<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 March 31, 1997
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 May 9, 1997, 9,503,874
shares of common stock, $.001 par value, were outstanding.
<PAGE> 2
INSILCO CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
- March 31, 1997 (unaudited)
- December 31, 1996
Condensed Consolidated Income Statements 4
- Three months ended March 31, 1997 (unaudited)
- Three months ended March 31, 1996 (unaudited)
Condensed Consolidated Statement of Stockholders' Equity 5
- Three months ended March 31, 1997 (unaudited)
Condensed Consolidated Statements of Cash Flows 6
- Three months ended March 31, 1997 (unaudited)
- Three months ended March 31, 1996 (unaudited)
Notes to Unaudited Condensed Consolidated Financial Statements 7
Independent Auditors' Review Report 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</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)
March 31, December 31,
1997 1996
-------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $115,523 3,481
Trade receivables, net 71,375 73,874
Other receivables 10,493 8,499
Inventories, net 70,500 66,385
Deferred tax asset 2,710 29,859
Prepaid expenses and other current assets 11,853 7,010
-------------- ------------
Total current assets 282,454 189,108
Property, plant and equipment, net 109,282 114,379
Deferred tax asset 7,263 7,542
Investment in Thermalex 9,266 8,550
Goodwill, net 13,133 13,659
Other assets and deferred charges 11,122 18,762
-------------- ------------
Total assets $432,520 352,000
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $24,057 24,272
Current portion of other long-term obligations 6,602 6,661
Accounts payable 34,923 37,984
Income taxes payable 15,248 3,596
Accrued expenses and other 70,710 68,639
-------------- ------------
Total current liabilities 151,540 141,152
Long-term debt, excluding current portion 144,643 136,770
Other long-term obligations, excluding current portion 38,877 40,676
Stockholders' equity 97,460 33,402
-------------- ------------
Total liabilities and stockholders' equity $432,520 352,000
============== ============
</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1996 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 Income Statements
(Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------
<S> <C> <C>
Sales $ 117,341 122,449
Cost of products sold 82,789 84,840
Depreciation and amortization 4,065 3,116
Selling, general and administrative expenses 18,932 21,193
------------ ------------
Operating income 11,555 13,300
------------ ------------
Other income (expense):
Interest expense (3,643) (4,512)
Interest income 489 297
Gain on sale of Rolodex 95,001 -
Other income, net 510 305
------------ ------------
92,357 (3,910)
------------ ------------
Income before income taxes 103,912 9,390
Income tax expense (40,593) (3,244)
------------ ------------
Net income $ 63,319 6,146
============ ============
Net income per common share and common
share equivalent $ 6.39 0.62
============ ============
Weighted average number of common shares and
common share equivalents 9,912,314 9,954,245
============ ============
</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 Three Months Ended March 31, 1997
(unaudited)
(In thousands)
<TABLE>
<CAPTION>
Common Stock Additional Retained Cumulative Total
Par Value Paid-in Earnings Treasury Translation Stockholders'
$0.001 Capital (Deficit) Stock Adjustment Equity
------------ ---------- --------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $10 81,496 (37,115) (10,745) (244) 33,402
Net income - - 63,319 - - 63,319
Purchase of treasury stock - - - (1,204) - (1,204)
Shares issued upon exercise
of stock options - 2,406 - - - 2,406
Tax benefit from exercise of
stock options - 1,312 - - - 1,312
Foreign currency translation - - - - (1,775) (1,775)
------------ ---------- --------- -------- ----------- -------------
Balance at March 31, 1997 $10 85,214 26,204 (11,949) (2,019) 97,460
============ ========== ========= ======== =========== =============
</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>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 63,319 6,146
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 4,065 3,116
Deferred tax expense 27,956 2,303
Gain on sale of Rolodex (95,001) -
Other noncash charges and credits (388) 136
Change in operating assets and liabilities:
Receivables (10,552) 8,982
Inventories (12,162) (17,578)
Payables and other 18,928 (5,463)
Other long-term liabilities (377) (880)
----------- ----------
Net cash used in operating activities (4,212) (3,238)
------------ ----------
Cash flows from investing activities:
Proceeds from sale of Rolodex 112,610 -
Acquisitions of businesses, net of cash acquired - (5,129)
Capital expenditures (4,505) (4,099)
Other investing activities 579 109
------------ ----------
Net cash provided by (used in) investing activities 108,684 (9,119)
------------ ----------
Cash flows from financing activities:
Proceeds from debt borrowings 8,440 15,200
Proceeds from sale of stock 1,777 276
Payment of prepetition liabilities (1,708) (1,651)
Purchase of treasury stock (576) (2,359)
Retirement of long-term debt (161) (4,107)
------------ ----------
Net cash provided by financing activities 7,772 7,359
------------ ----------
Effect of exchange rate changes on cash (202) -
------------ ----------
Net increase (decrease) in cash and cash equivalents 112,042 (4,998)
Cash and cash equivalents at beginning of period 3,481 9,894
------------ ----------
Cash and cash equivalents at end of period $115,523 4,896
============ ==========
Interest paid $ 3,821 4,807
============ ==========
Income taxes paid $ 183 119
============ ==========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial
statements.
