 million, or $0.12 per share, related to the early extinguishment of debt as
a result of the Company's refinancing and share repurchase which was completed
in August.
For the nine months ended September 30, 1997 the Company recorded net income of
$78.1 million, or $9.19 per share, which included an after tax gain of $57.8
million, or $6.80 per share, on the first quarter sale of the Rolodex business
unit. For the nine months ended September 30, 1997 sales were $418.4 million.
The Company's press release issued October 22, 1997 is attached as an exhibit
and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
Exhibit No. Description
99 (a) Press release of the Company issued October 22, 1997.
2
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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: October 23, 1997 By: /s/ David A. Kauer
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David A. Kauer
Vice President and Treasurer
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EXHIBIT INDEX
Exhibit No. Description Page
99 (a) Press release of the Company issued October 22, 1997.
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Exhibit 99 (a)
Excellence in Electronics, Telecommunications, Automotive, Publishing
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News Release
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For Immediate Release Contact: David A. Kauer
Vice President and
Treasurer
(614) 792-0468
INSILCO CORPORATION REPORTS THIRD QUARTER 1997 RESULTS
COLUMBUS, OHIO, OCTOBER 22, 1997 - INSILCO CORPORATION (NASDAQ:INSL) today
reported net income of $3.6 million, or $.62 per share, for its third quarter
ended September 30, 1997, on sales of $131.4 million. The 1997 third quarter
included an extraordinary charge of $0.7 million, or $.12 per share, related to
the early extinguishment of debt as a result of the Company's refinancing and
share repurchase which was completed in August.
For the nine months ended September 30, 1997 the Company recorded net
income of $78.1 million, or $9.19 per share, which included an after tax gain of
$57.8 million, or $6.80 per share, on the first quarter sale of the Rolodex
business unit. For the nine months ended September 30, 1997 sales were $418.4
million.
The Company said that reported results were not comparable to the prior
year results due to acquisitions and divestitures completed after July 1, 1996
and its recent refinancing and share repurchase. For the three and nine months
ended September 30, 1996, without adjustments for acquisitions, divestitures and
the Company's refinancing and share repurchase, respectively, the Company earned
$8.5 million, or $.86 per share and $26.4 million, or $2.67 per share,
respectively. Sales for the three and nine month periods ended September 30,
1996 were $142.9 million and $443.4 million, respectively.
PRO FORMA RESULTS
On an unaudited pro forma basis, adjusting results for the 1996 acquisition
of the Lingemann aluminum tubing business, the 1996 and 1997 divestitures of the
Company's office products businesses, and the third quarter 1997 share
repurchase and debt issuance, as if all had occurred at the beginning of the
respective periods, the Company reported higher sales and operating income for
the third quarter and nine months. Pro forma results were as follows: Sales of
$131.4 million for the third quarter 1997 were up 8% from $122.2 million
recorded in the 1996 third quarter. Operating income increased 6% in the current
year third quarter to $11.0 million,
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from $10.4 million recorded in the year earlier third quarter. Net income for
the third quarter of 1997 was $3.1 million, or $.73 per share, compared to $4.0
million, or $.96 per share, recorded in the 1996 third quarter. The Company
noted that other non-operating income declined from $2.5 million in last year's
third quarter to $0.1 million this year. Last year's other income for the third
quarter included a favorable non-recurring adjustment of $2.2 million, or $.33
per share, to the Company's environmental liabilities.
Pro forma sales of $407.6 million for the first nine months of 1997 were up
4% from $391.6 million recorded in the first nine months of 1996. Operating
income was $39.8 million for the first nine months of 1997, up 7% from $37.2
million recorded in the nine months ended September 30, 1996. Year to date 1997
net income was $12.9 million, or $3.10 per share, compared to $12.9 million, or
$3.09 per share, recorded in the first nine months of 1996.
BUSINESS DISCUSSION
The Company's Automotive Components Group reported 6% sales growth in the
1997 third quarter to $55.7 million, compared to $52.6 million reported in the
year earlier third quarter. Sales growth was moderated by continued softness in
aftermarket demand for heat exchangers and related components and flat OEM
shipments of transmission components. Operating income for the Automotive
Components Group was $5.5 million in the quarter, compared to $6.2 million in
the year ago third quarter. The Group's operating performance was primarily
impacted by lower operating income from the businesses acquired in 1996 and
increased research and development expenses associated with the Group's new
technical center.
The Company's Technologies Group reported 10% sales growth in the third
quarter to $50.1 million from $45.5 million in the 1996 third quarter. Strong
telecommunications market demand for contract manufacturing continued in the
quarter with sales of wire and cable assemblies up 21%, despite a comparison
against 34% sales growth in last year's third quarter. Power transformer sales
grew 23% in the quarter, while precision stampings and connector sales were
essentially flat. Operating income for the Technologies Group was $6.9 million
in the 1997 third quarter, compared to $6.4 million recorded in the 1996 third
quarter. Operating results for the wire and cable assembly and power transformer
businesses improved sharply during the quarter, but were partially offset by
operating income declines from the precision stamping and connector businesses.
