Exhibit 99.1
General Cable Corporation Reports Third Quarter Results
HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--Oct. 21, 2003--General
Cable Corporation (NYSE:BGC) reported net income for the third quarter
ended September 30, 2003 of $2.1 million which was $0.06 on a diluted
per share basis. These results were up from a net loss of $(4.0)
million or $(0.12) per diluted share in the third quarter of 2002.
Included in the results for the 2003 third quarter is a $0.6 million
pre-tax charge (about $0.01 per share), for severance related to the
Company's ongoing cost cutting efforts in Europe.
Net sales for the third quarter of 2003 were $382.5 million, an
increase of 7% versus metal-adjusted net sales in the 2002 third
quarter. Overall net sales for the quarter compared to the same period
in the prior year were positively affected by about 5% as a result of
favorable foreign currency exchange rates for the Company's
international operations.
Management Comments
"I am encouraged by our third quarter results and believe they
demonstrate a bottoming in our business, which up until now has been
operating in an economic environment that produced a decline of almost
40% in North American wire and cable demand since 2000," commented
Gregory B. Kenny, President and Chief Executive Officer. "All three
business segments reported favorable year-over-year metal-adjusted net
sales comparisons, including our Communications segment which had
reported negative sales comparisons for the last nine quarters. Also,
two of our three business segments reported positive year-over-year
comparisons in operating income in the third quarter, with particular
strength shown in the European Energy business and in energy
transmission cables in North America. The recent blackouts in both the
United States and Europe clearly demonstrate the urgent need for
additional investment in the power transmission and distribution
infrastructure on a global basis. As a leading supplier of energy
cables both domestically and in Europe, we should directly benefit
from this anticipated step-up in investment by the utilities."
"Our improved financial performance is due in large part to our
ongoing focus on increased productivity and continuous cost reduction.
Relative to the industry, we continue to post very low SG&A costs. We
have been successful this year in reducing our manufacturing costs
despite experiencing significant increases in medical, pension and
certain raw material costs. Our focus on maximizing cash flows, when
combined with our highly efficient supply chain management systems,
allowed us to reduce our inventory (excluding foreign currency
effects) by about $17.0 million in the quarter, which in turn resulted
in a $17.0 million reduction in our total debt during the period,"
added Kenny.
Third Quarter Results
Net sales in the Energy segment increased 7% in the third quarter
of 2003 versus metal-adjusted net sales in the third quarter of 2002.
North American metal-adjusted sales were up 2% year-over-year while
the international business was up 20%, driven largely by new contract
awards throughout Europe and the impact of favorable foreign currency
exchange rates. International sales were up 4% excluding the positive
impact of foreign currency exchange rates. Demand from North American
customers for bare overhead cables and medium voltage distribution
cables began to strengthen in the second quarter of 2003 versus the
same period in the prior year and continued to strengthen into the
third quarter of 2003. The Company anticipates that sales volume
should improve over time as utility customers address capital projects
that were previously deferred.
Net sales in the Industrial and Specialty segment were up 7%
versus metal-adjusted net sales in the third quarter of 2002. This
increase was driven by a 20% increase in the automotive after-market
ignition wire business and a 14% increase in the international
business due to the ongoing rollout of environment friendly, flexible
zero-halogen cables in Europe and the favorable impact of foreign
currency exchange rate changes. These increases were partially offset
by a 5% decrease in net sales of cables utilized primarily in new
industrial construction in North America. Net sales in North America
of industrial cables utilized in maintenance, repair and plant
operations (MRO) were flat compared to the third quarter of 2002.
Net sales in the Communications segment increased 5% in the third
quarter of 2003 versus metal-adjusted net sales in the same quarter of
2002. The year-over-year increase was driven by an 11% increase in
sales of electronic cables and a 16% increase in telephone exchange
cables. For the first time since the collapse of the
telecommunications market in mid-2001, all three of the Company's RBOC
customers delivered year-over-year favorable sales comparisons. These
increases were partially offset by a 17% decline in data communication
cables as IT infrastructure spending in North America continues to be
constrained.