6
<PAGE> 7
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 1997
(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.
(2) DIVESTITURE
On March 5, 1997, the Company sold its Rolodex office products business
for $112,610,000 which is net of transaction costs including $1,755,000 of
fees payable to Goldman Sachs & Co., an affiliate of the Company's
principal stockholders. The Company expects to substantially offset the
cash taxes resulting from the sale by utilizing its usable tax loss
carryforwards. The Company is considering various alternatives for the
use of the proceeds including a possible one time distribution of the
proceeds to shareholders or a repurchase of shares.
(3) CASH & CASH EQUIVALENTS
The Company has placed into a restricted account $110,000,000 of the
proceeds from the sale of the Rolodex office products business which has
been pledged as security against the Company's bank loans. Approximately
$10,454,000 was invested in a money market fund with Goldman Sachs & Co.
at the end of the first quarter of 1997. Cash equivalents of $99,546,000
were invested in various commercial paper at the end of the first quarter.
Under an amendment to the Company's bank credit agreement, application
has been deferred until a date not later than December 30, 1997.
(4) INVENTORIES
Inventories consisted of the following at March 31, 1997 (in thousands):
<TABLE>
<S> <C>
Raw materials and supplies $25,660
Work-in-process 35,390
Finished goods 9,450
-------
Total inventories $70,500
=======
</TABLE>
(5) EARNINGS PER SHARE
When dilutive, stock options are 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 as of March 31, 1997 and 1996, were 9,912,314 and 9,954,245,
respectively.
7
<PAGE> 8
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 1997
In March 1997, the Financial Accounting Standards Board released Statement
of Financial Accounting Standards ("SFAS") SFAS No. 128, Earnings Per
Share, which simplifies the method for calculating earnings per share. As
defined in SFAS No. 128 "basic earnings per share" is determined using only
the weighted average of the shares issued and reserved for issuance, while
"diluted earnings per share" includes stock options (when dilutive) as
share equivalents using the treasury stock method. If SFAS No. 128 had
been adopted as of March 31, 1997, basic earnings per share for the first
quarter of 1997 would have been $6.65 per share and diluted earnings per
share would have been $6.39 per share.
(6) CONTINGENCIES
The Company is implicated in various claims and legal actions arising in
the ordinary course of business. In addition, 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. It is reasonably
possible that the estimated settlement amounts could change in the near
term but it is not expected that such a change would have a material
effect on the financial statements in the near term. Those claims or
liabilities not subject to Bankruptcy Court litigation will be addressed
in the ordinary course of business and be paid in cash as expenses are
incurred.
The United States Federal Trade Commission ("FTC") is investigating the
Company's acquisition of the automotive tubing business assets of
Helima-Helvetion International, Inc. ("HHI") to determine if the
acquisition violated federal antitrust laws. The Company has responded to
various FTC requests for information concerning the relevant market and
competitive conditions in that market. At this time it is not known
whether the investigation will result in the issuance of a complaint, or
if such complaint is issued, the relief that will be sought or obtained.
Revenues for the first quarter of 1997 associated with the automotive
tubing business acquired from HHI were $1,207,000 and the tangible net
assets at March 31, 1997 were $7,693,000.
In the opinion of management, the ultimate disposition of the matters
discussed above will not have a material adverse effect on the Company's
consolidated financial position, results of operations or liquidity. At
March 31, 1997, all unresolved bankruptcy settlements are included in the
shares reserved to satisfy claims.
(7) 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 are likely to differ from
those estimates and assumptions, but management does not believe such
differences will materially affect the Company's financial position,
results of operations or cash flows.
