Exhibit 99.1
General Cable Corporation Reports Third Quarter Results and Declares Dividend on
Preferred Stock
HIGHLAND HEIGHTS, Ky.--(BUSINESS WIRE)--Oct. 19, 2004--General
Cable Corporation (NYSE:BGC) reported net income after preferred stock
dividends for the third quarter ended October 1, 2004 of $5.9 million,
which was $0.15 on a diluted per share basis. These results were up
from net income of $2.1 million in the third quarter of 2003. Included
in the results for the 2004 third quarter were pre-tax charges of $3.6
million associated with the previously announced rationalization of
certain of the Company's manufacturing facilities and remediation
costs related to a former manufacturing facility. These charges
reduced reported earnings per share by $0.07 in the third quarter.
In accordance with the terms of the Company's 5.75% Series A
Convertible Redeemable Preferred Stock, the Board of Directors has
declared a preferred stock dividend of approximately $0.72 per share
for the three-month period ending November 24, 2004. The dividend is
payable on November 24, 2004 to preferred stockholders of record as of
October 31, 2004.
Highlights
-- Net sales of $489.3 million were up 12% versus metal-adjusted
sales in the third quarter of 2003.
-- Broad based unit growth of 10% year-over-year with North
America up 8% and the international operations up 14%.
-- Total debt of $353 million was down $22 million from June 30,
2004.
-- Working capital turnover of 8.7 times in the third quarter
2004, up 1.6 points from metal-adjusted turns in the third
quarter of 2003.
-- Inventory turnover of 5.9 times in the third quarter 2004, up
0.7 points from metal-adjusted turns in the third quarter of
2003.
-- Additional price increases are being implemented in order to
offset the strong inflationary pressure on non-metal raw
materials used in cable manufacturing driven principally by
rapidly rising energy and steel prices.
-- Earnings forecast for the fourth quarter between $0.10 and
$0.13 per share on roughly $450 to $460 million in revenues.
General Cable will discuss third quarter results on a conference
call and Webcast at 8:30 a.m. EDT tomorrow, October 20. Call
information is available at www.generalcable.com.
"Our earnings per share exceeded our earlier guidance as we more
quickly recovered some of the inflation driven cost increases,"
commented Gregory B. Kenny, President and Chief Executive Officer of
General Cable. "Additionally, we were able to successfully manage a
relatively quick resolution of the strike at our Bonham, Texas
manufacturing facility. Sales for the quarter, which where down
sequentially due to the seasonality of our business, met our forecast
and continued to demonstrate the broad recovery in demand that we have
seen beginning late last year."
Third Quarter Results
Net sales for the third quarter of 2004 were $489.3 million, an
increase of 12% versus metal-adjusted net sales in the 2003 third
quarter. The average price per pound of copper and aluminum increased
$0.49 and $0.15, respectively, from the third quarter of 2003 to the
third quarter of 2004. The 2003 net sales have been increased in this
comparison to put them on a consistent metal-adjusted basis with 2004
net sales. Overall net sales for the quarter were positively affected
by about 2% as a result of favorable changes in foreign currency
exchange rates for the Company's international operations.
Net sales in the Energy segment increased 11% in the third quarter
of 2004 versus metal-adjusted net sales in the third quarter of 2003.
North American sales were up due to strong demand from power utilities
for primary and secondary distribution cables. International sales
were up due to demand for distribution cable, increased wind farm
projects and favorable foreign currency exchange rates.
Net sales in the Industrial & Specialty segment were up 15% versus
metal-adjusted net sales in the third quarter of 2003. North America
sales increased due to strength in industrial cables utilized in
maintenance, repair and plant operations (MRO) and cables utilized
primarily in industrial construction. International sales were up due
in part to increased sales of higher value flexible zero-halogen
cables in Europe and the favorable impact of foreign currency exchange
rates.
Net sales in the Communications segment increased 10% in the third
quarter of 2004 versus metal-adjusted net sales in the same quarter of
2003. North America and international sales increased due to growth in
all parts of the business, including LAN cables, Telephone Exchange
cables and Electronic cables.
