-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EY7Ikump7fSflYzqrmPH8SC+R3rXYaDYO8ns3dFDPH2TqgCytPUx97SUEvrSYw4p Xd1PGA4xOlzBSKtJg1wMKw== 0000950152-99-002255.txt : 19990325 0000950152-99-002255.hdr.sgml : 19990325 ACCESSION NUMBER: 0000950152-99-002255 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL CABLE CORP /DE/ CENTRAL INDEX KEY: 0000886035 STANDARD INDUSTRIAL CLASSIFICATION: DRAWING AND INSULATING NONFERROUS WIRE [3357] IRS NUMBER: 311351333 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-12983 FILM NUMBER: 99570610 BUSINESS ADDRESS: STREET 1: 4 TESSENEER DRIVE CITY: HIGHLAND HEIGHTS STATE: KY ZIP: 41076 BUSINESS PHONE: 6065728000 10-K405 1 GENERAL CABLE CORPORATION FORM 10-K405 1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1998 Commission File No. 1-12983 GENERAL CABLE CORPORATION (Exact name of registrant as specified in its charter) Delaware 06-1398235 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4 Tesseneer Drive Highland Heights, KY 41076 (Address of principal executive offices) (606) 572-8000 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of Each Class Name of Each Exchange on which registered - ------------------- ----------------------------------------- Common Stock, $.01 Par Value New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of the Regulation S-K is not contained herein, and need not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. [X] As of February 26, 1999, there were 37,017,795 shares of the Registrant's Common Stock outstanding. The aggregate market value of Common Stock held by non-affiliates was $686 million (based upon non-affiliate holdings of 36,445,429 shares and a market price of $18.81 per share). DOCUMENTS INCORPORATED BY REFERENCE: Proxy Statement for the 1999 Annual Meeting of Shareholders (portions of which are incorporated by reference in Part III hereof). - -------------------------------------------------------------------------------- 2 GENERAL CABLE CORPORATION INDEX TO ANNUAL REPORT ON FORM 10-K PART I Page ---- Item 1. Business 3 Item 2. Properties 11 Item 3. Legal Proceedings 13 Item 4. Submission of Matters to a Vote of Security Holders 14 PART II Item 5. Market for Registrant's Common Stock and Related Stockholder Matters 15 Item 6. Selected Financial Data 15 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 23 Item 8. Financial Statements and Supplementary Data 24 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 24 PART III Item 10. Directors and Executive Officers of the Registrant 25 Item 11. Executive Compensation 26 Item 12. Security Ownership of Certain Beneficial Owners and Management 26 Item 13. Certain Relationships and Related Transactions 26 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports On Form 8-K 27 Signatures 29 2 3 PART I. ITEM 1. BUSINESS General Cable Corporation (General Cable or the Company) is a leader in the development, design, manufacture, marketing and distribution of copper, aluminum and optical fiber wire and cable products for the communications and electrical markets. Communications wire and cable transmits low voltage signals for voice, data, video and control applications. Electrical wire and cable conducts electrical current for power and control applications. General Cable believes that its principal competitive strengths include its breadth of product line; brand recognition; distribution strength; customer selection, sales and service; and improved operating efficiency. General Cable is a Delaware corporation and was incorporated in April 1994. Its principal executive offices are located at 4 Tesseneer Drive, Highland Heights, Kentucky 41076 and its telephone number is (606) 572-8000. General Cable and its predecessors have served the communications and electrical markets for over 150 years. The Company's immediate predecessor (the Predecessor) was formed in April 1992 to hold the wire and cable and heavy equipment businesses of American Premier Underwriters, Inc. (American Premier), then known as The Penn Central Corporation (PCC). American Premier entered the wire and cable business in 1981, when it acquired the successor to the original General Cable Corporation, and significantly expanded the business between 1988 and 1991 by acquiring Carol Cable Company, Inc. and other wire and cable businesses and facilities. In July 1992, American Premier distributed 88% of the outstanding common stock of General Cable to American Premier's stockholders and retained the balance of General Cable's common stock. As a result, General Cable, which owned wire and cable and heavy equipment businesses, became a public company with its common stock traded on the Nasdaq Market. In June 1994, a subsidiary of Wassall PLC (Wassall) acquired General Cable by private purchases of a $169.8 million General Cable subordinated promissory note and the General Cable common stock held by American Premier and its affiliate and a tender offer for the publicly-held General Cable common stock (the Acquisition). In May and August 1997, Wassall consummated public offerings for the sale of all of its interest in General Cable's common stock. General Cable has operated as an independent public company since completion of the offerings. 3 4 The principal markets, products, distribution channels and end-users of each of General Cable's eight product categories are summarized below:
- -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- PRINCIPAL PRODUCT CATEGORY PRINCIPAL MARKETS PRINCIPAL PRODUCTS DISTRIBUTION PRINCIPAL END-USERS CHANNELS - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- COMMUNICATIONS GROUP: - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Outside Voice and Data Telecom Local Loop PIC; Outside Service Direct;Distributors Telecommunications Wire System Operators - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Datacom Computer Networking Multi-Conductor/ Distributors; Contractors; Original And Multimedia Multi-Pair; Fiber Direct Equipment Manufacturers Applications Optic Cable ("OEMs"); Systems Integrators - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Industrial Building Management; Multi-Conductor; Distributors; Contractors; Instrumentation and Entertainment; Coaxial Cable; Sound, Retailers; Direct Consumers; Control Equipment Control Security/Fire Alarm Industrial - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Communication Telecommunication; Cable Harness; Direct Communications and Assemblies Industrial Connector Cables Industrial Equipment; Equipment Medical Equipment Manufacturers - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- ELECTRICAL GROUP: - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Building Wire Non-Residential and THHN; Romex(R); Distributors; Contractors; Consumers Residential Aluminum; Armored Retailers Construction Products - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Portable Cord Industrial Power Rubber and Plastic- Distributors; Industrial; Consumers; and Jacketed Wire and Retailers; Contractors; OEMs Control Cable Direct - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Cordset and Power DIY; Construction; Consumer Cordsets; Retailers; Direct; Consumers; Contractors; Assemblies Industrial Equipment OEM Cordsets; Distributors OEMs Assemblies - -------------------------- ------------------------ ------------------------- ----------------------- ------------------------- Automotive Automotive Ignition Wire Sets; Retailers; Consumers Aftermarket Booster Cables Distributors - -------------------------- ------------------------ ------------------------- ----------------------- -------------------------
The following table sets forth summarized financial information by reportable segment for the years ended December 31 (in millions):
1998 1997 1996 ---------- ---------- ---------- Net sales: Communications $ 460.1 $ 415.9 $ 375.6 Electrical 690.4 718.6 668.0 ---------- ---------- ---------- $ 1,150.5 $ 1,134.5 $ 1,043.6 ========== ========== ========== Operating income: Communications $ 74.0 $ 53.0 $ 47.8 Electrical 55.6 51.5 30.7 ---------- ---------- ---------- $ 129.6 $ 104.5 $ 78.5 ========== ========== ==========
4 5 COMMUNICATIONS GROUP The Communications Group manufactures and sells wire and cable products for voice, data and video transmission applications (Outside Voice and Data Products), multi-conductor/multi-pair cables used for computer and telephone interconnections in telephone company central offices and customer premises (Datacom Products) and specialty products for use in machinery and instrument interconnection, audio, computer, security and other applications (Industrial Instrumentation and Control Products), and harnesses and assemblies for telecommunications equipment manufacturers, industrial equipment manufacturers and medical equipment manufacturers (OEM Products). Outside Voice and Data Products General Cable's principal Outside Voice and Data Products are plastic insulated cable (PIC) and outside service wire. PIC is short haul trunk, feeder or distribution cable from a telephone company central office to the subscriber premises. It consists of multiple paired conductors (ranging from 2 pairs to 4,200 pairs) and various types of sheathing, water-proofing, foil wraps and metal jacketing. Outside service wire is used to connect telephone subscriber premises to curbside distribution cable. General Cable sells its Outside Voice and Data Products primarily to telecommunications system operators through its direct sales force under supply contracts of varying lengths, and also to telecommunications distributors. In 1996, approximately 10.4% of the Company's net sales were generated by sales of Outside Voice and Data and (to a lesser extent) Datacom products to its largest customer, US West, pursuant to a ten-year supply agreement that took effect on November 1, 1994. The agreement does not guarantee a minimum level of sales. Product prices are subject to periodic adjustment based upon changes in the cost of copper and other factors. The agreement is terminable by US West prior to its scheduled expiration date if the Company does not meet certain performance criteria. In 1996, 1997 and 1998, sales of Outside Voice and Data Products accounted for approximately 24%, 22% and 24%, respectively, of the Company's net sales. Datacom Products The Company's Datacom Products are high-bandwidth twisted pair copper and fiber optic cable for the customer premises, local area networks, central office and OEM telecommunications equipment markets. Customer premises products are used for wiring at subscriber premises, and include computer, riser rated and plenum rated wire and cable. Riser cable runs between floors and plenum cable runs in air spaces, primarily above ceilings in non-residential structures. Local area network cables run between computers along horizontal race ways and in backbones between servers. Central office products interconnect components within central office switching systems and public branch exchanges. General Cable sells Datacom Products primarily through distributors and agents under the General Cable(R) brand name. In 1996, 1997 and 1998, sales of Datacom Products accounted for approximately 10%, 11% and 11%, respectively, of the Company's net sales. 5 6 In December 1996, subsidiaries of the Company and SpecTran Corporation (SpecTran) formed General Photonics LLC (General Photonics), an equally-owned joint venture, for the design, development, manufacture and marketing of communications-grade fiber optic cable for the customer premises market in the United States, Canada and Mexico. SpecTran is a developer, manufacturer and marketer of glass optical fiber and specialty value-added fiber optic components and assemblies. Under the joint venture arrangement, fiber optic cable and other products manufactured by General Photonics are marketed primarily through General Cable's sales force with some direct sales and customer support provided by General Photonics personnel. Industrial Instrumentation and Control Products The Company's Industrial Instrumentation and Control Products include multi-conductor, multi-pair, coaxial, hook-up, audio and microphone cables, speaker and television lead wire, high temperature and shielded electronic wire, and harness assemblies. Primary uses for these products are various applications within the commercial, industrial instrumentation and control, and residential markets. These markets require a broad range of multi-conductor products for applications involving programmable controllers, robotics, process control and computer integrated manufacturing, sensors and test equipment, as well as cable for fire alarm, smoke detection, sprinkler control, entertainment and security systems. Many industrial and commercial environments require cables with exterior armor and/or jacketing materials that can endure exposure to chemicals, extreme temperatures and outside elements. The Company offers products that are specially designed for these applications. Communications assemblies are used in communications switching systems and industrial control applications as well as medical equipment applications. These assemblies are used in such products as data processing equipment, telecommunications network switches, diagnostic imaging equipment, office machines and industrial machinery. General Cable's Industrial Instrumentation and Control Products are sold primarily through distributors and agents under the Carol(R) brand name. ELECTRICAL GROUP The Electrical Group manufactures and sells wire and cable products (typically for applications at 600 volts or less) for use in non-residential and residential structures and in a wide variety of capital goods and consumer uses. General Cable has four principal Electrical product categories: building wire, portable cord, cordsets and OEM assemblies, and automotive products. 