FORM 8-K |
Delaware (State of incorporation) | 001-12983 (Commission File Number) | 06-1398235 (IRS Employer Identification No.) |
4 Tesseneer Drive Highland Heights, Kentucky 41076-9753 (Address of principal executive offices, including zip code) | ||
(859) 572-8000 (Registrant’s telephone number, including area code) |
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)) |
Emerging growth company o |
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Press Release dated August 2, 2017 | |
99.2 | Certain slides contained in General Cable’s Second Quarter 2017 Investor Presentation |
GENERAL CABLE CORPORATION | ||
August 2, 2017 | By: | /s/ EMERSON C. MOSER |
Emerson C. Moser | ||
Senior Vice President, General Counsel and Corporate Secretary |
Exhibit No. | Description | |
99.1 | Press Release dated August 2, 2017 | |
99.2 | Certain slides contained in General Cable’s Second Quarter 2017 Investor Presentation |
• | Board of Directors initiated review of strategic alternatives to maximize shareholder value, including a potential sale of the Company |
• | Reported operating loss of $23 million due to a non-cash charge of $36 million related to the sale of the Company’s investment in Algeria in the second quarter of 2017, compared to a gain of $53 million on the sale of the Company’s North American automotive ignition wire business in the second quarter of 2016 |
• | Adjusted operating income of $32 million declined by $17 million period over period as restructuring savings and the continued performance improvement in Latin America were more than offset by the impact of lower subsea project activity and industry dynamics including pricing pressure in certain end markets in North America and Europe |
• | Maintained significant liquidity with $378 million of availability on the Company’s $700 million asset-based revolving credit facility; completed the amendment of its asset-based revolving credit facility extending maturity date to 2022 |
• | Impact of metal prices was a $2 million benefit compared to a negative $3 million impact in the prior year period |
Second Quarter of 2017 versus Second Quarter of 2016 | |||||||||
Second Quarter | |||||||||
2017 | 2016 | ||||||||
In millions, except per share amounts | Operating Income | EPS | Operating Income | EPS | |||||
Reported | $ (22.8) | $ (1.42) | $ 53.3 | $ 0.57 | |||||
Adjustments to reconcile operating Income/EPS | |||||||||
Non-cash convertible debt interest expense (1) | - | 0.01 | - | 0.01 | |||||
Mark to market (gain) loss on derivative instruments (2) | - | 0.08 | - | (0.05 | ) | ||||
Restructuring and divestiture costs (3) | 12.2 | 0.21 | 16.7 | 0.25 | |||||
Legal and investigative costs (4) | 0.3 | - | 1.1 | 0.02 | |||||
(Gain) loss on sale of assets (5) | - | - | (46.5 | ) | (0.86 | ) | |||
Foreign Corrupt Practices Act (FCPA) (6) | - | 0.20 | 5.0 | 0.09 | |||||
Asia Pacific and Africa (income)/loss (7) | 42.5 | 1.03 | 19.4 | 0.27 | |||||
Total adjustments | 55.0 | 1.53 | (4.3 | ) | (0.27 | ) | |||
Adjusted | $ 32.2 | $ 0.11 | $ 49.0 | $ 0.30 |
(1) | The Company's adjustment for the non-cash convertible debt interest expense reflects the accretion of the equity component of the 2029 convertible notes, which is reflected in the income statement as interest expense. |
(2) | Mark to market (gains) and losses on derivative instruments represents the current period changes in the fair value of commodity instruments designated as economic hedges. The Company adjusts for the changes in fair values of these commodity instruments as the earnings associated with the underlying contracts have not been recorded in the same period. |
