S-1/A 1 ds1a.htm AMENDMENT NO.4 TO FORM S-1 Amendment No.4 to Form S-1
Table of Contents

As filed with the Securities and Exchange Commission on January 18, 2006

Registration No. 333-128250


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Pre-Effective

Amendment No. 4

to

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933


KOPPERS HOLDINGS INC.

(Exact name of registrant as specified in its charter)


Pennsylvania   2491   20-1878963

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

436 Seventh Avenue

Pittsburgh, Pennsylvania 15219

Telephone: (412) 227-2001

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Steven R. Lacy, Esq.

Senior Vice President, Administration, General Counsel and Secretary

Koppers Holdings Inc.

436 Seventh Avenue

Pittsburgh, Pennsylvania 15219

Telephone: (412) 227-2001

(Name, address, including zip code, and telephone number, including area code, of agent for service)


Copies of communications to:

Richard E. Farley, Esq.

Cahill Gordon & Reindel LLP

80 Pine Street

New York, New York 10005

Telephone: (212) 701-3000

 

William J. Whelan III, Esq.

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Telephone: (212) 474-1000


Approximate date of commencement of proposed sale to the public:    As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  ¨


CALCULATION OF REGISTRATION FEE


Title of each class of

securities to be registered

  Amount to be
registered (1)
 

Proposed maximum
offering price

per share

  Proposed maximum
aggregate offering
price (2)
  Amount of
registration fee (3)

Common stock, par value $0.01 per share

  11,500,000   $16.00   $184,000,000   $21,025.50

(1) Includes 1,500,000 shares issuable upon exercise of the underwriters’ option to purchase additional shares of common stock.
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act.
(3) $18,466.06 was paid by Koppers Holdings Inc. in connection with the previous filing registering shares at a proposed maximum aggregate offering price equal to $160,080,000. An additional fee of $2,559.44 is being paid pursuant to this amendment to cover additional shares registered in connection with the $23,920,000 increase in the proposed maximum aggregate offering price.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.



Table of Contents

The information in this prospectus is not complete and may be changed. We and the selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

SUBJECT TO COMPLETION, DATED JANUARY 18, 2006

 

10,000,000 Shares

 

LOGO

 

Koppers Holdings Inc.

 

Common Stock

 


 

We are selling 8,700,000 shares of common stock and the selling shareholders are selling 1,300,000 shares of common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling shareholders.

 

Prior to this offering, there has been no public market for our common stock. The initial public offering price of the common stock is expected to be between $14.00 and $16.00 per share. We have applied to list our common stock on the New York Stock Exchange under the symbol “KOP.”

 

The underwriters have an option to purchase a maximum of 1,500,000 additional shares from the selling shareholders to cover over-allotments of shares. We will not receive any of the proceeds from the shares of common stock sold by the selling shareholders pursuant to the underwriter’s over-allotment option.

 

Investing in our common stock involves risks. See “ Risk Factors” on page 12.

 

    

Price to

Public


  

Underwriting

Discounts and

Commissions


  

Proceeds to

Issuer


  

Proceeds to

Selling

Shareholders


Per Share

   $                $                $                $            

Total

   $                        $                        $                        $                    

 

Delivery of the shares of common stock will be made on or about                     , 2006.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

Credit Suisse   UBS Investment Bank

 

First Analysis Securities Corporation          
     Jefferies & Company     
          KeyBanc Capital Markets

 

The date of this prospectus is                     , 2006.


Table of Contents

LOGO

 

 


Table of Contents

 


 

TABLE OF CONTENTS

 

     Page

SUMMARY

   1

RISK FACTORS

   12

FORWARD-LOOKING STATEMENTS

   25

INDUSTRY AND MARKET DATA

   25

USE OF PROCEEDS

   26

CAPITALIZATION

   27

DIVIDEND POLICY

   29

DILUTION

   31

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

   32

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

   36

BUSINESS

   61

MANAGEMENT

   76

EXECUTIVE COMPENSATION

   80
     Page

PRINCIPAL AND SELLING SHAREHOLDERS

   89

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

   91

DESCRIPTION OF CERTAIN INDEBTEDNESS

   93

DESCRIPTION OF CAPITAL STOCK

   96

SHARES ELIGIBLE FOR FUTURE SALE

   98

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

   100

UNDERWRITING

   103

NOTICE TO CANADIAN RESIDENTS

   107

LEGAL MATTERS

   108

EXPERTS

   108

WHERE YOU CAN FIND MORE INFORMATION

   108

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

   F-1

 


