UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 19, 2010
COLEMAN CABLE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-33337 | 36-4410887 | ||
| (State or other jurisdiction of | (Commission File Number) | (IRS Employer Identification Number) | ||
| incorporation) |
| 1530 Shields Drive, Waukegan, IL | 60085 | |
| (Address of principal executive offices) | (Zip Code) |
(847) 672-2300
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 1 — Registrant’s Business and Operations
Item 1.01. Entry into a Material Definitive Agreement
On January 19, 2010, Coleman Cable, Inc. (“Coleman Cable”) entered into an amendment to its Amended and Restated Credit Agreement with its senior secured lenders (the “Amendment”). The Amendment:
(i) permits the incurrence of indebtedness, the proceeds of which will be used to redeem, retire or repurchase its 9.875% Senior Notes due 2012 so long as:
(a) such indebtedness does not exceed $275 million,
(b) the scheduled maturity dates of such indebtedness are not shorter than the maturity dates of the 2012 Senior Notes, and
(c) the incurrence of such indebtedness is on terms and conditions no more restrictive, when taken as a whole, than the terms and conditions of the 2012 Senior Notes;
(ii) allows for the creation and financing of foreign subsidiaries;
(iii) modifies the negative covenants to permit the incurrence of indebtedness, acquisitions and other transactions and the making of investments and other payments, in each case, based upon pro forma liquidity and covenant compliance; and
(iv) makes various other technical changes to increase operating flexibility and to provide relief from certain restrictive provisions.
Pursuant to the terms of the Amendment, borrowing availability under the Amended and Restated Credit Agreement for foreign subsidiaries is limited to the greater of (i) the sum of 85% of the aggregate book value of accounts receivable of such foreign subsidiaries plus 60% of the aggregate book value of the inventory of such foreign subsidiaries and (ii) $25 million (excluding permitted intercompany indebtedness of such foreign subsidiaries).
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Third Amendment to Amended and Restated Credit Agreement, which is filed as Exhibit 10.1 hereto and is incorporated herein by reference.
Section 7 — Regulation FD
Item 7.01. Regulation FD Disclosure
On January 20, 2010, Coleman Cable announced that it has commenced a cash tender offer and consent solicitation for any and all of its outstanding 9.875% Senior Notes due 2012. A copy of Coleman Cable’s press release, dated January 20, 2010, is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
In connection with a private offering of Coleman Cable debt securities, Coleman Cable has included the following information in a private offering memorandum:
Fourth Quarter Results
Based on our preliminary results, we estimate that for the fourth quarter of 2009, we will have revenues between $139.0 million and $141.0 million and Adjusted EBITDA between $13.5 million and $15.5 million. This compares to revenues of $182.2 million and an Adjusted EBITDA loss of $0.8 million for the fourth quarter of 2008. We estimate that as of December 31, 2009 we had between $7.0 million and $8.0 million of cash and equivalents, between $80.0 million and $81.0 million of availability under our Revolving Credit Facility, and between $236.5 million and $237.0 million of total indebtedness, as compared to $16.3 million, $74.2 million and $272.8 million, respectively, as of December 31, 2008.
Based on our estimated results for the fourth quarter of 2009, we estimate that for the twelve-month period ended December 31, 2009 we will have revenues between $503.0 million and $505.0 million and Adjusted EBITDA between $46.8 million and $48.8 million. This compares to revenues of $973.0 million and Adjusted EBITDA of $59.6 million, respectively, for the prior year ended December 31, 2008. Based upon our estimated range of Adjusted EBITDA for the twelve-month period ended December 31, 2009 and our estimated range of total indebtedness as of December 31, 2009, we estimate that our ratio of such total indebtedness to such Adjusted EBITDA will be between 5.0x and 5.2x as of December 31, 2009, after adjusting for a pending private placement of debt securities.