(3) | Restructuring and divestiture costs represent costs associated with the Company's announced restructuring and divestiture programs. Examples consist of, but are not limited to, employee separation costs, asset write-downs, accelerated depreciation, working capital write-downs, equipment relocation, contract terminations, consulting fees and legal costs incurred as a result of the programs. The Company adjusts for these charges as management believes these costs will not continue at the conclusion of both the restructuring and divestiture programs. |
(4) | Legal and investigative costs represent costs incurred for external legal counsel and forensic accounting firms in connection with the restatement of our financial statements and the Foreign Corrupt Practices Act investigation. The Company adjusts for these charges as management believes these costs will not continue at the conclusion of these investigations which are considered to be outside the normal course of business. |
(5) | Gain and losses on the sale of assets are the result of divesting certain General Cable businesses. The Company adjusts for these gains and losses as management believes the gains and losses are one-time in nature and will not occur as part of the ongoing operations. |
(6) | Foreign Corrupt Practices Act (FCPA) represents expense recorded in 2016 related to the FCPA settlement of the SEC and DOJ investigations. The Company adjusts for this activity as management believes this is a one-time charge and will not occur as part of ongoing operations. In 2017, the adjustment principally reflects additional tax expense associated with changes in judgment concerning uncertain tax positions related to the FCPA settlement stemming from a recent change in law. |
(7) | The adjustment excludes the impact of operations in the Africa and Asia Pacific segment which are not considered "core operations" under the Company's strategic roadmap. The Company is in the process of divesting or closing these operations which are not expected to continue as part of the ongoing business. For accounting purposes, the continuing operations in Africa and Asia Pacific do not meet the requirement to be presented as discontinued operations. Second quarter of 2017 principally reflects the non-cash impact for the release of cumulative foreign currency losses recognized on the sale of the Company’s investment in Algeria of $36 million and the closure of certain operations in Asia Pacific of $4 million as well as the non-cash write-off of deferred tax assets of $6 million related to the divesture of certain operations in Asia Pacific. The second quarter of 2016 principally reflects the impact of non-cash charges related to the dispositions of Zambia and Egypt principally due to the release of cumulative foreign currency losses. |
GENERAL CABLE CORPORATION AND SUBSIDIARIES | ||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Fiscal Months Ended | Six Fiscal Months Ended | |||||||||||||||
June 30, | July 1, | June 30, | July 1, | |||||||||||||
2017 | 2016 | 201 | 2016 | |||||||||||||
Net sales | $ | 943.1 | $ | 1,021.2 | $ | 1,861.3 | $ | 2,023.9 | ||||||||
Cost of sales | 842.2 | 902.0 | 1,641.8 | 1,793.8 | ||||||||||||
Gross profit | 100.9 | 119.2 | 219.5 | 230.1 | ||||||||||||
Selling, general and administrative expenses | 123.7 | 63.4 | 218.5 | 151.9 | ||||||||||||
Goodwill impairment charges | — | — | — | 1.6 | ||||||||||||
Intangible asset impairment charges | — | 2.5 | — | 2.8 | ||||||||||||
Operating income (loss) | (22.8 | ) | 53.3 | 1.0 | 73.8 | |||||||||||
Other income (expense) | (7.8 | ) | 8.0 | 7.2 | 6.8 | |||||||||||
Interest income (expense): | ||||||||||||||||
Interest expense | (19.4 | ) | (22.8 | ) | (40.1 | ) | (44.7 | ) | ||||||||
Interest income | 0.5 | 0.5 | 1.1 | 1.0 | ||||||||||||
(18.9 | ) | (22.3 | ) | (39.0 | ) | (43.7 | ) | |||||||||