6 7 Building Wire General Cable manufactures and sells a broad line of thermosetting, thermoplastic and elastomeric insulated wire and cable products for the distribution of electrical power to and within non-residential and residential structures. The Company's principal building wire products are THHN, a copper conductor used in non-residential construction and industrial applications, Romex(R) brand residential circuit, intermediate and feeder sized cables, and value-added specialty cables for industrial applications. An increasing portion of the Company's building wire sales consists of sales of high value-added products that meet more demanding service requirements or reduce installation costs. These products include tray cable, armored cable, aluminum utility service cable and control cable used in the operation and interconnection of protective and signaling devices in electrical distribution systems. General Cable sells its building wire products primarily to electrical distributors for resale to electrical contractors, industrial customers and OEMs. Sales are also made through hardware and home center retail chains and other retail stores. In 1996, 1997 and 1998, sales of Building Wire accounted for approximately 40%, 41% and 38%, respectively, of the Company's net sales. Portable Cord The Company manufactures and sells a wide variety of rubber and plastic insulated portable cord products for power and control applications serving industrial, mining, entertainment, OEM, farming and other markets. Portable cord products have electrical characteristics similar to building wire, but are designed and constructed to be used in more dynamic and severe environmental conditions where a flexible but durable power supply is required. Portable cord products include both standard commercial cord and cord products designed to customer specifications. Portable rubber-jacketed power cord, the Company's largest selling cord product line, is typically manufactured without a connection device at either end and is sold in standard and customer-specified lengths. Portable cord is also sold to OEMs for use as power cords on their products and in other applications, in which case the cord is made to the OEMs' specifications. The Company also manufactures portable cord for use with moveable heavy equipment and machinery. General Cable's portable cord products are sold under the Carol(R) brand name, primarily through electrical distributors and electrical retailers to industrial customers, OEMs, contractors and consumers. General Cable's portable cords are used in the installation of new industrial equipment and the maintenance of existing equipment, and to supply electrical power at temporary venues such as festivals, sporting events, concerts and construction sites. The Company expects demand for portable cord to grow in response to general economic activity and the development of higher specification products for more environmentally demanding industrial applications. 7 8 Cordsets and Power Assemblies General Cable focuses primarily on high-performance, value-added cordsets, including extension cords and multiple outlet power centers, appliance cords for ranges and dryers, portable lights, and cordsets with surge protection and ground fault interruption devices for use by consumers, contractors and OEMs. Cordsets are manufactured with connection devices at one or both ends, with standard indoor and outdoor, single or multiple outlet extension cords being the most common example. Jackets for cordset products are typically thermoplastic. The Company has developed many high-performance plastic and premium rubber cordsets for use in a wide variety of demanding applications, such as outdoor locations or rugged job sites. Power assemblies are used in a variety of demanding applications such as power delivery to office modules and for such products as power hand tools, floor care products and other appliances. The Company targets customers who require premium cordsets or assemblies that require innovative engineering and for whom the Company's vertical integration in high-performance wire and cable provides a competitive cost advantage. General Cable sells its cordsets primarily to OEMs and to hardware and home center retail chains, hardware distributors and mass merchants for resale to consumers and contractors. In addition, an increasing portion of the Company's cordset sales are to electrical distributors for resale to retail outlets, electrical contractors, industrial companies and OEMs. Automotive Products General Cable's principal automotive products are ignition wire sets and booster cables for sale to the automotive aftermarket. Booster cable sales are affected by the severity of weather conditions and related promotional activity by retailers. As a result, a majority of booster cable sales occur between September and January. General Cable sells its automotive wire and cable primarily to automotive parts retailers and distributors, mass merchants, hardware and home center retail chains and hardware distributors. The Company's automotive products are also sold on a private label basis to retailers and other automotive parts manufacturers. Other Operations Genca Corporation (Genca), a subsidiary of General Cable, designs and manufactures extrusion tooling, accessories, and cryogenic cleaning systems for sale to third parties and for use by General Cable. Genca's product line of extrusion tooling includes generic and specialty crossheads, inline heads, extrusion and mixing screws, small tools, extrusion tips and dies, and related technical services. These products are used principally for the manufacture of insulated wire and cable, and the fabrication of plastic tubing and various hoses and pipes. Genca's products are primarily sold through Genca's agents and direct sales forces to end users. 8 9 COMPETITION The markets for all of General Cable's products are highly competitive, and the Company experiences competition from at least one major competitor within each market. Due to the diversity of its product lines, however, the Company believes that no single competitor competes with the Company across the entire spectrum of the Company's product lines. General Cable believes that it has developed strong customer relations as a result of its ability to supply customer needs across a broad range of products, its commitment to quality control and continuous improvement, its continuing investment in information technology, its emphasis on customer service, and its substantial product and distribution resources. Although the primary competitive factors for General Cable's products vary somewhat across the different product categories, the principal factors influencing competition are generally breadth of product line, inventory availability and delivery time, price, quality and customer service. Price is a highly significant factor for certain lines within the Company's Electrical product categories. Many of the Company's products are made to industry specifications, and are therefore essentially functionally interchangeable with those of competitors. However, the Company believes that significant opportunities exist to differentiate all of its products on the basis of quality, consistent availability, conformance to manufacturer's specifications and customer service. Within the communications market, conformance to manufacturer's specifications and technological superiority are also important competitive factors. Brand recognition is also a primary differentiating factor in the portable cord market and, to a lesser extent, in the Company's other product groups. RAW MATERIALS The principal raw material used by General Cable in the manufacture of its wire and cable products is copper. General Cable purchases copper in either cathode, rod or wire form from a number of major domestic and foreign producers, generally through annual supply contracts. In 1998, the Company produced approximately 34% of the copper rod used in its manufacturing operations at its cast copper rod mill, which uses both cathode and recycled copper. Copper is available from many sources, and General Cable believes that it is not dependent on any single supplier of copper. In 1998, the Company's largest supplier of copper accounted for approximately 25% of the Company's copper purchases. General Cable has centralized its copper purchasing to capitalize on economies of scale and to facilitate the negotiation of favorable purchase terms from suppliers. The cost of copper has been subject to considerable volatility over the past several years. However, as a result of a number of practices intended to match copper purchases with sales, the Company's profitability has generally not been significantly affected by changes in copper prices. General Cable generally passes changes in copper prices along to its customers, although there are timing delays of varying lengths depending upon the type of product, competitive conditions and particular customer arrangements. The Company does not engage in speculative metals trading or other speculative activities, nor does it engage in activities to hedge the underlying value of its copper inventory. Other raw materials utilized by the Company include nylon, PVC resin and compounds, polyethylene and plasticizers, fluoropolymer compounds, a variety of filling, binding and sheathing materials, and aluminum wire. The Company believes that all of these materials are available in sufficient quantities through purchases in the open market. 9 10 PATENTS AND TRADEMARKS General Cable believes that the success of its business depends more on the technical competence, creativity and marketing abilities of its employees than on any individual patent, trademark or copyright. Nevertheless, General Cable has a policy of seeking patents when appropriate on inventions concerning new products and product improvements as part of its ongoing research, development and manufacturing activities. General Cable owns 32 U.S. patents, which expire in 1999 through 2016, and has three patent applications pending in the U.S. In addition, the Company owns 28 foreign patents, which expire in 1999 through 2017 and has 16 patent applications pending in foreign countries. The Company also owns 95 registered trademarks and 26 trademarks for which application for registration is pending. Although in the aggregate these patents and trademarks are of considerable importance to the manufacturing and marketing of many of the Company's products, the Company does not consider any single patent or trademark or group of patents or trademarks to be material to its business as a whole. While General Cable occasionally obtains patent licenses from third parties, none are deemed to be significant. Trademarks which are considered to be important are Carol(R), Genca(R), General Cable(R), Romex(R), Vutron(R) and DreamLan(TM), and the General Cable triangle symbol. General Cable believes that the Company's products bearing these trademarks have achieved significant brand recognition within the industry. General Cable also relies on trade secret protection for its confidential and proprietary information. General Cable routinely enters into confidentiality agreements with its employees. There can be no assurance, however, that others will not independently obtain similar information and techniques or otherwise gain access to the Company's trade secrets or that the Company will be able to effectively protect its trade secrets. ENVIRONMENTAL MATTERS The Company is subject to numerous federal, state, local and foreign laws and regulations relating to the storage, handling, emission and discharge of materials into the environment, including CERCLA, the Clean Water Act, the Clean Air Act (including the 1990 amendments) and the Resource Conversation and Recovery Act. Subsidiaries of the Company have been identified as potentially responsible parties (PRPs) with respect to several sites designated for cleanup under CERCLA or similar state laws, which impose liability for cleanup of certain waste sites and for related natural resource damages without regard to fault or the legality of waste generation or disposal. Persons liable for such costs and damages generally include the site owner or operator and persons that disposed or arranged for the disposal of hazardous substances found at those sites. Although CERCLA imposes joint and several liability on all PRPs, in application, the PRPs typically allocate the investigation and cleanup costs based, among other things, upon the volume of waste contributed by each PRP. 10 11 Settlements can often be achieved through negotiations with the appropriate environmental agency or the other PRPs. PRPs that contributed small amounts of waste (typically less than 1% of the waste) are often given the opportunity to settle as "de minimis" parties, resolving their liability for a particular site. The Company does not own or operate any of the waste sites with respect to which it has been named as a PRP by the government. Based on its review and other factors, the Company believes that costs to the Company relating to environmental clean-up at these sites will not have a material adverse effect on its results of operations, cash flows or financial position. American Premier, in connection with the Acquisition, agreed to indemnify General Cable against liabilities (including all environmental liabilities) arising out of General Cable's or its predecessors' ownership or operation of the Indiana Steel & Wire Company and Marathon Manufacturing Holdings, Inc. businesses (which were divested), without limitation as to time or amount. American Premier also agreed to indemnify General Cable against 66 2/3% of all other environmental liabilities arising out of General Cable's or its predecessors' ownership or operation of other properties and assets in excess of $10 million but not in excess of $33 million which are identified during the seven year period ending June 2001. General Cable also has claims against third parties with respect to some of these liabilities. While it is difficult to estimate future environmental liabilities accurately, the Company does not currently anticipate any material adverse effect on its results of operations, financial condition or cash flows as a result of compliance with federal, state, local or foreign environmental laws or regulations or cleanup costs of the sites discussed above. EMPLOYEES At December 31, 1998, approximately 4,700 persons were employed by General Cable, and collective bargaining agreements covered approximately 3,700 employees at 14 locations. During the last five years, the Company has experienced two strikes affecting a total of three facilities; both were settled on satisfactory terms. Union contracts will expire at two facilities in 1999 and five facilities in 2000. The Company believes that its relationships with employees are good. ITEM 2. PROPERTIES General Cable operates 15 manufacturing facilities in the U.S. The Company owns 14 of the facilities, which encompass approximately 3.7 million square feet. The remaining facility, which is approximately 138,000 square feet, is leased under an agreement with an expiration date of August 31, 2000. In addition, General Cable operates two manufacturing facilities outside the U.S., totaling approximately 51,000 square feet. General Cable also leases five regional distribution centers, totaling approximately 1.1 million square feet, located in Anaheim, CA; Dallas, TX; Lebanon, IN; Vineland, NJ and Atlanta, GA. These leases expire in 2001 and 2002. 11 12 General Cable's principal properties are listed below. The Company believes that its properties are generally well maintained and are adequate for the Company's current level of operations.