The following table provides a reconciliation of our range of estimated Adjusted EBITDA results to our range of estimated net income (loss) for the three and twelve months ended December 31, 2009:
| Range of Estimated 2009 | ||||||||||||||||
| Adjusted EBITDA & Net Income (Loss) | ||||||||||||||||
| Three Months ended | Twelve months ended | |||||||||||||||
| December 31, 2009 | December 31, 2009 | |||||||||||||||
| Adjusted EBITDA | $ | 13.5 | $ | 15.5 | $ | 46.8 | $ | 48.8 | ||||||||
| Asset impairments and restructuring charges (a) (b) | 3.0 | 2.0 | 76.8 | 75.8 | ||||||||||||
| Gains on debt repurchases (c) | — | — | (3.3 | ) | (3.3 | ) | ||||||||||
| Foreign currency transaction loss (gain) (d) | 0.2 | (0.2 | ) | (0.9 | ) | (1.3 | ) | |||||||||
| EBITDA | 10.3 | 13.7 | (25.8 | ) | (22.4 | ) | ||||||||||
| Depreciation and amortization expense (e) | 5.8 | 4.8 | 22.4 | 21.4 | ||||||||||||
| Income tax (benefit) (f) | 3.0 | 4.1 | (5.1 | ) | (4.0 | ) | ||||||||||
| Interest expense, net | 6.4 | 6.2 | 25.4 | 25.2 | ||||||||||||
| Net income (loss) | $ | (4.9 | ) | $ | (1.4 | ) | $ | (68.5 | ) | $ | (65.0 | ) | ||||
| (a) | We recorded approximately $69.8 million of impairment charges during the first nine months of 2009 ($69.5 million recorded in the first quarter of 2009 and $0.3 million recorded in the third quarter of 2009) consisting primarily of a non-cash goodwill impairment recorded during the first quarter of 2009 across three of four reporting units comprising our Distribution segment: Electrical distribution, Wire and Cable distribution, and Industrial distribution. This non-cash goodwill impairment resulted from a combination of factors which were in existence at that time, including a significant decline in our market capitalization, as well as the recessionary economic environment and its then estimated potential impact on our business. | |
| (b) | We recorded restructuring charges of approximately $4.0 million during the first nine months of 2009 related to the closure of our facilities in East Longmeadow, MA and Oswego, NY, both of which were closed in 2009, as well as holding costs associated with properties closed in 2008. | |
| (c) | We recorded a gain of approximately $3.3 million during the first nine months of 2009 resulting from our repurchase of $15.0 million in par value of our Senior Notes due 2012. | |
| (d) | Currency transaction loss (gain) reflects currency related gains/losses at our Canadian subsidiary reflecting the impact of exchange rate fluctuations on our Canadian subsidiary. | |
| (e) | Depreciation and amortization expense does not include amortization of debt issuance costs, which is included in interest expense. | |
| (f) | Income tax expense (benefit) includes an out-of-period adjustment to be recorded in the fourth quarter of 2009 to correct an error in the amount of tax benefit initially recorded in relation to the goodwill impairment charge of $69.5 million recorded in the first quarter of 2009. The adjustment, which we have evaluated as immaterial from both quantitative and qualitative perspectives, will result in a $2.9 million decrease in the tax benefit associated with the impairment charge and a corresponding decrease in the non-current deferred income taxes previously reported in the first quarter of 2009. |
Our estimates of revenues, Adjusted EBITDA, cash and cash equivalents, indebtedness, excess availability and our reconciliations of a range of Adjusted EBITDA to a range of estimated net income (loss) are derived from preliminary results of operations that are unaudited and not reviewed for the fourth quarter of 2009 and are subject to the completion of our financial closing process for this period. Our actual results for the fourth quarter of 2009 may differ from our estimated results due to, among other factors, special charges or other closing adjustments.
Employees
As of September 30, 2009, we had 950 employees, with approximately 26% of our employees represented by one labor union. Our current collective bargaining agreement expired on December 22, 2009, and has been extended through February 2010. We began collective bargaining negotiations on January 14, 2010. We consider our labor relations to be good, and we have not experienced any significant labor disputes.