Selling, general and administrative expenses were $39.1 million in
the third quarter of 2004, up from $31.9 million in the third quarter
of 2003. The increase in SG&A was due in part to increased variable
selling expenses from higher sales volumes, changes in foreign
currency exchange rates, and a change in the reporting of the results
of the Company's fiber optics joint venture. Beginning in the first
quarter of this year, the Company consolidated the results of its
NextGen joint venture, which had previously been accounted for on an
equity basis. Additionally, SG&A in the third quarter of 2004 included
$0.3 million of charges related to the rationalization of certain of
the Company's manufacturing facilities, $1.1 million of costs related
to the Company's Sarbanes-Oxley compliance activities and $1.5 million
of charges related to remediation costs associated with a property
that was divested by the Company in 1971. As a result of these items,
reported SG&A was 8.0% of net sales in the third quarter of 2004, up
from 7.3% of metal-adjusted net sales in the third quarter of 2003.
The third quarter 2004 operating income of $19.7 million was up
from $13.5 million in the third quarter of 2003. The results in 2004
include $2.1 million of pre-tax charges related to the rationalization
of certain manufacturing facilities and $1.5 million of charges
related to remediation costs. The 2003 results included a $0.6 million
pre-tax charge for severance related to the Company's cost cutting
efforts in Europe. Operating income for the third quarter of 2004
benefited from the increased sales volume, absorption from a slight
increase in inventory and lower manufacturing costs as a result of the
Company's Lean initiatives, as well as changes in foreign currency
exchange rates.
Net interest expense was $9.0 million for the third quarter of
2004, down $1.3 million from the same period in 2003 as a result of
the Company's refinancing in the fourth quarter of 2003. During the
quarter, the Company also accrued approximately $1.5 million in
dividends on its preferred stock.
The Company's effective tax rate for the third quarter of 2004 was
approximately 30.8%.
Nine Month Results
Net income applicable to common shareholders for the nine months
of 2004 was $6.2 million, or $0.16 per diluted share. These results
include $6.4 million of pre-tax charges relating to the
rationalization of certain manufacturing facilities, a $1.5 million
pre-tax charge for remediation costs and $0.9 million of pre-tax
losses resulting from unfavorable foreign currency transactions. These
costs reduced reported earnings per share by $0.16 for the first nine
months of the year.
Net sales for the first nine months of 2004 were $1,485.4 million,
up 15% versus metal-adjusted net sales for the same period in 2003.
Contributing to this increase was a 13% increase in Energy cables,
where North American sales increased due to demand from power
utilities for distribution cable and international sales, which were
up as well, driven largely by foreign currency exchange rate changes.
Industrial & Specialty cables were up 21%, with North America up due
to a broad based improvement in all business units and international
activity, where sales were up driven by strength in zero halogen cable
sales in Europe and favorable foreign currency exchange rate changes.
Communications cables revenue increased 9% year-over-year due to
improving conditions in North America and Europe.
Selling, general and administrative expenses were $115.9 million
in the first nine months of 2004, up from $93.6 million for the same
period in 2003. The increase in SG&A was due in part to increased
variable selling expenses related to higher sales volumes, changes in
foreign currency exchange rates, and a change in the reporting of the
results of the Company's fiber optics joint venture. Additionally,
SG&A in 2004 includes $0.7 million of charges related to the
rationalization of certain of the Company's manufacturing facilities,
$1.9 million for the Company's Sarbanes-Oxley compliance activities
and $1.5 million of remediation costs. As a result of these items,
reported SG&A was 7.8% of net sales in the first nine months of 2004,
up from 7.2% of metal-adjusted net sales in the first nine months of
2003.
Management Comments
"We continue to face inflationary pressure on all raw material
costs. Additionally, after a quarter of relatively stable metal prices
(with copper averaging about $1.30 per pound), we have again
experienced significant volatility in the cost of copper. Copper cost
recently climbed to about $1.47 per pound and then dropped by $0.16
per pound in one day," commented Kenny. "To deal with extreme cost
volatility in metals as well as all the other primary components of
cable, we are now greatly expanding the use of material cost recovery
mechanisms for our contract customers. At the same time, we are
implementing price increases for all products sold into the spot
(distribution) market in the U.S. and Canada."
"We are estimating that sales unit volume, as measured in metal
pounds sold, should be up slightly compared to the fourth quarter of
2003 (but flat on an adjusted revenue basis as we continue to chase
inflation) and down seasonally approximately 5% on a sequential
basis," said Kenny. "With the expectation that copper will average in
the $1.30 per pound range, diluted earnings per share, excluding
charges related to the rationalization of certain of our manufacturing
facilities, should be in the $0.10 to $0.13 range."
