<PAGE> 1
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 29, 1998
INSILCO CORPORATION
(Exact Name of Registrant as specified in its charter)
Delaware 0-22098 06-0635844
-------- ------- ----------
(State or other jurisdiction of (Commission File No.) (IRS Employer
incorporation or organization) Identification Number)
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)
<PAGE> 2
ITEM 5. OTHER EVENTS.
On October 29, 1998 Insilco Holding Co. (the "Company") issued its third quarter
earnings release.
Sales of $135.1 million were up 3% for the 1998 third quarter, compared to
$131.4 million recorded in the year ago third quarter. For the nine months of
1998 sales were up 4% to $422.4 million, compared to $407.6 million recorded in
the comparable nine months of 1997.
The Company reported Adjusted EBITDA (earnings before interest, taxes,
depreciation, amortization, merger-related expenses and other non-recurring
expenses plus cash dividends received from Thermalex, the Company's 50% owned
joint venture) of $14.4 million for the 1998 third quarter, compared to $15.7
million recorded in the 1997 third quarter. The Company's Adjusted EBITDA for
the third quarter excludes $24.2 million of charges related to the merger
between Insilco and affiliates of DLJ Merchant Banking and $1.4 million of other
non-recurring expenses related primarily to management severance and legal
expenses.
For the nine months of 1998, the Company reported Adjusted EBITDA of $53.3
million, compared to $55.8 million recorded in the year ago nine months ended
September 30, 1997. The Company's Adjusted EBITDA for the nine months of 1998
excludes $25.5 million of merger-related expenses and $3.0 million of other
non-recurring charges related primarily to management severance and legal
expenses.
Including the merger-related and other charges, the Company reported a net loss
of $17.2 million for its third quarter ended September 30, 1998, compared to net
income of $3.6 million recorded a year ago in the third quarter. Loss applicable
to common shares for the third quarter of 1998 was $6.53 per diluted share
compared to income applicable to common shares of $0.62 per diluted share in the
prior year. For the nine months ended September 30, 1998, the Company recorded a
net loss of $10.0 million compared to net income of $78.1 million recorded in
the year ago nine months. Loss applicable to common shares for the nine months
ended September 30, 1998 was $2.90 per diluted share compared to income
applicable to common shares of $9.19 per diluted share recorded the prior year.
Net income for the nine months of 1997 included an after tax gain of $57.8
million, or $6.80 per diluted share, on the sale of the Rolodex business unit.
The Company's press release issued October 29, 1998 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 29, 1998.
2
<PAGE> 3
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 30, 1998 By: /s/ David A. Kauer
------------------------------------------
David A. Kauer
Vice President and Chief Financial Officer
3
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Description
99 (a) Press release of the Company issued October 29, 1998.
4
<PAGE> 1
Exhibit 99(a)
Excellence in Electronics, Telecommunications, Automotive, Publishing
- --------------------------------------------------------------------------------
NEWS RELEASE
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE CONTACT: DAVID A. KAUER
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(614) 792-0468
INSILCO HOLDING CO. REPORTS THIRD QUARTER 1998 RESULTS
COLUMBUS, OHIO, OCTOBER 29, 1998 - INSILCO HOLDING CO. (OTC BULLETIN
BOARD:INSL) today reported sales and operating results for the third quarter
ended September 30, 1998.
Sales of $135.1 million were up 3% for the 1998 third quarter, compared
to $131.4 million recorded in the year ago third quarter. For the nine months of
1998 sales were up 4% to $422.4 million, compared to $407.6 million recorded in
the comparable nine months of 1997.
The Company reported Adjusted EBITDA (earnings before interest, taxes,
depreciation, amortization, merger-related expenses and other non-recurring
expenses plus cash dividends received from Thermalex, the Company's 50% owned
joint venture) of $14.4 million for the 1998 third quarter, compared to $15.7
million recorded in the 1997 third quarter. The Company's Adjusted EBITDA for
the third quarter excludes $24.2 million of charges related to the merger
between Insilco and affiliates of DLJ Merchant Banking and $1.4 million of other
non-recurring expenses related primarily to management severance and legal
expenses.
For the nine months of 1998, the Company reported Adjusted EBITDA of
$53.3 million, compared to $55.8 million recorded in the year ago nine months
ended September 30, 1997. The Company's Adjusted EBITDA for the nine months of
1998 excludes $25.5 million of merger-related expenses and $3.0 million of other
non-recurring charges related primarily to management severance and legal
expenses.