Income (loss) before income taxes | (49.5 | ) | 39.0 | (30.8 | ) | 36.9 | ||||||||||
Income tax (provision) benefit | (19.2 | ) | (11.0 | ) | (25.5 | ) | (13.4 | ) | ||||||||
Equity in net earnings of affiliated companies | — | 0.3 | — | 0.4 | ||||||||||||
Net income (loss) including noncontrolling interest | (68.7 | ) | 28.3 | (56.3 | ) | 23.9 | ||||||||||
Less: net income (loss) attributable to noncontrolling interest | 2.1 | (1.5 | ) | 2.1 | (1.2 | ) | ||||||||||
Net income (loss) attributable to Company common shareholders | $ | (70.8 | ) | $ | 29.8 | $ | (58.4 | ) | $ | 25.1 | ||||||
Earnings (loss) per share attributable to Company common shareholders | ||||||||||||||||
Earnings (loss) per common share - basic | $ | (1.42 | ) | $ | 0.60 | $ | (1.17 | ) | $ | 0.51 | ||||||
Weighted average common shares - basic | 50.0 | 49.6 | 49.9 | 49.5 | ||||||||||||
Earnings (loss) per common share - assuming dilution | $ | (1.42 | ) | $ | 0.57 | $ | (1.17 | ) | $ | 0.48 | ||||||
Weighted average common shares - assuming dilution | 50.0 | 52.1 | 49.9 | 52.0 |
GENERAL CABLE CORPORATION AND SUBSIDIARIES | |||||||||||||||||
Consolidated Statements of Operations | |||||||||||||||||
Segment Information | |||||||||||||||||
(in millions) | |||||||||||||||||
(unaudited) | |||||||||||||||||
Three Fiscal Months Ended | Six Fiscal Months Ended | ||||||||||||||||
June 30, | July 1, | June 30, | July 1, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||
Revenues (as reported) | |||||||||||||||||
North America | $ | 560.2 | $ | 530.9 | $ | 1,103.2 | $ | 1,069.1 | |||||||||
Europe | 214.3 | 229.5 | 395.3 | 451.4 | |||||||||||||
Latin America | 148.0 | 168.2 | 305.9 | 323.2 | |||||||||||||
Africa / Asia Pacific | 20.6 | 92.6 | 56.9 | 180.2 | |||||||||||||
Total | $ | 943.1 | $ | 1,021.2 | $ | 1,861.3 | $ | 2,023.9 | |||||||||
Revenues (metal adjusted)(1) | |||||||||||||||||
North America | $ | 560.2 | $ | 569.3 | $ | 1,103.2 | $ | 1,153.5 | |||||||||
Europe | 214.3 | 241.5 | 395.3 | 477.0 | |||||||||||||
Latin America | 148.0 | 187.9 | 305.9 | 363.8 | |||||||||||||
Africa / Asia Pacific | 20.6 | 102.1 | 56.9 | 200.3 | |||||||||||||
Total | $ | 943.1 | $ | 1,100.8 | $ | 1,861.3 | $ | 2,194.6 | |||||||||
Metal Pounds Sold | |||||||||||||||||
North America | 147.2 | 137.3 | 288.9 | 279.3 | |||||||||||||
Europe | 37.8 | 40.8 | 74.6 | 79.0 | |||||||||||||
Latin America | 52.6 | 63.9 | 108.9 | 119.0 | |||||||||||||
Africa / Asia Pacific | 4.7 | 30.1 | 13.7 | 55.6 | |||||||||||||
Total | 242.3 | 272.1 | 486.1 | 532.9 | |||||||||||||
Operating Income (loss) | |||||||||||||||||
North America | $ | 19.9 | $ | 73.8 | $ | 45.7 | $ | 91.5 | |||||||||
Europe | (2.5 | ) | (1.5 | ) | (6.1 | ) | 6.2 | ||||||||||
Latin America | 2.3 | 0.4 | 6.9 | (3.3 | ) | ||||||||||||
Africa / Asia Pacific | (42.5 | ) | (19.4 | ) | (45.5 | ) | (20.6 | ) | |||||||||
Total | $ | (22.8 | ) | $ | 53.3 | $ | 1.0 | $ | 73.8 | ||||||||
Adjusted Operating Income (loss)(2) | |||||||||||||||||
North America | $ | 31.4 | $ | 40.1 | $ | 73.2 | $ | 71.6 | |||||||||
Europe | (1.5 | ) | 8.6 | (3.4 | ) | 19.9 | |||||||||||
Latin America | 2.3 | 0.3 | 7.1 | (0.9 | ) | ||||||||||||
Total | $ | 32.2 | $ | 49.0 | $ | 76.9 | $ | 90.6 | |||||||||
Return on Metal Adjusted Sales(3) | |||||||||||||||||
North America | 5.6 | % | 7.0 | % | 6.6 | % | 6.2 | % | |||||||||
Europe | (0.7 | )% | 3.6 | % | (0.9 | )% | 4.2 | % | |||||||||
Latin America | 1.6 | % | 0.2 | % | 2.3 | % | (0.2 | )% | |||||||||
Total | 3.5 | % | 4.9 | % | 4.3 | % | 4.5 | % | |||||||||
Capital Expenditures | |||||||||||||||||
North America | $ | 12.2 | $ | 9.5 | $ | 33.3 | $ | 16.5 | |||||||||
Europe | 5.1 | 4.8 | 17.0 | 8.9 | |||||||||||||
Latin America | 0.9 | 3.5 | 2.9 | 6.6 | |||||||||||||
Africa / Asia Pacific | — | — | 0.2 | 0.1 | |||||||||||||
