<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, 1999
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
The registrant meets the conditions set forth in General Instruction H (1) (a)
and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.
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 3, 1999, 100
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 (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 18
Item 3. Quantitative and Qualitative Disclosure About Market Risk 23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 2. Changes in Securities and Use of Proceeds 23
Item 3. Defaults upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Securities Holders 23
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 24
</TABLE>
2
<PAGE> 3
INSILCO CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) Page
----
<S> <C>
Condensed Consolidated Balance Sheets at June 30, 1999 4
and December 31, 1998
Condensed Consolidated Statements of Operations for the three 5
months and six months ended June 30, 1999 and 1998
Condensed Consolidated Statements of Cash Flows for the 6
six months ended June 30, 1999 and 1998
Notes to the Condensed Consolidated Financial Statements 7
Independent Auditors' Review Report 17
</TABLE>
3
<PAGE> 4
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- ------------
(Unaudited) (Note 1)
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,164 7,430
Trade receivables, net 93,018 74,969
Other receivables 6,219 4,337
Receivables from related party -- 4,882
Inventories, net 65,452 64,565
Deferred taxes 1,736 6,143
Prepaid expenses and other current assets 4,544 4,387
--------- ---------
Total current assets 181,133 166,713
Property, plant and equipment, net 123,671 114,756
Deferred taxes 5,942 1,517
Other assets and deferred charges 44,015 40,040
--------- ---------
Total assets $ 354,761 323,026
========= =========
Liabilities and Stockholder's Deficit
-------------------------------------
Current liabilities:
Current portion of long-term debt $ 1,264 1,265
Accounts payable 37,344 34,513
Accrued expenses and other 71,033 63,693
--------- ---------
Total current liabilities 109,641 99,471
Long-term debt, excluding current portion 334,701 311,144
Other long-term obligations, excluding current portion 46,656 46,329
Amounts due to Insilco Holding Co. 2,964 2,991
Minority interest 100 --
Stockholder's deficit:
Common stock, $.001 par value; 1,000 shares authorized; 100 shares
issued and outstanding at June 30, 1999 and December 31, 1998 -- --
Other stockholder's deficit (139,301) (136,909)
--------- ---------
Contingencies (See Note 5)
Total liabilities and stockholder's deficit $ 354,761 323,026
========= =========
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
4
<PAGE> 5
INSILCO CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 178,437 170,018 305,336 287,323
Cost of products sold (1999 includes $3,156
of restructuring expenses) 123,917 115,053 219,922 200,671
Depreciation and amortization 6,927 6,403 11,785 10,643
Selling, general and administrative expenses
(1999 includes $211 of restructuring
expenses) 36,745 33,032 54,459 50,704
Merger fees -- 1,340 -- 1,340
Restructuring charge 5,515 -- 5,515 --
--------- ------- ------- -------
Operating income 5,333 14,190 13,655 23,965
--------- ------- ------- -------
Other income expense:
Interest expense (9,765) (6,928) (18,377) (13,805)
Interest income 278 21 293 72
Equity in net income of Thermalex 961 734 1,941 1,450
Other income, net 106 1,413 260 2,026
--------- ------- ------- -------
Total other expense (8,420) (4,760) (15,883) (10,257)
--------- ------- ------- -------
Income (loss) before income taxes (3,087) 9,430 (2,228) 13,708
Income tax (expense) benefit 319 (4,997) (19) (6,494)
--------- ------- ------- -------
Net income (loss) $ (2,768) 4,433 (2,247) 7,214
========= ======= ======= =======
</TABLE>
See accompanying notes to the 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 Ended
June 30,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,247) 7,214
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 11,785 10,643
Deferred taxes 83 3,917
Other noncash charges and credits 1,685 (1,822)
Change in operating assets and liabilities:
Receivables (15,926) (18,009)
Inventories 1,829 (1,189)
Prepaids 335 (546)
Payables 723 (3,002)
Other current liabilities and other 7,501 (1,016)
-------- -------
Net cash provided by (used in) operating activities 5,768 (3,810)
-------- -------
Cash flows from investing activities:
Acquisition, net of cash acquired (25,340) --
Capital expenditures (7,729) (10,884)
Other investing activities 2,866 1,621
-------- -------
Net cash used in investing activities (30,203) (9,263)
-------- -------
Cash flows from financing activities:
Proceeds from revolving credit facility 28,396 8,952
Funds received from excess deposited for 10 1/4% bonds 2,032 --
Proceeds from sale of minority interest 100 --
Retirement of 10 1/4% bonds (1,526) --
Payment of prepetition liabilities (1,086) (1,647)
Retirement of long-term debt (633) (1,166)
Loan from Insilco Holding Co. (27) --
Proceeds from sale of stock -- 3,281
-------- -------
Net cash provided by financing activities 27,256 9,420
-------- -------
Effect of exchange rate changes on cash (87) (15)
-------- -------
Net increase (decrease) in cash and cash equivalents 2,734 (3,668)
Cash and cash equivalents at beginning of period 7,430 10,651
-------- -------
Cash and cash equivalents at end of period $ 10,164 6,983
======== =======
Interest paid $ 15,594 13,453
======== =======
Income taxes paid $ 179 1,114
======== =======
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
6
<PAGE> 7
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(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 and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month and six-month periods
ended June 30, 1999 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
As a result of the transactions described in Note 2, Insilco Corporation
and Subsidiaries (the "Company") is a wholly owned subsidiary of Insilco
Holding Co. ("Holdings") and is included in Holdings' consolidated
financial statements and is a part of Holdings' consolidated group for
tax purposes. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998.
