(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2003

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 000-16496

Constar International Inc.

(Exact name of registrant as specified in its charter)

Delaware

13-1889304

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification Number)

One Crown Way, Philadelphia, PA

19154

(Address of principal executive offices)

(Zip Code)

(215) 552-3700

(Registrant’s telephone number, including area code)

Yes   x

No   o

Yes   o

No   x

Page Number

PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

1

Combined and Consolidated Statements of Operations

2

Condensed Combined and Consolidated Statements of Cash Flows

3

Consolidated Statement of Stockholders’ Equity

4

Notes to Combined and Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

22

Item 4.

Controls and Procedures

22

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

23

Item 6.

Exhibits and Reports on Form 8-K

24

Signatures

25

Certifications

26

March 31,
2003

December 31,
2002

(Unaudited)

Assets

Current Assets

Cash and cash equivalents

$

14,599

$

20,913

Accounts receivable, net

72,105

55,374

Inventories, net (Note 3)

107,934

85,907

Prepaid expenses and other current assets

5,562

5,222

Total current assets

200,200

167,416

Property Plant and Equipment, net

230,376

235,122

Goodwill (Note 4)

331,813

331,813

Other Assets

15,365

15,614

Total Assets

$

777,754

$

749,965

Liabilities and Stockholders’ Equity

Current Liabilities

Revolver Loan (Note 5)

$

50,000

$

55,000

Current portion of long-term debt (Note 5)

1,500

1,500

Accounts payable and accrued liabilities

127,772

93,079

Income taxes payable

1,439

1,079

Total current liabilities

180,711

150,658

Long-term Debt net of Current Portion:

Term B Loan (Note 5)

147,750

148,125

Senior Subordinated Notes (Note 5)

172,484

172,392

Pension and Postretirement Liabilities

8,284

7,729

Deferred Income Taxes

15,167

16,264

Other Liabilities

5,705

5,386

Total liabilities

530,101

500,554

Commitments and Contingent Liabilities (Note 10)

—  

—  

Minority Interests

3,216

3,289

Stockholders’ Equity

244,437

246,122

Total Liabilities and Stockholders’ Equity

$

777,754

$

749,965

Three months ended March 31,

2003

2002

Net customer sales

$

168,433

$

166,842

Net affiliate sales

358

1,306

Net sales

168,791

168,148

Cost of products sold, excluding depreciation

142,732

140,661

Depreciation

14,002

13,580

Gross profit

12,057

13,907

Selling and administrative expenses

4,759

2,216

Management charges

996

Research and technology expenses

1,419

2,966

Interest expense, net

8,283

850

Foreign exchange adjustments

47

(70

)

Other expenses (income), net

63

(66

)

Income (loss) before taxes and cumulative effect of change in accounting for goodwill

(2,514

)

7,015

Provision for income taxes

610

(2,711

)

Minority interests

73

(87

)

Income (loss) before cumulative effect of change in accounting for goodwill

(1,831

)

4,217

Cumulative effect of change in accounting for goodwill

(50,059

)

Net loss

$

(1,831

)

$

(45,842

)

Per common share data:

Basic and diluted:

Income (loss) before cumulative effect of change in accounting for goodwill

$

(0.15

)

$

0.35

Cumulative effect of change in accounting for goodwill

—  

(4.17

)

Net loss

$

(0.15

)

$

(3.82

)

Weighted average shares outstanding:

Basic and diluted

12,000

12,000

Three months ended March 31,

2003

2002

Cash flows from operating activities

Net (loss)

$

(1,831

)

$

(45,842

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

14,397

13,580

Deferred income taxes

(1,008

)

(200

)

Cumulative effect of a change in accounting for goodwill

50,059

Change in other assets and liabilities, net

(2,847

)

(5,009

)

Net cash provided by operating activities

8,711

12,588

Cash flows from investing activities

Purchases of property, plant and equipment, net

(9,648

)

(3,570

)

Proceeds from sale of property, plant and equipment

20

300

Net cash used in investing activities

(9,628

)

(3,270

)

Cash flows from financing activities

Net change in long-term balances due to affiliates

(8,646

)

Repayment of Term B Loan

(375

)

Repayment of Revolver Loan

(5,000

)

Net cash used in financing activities

(5,375

)

(8,646

)

Effect of exchange rate changes on cash and cash equivalents

(22

)

(19

)

Net change in cash and cash equivalents

(6,314

)

653

Cash and cash equivalents at beginning of period

20,913

3,754

Cash and cash equivalents at end of period

$

14,599

$

4,407

Comprehensive
Income (Loss)

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Unearned
Compensation

Total

Balance, December 31, 2002

$

120

$

273,172

$

(1,675

)

$

(25,322

)

$

(173

)

$

246,122

Net loss

$

(1,831

)

(1,831

)

(1,831

)

Translation adjustments

131