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 or distributor
purchasing patterns in our business segments; the Company's ability to
increase manufacturing capacity and productivity; the financial impact
of any future plant closures; the Company's ability to successfully
complete and integrate acquisitions and divestitures; the Company's
ability to negotiate extensions of labor agreements on acceptable
terms; the Company's ability to service debt requirements and maintain
adequate domestic and international credit facilities and credit
lines; the Company's ability to pay dividends on its preferred stock;
the impact of unexpected future judgments or settlements of claims and
litigation; the Company's ability to achieve target returns on
investments in its defined benefit plans; the Company's ability to
avoid limitations on utilization of net losses for income tax
purposes; the cost of raw materials, including copper and aluminum;
the Company's ability to increase its selling prices during periods of
increasing raw material costs; the impact of foreign currency
fluctuations; the impact of technological changes; and other factors
which are discussed in the Company's Report on Form 10-K filed with
the Securities and Exchange Commission on March 12, 2004, 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)
---------------- -------------------
Fiscal Three Fiscal Nine
Months Ended Months Ended
---------------- -------------------
Oct. 1, Sept. 30, Oct. 1, Sept. 30,
2004 2003 2004 2003
------- -------- --------- ---------
Net sales $489.3 $382.5 $1,485.4 $1,133.1
Cost of sales 430.5 337.1 1,326.0 998.7
------- -------- --------- ---------
Gross profit 58.8 45.4 159.4 134.4
Selling, general and
administrative expenses 39.1 31.9 115.9 93.6
------- -------- --------- ---------
Operating income 19.7 13.5 43.5 40.8
Other expense - - (0.9) -
Interest income (expense):
Interest expense (9.1) (10.4) (27.6) (33.1)
Interest income 0.1 0.1 0.3 0.3
------- -------- --------- ---------
(9.0) (10.3) (27.3) (32.8)
------- -------- --------- ---------
Earnings before income taxes 10.7 3.2 15.3 8.0
Income tax provision (3.3) (1.1) (4.6) (2.8)
------- -------- --------- ---------
Net income 7.4 2.1 10.7 5.2
Less: preferred stock dividends (1.5) - (4.5) -
------- -------- --------- ---------
Net income applicable to common
shareholders $5.9 $2.1 $6.2 $5.2
------- -------- --------- ---------
------- -------- --------- ---------
Earnings per share
- ---------------------------------
Earnings per common share $0.15 $0.06 $0.16 $0.16
------- -------- --------- ---------
------- -------- --------- ---------
Weighted average common shares 39.3 33.1 39.2 33.1
------- -------- --------- ---------
------- -------- --------- ---------
Earnings per common share-
assuming dilution $0.15 $0.06 $0.16 $0.16
------- -------- --------- ---------
------- -------- --------- ---------
Weighted average common shares-
assuming dilution 40.0 33.6 39.9 33.4
------- -------- --------- ---------
------- -------- --------- ---------
General Cable Corporation and Subsidiaries
Consolidated Statements of Operations
Segment Information
(in millions)
(unaudited)
---------------- -------------------
Fiscal Three Fiscal Nine
Months Ended Months Ended
---------------- -------------------
Oct. 1, Sept. 30, Oct. 1, Sept. 30,
2004 2003 2004 2003
------- -------- --------- ---------
Revenues (as reported)
- ---------------------------------
Energy Segment $169.3 $138.2 $520.4 $413.5
Industrial & Specialty
Segment 174.5 128.5 561.6 395.1
Communications Segment 145.5 115.8 403.4 324.5
------- -------- --------- ---------
Total $489.3 $382.5 $1,485.4 $1,133.1
------- -------- --------- ---------
------- -------- --------- ---------
Revenues (metal adjusted)
- ---------------------------------
Energy Segment $169.3 $153.1 $520.4 $458.8
Industrial & Specialty
Segment 174.5 151.8 561.6 465.7