SQUARE USE/PRODUCT OWNED LOCATION FEET LINE(S) OR LEASED - -------- ---- ------- --------- MANUFACTURING FACILITIES Manchester, NH 533,000 Electronic and Datacom Products Owned Plano, TX 404,000 Electrical Products and Rod Mill Owned Lincoln, RI 398,000 Electrical Products and Automotive Owned Bonham, TX 360,000 Outside Voice and Data Products Owned Lawrenceburg, KY 339,000 Outside Voice and Data Products and Datacom Products Owned Montoursville, PA 318,000 Cordsets and Electrical Products Owned Monticello, IL 250,000 Outside Voice and Data and Electrical Products Owned Kingman, AZ 243,000 Electrical Products Owned Watkinsville, GA 224,000 Electrical Products Owned Altoona, PA 195,000 Automotive and Power Assemblies Products Owned Williamstown, MA 167,000 Electrical Products and Cordsets Owned Taunton, MA 138,000 Wire Fabricating Leased Sanger, CA 105,000 Datacom Products Owned Cass City, MI 100,000 Datacom Products Owned Clearwater, FL 72,000 Extrusion Systems and Tooling Owned Piedras Negras, Mexico 40,000 Communications Assemblies Leased Wellingborough, UK 11,000 Automotive Leased DISTRIBUTION AND OTHER FACILITIES: Atlanta, GA 328,000 Distribution Center Leased Dallas, TX 200,000 Distribution Center Leased Lebanon, IN 198,000 Distribution Center Leased Vineland, NJ 200,000 Distribution Center Leased Anaheim, CA 189,000 Distribution Center Leased Highland Heights, KY 166,000 Corporate Headquarters, Laboratory and Learning Center Owned Toronto, Ontario Canada 24,000 Sales Office and Warehouse Leased
12 13 ITEM 3. LEGAL PROCEEDINGS General Cable is subject to numerous federal, state, local and foreign laws and regulations relating to the storage, handling, emission and discharge of materials into the environment, including CERCLA, the Clean Water Act, the Clean Air Act (including the 1990 amendments) and the Resource Conservation and Recovery Act. Subsidiaries of General Cable have been identified as PRPs with respect to several sites designated for cleanup under CERCLA or similar state laws, which impose liability for cleanup of certain waste sites and for related natural resource damages without regard to fault or the legality of waste generation or disposal. General Cable does not own or operate any of the waste sites with respect to which it has been named as a PRP by the government. Based on its review and other factors, management believes that costs to the Company relating to environmental clean-up at these sites will not have a material adverse effect on its results of operations, cash flows or financial position. American Premier, in connection with the Acquisition, agreed to indemnify General Cable against liabilities (including all environmental liabilities) arising out of General Cable's or its predecessors' ownership or operation of the Indiana Steel & Wire Company and Marathon Manufacturing Holdings, Inc. businesses (which were divested by the Predecessor prior to the Acquisition), without limitation as to time or amount. American Premier also agreed to indemnify General Cable against 66 2/3% of all other environmental liabilities arising out of General Cable's or its predecessors' ownership or operation of other properties and assets in excess of $10 million but not in excess of $33 million which are identified during the seven year period ending June 2001. General Cable also has claims against third parties with respect to some of these liabilities. While it is difficult to estimate future environmental liabilities accurately, the Company does not currently anticipate any material adverse effect on its results of operations, financial condition or cash flows as a result of compliance with federal, state, local or foreign environmental laws or regulations or cleanup costs of the sites discussed above. There are approximately 4,508 pending non-maritime asbestos cases involving subsidiaries of General Cable. The overwhelming majority of these cases involve employees in shipyards alleging exposure to asbestos-contaminated shipboard cable manufactured by General Cable's predecessors. In addition to the Company's subsidiaries, numerous other wire and cable manufacturers have been named as defendants. Most cases previously filed have been dismissed with prejudice and without imposition of liability against General Cable. In some instances, individual cases have settled on a nominal basis. In addition, subsidiaries of the Company have been named, together with numerous other wire and cable manufacturers, as defendants in approximately 24,400 suits brought by plaintiffs alleging asbestos-related injury from the maritime industry (MARDOC cases), under the supervision of the U.S. District Court for the District of Easter Pennsylvania (the District Court). On May 1, 1996 the District Court ordered that 9,373 of such MARDOC cases be dismissed without prejudice for failure to plead sufficient facts. Pursuant to that order of dismissal, plaintiffs' attorney was permitted to bring future MARDOC cases only if the cases were brought in admiralty under the Merchant Marine Act of 1920 (commonly known as the Jones Act) and if counsel paid a filing fee for each new complaint and pleaded sufficient facts showing an asbestos-related injury as well as product identification specific as to each defendant. Based upon its experience to date, the Company does not believe that the outcome of the pending non-maritime and MARDOC asbestos cases will have a material adverse effect on its results of operations, cash flows or financial position. 13 14 In January 1994, General Cable entered into a settlement agreement with certain principal primary insurers concerning liability for the costs of defense, judgments and settlements, if any, in all of the asbestos litigation described above. Subject to the terms and conditions of the settlement agreement, the insurers are responsible for a substantial portion of the costs and expenses incurred in the defense or resolution of such litigation. Accordingly, based on (1) the terms of the insurance settlement agreement; (2) the relative costs and expenses incurred in the disposition of past asbestos cases; (3) reserves established on the books of the Company which are believed to be reasonable; and (4) defenses available to the Company in the litigation, the Company believes that the resolution of the present asbestos litigation will not have a material adverse effect on its results of operations, cash flows or financial position. Liabilities incurred in connection with asbestos litigation are not covered by the American Premier indemnification. General Cable is also involved in various routine legal proceedings and administrative actions. In the opinion of the Company's management, such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on its results of operations, cash flows or financial position. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None during the fourth quarter of 1998. PART II. DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS All statements, other than statements of historical fact, included in this Report, including without limitation the statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations", are, or may be considered, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Important factors that could cause actual results to differ materially from those discussed in the forward-looking statements (Cautionary Statements) include: price competition, particularly in certain segments of the building wire and cordset markets, and other competitive pressures; general economic conditions, particularly those affecting the non-residential construction industry; the Company's ability to retain key customers and distributors; the Company's ability to increase manufacturing capacity and productivity; the cost of raw materials, including copper; the level of growth in demand for products serving various segments of the communications markets; the Company's ability to successfully introduce new or enhanced products; the impact of qualified technological changes; the Company's ability to achieve productivity improvements; and the impact of changes in industry standards and the regulatory environment. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by the Cautionary Statements. 14 15 ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS General Cable's common stock, $0.01 par value (Common Stock), commenced trading on the New York Stock Exchange (NYSE) on May 16, 1997, under the symbol "GCN". The following table sets forth the high and low daily sales prices for the Common Stock as reported on the NYSE for the period from May 16, 1997, when the Common Stock was first traded, to December 31, 1998:
1997 1998 ------------------------ -------------------------- High Low High Low ------- ------- --------- -------- First Quarter - - $30 7/16 $22 3/4 Second Quarter (commencing May 16) $17 1/2 $13 13/16 $32 3/4 $22 3/4 Third Quarter $24 3/16 $16 15/16 $31 7/8 $17 3/8 Fourth Quarter $26 1/16 $21 5/16 $21 $12 1/4
General Cable has paid a $0.05 per share dividend each quarter since the fourth quarter of 1997 and intends to pay a $0.05 quarterly dividend in the future. The payment of dividends is subject to the discretion of the Board of Directors and the requirements of Delaware law and will depend upon general business conditions, the financial performance of the Company and other factors the Board of Directors may consider relevant. The Credit Facility contains certain provisions that restrict the ability of the Company to pay dividends or to repurchase its Common Stock. ITEM 6. SELECTED FINANCIAL DATA The selected financial data set forth in the following table for the years ended December 31, 1998, 1997, 1996, 1995 and the period June 9, 1994 to December 31, 1994 were derived from audited consolidated financial statements after the Acquisition. The selected financial data set forth in the following table for the period January 1, 1994 to June 8, 1994 were derived from the audited consolidated financial statements of the Predecessor. As a result of the Acquisition, which was accounted for as a purchase, the Company's results of operations, cash flows and financial position for the periods after June 8, 1994 are not comparable to prior periods. The pro forma statement of operations data give pro forma effect to the refinancing of the Company's debt under a new Credit Facility as if it had occurred on January 1, 1996. The pro forma financial adjustments are based upon available information and certain assumptions that the Company believes are reasonable. Such pro forma data are for informational purposes only and may not be indicative of the results of operations of the Company had the debt refinancing actually occurred on such date. 15 16 The following selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", the consolidated financial statements of the Company and related notes thereto (in millions, except per share data). Certain reclassifications have been made to conform to current years presentation.
THE COMPANY PREDECESSOR -------------------------------------------------------------------- ------------- JANUARY 1 YEAR ENDED DECEMBER 31, JUNE 9 TO TO ---------------------------------------------------- DECEMBER 31, JUNE 8, 1998 1997 1996 1995 1994 1994 ----------- ---------- --------- ---------- ------------- ----------- Statement of Operations Data: Net sales $ 1,150.5 $ 1,134.5 $ 1,043.6 $ 1,061.3 $ 543.3 $ 355.0 Gross profit 249.8 225.4 188.3 138.7 73.4 44.2 Operating income 129.6 104.5 78.5 44.5 20.3 1.1 Interest expense, net (15.7) (17.3) (19.6) (20.7) (11.0) (12.1) Earnings(loss) before income taxes 113.9 87.2 58.9 23.8 9.3 (11.0) Income tax benefit (provision) (42.7) (34.0) (19.7) 1.5(1) (6.5) 0.1 Net income (loss) 71.2 53.2 39.2 25.3 2.8 (10.9) Earnings per common share (2) $ 1.93 $ 1.45 $ 1.08 $ 0.70 $ 0.08 Earnings per common share - assuming dilution (2) $ 1.90 $ 1.44 $ 1.08 $ 0.70 $ 0.08 Weighted average shares outstanding (2) 36.8 36.6 36.4 36.4 36.4 Weighted average shares outstanding - assuming dilution(2) 37.5 36.9 36.4 36.4 36.4 Pro Forma Statement of Operations Data: Net income $ 54.6 $ 42.5 Earnings per common share (2) $ 1.49 $ 1.17 Earnings per common share- assuming dilution (2) $ 1.48 $ 1.17 Other Data: Average daily COMEX price per pound of copper cathode $ 0.75 $ 1.04 $ 1.06 $ 1.35 $ 1.20 $ 0.91(3) Capital expenditures $ 75.5 $ 42.6 $ 30.0 $ 26.2 $ 9.1 $ 6.2 DECEMBER 31, ----------------------------------------------------------- Balance Sheet Data: 1998 1997 1996 1995 1994 ------- ------- ------- ------- ------- Working capital $ 233.8 $ 225.9 $ 205.6 $ 234.4 $ 224.8 Total assets 651.0 563.7 513.6 535.6 518.7 Long-term debt 246.8 238.5 205.1 205.9 206.5 Dividends to shareholders 6.1 43.8 55.1 - - Shareholders' equity 177.2 122.4 107.4 122.9 97.6 Footnotes (1) At December 31, 1995, the Company recognized the full value of its net deferred tax assets; accordingly, goodwill recorded in the Acquisition was eliminated, and the Company recognized a tax benefit of $1.7 million. (2) Earnings per share were computed based on the weighted average common shares outstanding for each period, adjusted on a retroactive basis for a three-for-two stock split. Earnings per common share - assuming dilution were computed after giving effect to the dilutive effect of stock options and restricted stock units outstanding. (3) The average daily COMEX price per pound for the full year 1994 was $1.07.
16 17 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL General Cable's reported net sales are directly influenced by the price of copper. The price of copper has been subject to considerable volatility, with the daily selling price of copper cathode on the COMEX averaging $0.75 in 1998, $1.04 per pound in 1997 and $1.06 per pound in 1996. However, as a result of a number of practices intended to match copper purchases with sales, General Cable's profitability has generally not been significantly affected by changes in copper prices. General Cable generally passes changes in copper prices along to its customers, although there are timing delays of varying lengths depending upon the type of product, competitive conditions and particular customer arrangements. General Cable does not engage in speculative metals trading or other speculative activities, nor does it engage in activities to hedge the underlying value of its copper inventory. The Company accounts for its copper inventory on a LIFO basis and periodically reviews the carrying value of such inventory to determine whether or not a lower of cost or market write-down is required. Based upon the market price of copper and the Company's ability to recover the cost of its copper inventory through the sale of its finished products, an inventory write-down was not required as of December 31, 1998. In the future, further reductions in the market price of copper or in the selling prices realized by the Company, may require the Company to write-down its copper inventory. General Cable generally experiences certain seasonal trends in sales and cash flow. Relatively significant amounts of cash are generally required during the first and second quarters of the year to build inventories in anticipation of higher demand during the spring and summer months, when construction activity increases. In general, receivables related to higher sales activity during the spring and summer months are collected during the third and fourth quarters of the year. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, statement of income data in millions of dollars and as a percentage of net sales.
Year Ended December 31, ---------------------------------------------------------------------------------- 1998 1997 1996(1) ---------------------- ------------------------- ------------------------------- Amount % Amount % Amount % ------ ------ ---------- ------ ---------- ------ Net Sales $ 1,150.5 100.0% $ 1,134.5 100.0% $ 1,043.6 100.0% Cost of sales 900.7 78.3 909.1 80.1 855.3 82.0 ---------- ----- ---------- ----- ---------- ----- Gross profit 249.8 21.7 225.4 19.9 188.3 18.0 Selling, general and administrative expenses 120.2 10.4 120.9 10.7 109.8 10.5 ---------- ----- ---------- ----- ---------- ----- Operating income 129.6 11.3 104.5 9.2 78.5 7.5 Interest expense, net (15.7) (1.4) (17.3) (1.5) (19.6) (1.9) ---------- ----- ---------- ----- ---------- ----- Earnings before income taxes 113.9 9.9 87.2 7.7 58.9 5.6 Income tax provision (42.7) (3.7) (34.0) (3.0) (19.7) (1.9) ---------- ----- ---------- ----- ---------- ----- Net income $ 71.2 6.2% $ 53.2 4.7% $ 39.2 3.8% ========== ===== ========== ===== ========== ===== (1) Percentages do not add due to rounding.