Properties
As of September 30, 2009, we owned or leased the following primary facilities:
| Approximate | ||||||
| Operating facilities | Type of Facility | Square Feet | Leased or Owned | |||
| Waukegan, Illinois | Manufacturing | 212,530 | Owned — 77,394 | |||
| Leased — 135,136 | ||||||
| Pleasant Prairie, Wisconsin | Warehouse | 503,000 | Leased | |||
| Bremen, Indiana (Insulating) | Manufacturing | 43,007 | Leased | |||
| Bremen, Indiana (Fabricating) | Manufacturing | 124,160 | Leased | |||
| Bremen, Indiana (East) | Manufacturing | 106,200 | Leased | |||
| Bremen, Indiana (Distribution Center) | Warehouse | 48,000 | Leased | |||
| North Chicago, Illinois | Manufacturing | 23,277 | Leased | |||
| Texarkana, Arkansas | Manufacturing, Warehouse | 106,700 | Owned | |||
| Hayesville, North Carolina | Manufacturing | 104,000 | Owned | |||
| El Paso, Texas (Hoover) | Manufacturing, Warehouse | 401,400 | Leased | |||
| Lafayette, Indiana | Manufacturing | 337,256 | Owned | |||
| Waukegan, Illinois | Offices | 30,175 | Leased | |||
| Toronto, Ontario, Canada | Offices, Warehouse | 200,000 | Leased |
| Approximate | ||||||
| Closed facilities | Closure Year | Square Feet | Leased or Owned | |||
| Siler City, North Carolina | 2006 | 86,000 | Owned | |||
| Nogales, Arizona* | 2008 | 84,000 | Leased | |||
| El Paso, Texas (Zaragosa Rd.)* | 2008 | 69,163 | Owned | |||
| Avilla, Indiana | 2008 | 119,000 | Owned | |||
| Indianapolis, Indiana** | 2008 | 257,600 | Leased | |||
| Indianapolis, Indiana** | 2008 | 90,400 | Leased | |||
| Indianapolis, Indiana** | 2008 | 23,107 | Leased | |||
| East Longmeadow, Massachusetts | 2009 | 90,000 | Leased | |||
| Oswego, New York | 2009 | 115,000 | Owned |
| * | These facilities, acquired as part of the Copperfield acquisition in 2007, were closed in 2008 in connection with the integration of multiple facilities into one modern facility in El Paso, Texas, opened in 2008. | |
| ** | These facilities, including the Indianapolis properties which were received as part of the Woods acquisition in 2007, were closed in 2008 and the distribution operations of such facilities consolidated within a new modern distribution center in Pleasant Prairie, Wisconsin, opened in 2008. |
We are currently marketing all of our available closed facilities for either sale or sublease. We have certain subleases in place relative to certain closed leased facilities.
The information contained in this Item 7.01 and in the accompanying Exhibit 99.1 shall not bedeemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Forward-Looking Statements
Various statements included in this Current Report on Form 8-K, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact constitute forward-looking statements. These statements may be identified by the use of forward-looking terminology such as “believes,” “plans,” “anticipates,” “expects,” “estimates,” “continues,” “could,” “may,” “might,” “potential,” “predict,” “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about Coleman Cable’s expectations, beliefs, plans, objectives, assumptions or future events, financial results or performance contained in this release are forward-looking statements. Coleman Cable has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While Coleman Cable believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in Coleman Cable’s most recent Annual Report on Form 10-K (available at www.sec.gov), may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from Coleman Cable’s expectations include:
•fluctuations in the supply or price of copper and other raw materials;
•increased competition from other wire and cable manufacturers, including foreign manufacturers;
•pricing pressures causing margins to decrease;
•adverse changes in general economic and capital market conditions;
•changes in the demand for Coleman Cable’s products by key customers;
•additional impairment charges related to our goodwill and long-lived assets;
•failure to identify, finance or integrate acquisitions;
•failure to accomplish integration activities on a timely basis;
•failure to achieve expected efficiencies in Coleman Cable’s manufacturing and integration activities;
•unforeseen developments or expenses with respect to Coleman Cable’s business acquisition, integration and consolidation efforts;
• increase in exposure to political and economic developments, crises, instability, terrorism, civil strife, expropriation and other risks of doing business in foreign markets;
•impact of foreign currency fluctuations and changes in interest rates;
•impact of negotiation of extensions of labor agreements; and
•other risks and uncertainties, including those described under “Item 1A. Risk Factors” in Coleman Cable’s most recent Annual Report on Form 10-K.
In addition, any forward-looking statements represent Coleman’s views only as of today and should not be relied upon as representing its views as of any subsequent date. While Coleman may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its estimates change and, therefore, you should not rely on these forward-looking statements as representing Coleman’s views as of any date subsequent to today.
Item 9.01. Financial Statements and Exhibits
| Exhibit | ||
| Number | Description | |
| 10.1 | Third Amendment to Amended and Restated Credit Agreement, dated as of January 19, 2010, by and among Coleman Cable, Inc., the Subsidiaries that are signatories thereto, and the lenders that are signatories thereto. | |
| 99.1 | Press Release, dated January 20, 2010. |
SIGNATURE
Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| COLEMAN CABLE, INC. | ||||
| Date: January 20, 2010 | By: | /s/ Richard N. Burger | ||
| Name: | Richard N. Burger | |||
| Title: | Chief Financial Officer, Executive Vice President, Secretary and Treasurer | |||