 

You should rely only on the information contained in this document or to which we have referred you. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

 

Dealer Prospectus Delivery Obligation

 

Until             , 2006 all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

 

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SUMMARY

 

You should read the following summary together with the more detailed information appearing elsewhere in this prospectus and the financial statements and other information included in this prospectus. In this prospectus, unless otherwise indicated or the context requires otherwise, when we use the terms the “Company,” “we,” “our” or “us,” we mean Koppers Inc., formerly known as Koppers Industries, Inc., and its subsidiaries on a consolidated basis for periods up until November 18, 2004 and Koppers Holdings Inc., or Koppers Holdings (formerly known as KI Holdings Inc.), and its subsidiaries on a consolidated basis for periods from and including November 18, 2004, when Koppers Holdings became the parent of Koppers Inc. The use of these terms is not intended to imply that Koppers Holdings and Koppers Inc. are not separate and distinct legal entities.

 

Our Company

 

We are a leading integrated global provider of carbon compounds and commercial wood treatment products. Our products are used in a variety of niche applications in a diverse range of end-markets, including the aluminum, railroad, specialty chemical, utility, rubber and steel industries. We provide products which represent only a small portion of our customers’ costs but are essential inputs into the products they produce and the services they provide. In the aggregate, we believe that we maintain the number one market position by volume in a majority of our principal product lines in North America, Australia and Europe.

 

We serve our customers through a comprehensive global manufacturing and distribution network, including 35 manufacturing facilities located in North America, Australasia, China, Europe and South Africa. We conduct business in 73 countries with over 2,600 customers, many of which are leading companies in their respective industries, including Alcoa Inc., CSX Transportation, Inc., Union Pacific Railroad Company, Norfolk Southern Corporation and Burlington Northern Santa Fe Railway. We believe that our customers place significant value on our industry-leading “Koppers” brand, which for more than 70 years has maintained a reputation for quality, reliability and customer service. For the twelve months ended September 30, 2005, we generated net sales of $999.7 million, net income of $10.8 million and EBITDA of $103.7 million. For information relating to our net sales, net income and EBITDA for the last three fiscal years, see “—Summary Historical Consolidated Financial Data” and for a reconciliation of EBITDA to net income, see footnote (6) under “—Summary Historical Consolidated Financial Data.”

 

We operate two principal businesses, Carbon Materials & Chemicals and Railroad & Utility Products. Through our Carbon Materials & Chemicals business (58% of 2004 net sales), we believe we are the largest distiller of coal tar in North America, Australia, the United Kingdom and Scandinavia. We process coal tar into a variety of products, including carbon pitch, creosote and phthalic anhydride, which are critical intermediate materials in the production of aluminum, the pressure treatment of wood and the production of plasticizers and specialty chemicals, respectively. Through our Railroad & Utility Products business (42% of 2004 net sales), we are the largest North American supplier of railroad crossties. Our other commercial wood treatment products include the provision of utility poles to the electric and telephone utility industries.

 

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The following charts provide a breakdown of our 2004 net sales by product and industry:

 

LOGO   LOGO

 

Industry Overview

 

We believe that demand for aluminum and railroad track maintenance substantially drive demand in our two principal businesses. According to the King Report, worldwide aluminum production increased 6.5% to 29.8 million metric tons in 2004 and is expected to grow by 7.6% in 2005 and 6.8% in 2006. Carbon pitch requirements for the aluminum industry were 2.8 million metric tons in 2004 and are expected to grow as a function of growth in aluminum production. Recent global restructuring in the electrode and aluminum markets has resulted in reduced consumption volumes of carbon pitch in domestic markets. Any prolonged decline in demand for aluminum or further restructuring in the electrode and aluminum markets could negatively impact our business.

 

The railroad crosstie business is benefiting from positive general economic conditions in the railroad industry and from expected increases in spending on both new track and existing track maintenance. A decline in maintenance spending by the seven largest railroads in North America, which we refer to as the Class 1 railroads, could negatively impact demand for our products. The Railway Tie Association, or RTA, estimates that approximately 13.7 million crossties for the Class 1 railroads were installed in the United States in 2004 and approximately 14.0 million crossties are projected to be installed in 2005. The RTA projects demand to increase by 9.2% to 15.3 million crossties in 2006. In addition, on August 10, 2005, a federal transportation bill was signed into law which provides $286.5 billion of funding for various projects in the transportation industry. Although it is difficult to estimate the impact of this legislation on our business, we believe that it is likely to benefit us directly by increased sales related to projects identified in the legislation or indirectly as additional railroad capital can be reallocated to infrastructure maintenance priorities.