17 18 YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997 General Cable continued record-setting results during 1998, including substantial growth in earnings per share, return on assets and copper-adjusted net sales. Fully diluted earnings per share increased 32% to $1.90, up from $1.44 per share in 1997. The significant improvement in earnings was driven by higher sales volume and continuing productivity improvement initiatives. In addition, return on net assets for 1998 of 18.0% was up 2.6 points over 1997. Net sales for 1998 increased $16.0 million, or 1%, to $1,150.5 million from net sales of $1,134.5 million in 1997 despite a $0.29 decrease in the average monthly COMEX price per pound of copper in 1998 compared to 1997. After adjusting the net sales for 1997 to reflect the $0.29 lower average monthly COMEX price per pound of copper in 1998, net sales were $120.3 million, or 12%, higher than 1997. The increase in copper-adjusted net sales reflects a 7% increase in the copper-adjusted net sales of Electrical products and a 19% increase in the copper-adjusted net sales of Communications products. The 19% growth in Communications Group net sales was the result of higher sales volume of plastic insulated cable (PIC) and datacom products. Increased PIC sales resulted from higher sales to a broad base of Local Telephone Exchange Carrier and distribution customers, which increased 25% on a copper-adjusted basis despite year-over-year reductions in sales volume at the Company's two largest customers for PIC products. Sales of PIC products to commercial distributors were 58% higher in 1998 compared to 1997. In addition, copper-adjusted net sales of data communications products rose 16%, with the largest increase coming from General Cable's higher performing enhanced category cables, which were more than double compared to 1997. The ongoing proliferation of personal computers; growth in Internet use; expansion of local and wide area networks, high-speed modems and access lines, and advanced voice, data and video applications continue to drive the Communications Group sales growth. The 7% increase in Electrical Group net sales was driven by higher sales volume of building wire, industrial power and control products, consumer cordsets and products for the automotive aftermarket. These volume increases were partially offset by lower building wire pricing in 1998 compared to 1997. General Cable continued to show excellent sales growth with key customers through "The Power of One" strategy. Copper-adjusted net sales to the Company's top 20 customers increased 23% in 1998 compared to 1997, reflecting General Cable's continuing ability to partner with customers for mutually beneficial growth in revenues and earnings. Selling, general and administrative expenses decreased $0.7 million, or 1%, to $120.2 million in 1998 from $120.9 million in 1997. Selling, general and administrative expenses as a percentage of copper-adjusted net sales declined from 11.7% in 1997, to 10.4% in 1998 as the Company continued to leverage its sales growth. Operating profit increased 24% to $129.6 million in 1998 from $104.5 million in 1997. The significant improvement in operating profit reflects the 12% increase in copper-adjusted net sales, manufacturing productivity of 5.9%, and selling, general and administrative expense productivity. These improvements in operating profit were partially offset by lower building wire pricing in 1998. The average price premium over the cost of copper was down 8% versus 1997 despite healthy demand. 18 19 Manufacturing productivity included savings related to materials, cycle-time reductions and process improvements. Material productivity resulted from partnering with suppliers to reduce the total delivered costs of raw materials, sourcing in-house certain compounds previously purchased outside the Company and enhanced process controls that reduced material usage. Net interest expense was $15.7 million in 1998 compared to $17.3 million in 1997. The reduction reflects the impact of refinancing related party debt in May 1997 with a borrowing under a new credit facility at a lower effective interest rate. The effective income tax rate for 1998 was 37.5% compared to 39% for 1997 due to a lower effective state tax rate. YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996 Net sales for 1997 increased $90.9 million, or 9%, to $1,134.5 million from 1996 net sales of $1,043.6 million. The increase reflects an increase of $40.3 million, or 11%, in the net sales of the Communications Group and an increase of $50.6 million, or 8%, in the net sales of the Electrical Group. Such amounts reflect a $0.02 decrease in the average monthly COMEX price per pound of copper in 1997 compared to 1996, which did not materially affect reported net sales. The increase in Communications Group net sales was primarily attributable to higher sales volume of datacom products, partially offset by lower selling prices of certain high-speed data networking cables in 1997. The growth in Electrical Group net sales was primarily due to more favorable building wire pricing and increased sales volume of building wire, portable cord and OEM cordset products in 1997 compared to 1996. Sales to General Cable's top 20 customers for 1997 were approximately 53% of total sales and increased at the rate of 22% from 1996, when they were 47% of total sales. The increase resulted from further development of supply relationships with preferred customers who have a favorable combination of industry position, product mix, procurement practices and volume. Gross profit increased $37.1 million, or 20%, to $225.4 million in 1997 from $188.3 million in 1996. General Cable's gross profit percentage was 19.9% in 1997 compared to 18.0% in 1996. On a copper-adjusted basis to 1997, General Cable's gross profit percentage was 18.2% in 1996. The improvement in 1997 was primarily attributable to manufacturing cost reductions combined with favorable building wire pricing, partially offset by a decrease in pricing for certain high-speed data networking cables. The reduction in manufacturing costs in 1997 compared to 1996 primarily reflected (i) the carryover effects of production facilities rationalized in 1996; (ii) improvement in capacity utilization, including the conversion of certain facilities from five-day to seven-day per week continuous production schedules; (iii) product redesigns to reduce material costs; and (iv) capital investment and other improvements in manufacturing processes to improve materials usage, reduce waste, reduce labor and increase throughput. Selling, general and administrative expenses increased $11.1 million, or 10%, to $120.9 million in 1997 from $109.8 million in 1996. The increase primarily reflected higher sales volume related expenses, such as transportation and commissions, and higher advertising costs, as well as increased salaries for additional staffing 19 20 to support sales growth and productivity improvement. Selling, general and administrative expenses as a percentage of sales were 10.7% in 1997, compared to 10.5% in 1996 and 10.6% in 1996 on a copper-adjusted basis. Net interest expense was $17.3 million in 1997 compared to $19.6 million in 1996. The reduction reflects the repayment of an $8.0 million related party note during 1996 and the impact of refinancing the remaining related party debt in May 1997 under a new credit facility at a lower effective interest rate. The effective income tax rate for 1997 was 39% compared to 33% for 1996. The lower 1996 effective tax rate reflected the impact of certain tax return reconciliation adjustments. PRO FORMA RESULTS The following pro forma results give effect to the refinancing of related party debt as if it had occurred as of the beginning of the periods presented. The pro forma financial data are for informational purposes only and may not necessarily be indicative of the results of operations had the refinancing actually occurred on such date.
Year Ended December 31, ---------------------- 1997 1996 ---- ---- Pro forma net income (in millions) $54.6 $42.5 ===== ===== Pro forma earnings per common share $1.49 $1.17 ===== ===== Pro forma earnings per common share- assuming dilution $1.48 $1.17 ===== =====
YEAR 2000 The Year 2000 issue is the result of computer programs being written using two digits rather than four to define the applicable year. Absent corrective actions, a computer program that has date-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in system failures or miscalculations causing disruptions to various activities and operations. The Company began a Year 2000 readiness program in 1997. Key financial and operational systems including equipment with embedded systems have been inventoried and assessed for Year 2000 compliance. As of December 31, 1998, all primary business systems have been made Year 2000 compliant. More than 90% of plant machinery has been evaluated, with 85% of the machinery already Year 2000 compliant. The remaining machinery will be Year 2000 ready by the third quarter of 1999. The Company has contacted the majority of its key customers and vendors regarding their plans for Year 2000 readiness. The key customers indicate they will be ready by the third quarter of 1999, while the key suppliers anticipate readiness by the fourth quarter of 1999. The effect, if any, on the Company's results of operation from failure of third parties to be Year 2000 ready is not reasonably estimable. 20 21 The Company currently believes that the most reasonably likely worst case scenario with respect to the Year 2000 issue is the failure of a supplier, including utility suppliers, to become Year 2000 compliant, which could result in the temporary interruption of the supply of necessary products or services to a manufacturing facility. This could result in interruptions in production for a period of time, which in turn could result in potential lost sales and profits. Additionally, marketing and administrative expense could increase if automated functions would need to be performed manually. Contingency plans to protect the business from Year 2000-related interruptions are being developed and will address the recovery procedures in the event of a failure of critical business systems, including supplier and customer relationships. These plans will encompass, but not be limited to, alternate sourcing, procedural alternatives and remediation resource availability. Contingency plans are anticipated to be completed by the third quarter of 1999. General Cable's total cost of the Year 2000 project is estimated to be $2.5 million including $1.4 million of estimated expense and $1.1 million of capital expenditures. Approximately $0.7 million has been expensed and $1.1 million has been capitalized through December 31, 1998. LIQUIDITY AND CAPITAL RESOURCES In general, General Cable requires cash for working capital, capital expenditures, debt repayment, interest and taxes. General Cable's working capital requirements increase when it experiences strong incremental demand for products and/or significant copper price increases. Based upon historical experience and the expected availability of funds under the Credit Facility, the Company expects that its sources of liquidity will be sufficient to enable it to meet its cash requirements for working capital, capital expenditures, debt repayment, interest and taxes in 1999. Cash flow provided by operating activities in 1998 was $74.2 million. This principally reflected net income before depreciation and deferred taxes of $102.3 million and a $21.6 million increase in accounts payable, accrued liabilities and other long-term liabilities, partially offset by a $1.0 million increase in accounts receivable, a $34.9 million increase in inventories and a $13.8 million increase in other assets. Inventories increased 21% primarily as a result of the 12% increase in copper-adjusted net sales. The additional increase in inventories was partially attributable to the decreased demand in the fourth quarter of 1998 for PIC products by the regional bell operating companies. Production of PIC product was not decreased in the fourth quarter as inventory was built for anticipated demand in 1999, thereby allowing the Company to eliminate the outsourcing of higher cost PIC products. Also, cordset inventories were increased in the fourth quarter to ensure high customer service levels after announcing the closure of the Montoursville, Pennsylvania facility and to build inventory in anticipation of the 1999 rollout of new cordset business with The Home Depot. Cash flow used in investing activities was $77.1 million in 1998, principally reflecting $75.5 million of capital expenditures. Also included in cash flow from investing activities was $3.8 million from repayment of real estate loans and the sale of excess real property and $6.0 million of loans to executives and key employees for the purchase of General Cable Common Stock. General Cable expended $75.5 million, $42.6 million and $30.0 million for capital projects during 1998, 1997 and 1996, respectively. Capital expenditures in 1998 included $48.4 million for increased capacity and $21.7 21 22 million for productivity projects. New production equipment for PIC was brought on-line at the Bonham, Texas facility, which increased capacity by 48%. In Lawrenceburg, Kentucky, a new 82,000 square foot building expansion was completed to increase the capacity to manufacture PIC by 43% and data communications cable by 66%. Since Lawrenceburg manufactures both PIC and data communications products, much of the new equipment was designed to be interchangeable to enable the Company to switch product types depending on market demand. Capital expenditures in 1997 consisted primarily of projects to increase manufacturing productivity and to selectively add production capacity. Capital expenditures in 1996 consisted of projects to reduce product costs, increase capacity and modernize machinery and equipment. Cash flow provided by financing activities in 1998 was $2.1 million, primarily reflecting $9.0 million additional borrowing under General Cable's Credit Facility, partially offset by $6.1 million of dividend payments to shareholders. Borrowings under the Credit Facility amounted to $239.0 million at December 31, 1998. In May 1997, as part of the initial