##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
 
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For Quarterly Period Ended June 30, 2010
 OR
 o
    
    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 001-01982
 Constar International Inc.
 (Exact name of registrant as specified in its charter)
 
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    13-1889304
(IRS Employer
Identification Number)One Crown Way, Philadelphia, PA
(Address of principal executive offices)
    
    19154
(Zip Code)
 (215) 552-3700
(Registrants telephone number, including area code)
 
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 Yes o No þ
 þ o




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##### 



TABLE OF CONTENTS
 PageNumberPART IFINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)
    
    
    3Condensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    39Item 4. Controls and Procedures
    
    
    53PART IIOTHER INFORMATIONItem 1. Legal Proceedings
    
    
    54Item 1A. Risk Factors
    
    
    54Item 6. Exhibits
    
    
    57Signatures
    
    
    58Exhibit 10.1Exhibit 10.2Exhibit 10.3Exhibit 10.4Exhibit 10.5Exhibit 10.6Exhibit 10.7Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Constar International Inc.
 
 Condensed Consolidated Balance Sheets
 (In thousands, except par value)
 (Unaudited)
 SuccessorJune 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    1,480
    
    
    $
    2,469Accounts receivable, net
    
    
    48,889
    
    
    
    39,054Inventories, net
    
    
    44,884
    
    
    
    44,058Prepaid expenses and other current assets
    
    
    7,161
    
    
    
    7,896Restricted cash
    
    
    
    
    
    
    7,589Total current assets
    
    
    102,414
    
    
    
    101,066Property, plant and equipment, net
    
    
    136,539
    
    
    
    151,526Goodwill
    
    
    86,182
    
    
    
    118,682Intangible assets, net
    
    
    25,543
    
    
    
    31,398Other assets
    
    
    5,999
    
    
    
    3,592Total assets
    
    $
    356,677
    
    
    $
    406,264LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Short-term debt
    
    $
    5,523
    
    
    $
    5,000Accounts payable
    
    
    64,308
    
    
    
    59,128Accrued expenses and other current liabilities
    
    
    24,986
    
    
    
    25,253Deferred income taxes
    
    
    1,578
    
    
    
    1,222Total current liabilities
    
    
    96,395
    
    
    
    90,603Long-term debt
    
    
    178,939
    
    
    
    167,919Pension and postretirement liabilities
    
    
    29,015
    
    
    
    31,105Deferred income taxes
    
    
    9,788
    
    
    
    23,531Other liabilities
    
    
    14,991
    
    
    
    14,503Total liabilities
    
    
    329,128
    
    
    
    327,661Commitments and contingencies (Note 11)Stockholders Equity:Common stock, $.01 par value, 75,000 shares authorized, 1,750 shares
issued and outstanding at June 30, 2010 and December 31, 2009
    
    
    18
    
    
    
    18Additional paid-in capital
    
    
    101,466
    
    
    
    101,466Accumulated other comprehensive loss, net of tax
    
    
    (3,557
    )
    
    
    (1,769
    )Accumulated deficit
    
    
    (70,378
    )
    
    
    (21,112
    )Total stockholders equity
    
    
    27,549
    
    
    
    78,603Total liabilities and stockholders equity
    
    $
    356,677
    
    
    $
    406,264
   3




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##### Table of Contents



Constar International Inc.
 
 Condensed Consolidated Statements of Operations
 (In thousands, except per share data)
 (Unaudited)
 Successor
    
    
    
    PredecessorThree Months
    
    
    Two Months
    
    
    
    One MonthEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Net customer sales
    
    $
    157,655
    
    
    $
    121,518
    
    
    
    $
    57,142Net affiliate sales
    
    
    
    
    
    
    
    
    
    
    
    676Net sales
    
    
    157,655
    
    
    
    121,518
    
    
    
    
    57,818Cost of products sold, excluding depreciation
    
    
    139,411
    
    
    
    104,370
    
    
    
    
    47,703Depreciation and amortization
    
    
    8,763
    
    
    
    7,064
    
    
    
    
    2,477Gross profit
    
    
    9,481
    
    
    
    10,084
    
    
    
    
    7,638Selling and administrative expenses
    
    
    7,554
    
    
    
    3,139
    
    
    
    
    1,832Goodwill impairment
    
    
    32,500
    
    
    
    
    
    
    
    
    Impairment of intangible assets
    
    
    5,100
    
    
    
    
    
    
    
    
    Research and technology expenses
    
    
    1,623
    
    
    
    1,229
    
    
    
    
    832Provision for restructuring
    
    
    272
    
    
    
    265
    
    
    
    
    133Gain on disposal of assets
    
    
    (108
    )
    
    
    (3
    )
    
    
    
    (76
    )Total operating expenses
    
    
    46,941
    
    
    
    4,630
    
    
    
    
    2,721Operating income (loss)
    
    
    (37,460
    )
    
    
    5,454
    
    
    
    
    4,917Interest expense
    
    
    (8,697
    )
    
    
    (5,788
    )
    
    
    
    (1,255
    )Interest expense  related party
    
    
    
    
    
    
    
    
    
    
    
    (15
    )Reorganization items, net
    
    
    
    
    
    
    (1,167
    )
    
    
    
    147,723Other income (expense), net
    
    
    (1,115
    )
    
    
    3,408
    
    
    
    
    1,382Income (loss) from continuing operations before income taxes
    
    
    (47,272
    )
    
    
    1,907
    
    
    
    
    152,752(Provision for) benefit from income taxes
    
    
    7,518
    
    
    
    805
    
    
    
    
    (37,825
    )Income (loss) from continuing operations
    
    
    (39,754
    )
    
    
    2,712
    
    
    
    
    114,927Income (loss) from discontinued operations, net of taxes
    
    
    64
    
    
    
    (60
    )
    
    
    
    (19
    )Net income (loss)
    
    $
    (39,690
    )
    
    $
    2,652
    
    
    
    $
    114,908Basic and diluted earnings (loss) per common share:Continuing operations
    
    $
    (22.72
    )
    
    $
    1.55
    
    
    
    $
    9.23Discontinued operations
    
    
    0.04
    
    
    
    (0.03
    )
    
    
    
    Net earnings (loss) per share
    
    $
    (22.68
    )
    
    $
    1.52
    
    
    
    $
    9.23Weighted average common shares outstanding:Basic and diluted
    
    
    1,750
    
    
    
    1,750
    
    
    
    
    12,455
   4




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Constar International Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
 Successor
    
    
    
    PredecessorSix Months
    
    
    Two Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Net customer sales
    
    $
    292,177
    
    
    $
    121,518
    
    
    
    $
    214,204Net affiliate sales
    
    
    
    
    
    
    
    
    
    
    
    3,256Net sales
    
    
    292,177
    
    
    
    121,518
    
    
    
    
    217,460Cost of products sold, excluding depreciation
    
    
    263,128
    
    
    
    104,370
    
    
    
    
    189,816Depreciation and amortization
    
    
    18,554
    
    
    
    7,064
    
    
    
    
    9,733Gross profit
    
    
    10,495
    
    
    
    10,084
    
    
    
    
    17,911Selling and administrative expenses
    
    
    12,111
    
    
    
    3,139
    
    
    
    
    7,005Goodwill impairment
    
    
    32,500
    
    
    
    
    
    
    
    
    Impairment of intangible assets
    
    
    5,100
    
    
    
    
    
    
    
    
    Research and technology expenses
    
    
    3,324
    
    
    
    1,229
    
    
    
    
    2,698Provision for restructuring
    
    
    637
    
    
    
    265
    
    
    
    
    648Gain on disposal of assets
    
    
    (654
    )
    
    
    (3
    )
    
    
    
    (396
    )Total operating expenses
    
    
    53,018
    
    
    
    4,630
    
    
    
    
    9,955Operating income (loss)
    
    
    (42,523
    )
    
    
    5,454
    
    
    
    
    7,956Interest expense
    
    
    (17,824
    )
    
    
    (5,788
    )
    
    
    
    (5,512
    )Interest expense  related party
    
    
    
    
    
    
    
    
    
    
    
    (54
    )Reorganization items, net
    
    
    
    
    
    
    (1,167
    )
    
    
    
    144,168Other income (expense), net
    
    
    (1,901
    )
    
    
    3,408
    
    
    
    
    1,543Income (loss) from continuing operations before income taxes
    
    
    (62,248
    )
    
    
    1,907
    
    
    
    
    148,101(Provision for) benefit from income taxes
    
    
    12,889
    
    
    
    805
    
    
    
    
    (37,807
    )Income (loss) from continuing operations
    
    
    (49,359
    )
    
    
    2,712
    
    
    
    
    110,294Income (loss) from discontinued operations, net of taxes
    
    
    93
    
    
    
    (60
    )
    
    
    
    (96
    )Net income (loss)
    
    $
    (49,266
    )
    
    $
    2,652
    
    
    
    $
    110,198Basic and diluted earnings (loss) per common share:Continuing operations
    
    $
    (28.21
    )
    
    $
    1.55
    
    
    
    $
    8.86Discontinued operations
    
    
    0.05
    
    
    
    (0.03
    )
    
    
    
    (0.01
    )Net earnings (loss) per share
    
    $
    (28.16
    )
    
    $
    1.52
    
    
    
    $
    8.85Weighted average common shares outstanding:Basic and diluted
    
    
    1,750
    
    
    
    1,750
    
    
    
    
    12,455
   5




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Constar International Inc.
 