 

For more information on our industry and recent trends, see “Business—Industry Overview.”

 

Key Competitive Strengths

 

We believe that we are distinguished by the following key competitive strengths:

 

Leading Market Positions Across Business Segments.    We are a leading integrated global provider of carbon compounds and commercial wood treatment products.

 

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The following table sets forth our leading market position for each of our principal product lines in our three major geographic regions:

 

     2004 Net Sales

  

Estimated % of

Market


    Market Position

     (in millions)           

North American Market

                 

Railroad Crossties (U.S.)

   $ 246.1    55 %   #1

Carbon Pitch (1)

     75.4    49 %   #1

Phthalic Anhydride (2)

     71.4    37 %   #1

Australian Market

                 

Carbon Pitch

   $ 53.8    81 %   #1

Wood Preservatives

     48.1    50 %   #1

Carbon Black

     30.1    80 %   #1

Utility Poles

     11.8    66 %   #1

European Market

                 

Carbon Pitch

   $ 47.6    14 %   #3
 
  (1) Only refers to carbon pitch sales to the aluminum industry.
  (2) Only refers to merchant market sales of phthalic anhydride.

 

Strong Customer Relationships Under Contract Arrangements.    Our reputation and industry-leading “Koppers” brand have enabled us to establish strong relationships with leading companies in their respective industries. All of our top ten customers are served under long-term contracts and approximately 56% of our 2004 net sales were made to customers with whom we have contract arrangements of two or more years.

 

Diverse End-Markets and Global Presence.    Our approximately 2,600 customers operate in diverse end-markets such as aluminum, railroads, specialty chemicals, including polyester resins, paints, coatings and plasticizers, steel, utilities, rubber, wood preservation, roofing and pavement sealers. We believe our global presence and our strategically located facilities enable us to capitalize on opportunities to increase sales of our existing product portfolio into higher-growth emerging economies, such as China, the Middle East, India and Eastern Europe.

 

Cost Advantage Through Vertical Integration.    The degree of vertical integration in our business enables us to utilize products produced in our Carbon Materials & Chemicals business in our manufacturing processes, providing us with significant cost and supply advantages. In addition, internally generated products provide a more reliable source of feedstock for our wood treatment and phthalic anhydride products.

 

Experienced and Incentivized Management Team.    Our senior management team has an average of 27 years of industry experience. Prior to the offering, our directors, management team and employees beneficially own approximately 24% of our equity.

 

For further information on our strengths, see “Business—Key Competitive Strengths.”

 

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Our Business Strategy

 

The key elements of our strategy are:

 

Capitalize on Attractive Growth Opportunities.    We believe our existing key end-markets, especially the aluminum and railroad industries, and geographic focus provide attractive growth opportunities. We are well positioned to capitalize on these opportunities. In addition, we intend to pursue growth opportunities in three ways:

 

    New Regional Expansion:    We intend to leverage our global reach by capitalizing on opportunities in high-growth regions such as China, the Middle East and India and expect demand for our products in these regions to grow faster than in our core markets.

 

    Selective Acquisitions:    We intend to continue to selectively pursue complementary opportunities in areas that enable us to build upon our product portfolio, expand our customer base and leverage our existing customer relationships.

 

    Development of New Products:    We expect to expand many of our product lines through the development of related products to meet new end-use applications.

 

Maximize Cash Flow and Reduce Financial Leverage.    We expect to reduce our financial leverage by using a portion of our net proceeds from this offering and a portion of cash flow from operations after required capital expenditures.

 

Continue Productivity and Cost Reduction Initiatives.    We are focused on improving our profitability and cash flows by achieving productivity enhancements and by improving our cost platform.

 

For further information on our business strategy, see “Business—Our Strategy.”

