Insilco Corporation Reports 1997 Fourth Quarter and Year End Results
4 February 1998
Insilco Corporation Reports 1997 Fourth Quarter and Year End Results
Pro Forma Earnings Up 13% in Fourth Quarter
COLUMBUS, Ohio, Feb. 4 -- Insilco Corporation
today reported results for its fourth quarter and full year ended December 31,
1997, as follows:
PRO FORMA RESULTS
The Company said that reported results were not comparable to the prior
year results due to acquisitions and divestitures completed after July 1, 1996
and its 1997 third quarter refinancing and share repurchase. As a result,
the Company is reporting unaudited pro forma results, adjusting for the 1996
acquisition of the Lingemann aluminum tubing business, the 1996 and 1997
divestitures of the Company's office products businesses, and the third
quarter 1997 share repurchase and debt issuance, as if all had occurred at the
beginning of the respective periods.
On a pro forma basis, for the fourth quarter ended December 31, 1997 net
income was up 13% to $3.5 million, compared to $3.1 million recorded in the
year earlier fourth quarter. Diluted earnings per share were up 15% to $.85
for the 1997 fourth quarter, from $.74 recorded in the 1996 fourth quarter.
The Company noted that in the fourth quarter of 1996, it recorded non-
recurring deferred tax assets which reduced its pro forma income tax provision
by $1.0 million in that period.
On a pro forma basis, for the full year 1997 net income was $16.5 million
compared to $16.0 million recorded for the full year 1996. Diluted earnings
per share were $4.01 for the year ended December 31, 1997 compared to $3.83
for the year 1996.
Pro forma sales for the 1997 fourth quarter increased 4% to $120.6 million
compared to $115.5 million recorded in the 1996 fourth quarter. Pro forma
sales for the full year 1997 were also up 4% to $528.2 million, compared to
$507.1 million recorded a year earlier.
"We are very pleased with the results achieved in the fourth quarter,"
said Robert L. Smialek, Insilco Chairman and CEO. "Pro forma net income was
up 13% despite a difficult comparison to last year's fourth quarter when we
recorded virtually no tax expense, versus a $1.8 million tax expense recorded
this fourth quarter. It is also gratifying to report that our seasonally
strong fourth quarter cash flow allowed us to reduce outstanding debt net of
cash by over $28 million since September 30, 1997."
REPORTED RESULTS
The Company recorded net income of $3.5 million, or $.85 per diluted
share, for its fourth quarter ended December 31, 1997, compared to net income
of $12.6 million, or $1.27 per diluted share, reported in the year earlier
quarter. The 1996 fourth quarter results included an after-tax gain of
$1.9 million, or $0.19 per diluted share, on the sale of the Rolodex
electronics product line, as well as recognition of additional deferred tax
assets which reduced the fourth quarter income tax provision by $3.2 million
or $.32 per diluted share.
For the full year ended December 31, 1997, net income was $81.6 million,
or $11.12 per diluted share, compared to net income of $39.1 million, or
$3.95 per diluted share, for the full year 1996. Full year 1997 results
included an after tax gain of $57.8 million, or $7.87 per diluted share, on
the sale of the Rolodex business unit.
Sales for the fourth quarters of 1997 and 1996 were $120.6 million and
$129.1 million, respectively. The 1996 fourth quarter included $13.6 million
of sales from office product lines that were divested in 1996 and early 1997.
Full year 1997 sales were $539.0 million, compared to $572.5 million recorded
in 1996. Full year sales for 1997 and 1996 included $10.8 million and
$80.1 million, respectively, from the divested office products businesses.
BUSINESS DISCUSSION
The Automotive Components Group reported fourth quarter 1997 sales up 6%
to $59.1 million, from $55.7 million in the prior year. The Group recorded
operating income of $6.6 million versus $6.8 million recorded in the prior
year's fourth quarter. Higher R&D expenses and a disproportionate level of
expense related to new plant facilities, management recruiting and other
miscellaneous items moderated the overall performance of the Group.
The Technologies Group posted 11% sales growth in the quarter to
$50.9 million, compared to $46.0 million in the year earlier fourth quarter.