(2) Significant Transactions
------------------------
The Company consummated several material transactions in 1998 that
resulted in significant changes to its debt and capital structure. The
following is a brief description of these transactions, for further
information see the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
The Mergers. On August 17, 1998, the Company's management, Holdings and
Silkworm Acquisition Corporation ("Silkworm"), an affiliate of
Donaldson, Lufkin & Jenrette Merchant Banking Partners ("DLJMB"),
completed a series of merger transactions. As a result, the Company
became a wholly owned subsidiary of Holdings and is included in
Holdings' consolidated financial statements and is a part of Holdings'
consolidated group for tax purposes.
Refinancing of 10 1/4% Subordinated Debt. As a result of the Mergers,
the Company was required to make an offer to purchase all of the $150
million of outstanding 10 1/4% Senior Subordinated Notes due 2007 (the
"10 1/4% Notes") at 101% of their aggregate principal amount, plus
accrued interest. To fund a portion of the repurchase of the 10 1/4%
Notes, the Company sold $120 million of 12% Senior Subordinated Notes
due 2007 (the "12% Notes") with warrants to purchase 62,400 shares of
Holdings common stock at $45 per share on November 9, 1998. The balance
of the repurchase was funded by borrowings under the Company's Credit
Facilities.
In addition, on November 24, 1998, the Company amended and restated its
Bank Credit Agreement to, among other things, provide for two Credit
Facilities: a $175 million Revolving Facility and $125 million Term
Facility.
As a result of these transactions, the Company's condensed consolidated
results for the periods
7
<PAGE> 8
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
presented are not directly comparable. Pro forma results of operations
for the three and six months ended June 30, 1998 which assumes these
transactions occurred at the beginning of the period and actual results
for the three and six months ended June 30, 1999, are as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1998 1998 1999 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $178,437 170,018 305,336 287,323
Income from continuing operations (2,768) 5,768 (2,247) 7,336
</TABLE>
(3) Purchase of EFI
---------------
On January 25, 1999, the Company purchased the stock of Eyelets for
Industries, Inc. and EFI Metal Forming, Inc. (collectively referred to
as "EFI") a precision stamping manufacturer, for $25.3 million,
including costs incurred directly related to the transaction. The entire
purchase was financed from borrowings under the Company's Revolving
Credit Facility. The acquisition has been accounted for using the
purchase method of accounting. The preliminary excess of the purchase
price over the net identifiable assets acquired of $3,676,000, includes
costs for employee terminations, facility closure and related costs of
$382,000, has been recorded as goodwill and is being amortized on a
straight-line basis over 20 years and is pending the calculation of
deferred taxes. In addition, the Company also entered into a Sales
Participation Agreement which provides for additional payments over the
next 13 years contingent on future sales of a specific product line. The
additional payments, if any, will be accounted for as additional
goodwill. The acquisition did not result in a significant business
combination within the definition provided by the Securities and
Exchange Commission and therefore, pro forma financial information has
not been presented.
(4) Inventories
-----------
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
Raw materials and supplies $ 27,101 27,238
Work-in-process 23,180 23,559
Finished goods 15,171 13,768
-------- ------
Total inventories $ 65,452 64,565
======== ======
</TABLE>
(5) Contingencies
-------------
The Company is implicated in various claims and legal actions arising in
the ordinary course of business. Those claims or liabilities will be
addressed in the ordinary course of business and will be paid 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.
8
<PAGE> 9
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(6) Segment Information
-------------------
There have been no changes in the basis of segmentation or in the basis
of measurement of segment profit or loss from the Company=s December 31,
1998 consolidated financial statements.
Summary financial information by business segment is as follows (in
thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
1999 1998 1999 1998
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales:
Automotive Components $ 56,213 54,435 113,094 108,904
Technologies 55,848 48,807 111,262 99,017
Specialty Publishing 59,606 59,523 66,066 64,541
Other 6,770 7,253 14,914 14,861
--------- ------- ------- -------
$ 178,437 170,018 305,336 287,323
========= ======= ======= =======
Operating income:
Automotive Components $ 6,037 6,515 12,002 13,001
Technologies 4,725 6,132 9,512 12,578
Specialty Publishing 7,850 5,389 7,266 4,999
Other (14) 234 439 352
Unallocated amounts:
Corporate expenses (1,739) (1,704) (3,719) (3,963)
Significant legal, professional and
merger expenses (2,445) (2,046) (2,503) (2,302)
Severance, write-downs and other (9,081) (330) (9,342) (700)
--------- ------- ------- -------
Total operating income 5,333 14,190 13,655 23,965
Interest expense (9,765) (6,928) (18,377) (13,805)
Interest income 278 21 293 72
Equity in net income of Thermalex 961 734 1,941 1,450
Other income, net 106 1,413 260 2,026
--------- ------- ------- -------
Income (loss) from operations before income taxes $ (3,087) 9,430 (2,228) 13,708
========= ======= ======= =======
</TABLE>
A summary of identifiable assets by segment follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- -----------
<S> <C> <C>
Automotive Components $133,751 135,525
Technologies 125,155 96,742
Specialty Publishing 52,583 42,073
Other 12,173 17,342
Corporate 31,099 31,344
-------- -------
Total $354,761 323,026
======== =======
</TABLE>
9
<PAGE> 10
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
The significant increase in identifiable assets of Technologies relates
to the acquisition of EFI in January 1999 (see Note 3).