 Condensed Consolidated Statements of Cash Flows
 (In thousands)
 (Unaudited)
 Successor
    
    
    
    PredecessorSix Months
    
    
    Two Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Cash flows from operating activities:Net income (loss)
    
    $
    (49,266
    )
    
    $
    2,652
    
    
    
    $
    110,198Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    18,944
    
    
    
    7,120
    
    
    
    
    10,060Impairment of goodwill and intangible assets
    
    
    37,600
    
    
    
    
    
    
    
    
    Debt accretion expense
    
    
    11,020
    
    
    
    3,303
    
    
    
    
    Bad debt expense (recoveries)
    
    
    37
    
    
    
    (39
    )
    
    
    
    (483
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    591Gain on disposal of assets and ARO settlements
    
    
    (654
    )
    
    
    (3
    )
    
    
    
    (396
    )Deferred income taxes
    
    
    (12,925
    )
    
    
    (923
    )
    
    
    
    37,835Gain on interest rate swap
    
    
    (696
    )
    
    
    
    
    
    
    
    Fresh start accounting adjustments
    
    
    
    
    
    
    
    
    
    
    
    (68,109
    )Reorganization items, net
    
    
    
    
    
    
    (404
    )
    
    
    
    (79,299
    )Changes in working capital and other
    
    
    (6,609
    )
    
    
    (704
    )
    
    
    
    7,104Net cash provided by (used in) operating activities
    
    
    (2,549
    )
    
    
    11,002
    
    
    
    
    17,501Cash flows from investing activities:Restricted cash
    
    
    7,589
    
    
    
    (2,485
    )
    
    
    
    (9,327
    )Purchases of property, plant and equipment
    
    
    (5,508
    )
    
    
    (2,653
    )
    
    
    
    (5,723
    )Proceeds from sale of property, plant, and equipment
    
    
    623
    
    
    
    
    
    
    
    
    149Net cash provided by (used in) investing activities
    
    
    2,704
    
    
    
    (5,138
    )
    
    
    
    (14,901
    )Cash flows from financing activities:Costs associated with debt financing
    
    
    (1,862
    )
    
    
    (101
    )
    
    
    
    Proceeds from short-term financing
    
    
    294,993
    
    
    
    125,000
    
    
    
    
    212,723Repayment of short-term financing
    
    
    (294,152
    )
    
    
    (130,000
    )
    
    
    
    (227,723
    )Net cash used in financing activities
    
    
    (1,021
    )
    
    
    (5,101
    )
    
    
    
    (15,000
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (123
    )
    
    
    79
    
    
    
    
    (8
    )Net increase (decrease) in cash and cash equivalents
    
    
    (989
    )
    
    
    842
    
    
    
    
    (12,408
    )Cash and cash equivalents at beginning of period
    
    
    2,469
    
    
    
    1,884
    
    
    
    
    14,292Cash and cash equivalents at end of period
    
    $
    1,480
    
    
    $
    2,726
    
    
    
    $
    1,884
   6




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Constar International Inc.
 
 Notes to Condensed Consolidated Financial Statements
 (Dollar and share amounts in thousands, unless otherwise noted)
 (Unaudited)
 1. Basis of Presentation
  Reorganizations
  Discontinued Operations
    7




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2. New Pronouncements
 Improving
Disclosures about Fair Value Measurements
 3. Reorganization Items
  Successor
    
    
    
    PredecessorThree Months
    
    
    Two Months
    
    
    
    One MonthEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Gain from discharge of debt
    
    $
    
    
    
    $
    
    
    
    
    $
    84,745Gain from fresh-start accounting adjustments
    
    
    
    
    
    
    
    
    
    
    
    68,109Contract termination expenses
    
    
    
    
    
    
    
    
    
    
    
    (523
    )Professional fees associated with bankruptcy proceedings
    
    
    
    
    
    
    (1,027
    )
    
    
    
    (4,190
    )Other, net
    
    
    
    
    
    
    (140
    )
    
    
    
    (418
    )Total reorganization items, net
    
    $
    
    
    
    $
    (1,167
    )
    
    
    $
    147,723
  8




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##### Table of Contents



Successor
    
    
    
    PredecessorSix Months
    
    
    Two Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,2010
    
    
    2009
    
    
    
    2009Gain from discharge of debt
    
    $
    
    
    
    $
    
    
    
    
    $
    84,745Gain from fresh-start accounting adjustments
    
    
    
    
    
    
    
    
    
    
    
    68,109Contract termination expenses
    
    
    
    
    
    
    
    
    
    
    
    (523
    )Professional fees associated with bankruptcy proceedings
    
    
    
    
    
    
    (1,027
    )
    
    
    
    (6,905
    )Debtor-in-possession and Exit Financing fees
    
    
    
    
    
    
    
    
    
    
    
    (100
    )Other, net
    
    
    
    
    
    
    (140
    )
    
    
    
    (1,158
    )Total reorganization items, net
    
    $
    
    
    
    $
    (1,167
    )
    
    
    $
    144,168
  4. Accounts Receivable
 SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Trade accounts receivable
    
    $
    44,796
    
    
    $
    35,427Less: allowance for doubtful accounts
    
    
    (190
    )
    
    
    (322
    )Net trade accounts receivable
    
    
    44,606
    
    
    
    35,105Value added taxes recoverable
    
    
    3,763
    
    
    
    2,202Miscellaneous receivables
    
    
    520
    
    
    
    1,747Accounts receivable, net
    
    $
    48,889
    
    
    $
    39,054
 5. Inventories
 SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Finished goods
    
    $
    28,727
    
    
    $
    28,900Raw materials and supplies
    
    
    17,112
    
    
    
    16,343Total
    
    
    45,839
    
    
    
    45,243Less: reserves for obsolete and slow-moving inventories
    
    
    (955
    )
    
    
    (1,185
    )Inventories, net
    
    $
    44,884
    
    
    $
    44,058
  9




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6. Property, Plant and Equipment
 SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Land and improvements
    
    $
    15,181
    
    
    $
    15,812Buildings and improvements
    
    
    47,773
    
    
    
    50,708Machinery and equipment
    
    
    123,552
    
    
    
    121,975186,506
    
    
    
    188,495Less: accumulated depreciation and amortization
    
    
    (55,906
    )
    
    
    (40,303
    )130,600
    
    
    
    148,192Construction in progress
    
    
    5,939
    
    
    
    3,334Property, plant and equipment, net
    
    $
    136,539
    
    
    $
    151,526
  7. Impairment of Long-Lived Assets
   8. Goodwill and Intangible Assets
   1.
    
    Income Approach (discounted cash flow analysis)- the discounted cash flow (DCF)
valuation method requires an estimation of future cash flows of an entity and then
discounts those cash flows to their present value using an appropriate discount rate. The
discount rate selected should reflect the risks inherent in the projected cash flows. The
key inputs and assumptions of the DCF method are the projected cash flows, the terminal
value of the entity, and the discount rate. The Company used the Gordon Growth Model and
assumed a 2.75% growth rate to estimate the terminal value of the business. Cash flows
were discounted at a rate of 10.6%.
  10




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##### Table of Contents



2.
    
    Market Approach (market multiples)- this method begins with the identification of
a group of peer companies. Peer companies represent a group of companies in the same or
similar industry as the company being valued. A valuation average multiple is then
computed for the peer group based upon a valuation metric. The Company selected a ratio
of enterprise value to projected earnings before interest, taxes, depreciation and
amortization (EBITDA) as an appropriate valuation multiple. Various operating
performance measurements of the company being valued are then benchmarked against the
peer group and a discount or premium is applied to reflect favorable or unfavorable
comparisons. The resulting multiple is then applied to the company being valued to arrive
at an estimate of its fair value. An equity value is then derived by subtracting the fair
value of interest bearing debt from the total enterprise value. A control premium is then
applied to the equity value. The combined value of interest bearing debt plus an equity
value including control premium equals the estimated total, or enterprise value, of the
business. The Company selected 11 public companies in the packaging industry as its peer
group. The Company calculated for the peer group an average multiple of 2010 projected
EBITDA and a multiple of projected 2011 EBITDA. The peer group average multiples were
then discounted based upon an unfavorable comparison of the Companys historical growth
and profit margins as compared to the peer group. The result was a market multiple of 5.2
for 2010 and a market multiple of 4.7 for 2011. Weightings of 80% and 20% were assigned
to the 2010 and 2011 valuation multiples, respectively. The Company used quoted market
prices to determine the fair value of its debt at June 30, 2010. No control premium was
assumed to determine the Companys equity value.
   (In millions)Assumed
    
    Decrease inValuation Method
    
    Assumption
    
    Change
    
    Fair ValueDiscounted cash flow
    
    Projected cash flows
    
    10% decrease
    
    $
    (11.5
    )Discounted cash flow
    
    Terminal year growth rate
    
    100 basis point decrease
    
    $
    (10.2
    )Discounted cash flow
    
    Discount rate
    
    100 basis point increase
    
    $
    (6.0
    )Market approach
    
    Projected cash flows
    
    10% decrease
    
    $
    (5.6
    )Market approach
    
    Market multiple
    
    20% discount to peer average
    
    $
    (6.2
    )
   11




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##### Table of Contents



Successor
    
    
    
    April 30, 2009
    
    
    PredecessorSix Months
    
    
    Two Months
    
    
    
    Fresh-start
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    Accounting
    
    
    Ended(In thousands)
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    Adjustments
    
    
    April 30, 2009Beginning balance:Goodwill
    
    $
    118,682
    
    
    $
    117,313
    
    
    
    $
    381,872
    
    
    $
    381,872Accumulated impairment losses
    
    
    
    
    
    
    
    
    
    
    
    (233,059
    )
    
    
    (233,059
    )118,682
    
    
    
    117,313
    
    
    
    
    148,813
    
    
    
    148,813Fresh-start accounting adjustments, net
    
    
    
    
    
    
    
    
    
    
    
    (31,500
    )
    
    
    Impairment charges
    
    
    (32,500
    )
    
    
    
    
    
    
    
    
    
    
    
    Ending balance:Goodwill
    
    
    118,682
    
    
    
    117,313
    
    
    
    
    117,313
    
    
    
    381,872Accumulated impairment losses
    
    
    (32,500
    )
    
    
    
    
    
    
    
    
    
    
    
    (233,059
    )$
    86,182
    
    
    $
    117,313
    
    
    
    $
    117,313
    
    
    $
    148,813
    12




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##### Table of Contents



SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Trade name
    
    
    25,500
    
    
    
    25,500Accumulated impairment losses
    
    
    (9,100
    )
    
    
    (4,000
    )Total
    
    $
    16,400
    
    
    $
    21,500
  SuccessorJune 30, 2010
    
    
    December 31, 2009Estimated
    
    
    Gross
    
    
    
    
    
    
    
    
    
    
    GrossLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Net Book
    
    
    Carrying
    
    
    Accumulated
    
    
    Net Book(In thousands)
    