The Group's El Paso, Texas precision stamping facility, which began production
early in 1997, continued to report an operating loss in the third quarter, as it
builds a new customer base in the southwestern United States.
Sales at the Company's Taylor Publishing business unit were up 6% in the
third quarter to $25.6 million, compared to 1996 third quarter sales of $24.1
million. Taylor's operating income was $0.9 million, compared to $0.2 million
recorded in the third quarter last year. The Company said the increase in sales
and operating income was largely due to the timing of deliveries of fall season
yearbooks versus a year ago.
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REFINANCING AND SHARE REPURCHASE
As previously reported, during the third quarter the Company completed the
repurchase of 5.7 million shares of its common stock for $220 million, reducing
outstanding shares to approximately 4.1 million at the end of the quarter. In
connection with this share repurchase, the Company issued $150 million of 10.25%
senior subordinated notes, due in 2007 and replaced its previous bank credit
facility with a new six year $200 million secured bank credit facility (at LIBOR
plus 1.25%).
CEO COMMENTS
Robert L. Smialek, Insilco Chairman and CEO, said, "We are pleased to
report improved operating performance at several of our business units. Our wire
and cable assembly business benefited from both strong telecommunications market
demand and from an expansion of its customer base. Our power transformer
business has rebounded nicely from a year ago, reporting double digit sales
growth in each of the past two quarters and markedly improved operating income.
Taylor Publishing, coming off its peak yearbook season, posted improved results,
although the benefit of the technology and automation investments we continue to
make today to capture additional market share will not be recognized until
future years. However, the performance of our connector and precision stamping
business units and certain businesses in our Automotive Components Group
tempered the favorable results overall."
"While most of our business units are participating in markets with strong
long-term growth profiles or trends that will provide strong future growth
prospects, we are mindful of the difficult near-term factors in certain of our
markets and businesses. In addition, our 1997 fourth quarter results will be
taxed at a normalized corporate tax rate, which will make a difficult comparison
versus the prior year when we recorded non-recurring deferred tax assets that
reduced the pro forma effective tax rate to 1% in the quarter."
"From an operating perspective, current year results at our connector
business have been impacted by the lack of new product introductions. As we have
previously stated, it will be 1998 before meaningful revenues are generated from
new products scheduled for release in late 1997 and the first half of 1998.
Nonetheless, the long-term outlook for inter-connectivity products remains
strong and we are positioning our business to continue a leadership position in
the data grade segment of the connector market."
"The Automotive Components Group experienced continued soft aftermarket
demand for heat exchangers as well as a substantial decline in the order backlog
of our heat exchanger equipment manufacturing business as of the end of the
quarter. Third quarter results were also affected by additional expenses related
to the integration of our German acquisition into our operations. In addition,
our ability to improve results at our new Duncan, S.C. manufacturing facility
have been hampered all year by the ongoing FTC inquiry. However, we are
evaluating a number of alternatives to enhance the profitability of our tubing
operations and will be able to take appropriate actions once the FTC matter has
been resolved. In addition, we are strengthening our distribution network and
broadening our aftermarket radiator product line to capitalize on the
anticipated increase in replacement market demand. Our optimism about the
long-term growth prospects in the world-wide heat exchanger market remains
strong," Smialek concluded.
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The statements made in this press release which are not historical facts
may be deemed forward looking statements, and, as such, are subject to certain
risks and uncertainties, including statements concerning Taylor Publishing and
the future benefits and market share gains resulting from current capital
investments, sales growth as a result of market acceptance for the Company's new
connector products, the ability of the Company's connector business to maintain
its leadership position, the Company's ability to improve automotive aftermarket
sales, the Company's ability to improve its tubing operations' performance and
statements concerning the growth prospects present in the automotive markets
served by the Company's automotive businesses. It is important to note that
results could differ materially from those projected in such forward looking
statements. Factors which could cause results to differ materially include, but
are not limited to the following: delays in new product introductions, lack of
market acceptance for new products, changes in demand for the Company's
products, changes in market trends, general competitive pressures from existing
and new competitors, changes in interest rates, and adverse economic conditions
which could affect the amount of cash available for debt servicing and capital
investments. Further information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements are
contained from time to time in the Company's SEC filings, including but not
limited to the Company's report on Form 10-K for the year ended December 31,
1996, and the Company's report on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997. Copies of these filings may be
obtained by contacting the Company or the SEC.
Insilco Corporation, based in suburban Columbus Ohio, is a diversified
manufacturer of industrial components and a supplier of specialty publications.