(7) Comprehensive Income
--------------------
Comprehensive income (loss) was ($3,100,000) and $4,504,000 for the three
months ended June 30, 1999 and 1998 respectively, including other
comprehensive income consisting of foreign currency translation
adjustments (losses) totaling ($332,000) and $71,000 respectively.
Comprehensive income (loss) for the six months ended June 30, 1999 and
1998 was ($2,563,000) and $7,304,000, respectively, including other
comprehensive income consisting of foreign currency translation
adjustments (losses) totaling ($316,000) and $90,000, respectively.
(8) Related Party Transactions
--------------------------
In the first quarter of 1999, the Company received from Donaldson, Lufkin
& Jenrette Securities Corporation ("DLJSC") $2,032,000 for funds
deposited in excess of the retired 103% Notes which had been included in
"Receivables from related parties" at December 31, 1998. In addition, the
Company paid DLJSC advisory and retainer fees of $500,000 and $110,000
respectively, year to date June 30, 1999, and at June 30, 1999 had a
payable to DLJSC of $150,000 of retainer fees for investment banking
services.
(9) Guarantor Subsidiaries
----------------------
In connection with the November 1998 sale of $120 million of 12% Notes,
the Company permitted its wholly-owned domestic subsidiaries
("Guarantors") to unconditionally guarantee the 12% Notes on a senior
subordinated basis.
The guarantees are general unsecured obligations of the Guarantors, are
subordinated in right of payment to all existing and future senior
indebtedness of the guarantors (including indebtedness of the Credit
Facilities) and will rank senior in right of payment to any future
subordinated indebtedness of the Guarantors. The following condensed
consolidating financial information of the Company includes the accounts
of the Guarantors, the combined accounts of the non-guarantors and the
Company for the periods indicated. Separate financial statements of each
of the Guarantors are not presented because management has determined
that such information is not material in assessing the Guarantors.
10
<PAGE> 11
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(9) Guarantor Subsidiaries (continued)
<TABLE>
<CAPTION>
Condensed Consolidating Balance Sheet (in thousands)
-----------------------------------------------------------------------------------------------------
June 30, 1999 December 31, 1998
----------------------------------------------- -----------------------------------------------
Non Non
Assets Insilco Guarantors Guarantors Consolidated Insilco Guarantors Guarantors Consolidated
- ------ ------- ---------- ---------- ------------ ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents $ 8,527 (124) 1,761 10,164 $ 6,472 23 935 7,430
Accounts receivable 264 93,757 5,216 99,237 2,131 76,899 5,158 84,188
Inventories -- 63,148 2,304 65,452 -- 61,178 3,387 64,565
Deferred taxes 1,736 -- -- 1,736 6,143 -- -- 6,143
Prepaid expenses
and other 621 3,749 174 4,544 838 3,506 43 4,387
--------- ------- ------ -------- --------- ------- ------ --------
Total current
assets 11,148 160,530 9,455 181,133 15,584 141,606 9,523 166,713
Property, plant and
equipment, net 78 113,704 9,889 123,671 208 103,061 11,487 114,756
Deferred taxes 5,841 101 -- 5,942 1,517 -- -- 1,517
Other assets and
deferred charges 14,032 26,975 3,008 44,015 14,035 22,463 3,542 40,040
--------- ------- ------ -------- --------- ------- ------ --------
Total assets $ 31,099 301,310 22,352 354,761 $ 31,344 267,130 24,552 323,026
========= ======= ====== ======== ========= ======= ====== ========
Liabilities and
- ---------------
Stockholder's Equity
--------------------
(Deficit)
---------
Current liabilities:
Current portion of
long-term debt $ 1,250 14 -- 1,264 $ 1,250 15 -- 1,265
Accounts payable -- 33,870 3,474 37,344 -- 31,097 3,416 34,513
Customer deposits -- 16,188 2 16,190 -- 24,981 -- 24,981
Accrued expenses
and other 16,214 37,486 1,143 54,843 12,411 5,360 20,941 38,712
--------- ------- ------ -------- --------- ------- ------ --------
Total current
liabilities 17,464 87,558 4,619 109,641 13,661 61,453 24,357 99,471
Long-term debt, less
current portion 334,509 192 -- 334,701 310,945 199 -- 311,144
Other long-term
obligations, excluding
current portion, and
minority interest 27,597 19,156 3 46,756 13,243 32,938 148 46,329
Intercompany payable (119,542) 105,593 16,913 2,964 (79,887) 82,878 -- 2,991
--------- ------- ------ -------- --------- ------- ------ --------
Total liabilities 260,028 212,499 21,535 494,062 257,962 177,468 24,505 459,935
Stockholder's equity
(deficit) (228,929) 88,811 817 (139,301) (226,618) 89,662 47 (136,909)
--------- ------- ------ -------- --------- ------- ------ --------
Total liabilities
and stockholder's
equity (deficit) $ 31,099 301,310 22,352 354,761 $ 31,344 267,130 24,552 323,026
========= ======= ====== ======== ========= ======= ====== ========
</TABLE>
11
<PAGE> 12
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(9) Guarantor Subsidiaries (continued)
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Operations (in thousands)
-----------------------------------------------------------------------------------------------
Three Months Ended June 30, 1999 Three Months Ended June 30, 1998
---------------------------------------------- ---------------------------------------------
Non Non
Insilco Guarantors Guarantors Consolidated Insilco Guarantors Guarantors Consolidated
------- ---------- ---------- ------------ ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ -- 169,997 8,440 178,437 $ -- 161,602 8,416 170,018
Cost of products sold -- 117,148 6,769 123,917 -- 108,377 6,676 115,053
Depreciation and amortization 14 6,536 377 6,927 18 5,880 505 6,403
Selling, general and
administrative expenses 4,240 31,831 674 36,745 2,432 29,977 623 33,032
Merger fees -- -- -- -- 1,340 -- -- 1,340
Restructuring charge 2,915 2,600 -- 5,515 -- -- -- --
-------- ------- ----- ------- ------- ------- ----- -------
Operating income (loss) (7,169) 11,882 620 5,333 (3,790) 17,368 612 14,190
Other income expense:
Interest expense (9,406) (359) -- (9,765) (6,629) (286) (13) (6,928)
Interest income 261 13 4 278 5 6 10 21
Other income, net (36) 1,078 25 1,067 1,165 903 79 2,147
-------- ------- ----- ------- ------- ------- ----- -------
Income (loss) before (16,350) 12,614 649 (3,087) (9,249) 17,991 688 9,430
income taxes
Income tax benefit (expense) 4,997 (4,678) -- 319 978 (5,976) 1 (4,997)
-------- ------- ----- ------- ------- ------- ----- -------
Net income (loss) $(11,353) 7,936 649 (2,768) $(8,271) 12,015 689 4,433
======== ======= ===== ======= ======= ======= ===== =======
</TABLE>
12
<PAGE> 13
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(9) Guarantor Subsidiaries (continued)
<TABLE>
<CAPTION>
Condensed Consolidating Statement of Operations (in thousands)
----------------------------------------------------------------------------------------------
Six Months Ended June 30, 1999 Six Months Ended June 30, 1998
---------------------------------------------- --------------------------------------------
Non Non
Insilco Guarantors Guarantors Consolidated Insilco Guarantors Guarantors Consolidated
------- ---------- ---------- ------------ ------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ -- 288,614 16,722 305,336 $ -- 271,700 15,623 287,323
Cost of products sold -- 206,553 13,369 219,922 -- 188,583 12,088 200,671
Depreciation and amortization 32 10,981 772 11,785 36 9,609 998 10,643
Selling, general and
administrative expenses 6,287 46,817 1,355 54,459 5,281 44,054 1,369 50,704
Merger fees -- -- -- -- 1,340 -- -- 1,340
Restructuring charges 2,915 2,600 -- 5,515 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- --------
Operating income (loss) (9,234) 21,663 1,226 13,655 (6,657) 29,454 1,168 23,965
Other income expense:
Interest expense (18,009) (368) -- (18,377) (13,504) (274) (27) (13,805)
Interest income 277 29 (13) 293 16 17 39 72
Other income, net 122 2,011 68 2,201 2,143 1,173 160 3,476
-------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes (26,844) 23,335 1,281 (2,228) (18,002) 30,370 1,340 13,708
Income tax benefit (expense) 7,978 (7,997) -- (19) 3,490 (10,016) 32 (6,494)
-------- -------- -------- -------- -------- -------- -------- --------
Net income (loss) $(18,866) 15,338 1,281 (2,247) $(14,512) 20,354 1,372 7,214
======== ======== ======== ======== ======== ======== ======== =========
</TABLE>
13
<PAGE> 14
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(9) Guarantor Subsidiaries (continued)
Condensed Statement of Cash Flows
Six Months Ended June 30, 1999
(In thousands)
<TABLE>
<CAPTION>
Non
Insilco Guarantors Guarantors Total
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $(12,723) 17,059 1,432 5,768
Cash flows used in investing activities:
Acquisitions, net of cash (25,340) -- -- (25,340)
Capital expenditures, net (6) (7,204) (519) (7,729)
Other investing activities 2,866 -- -- 2,866
-------- -------- -------- --------
Net cash used in investing
activities (22,480) (7,204) (519) (30,203)
-------- -------- -------- --------
Cash flows provided by (used in) financing activities:
Proceeds from revolving credit facility 28,396 -- -- 28,396
Intercompany transfer of funds 9,994 (9,994) -- --
Proceeds from sale of minority interest 100 -- -- 100
Funds deposited in excess of retired
10 1/4% Notes 2,032 -- -- 2,032
Retirement of 10 1/4% Notes (1,526) -- -- (1,526)
Payment of prepetition liabilities (1,086) -- -- (1,086)
Repayment of long term debt (625) (8) -- (633)
Loan from Insilco Holding Co. (27) -- -- (27)
-------- -------- -------- --------
Net cash provided by (used in)
financing activities 37,258 (10,002) -- 27,256
-------- -------- -------- --------
Effect of exchange rate changes on cash -- -- (87) (87)
-------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents 2,055 (147) 826 2,734
Cash and cash equivalents at
beginning of period 6,472 23 935 7,430
-------- -------- -------- --------
Cash and cash equivalents at end of
period $ 8,527 (124) 1,761 10,164
======== ======== ======== ========
</TABLE>
14
<PAGE> 15
INSILCO CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements (Unaudited)
June 30, 1999
(9) Guarantor Subsidiaries (continued)
Condensed Statement of Cash Flows
Six Months Ended June 30, 1998
(In thousands)
<TABLE>
<CAPTION>
Non
Insilco Guarantors Guarantors Total
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Net cash provided by (used in)
operating activities $(13,551) 9,263 478 (3,810)
-------- -------- -------- --------
Cash flows used in investing activities:
Capital expenditures, net (34) (10,638) (212) (10,884)
Other investing activities 297 1,324 -- 1,621
-------- -------- -------- --------
Net cash provided by (used in)
investing activities 263 (9,314) (212) (9,263)
-------- -------- -------- --------
Cash flows provided by (used in)
financing activities:
Proceeds from revolving credit facility 8,952 -- -- 8,952
Proceeds from stock option exercise 3,281 -- -- 3,281
Intercompany transfer of funds 400 (400) -- --
Payment of prepetition liabilities (1,647) -- -- (1,647)
Repayment of long-term debt (25) (1,141) -- (1,166)
-------- -------- -------- --------
Net cash used in financing
activities 10,961 (1,541) -- 9,420
-------- -------- -------- --------
Effect of exchange rate changes on cash -- -- (15) (15)
-------- -------- -------- --------
Net increase (decrease) in cash
and cash equivalents (2,327) (1,592) 251 (3,668)
Cash and cash equivalents at
beginning of period 9,809 (185) 1,027 10,651
-------- -------- -------- --------
Cash and cash equivalents at end of
period $ 7,482 (1,777) 1,278 6,983
======== ======== ======== ========
</TABLE>
15
<PAGE> 16
INSILCO CORPORATION AND SUBSIDIARIES
(10) Restructuring and Plant Closing Costs
-------------------------------------
In the second quarter of 1999, the Company approved plans to reduce its
corporate office staff, restructure certain of its heat exchanger and
tubing manufacturing facilities, and close its heat exchanger machinery
and equipment manufacturing operations (McKenica) with the objectives
of lowering operating costs and focusing resources on core business
units.