8
<PAGE> 9
INSILCO CORPORATION AND SUBSIDIARIES
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 1997
(8) PRO FORMA RESULT OF OPERATIONS
The following pro forma financial information presents consolidated net
sales and results of operations as if the sale of the Rolodex office
products business (see Note 2) had occurred at the beginning of the
periods presented exclusive of nonrecurring items directly attributable to
the transaction. The pro forma results of operations are as follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1997 1996
-------- -------
<S> <C> <C>
Net sales $106,544 106,266
Net income 4,786 4,273
Net income per common share
and share equivalent 0.48 0.43
</TABLE>
9
<PAGE> 10
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 March 31, 1997, the related condensed
consolidated statements of earnings and cash flows for the three-month periods
ended March 31, 1997 and 1996 and the condensed consolidated statement of
stockholders' equity for the three-month period ended March 31, 1997. 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, 1996, and the related consolidated statements
of operations, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated January 31, 1997, except as to the
second paragraph in Note 3, which is as of March 5, 1997, we expressed an
unqualified opinion on those consolidated financial statements. We did not
audit the 1996 financial statements of Thermalex, Inc., a 50 percent owned
investee company which is accounted for under the equity method. The 1996
financial statements of Thermalex, Inc. were audited by other auditors whose
report has been furnished to us, and in our opinion, insofar as it relates to
the amounts included for Thermalex, Inc., was based solely on the report of the
other auditors. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31, 1996, is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
Columbus, Ohio
April 18, 1997 KPMG Peat Marwick, LLP
10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company is a diversified manufacturer of automotive component products,
telecommunications and electronics and is a supplier of specialty publications.
The Company's Automotive Components Group serves primarily the automotive
markets through Thermal Components and Steel Parts operating units and
manufactures stainless steel tubing used in non-automotive applications through
its Romac Metals operating unit. 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 Specialty Publishing Group consists of Taylor Publishing (a
publisher of yearbooks and other specialty publications). The Company
completed the divestiture of its Office Products business with the sale of the
Rolodex office products business on March 5, 1997 for a net sales price of
$112,610,000. The Company recognized a pretax gain on the sale totaling
$95,001,000 in the first quarter of 1997. In the fourth quarter of 1996, the
Company had previously divested its computer accessories business and the
Rolodex electronics product line.
Summarized sales and operating income (loss) by business segment for the three
months ended March 31, 1997 compared to the corresponding period in 1996 are
set forth in the following table (in thousands) and discussed below:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
-------- -------
<S> <C> <C>
SALES
Automotive Components Group $56,183 49,301
Technologies Group 47,094 44,183
Office Products/Specialty Publishing Group:
Specialty Publishing 3,267 4,669
Office Products 10,797 24,296
-------- -------
14,064 28,965
-------- -------
$117,341 122,449
======== =======
OPERATING INCOME (LOSS)
Automotive Components Group $5,676 5,620
Technologies Group 4,974 6,158
Office Products/Specialty Publishing Group
Specialty Publishing (999) (1,071)
Office Products 1,926 2,614
-------- -------
927 1,543
-------- -------
Unallocated Corporate (22) (21)
-------- -------
$11,555 13,300
======== =======
</TABLE>
11
<PAGE> 12
SALES AND OPERATING INCOME. Total net sales decreased by approximately 4%
($5,108,000) in the first quarter of 1997 compared to the corresponding period
in 1996 due to the divestiture of the Office Products business in three
separate transactions completed in late 1996 and the first quarter of 1997.
Sales of the Office Products business totaled $10,797,000 in the first quarter
of 1997 compared to $24,296,000 in the first quarter of 1996. Excluding the
Office Products business, the Company's sales increased 9% ($8,391,000) in the
first quarter of 1997 compared to the first quarter of 1996 due to 14%
($6,882,000) and 7% ($2,911,000) increases in the Automotive Components Group
and Technologies Group, respectively. Partially offsetting these increases was
a 30% ($1,402,000) decline in the Specialty Publishing Group's sales in its
traditionally seasonally slow first quarter.
The 14% increase in the Automotive Component's Group's sales was due to an
increase in the sales of automotive heat exchangers and related components and
equipment, including sales of $7,807,000 from the Company's two aluminum tubing
subsidiaries which were acquired in July 1996. Partially offsetting this
growth was continued weakness in the domestic automotive radiator aftermarket.
Steel Parts reported an 8% gain in sales of transmissions and other stamped
steel parts due to higher content per car of Steel Parts' transmission
components and diversification of its product line.
The Technologies Group's sales increase of 7% is due to growth in sales of
precision stampings by Stewart Stamping, resulting from increased customer
demand, and wire and cable assemblies by Escod Industries, reflecting continued
expansion of its customer base. In addition, Stewart Connector's modular data
interconnect product sales increased 5%. Partially offsetting these
improvements was a decline in the sales of power transformers by Signal
Transformer.