    (in years)
    
    
    Amount
    
    
    Amortization
    
    
    Value
    
    
    Amount
    
    
    Amortization
    
    
    ValueTechnology
    
    4 to 12
    
    $
    9,700
    
    
    $
    (1,410
    )
    
    $
    8,290
    
    
    $
    9,700
    
    
    $
    (805
    )
    
    $
    8,895Leasehold interests
    
    4
    
    

    1,204
    
    
    
    (351
    )
    
    
    853
    
    
    
    1,204
    
    
    
    (201
    )
    
    
    1,003Total
    
    
    
    
    
    $
    10,904
    
    
    $
    (1,761
    )
    
    $
    9,143
    
    
    $
    10,904
    
    
    $
    (1,006
    )
    
    $
    9,898
   (In thousands)Six months ended December 31, 2010
    
    $
    7552011
    
    
    1,5092012
    
    
    1,5092013
    
    
    9092014
    
    
    608After 2014
    
    
    3,853$
    9,143
 9. Debt
 SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Short-term debt:GE Credit Agreement
    
    $
    1,855
    
    
    $
    ING Credit Agreements
    
    
    3,668
    
    
    
    Exit Facility
    
    
    
    
    
    
    5,000Total short-term debt
    
    $
    5,523
    
    
    $
    5,000Long-term debt:Secured Notes
    
    $
    178,939
    
    
    $
    167,919
   13




---



##### Table of Contents



(a)
    
    Up to 85% of the dollar equivalent of the book value
of eligible accounts receivable; plus(b)
    
    subject to certain limitations, the lesser of
(i) 65% of the dollar equivalent of the book value
of eligible inventory valued at the lower of cost on
a first-in, first-out basis or market, and (ii) up
to 85% of the dollar equivalent of the book value of
the net orderly liquidation value of eligible
inventory; minus(c)
    
    $5.0 million; minus(d)
    
    such reserves as the Agent may from time to time
establish in its discretion in connection with
hedging arrangements; minus(e)
    
    such reserves as the Agent may from time to time
establish in its discretion.
       14




---



##### Table of Contents




    
    a dividend or other distribution from Constar Holland causing its
equity capital to amount to less than 35% of total assets;
  15




---



##### Table of Contents




    
    a breach of a covenant, representation, warranty or certification made
in connection with an ING Credit Agreement, including a default in the
payment of any amount due under the ING Credit Agreements;
    
    a default or acceleration with respect to financing or guarantee
agreements of Constar Holland of more than 50,000 or the
occurrence of certain insolvency events; and
    
    Constar Holland becoming subject to certain judgments.
      10. Restructuring
   16




---



##### Table of Contents



2007 Plan
    
    
    2008 PlansSeverance
    
    
    Contractand
    
    
    and LeaseTermination
    
    
    Termination
    
    
    Other(In thousands)
    
    Benefits
    
    
    Costs
    
    
    Costs
    
    
    TotalBalance, January 1, 2010 (Successor)
    
    $
    14
    
    
    $
    46
    
    
    $
    329
    
    
    $
    389Charges to income
    
    
    
    
    
    
    319
    
    
    
    318
    
    
    
    637Payments
    
    
    
    
    
    
    (365
    )
    
    
    (564
    )
    
    
    (929
    )Adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance, June 30, 2010 (Successor)
    
    $
    14
    
    
    $
    
    
    
    $
    83
    
    
    $
    97
 11. Commitments and Contingencies
      17




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##### Table of Contents



12. Other Comprehensive Income (Loss)
  Successor
    
    
    
    PredecessorThree Months Ended
    
    
    Two Months Ended
    
    
    
    One Month EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    
    April 30, 2009Tax
    
    
    
    
    
    
    
    
    
    
    Tax
    
    
    
    
    
    
    
    
    
    
    
    TaxPre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax(In thousands)
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    
    Amount
    
    
    Benefit
    
    
    AmountNet income (loss)
    
    
    
    
    
    
    
    
    
    $
    (39,690
    )
    
    
    
    
    
    
    
    
    
    $
    2,652
    
    
    
    
    
    
    
    
    
    
    
    $
    114,908Other comprehensive income (loss):Pension curtailment
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension remeasurement
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension and postretirement amortization
    
    
    (14
    )
    
    
    17
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    462
    
    
    
    
    
    
    
    462Cash-flow hedge
    
    
    (215
    )
    
    
    83
    
    
    
    (132
    )
    
    
    735
    
    
    
    (257
    )
    
    
    478
    
    
    
    
    743
    
    
    
    
    
    
    
    743Foreign currency translation adjustments
    
    
    (1,715
    )
    
    
    
    
    
    
    (1,715
    )
    
    
    (489
    )
    
    
    
    
    
    
    (489
    )
    
    
    
    (474
    )
    
    
    
    
    
    
    (474
    )Total other comprehensive income (loss)
    
    
    (1,956
    )
    
    
    100
    
    
    
    (1,856
    )
    
    
    246
    
    
    
    (257
    )
    
    
    (11
    )
    
    
    
    731
    
    
    
    
    
    
    
    731Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    $
    (41,546
    )
    
    
    
    
    
    
    
    
    
    $
    2,641
    
    
    
    
    
    
    
    
    
    
    
    $
    115,639
 Successor
    
    
    
    PredecessorSix Months Ended
    
    
    Two Months Ended
    
    
    
    Four Months EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    
    April 30, 2009Tax
    
    
    
    
    
    
    
    
    
    
    Tax
    
    
    
    
    
    
    
    
    
    
    
    TaxPre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax
    
    
    
    Pre-tax
    
    
    (Expense)
    
    
    After-tax(In thousands)
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    Amount
    
    
    Benefit
    
    
    Amount
    
    
    
    Amount
    
    
    Benefit
    
    
    AmountNet income (loss)
    
    
    
    
    
    
    
    
    
    $
    (49,266
    )
    
    
    
    
    
    
    
    
    
    $
    2,652
    
    
    
    
    
    
    
    
    
    
    
    $
    110,198Other comprehensive income (loss):Pension curtailment
    
    
    613
    
    
    
    
    
    
    
    613
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension remeasurement
    
    
    (126
    )
    
    
    
    
    
    
    (126
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Pension and postretirement amortization
    
    
    (30
    )
    
    
    12
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,919
    
    
    
    
    
    
    
    1,919Cash-flow hedge
    
    
    (699
    )
    
    
    269
    
    
    
    (430
    )
    
    
    735
    
    
    
    (257
    )
    
    
    478
    
    
    
    
    951
    
    
    
    
    
    
    
    951Foreign currency translation adjustments
    
    
    (1,827
    )
    
    
    
    
    
    
    (1,827
    )
    
    
    (489
    )
    
    
    
    
    
    
    (489
    )
    
    
    
    (1,134
    )
    
    
    
    
    
    
    (1,134
    )Total other comprehensive income (loss)
    
    
    (2,069
    )
    
    
    281
    
    
    
    (1,788
    )
    
    
    246
    
    
    
    (257
    )
    
    
    (11
    )
    
    
    
    1,736
    
    
    
    
    
    
    
    1,736Comprehensive income (loss)
    
    
    
    
    
    
    
    
    
    $
    (51,054
    )
    
    
    
    
    
    
    
    
    
    $
    2,641
    
    
    
    
    
    
    
    
    
    
    
    $
    111,934
  18




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##### Table of Contents



SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Pension and post-retirement liabilities, net of tax
    
    $
    (1,991
    )
    
    $
    (2,460
    )Cash-flow hedge, net of tax
    
    
    232
    
    
    
    662Foreign currency translation adjustments
    
    
    (1,798
    )
    
    
    29Accumulated other comprehensive loss
    
    $
    (3,557
    )
    
    $
    (1,769
    )
 13. Stock-Based Compensation
   PredecessorFour Months Ended
    
    
    One Month Ended(In thousands)
    
    April 30, 2009
    
    
    April 30, 2009Restricted stock
    
    $
    597
    
    
    $
    464Restricted stock units
    
    
    (6
    )
    
    
    (2
    )$
    591
    
    
    $
    462
 14. Earnings (Loss) Per Common Share
   15. Pension and Other Postretirement Benefits
 Pension Benefits
  Successor
    
    
    
    PredecessorThree Months Ended
    
    
    Two Months Ended
    
    
    
    One Month EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    
    April 30, 2009(In thousands)
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    
    U.S.
    
    
    Europe
    
    
    TotalService cost
    
    $
    160
    
    
    $
    6
    
    
    $
    166
    
    
    $
    89
    
    
    $
    94
    
    
    $
    183
    
    
    
    $
    52
    
    
    $
    31
    
    
    $
    83Interest cost
    
    
    1,303
    
    
    
    169
    
    
    
    1,472
    
    
    
    901
    
    
    
    113
    
    
    
    1,014
    
    
    
    
    437
    
    
    
    31
    
    
    
    468Expected return on plan assets
    
    
    (1,362
    )
    
    
    (178
    )
    
    
    (1,540
    )
    
    
    (757
    )
    
    
    (104
    )
    
    
    (861
    )
    
    
    
    (376
    )
    
    
    (30
    )
    
    
    (406
    )Amortization of net loss
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    396
    
    
    
    23
    
    
    
    419Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    (2
    )
    
    
    3Total pension expense
    
    $
    102
    
    
    $
    (3
    )
    
    $
    99
    
    
    $
    233
    
    
    $
    103
    
    
    $
    336
    
    
    
    $
    514
    
    
    $
    53
    
    
    $
    567
  19




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##### Table of Contents



Successor
    
    
    
    PredecessorSix Months Ended
    
    
    Two Months Ended
    
    
    
    Four Months EndedJune 30, 2010
    
    
    June 30, 2009
    
    
    
    April 30, 2009(In thousands)
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    U.S.
    
    
    Europe
    
    
    Total
    
    
    
    U.S.
    