The estimated cost of these actions is $8,882,000 which has been
reflected in cost of sales ($3,156,000), SG&A ($211,000) and
restructuring and plant closing costs ($5,515,000). The charge
consisted of employee separation costs of $3,040,000, asset impairments
of $854,000, remaining noncancellable lease costs $1,267,000 and other
exit costs of $3,721,000. Employee separations occurred at
manufacturing facilities affected by the plan and at the corporate
office. The decision to exit the heat exchanger machinery and equipment
business decreased cash flows triggering the asset impairment. The
amount of impairment of such assets was based on the estimated net
realizable market value of the assets.
Special charges recorded during the quarter and related accruals in
thousands were as follows:
<TABLE>
<CAPTION>
Charges for the Accrual
Six Months ended As of
June 30, 1999 June 30, 1999
---------------- -------------
<S> <C> <C>
Restructuring charges:
Employee separations $3,040 3,040
Other exit costs 3,721 1,363
Remaining noncancellable lease costs 1,267 1,267
------ ------
Subtotal 8,028 5,670
------ ======
Asset impairments 854
------
Total restructuring and plant closing
costs $8,882
======
</TABLE>
The headcount reduction from these activities is approximately 115
employees. Other exit costs consist of inventory write-downs, losses on
remaining percentage of completion contracts and additional warranty
costs, which are included primarily in cost of sales and SG&A and relate
to the closing of the heat exchanger machinery and equipment business.
The accrual of $5,670,000 is included in accrued expenses and other.
(11) Subsequent Event
----------------
On July 20, 1999, Holdings through a newly created wholly-owned
subsidiary, Thermal Transfer Acquisition Corporation, completed its
merger with Thermal Transfer Products to form Thermal Transfer Products
Limited ("Thermal Transfer"). Thermal Transfer, a wholly owned
subsidiary of Insilco Corporation, is a leading manufacturer of
industrial oil coolers and other heat exchanger products and is based in
Racine, Wisconsin.
The purchase price of $27.2 million, including estimated costs to
complete the transaction, has not yet been allocated and is pending
asset appraisals. The Company expects to have all costs quantified
within one year of the date of acquisition and will account for the
acquisition as a purchase. The Company is currently evaluating an
appropriate period for amortizing any goodwill that might result from
this transaction. The Company financed the acquisition through its
credit facilities.
16
<PAGE> 17
INDEPENDENT AUDITORS' REVIEW REPORT
THE BOARD OF DIRECTORS AND SHAREHOLDER
INSILCO CORPORATION:
We have reviewed the condensed consolidated balance sheet of Insilco Corporation
and subsidiaries as of June 30, 1999, and the related condensed consolidated
statements of operations and cash flows for the three-month and six-month
periods ended June 30, 1999 and 1998. 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, 1998, 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 10, 1999, except
as to the first paragraph of Note 7, which is as of March 26, 1999, 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, 1998, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.
Columbus, Ohio
July 30, 1999 KPMG LLP
17
<PAGE> 18
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company consummated several material transactions in 1998 that resulted in
significant changes to its debt and capital structure. As a result of these
transactions, the Company's condensed consolidated results for the three-month
and six-month periods ended June 30, 1999 and 1998 are not directly comparable.
Pro forma results of operations, which assume these transactions occurred at the
beginning of their respective periods, and additional details are presented in
Note 2 of the Notes to the Condensed Consolidated Financial Statements.
RESULTS OF OPERATIONS
The discussion that follows is based on a management approach and is consistent
with the basis and manner in which the Company's management internally
disaggregates financial information for the purposes of assisting in making
internal operating decisions. See Note 6 of the Notes to the Condensed
Consolidated Financial Statements for summary financial information by business
segment.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
Consolidated Results of Operations. Our results for the second quarter of 1999
were impacted by the following:
o We announced the closing of our heat exchanger machinery and equipment
business (McKenica) and took a $5.8 million charge relating to this
action in the quarter.
o We announced the restructuring of our corporate staff and related
operations and took a $3.0 million charge relating to this action in
the quarter.
o As part of our re-organization, we created a separate legal entity to
better manage our future health care costs. Consulting fees relating
to the analysis of potential cost benefits and the expense of
establishing this subsidiary were $1.8 million and are included in
significant legal, professional and merger expenses.
o We incurred $0.3 million of severance costs relating to
rationalization activities within our operating units and $0.6 million
of legal fees relating to our antitrust and other significant legal
cases.