 

Risks Related to our Competitive Strengths and Business Strategy

 

The key competitive strengths that currently distinguish our company as well as the key elements of our business strategy are each subject to certain risks. Such risks include:

 

    our leading market position could be lost if we are unable to compete successfully in any or all of our industry segments;

 

    we are dependent on certain major customers;

 

    our operations are subject to fluctuations in the price, quality and availability of our primary raw materials;

 

    the success of our strategy of expanding into new geographic markets is subject to the risks inherent in foreign operations, including changes in social, political and economic conditions;

 

    our strategy to selectively pursue complementary acquisitions may present unforeseen integration obstacles or costs;

 

    our significant amount of debt and negative net worth could be exacerbated if the execution of our plans result in our having greater losses than we have historically;

 

 

    our strategy to reduce financial leverage may be hindered by the fact that we will be using some of our free cash flow to pay dividends;

 

    the new products we develop may be rendered obsolete or less attractive by changes in regulatory, legislative or industry requirements;

 

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    our operations are subject to the hazards associated with chemical manufacturing; and

 

 

    demand for our products is cyclical.

 

Any of the above risks could adversely affect our financial position and results of operations. For additional risks related to our business or this offering, see “Risk Factors.”

 

Recent Developments

 

On August 8, 2005, the President signed the Energy Policy Act of 2005 into law. Included in this legislation are Section 29 Energy Tax Credits earned for the production and sale of coke to a third party. These credits against federal income tax will be earned in conjunction with the coke operations at our Monessen, Pennsylvania facility. The tax credit generated per ton of coke sold is tied to a per barrel of oil equivalent on a BTU basis and adjusted annually for inflation. The credits are effective January 2006, expire December 2009 and can be carried forward for 20 years. Based on our understanding of the legislation and subject to final determination of an oil price range, we could earn up to $4.0 million per year of credits that will reduce federal income taxes.

 

Principal Shareholder

 

Saratoga Partners III, L.P. has informed us that it is a New York based investment firm managed by Saratoga Management Company LLC making private equity investments in partnership with management in the business services and manufacturing industries. Saratoga Partners was founded in 1984 as the corporate buyout group of Dillon, Read & Co. Inc. and has been independent since 1998. Saratoga Partners is an experienced firm, having led buyout investments in 33 companies.

 

Corporate Information

 

We are a Pennsylvania corporation. Our principal offices are located at 436 Seventh Avenue, Pittsburgh, Pennsylvania 15219-1800. Our telephone number is (412) 227-2001. We maintain a website at www.koppers.com. The information contained on or linked to from our website does not constitute a part of this prospectus and is not incorporated by reference herein.

 

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The Offering

 

Shares of common stock offered by us

8,700,000 shares.

 

Shares of common stock offered by the selling shareholders

1,300,000 shares.

 

Shares of common stock to be outstanding following the offering

20,714,192 shares.

 

Use of Proceeds

We estimate that the net proceeds to us of this offering, after deducting underwriting discounts and estimated offering expenses, will be approximately $119,900,000. We intend to use all of the net proceeds to redeem up to $109,124,005 aggregate principal amount of Koppers Inc.’s 9 7/8% senior secured notes due 2013 at a price of 109 7/8% of the principal amount thereof plus accrued and unpaid interest. See “Use of Proceeds.”

 

 

We will not receive any proceeds from the sale of shares by the selling shareholders.

 

Dividend Policy

Our board of directors is expected to adopt a dividend policy, effective upon the closing of this offering, which reflects its judgment that our stockholders would be better served if we distributed to them, as quarterly dividends payable at the discretion of our board of directors, a portion of the cash generated by our business in excess of our expected cash needs rather than retaining it or using the cash for other purposes. Our expected cash needs include operating expenses and working capital requirements, interest and principal payments on our indebtedness, capital expenditures, incremental costs associated with being a public company, taxes and certain other costs.

 

 

In accordance with our dividend policy, we currently intend to pay a portion of our initial quarterly dividend of $0.17 per share on or about April 17, 2006, which will be pro rated at the time of payment based upon the timing of the closing of the offering, and to continue to pay quarterly dividends at an annual rate of $0.68 per share for the first full year following such date, subject to our board of directors’ decision to declare these dividends and various restrictions on our ability to do so. Based on an assumed closing of February 6, 2006, the initial quarterly dividend will be $0.10. We are not required to pay dividends, and our shareholders will not be guaranteed, or have contractual or other rights, to receive dividends. Our board of directors may decide, in its discretion, at any time, to decrease the amount of dividends, otherwise modify or repeal the dividend policy or discontinue entirely the payment of dividends.

 

 

Our ability to pay dividends will be restricted by current and future agreements governing our debt, including Koppers Inc.’s credit agreement, the indentures governing our senior discount notes and Koppers Inc.’s senior secured notes and by Pennsylvania law.