In a seasonally slow quarter, Taylor Publishing sales decreased 30%
($1,402,000) in the first quarter of 1997 from the corresponding period of the
prior year primarily due to timing differences in the delivery of yearbooks.
(See Seasonality.)
Operating income decreased to $11,555,000 in the first quarter of 1997 from
$13,300,000 in the first quarter of 1996 due to the divestiture of the Office
Products business and lower operating margins in the Technologies Group.
Operating income in the first quarter of 1997 included $1,926,000 from the
divested Office Products business compared to $2,614,000 in the first quarter
of 1996.
The Automotive Components Group=s operating income in the first quarter of 1997
compared to the corresponding period of 1996 increased from $5,620,000 to
$5,676,000. Increased operating income at the Company's stamped steel parts
business and stainless steel tubing business units was largely offset by lower
operating margins at the Company's 1996 acquisitions and the weak domestic
automotive radiator aftermarket.
The Technologies Group's operating income in the first quarter of 1997 compared
to the corresponding period of 1996 decreased from $6,158,000 to $4,974,000.
Operating income was impacted by lower margins on power transformers, a higher
sales mix of lower margin wire and cable assemblies, and competitive pricing
pressures in the connector market. In addition, Stewart Connector incurred a
one-time $592,000 research and development expense related to a new type of
fiber-optic connector.
In the Specialty Publishing Group, Taylor Publishing's operating loss of
$999,000 in the first quarter of 1997 was relatively flat with the prior year
as improved operating margins offset the decline in sales.
OTHER INCOME (EXPENSE). Other income for the first quarter of 1997 included a
pretax gain on the sale of the Rolodex office products business totaling
$95,001,000. Other income for the first quarters of 1997 and 1996 included
$717,000 and $613,000, respectively, of equity income from the Company's
unconsolidated joint venture, Thermalex, which manufactures extruded aluminum
tubing primarily for automotive air conditioning condensers. Interest expense
decreased 19% ($869,000) in the first quarter of 1997 compared to the first
quarter of 1996 due to a lower effective interest rate and lower debt balances.
12
<PAGE> 13
INCOME TAX EXPENSE. The Company's effective income tax rate increased from
34.5% at March 31, 1996 to 39.1% at March 31, 1997 primarily because of the
greater proportion of domestic source income resulting from the sale of the
Rolodex business. The Company expects to substantially offset the cash taxes
resulting from the sale of Rolodex by utilizing its usable tax loss
carryforwards.
CASH FLOWS USED IN OPERATING ACTIVITIES. Operations used $4,212,000 cash in
the first quarter of 1997 as compared to a cash usage of $3,238,000 in the
first quarter of 1996. Cash flows from operations decreased from the prior
year due to lower cash flow from operating earnings partially offset by
improved working capital management.
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES. In 1997, the Company sold its
Rolodex office products business for a net sales price of $112,610,000. In
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 $4,505,000 and $4,099,000 during the
quarters ended March 31, 1997 and March 31, 1996, respectively.
CASH FLOWS FROM FINANCING ACTIVITIES. In the first quarter of 1997, the
Company borrowed a net amount of $8,440,000 on its revolving credit facility.
In addition, the Company paid $1,708,000 of prepetition liabilities in the
first quarter of 1997. In the first quarter of 1996, the Company made payments
totaling $4,000,000 on its term loan and borrowed a net amount of $15,200,000
on its revolving credit facility. The Company also repurchased an additional
74,500 shares of its common stock for $2,359,000. In addition, the Company
paid $1,651,000 of prepetition liabilities in the first quarter of 1996.
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 March 31, 1997, the Company's cash and cash equivalents and net
working capital amounted to $115,523,000 and $130,914,000, respectively,
compared to $3,481,000 and $47,956,000, respectively, at March 31, 1996. The
significant increases over December 31, 1996 levels are due to the receipt of
the net proceeds from the sale of the Rolodex office products business totaling
$112,610,000. The Company has placed into a restricted account $110,000,000 of
these proceeds which have been pledged as security against the Company's bank
loans. Under an amendment to the Company's bank credit agreement, the
application of these funds has been deferred until a date not later than
December 30, 1997. The Company is considering various alternatives for the use
of the proceeds including a possible one-time distribution of the proceeds to
shareholders or a repurchase of shares. The borrowing ability under the
Company's revolving credit facility as of the end of the first quarter of 1997
was $70,663,000, including $40,403,000 available for letters of credit.