public offering of common stock, General Cable entered into a new $350.0 million Credit Facility with The Chase Manhattan Bank, as administrative agent, and a syndicate of banks (the Credit Facility). The Credit Facility consists of a five-year senior unsecured revolving credit and competitive advance facility in an aggregate principal amount of $350.0 million. Borrowings are guaranteed by General Cable's principal operating subsidiaries. General Cable made an initial borrowing of $268 million and used the proceeds of such borrowing to (i) repay all of its revolving bank debt; (ii) repay all intercompany debt and advances owed to Wassall PLC and its subsidiaries; (iii) pay $42.6 million as a dividend to Wassall; (iv) pay $2.0 million for the purchase of two related companies, Carol Cable Europe Ltd. and Carol Cable Ltd., from Wassall; and (v) pay expenses of the refinancing of $0.4 million. The Credit Facility loans bear interest, at General Cable's option, at (i) a spread over LIBOR or (ii) the Alternate Base Rate, which is defined as the higher of (a) the Agent's Prime Rate, (b) the secondary market rate for certificates of deposit (adjusted for reserve requirements) plus 1% or (c) the Federal Funds Effective Rate. A facility fee accrues on the full amount of the Credit Facility, regardless of usage. The facility fee ranges between 8.0 and 20.0 basis points per annum and the spread over LIBOR ranges between 17.0 and 42.5 basis points per annum. Both the facility fee and the spread over LIBOR are subject to periodic adjustment depending upon General Cable's Leverage Ratio. As a result of the Company's continuing strong financial performance, both the facility fee and the spread over LIBOR were adjusted down effective March 31, 1998 to the minimum amount provided under the Credit Facility. The Credit Facility restricts certain corporate acts and contains required minimum financial ratios and other covenants. At December 31, 1998, the cumulative maximum dividend allowable under the most restrictive debt covenant was $49.8 million. ENVIRONMENTAL AND ASBESTOS-RELATED LITIGATION MATTERS General Cable's expenditures for environmental compliance and remediation amounted to approximately $0.7 million, $1.2 million and $1.0 million in 1998, 1997 and 1996, respectively. In addition, subsidiaries of the Company have been named as potentially responsible parties ("PRP"s) in certain proceedings that involve environmental remediation. General Cable had accrued $5.3 million at December 31, 1998 for all environmental liabilities. In connection with Wassall's acquisition of General Cable from American Premier Underwriters, 22 23 American Premier has agreed to indemnify General Cable against certain environmental liabilities arising out of General Cable's or its predecessor's ownership or operation of properties and assets. While it is difficult to estimate future environmental liabilities, General Cable does not currently anticipate any material adverse effect on its results of operations, cash flows or financial position as a result of compliance with federal, state, local or foreign environmental laws or regulations or remediation costs. General Cable's expenditures for asbestos litigation amounted to approximately $0.1 million, $0.1 million and $0.6 million in 1998, 1997 and 1996, respectively (before reimbursement of a substantial portion thereof under the settlement agreement), all of which were for defense costs. General Cable had accrued approximately $1.9 million for this litigation at December 31, 1998. General Cable has entered into a settlement agreement with certain principal primary insurers concerning liability for the costs of defense, judgments and settlements, if any, in the asbestos litigation. Subject to the terms and conditions of the settlement agreement, the insurers are responsible for a substantial portion of the costs and expenses incurred in the defense or resolution of this litigation. The Company does not believe that the outcome of the litigation will have a material adverse effect on its results of operations, cash flows or financial position. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK General Cable is exposed to various market risks, including changes in interest rates and copper prices. To manage risk associated with the volatility of these natural business exposures, General Cable enters into interest rate swap agreements and copper forward purchase agreements. General Cable does not hold or issue derivative instruments for trading purposes. The fair market value of General Cable's variable rate Credit Facility approximates carrying value. Due to the short-term nature in which interest rates change under the Credit Facility, a 10% change in interest rates would not impact the fair market value. General Cable enters into interest rate swap agreements to manage its exposure to interest rate changes. The swaps involve the exchange of variable (three-month LIBOR) for fixed rate payments without exchanging the notional principal amount. In November 1997, General Cable entered into interest rate swap agreements with three banks, which effectively fixed interest rates at an average rate of 6% for specific amounts borrowed under the Credit Facility. The remaining interest rate swaps are as follows (dollars in millions):
Notional Interest Period Amounts Rate ------------------------------ ------- ---- November 1998 to November 1999 $125.0 6.2% November 1999 to November 2000 75.0 6.2% November 2000 to November 2001 25.0 6.2%
The fair value of these interest rate swap agreements represents the estimated payments or receipts that would be made to terminate the agreements. At December 31, 1998, General Cable had an unrealized loss of $2.4 million. A 10% decrease in the variable rate would increase the unrealized loss by $1.0 million. In the normal course of business, General Cable enters into forward pricing agreements for purchase of copper for delivery in a future month to match certain sales transactions. At December 31, 1998, General Cable had an unrealized loss of $2.7 million. A 10% decrease in the price of copper would increase the amount of the unrealized loss by $3.2 million. General Cable expects to recover the unrealized loss under these agreements as a result of firm sales price commitments with customers. 23 24 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page ---- Independent Auditors' Report F-1 Consolidated Statements of Income For the Years Ended December 31, 1998, 1997 and 1996 F-2 Consolidated Balance Sheets at December 31, 1998 and 1997 F-3 Consolidated Statements of Cash Flows For the Years Ended December 31, 1998, 1997 and 1996 F-4 Consolidated Statement of Changes in Shareholders' Equity For the Years Ended December 31, 1998, 1997 and 1996 F-5 Notes to Consolidated Financial Statements F-6 "Selected Quarterly Financial Data" has been included in Note 18 to the Consolidated Financial Statements. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 24 25 PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information concerning the persons who served as executive officers of General Cable on March 2, 1999. All of the executive officers were elected to their current offices in March 1997.
PRINCIPAL BUSINESS AFFILIATIONS NAME, AGE AND TITLE DURING PAST FIVE YEARS ------------------- ---------------------- Gregory B. Kenny, 46 Mr. Kenny has served as Executive Vice President and Executive Vice President and Chief Chief Operating Officer of General Cable since March Operating Officer 1997. From June 1994 to March 1997, he was Executive Vice President of the subsidiary of General Cable which was General Cable's immediate predecessor. From April 1992 until June 1994, he served as Senior Vice President of the predecessor company. Stephen Rabinowitz, 55 Mr. Rabinowitz has served as Chairman, President and Chairman, President and Chief Executive Officer Chief Executive Officer of General Cable since March 1997. From September 1994 until March 1997, he was President and Chief Executive Officer of the predecessor company. From March 1992 until August 1994, Mr. Rabinowitz served as President and Group Executive for AlliedSignal Friction Materials and President of AlliedSignal Braking Systems Business. Mr. Rabinowitz is also a director of JLG Industries, Inc. Robert J. Siverd, 50 Mr. Siverd has served as Executive Vice President, Executive Vice President, General Counsel and Secretary General Counsel and Secretary of General Cable since March 1997. From July 1994 until March 1997, he was Executive Vice President, General Counsel and Secretary of the predecessor company. From April 1992 until July 1994, he was Senior Vice President, General Counsel and Secretary of the predecessor company.
25 26
Christopher F. Virgulak, 43 Mr. Virgulak has served as Executive Vice President, Executive Vice President, Chief Financial Officer and Chief Financial Officer and Treasurer of General Cable Treasurer since March 1997. From October 1994 until March 1997, he was Executive Vice President, Chief Financial Officer and Treasurer of the predecessor company. From January 1993 until October 1994, he was Chief Financial Officer of Wassall USA, Inc.
Except as set forth above, the information required in this Part (Item 10. Directors and Executive Officers of the Registrant), as well as the information called for by Item 11. Executive Compensation, Item 12. Security Ownership of Certain Beneficial Owners and Management; and Item 13. Certain Relationships and Related Transactions, is incorporated by reference to the definitive Proxy Statement which General Cable intends to file with the Securities and Exchange Commission within 120 days after December 31, 1998. 26 27 PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents filed as part of the Form 10-K: 1. Financial Statements are included in Part II, Item 8. 2. Financial Statement Schedules filed herewith for 1998, 1997 and 1996: II. Valuation and Qualifying Accounts S-1 All other schedules for which provisions are made in the applicable regulation of the Securities and Exchange Commission have been omitted as they are not applicable, not required, or the required information is included in the consolidated financial statements or notes thereto. 3. Exhibits EXHIBIT NUMBER DESCRIPTION - ------ ----------- 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-22961) of the Company filed with the Securities and Exchange Commission on March 7, 1997, as amended (the "Initial S-1"). 3.2 Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the Initial S-1). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Initial S-1). 10.1 Credit Agreement between the Company, Chase Manhattan Bank, as Administrative Agent, and the lenders signatory thereto ( incorporated by reference to Exhibit 10.2 to the Initial S-1). 10.2 General Cable Corporation 1998 Annual Incentive Plan (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.3 General Cable Corporation 1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Initial S-1). 10.4 General Cable Corporation 1997 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.5 Employment Agreement dated May 13, 1997, between Stephen Rabinowitz and the Company (incorporated by reference to Exhibit 10.5 to the Initial S-1). 10.6 Amendment dated March 16, 1998 to Employment Agreement dated May 13, 1997, between Stephen Rabinowitz and the Company (incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.7 Employment Agreement dated May 13, 1997, between Gregory B. Kenny and the Company (incorporated by reference to Exhibit 10.6 to the Initial S-1). 27 28 10.8 Amendment dated March 16, 1998 to Employment Agreement dated May 13, 1997, between Gregory B. Kenny and the Company (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.9 Employment Agreement dated May 13, 1997, between Christopher F. Virgulak and the Company (incorporated by reference to Exhibit 10.7 to the Initial S-1). 10.10 Employment Agreement dated May 13, 1997, between Robert J. Siverd and the Company (incorporated by reference to Exhibit 10.8 to the Initial S-1). 10.11 Change-in-Control Agreement dated May 13, 1997, between Stephen Rabinowitz and the Company (incorporated by reference to Exhibit 10.9 to the Initial S-1). 10.12 Change-in-Control Agreement dated May 13, 1997, between Gregory B. Kenny and the Company (incorporated by reference to Exhibit 10.10 to the Initial S-1). 10.13 Change-in-Control Agreement dated May 13, 1997, between Christopher F. Virgulak and the Company (incorporated by reference to Exhibit 10.11 to the Initial S-1). 10.14 Change-in-Control Agreement dated May 13, 1997, between Robert J. Siverd and the Company (incorporated by reference to Exhibit 10.12 to the Initial S-1). 10.15 Form of Intercompany Agreement among Wassall PLC, Netherlands Cable B.V. and the Company (incorporated by reference to Exhibit 10.14 to the Initial S-1). 10.16 Purchase Agreement dated May 13, 1997, among Wassall PLC, General Cable Industries Inc. and the Company (incorporated by reference to Exhibit 10.15 to the Initial S-1). 10.17 General Cable Corporation Deferred Compensation Plan dated April 1, 1996. 10.18 Amended and Restated General Cable Corporation Deferred Compensation Plan dated December 14, 1998. 21.1 List of Subsidiaries of General Cable. 23.1 Consent of Deloitte & Touche LLP. 27.1 Financial Data Schedule. (b) Reports on Form 8-K None. 28 29 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, General Cable Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. General Cable Corporation Signed: March 15, 1999 By: /s/STEPHEN RABINOWITZ ----------------------------- Stephen Rabinowitz Chairman, President and Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ GREGORY B. KENNY Executive Vice President, March 15, 1999 ---------------------------- Chief Operating Officer and Gregory B. Kenny Director /s/ROBERT J. SIVERD Executive Vice President, General March 15, 1999 - ----------------------------- Counsel and Secretary Robert J. Siverd /s/CHRISTOPHER F. VIRGULAK Executive Vice President, Chief March 15, 1999 - ----------------------------- Financial Officer and Treasurer Christopher F. Virgulak (Chief Accounting Officer) /s/GREGORY E. LAWTON Director March 15, 1999 - ----------------------------- Gregory E. Lawton /s/JEFFREY NODDLE Director March 15, 1999 - ----------------------------- Jeffrey Noddle /s/ROBERT L. SMIALEK Director March 15, 1999 - ----------------------------- Robert L. Smialek /s/JOHN E. WELSH Director March 15, 1999 - ----------------------------- John E. Welsh