Group sales results continued to be favorably impacted by strong demand for
wire and cable assemblies, which were up 32% in the quarter. Sales of modular
data interconnect products were down 5% in the quarter compared to last year,
principally a result of price erosion for existing products and delayed new
product availability. The Group recorded a 6% increase in operating income to
$6.5 million in the quarter, compared to $6.1 million recorded in the fourth
quarter last year. Significant improvement in operating margins quarter over
quarter at the Company's wire and cable assembly business was partially offset
by price erosion and flat unit sales at the Company's connector business.
Taylor Publishing, the Company's specialty publishing business unit, in a
seasonally low quarter, reported sales of $10.6 million, compared to
$13.8 million recorded in the 1996 fourth quarter. Taylor reported operating
income of $0.2 million in its 1997 ourth quarter, compared to an operating
loss of $1.3 million in last year's fourth quarter. Last year's fourth
quarter results included a pre-tax restructuring charge of $1.5 million.
CEO COMMENTS
Robert L. Smialek, Insilco Chairman and CEO, commented, "During 1997, we
completed a number of corporate objectives aimed at positioning the Company
for long term sales and earnings growth. With the sale of Rolodex, we refined
our focus on our core industrial businesses and we continued to make
investments to improve productivity within these core businesses. We invested
over $26 million, or 5% of pro forma sales, in new manufacturing equipment,
product research and development and geographic expansion."
"The results of our efforts are evident in several of our business units'
operating performance in 1997. Taylor Publishing, where we have invested
significant capital to automate pre-press operations, posted markedly improved
results last year. We also expect improving sales performance in 1998 from
Taylor as we begin to realize the benefits of a restructured sales
organization and increased focus on higher volume accounts."
"Our wire and cable assembly business, which has benefitted from a growing
telecommunications market, also made substantial productivity gains in 1997 as
evidenced by its improved operating margin. At our connector business, we
automated a number of functions and began to better utilize our low cost
production facilities in Mexico. New connector product development also
remained a top priority in 1997. While higher product development expenses
negatively impacted short-term results, we are optimistic that we have strong
opportunities for sales and earnings growth from new products and productivity
gains in 1998."
"In the Automotive Group, in addition to solidifying our OEM positions, we
substantially increased our aftermarket product offerings and improved our
distribution capabilities with the opening of a Western U.S. distribution
outlet. We also made additional investments at our automotive Technical
Center, which is dedicated to research and development of new heat exchanger
technology. Finally, we are very pleased to have recently concluded the FTC
matter related to our 1996 automotive acquisition. Our ability to improve
results at this operation has been hampered all year by this ongoing
investigation. We will now move quickly to correct the operating
inefficiencies and depressed sales volume at this business unit."
Smialek concluded, "Looking ahead, we are optimistic regarding our
prospects for delivering solid growth and value for our shareholders in the
future. We have the opportunity for increased earnings resulting from higher
margins on new products, increased sales penetration in existing markets and
ongoing cost reduction initiatives. We have also put in place a capital
structure that should allow us to build future shareholder value more rapidly.
Our historically strong cash flow provides us with the opportunity to enhance
future earnings as we repay debt and reduce interest expense."
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 regard to (but not limited
to): sales and performance improvement as a result of the introduction of new
products and productivity gains, sales performance improvement as a result of
Taylor's restructured sales organization and focus on higher volume accounts,
performance improvements at the Company's business unit acquired in 1996 and
higher future earnings as a result of debt and interest expense reductions.
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 of 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 annual report on Form 10-K for the year ended December 31, 1996,
and the Company's report on Form 10-Q for the quarters ended March 31, 1997,
June 30, 1997 and September 30, 1997. Copies of these filings may be obtained
contacting the Company or the SEC.
Insilco Corporation, based in suburban Columbus Ohio, is a diversified
manufacturer of industrial components and a supplier of specialty publications
The Company's industrial business units serve the automotive, electronics,
telecommunications and other industrial markets, and its publishing business
serves the school yearbook market. It had revenues in 1997 of $539 million.