13
<PAGE> 14
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 10(i) First Amendment to the Insilco Corporation 1993
Long-term Incentive Plan
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
A report, dated March 5, 1997, on Form 8-K was filed during the
quarter ending March 31, 1997, pursuant to Item 2 of that form. The
following financial statements were filed as part of that report:
(1) Pro Forma Financial Information.
Pro Forma Condensed Balance Sheet as of December 31, 1997
Pro Forma condensed Consolidated Statements of Operations for
the Year Ended December 31, 1996
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: May 14, 1997 By: /s/ Philip K. Woodlief
-----------------------
Philip K. Woodlief
* Corporate Controller; Principal
Accounting Officer
* In his capacity as Corporate Controller, Mr. Woodlief is duly authorized
to sign this report on behalf of the registrant.
15
<PAGE> 16
INSILCO CORPORATION
FORM 10-Q
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page No.
- ----------- ------- --------
<S> <C> <C>
10(i) First Amendment to the Insilco
Corporation 1993 Long-term Incentive Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 1
FIRST AMENDMENT
TO THE
INSILCO CORPORATION 1993 LONG-TERM INCENTIVE PLAN
BACKGROUND
A. Insilco Corporation, a Delaware corporation, (the "Corporation")
previously adopted the Insilco Corporation 1993 Long-Term Incentive Plan (the
"Plan") for the benefit of certain employees.
B. The Corporation desires to amend the Plan to (a) provide for full
vesting upon a change in control, and (b) protect participants from certain
corporate events that may cause awards to become diluted or less valuable.
AMENDMENTS
1. Section 12 of the Plan shall be amended by adding the following
language to the end of such Section:
Notwithstanding any other provision of this Plan to the contrary,
if a Change in Control (as defined below) occurs, each Award
outstanding under this Plan will become immediately 100% vested
and exercisable with respect to the total number of shares of
Common Stock subject to such Award. As used herein, a "Change in
Control" means any of the following:
(i) the acquisition, directly or indirectly, by any person
(as defined under Section 13(d) of the Securities Exchange Act of
1934) within any twelve-month period of securities of the Company
representing an aggregate of 25 percent or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof before the
end of such period unless the election of each Director who was
not a Director at the beginning of such period was approved in
advance by Directors representing at least two-thirds of the
Directors then in office who were Directors at the beginning of
such period; or
(iii) consummation of (A) a merger, consolidation, or other
business combination which would result in the common stock of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into common stock of the surviving entity or a parent or affiliate
thereof representing at least 60 percent of the common stock of
the Company or such surviving entity or parent or affiliate
thereof outstanding immediately after such merger, consolidation,
or business combination, or (B) a plan of complete liquidation of
the Company, or (C) an agreement for the sale or disposition by
the Company of a majority (in value) of the Company's assets; or
(iv) the occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board
determines affects control of the
<PAGE> 2
Company and, in order to implement the purposes of this Plan as
set forth above, adopts a resolution that such event or
circumstance constitutes a Change in Control for the purposes of
this Plan.
For purposes of determining a Change in Control on any given date,
a partner in Water Street Corporate Recovery Fund I, L.P. ("Water
Street") will be deemed to own that number of voting shares of the
Company determined by multiplying such partner's pro rata
partnership interest in Water Street by the number of voting
shares of the Company owned by Water Street as of such date.
2. Section 14(b) of the Plan shall be amended by deleting the first
sentence of such Section and replacing it with the following:
In the event of any subdivision or consolidation of outstanding shares of
Common Stock, or declaration of a dividend or distribution payable in
shares of Common Stock, cash, or other property, or capital
reorganization, reclassification, merger or other transaction involving
an increase or reduction in the number of outstanding shares of Common
Stock, the Committee shall make proportional substitutions or adjustments
to appropriately reflect such event and to prevent the dilution of rights
granted in all Awards under the Plan. The Committee shall use its
discretion to determine the specific manner in which the outstanding
Awards are to be adjusted, including but not limited to proportionally
substituting or adjusting (i) the number of shares of Common Stock
reserved under this Plan and covered by outstanding Awards denominated in
Common Stock or units of Common Stock; (ii) the exercise or other price
in respect of such Awards; and (iii) the appropriate Fair Market Value
and other price determinations for such Awards. After the Committee
makes such a substitution or adjustment, the Committee shall notify the
affected Participants of the new terms and conditions of their Awards.
3. The provisions contained in this Amendment shall apply to all
currently outstanding and future awards under the Plan. All other provisions
of the Plan shall remain unchanged.
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
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0
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