 

 

Since we are a holding company, substantially all of the assets shown on our consolidated balance sheet are held by our subsidiaries.

 

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Accordingly, our earnings and cash flow and our ability to pay dividends are largely dependent upon the earnings and cash flows of our subsidiaries and the distribution or other payment of such earnings to us in the form of dividends. Koppers Inc., our largest operating subsidiary, is a party to a credit agreement that restricts its ability to pay dividends to us.

 

 

See “Risk Factors—Risks Relating to Our Common Stock and This Offering—You may not receive dividends because our board of directors could, in its discretion, depart from or change our dividend policy at any time, because of restrictions in our debt agreements, because of our negative net worth or because of restrictions imposed by Pennsylvania law” and “Dividend Policy.”

 

Listing

We have applied to list our common stock on the New York Stock Exchange under the trading symbol “KOP.”

 

The calculation of shares of common stock to be outstanding after this offering as presented here and throughout this prospectus, unless otherwise indicated, is based on 12,014,192 shares of our common stock outstanding immediately prior to the consummation of this offering and:

 

    assumes the underwriters do not exercise their over-allotment option;

 

    the initial offering price will be $15.00 per share, the mid-point of the initial public offering price range indicated on the cover page of this prospectus;

 

    includes a 3.9799-for-one split of our common stock that took effect on January 11, 2006;

 

    excludes 2,089,448 shares reserved to be issued under the 2005 Long-Term Incentive Plan that was adopted on December 7, 2005;

 

    excludes 322,372 restricted stock units that have been granted and which will result in the issuance of an equal number of shares upon vesting; and

 

    assumes the conversion of all of our senior convertible preferred stock into shares of common stock prior to the consummation of this offering.

 

Risk Factors

 

Before making an investment in our common stock, you should consider carefully the information included in the “Risk Factors” section beginning on page 12 of this prospectus, as well as any other information contained in this prospectus.

 

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Summary Historical Consolidated Financial Data

The following table contains our summary historical consolidated financial data for the three years ended December 31, 2004 and as of and for the nine months ended September 30, 2005 and 2004 and the twelve months ended September 30, 2005. The summary historical consolidated financial data for each of the years ended December 31, 2004, 2003 and 2002 have been derived from our audited consolidated financial statements. The summary historical consolidated financial data as of and for the nine months ended September 30, 2005 and 2004 have been derived from our unaudited consolidated financial statements, which were prepared on the same basis as our audited consolidated financial statements and, in our opinion, reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly present our results of operations and financial condition for such periods. The summary historical consolidated financial data for the twelve months ended September 30, 2005 have been derived by adding our historical consolidated financial data for the year ended December 31, 2004 to our unaudited consolidated financial data for the nine months ended September 30, 2005 and subtracting our unaudited consolidated financial data for the nine months ended September 30, 2004. This is only a summary and should be read in conjunction with our historical consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

   

Year ended

December 31,


   

Nine months

ended

September 30,


   

Twelve

months

ended

September 30,

2005


 
    2002

    2003

    2004

    2004

    2005

   
                      (unaudited)

 
    (in millions, except for per share data)  

Statement of Operations Data:

                                               

Net sales

  $ 776.5     $ 842.9     $ 952.5     $ 720.7     $ 767.9     $ 999.7  

Operating expenses:

                                               

Cost of sales

    659.5       726.0       798.4       604.0       636.0       830.4  

Depreciation and amortization

    28.7       33.7       32.9       24.3       24.6       33.2  

Selling, general and administrative

    44.0       55.6       56.8       41.7       49.4       64.5  

Restructuring and impairment charges (1)

    —         8.5       —         —         —         —    
   


 


 


 


 


 


Total operating expenses

    732.2       823.8       888.1       670.0       710.0       928.1  
   


 


 


 


 


 


Operating profit

    44.3       19.1       64.4       50.7       57.9       71.6  

Equity in earnings (losses) of affiliates (2)

    —         (0.1 )     0.3       0.1       0.3       0.5  

Other income (3)

    9.8       0.1       0.1       —         0.4       0.5  

Interest expense

    22.9       37.7       38.5       26.6       38.2       50.1  
   


 


 


 


 


 


Income (loss) before income tax provision (benefit) and minority interest

    31.2       (18.6 )     26.3       24.2       20.4