    
    Europe
    
    
    TotalService cost
    
    $
    319
    
    
    $
    207
    
    
    $
    526
    
    
    $
    89
    
    
    $
    94
    
    
    $
    183
    
    
    
    $
    207
    
    
    $
    168
    
    
    $
    375Interest cost
    
    
    2,606
    
    
    
    358
    
    
    
    2,964
    
    
    
    901
    
    
    
    113
    
    
    
    1,014
    
    
    
    
    1,752
    
    
    
    171
    
    
    
    1,923Expected return on plan assets
    
    
    (2,722
    )
    
    
    (363
    )
    
    
    (3,085
    )
    
    
    (757
    )
    
    
    (104
    )
    
    
    (861
    )
    
    
    
    (1,504
    )
    
    
    (168
    )
    
    
    (1,672
    )Amortization of net loss
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,585
    
    
    
    106
    
    
    
    1,691Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    (12
    )
    
    
    6Total pension expense
    
    $
    204
    
    
    $
    202
    
    
    $
    406
    
    
    $
    233
    
    
    $
    103
    
    
    $
    336
    
    
    
    $
    2,058
    
    
    $
    265
    
    
    $
    2,323
   Other Postretirement Benefits
  Successor
    
    
    
    PredecessorThree Months Ended
    
    
    Two Months Ended
    
    
    
    One Month Ended(In thousands)
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 30, 2009Interest cost
    
    $
    63
    
    
    $
    58
    
    
    
    $
    27Amortization of net (gain) loss
    
    
    (15
    )
    
    
    
    
    
    
    
    65Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    (25
    )Total other postretirement benefits expense
    
    $
    48
    
    
    $
    58
    
    
    
    $
    67Successor
    
    
    
    PredecessorSix Months Ended
    
    
    Two Months Ended
    
    
    
    Four Months Ended(In thousands)
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    April 30, 2009Interest cost
    
    $
    127
    
    
    $
    58
    
    
    
    $
    109Amortization of net (gain) loss
    
    
    (31
    )
    
    
    
    
    
    
    
    261Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    
    (102
    )Total other postretirement benefits expense
    
    $
    96
    
    
    $
    58
    
    
    
    $
    268
 16. Income Taxes
    20




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##### Table of Contents



17. Derivative Financial Instruments
      21




---



##### Table of Contents



SuccessorDerivative Liabilities(In thousands)
    
    Balance
    
    
    Fair ValueDerivatives designated as
    
    Sheet
    
    
    June 30,
    
    
    December 31,hedging instruments
    
    Location
    
    
    2010
    
    
    2009Interest rate swap
    
    Other liabilities
    
    $
    6,488
    
    
    $
    6,485
  SuccessorThree Months Ended June 30, 2010Amount of
    
    
    Amount of Pre-taxGain or (Loss)
    
    
    Gain or (Loss)
    
    
    Amount of Pre-taxRecognized in OCI
    
    
    Reclassified from
    
    
    Gain or (Loss)(In thousands)
    
    on Derivative,
    
    
    Accumulated
    
    
    Recognized in IncomeDerivatives in cash flow
    
    Net of Tax
    
    
    OCI into Income
    
    
    on Derivativehedging relationships
    
    (Effective Portion)
    
    
    (Effective Portion) (a)
    
    
    (Ineffective Portion) (a)Interest rate swaps
    
    $
    
    
    
    $
    (1,126
    )
    
    $
    672
 Amount of Gain or (Loss)
    
    
    Amount of Pre-tax Gain or (Loss)Recognized in OCI on Derivative,
    
    
    Reclassified from Accumulated OCINet of Tax (Effective Portion)
    
    
    into Income (Effective Portion) (a)Successor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    Predecessor(In thousands)
    
    Two Months
    
    
    
    One Month
    
    
    Two Months
    
    
    
    One MonthDerivatives in cash flow
    
    Ended
    
    
    
    Ended
    
    
    Ended
    
    
    
    Endedhedging relationships
    
    June 30, 2009
    
    
    
    April 30, 2009
    
    
    June 30, 2009
    
    
    
    April 30, 2009Interest rate swap
    
    $
    478
    
    
    
    $
    743
    
    
    $
    602
    
    
    
    $
    274
 SuccessorSix Months Ended June 30, 2010Amount of
    
    
    Amount of Pre-taxGain or (Loss)
    
    
    Gain or (Loss)
    
    
    Amount of Pre-taxRecognized in OCI
    
    
    Reclassified from
    
    
    Gain or (Loss)(In thousands)
    
    on Derivative,
    
    
    Accumulated
    
    
    Recognized in IncomeDerivatives in cash flow
    
    Net of Tax
    
    
    OCI into Income
    
    
    on Derivativehedging relationships
    
    (Effective Portion)
    
    
    (Effective Portion) (a)
    
    
    (Ineffective Portion) (a)Interest rate swaps
    
    $
    (265
    )
    
    $
    (2,236
    )
    
    $
    427
  22




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##### Table of Contents



Amount of Gain or (Loss)
    
    
    Amount of Pre-tax Gain or (Loss)Recognized in OCI on Derivative,
    
    
    Reclassified from Accumulated OCINet of Tax (Effective Portion)
    
    
    into Income (Effective Portion) (a)Successor
    
    
    
    Predecessor
    
    
    Successor
    
    
    
    Predecessor(In thousands)
    
    Two Months
    
    
    
    Four Months
    
    
    Two Months
    
    
    
    Four MonthsDerivatives in cash flow
    
    Ended
    
    
    
    Ended
    
    
    Ended
    
    
    
    Endedhedging relationships
    
    June 30, 2009
    
    
    
    April 30, 2009
    
    
    June 30, 2009
    
    
    
    April 30, 2009Interest rate swap
    
    $
    478
    
    
    
    $
    951
    
    
    $
    602
    
    
    
    $
    974
 (a)
    
    Amounts are included in interest expense on the condensed consolidated statements of
operations.  18. Fair Value Measurements
  SuccessorJune 30, 2010SignificantQuoted
    
    
    Significant Other
    
    
    Unobservable
    
    
    TotalPrices
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Fair(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueLiabilitiesInterest rate swap
    
    $
    
    
    
    $
    6,488
    
    
    $
    
    
    
    $
    6,488
 SuccessorDecember 31, 2009SignificantQuoted
    
    
    Significant Other
    
    
    Unobservable
    
    
    TotalPrices
    
    
    Observable Inputs
    
    
    Inputs
    
    
    Fair(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueLiabilitiesInterest rate swap
    
    $
    
    
    
    $
    6,485
    
    
    $
    
    
    
    $
    6,485
   23




---



##### Table of Contents



SuccessorJune 30, 2010
    
    
    December 31, 2009(In thousands)
    
    Carrying 
Amount
    
    
    Fair Value
    
    
    Carrying
 Amount
    
    
    Fair ValueAsset (liability)Senior Notes
    
    
    (178,939
    )
    
    
    (183,425
    )
    
    
    (167,919
    )
    
    
    (182,050
    )
  SuccessorJune 30, 2010Significant Other
    
    
    SignificantQuoted
    
    
    Observable
    
    
    Unobservable
    
    
    TotalPrices
    
    
    Inputs
    
    
    Inputs
    
    
    Fair(In thousands)
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    ValueGoodwill
    
    $
    
    
    
    $
    
    
    
    $
    86,182
    
    
    $
    86,182Trade name
    
    
    
    
    
    
    
    
    
    
    16,400
    
    
    
    16,400$
    
    
    
    $
    
    
    
    $
    102,582
    
    
    $
    102,582
  19. Other Income (Expense)
  Successor
    
    
    
    PredecessorThree Months
    
    
    Two Months
    
    
    
    One MonthEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Foreign exchange gains (losses)
    
    $
    (1,219
    )
    
    $
    3,346
    
    
    
    $
    1,206Royalty income
    
    
    142
    
    
    
    109
    
    
    
    
    365Royalty expense
    
    
    (55
    )
    
    
    (55
    )
    
    
    
    (154
    )Interest income
    
    
    13
    
    
    
    8
    
    
    
    
    (10
    )Other income (expense)
    
    
    4
    
    
    
    
    
    
    
    
    (25
    )Other income (expense), net
    
    $
    (1,115
    )
    
    $
    3,408
    
    
    
    $
    1,382
  24




---



##### Table of Contents



Successor
    
    
    
    PredecessorSix Months
    
    
    Two Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Foreign exchange gains (losses)
    
    $
    (2,056
    )
    
    $
    3,346
    
    
    
    $
    1,321Royalty income
    
    
    255
    
    
    
    109
    
    
    
    
    418Royalty expense
    
    
    (124
    )
    
    
    (55
    )
    
    
    
    (185
    )Interest income
    
    
    27
    
    
    
    8
    
    
    
    
    12Other income (expense)
    
    
    (3
    )
    
    
    
    
    
    
    
    (23
    )Other income (expense), net
    
    $
    (1,901
    )
    
    $
    3,408
    
    
    
    $
    1,543
 20. Supplemental Sales Information
 The Company has only one operating segment and one reporting unit. The Company has operating
plants in the United States and Europe.  Successor
    
    
    
    PredecessorThree months
    
    
    Two months
    
    
    
    One monthEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009United States
    
    $
    116,923
    
    
    $
    95,253
    
    
    
    $
    46,783United Kingdom
    
    
    31,660
    
    
    
    23,279
    
    
    
    
    9,886Holland
    
    
    9,072
    
    
    
    2,986
    
    
    
    
    1,149Net sales
    
    $
    157,655
    
    
    $
    121,518
    
    
    
    $
    57,818Successor
    
    
    
    PredecessorSix months
    
    
    Two months
    
    
    
    Four monthsEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009United States
    
    $
    221,504
    
    
    $
    95,253
    
    
    
    $
    180,086United Kingdom
    
    
    55,847
    
    
    
    23,279
    
    
    
    
    33,733Holland
    
    
    14,826
    
    
    
    2,986
    
    
    
    
    3,641Net sales
    
    $
    292,177
    
    
    $
    121,518
    
    
    
    $
    217,460
 21. Discontinued Operations
   25




---



##### Table of Contents



SuccessorJune 30,
    
    
    December 31,(In thousands)
    
    2010
    
    
    2009Assets of Discontinued Operations:Prepaid expenses and other current assets
    
    $
    287
    
    
    $
    337Liabilities of Discontinued Operations:Accounts payable and accrued expenses
    