Selling, general and administrative expenses were $31.9 million in
the third quarter of 2003, down 5% from $33.5 million in the third
quarter of 2002. After excluding the impact of changes in foreign
currency exchange rates and severance-related charges in the third
quarter of both years, SG&A would have been down about 2% in the third
quarter of 2003 versus the same period in 2002 and down 67 basis
points as a percent of metal-adjusted sales. The Company's ongoing
focus on cost control has allowed it to more than offset a significant
increase in medical and pension related costs in the third quarter of
2003.
Operating income was $13.5 million in the third quarter of 2003,
up from $4.1 million in the third quarter of 2002. The improvement in
operating income in the third quarter of 2003 compared to the prior
year was due to increased sales volume in all business segments and
the benefits derived from the Company's cost reduction initiatives,
including a significant turn around of our operations in Portugal. The
2002 third quarter results also included $3.7 million of charges
related to severance and plant closures, while the 2003 third quarter
included only $0.6 million of severance charges. Operating results for
the third quarter of both years was also negatively impacted by
unfavorable manufacturing variances due to the Company's decision to
reduce inventory quantities as the result of our increased customer
integration. As a result of these actions, inventory was reduced
(excluding foreign currency effects) by about $17.0 million and
$25.0 million, and operating income was reduced by about $3.4 million
and $5.0 million in the third quarter of 2003 and 2002, respectively.
Net interest expense was $10.3 million for the third quarter of
2003, equal to the same period in 2002. Lower average net borrowings
under the Company's credit facility and lower interest rates on the
floating rate portion of debt were offset by a higher credit spread
for the Company's borrowing due to an October 2002 credit facility
amendment and the amortization of bank fees related to the amendment.
The Company was required under the terms of its credit agreement to
fix the interest rate on a portion of its floating rate debt. As a
result, the Company has not fully benefited from the recent decline in
interest rates because the underlying LIBOR rate on $200.0 million of
its debt was fixed at approximately 4.67% under a swap transaction,
which will expire on December 31, 2003.
The effective tax rate for the third quarter of 2003 was unchanged
from the 2002 rate of 35.5%.
Nine Month Results
Net sales for the first nine months of 2003 were $1,133 million,
up 1% versus metal-adjusted net sales in the same period in 2002.
Contributing to this increase was a 4% increase in metal-adjusted net
sales of Energy cables, where a 3% reduction in the North American
business was more than offset by the international business, which was
up in comparison to last year largely due to foreign currency exchange
rates. Metal-adjusted net sales in the Industrial and Specialty
segment increased 2%, where growth in MRO, automotive and
international businesses was partially offset by a significant
reduction in cables utilized in new industrial construction and
infrastructure projects. Metal-adjusted net sales fell 3% in the
Communications segment due to a reduction in sales of both telephone
exchange and data communication cables.
Selling, general and administrative expenses were $93.6 million in
the first nine months of 2003, down 19%, or $22.6 million from
$116.2 million for the same period in 2002. Excluding the impact of
foreign currency exchange rates and charges related to severance and
plant closure costs from both periods, SG&A decreased by about 5% in
2003 versus 2002.
Operating income was $40.8 million in the first nine months of
2003, up from $14.2 million in the first nine months of 2002. The
results for the 2002 nine-month period included $28.7 million of
severance and plant closure costs while the results for the nine
months of 2003 included $1.7 million of severance charges. Excluding
the charges from both periods, operating income was about flat in the
first nine months of 2003 versus the same period in 2002. The positive
impact of increased sales volume and lower manufacturing costs were
offset by price decreases in telephone exchange cables, LAN cables and
energy cables.
General Cable (NYSE:BGC), headquartered in Highland Heights,
Kentucky, is a leader in the development, design, manufacture,
marketing and distribution of copper, aluminum and fiber optic wire
and cable products for the energy, industrial, specialty and
communications markets. The Company offers competitive strengths in
such areas as breadth of product line, brand recognition, distribution
and logistics, sales and service and operating efficiency.