Similarly, our results for the second quarter of 1998 were impacted by the
following:
o Merger fees relating to the August 1998 merger with DLJMB of $1.3
million were incurred and are included in significant legal,
professional and merger expenses (see Note 2 of the Notes to the
Condensed Consolidated Financial Statements).
o We incurred $0.7 million in legal fees relating to our antitrust cases
and other significant legal cases and these expenses are included in
significant legal, professional and merger expenses.
o We incurred severance costs relating to Corporate staff reductions of
$0.3 million.
Our net sales for the three months ended June 30, 1999 increased $8.4 million,
or 5%, to $178.4 million from $170.0 million for the same period last year.
Sales in the Automotive Components segment increased $1.8 million or 3% over
last year as a result of higher transmission component, vehicle heat exchanger,
and heat exchanger tubing sales. Sales in the Technologies segment increased
$7.0 million or 14%. Contributing to this increase in sales was this year's
acquisition of EFI in January and last year's acquisitions of two Ireland cable
assembly operations in the second half. Seasonal sales from the Specialty
Publishing segment were flat with last year, because of accelerated yearbook
shipments in the previous quarter. Finally, other segment sales, which includes
heat exchanger machinery and equipment and welded stainless tubing products,
declined $0.5 million or 7%.
18
<PAGE> 19
Operating income for the three months ended June 30, 1999 decreased $8.9 million
to $5.3 million from $14.2 million for the same period last year. The 1999 and
1998 results reflect $11.5 million and $2.4 million, respectively, in charges
and expenses relating to the actions mentioned earlier. Without these charges,
operating income for the three months ended June 30, 1999, would have increased
$0.2 million to $16.8 million from $16.6 million for the same period last year.
Operating income for the Automotive Components segment declined $0.5 million or
7%. Aftermarket tubing sales, which generally provide higher margins for our
tubing products, continue to lag behind the prior year and are offsetting higher
operating income from our transmission component products. Operating income from
the Technologies segment declined $1.4 million or 23% as a result of lower sales
in the core product lines. Operating income from the Specialty Publishing
segment rose $2.5 million or 46% as a result of process improvements and
improved on-time deliveries. Other segment operating income decreased $0.2
million, as a result of a higher operating loss from our heat exchanger
equipment and machinery operations.
Interest expense for the quarter ended June 30, 1999 increased $2.9 million to
$9.8 million from $6.9 million last year, reflecting the higher interest rates
of our 1998 debt offerings and higher debt levels as a result of our acquiring
EFI and the merger with DLJMB.
Other income decreased $1.1 million due to several different one-time items in
1998.
We had an income tax benefit for the period of $0.3 million compared to an
expense of $5.0 million last year due to the pre-tax loss in the second quarter
of 1999.
Automotive Components Segment. Net sales for the quarter increased $1.8 million,
or 3%, to $56.2 million from $54.4 million in the same period last year.
Transmission component, vehicle heat exchanger, and heat exchanger tubing sales
were up 9%, 8% and 5%, respectively, from the second quarter last year. Copper
and brass tubing sales, which generally provide higher margins, declined 27%
from the same period last year due to weaker demand for industrial and
aftermarket radiators. As noted, sales of industrial radiators remain soft and
trail last year's second quarter revenues by 14%. We believe the soft demand for
industrial radiators is temporary and will improve as the demand for the end use
products that drive the demand for our products improves.
Operating income for the period decreased $0.5 million, or 7%, to $6.0 million
from $6.5 million last year. This decline was primarily the result of lower
copper and brass tubing sales. Operating margins fell to 10.7% from 12.0% last
year, reflecting the tubing mix change and lower industrial radiator sales.
Technologies Segment. Net sales for the period increased $7.0 million, or 14%,
to $55.8 million from $48.8 million last year. Sales from our acquisition of EFI
and two cable assembly operations in Ireland, which were all purchased after
June 30, 1998, accounted for approximately $10.8 million in new revenues.
Offsetting these new revenues were lower sales, which of existing products were
down 9%. We continued to experience soft demand for transformer products during
the quarter, but are now seeing increased order activity for these products.
Connector sales were below last year due to lower unit shipments of plugs and
price pressures on certain jack products.
Operating income for the quarter declined $1.4 million, or 23%, to $4.7 million
from $6.1 million last year. The decline was due to the lower sales. We are
currently rationalizing our manufacturing facilities to better utilize our lower
cost facilities, particularly for cable assemblies and transformer products.
During the quarter we consolidated our two precision stamping facilities in El
Paso, Texas into one facility. Operating margins fell to 8.5% from 12.6% last
year reflecting lower sales and pricing pressures on certain connector products.
Specialty Publishing Segment. Seasonal net sales for the quarter were flat with
last year at $59.6 million, because of accelerated yearbook shipments in the
previous quarter.
Operating income rose $2.5 million, or 46%, to $7.9 million from $5.4 million,
as a result of process improvements
19
<PAGE> 20
and improved on-time deliveries. We expect these improvements to carry over into
the fall season, which ends in September.
Other Segment. Net sales declined $0.5 million, or 7%, to $6.8 million from $7.3
million last year. Sales of heat exchanger machinery and equipment fell 66% and
during the quarter as we announced our plans to close this division and sell its
equipment. Sales of welded stainless steel tubing products increased 6%.