The company's third quarter and nine month results were negatively
impacted by the results of its McKenica division, a tubing mill capital
equipment manufacturer. McKenica, which posted $0.6 million and $2.2 million
declines in EBITDA in the third quarter and nine month periods respectively, was
affected by lower orders from far east and domestic customers. Excluding
McKenica results, the Company's Adjusted EBITDA in the third quarter would have
been $14.6 million in 1998 as compared to $15.2 million in 1997, and Adjusted
EBITDA for the nine month period would have been $53.5 million in 1998 as
compared to $53.7 million in 1997.
<PAGE> 2
BUSINESS DISCUSSION
The Company's Automotive Components Group reported 11% sales growth in
the 1998 third quarter to $62.0 million, compared to $55.7 million reported in
the year earlier third quarter, led by strong growth of heat exchanger sales.
Adjusted EBITDA for the Group was $8.2 million and $7.9 million for the third
quarters of 1998 and 1997, respectively. Excluding the results of McKenica, the
Automotive Components Group would have reported third quarter Adjusted EBITDA of
$8.3 million in 1998 as compared to $7.4 million in 1997.
The Company's Technologies Group reported sales of $45.7 million in the
1998 third quarter compared to $50.1 million recorded in the 1997 third quarter
reflecting the overall slowdown in the global telecommunications and electronics
markets. While sales of connector products were up 14% in the quarter, weaker
demand for wire and cable assemblies from the telecommunications market and for
power transformers from the electronics market impacted performance. EBITDA for
the Technologies Group was $6.6 million in the 1998 third quarter, compared to
$8.4 million recorded in the 1997 third quarter. Group performance was
negatively impacted by the sales decline at both the Company's power transformer
and wire and cable assembly businesses as well as a less favorable sales mix of
lower margin connector cable assemblies.
Sales at the Company's Taylor Publishing business unit were up 7% in
the third quarter to $27.4 million, due to the timing of yearbook deliveries,
compared to 1997 third quarter sales of $25.6 million. Taylor's EBITDA of $1.7
million was flat compared to the third quarter last year.
CEO COMMENTS
Robert L. Smialek, Insilco Chairman and CEO, said, "We were very
pleased with the strong performance posted at our heat exchanger business units,
which recorded 22% sales growth in the quarter, reflecting strong demand for
heat exchangers and related tubing. Despite these strong results, lower
operating income at the McKenica division and plant consolidation expenses
designed to improve operating efficiencies adversely impacted overall results of
the Group. Nonetheless, our outlook for our heat exchanger businesses remains
quite positive. Weak demand from the telecommunications and electronics markets
further mitigated the positive performance posted by our heat exchanger
business."
"While most of our business units are participating in markets with
good long-term growth trends, we are mindful of the difficult near-term factors
in the global telecommunications and electronics markets. While we believe the
slowdown in demand from the electronics market to be short-term and not
indicative of a trend, both our corporate staff and our business unit leaders
are well aware of the need to control expenses during this slowdown. We are
aggressively pursuing a number of projects that, when implemented, could improve
operating efficiencies and reduce expenses company-wide by up to $10 million on
an annual basis. We will continue to implement strategies which we believe
positions specific technology and automotive businesses to continue the
leadership positions they hold in the niche markets they serve."
REPORTED RESULTS
Including the merger-related and other charges, the Company reported a
net loss of $17.2 million for its third quarter ended September 30, 1998,
compared to net income of $3.6 million recorded a year ago in the third quarter.
Loss applicable to common shares for the third quarter of 1998 was $6.53 per
diluted share compared to income applicable to common shares of $0.62 per
diluted share in the prior year. For the nine
<PAGE> 3
months ended September 30, 1998, the Company recorded a net loss of $10.0
million compared to net income of $78.1 million recorded in the year ago nine
months. Loss applicable to common shares for the nine months ended September 30,
1998 was $2.90 per diluted share compared to income applicable to common shares
of $9.19 per diluted share recorded the prior year. Net income for the nine
months of 1997 included an after tax gain of $57.8 million, or $6.80 per diluted
share, on the sale of the Rolodex business unit.
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 with respect to the
Company's long-term outlook; growth prospects; slowdown in the electronics
markets; the ability to improve operating efficiencies and to reduce expenses,
as well as the ability of the Company's businesses to maintain their leadership
position. 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, 1997, and the Company's report on Form 10-Q
for the prior fiscal quarters. Copies of these filings may be obtained by
contacting the Company or the SEC.