Total | $ | 18.2 | $ | 17.8 | $ | 53.4 | $ | 32.1 | |||||||||
Depreciation & Amortization | |||||||||||||||||
North America | $ | 9.1 | $ | 11.0 | $ | 18.3 | $ | 21.9 | |||||||||
Europe | 5.5 | 5.8 | 11.0 | 11.4 | |||||||||||||
Latin America | 4.0 | 4.3 | 8.2 | 8.4 | |||||||||||||
Africa / Asia Pacific | 0.3 | 0.5 | 0.9 | 1.1 | |||||||||||||
Total | $ | 18.9 | $ | 21.6 | $ | 38.4 | $ | 42.8 | |||||||||
Revenues by Major Product Lines | |||||||||||||||||
Electric Utility | $ | 330.5 | $ | 365.3 | $ | 653.7 | $ | 724.5 | |||||||||
Electrical Infrastructure | 240.5 | 257.3 | 478.0 | 538.4 | |||||||||||||
Construction | 198.2 | 209.9 | 397.1 | 400.1 | |||||||||||||
Communications | 131.6 | 128.4 | 248.4 | 244.8 | |||||||||||||
Rod Mill Products | 42.3 | 60.3 | 84.1 | 116.1 | |||||||||||||
Total | $ | 943.1 | $ | 1,021.2 | $ | 1,861.3 | $ | 2,023.9 | |||||||||
(1) Metal-adjusted revenues, a non-GAAP financial measure, is provided in order to eliminate an estimate of metal price volatility from the comparison of revenues from one period to another. | |||||||||||||||||
(2) Adjusted operating income (loss) is a non-GAAP financial measure. The company is providing adjusted operating income (loss) on a segment basis because management believes it is useful in analyzing the operating performance of the business and is consistent with how management reviews the underlying business trends. A reconciliation of segment reported operating income (loss) to segment adjusted operating income (loss) is provided in the appendix of the Second Quarter 2017 Investor Presentation, located on the Company's website. | |||||||||||||||||
(3) Return on Metal Adjusted Sales is calculated on Adjusted Operating Income (Loss) |
GENERAL CABLE CORPORATION AND SUBSIDIARIES | ||||||||
Consolidated Balance Sheets | ||||||||
(in millions, except share data) | ||||||||
Assets | June 30, 2017 | December 31, 2016 | ||||||
(unaudited) | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 96.6 | $ | 101.1 | ||||
Receivables, net of allowances of $22.0 million at June 30, 2017 | ||||||||
and $20.2 million at December 31, 2016 | 697.9 | 664.5 | ||||||
Inventories | 770.8 | 768.2 | ||||||
Prepaid expenses and other | 76.6 | 65.4 | ||||||
Total current assets | 1,641.9 | 1,599.2 | ||||||
Property, plant and equipment, net | 536.6 | 529.3 | ||||||
Deferred income taxes | 10.5 | 20.4 | ||||||
Goodwill | 12.2 | 12.0 | ||||||
Intangible assets, net | 26.1 | 28.3 | ||||||
Unconsolidated affiliated companies | 0.2 | 9.0 | ||||||
Other non-current assets | 49.5 | 43.4 | ||||||
Total assets | $ | 2,277.0 | $ | 2,241.6 | ||||
Liabilities and Total Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 431.1 | $ | 414.0 | ||||
Accrued liabilities | 337.9 | 419.6 | ||||||
Current portion of long-term debt | 49.0 | 67.5 | ||||||
Total current liabilities | 818.0 | 901.1 | ||||||
Long-term debt | 1,034.0 | 871.1 | ||||||
Deferred income taxes | 131.1 | 126.7 | ||||||
Other liabilities | 170.9 | 173.8 | ||||||
Total liabilities | 2,154.0 | 2,072.7 | ||||||
Total Equity: | ||||||||
Common stock, $0.01 par value, issued and outstanding shares: | ||||||||
June 30, 2017 - 49,754,732 (net of 9,055,234 treasury shares) | ||||||||
December 31, 2016 - 49,390,850 (net of 9,419,116 treasury shares) | 0.6 | 0.6 | ||||||
Additional paid-in capital | 707.0 | 711.0 | ||||||
Treasury stock | (164.1 | ) | (169.9 | ) | ||||
Retained earnings (deficit) | (178.2 | ) | (102.2 | ) | ||||
Accumulated other comprehensive loss | (245.1 | ) | (286.4 | ) | ||||
Total Company shareholders' equity | 120.2 | 153.1 | ||||||
Noncontrolling interest | 2.8 | 15.8 | ||||||
Total equity | 123.0 | 168.9 | ||||||
Total liabilities and equity | $ | 2,277.0 | $ | 2,241.6 |
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