Operating income decreased $0.2 million to breakeven from $0.2 million last
year, as a result of a higher operating loss from our heat exchanger equipment
and machinery operations.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
Consolidated Results of Operations. Our results for the first half of 1999 were
impacted by the following:
o We announced the closing of our heat exchanger machinery and equipment
business (McKenica) and took a $5.8 million charge relating to this
action.
o We announced the restructuring of our corporate staff and related
operations and took a $3.0 million charge relating to this action.
o As part of our re-organization, we created a separate legal entity to
better manage our future health care costs. Consulting fees relating
to the analysis of potential cost benefits and the expense of
establishing this subsidiary were $1.8 million and are included in
significant legal, professional and merger expenses.
o We incurred $0.5 million severance costs relating to rationalization
activities within our operating units and $0.7 million of legal fees
relating to our antitrust and other significant legal cases.
Similarly, our results for the first half of 1998 were impacted by the
following:
o Merger fees relating to the August 1998 merger with DLJMB of $1.3
million were incurred and are included in significant legal,
professional and merger expenses (see Note 2 of the Notes to the
Condensed Consolidated Financial Statements).
o We incurred $1.0 million in legal fees relating to our antitrust and
other significant level cases and are included in significant legal,
professional and merger expenses.
o We incurred severance costs relating to Corporate staff reductions of
$0.7 million.
Our net sales for the six months ended June 30, 1999 increased $18.0 million, or
6%, to $305.3 million from $287.3 million for the same period last year. Sales
in the Automotive Components segment increased $4.2 million or 4% over last year
as a result of higher transmission component, vehicle heat exchanger, and heat
exchanger tubing sales. Sales in the Technologies segment increased $12.3
million or 12%. Contributing to this increase in sales was this year's
acquisition of EFI in January and last year=s acquisitions of two Ireland cable
assembly operations in the second half. Seasonal sales from the Specialty
Publishing segment were up $1.5 million or 2%. Finally, other segment sales,
which includes heat exchanger machinery and equipment and welded stainless
tubing products were flat to the prior year.
Operating income for the six months ended June 30, 1999 decreased $10.3 million
to $13.7 million from $24.0 million for the same period last year. The 1999 and
1998 results reflect $11.8 million and $3.0 million, respectively, in charges
and expenses relating to the actions mentioned earlier. Without these charges,
operating income for the six months ended June 30, 1999 would have decreased
$1.5 million to $25.5 million from $27.0 million for the same period last year.
Operating income for the Automotive Components segment declined $1.0 million or
8%. Aftermarket tubing sales, which generally provide higher margins for our
tubing products, have lagged behind the prior year and are offsetting higher
operating income from our transmission component and vehicle heat exchanger
products. Operating income from the Technologies segment declined $3.1 million
or 24% as a result of lower sales in core product lines. Operating income from
the Specialty Publishing segment rose
20
<PAGE> 21
$2.3 million or 45% as a result of process improvements and improved on-time
deliveries. Other segment operating income is flat with last year, excluding the
shutdown costs incurred at the heat exchanger equipment and machinery operation.
Interest expense for the first half increased $4.6 million to $18.4 million from
$13.8 million last year, reflecting the higher interest rates of our 1998 debt
offerings and higher debt levels as a result of our acquiring EFI and the merger
with DLJMB.
Other income decreased $1.3 million due to several different one-time items in
1998.
We had a small income tax expense for the period compared to an expense of $6.5
million last year due to the pre-tax loss in the first half of 1999.
Automotive Components Segment. Net sales for the six month period increased $4.2
million, or 4%, to $113.1 million from $108.9 million in the same period last
year. Transmission component, vehicle heat exchanger, and heat exchanger tubing
sales were up 6%, 10% and 8%, respectively, from the same period last year.
Copper and brass tubing sales, which generally provide higher margins, declined
32% from the same period last year due to weaker demand for industrial and
aftermarket radiators. Sales of industrial radiators trail last year's first
half revenues by 17%.
Operating income for the period decreased $1.0 million, or 8%, to $12.0 million
from $13.0 million last year. This decline was the result of lower copper and
brass tubing sales. Operating margins fell to 10.6% from 11.9% last year,
reflecting the tubing mix change and lower industrial radiator sales.
Technologies Segment. Net sales for the period increased $12.3 million, or 12%,
to $111.3 million from $99.0 million last year. Sales from our acquisition of
EFI and two cable assembly operations in Ireland, which were all purchased after
June 30, 1998, accounted for approximately $20.2 million in new revenues.
Offsetting these new revenues were lower domestic cable assembly, transformer
and precision stampings sales which collectively were down 9%, reflecting
continuing weakness in worldwide demand for electronic components.
Operating income declined $3.1 million, or 24%, to $9.5 million from $12.6
million last year. The decline was due to the lower sales mentioned above.
Operating margins fell to 8.5% from 12.7% last year reflecting lower sales and
pricing pressures on certain connector products.
Specialty Publishing Segment. Seasonal net sales increased $1.5 million, or 2%,
to $66.0 million from $64.5 million in the prior year period.
Operating income rose $2.3 million, or 45%, to $7.3 million from $5.0 million,
as a result of process improvements and improved on-time deliveries.
Other Segment. Net sales were flat compared to the prior year. Sales of heat
exchanger machinery and equipment fell 31%. Sales of welded stainless steel
tubing products increased 6%.