29 30 INDEPENDENT AUDITORS' REPORT General Cable Corporation: We have audited the accompanying consolidated balance sheets of General Cable Corporation and subsidiaries as of December 31, 1998 and 1997, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1998. Our audit also included the financial statement schedule listed in the Index at Item 14. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of General Cable Corporation and subsidiaries as of December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Cincinnati, Ohio January 28, 1999 F-1 31 GENERAL CABLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (IN MILLIONS, EXCEPT PER SHARE DATA)
Year Ended December 31, ----------------------------------------------------- 1998 1997 1996 ----------- ----------- ----------- Net sales $ 1,150.5 $ 1,134.5 $ 1,043.6 Cost of sales 900.7 909.1 855.3 ----------- --------- --------- Gross profit 249.8 225.4 188.3 Selling, general and administrative 120.2 120.9 109.8 ----------- --------- --------- Operating income 129.6 104.5 78.5 ----------- --------- --------- Interest income(expense): Interest expense (16.6) (18.1) (20.7) Interest income 0.9 0.8 1.1 ----------- --------- --------- (15.7) (17.3) (19.6) ----------- --------- --------- Earnings before income taxes 113.9 87.2 58.9 Income tax provision (42.7) (34.0) (19.7) ----------- --------- --------- Net income $ 71.2 $ 53.2 $ 39.2 =========== ========= ========= Earnings per common share $ 1.93 $ 1.45 $ 1.08 =========== ========= ========= Weighted average common shares 36.8 36.6 36.4 =========== ========= ========= Earnings per common share-assuming dilution $ 1.90 $ 1.44 $ 1.08 =========== ========= ========= Weighted average common shares-assuming dilution 37.5 36.9 36.4 =========== ========= =========
See accompanying Notes to Consolidated Financial Statements. F-2 32
GENERAL CABLE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN MILLIONS, EXCEPT SHARE DATA) ASSETS December 31, ------ -------------------------- 1998 1997 ---- ---- Current Assets: Cash $ 3.4 $ 4.2 Receivables, net 163.4 162.4 Inventories 198.5 163.6 Deferred income taxes 15.3 20.9 Prepaid expenses and other 9.7 10.7 -------- -------- Total current assets 390.3 361.8 Property, plant and equipment, net 210.8 155.6 Deferred income taxes 24.2 29.2 Other non-current assets 25.7 17.1 -------- -------- Total assets $ 651.0 $ 563.7 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current Liabilities: Accounts payable $ 99.6 $ 80.5 Accrued liabilities 56.9 55.4 -------- ------- Total current liabilities 156.5 135.9 Long-term debt 246.8 238.5 Other liabilities 70.5 66.9 -------- ------- Total liabilities 473.8 441.3 -------- ------- Shareholders' Equity: Common stock, $0.01 par value: Issued and outstanding shares: December 31, 1998 - 36,815,340 December 31, 1997 - 36,773,139 0.4 0.4 Additional paid-in capital 84.8 83.3 Notes receivable from shareholders (6.0) - Retained earnings 103.2 38.2 Accumulated other comprehensive income (loss) (5.2) 0.5 -------- ------- Total shareholders' equity 177.2 122.4 -------- ------- Total liabilities and shareholders' equity $ 651.0 $ 563.7 ======== =======
See accompanying Notes to Consolidated Financial Statements. F-3 33
GENERAL CABLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN MILLIONS) Year Ended December 31, ------------------------------------- 1998 1997 1996 ---- ---- ---- Cash flows of operating activities: Net income $ 71.2 $ 53.2 $ 39.2 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18.5 13.9 12.1 Deferred income taxes 12.6 5.4 9.3 Changes in operating assets and liabilities: (Increase) decrease in receivables (1.0) (26.9) 12.1 (Increase) decrease in inventories (34.9) (2.6) 17.6 (Increase) decrease in other assets (6.1) (0.2) 2.1 Increase (decrease) in accounts payable, accrued and other liabilities 13.9 11.3 (11.6) ------- -------- ------- Net cash flows of operating activities 74.2 54.1 80.8 ------- -------- ------- Cash flows of investing activities: Capital expenditures (75.5) (42.6) (30.0) Proceeds from properties sold 3.8 5.2 -- Investments in joint venture -- -- (6.4) Loans to shareholders (6.0) -- -- Other, net 0.6 (2.0) 0.9 ------- -------- ------- Net cash flows of investing activities (77.1) (39.4) (35.5) ------- -------- ------- Cash flows of financing activities: Dividends paid (6.1) (43.8) (55.1) Net borrowings of revolving credit facility 9.0 230.0 -- Proceeds from related party notes payable -- -- 4.8 Proceeds from other debt -- -- 2.0 Repayment of related party notes payable -- (195.8) (8.0) Repayment of short-term debt -- (2.0) -- Repayment of other long-term debt (0.8) (0.8) (0.8) ------- -------- ------- Net cash flows of financing activities 2.1 (12.4) (57.1) ------- -------- ------- Increase (decrease) in cash (0.8) 2.3 (11.8) Cash - beginning of period 4.2 1.9 13.7 ------- -------- ------- Cash - end of period $ 3.4 $ 4.2 $ 1.9 ======= ======== ======= SUPPLEMENTAL INFORMATION Income taxes paid (refunded) $ 22.7 $ 22.7 $ (1.1) ======= ======== ======= Interest paid $ 16.4 $ 16.7 $ 20.1 ======= ======== ======= NONCASH ACTIVITIES Issuance of restricted stock, net of forfeitures $ 0.7 $ 5.6 -- ======= ======== =======
See accompanying Notes to Consolidated Financial Statements F-4 34
GENERAL CABLE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IN MILLIONS, EXCEPT SHARE AMOUNTS) Accumulated Notes Additional Other Receivable Common Stock Paid-In Retained Comprehensive From Shares Amount Capital Earnings Income(Loss) Shareholders Total ----------- ------- ------- -------- ------------- ------------ -------- Balance, December 31, 1995 36,375,000 $ 0.4 $ 94.5 $ 28.0 $ 122.9 Comprehensive income: Net income 39.2 39.2 Foreign currency translation adjustment $ 0.4 0.4 Comprehensive income 39.6 Dividends (55.1) (55.1) ----------- ------- ------- ------- ----- --------- -------- Balance, December 31, 1996 36,375,000 0.4 94.5 12.1 0.4 107.4 Comprehensive income: Net income 53.2 53.2 Foreign currency translation adjustment 0.1 0.1 Comprehensive income 53.3 Dividends (16.7) (27.1) (43.8) Issuance of restricted stock 408,660 5.8 5.8 Forfeiture of restricted stock (10,521) (0.2) (0.2) Other (0.1) (0.1) ----------- ------- ------- ------- ----- --------- -------- Balance, December 31, 1997 36,773,139 0.4 83.3 38.2 0.5 122.4 Comprehensive income: Net income 71.2 71.2 Foreign currency translation adjustment (0.2) (0.2) Minimum pension liability adjustment, net of tax (5.5) (5.5) Comprehensive income 65.5 Dividends (6.1) (6.1) Issuance of restricted stock 38,097 1.0 1.0 Forfeiture of restricted stock (18,191) (0.3) (0.3) Tax benefit related to restricted stock 0.4 0.4 Exercise of stock options 18,600 0.3 0.3 Loans to shareholders $ (6.0) (6.0) Other 3,695 0.1 (0.1) -- ----------- ------- ------- ------- ----- --------- -------- Balance, December 31, 1998 36,815,340 $ 0.4 $ 84.8 $ 103.2 $(5.2) $ (6.0) $ 177.2 =========== ======= ======= ======= ===== ========= ========
See accompanying Notes to Consolidated Financial Statements. F-5 35 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL ------- General Cable Corporation and subsidiaries (General Cable) are engaged in the development, design, manufacture, marketing and distribution of copper wire and cable products for the communications and electrical markets. As of December 31, 1998, General Cable operated 17 manufacturing facilities and five regional distribution centers in addition to the corporate headquarters in Highland Heights, Kentucky. In June 1994, a subsidiary of Wassall PLC acquired all of the outstanding common stock of General Cable (the Acquisition). On May 20, 1997, Wassall completed an initial public offering of approximately 29,152,500 shares of General Cable common stock at a price of $14 per share. This included 3,802,500 shares purchased under the U.S. Underwriters' over-allotment option. On August 22, 1997, a secondary offering of 7,222,500 shares of common stock at a price of $20.67 per share was completed. These shares represented all of Wassall's remaining holdings of General Cable common stock. General Cable did not receive any proceeds from the sale of the shares of common stock in these offerings. In conjunction with the initial public offering, General Cable repaid a $169.8 million, 9.98% subordinated note and a $26.0 million note payable bearing interest at prime plus 3/4% payable to Wassall. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of General Cable Corporation and its wholly-owned subsidiaries. Investment in joint venture is accounted for under the equity method of accounting. Other non-current assets included investment in joint venture of $4.5 million and $5.5 million at December 31, 1998 and 1997, respectively. All transactions and balances among the consolidated companies have been eliminated. Certain reclassifications have been made to the prior year to conform to the current year's presentation. STOCK SPLIT In April 1998, General Cable's Board of Directors approved a three-for-two stock split on the Company's common stock, effected in the form of a stock dividend paid on May 14, 1998 to shareholders of record on April 28, 1998. An amount equal to the par value of the common shares issued was transferred from additional paid-in capital to the common stock account. All references to number of shares and to per share information have been adjusted to reflect the stock split on a retroactive basis. REVENUE RECOGNITION Revenue is recognized when shipments are made to customers. EARNINGS PER SHARE Earnings per common share are computed based on the weighted average number of common shares outstanding. Earnings per common share-assuming dilution are computed based on the weighted average number of common shares and the dilutive effect of stock options and restricted stock units outstanding. NEW STANDARDS During 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities". General Cable will be required to adopt SFAS No. 133 no later than January 1, 2000. Management has not yet analyzed the impact of SFAS No. 133 on its consolidated financial statements. F-6 36 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS INVENTORIES Inventories are stated at the lower of cost or market value. General Cable values the copper component of its inventories using the last-in/first-out (LIFO) method and values all remaining inventories using the first-in/first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at cost. Costs assigned to property, plant and equipment relating to the Acquisition were based on estimated fair values at that date. Depreciation is provided using the straight-line method over the estimated useful lives of the assets: new buildings, from 15 to 25 years; and machinery, equipment and office furnishings, from 3 to 15 years. Leasehold improvements are depreciated over the life of the lease. FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments are defined as cash or contracts relating to the receipt, delivery or exchange of financial instruments. Except as otherwise noted, fair value approximates the carrying value of such instruments. FORWARD PRICING AGREEMENTS FOR PURCHASES OF COPPER In the normal course of business, General Cable enters into forward pricing agreements for purchases of copper to match certain sales transactions. At December 31, 1998 and 1997, General Cable had $34.6 million and $45.5 million, respectively, of future copper purchases that were under forward pricing agreements. The fair market value of the forward pricing agreements was $31.9 million and $39.3 million at December 31, 1998 and 1997, respectively. General Cable expects to recover the cost of copper under these agreements as a result of firm sales price commitments with customers. USE OF ESTIMATES The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CONCENTRATION OF CREDIT RISK General Cable sells a broad range of products throughout the United States, Canada and Europe. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers, including members of buying groups, composing General Cable's customer base. Ongoing credit evaluations of customers' financial condition are performed, and generally, no collateral is required. General Cable maintains reserves for potential credit losses and such losses, in the aggregate, have not exceeded management's estimates. F-7 37 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments are utilized to reduce interest rate risk. General Cable does not hold or issue derivative financial instruments for trading purposes. General Cable has entered into interest rate swap agreements designed to hedge underlying debt obligations. Amounts to be paid or received under interest rate swap agreements are accrued as interest and are recognized over the life of the swap agreements as an adjustment to interest expense on the underlying debt obligation. STOCK-BASED COMPENSATION Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. General Cable has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock. 3. RECEIVABLES ----------- Receivables are net of allowances of $7.0 million and $7.3 million at December 31, 1998 and 1997, respectively. 4. INVENTORIES ----------- Inventories consisted of the following (in millions):
December 31, ------------ 1998 1997 ---- ---- Raw materials $23.0 $ 20.7 Work in process 25.2 28.4 Finished goods 150.3 114.5 ------- ------- $198.5 $163.6 ====== ======
At December 31, 1998 and 1997, $75.9 million and $70.7 million, respectively, of inventories were valued using the LIFO method. Approximate replacement cost of inventories valued using the LIFO method totaled $55.6 million at December 31, 1998 and $59.3 million at December 31, 1997. A reduction in inventory quantities during 1996 resulted in a liquidation of LIFO inventory quantities carried at a lower cost as compared with the cost of current purchases. The effect of this liquidation was to decrease cost of goods sold by $1.6 million for the year ended December 31, 1996. F-8 38 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. PROPERTY, PLANT AND EQUIPMENT ----------------------------- Property, plant and equipment consisted of the following (in millions):