Energy cables include low-, medium- and high-voltage power
distribution and power transmission products. The Industrial and
Specialty segment is comprised of application-specific cables for uses
such as electrical power generation (traditional fuels, alternative
and renewable sources, and distributed generation), the oil, gas and
petrochemical industries, mining, industrial automation, marine,
military and aerospace applications, power applications in the
telecommunications industry, and other key industrial segments.
Communications wire and cable products transmit low-voltage signals
for voice, data, video and control applications. Visit our website at
www.GeneralCable.com.
Certain statements in this press release, including without
limitation, statements regarding future financial results and
performance, plans and objectives, capital expenditures and the
Company's or management's beliefs, expectations or opinions, are
forward-looking statements. Actual results may differ materially from
those statements as a result of factors, risks and uncertainties over
which the Company has no control. Such factors include economic and
political consequences resulting from the September 2001 terrorist
attack and the war with Iraq, domestic and local country price
competition, particularly in certain segments of the power cable
market and other competitive pressures; general economic conditions,
particularly in construction; changes in customer purchasing patterns
in our business segments; the Company's ability to increase
manufacturing capacity and productivity; the Company's ability to
successfully complete and integrate acquisitions and divestitures; the
Company's ability to obtain credit facilities and changes to
facilities as market conditions warrant; the cost of raw materials,
including copper; the impact of foreign currency fluctuations; the
impact of technological changes; the Company's ability to achieve
productivity improvements; and other factors which are discussed in
the Company's Report on Form 10-K filed with the Securities and
Exchange Commission on March 28, 2003, as well as periodic reports
filed with the Commission.
TABLES TO FOLLOW
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
------------------ ------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------ ------------------
2003 2002 2003 2002
-------- -------- --------- ---------
Net sales $382.5 $347.4 $1,133.1 $1,102.5
Cost of sales 337.1 309.8 998.7 972.1
-------- -------- --------- ---------
Gross profit 45.4 37.6 134.4 130.4
Selling, general and
administrative expenses 31.9 33.5 93.6 116.2
-------- -------- --------- ---------
Operating income 13.5 4.1 40.8 14.2
Interest income (expense):
Interest expense (10.4) (10.5) (33.1) (31.9)
Interest income 0.1 0.2 0.3 0.8
-------- -------- --------- ---------
(10.3) (10.3) (32.8) (31.1)
Earnings (loss) before income
taxes 3.2 (6.2) 8.0 (16.9)
Income tax (provision) benefit (1.1) 2.2 (2.8) 6.0
-------- -------- --------- ---------
Income (loss) from continuing
operations 2.1 (4.0) 5.2 (10.9)
Discontinued Operations
- ---------------------------------
Loss from discontinued operations
(net of tax) - - - -
Loss on disposal of discontinued
operations (net of tax) - - - (3.9)
-------- -------- --------- ---------
Net income (loss) $2.1 $(4.0) $5.2 $(14.8)
======== ======== ========= =========
EPS of Continuing Operations
- ---------------------------------
Earnings (loss) per common share $0.06 $(0.12) $0.16 $(0.33)
======== ======== ========= =========
Weighted average common shares 33.1 33.1 33.1 33.0
======== ======== ========= =========
Earnings (loss) per common share-
assuming dilution $0.06 $(0.12) $0.16 $(0.33)
======== ======== ========= =========
Weighted average common shares-
assuming dilution 33.6 33.1 33.4 33.0
======== ======== ========= =========
EPS Including Discontinued Operations
- --------------------------------------
Earnings (loss) per common share $0.06 $(0.12) $0.16 $(0.45)
======== ======== ========= =========
Earnings (loss) per common share-
assuming dilution $0.06 $(0.12) $0.16 $(0.45)