The Company's industrial business units serve the automotive, electronics,
telecommunications and other industrial markets, and its publishing business
serves the school yearbook market. It had revenues in 1996 of $572 million.
Investor Relations Contact: David A. Kauer, (614) 792-0468 or write to
Insilco Corporation, Investor Relations, 425 Metro Place North, Box 7196,
Dublin, OH 43017 or call Melodye Demastus, Melrose Consulting (614) 771-0860.
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INSILCO CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
(Amounts in millions, except per share data)
THIRD QUARTER
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Actual Pro Forma
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Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
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Sales $ 131.4 142.9 131.4 122.2
Gross profit 34.3 41.0 34.3 31.1
% of sales 26.1% 28.7% 26.1% 25.5%
SG&A 23.1 26.7 23.1 20.5
Goodwill amortization 0.2 0.1 0.2 0.2
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Operating income 11.0 14.2 11.0 10.4
Interest expense, net (4.9) (4.4) (7.0) (7.6)
Equity in net income of Thermalex 0.6 0.9 0.6 0.9
Other income and expense, net 0.1 1.8 0.1 2.5
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Income before income taxes and
extraordinary item 6.8 12.5 4.7 6.2
Income tax expense (2.5) (4.0) (1.6) (2.2)
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Income tax rate 36.2% 32.2% 35.2% 36.3%
Income before extraordinary item 4.3 8.5 3.1 4.0
Extraordinary item, net of tax (0.7) -- -- --
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Net income $ 3.6 8.5 3.1 4.0
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Earnings (loss) per share:
Income before extraordinary item $ 0.74 0.86 0.73 0.96
Extraordinary item (0.12) -- -- --
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Net income per share $ 0.62 0.86 0.73 0.96
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Weighted average shares outstanding 5.8 9.9 4.2 4.1
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Memo: Depreciation expense
included in earnings $ 4.6 4.6 4.6 4.1
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INSILCO CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
(Amounts in millions, except per share data)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
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Actual Pro Forma
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Nine Months Nine Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
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Sales $418.4 443.4 407.6 391.6
Gross profit 117.7 131.6 112.5 105.3
% of sales 28.1% 29.7% 27.6% 26.9%
SG&A 75.4 84.3 72.3 67.7
Goodwill amortization 0.4 0.2 0.4 0.4
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Operating income 41.9 47.1 39.8 37.2
Interest expense, net (10.6) (13.4) (21.6) (24.0)
Gain on sale of Rolodex 95.0 -- -- --
Equity in net income of Thermalex 2.2 2.3 2.2 2.3
Other income and expense, net 0.1 3.5 0.1 4.2
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Income before income taxes and
extraordinary item 128.6 39.5 20.5 19.7
Income tax expense (49.8) (13.1) (7.6) (6.8)
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Income tax rate 38.7% 33.2% 36.8% 34.7%
Income before extraordinary item 78.8 26.4 12.9 12.9
Extraordinary item, net of tax (0.7) -- -- --
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Net income $ 78.1 26.4 12.9 12.9
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Earnings (loss) per share:
Income before extraordinary item $ 9.27 2.67 3.10 3.09
Extraordinary item (0.08) -- -- --
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Net income per share $ 9.19 2.67 3.10 3.09
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Weighted average shares outstanding 8.5 9.9 4.2 4.2
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Memo: Depreciation expense
included in earnings $ 14.2 12.6 14.0 12.7
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Capital Spending $(15.0) (14.7) (15.0) N/A
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Trailing Four Quarter EBITDA $ 72.5 77.3 67.6 N/A
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INSILCO CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In Millions)
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9/30/97 12/31/96 9/30/96
Assets ------- -------- -------
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Current assets:
Cash and cash equivalents $ 4.6 3.5 1.4
Receivables, net 90.3 82.4 90.1
Inventories, net 54.5 66.4 64.4
Current portion of deferred taxes 1.6 29.9 7.5
Assets held for sale -- -- 10.7
Prepaid expenses 7.1 7.0 7.4
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Total current assets 158.1 189.2 181.5
Property, plant and equipment, net 110.3 114.4 112.3
Goodwill, net 13.6 13.7 12.8
Deferred taxes 3.8 7.5 19.2
Other assets and deferred charges 28.2 27.2 30.7
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Total assets $ 314.0 352.0 356.5
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Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term debt $ 0.6 24.3 20.2
Current portion of long-term obligations 5.6 6.7 7.0
Accrued interest payable 3.6 3.1 3.3
Accounts payable 34.0 38.0 32.6
Accrued expenses and other 58.7 69.1 57.6
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Total current liabilities 102.5 141.2 120.7
Long-term debt 279.7 136.7 184.3
Other long-term obligations 37.5 40.7 41.1
Stockholders' equity (deficit) (105.7) 33.4 10.4
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Total liabilities and stockholders' equity (deficit) $ 314.0 352.0 356.5
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