    $
    60
    
    
    $
    44Total current liabilities of discontinued operations
    
    
    60
    
    
    
    44Other liabilities
    
    
    752
    
    
    
    881Total liabilities of discontinued operations
    
    $
    812
    
    
    $
    925
   Successor
    
    
    
    PredecessorThree Months
    
    
    Two Months
    
    
    
    One MonthEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Net sales
    
    $
    
    
    
    $
    
    
    
    
    $
    Income (loss) from discontinued operations before income taxes
    
    
    64
    
    
    
    (59
    )
    
    
    
    (19
    )Provision for income taxes
    
    
    
    
    
    
    (1
    )
    
    
    
    Income (loss) from discontinued operations
    
    $
    64
    
    
    $
    (60
    )
    
    
    $
    (19
    )Successor
    
    
    
    PredecessorSix Months
    
    
    Two Months
    
    
    
    Four MonthsEnded
    
    
    Ended
    
    
    
    EndedJune 30,
    
    
    June 30,
    
    
    
    April 30,(In thousands)
    
    2010
    
    
    2009
    
    
    
    2009Net sales
    
    $
    
    
    
    $
    
    
    
    
    $
    Income (loss) from discontinued operations before income taxes
    
    
    93
    
    
    
    (59
    )
    
    
    
    (17
    )Provision for income taxes
    
    
    
    
    
    
    (1
    )
    
    
    
    (79
    )Income (loss) from discontinued operations
    
    $
    93
    
    
    $
    (60
    )
    
    
    $
    (96
    )
 22. Condensed Consolidating Financial Information
   26




---



##### Table of Contents



Condensed Consolidating Balance Sheet
June 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    Reclassifications/
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    887
    
    
    $
    593
    
    
    $
    
    
    
    $
    1,480Intercompany receivables
    
    
    
    
    
    
    237,632
    
    
    
    10,250
    
    
    
    (247,882
    )
    
    
    Accounts receivable, net
    
    
    
    
    
    
    43,684
    
    
    
    5,205
    
    
    
    
    
    
    
    48,889Inventories, net
    
    
    
    
    
    
    40,921
    
    
    
    3,963
    
    
    
    
    
    
    
    44,884Prepaid expenses and other current assets
    
    
    
    
    
    
    6,393
    
    
    
    768
    
    
    
    
    
    
    
    7,161Deferred taxes
    
    
    356
    
    
    
    
    
    
    
    
    
    
    
    (356
    )
    
    
    Total current assets
    
    
    356
    
    
    
    329,517
    
    
    
    20,779
    
    
    
    (248,238
    )
    
    
    102,414Property, plant and equipment, net
    
    
    
    
    
    
    127,798
    
    
    
    8,741
    
    
    
    
    
    
    
    136,539Goodwill and intangible assets
    
    
    
    
    
    
    111,725
    
    
    
    
    
    
    
    
    
    
    
    111,725Investment in subsidiaries
    
    
    367,345
    
    
    
    17,752
    
    
    
    
    
    
    
    (385,097
    )
    
    
    Deferred income taxes
    
    
    66,229
    
    
    
    
    
    
    
    
    
    
    
    (66,229
    )
    
    
    Other assets
    
    
    
    
    
    
    5,740
    
    
    
    259
    
    
    
    
    
    
    
    5,999Total assets
    
    $
    433,930
    
    
    $
    592,532
    
    
    $
    29,779
    
    
    $
    (699,564
    )
    
    $
    356,677LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Short-term debt
    
    $
    
    
    
    $
    1,855
    
    
    $
    3,668
    
    
    $
    
    
    
    $
    5,523Accounts payable and accrued liabilities
    
    
    1,497
    
    
    
    82,668
    
    
    
    5,129
    
    
    
    
    
    
    
    89,294Intercompany payable
    
    
    219,457
    
    
    
    27,732
    
    
    
    693
    
    
    
    (247,882
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    1,934
    
    
    
    
    
    
    
    (356
    )
    
    
    1,578Total current liabilities
    
    
    220,954
    
    
    
    114,189
    
    
    
    9,490
    
    
    
    (248,238
    )
    
    
    96,395Long-term debt
    
    
    178,939
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    178,939Pension and postretirement liabilities
    
    
    
    
    
    
    28,251
    
    
    
    764
    
    
    
    
    
    
    
    29,015Deferred income taxes
    
    
    
    
    
    
    74,996
    
    
    
    1,021
    
    
    
    (66,229
    )
    
    
    9,788Other liabilities
    
    
    6,488
    
    
    
    7,751
    
    
    
    752
    
    
    
    
    
    
    
    14,991Total liabilities
    
    
    406,381
    
    
    
    225,187
    
    
    
    12,027
    
    
    
    (314,467
    )
    
    
    329,128Commitments and contingenciesStockholders equity (deficit)
    
    
    27,549
    
    
    
    367,345
    
    
    
    17,752
    
    
    
    (385,097
    )
    
    
    27,549Total liabilities and stockholders
equity (deficit)
    
    $
    433,930
    
    
    $
    592,532
    
    
    $
    29,779
    
    
    $
    (699,564
    )
    
    $
    356,677
  27




---



##### Table of Contents



Condensed Consolidating Balance Sheet
December 31, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantor
    
    
    Eliminations
    
    
    CompanyASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    2,022
    
    
    $
    447
    
    
    $
    
    
    
    $
    2,469Intercompany receivables
    
    
    
    
    
    
    216,779
    
    
    
    10,821
    
    
    
    (227,600
    )
    
    
    Accounts receivable, net
    
    
    
    
    
    
    36,785
    
    
    
    2,269
    
    
    
    
    
    
    
    39,054Inventories, net
    
    
    
    
    
    
    40,284
    
    
    
    3,774
    
    
    
    
    
    
    
    44,058Prepaid expenses and other current assets
    
    
    12
    
    
    
    7,218
    
    
    
    666
    
    
    
    
    
    
    
    7,896Restricted cash
    
    
    
    
    
    
    7,589
    
    
    
    
    
    
    
    
    
    
    
    7,589Deferred income taxes
    
    
    2,098
    
    
    
    
    
    
    
    
    
    
    
    (2,098
    )
    
    
    Total current assets
    
    
    2,110
    
    
    
    310,677
    
    
    
    17,977
    
    
    
    (229,698
    )
    
    
    101,066Property, plant and equipment, net
    
    
    
    
    
    
    141,521
    
    
    
    10,005
    
    
    
    
    
    
    
    151,526Goodwill and intangible assets
    
    
    
    
    
    
    150,080
    
    
    
    
    
    
    
    
    
    
    
    150,080Investment in subsidiaries
    
    
    405,700
    
    
    
    20,910
    
    
    
    
    
    
    
    (426,610
    )
    
    
    Deferred income taxes
    
    
    58,772
    
    
    
    
    
    
    
    
    
    
    
    (58,772
    )
    
    
    Other assets
    
    
    552
    
    
    
    2,728
    
    
    
    312
    
    
    
    
    
    
    
    3,592Total assets
    
    $
    467,134
    
    
    $
    625,916
    
    
    $
    28,294
    
    
    $
    (715,080
    )
    
    $
    406,264LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current Liabilities:Short-term debt
    
    $
    5,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,000Accounts payable and accrued liabilities
    
    
    1,681
    
    
    
    79,325
    
    
    
    3,375
    
    
    
    
    
    
    
    84,381Intercompany payable
    
    
    207,446
    
    
    
    19,325
    
    
    
    829
    
    
    
    (227,600
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    3,320
    
    
    
    
    
    
    
    (2,098
    )
    
    
    1,222Total current liabilities
    
    
    214,127
    
    
    
    101,970
    
    
    
    4,204
    
    
    
    (229,698
    )
    
    
    90,603Long-term debt
    
    
    167,919
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,919Pension and postretirement liabilities
    
    
    
    
    
    
    30,053
    
    
    
    1,052
    
    
    
    
    
    
    
    31,105Deferred income taxes
    
    
    
    
    
    
    81,056
    
    
    
    1,247
    
    
    
    (58,772
    )
    
    
    23,531Other liabilities
    
    
    6,485
    
    
    
    7,137
    
    
    
    881
    
    
    
    
    
    
    
    14,503Total liabilities
    
    
    388,531
    
    
    
    220,216
    
    
    
    7,384
    
    
    
    (288,470
    )
    
    
    327,661Commitments and contingenciesStockholders equity (deficit)
    
    
    78,603
    
    
    
    405,700
    
    
    
    20,910
    
    
    
    (426,610
    )
    
    
    78,603Total liabilities and stockholders
equity (deficit)
    
    $
    467,134
    
    
    $
    625,916
    
    
    $
    28,294
    
    
    $
    (715,080
    )
    
    $
    406,264
  28




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##### Table of Contents



Condensed Consolidating Statement of Operations
For the three months ended June 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    148,548
    
    
    $
    9,107
    
    
    $
    
    
    
    $
    157,655Cost of products sold, excluding depreciation
    
    
    
    
    
    
    130,872
    
    
    
    8,539
    
    
    
    
    
    
    
    139,411Depreciation and amortization
    
    
    
    
    
    
    8,541
    
    
    
    222
    
    
    
    
    
    
    
    8,763Gross profit
    
    
    
    
    
    
    9,135
    
    
    
    346
    
    
    
    
    
    
    
    9,481Selling and administrative expenses
    
    
    
    
    
    
    7,368
    
    
    
    186
    
    
    
    
    
    
    
    7,554Goodwill impairment
    
    
    
    
    
    
    32,500
    
    
    
    
    
    
    
    
    
    
    
    32,500Impairment of intangible assets
    
    
    
    
    
    
    5,100
    
    
    
    
    
    
    
    
    
    
    
    5,100Research and technology expenses
    
    
    
    
    
    
    1,623
    
    
    
    
    
    
    
    
    
    
    
    1,623Provision for restructuring
    
    
    
    
    
    
    272
    
    
    
    
    
    
    
    
    
    
    
    272Gain on disposal of assets
    
    
    
    
    
    
    (108
    )
    
    
    
    
    
    
    
    
    
    
    (108
    )Total operating expenses
    
    
    