======== ======== ========= =========
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations (continued)
Segment Information
(in millions, except per share data)
(unaudited)
------------------ -------------------
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -------------------
2003 2002 2003 2002
--------- -------- --------- ---------
Revenues (as reported)
- --------------------------------
Energy Segment $138.2 $123.8 $413.5 $389.0
Industrial & Specialty Segment 128.5 116.7 395.1 383.1
Communications Segment 115.8 106.9 324.5 330.4
--------- -------- --------- ---------
Total $382.5 $347.4 $1,133.1 $1,102.5
========= ======== ========= =========
Revenues (metal adjusted)
- --------------------------------
Energy Segment $138.2 $128.7 $413.5 $396.8
Industrial & Specialty Segment 128.5 120.4 395.1 388.8
Communications Segment 115.8 110.0 324.5 335.0
--------- -------- --------- ---------
Total $382.5 $359.1 $1,133.1 $1,120.6
========= ======== ========= =========
Operating Profit (Loss)
- --------------------------------
Energy Segment $11.8 $8.9 $29.6 $29.0
Industrial & Specialty Segment 1.0 1.9 8.1 7.3
Communications Segment 2.1 (1.6) 5.6 8.0
--------- -------- --------- ---------
Subtotal 14.9 9.2 43.3 44.3
Corporate (1.4) (5.1) (2.5) (30.1)
--------- -------- --------- ---------
Total $13.5 $4.1 $40.8 $14.2
========= ======== ========= =========
Return on Metal Adjusted Sales
- --------------------------------
Energy Segment 8.5% 6.9% 7.2% 7.3%
Industrial & Specialty Segment 0.8% 1.6% 2.1% 1.9%
Communications Segment 1.8% -1.5% 1.7% 2.4%
--------- -------- --------- ---------
Subtotal 3.9% 2.6% 3.8% 4.0%
Corporate -0.4% -1.4% -0.2% -2.7%
--------- -------- --------- ---------
Total 3.5% 1.1% 3.6% 1.3%
========= ======== ========= =========
Capital Expenditures
- --------------------------------
Energy Segment $1.3 $1.9 $3.8 $7.0
Industrial & Specialty Segment 1.9 3.9 5.5 10.2
Communications Segment 0.7 1.3 2.5 5.6
--------- -------- --------- ---------
Total $3.9 $7.1 $11.8 $22.8
========= ======== ========= =========
Depreciation
- --------------------------------
Energy Segment $0.6 $0.5 $2.9 $2.9
Industrial & Specialty Segment 2.0 1.8 6.7 6.3
Communications Segment 3.6 3.7 10.9 12.1
--------- -------- --------- ---------
Total $6.2 $6.0 $20.5 $21.3
========= ======== ========= =========
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
September 30, December 31,
ASSETS 2003 2002
- ------------------------------------------- ------------- ------------
(unaudited)
Current Assets:
Cash $24.2 $29.1
Receivables, net of allowances of
$14.3 million at September 30, 2003
and $11.6 million at December 31, 2002 141.4 105.9
Retained interest in accounts receivable 80.9 84.8
Inventories 247.0 258.3
Deferred income taxes 12.3 12.2
Prepaid expenses and other 24.6 42.6
------------- ------------
Total current assets 530.4 532.9
Property, plant and equipment, net 326.8 323.3
Deferred income taxes 74.7 68.3
Other non-current assets 46.0 48.8
------------- ------------
Total assets $977.9 $973.3
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------
Current Liabilities:
Accounts payable $260.0 $242.1
Accrued liabilities 103.5 99.2
Current portion of long-term debt 33.5 40.8
------------- ------------
Total current liabilities 397.0 382.1
Long-term debt 370.5 411.1
Deferred income taxes 2.7 2.1
Other liabilities 124.1 117.1
------------- ------------
Total liabilities 894.3 912.4
------------- ------------
Shareholders' Equity:
Common stock, $0.01 par value:
Issued and outstanding shares:
September 30, 2003 - 33,083,028
(net of 4,828,225 treasury shares)
December 31, 2002 - 33,135,002
(net of 4,745,425 treasury shares) 0.4 0.4
Additional paid-in capital 100.2 100.0
Treasury stock (50.4) (50.0)
Retained earnings 65.1 59.9
Accumulated other comprehensive loss (28.4) (44.6)
Other shareholders' equity (3.3) (4.8)
------------- ------------
Total shareholders' equity 83.6 60.9
------------- ------------
Total liabilities and shareholders'
equity $977.9 $973.3
============= ============
CONTACT: General Cable Corporation
Paul M. Montgomery, 859-572-8684