Communications Segment 145.5 131.8 403.4 369.1
------- -------- --------- ---------
Total $489.3 $436.7 $1,485.4 $1,293.6
------- -------- --------- ---------
------- -------- --------- ---------
Metal Pounds Sold
- ---------------------------------
Energy Segment 62.1 61.5 208.4 192.1
Industrial & Specialty
Segment 53.8 47.4 178.4 145.7
Communications Segment 39.7 32.8 110.2 92.1
------- -------- --------- ---------
Total 155.6 141.7 497.0 429.9
------- -------- --------- ---------
------- -------- --------- ---------
Operating Profit (Loss)
- ---------------------------------
Energy Segment $10.8 $11.6 $28.2 $29.4
Industrial & Specialty
Segment 8.7 0.7 18.2 7.8
Communications Segment 3.8 1.8 5.0 5.3
------- -------- --------- ---------
Subtotal 23.3 14.1 51.4 42.5
Corporate (3.6) (0.6) (7.9) (1.7)
------- -------- --------- ---------
Total $19.7 $13.5 $43.5 $40.8
------- -------- --------- ---------
------- -------- --------- ---------
Return on Metal Adjusted Sales
- ---------------------------------
Energy Segment 6.4% 7.6% 5.4% 6.4%
Industrial & Specialty
Segment 5.0% 0.5% 3.2% 1.7%
Communications Segment 2.6% 1.4% 1.2% 1.4%
------- -------- --------- ---------
Total 4.0% 3.1% 2.9% 3.2%
------- -------- --------- ---------
------- -------- --------- ---------
Capital Expenditures
- ---------------------------------
Energy Segment $2.4 $1.3 $9.6 $3.8
Industrial & Specialty
Segment 3.4 1.9 9.8 5.5
Communications Segment 1.5 0.7 4.6 2.5
------- -------- --------- ---------
Total $7.3 $3.9 $24.0 $11.8
------- -------- --------- ---------
------- -------- --------- ---------
Depreciation & Amortization
- ---------------------------------
Energy Segment $0.8 $0.9 $4.6 $3.9
Industrial & Specialty
Segment 2.0 2.0 7.1 7.5
Communications Segment 4.1 4.0 12.8 11.8
------- -------- --------- ---------
Subtotal 6.9 6.9 24.5 23.2
Corporate(1) 0.4 - 2.7 -
------- -------- --------- ---------
Total $7.3 $6.9 $27.2 $23.2
------- -------- --------- ---------
------- -------- --------- ---------
(1) Relates to the rationalization of certain Industrial plant
locations.
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in millions, except share data)
ASSETS Oct. 1, Dec. 31,
- ------ 2004 2003
---------- ----------
Current Assets: (unaudited)
Cash $31.7 $25.1
Receivables, net of allowances of $16.8 million
at October 1, 2004 and $15.6 million
at December 31, 2003 363.6 268.9
Inventories 273.8 256.7
Deferred income taxes 13.5 13.5
Prepaid expenses and other 26.4 24.9
---------- ----------
Total current assets 709.0 589.1
Property, plant and equipment, net 334.2 333.3
Deferred income taxes 95.7 76.5
Other non-current assets 48.2 50.6
---------- ----------
Total assets $1,187.1 $1,049.5
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------------------
Current Liabilities:
Accounts payable $332.9 $250.6
Accrued liabilities 127.8 99.6
Current portion of long-term debt 1.5 2.3
---------- ----------
Total current liabilities 462.2 352.5
Long-term debt 351.7 338.1
Deferred income taxes 19.1 9.6
Other liabilities 104.3 109.2
---------- ----------
Total liabilities 937.3 809.4
---------- ----------
Shareholders' Equity:
Redeemable convertible preferred stock,
2,070,000 shares at redemption value
(liquidation preference of $50.00 per
share) 103.5 103.5
Common stock, $0.01 par value,
issued and outstanding shares:
October 1, 2004 - 39,246,059 (net of
4,885,823 treasury shares)
December 31, 2003 - 38,908,512 (net of
4,828,225 treasury shares) 0.4 0.4
Additional paid-in capital 143.3 140.8
Treasury stock (51.0) (50.4)
Retained earnings 60.7 54.5
Accumulated other comprehensive loss (2.5) (5.5)
Other shareholders' equity (4.6) (3.2)
---------- ----------
Total shareholders' equity 249.8 240.1
---------- ----------
Total liabilities and shareholders' equity $1,187.1 $1,049.5
---------- ----------
---------- ----------
CONTACT: General Cable Corporation
Investor Relations
Paul M. Montgomery, 859-572-8684