    
    
    
    46,755
    
    
    
    186
    
    
    
    
    
    
    
    46,941Operating income (loss)
    
    
    
    
    
    
    (37,620
    )
    
    
    160
    
    
    
    
    
    
    
    (37,460
    )Interest expense
    
    
    (9,205
    )
    
    
    411
    
    
    
    97
    
    
    
    
    
    
    
    (8,697
    )Other income (expense), net
    
    
    
    
    
    
    (1,021
    )
    
    
    (94
    )
    
    
    
    
    
    
    (1,115
    )Income (loss) from continuing
operations before income taxes
    
    
    (9,205
    )
    
    
    (38,230
    )
    
    
    163
    
    
    
    
    
    
    
    (47,272
    )(Provision for) benefit from income taxes
    
    
    3,189
    
    
    
    4,378
    
    
    
    (49
    )
    
    
    
    
    
    
    7,518Income (loss) from continuing operations
    
    
    (6,016
    )
    
    
    (33,852
    )
    
    
    114
    
    
    
    
    
    
    
    (39,754
    )Equity earnings
    
    
    (33,674
    )
    
    
    176
    
    
    
    
    
    
    
    33,498
    
    
    
    Income from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    64
    
    
    
    
    
    
    
    64Net income (loss)
    
    $
    (39,690
    )
    
    $
    (33,676
    )
    
    $
    178
    
    
    $
    33,498
    
    
    $
    (39,690
    )
  29




---



##### Table of Contents



Condensed Consolidating Statement of Income
For the two months ended June 30, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    118,532
    
    
    $
    2,986
    
    
    $
    
    
    
    $
    121,518Cost of products sold, excluding depreciation
    
    
    
    
    
    
    102,103
    
    
    
    2,267
    
    
    
    
    
    
    
    104,370Depreciation and amortization
    
    
    
    
    
    
    6,980
    
    
    
    84
    
    
    
    
    
    
    
    7,064Gross profit
    
    
    
    
    
    
    9,449
    
    
    
    635
    
    
    
    
    
    
    
    10,084Selling and administrative expenses
    
    
    
    
    
    
    3,001
    
    
    
    138
    
    
    
    
    
    
    
    3,139Research and technology expenses
    
    
    
    
    
    
    1,229
    
    
    
    
    
    
    
    
    
    
    
    1,229Provision for restructuring
    
    
    
    
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    265Gain on disposal of assets
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Total operating expenses
    
    
    
    
    
    
    4,492
    
    
    
    138
    
    
    
    
    
    
    
    4,630Operating income
    
    
    
    
    
    
    4,957
    
    
    
    497
    
    
    
    
    
    
    
    5,454Interest expense
    
    
    (5,788
    )
    
    
    (106
    )
    
    
    106
    
    
    
    
    
    
    
    (5,788
    )Reorganization items, net
    
    
    (1,157
    )
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (1,167
    )Other income (expense), net
    
    
    
    
    
    
    3,357
    
    
    
    51
    
    
    
    
    
    
    
    3,408Income (loss) from continuing
operations before income taxes
    
    
    (6,945
    )
    
    
    8,198
    
    
    
    654
    
    
    
    
    
    
    
    1,907(Provision for) benefit from income taxes
    
    
    
    
    
    
    1,030
    
    
    
    (225
    )
    
    
    
    
    
    
    805Income (loss) from continuing operations
    
    
    (6,945
    )
    
    
    9,228
    
    
    
    429
    
    
    
    
    
    
    
    2,712Equity earnings
    
    
    9,597
    
    
    
    369
    
    
    
    
    
    
    
    (9,966
    )
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    (60
    )Net income (loss)
    
    $
    2,652
    
    
    $
    9,597
    
    
    $
    369
    
    
    $
    (9,966
    )
    
    $
    2,652
  30




---



##### Table of Contents



Condensed Consolidating Statement of Income
For the one month ended April 30, 2009
(In thousands)
(Unaudited)
 PredecessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    56,668
    
    
    $
    1,150
    
    
    $
    
    
    
    $
    57,818Cost of products sold, excluding depreciation
    
    
    
    
    
    
    46,765
    
    
    
    938
    
    
    
    
    
    
    
    47,703Depreciation and amortization
    
    
    
    
    
    
    2,448
    
    
    
    29
    
    
    
    
    
    
    
    2,477Gross profit
    
    
    
    
    
    
    7,455
    
    
    
    183
    
    
    
    
    
    
    
    7,638Selling and administrative expenses
    
    
    
    
    
    
    1,784
    
    
    
    48
    
    
    
    
    
    
    
    1,832Research and technology expenses
    
    
    
    
    
    
    832
    
    
    
    
    
    
    
    
    
    
    
    832Provision for restructuring
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    133Gain on disposal of assets
    
    
    
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    (76
    )Total operating expenses
    
    
    
    
    
    
    2,673
    
    
    
    48
    
    
    
    
    
    
    
    2,721Operating income
    
    
    
    
    
    
    4,782
    
    
    
    135
    
    
    
    
    
    
    
    4,917Interest expense
    
    
    (1,747
    )
    
    
    424
    
    
    
    53
    
    
    
    
    
    
    
    (1,270
    )Reorganization items, net
    
    
    81,408
    
    
    
    61,679
    
    
    
    4,636
    
    
    
    
    
    
    
    147,723Other income (expense), net
    
    
    
    
    
    
    1,382
    
    
    
    
    
    
    
    
    
    
    
    1,382Income from continuing
operations before income taxes
    
    
    79,661
    
    
    
    68,267
    
    
    
    4,824
    
    
    
    
    
    
    
    152,752Provision for income taxes
    
    
    
    
    
    
    (36,951
    )
    
    
    (874
    )
    
    
    
    
    
    
    (37,825
    )Income from continuing operations
    
    
    79,661
    
    
    
    31,316
    
    
    
    3,950
    
    
    
    
    
    
    
    114,927Equity earnings
    
    
    35,247
    
    
    
    3,931
    
    
    
    
    
    
    
    (39,178
    )
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    (19
    )Net income (loss)
    
    $
    114,908
    
    
    $
    35,247
    
    
    $
    3,931
    
    
    $
    (39,178
    )
    
    $
    114,908
  31




---



##### Table of Contents



Condensed Consolidating Statement of Operations
For the six months ended June 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    277,316
    
    
    $
    14,861
    
    
    $
    
    
    
    $
    292,177Cost of products sold, excluding depreciation
    
    
    
    
    
    
    248,910
    
    
    
    14,218
    
    
    
    
    
    
    
    263,128Depreciation and amortization
    
    
    
    
    
    
    18,161
    
    
    
    393
    
    
    
    
    
    
    
    18,554Gross profit
    
    
    
    
    
    
    10,245
    
    
    
    250
    
    
    
    
    
    
    
    10,495Selling and administrative expenses
    
    
    
    
    
    
    11,746
    
    
    
    365
    
    
    
    
    
    
    
    12,111Goodwill impairment
    
    
    
    
    
    
    32,500
    
    
    
    
    
    
    
    
    
    
    
    32,500Impairment of intangible assets
    
    
    
    
    
    
    5,100
    
    
    
    
    
    
    
    
    
    
    
    5,100Research and technology expenses
    
    
    
    
    
    
    3,324
    
    
    
    
    
    
    
    
    
    
    
    3,324Provision for restructuring
    
    
    
    
    
    
    637
    
    
    
    
    
    
    
    
    
    
    
    637Gain on disposal of assets
    
    
    
    
    
    
    (654
    )
    
    
    
    
    
    
    
    
    
    
    (654
    )Total operating expenses
    
    
    
    
    
    
    52,653
    
    
    
    365
    
    
    
    
    
    
    
    53,018Operating loss
    
    
    
    
    
    
    (42,408
    )
    
    
    (115
    )
    
    
    
    
    
    
    (42,523
    )Interest expense
    
    
    (16,626
    )
    
    
    (1,454
    )
    
    
    256
    
    
    
    
    
    
    
    (17,824
    )Other income (expense), net
    
    
    
    
    
    
    (1,685
    )
    
    
    (216
    )
    
    
    
    
    
    
    (1,901
    )Loss from continuing
operations before income taxes
    
    
    (16,626
    )
    
    
    (45,547
    )
    
    
    (75
    )
    
    
    
    
    
    
    (62,248
    )Benefit from income taxes
    
    
    5,715
    
    
    
    7,156
    
    
    
    18
    
    
    
    
    
    
    
    12,889Loss from continuing operations
    
    
    (10,911
    )
    
    
    (38,391
    )
    
    
    (57
    )
    
    
    
    
    
    
    (49,359
    )Equity earnings
    
    
    (38,355
    )
    
    
    36
    
    
    
    
    
    
    
    38,319
    
    
    
    Income from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    93Net income (loss)
    
    $
    (49,266
    )
    
    $
    (38,355
    )
    
    $
    36
    
    
    $
    38,319
    
    
    $
    (49,266
    )
  32




---



##### Table of Contents



Condensed Consolidating Statement of Income
For the two months ended June 30, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    118,532
    
    
    $
    2,986
    
    
    $
    
    
    
    $
    121,518Cost of products sold, excluding depreciation
    
    
    
    
    
    
    102,103
    
    
    
    2,267
    
    
    
    
    
    
    
    104,370Depreciation and amortization
    
    
    
    
    
    
    6,980
    
    
    
    84
    
    
    
    
    
    
    
    7,064Gross profit
    
    
    
    
    
    
    9,449
    
    
    
    635
    
    
    
    
    
    
    
    10,084Selling and administrative expenses
    
    
    
    
    
    
    3,001
    
    
    
    138
    
    
    
    
    
    
    
    3,139Research and technology expenses
    
    
    
    
    
    
    1,229
    
    
    
    
    
    
    
    
    
    
    
    1,229Provision for restructuring
    
    
    
    
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    265Gain on disposal of assets
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Total operating expenses
    
    
    
    
    
    
    4,492
    
    
    
    138
    
    
    
    
    
    
    
    4,630Operating income
    
    
    
    
    
    
    4,957
    
    
    
    497
    
    
    
    
    
    
    
    5,454Interest expense
    
    
    (5,788
    )
    