Insilco Holding Co., 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. The Company had 1997 revenues in excess of
$500 million.
Investor Relations Contact: David A. Kauer or Stephen Smith, (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.
<PAGE> 4
<TABLE>
INSILCO HOLDING CO.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
(Amounts in millions, except per share data)
THIRD QUARTER
<CAPTION>
Three Months Three Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Sales $135.1 131.4
Gross profit 32.9 34.3
% of sales 24.4% 26.1%
SG&A 25.0 23.3
Merger Expenses 24.2 --
------ -----
Operating income (loss) (16.3) 11.0
Interest expense, net (8.0) (4.9)
Equity in net income of Thermalex 0.7 0.6
Other income and expense, net 0.4 0.1
------ -----
Total other income (expense) (6.9) (4.2)
Income (loss) before income taxes (23.2) 6.8
Income tax benefit (expense) 6.0 (2.5)
------ -----
Income tax rate 25.9% 36.8%
Income (loss) before extraordinary item (17.2) 4.3
Extraordinary item, net of tax -- (0.7)
------ -----
Net income (loss) (17.2) 3.6
Preferred stock dividend (0.7) --
------ -----
Net income (loss) available to common $(17.9) 3.6
====== =====
Basic earnings per share available:
Income (loss) before extraordinary item $(6.53) 0.77
Extraordinary item -- (0.13)
------ -----
Net income (loss) per share $(6.53) 0.64
====== =====
Weighted average shares outstanding 2.7 5.6
====== =====
Diluted earnings per share available:
Income (loss) before extraordinary $(6.53) 0.74
Extraordinary item -- (0.12)
------ -----
Net Income (loss) per share $(6.53) 0.62
====== =====
Weighted average shares and share
equivalents outstanding 2.7 5.8
====== =====
Memo: Depreciation and amortization
expense included in earnings $ 5.1 4.7
====== =====
Capital Spending $ (4.8) (4.7)
====== =====
</TABLE>
<PAGE> 5
<TABLE>
INSILCO HOLDING CO.
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited)
(Amounts in millions, except per share data)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Sales $422.4 407.6
Gross profit 110.8 112.5
% of sales 26.2% 27.6%
SG&A 77.7 72.7
Merger Expenses 25.5 --
------ -----
Operating income 7.6 39.8
Interest expense, net (21.7) (10.6)
Equity in net income of Thermalex 2.1 2.1
Other income and expense, net 2.5 0.2
------ -----
Total other income (expense) (17.1) (8.3)
Income (loss) from continuing operations
before income taxes (9.5) 31.5
Income tax expense (0.5) (11.6)
------ -----
Income tax rate -5.3% 36.8%
Income (loss) from continuing operations (10.0) 19.9
Discontinued operations, net of tax:
Income from operations -- 1.1
Gain on disposal -- 57.8
------ -----
Income from discontinued operations -- 58.9
------ -----
Income (loss) before extraordinary item (10.0) 78.8
Extraordinary item -- (0.7)
------ -----
Net income (loss) (10.0) 78.1
Preferred stock dividend (0.7) --
------ -----
Net income (loss) available to common $(10.7) 78.1
====== =====
Basic earnings per share available:
Income (loss) from continuing operations $(2.90) 2.41
Discontinued operations -- 7.15
Extraordinary item -- (0.09)
------ -----
Net income (loss) per share $(2.90) 9.47
====== =====
Weighted average shares outstanding 3.7 8.3
====== =====
Diluted earnings per share available:
Income (loss) from continuing operations $(2.90) 2.34
Discontinued operations -- 6.94
Extraordinary item -- (0.09)
------ -----
Net income (loss) per share $(2.90) 9.19
====== =====
Weighted average shares and share
equivalents outstanding 3.7 8.5
====== =====
Memo: Depreciation and amortization
expense included in earnings $ 15.8 14.4
====== =====
Capital Spending $(15.7) (15.0)
====== =====
</TABLE>
<PAGE> 6
<TABLE>
INSILCO HOLDING CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Millions)
<CAPTION>
9/30/98 12/31/97 9/30/97
------- -------- -------
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4.7 10.7 4.6
Receivables, net 87.8 70.7 90.3
Inventories, net 61.0 60.7 54.5
Current portion of deferred taxes -- 0.3 1.6
Prepaid expenses 4.1 2.7 7.1
------- ------ ------
Total current assets 157.6 145.1 158.1
Property, plant and equipment, net 114.1 114.0 110.3
Goodwill, net 13.2 13.4 13.6
Deferred taxes 4.6 1.0 3.8
Other assets and deferred charges 33.7 29.2 28.2
------- ------ ------
Total assets $ 323.2 302.7 314.0
======= ====== ======
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term debt $ -- 1.7 0.6
Current portion of long-term obligations 2.1 5.4 5.6
Accrued interest payable 3.5 8.0 3.6
Accounts payable 36.6 39.8 34.0
Accrued expenses and other 42.0 50.6 48.1
------- ------ ------
Total current liabilities 84.2 105.5 91.9
Long-term debt 383.9 256.1 279.7
Other long-term obligations 47.8 43.4 48.1
Preferred stock 32.7 -- --
Stockholders' equity (deficit) (225.4) (102.3) (105.7)
------- ------ ------
Total liabilities and stockholders' equity (deficit) $ 323.2 302.7 314.0
======= ====== ======
</TABLE>
<PAGE> 7
<TABLE>
INSILCO HOLDING CO.