INSILCO CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(In Millions)
Dec. 31, Dec. 31,
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 10.7 3.5
Receivables, net 70.7 82.4
Inventories, net 60.7 66.4
Current portion of
deferred taxes 0.3 29.9
Prepaid expenses 2.7 3.4
Total current assets 145.1 185.6
Property, plant and
equipment, net 114.0 114.4
Goodwill, net 13.4 13.7
Deferred taxes 1.0 7.5
Other assets and
deferred charges 29.2 27.2
Total assets $ 302.7 348.4
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of
long-term debt $ 1.7 24.3
Current portion of
long-term obligations 5.4 6.7
Accrued interest payable 8.0 3.1
Accounts payable 39.8 38.0
Accrued expenses and other 50.6 62.0
Total current liabilities 105.5 134.1
Long-term debt 256.1 136.7
Other long-term obligations 43.4 44.2
Stockholders' equity (deficit) (102.3) 33.4
Total liabilities and
stockholders' equity
(deficit) $ 302.7 348.4
INSILCO CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
(Amounts in millions, except per share data)
FOURTH QUARTER
Actual Pro Forma
Three Months Three Months
Ended Ended
December 31, December 31,
1997 1996 1997 1996
Sales $ 120.6 129.1 120.6 115.5
Gross profit 29.5 36.2 29.5 29.2
% of sales 24.5% 28.0% 24.5% 25.3%
SG&A 18.2 24.2 18.2 19.7
Operating income 11.3 12.0 11.3 9.5
Interest expense, net (7.1) (4.0) (7.1) (7.5)
Equity in net income
of Thermalex 0.5 0.6 0.5 0.6
Other income and
expense, net 0.6 3.7 0.6 0.6
Income before income
taxes 5.3 12.3 5.3 3.2
Income tax benefit
(expense) (1.8) 0.3 (1.8) (0.1)
Income tax rate 34.2% NA 34.2% 1.4%
Net income $ 3.5 12.6 3.5 3.1
Basic earnings per
share:
Net income per
share $ 0.87 1.33 0.87 0.83
Weighted average
shares outstanding 4.1 9.5 4.1 3.8
Diluted earnings per
share:
Net income per
share $ 0.85 1.27 0.85 0.74
Weighted average
shares and share
equivalents
outstanding 4.2 9.9 4.2 4.2
Memo: Depreciation and
amortization expense
included in earnings $ 4.0 4.0 4.0 3.9
INSILCO CORPORATION
Condensed Consolidated Income Statements
(Unaudited)
(Amounts in millions, except per share data)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Actual Pro Forma
Year Year
Ended Ended
December 31, December 31,
1997 1996 1997 1996
Sales $ 539.0 572.5 528.2 507.1
Gross profit 147.2 167.8 142.0 134.5
% of sales 27.3% 29.3% 26.9% 26.5%
SG&A 93.9 108.7 90.9 87.8
Operating income 53.3 59.1 51.1 46.7
Interest expense, net (17.7) (17.4) (28.7) (31.5)
Gain on sale of Rolodex 95.0 -- -- --
Equity in net income
of Thermalex 2.6 2.9 2.6 2.9
Other income and
expense, net 0.8 7.3 0.8 4.8
Income before income
taxes and
extraordinary item 134.0 51.9 25.8 22.9
Income tax expense (51.7) (12.8) (9.3) (6.9)
Income tax rate 38.5% 24.7% 36.2% 30.1%
Income before
extraordinary item 82.3 39.1 16.5 16.0
Extraordinary item,
net of tax (0.7) -- -- --
Net income $ 81.6 39.1 16.5 16.0
Basic earnings (loss)
per share:
Income before
extraordinary item $ 11.44 4.10 4.15 4.21
Extraordinary item (0.10) -- -- --
Net income per
share $ 11.34 4.10 4.15 4.21
Weighted average
shares outstanding 7.2 9.5 4.0 3.8
Diluted earnings
(loss) per share:
Income before
extraordinary item $ 11.22 3.95 4.01 3.83
Extraordinary item (0.10) -- -- --
Net income per
share $ 11.12 3.95 4.01 3.83
Weighted average
shares and share
equivalents
outstanding 7.3 9.9 4.1 4.2
Memo: Depreciation and
amortization expense
included in earnings $ 18.6 16.8 18.4 16.9
Capital Spending $ (23.6) (22.6) (23.6) N/A
Trailing Four Quarter
EBITDA $ 71.8 75.9 69.5 63.6
SOURCE Insilco Corporation