December 31, ------------ 1998 1997 ---- ---- Land $6.9 $ 6.9 Buildings and leasehold improvements 43.7 40.4 Machinery, equipment and office furnishings 175.3 122.6 Construction in progress 43.9 28.5 ------- -------- 269.8 198.4 Less-Accumulated depreciation and amortization (59.0) (42.8) ------- -------- $210.8 $155.6 ======= ========
Depreciation expense totaled $18.5 million, $13.9 million and $12.1 million for the years ended December 31, 1998, 1997 and 1996, respectively. 6. ACCRUED LIABILITIES ------------------- Accrued liabilities consisted of the following (in millions):
December 31, ------------ 1998 1997 ---- ---- Customer rebates $9.7 $9.7 Insurance claims and related expenses 8.8 9.2 Payroll related accruals 8.5 9.6 Income tax payable 5.1 - Accrued restructuring costs 4.7 9.2 Other accrued liabilities 20.1 17.7 ------ ------ $56.9 $55.4 ====== ======
F-9 39 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. RESTRUCTURING PLAN ------------------ In connection with the Acquisition, accruals of approximately $46.5 million were established for restructuring activities related to the reduction of excess manufacturing and warehouse capacity and the reduction of excess administrative overhead costs. These costs principally represented employee separation costs and costs related to facility closings, including lease payments for closed facilities and other premise costs. Facilities closed include one manufacturing plant and one warehouse during 1998, two manufacturing plants during 1996 and three manufacturing plants and one warehouse in 1995. The total cost of these actions is expected to approximate the original estimate. Changes in accrued restructuring costs were as follows (in millions):
Facility Separation Closing Costs Costs Total ----- ----- ----- Balance, December 31, 1995 $7.7 $19.4 $27.1 Utilization (4.7) (9.1) (13.8) ---- ----- ----- Balance, December 31, 1996 3.0 10.3 13.3 Utilization (0.7) (3.4) (4.1) ---- ----- ----- Balance, December 31, 1997 2.3 6.9 9.2 Utilization (1.2) (3.3) (4.5) ---- ----- ----- Balance, December 31, 1998 $1.1 $3.6 $4.7 ==== ===== =====
F-10 40 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8. LONG-TERM DEBT -------------- Long-term debt consisted of the following (in millions):
December 31, --------------------- 1998 1997 ------ ------ Revolving Credit Facility $239.0 $230.0 Other 7.8 8.5 ------ ------ $246.8 $238.5 ====== ======
In May 1997, General Cable entered into a Credit Facility with The Chase Manhattan Bank as administrative agent, and a syndicate of banks. The Credit Facility consists of a five-year senior unsecured revolving credit and competitive advance facility in an aggregate principal amount of $350 million, which expires in May 2002. Initial borrowings of $268 million were used in part to repay the notes payable to Wassall and subsidiaries outstanding at the time of the initial public offering. At December 31, 1998 and 1997, $239 million and $230 million, respectively, of revolving credit loans were outstanding, with a weighted average annual interest rate of 5.7% and 6.1%, and such amounts approximate fair market value. The Credit Facility loans bear interest, at General Cable's option, at (i) a spread over LIBOR or (ii) the Alternate Base Rate, which is defined as the higher of (a) the Agent's Prime Rate, (b) the secondary market rate for certificates of deposit (adjusted for reserve requirements) plus 1% or (c) the Federal Funds Effective Rate. A facility fee accrues on the full amount of the Credit Facility, regardless of usage. The facility fee ranges between 8.0 and 20.0 basis points per annum and the spread over LIBOR ranges between 17.0 and 42.5 basis points per annum. Both the facility fee and the spread over LIBOR are subject to periodic adjustment depending upon General Cable's Leverage Ratio as defined in the Credit Facility agreement. Both the facility fee and the spread over LIBOR were adjusted down effective March 31, 1998 to the minimum amount provided under the Credit Facility. The Credit Facility restricts certain corporate acts and contains required minimum financial ratios and other covenants. At December 31, 1998, the cumulative maximum dividend allowable under the most restrictive debt covenant was $49.8 million. Other long-term debt, primarily Industrial Revenue Bonds, had a weighted average annual interest rate of 4.6%. Maturities of such notes are as follows: 1999-$2.6 million, 2000-$0.1 million, 2001-$0.1 million, 2002-$0.1 million, 2003-$0.2 million and thereafter $4.7 million. F-11 41 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. INTEREST RATE SWAPS ------------------- General Cable utilizes interest rate swaps to manage its interest rate exposure by fixing its interest rate on a portion of the Credit Facility. Under the agreements, General Cable will pay or receive amounts equal to the difference between the average fixed rate and the three-month LIBOR rate. In November 1997, General Cable entered into interest rate swaps which effectively fixed interest rates for specific amounts borrowed under the Credit Facility as follows (dollars in millions):
Fixed Notional Interest Period Amounts Rate ------------------------------ ------- ---- November 1997 to November 1998 $180.0 5.9% November 1998 to November 1999 125.0 6.2% November 1999 to November 2000 75.0 6.2% November 2000 to November 2001 25.0 6.2%
At December 31, 1998 and 1997, the net unrealized loss on the interest rate swap transactions was $2.4 million and $0.5 million, respectively, while the carrying value was zero. F-12 42 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. INCOME TAXES ------------ The provision for income taxes consisted of the following (in millions):
Year Ended December 31, ------------------------------- 1998 1997 1996 ---- ---- ---- Current tax expense: Federal $28.7 $24.1 $6.8 State 0.9 3.8 2.9 Foreign 0.5 0.7 0.7 Deferred tax expense: Federal 11.3 4.3 8.4 State 1.3 1.1 0.9 ----- ----- ----- $42.7 $34.0 $19.7 ===== ===== =====
The reconciliation of reported income tax expense to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income is as follows (in millions):
Year Ended December 31, ------------------------------- 1998 1997 1996 ---- ---- ---- Statutory federal income tax $39.9 $30.5 $20.6 State income tax-net of federal benefit 1.3 3.2 1.7 Other, net 1.5 0.3 (2.6) ----- ----- ----- $42.7 $34.0 $19.7 ===== ===== =====
The components of deferred tax assets and liabilities were as follows (in millions):
December 31, ------------------ 1998 1997 ---- ---- Deferred tax assets: Net operating loss carryforward $25.2 $26.5 Pension and retiree benefits accruals 9.2 7.6 Asset and rationalization reserves 3.0 6.1 Inventory reserves 3.4 4.5 Alternative minimum tax credit 3.1 4.7 Other liabilities 10.8 13.6 ----- ----- Total deferred tax assets 54.7 63.0 Deferred tax liabilities: Depreciation and fixed assets 15.2 12.9 ----- ----- Net deferred tax assets $39.5 $50.1 ===== =====
F-13 43 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In accordance with the provisions of Internal Revenue Code Section 382, utilization of the Company's net operating loss carryforward is estimated to be limited to approximately $5.4 million per year. The net operating loss carryforward expires in varying amounts from 2006 through 2013. Because of the Section 382 limitation, the portion of the Company's total net operating loss carryforward that may be utilized through expiration is estimated to be approximately $72.0 million. General Cable also has $3.1 million of alternative minimum tax (AMT) credit carryforwards that have no expiration date. The utilization of the AMT credit carryforwards is also subject to Section 382 limitations. 11. PENSION PLANS ------------- General Cable provides retirement benefits through contributory and noncontributory pension plans for the majority of its regular full-time employees. Pension expense under the defined contribution plans sponsored by General Cable equaled four percent of each eligible employee's covered compensation. In addition, General Cable sponsors employee savings plans under which General Cable may match a specified portion of contributions made by eligible employees. Benefits provided under defined benefit pension plans sponsored by General Cable are generally based on years of service multiplied by a specific fixed dollar amount. Contributions to these pension plans are based on generally accepted actuarial methods, which may differ from the methods used to determine pension expense. The amounts funded for any plan year are neither less than the minimum required under federal law nor more than the maximum amount deductible for federal income tax purposes. Pension plan assets consist of equity securities and various fixed-income investments. General Cable adopted SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits", in 1998. Adoption of this standard did not impact the reported results of operations or financial position, however additional footnote disclosures have been made. F-14 44 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Net pension expense included the following components (in millions):
Year Ended December 31, ------------------------------- 1998 1997 1996 ---- ---- ---- Service cost $ 1.8 $ 1.4 $ 1.4 Interest cost 7.2 6.3 6.0 Return on plan assets (5.5) (16.7) (10.5) Net amortization and deferral (3.5) 9.1 3.2 ----- ----- ----- Net defined benefit pension expense 0.0 0.1 0.1 Net defined contribution pension expense 2.3 2.2 2.1 ----- ----- ----- Total pension expense $ 2.3 $ 2.3 $ 2.2 ===== ===== =====
The following table shows reconciliations of pension plan obligations and assets (in millions):
1998 1997 ---- ---- Beginning benefit obligation $95.9 $87.8 Service cost 1.8 1.4 Interest cost 7.2 6.5 Benefits paid (8.2) (7.7) Actuarial loss 15.5 7.9 ------ ----- Ending benefit obligation $112.2 $95.9 ====== ===== Beginning fair value of plan assets $97.4 $87.8 Actual return on plan assets 7.0 15.9 Company contributions 3.2 1.8 Benefits paid (9.0) (8.1) ------ ----- Ending fair value of plan assets $98.6 $97.4 ====== ===== Funded status of the plan $(13.6) $1.5 Unrecognized actuarial loss (gain) 8.3 (8.9) Unrecognized prior service cost 3.9 2.8 Additional minimum liability (12.8) - ------ ----- Accrued pension liability $(14.2) $(4.6) ====== =====
The weighted average rate assumptions used in determining pension costs and the benefit obligations were:
1998 1997 1996 ---- ---- ---- Discount rate 6.75% 7.0% 7.5% Expected rate of increase in future compensation levels 4.5% 4.5% 4.5% Long-term rate of return on plan assets 9.5% 9.5% 9.5%
For plans with an accumulated benefit obligation exceeding assets, the total projected benefit obligation and accumulated benefit obligation were $97.4 million and $3.9 million and the fair value of plan assets were $81.3 million and zero at December 31, 1998 and 1997, respectively. F-15 45 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The provisions of SFAS No. 87, "Employers' Accounting for Pensions," required the Company to record an additional minimum liability of $12.8 million at December 31, 1998. This liability represents the amount by which the accumulated benefit obligation exceeded the sum of the fair market value of plan assets and accrued amounts previously recorded. The additional minimum liability was offset by a $3.8 million intangible asset and resulted in a $5.5 million charge to comprehensive income, net of related tax benefits. The intangible asset is included in other non-current assets in the consolidated balance sheet at December 31, 1998. 12. POST-RETIREMENT BENEFITS OTHER THAN PENSIONS -------------------------------------------- General Cable has post-retirement benefit plans that provide medical and life insurance for certain retirees and eligible dependents. General Cable funds the plans as claims or insurance premiums are incurred. Net post-retirement benefit expense (income) included the following components (in millions):
Year Ended December 31, ------------------------------- 1998 1997 1996 ---- ---- ---- Service cost $ 0.1 $ 0.4 $ 0.4 Interest cost 0.5 1.1 1.1 Amortization of prior service cost (0.8) - - Curtailment gain (2.1) - - ----- ----- ----- Net post-retirement benefit expense (income) $(2.3) $ 1.5 $ 1.5 ===== ===== =====
The curtailment gain was a result of closing certain manufacturing facilities. The change in the accrued post-retirement benefit liability was as follows (in millions):
1998 1997 ---- ---- Beginning benefit obligation balance $15.3 $15.5 Net periodic benefit expense (income) (2.3) 1.5 Benefits paid (1.3) (1.7) ----- ----- Ending benefit obligation balance $11.7 $15.3 ===== =====
The discount rate used in determining the accumulated post-retirement benefit obligation was 6.5% for the year ended December 31, 1998, 7.0% for the year ended December 31, 1997 and 7.5% for the year ended December 31, 1996. The assumed health-care cost trend rate used in measuring the accumulated post-retirement benefit obligation was 9.5%, decreasing gradually to 5.0% in year 2005 and thereafter. Changing the assumed health- care cost trend rate by 1% would result in a change in the accumulated post-retirement benefit obligation of $0.5 million for 1998. The effect of this change would affect net post-retirement benefit expense by $0.4 million. F-16 46 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. STOCK OPTIONS ------------- General Cable has a Stock Incentive Plan under which a maximum of 4,725,000 shares of Common Stock may be issued. Stock options are granted to employees at prices which are not less than the closing market price on the date of grant. The majority of options granted during 1998 expire in 10 years and vest and become fully exercisable ratably over three years of continued employment. Options granted during 1997 expire in 10 years and vest and become fully exercisable at the end of three years of continued employment. General Cable applies APB Opinion 25 and related Interpretations in accounting for the plan. Accordingly, no compensation cost has been recognized for grants under the stock option plan. If compensation costs for General Cable's stock option plan had been determined based on the fair value at the grant dates for awards under this plan consistent with the method of SFAS No. 123, the pro forma net income would have been as follows for the years ended December 31, (in millions except per share amounts):