Operating income was flat with last year, excluding the cost of the shutdown of
the heat exchanger equipment and machinery operation.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities. For the six months ended June 30, 1999, net cash provided
by operating activities was $5.8 million compared to $3.8 million used in
operating activities during same period last year. The $9.6 million reduction in
cash requirements was due to improved working capital management, including
accounts receivable, inventories and accounts payable.
21
<PAGE> 22
On February 16, 1999, we paid $3.8 million in cash as our payment of interest on
our 12% Senior Subordinated Notes due 2007.
Investing Activities. Capital expenditures for the six months ended June 30,
1999 were $3.2 million less than the comparable period for 1998. We expect our
1999 capital expenditures to be consistent with 1998. Capital spending
allocations during the period were 50% to the Automotive Components segment and
45% to the Technologies segment.
Our acquisition of EFI was funded by borrowings under our Revolving Credit
Facility. In addition, we received a cash dividend of $2.9 million from its
investment in Thermalex compared to a $1.3 million dividend received in the
first quarter of 1998.
Financing Activities. During the first six months of 1999, we purchased the
remaining $1.5 million of outstanding 103% Senior Notes. We also paid cash of
$0.6 million in principal on our Term Loan Facility. On July 20, 1999 we
purchased Thermal Transfer Products. The purchase price of $26.5 million
included the acquisition of $3.9 million of cash. We financed this acquisition
with borrowings from our revolving credit facility (see Note 11 of the Notes to
the Condensed Consolidated Financial Statements).
We expect our principal sources of liquidity to be from our operating activities
and funding from the revolving line-of-credit agreement. We further expect that
these sources will enable us to meet our cash requirements for working capital,
capital expenditures, interest, taxes and debt repayment for the foreseeable
future.
Accumulated Deficit. At June 30, 1999, we had a stockholder's deficit totaling
$139.3 million, which is a result of both the Mergers (see Note 2 of the Notes
to the Condensed Consolidated Financial Statements) and the 1997 share
repurchases as described in our Annual Report on Form 10-K for the year ended
December 31, 1998.
MARKET RISK AND RISK MANAGEMENT
Our general policy is to use foreign currency borrowings as needed to finance
our foreign currency denominated assets. We use such borrowings to reduce our
asset exposure to the effects of changes in exchange rates B not as speculative
investments. As of June 30, 1999, we did not have any derivative instruments in
place for managing foreign currency exchange rate risks.
At the end of the second quarter of 1999, we had $216.0 million in variable rate
debt outstanding. A one percentage point increase in interest rates would
increase the amount of annual interest paid by approximately $2.2 million. As of
June 30, 1999, we had no interest rate derivative instruments in place for
managing interest rate risks.
THE YEAR 2000 ISSUES
As is more fully described in our Annual Report on Form 10-K for the year ended
December 31, 1998, we commenced an assessment in 1996 of the potential effects
of the Year 2000 issue on our business, financial condition and results of
operations. To date, the costs incurred to implement our Year 2000 compliance
program have been immaterial. Our management estimates these costs will remain
immaterial through its completion of the program. Management's assessment of the
risks associated with its Year 2000 program and the status of our's contingency
plans are unchanged from that described in the 1998 Annual Report on Form 10-K.
Our plans to complete our Year 2000 compliance program are based on our
management=s best estimates, which are based on numerous assumptions about
future events including the continued availability of certain resources
22
<PAGE> 23
and other factors. Therefore, there can be no guarantee that these estimates
will be achieved and actual results could differ materially from those plans.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes and similar
uncertainties.
The information above contains forward-looking statements, including, without
limitation, statements relating to our plans, strategies, objectives,
expectations, intentions, and adequate resources that are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned that forward-looking statements about Year 2000
should be read in conjunction with our disclosures under the heading Forward
Looking Information.
FORWARD-LOOKING INFORMATION
Except for the historical information contained herein, the matters discussed in
this Form 10-Q included in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" include "Forward Looking Statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Although we
believe that the expectations reflected in the Forward-Looking Statements
contained herein are reasonable, no assurance can be given that such
expectations will prove to have been correct. Certain important factors that
could cause actual results to differ materially from expectations ("Cautionary
Statements") include, but are not limited to the following: delays in new
product introductions, lack of market acceptance of new products, changes in
demand for our products, changes in market trends, operating hazards, general
competitive pressures from existing and new competitors, effects of governmental
regulations, changes in interest rates, and adverse economic conditions which
could affect the amount of cash available for debt servicing and capital
investments. All subsequent written and oral Forward-Looking Statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the Cautionary Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The information called for by this item is provided under the caption "Market
Risk and Risk Management" under Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(None)
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(None)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(None)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
(None)
ITEM 5. OTHER INFORMATION
(None)
23
<PAGE> 24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
A report, dated May 4, 1999, on Form 8-K was filed during the quarter
ended June 30, 1999, pursuant to Items 5 and 7 of that form.
A report, dated May 19, 1999, on Form 8-K was filed during the
quarter ended June 30, 1999, pursuant to Items 5 and 7 of that form.
A report, dated May 26, 1999, on Form 8-K was filed during the
quarter ended June 30, 1999, pursuant to Items 5 and 7 of that form.
A report, dated June 25, 1999, on Form 8-K was filed during the
quarter ended June 30, 1999, pursuant to Items 5 and 7 of that form.
A report, dated July 20, 1999, on Form 8-K was filed with the SEC on
August 4, 1999, pursuant to Items 2 and 7 of that form.
24
<PAGE> 25
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
Date: August 9, 1999 By: /s/ Michael R. Elia
------------------------------
Michael R. Elia
Vice President and
Chief Financial Officer
25
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