    
    (106
    )
    
    
    106
    
    
    
    
    
    
    
    (5,788
    )Reorganization items, net
    
    
    (1,157
    )
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    (1,167
    )Other income (expense), net
    
    
    
    
    
    
    3,357
    
    
    
    51
    
    
    
    
    
    
    
    3,408Income (loss) from continuing
operations before income taxes
    
    
    (6,945
    )
    
    
    8,198
    
    
    
    654
    
    
    
    
    
    
    
    1,907(Provision for) benefit from income taxes
    
    
    
    
    
    
    1,030
    
    
    
    (225
    )
    
    
    
    
    
    
    805Income (loss) from continuing operations
    
    
    (6,945
    )
    
    
    9,228
    
    
    
    429
    
    
    
    
    
    
    
    2,712Equity earnings
    
    
    9,597
    
    
    
    369
    
    
    
    
    
    
    
    (9,966
    )
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    (60
    )Net income (loss)
    
    $
    2,652
    
    
    $
    9,597
    
    
    $
    369
    
    
    $
    (9,966
    )
    
    $
    2,652
  33




---



##### Table of Contents



Condensed Consolidating Statement of Income
For the four months ended April 30, 2009
(In thousands)
(Unaudited)
 PredecessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyNet sales
    
    $
    
    
    
    $
    213,819
    
    
    $
    3,641
    
    
    $
    
    
    
    $
    217,460Cost of products sold, excluding depreciation
    
    
    
    
    
    
    185,975
    
    
    
    3,841
    
    
    
    
    
    
    
    189,816Depreciation and amortization
    
    
    
    
    
    
    9,507
    
    
    
    226
    
    
    
    
    
    
    
    9,733Gross profit
    
    
    
    
    
    
    18,337
    
    
    
    (426
    )
    
    
    
    
    
    
    17,911Selling and administrative expenses
    
    
    
    
    
    
    6,802
    
    
    
    203
    
    
    
    
    
    
    
    7,005Research and technology expenses
    
    
    
    
    
    
    2,698
    
    
    
    
    
    
    
    
    
    
    
    2,698Provision for restructuring
    
    
    
    
    
    
    648
    
    
    
    
    
    
    
    
    
    
    
    648Gain on disposal of assets
    
    
    
    
    
    
    (396
    )
    
    
    
    
    
    
    
    
    
    
    (396
    )Total operating expenses
    
    
    
    
    
    
    9,752
    
    
    
    203
    
    
    
    
    
    
    
    9,955Operating income (loss)
    
    
    
    
    
    
    8,585
    
    
    
    (629
    )
    
    
    
    
    
    
    7,956Interest expense
    
    
    (5,566
    )
    
    
    (204
    )
    
    
    204
    
    
    
    
    
    
    
    (5,566
    )Reorganization items, net
    
    
    77,853
    
    
    
    61,679
    
    
    
    4,636
    
    
    
    
    
    
    
    144,168Other income (expense), net
    
    
    
    
    
    
    1,546
    
    
    
    (3
    )
    
    
    
    
    
    
    1,543Income from continuing
operations before income taxes
    
    
    72,287
    
    
    
    71,606
    
    
    
    4,208
    
    
    
    
    
    
    
    148,101Provision for income taxes
    
    
    
    
    
    
    (36,944
    )
    
    
    (863
    )
    
    
    
    
    
    
    (37,807
    )Income from continuing operations
    
    
    72,287
    
    
    
    34,662
    
    
    
    3,345
    
    
    
    
    
    
    
    110,294Equity earnings
    
    
    37,911
    
    
    
    3,249
    
    
    
    
    
    
    
    (41,160
    )
    
    
    Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    
    
    
    
    (96
    )
    
    
    
    
    
    
    (96
    )Net income (loss)
    
    $
    110,198
    
    
    $
    37,911
    
    
    $
    3,249
    
    
    $
    (41,160
    )
    
    $
    110,198
  34




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the six months ended June 30, 2010
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyCash flows from operating activities:Net income (loss)
    
    $
    (49,266
    )
    
    $
    (38,355
    )
    
    $
    36
    
    
    $
    38,319
    
    
    $
    (49,266
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    18,504
    
    
    
    440
    
    
    
    
    
    
    
    18,944Impairment of goodwill and intangible assets
    
    
    
    
    
    
    37,600
    
    
    
    
    
    
    
    
    
    
    
    37,600Debt accretion
    
    
    11,020
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,020Gain on disposal of assets
    
    
    
    
    
    
    (654
    )
    
    
    
    
    
    
    
    
    
    
    (654
    )Equity earnings
    
    
    38,355
    
    
    
    (36
    )
    
    
    
    
    
    
    (38,319
    )
    
    
    Changes in operating assets and liabilities
    
    
    (12,121
    )
    
    
    (6,262
    )
    
    
    (1,810
    )
    
    
    
    
    
    
    (20,193
    )Net cash provided by (used in) operating activities
    
    
    (12,012
    )
    
    
    10,797
    
    
    
    (1,334
    )
    
    
    
    
    
    
    (2,549
    )Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    7,589
    
    
    
    
    
    
    
    
    
    
    
    7,589Purchases of property, plant and equipment
    
    
    
    
    
    
    (4,779
    )
    
    
    (729
    )
    
    
    
    
    
    
    (5,508
    )Proceeds from the sale of property, plant and equipment
    
    
    
    
    
    
    623
    
    
    
    
    
    
    
    
    
    
    
    623Net cash provided by (used in) investing activities
    
    
    
    
    
    
    3,433
    
    
    
    (729
    )
    
    
    
    
    
    
    2,704Cash flows from financing activities:Costs associated with exit facility
    
    
    
    
    
    
    (1,862
    )
    
    
    
    
    
    
    
    
    
    
    (1,862
    )Proceeds from short-term financing
    
    
    
    
    
    
    284,654
    
    
    
    10,339
    
    
    
    
    
    
    
    294,993Repayment of short-term financing
    
    
    
    
    
    
    (287,799
    )
    
    
    (6,353
    )
    
    
    
    
    
    
    (294,152
    )Net change in intercompany loans
    
    
    12,012
    
    
    
    (10,318
    )
    
    
    (1,694
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    12,012
    
    
    
    (15,325
    )
    
    
    2,292
    
    
    
    
    
    
    
    (1,021
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    (40
    )
    
    
    (83
    )
    
    
    
    
    
    
    (123
    )Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (1,135
    )
    
    
    146
    
    
    
    
    
    
    
    (989
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    2,022
    
    
    
    447
    
    
    
    
    
    
    
    2,469Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    887
    
    
    $
    593
    
    
    $
    
    
    
    $
    1,480
  35




---



##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the two months ended June 30, 2009
(In thousands)
(Unaudited)
 SuccessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyCash flows from operating activities:Net income (loss)
    
    $
    2,652
    
    
    $
    9,597
    
    
    $
    369
    
    
    $
    (9,966
    )
    
    $
    2,652Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    3,558
    
    
    
    6,743
    
    
    
    122
    
    
    
    
    
    
    
    10,423Gain on disposal of assets
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (3
    )Reorganization items
    
    
    (404
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (404
    )Equity earnings
    
    
    (9,597
    )
    
    
    (369
    )
    
    
    
    
    
    
    9,966
    
    
    
    Changes in operating assets and liabilities
    
    
    (1,791
    )
    
    
    1,383
    
    
    
    (1,258
    )
    
    
    
    
    
    
    (1,666
    )Net cash provided by (used in) operating activities
    
    
    (5,582
    )
    
    
    17,351
    
    
    
    (767
    )
    
    
    
    
    
    
    11,002Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    (2,485
    )
    
    
    
    
    
    
    
    
    
    
    (2,485
    )Purchases of property, plant and equipment
    
    
    
    
    
    
    (2,277
    )
    
    
    (376
    )
    
    
    
    
    
    
    (2,653
    )Net cash used in investing activities
    
    
    
    
    
    
    (4,762
    )
    
    
    (376
    )
    
    
    
    
    
    
    (5,138
    )Cash flows from financing activities:Costs associated with Exit Facility
    
    
    (101
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101
    )Proceeds from short-term financing
    
    
    125,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    125,000Repayment of short-term financing
    
    
    (130,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (130,000
    )Net change in intercompany loans
    
    
    10,683
    
    
    
    (11,785
    )
    
    
    1,102
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    5,582
    
    
    
    (11,785
    )
    
    
    1,102
    
    
    
    
    
    
    
    (5,101
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    52
    
    
    
    27
    
    
    
    
    
    
    
    79Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    856
    
    
    
    (14
    )
    
    
    
    
    
    
    842Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    1,317
    
    
    
    567
    
    
    
    
    
    
    
    1,884Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    2,173
    
    
    $
    553
    
    
    $
    
    
    
    $
    2,726
  36




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Condensed Consolidating Statement of Cash Flows
For the four months ended April 30, 2009
(In thousands)
(Unaudited)
 PredecessorNon-
    
    
    
    
    
    
    TotalParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    CompanyCash flows from operating activities:Net income (loss)
    
    $
    110,198
    
    
    $
    37,911
    
    
    $
    3,249
    
    
    $
    (41,160
    )
    
    $
    110,198Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    317
    
    
    
    9,514
    
    
    
    229
    
    
    
    
    
    
    
    10,060Stock-based compensation
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    
    
    
    
    591Gain on disposal of assets
    
    
    
    
    
    
    (396
    )
    
    
    
    
    
    
    
    
    
    
    (396
    )Reorganization items
    
    
    (79,299
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79,299
    )Fresh-start accounting adjustments
    
    
    2,654
    
    
    
    (66,127
    )
    
    
    (4,636
    )
    
    
    
    
    
    
    (68,109
    )Equity earnings
    
    
    (37,911
    )
    
    
    (3,249
    )
    
    
    
    
    
    
    41,160
    
    
    
    Changes in operating assets and liabilities
    
    
    (46
    )
    
    
    42,547
    
    
    
    1,955
    
    
    
    
    
    
    
    44,456Net cash provided by (used in) operating activities
    
    
    (4,087
    )
    
    
    20,791
    
    
    
    797
    
    
    
    
    
    
    