SUPPLEMENTAL SEGMENT DATA
(unaudited)
(Amounts in millions)
<CAPTION>
THIRD QUARTER
============================================
Three Months Three Months
Ended % Sales Ended
9/30/98 Growth 9/30/97
------------ ------- ------------
<S> <C> <C> <C>
SALES:
Industrial Business:
Technologies Group $ 45.7 -8.7% 50.1
Automotive Components 62.0 11.3% 55.7
------ -----
Total Industrial Business 107.7 1.8% 105.8
------ -----
Taylor 27.4 6.8% 25.6
------ -----
Total Sales $135.1 2.8% 131.4
====== =====
ADJUSTED EBITDA:
Industrial Business:
Technologies Group $ 6.6 8.4
% of sales 14.5% 16.7%
Automotive Components 8.2 7.9
% of sales 13.1% 14.2%
Total Industrial Business 14.8 16.3
% of sales 13.7% 15.4%
Taylor 1.7 1.7
% of sales 6.2% 6.7%
Unallocated Corporate (2.1) (2.3)
Thermalex Dividend -- --
------ -----
Total Adjusted EBITDA $ 14.4 15.7
====== =====
% of sales 10.7% 12.0%
</TABLE>
<PAGE> 8
<TABLE>
INSILCO HOLDING CO.
SUPPLEMENTAL SEGMENT DATA
(unaudited)
(Amounts in millions)
<CAPTION>
YEAR TO DATE
===========================================
Year to Date Year to Date
Ended % Sales Ended
9/30/98 Growth 9/30/97
------------ ------- ------------
<S> <C> <C> <C>
SALES:
Industrial Business:
Technologies Group $144.8 -2.2% 148.1
Automotive Components 185.7 8.0% 171.9
------ -----
Total Industrial Business 330.5 3.3% 320.0
------ -----
Taylor 91.9 4.9% 87.6
------ -----
Total Continuing Businesses $422.4 3.6% 407.6
====== =====
ADJUSTED EBITDA:
Industrial Business:
Technologies Group $ 22.7 24.9
% of sales 15.7% 16.8%
Automotive Components 26.3 26.8
% of sales 14.2% 15.6%
Total Industrial Business 49.0 51.7
% of sales 14.8% 16.1%
Taylor 9.0 9.8
% of sales 9.8% 11.2%
Unallocated Corporate (6.0) (7.2)
Thermalex Dividend 1.3 1.5
------ -----
Total Adjusted EBITDA $ 53.3 55.8
====== =====
% of sales 12.6% 13.7%
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
INSILCO HOLDING CO.
TRAILING FOUR QUARTER ADJUSTED EBITDA RECONCILIATION
(AMOUNTS IN MILLIONS)
<S> <C>
EBITDA $38.8
Expenses related to DLJMB/CVC merger 25.5
Cash Dividend from Thermalex, 50% owned Joint Venture 1.3
Management severance relating to management changes and
position elimination 1.3
Nonrecurring legal expenses for Jostens anti-trust suit resulting in
$25.2 million award to Taylor, subject to appeal 1.1
Nonrecurring legal expenses relating to a former employee's
noncompete agreement 0.5
Nonrecurring relocation expenses related to the rationalization
of manufacturing facilities 0.4
-----
Adjusted EBITDA $68.9
=====
</TABLE>