    17,501Cash flows from investing activities:Restricted cash
    
    
    
    
    
    
    (9,327
    )
    
    
    
    
    
    
    
    
    
    
    (9,327
    )Purchases of property, plant and equipment
    
    
    
    
    
    
    (5,557
    )
    
    
    (166
    )
    
    
    
    
    
    
    (5,723
    )Proceeds from the sale of property, plant and equipment
    
    
    
    
    
    
    149
    
    
    
    
    
    
    
    
    
    
    
    149Net cash used in investing activities
    
    
    
    
    
    
    (14,735
    )
    
    
    (166
    )
    
    
    
    
    
    
    (14,901
    )Cash flows from financing activities:Proceeds from short-term financing
    
    
    212,723
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    212,723Repayment of short-term financing
    
    
    (227,723
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (227,723
    )Net change in intercompany loans
    
    
    19,087
    
    
    
    (18,680
    )
    
    
    (407
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    4,087
    
    
    
    (18,680
    )
    
    
    (407
    )
    
    
    
    
    
    
    (15,000
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    8
    
    
    
    (16
    )
    
    
    
    
    
    
    (8
    )Net increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (12,616
    )
    
    
    208
    
    
    
    
    
    
    
    (12,408
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    13,933
    
    
    
    359
    
    
    
    
    
    
    
    14,292Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    1,317
    
    
    $
    567
    
    
    $
    
    
    
    $
    1,884
  37




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##### Table of Contents



23. Subsequent Events
    38




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
       39




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40




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Basis of Presentation
     Results of Operations
 Net Sales
 Three Months Ended June 30, 2010 and 2009
 Three months ended
    
    
    
    
    
    
    %June 30,
    
    
    Increase
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    (Decrease)United States
    
    $
    117.0
    
    
    $
    142.0
    
    
    $
    (25.0
    )
    
    
    (17.6
    )%Europe
    
    
    40.7
    
    
    
    37.3
    
    
    
    3.4
    
    
    
    9.1
    %Total
    
    $
    157.7
    
    
    $
    179.3
    
    
    $
    (21.6
    )
    
    
    (12.0
    )%
    41




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##### Table of Contents



Gross Profit
 Three months endedJune 30,
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)United States
    
    $
    7.5
    
    
    $
    14.5
    
    
    $
    (7.0
    )Europe
    
    
    2.0
    
    
    
    3.2
    
    
    
    (1.2
    )Total
    
    $
    9.5
    
    
    $
    17.7
    
    
    $
    (8.2
    )Percent of net sales
    
    
    6.0
    %
    
    
    9.9
    %
   Selling and Administrative Expenses
   Goodwill and Intangible Asset Impairments
  Research and Technology Expenses
   42




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##### Table of Contents



Provision for Restructuring
  Interest Expense
  Reorganization Items, net
  Other Income (Expense), net
   Provision for Income Taxes
     43




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##### Table of Contents



Six Months Ended June 30, 2010 and 2009
 Net Sales
 Six months ended
    
    
    
    
    
    
    %June 30,
    
    
    Increase
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)
    
    
    (Decrease)United States
    
    $
    221.5
    
    
    $
    275.3
    
    
    $
    (53.8
    )
    
    
    (19.5
    )%Europe
    
    
    70.7
    
    
    
    63.7
    
    
    
    7.0
    
    
    
    11.0
    %Total
    
    $
    292.2
    
    
    $
    339.0
    
    
    $
    (46.8
    )
    
    
    (13.8
    )%
   Gross Profit
 Six months endedJune 30,
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)United States
    
    $
    7.7
    
    
    $
    24.7
    
    
    $
    (17.0
    )Europe
    
    
    2.8
    
    
    
    3.3
    
    
    
    (0.5
    )Total
    
    $
    10.5
    
    
    $
    28.0
    
    
    $
    (17.5
    )Percent of net sales
    
    
    3.6
    %
    
    
    8.3
    %
   44




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##### Table of Contents



Selling and Administrative Expenses
  Goodwill and Intangible Asset Impairments
  Research and Technology Expenses
  Provision for Restructuring
  Interest Expense
  Reorganization Items, net
   45




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##### Table of Contents



Other Expense (Income), net
  Provision for Income Taxes
   Liquidity and Capital Resources
 Six months endedJune 30,
    
    
    Increase(Dollars in millions)
    
    2010
    
    
    2009
    
    
    (Decrease)Net cash provided by (used in) operating activities
    
    $
    (2.5
    )
    
    $
    28.5
    
    
    $
    (31.0
    )Net cash provided by (used in) investing activities
    
    $
    2.7
    
    
    $
    (20.0
    )
    
    $
    (22.7
    )Net cash used in financing activities
    
    $
    (1.0
    )
    
    $
    (20.1
    )
    
    $
    (19.1
    )
    46




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##### Table of Contents



Term
    
    Original GE Credit Agreement
    
    AmendmentMinimum available credit
less outstanding loans and
letters of credit
    
    $15.0 million for any period of five
consecutive business days during any
fiscal quarter
    
    $12.5 million for any period of five
consecutive business days during any
fiscal month or $7.5 million at any
timeMinimum consolidated 
EBITDA for trailing 
twelve months
    
    $40.0 million, if minimum available
credit less outstanding loans and letters
of credit are not maintained
    
    N/AMinimum Fixed Charge 
Coverage Ratio for trailing 
twelve months
    
    N/A
    
    1.0:1.0, if minimum available credit
less outstanding loans and letters of
credit are not maintainedLetters of Credit sublimit
    
    $15.0 million
    
    $20.0 millionEBITDA annual cash 
expense add-backs
    
    $1.5 million annually for cash
restructuring expense
    
    $3.0 million annually for cash
restructuring expense for fiscal years
ended December 31, 2010 and 2011,
$1.5 million for fiscal year ended
December 31, 2012Availability Block
    
    $2.5 million
    
    $5.0 millionInterest rate  either
    
    

    
    LIBOR
    
    Base
    
    Fixed Charge
    
    LIBOR
    
    BaseLIBOR or a Base Rate plus a spread
    

    Usage
    
    Spread
    
    Spread
    
    Coverage
    
    Spread
    
    Spread<$30M
    
    
    3.75
    %
    
    
    2.75
    %
    
    >1.2:1.0
    
    
    3.75
    %
    
    
    2.75
    %$30-$50M
    
    
    4.00
    %
    
    
    3.00
    %
    
    1.0  1.2:1.0
    
    
    4.00
    %
    
    
    3.00
    %>$50M
    
    
    4.25
    %
    
    
    3.25
    %
    
    <1.0:1.0
    
    
    4.25
    %
    
    
    3.25
    %
   47




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##### Table of Contents



48




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##### Table of Contents




    
    a dividend or other distribution from Constar Holland causing its
equity capital to amount to less than 35% of total assets;
    
    a breach of a covenant, representation, warranty or certification made
in connection with an ING Credit Agreement, including a default in the
payment of any amount due under the ING Credit Agreements;
    
    a default or acceleration with respect to financing or guarantee
agreements of Constar Holland of more than 50,000 or the
occurrence of certain insolvency events; and
    
    Constar Holland becoming subject to certain judgments.
   49




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##### Table of Contents



Capital Expenditures
  Pension Funding
    50




---



##### Table of Contents



Commitments and Contingent Liabilities
  Critical Accounting Policies and Estimates
  Impairment of Long-Lived Assets
     51




---



##### Table of Contents



Goodwill Impairment
     Impairment of Indefinite-Lived Intangible Assets
   52




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##### Table of Contents



Recent Accounting Pronouncements
 Improving Disclosures about Fair Value Measurements
 Forward-Looking Statements
    
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
    53




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 PART IIOther Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
   Our stock is not listed on a national securities exchange. It will likely be more difficult
for stockholders and investors to sell our common stock or to obtain accurate quotations of the
share price of our common stock.
  A restructuring of our Secured Notes may result in substantial dilution to, or the
cancellation of, our currently outstanding common stock.
  We have incurred, and may in the future incur, significant impairment charges, which result in
lower reported net income (or higher net losses) and a reduction to stockholders equity.
    54




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##### Table of Contents



We must comply with financial and other covenants in our GE Credit Agreement and
other debt agreements
    We expect our largest U.S. customer to increase its self-manufacturing of conventional
containers, which we expect will result in significant volume loss.
   55




---



##### Table of Contents



Our declining stockholders equity may cause our common stock to be delisted from the NASDAQ
Capital Market, which could negatively impact the market value and liquidity of our common stock
and our ability to access the capital markets.
  Legislative changes could reduce demand for our products.
   Recent federal health care legislation could increase our expenses.
   56




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##### Table of Contents



Item 6. Exhibits
 10.1
    
    Financing and Service Agreement (and Master Instrument of Pledge) dated April 29, 2010 between
Constar International Holland (Plastics) B.V. and ING Commercial Finance B.V.10.2
    
    Agreement on Stock Financing and Financing of Acquisition of Goods dated April 29, 2010 between
Constar International Holland (Plastics) B.V. and ING Commercial Finance B.V.10.3
    
    Deed of Possessory Lien on Stock dated April 29, 2010 between Constar International Holland
(Plastics) B.V. and ING Commercial Finance B.V.10.4
    
    (Master) Instrument of Pledge Relating to Orders on Hand dated April 29, 2010 between Constar
International Holland (Plastics) B.V. and ING Commercial Finance B.V.10.5
    
    Statement of Intended Abstraction dated April 29, 2010 between Constar International Holland
(Plastics) B.V. and ING Commercial Finance B.V.10.6
    
    Amendment Number One to Constar International Inc. 2009 Equity Compensation Plan.10.7
    
    Amendment No. 1 to Credit Agreement among Constar, Inc., the Credit Parties thereto, the Lenders
party thereto and General Electric Capital Corporation, as Agent, dated August 12, 201031.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of President and Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Executive Vice President and Chief Financial Officer Pursuant to U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  57




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##### Table of Contents



SIGNATURES
  Constar International Inc.Dated: August 16, 2010
    By:
    /s/    J. Mark BorsethJ. Mark BorsethExecutive Vice President and
Chief Financial Officer

(duly authorized officer and

principal financial officer)  58