1998 1997 ---- ---- Net income: As reported $71.2 $53.2 Pro forma 67.6 52.0 Earnings per common share: As reported 1.93 1.45 Pro forma 1.84 1.42 Earnings per common share-assuming dilution: As reported 1.90 1.44 Pro forma 1.80 1.41
These pro forma amounts may not be representative of future disclosures because the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years. In determining the pro forma amounts above, the fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:
1998 1997 ---- ---- Risk-free interest rate 4.9% 6.0% Expected dividend yield 0.9% 0.6% Expected option life 6.5 years 6.5 years Expected stock price volatility 54.0% 37.0% Weighted average fair value of options $13.78 $ 6.81
F-17 47 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A summary of option information for the years ended December 31, 1998 and 1997 follows (options in thousands):
Weighted Average Options Exercise Outstanding Price ----------- ----- Granted 1,715 $14.02 Forfeited (66) 14.00 ----- ------ Balance at December 31, 1997 1,649 14.02 Granted 417 25.55 Exercised (19) 14.00 Forfeited (173) 15.57 ----- ------ Balance at December 31, 1998 1,874 $16.49 ===== ======
As of December 31, 1998 there were 1,000 exercisable stock options at an exercise price of $21.91 per share. The following table summarizes information about stock options outstanding at December 31, 1998 (options in thousands):
Weighted-Avg. Remaining Range of Options Weighted-Avg. Contractual Option Prices Outstanding Exercise Price Life ------------- ----------- -------------- ---------- $14 to $15 1,483 $14.04 8.4 $21 to $28 391 $25.73 9.1
14. SHAREHOLDERS' EQUITY -------------------- General Cable adopted SFAS No. 130 "Reporting Comprehensive Income" during the first quarter of 1998 and has presented additional information in the consolidated statement of changes in shareholders' equity. General Cable is authorized to issue 75 million shares of common stock and 25 million shares of preferred stock. Following consummation of the initial public offering, General Cable awarded 402,890 shares of restricted stock to executive officers and other key employees. The awards of restricted stock were made in settlement of obligations under existing long-term incentive arrangements. Restrictions on 224,320 shares expired on December 31, 1998, while restrictions on the remaining 178,570 shares expire in May 2000. Additionally, 5,770 shares of restricted stock were issued during 1997. During 1998, General Cable awarded 38,097 shares of restricted stock. Restrictions on the majority of the shares issued in 1998 will expire ratably over a three-year period. F-18 48 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In November 1998, General Cable entered into a Stock Loan Incentive Plan (SLIP) with executive officers and key employees. Under the SLIP, the company loaned $6.0 million to facilitate open market purchases of General Cable Common Stock. The notes bear interest at 5.12% and mature in November 2003. A matching restricted stock unit (MRSU) was issued for each share of stock purchased under the SLIP. The MRSUs generally vest after five years of continuous employment. If the vesting requirements are met, one share of General Cable Common Stock will be issued in exchange for each MRSU. The fair value of the MRSUs at the grant date of $6.0 million will be amortized to expense over the five-year vesting period. There are 309,365 MRSUs outstanding as of December 31, 1998. 15. EARNINGS PER COMMON SHARE ------------------------- A reconciliation of the numerator and denominator of earnings per common share to earnings per common share assuming dilution for the years ended December 31, is as follows (in millions):
1998 1997 --------------------------------- ------------------------------- Per Per Income(1) Shares(2) Share Income(1) Shares(2) Share --------- --------- ----- --------- --------- ----- Earnings per common share $71.2 36.8 $1.93 $53.2 36.6 $1.45 Dilutive effect of stock options and restricted stock units - 0.7 - .3 ----- ---- ----- ---- Earnings per common share- Assuming dilution $71.2 37.5 $1.90 $53.2 36.9 $1.44 ===== ==== ===== ===== ==== =====
(1) Numerator (2) Denominator Earnings per common share and earnings per common share assuming dilution for 1996 were computed based on 36.4 million average shares outstanding. There were no dilutive securities outstanding in 1996. F-19 49 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. SEGMENT INFORMATION ------------------- The Company has adopted SFAS No. 131, "Disclosures about Segments of a Business Enterprise and Related Information". General Cable has two reportable operating segments: the Electrical Group and the Communications Group. These segments are strategic business units organized around two product categories that follow management's internal organization structure. The Electrical Group manufactures and sells wire and cable products which conduct electrical current for power and control applications for use in nonresidential and residential structures and in a wide variety of capital goods and consumer uses. The Communications Group manufactures and sells wire and cable products which transmit low voltage signals for voice, data, video and control applications. Segment net sales represent sales to external customers. The Company has no inter-segment revenues. In 1996, sales to one customer of the Communications Group accounted for 10.4% of total Company sales. Sales to customers outside the United States accounted for approximately 3% of total sales for each of the years ended December 31, 1998, 1997 and 1996. Segment operating income represents profit from operations before interest income, interest expense or income taxes. Depreciation on corporate property was allocated to the operating segments. Corporate assets included cash, deferred income taxes, property, certain prepaid expenses and other current and non-current assets. F-20 50 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Summarized financial information for the Company's operating segments for the years ended December 31, is as follows (in millions):
Electrical Communications Group Group Corporate Total ---------- ------------- --------- ----- Net Sales: 1998 $690.4 $460.1 - $1,150.5 1997 718.6 415.9 - 1,134.5 1996 668.0 375.6 - 1,043.6 Operating Income: 1998 55.6 74.0 - 129.6 1997 51.5 53.0 - 104.5 1996 30.7 47.8 - 78.5 Identifiable Assets: 1998 318.1 235.9 $97.0 651.0 1997 300.3 168.1 95.3 563.7 1996 279.1 140.3 94.2 513.6 Capital Expenditures: 1998 30.8 39.1 5.6 75.5 1997 12.7 25.1 4.8 42.6 1996 9.8 13.0 7.2 30.0 Depreciation Expense: 1998 8.6 9.9 - 18.5 1997 6.9 7.0 - 13.9 1996 6.3 5.8 - 12.1
F-21 51 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 17. COMMITMENTS AND CONTINGENCIES ----------------------------- Certain present and former operating sites, or portions thereof, currently or previously owned or leased by current or former operating units of General Cable are the subject of investigations, monitoring or remediation under the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund), the Federal Resource Conservation and Recovery Act or comparable state statutes or agreements with third parties. These proceedings are in various stages ranging from initial investigations to active settlement negotiations to implementation of the cleanup or remediation of sites. Certain present and former operating units of General Cable have been named as potentially responsible parties (PRPs) at several off-site disposal sites under CERCLA or comparable state statutes in federal court proceedings. In each of these matters, the operating unit of General Cable is working with the governmental agencies involved and other PRPs to address environmental claims in a responsible and appropriate manner. At December 31, 1998 and 1997, General Cable had an accrued liability of approximately $5.3 million and $6.1 million, respectively, for various environmental-related liabilities of which General Cable is aware. In connection with the Acquisition, American Premier Underwriter's Inc. agreed to indemnify General Cable against all environmental liabilities arising out of General Cable's or its predecessors' ownership or operation of the Indiana Steel & Wire Company and Marathon Manufacturing Holdings, Inc. businesses (which were divested by General Cable prior to the Acquisition), without limitation as to time or amount. American Premier also agreed to indemnify General Cable against 66 2/3% of all other environmental liabilities arising out of General Cable's or its predecessors' ownership or operation of other properties and assets in excess of $10 million but not in excess of $33 million which are identified during the seven-year period ending June 2001. While it is difficult to estimate future environmental liabilities accurately, General Cable does not currently anticipate any material adverse impact on its results of operations, financial position or cash flows as a result of compliance with federal, state, local or foreign environmental laws or regulations or cleanup costs of the sites discussed above. In addition, subsidiaries of the Company have been named as defendants in lawsuits alleging exposure to asbestos in products manufactured by the Company. At December 31, 1998 and 1997, General Cable had accrued approximately $1.9 million and $2.2 million, respectively, for these lawsuits. The Company does not believe that the outcome of the litigation will have a material adverse effect on its results of operations, cash flows or financial position. General Cable has entered into various operating lease agreements related principally to certain administrative, manufacturing and distribution facilities and transportation equipment. Future minimum rental payments required under noncancelable lease agreements at December 31, 1998 were as follows: 1999-$8.8 million, 2000-$8.7 million, 2001-$5.3 million, 2002-$1.8 million and 2003-$0.9 million. Rental expense recorded under operating leases was $8.1 million, $6.7 million and $4.2 million for the years ended December 31, 1998, 1997 and 1996, respectively. F-22 52 GENERAL CABLE CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 18. QUARTERLY OPERATING RESULTS (UNAUDITED) --------------------------------------- The interim financial information is unaudited. In the opinion of management, the interim financial information reflects all adjustments necessary for a fair presentation of quarterly financial information. Quarterly results have been influenced by seasonal factors inherent in General Cable's businesses. The sum of the quarter's earnings per share amounts may not add to full year earnings per share because each quarter is calculated independently. Summarized historical quarterly financial data for 1998 and 1997 are set forth below (in millions, except per share data):
First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- 1998 ---- Net sales $278.6 $306.7 $304.5 $260.7 Gross profit 57.0 66.9 69.3 56.6 Net income 13.5 18.1 22.1 17.5 Earnings per common share 0.37 0.49 0.60 0.48 Earnings per common share- Assuming dilution 0.36 0.48 0.59 0.47 1997 ---- Net sales $251.0 $292.2 $306.1 $285.2 Gross profit 48.8 55.0 61.7 59.9 Net income 8.6 12.0 17.3 15.3 Earnings per common share 0.23 0.33 0.47 0.41 Earnings per common share- Assuming dilution 0.23 0.33 0.46 0.41
The results for the fourth quarter of 1998 include the impact of adjusting the Company's full year effective tax rate to 37.5%, a reduction in the level of controllable expenses and a true-up of the Company's incentive compensation accrual to reflect the actual cash incentives earned in 1998. F-23 53 SCHEDULE II GENERAL CABLE CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS ACCOUNTS RECEIVABLE ALLOWANCES (IN MILLIONS)
FOR THE YEARS ENDED DECEMBER 31, ----------------------------- 1998 1997 1996 ---- ---- ---- Accounts Receivable Allowances: Beginning balance $ 7.3 $ 8.4 $ 8.1 Provision 0.8 1.3 1.3 Write-offs (1.1) (2.4) (1.0) ----- ----- ----- Ending balance $ 7.0 $ 7.3 $ 8.4 ===== ===== =====
S-1 54 GENERAL CABLE CORPORATION AND SUBSIDIARIES EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------ ----------- 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File No. 333-22961) of the Company filed with the Securities and Exchange Commission on March 7, 1997, as amended (the Initial S-1). 3.2 Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the Initial S-1). 4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Initial S-1). 10.1 Credit Agreement between the Company, Chase Manhattan Bank, as Administrative Agent, and the lenders signatory thereto ( incorporated by reference to Exhibit 10.2 to the Initial S-1). 10.2 General Cable Corporation 1998 Annual Incentive Plan (incorporated by reference to Exhibit 10.2 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.3 General Cable Corporation 1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the Initial S-1). 10.4 General Cable Corporation 1997 Stock Incentive Plan, as amended Plan (incorporated by reference to Exhibit 10.4 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.5 Employment Agreement dated May 13, 1997, between Stephen Rabinowitz and the Company (incorporated by reference to Exhibit 10.5 to the Initial S-1). 10.6 Amendment dated March 16, 1998 to Employment Agreement dated May 13, 1997, between Stephen Rabinowitz and the Company Plan (incorporated by reference to Exhibit 10.6 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.7 Employment Agreement dated May 13, 1997, between Gregory B. Kenny and the Company (incorporated by reference to Exhibit 10.6 to the Initial S-1). 10.8 Amendment dated March 16, 1998 to Employment Agreement dated May 13, 1997, between Gregory B. Kenny and the Company Plan (incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1997). 10.9 Employment Agreement dated May 13, 1997, between Christopher F. Virgulak and the Company (incorporated by reference to Exhibit 10.7 to the Initial S-1). 10.10 Employment Agreement dated May 13, 1997, between Robert J. Siverd and the Company (incorporated by reference to Exhibit 10.8 to the Initial S-1). 10.11 Change-in-Control Agreement dated May 13, 1997, between Stephen Rabinowitz and the Company (incorporated by reference to Exhibit 10.9 to the Initial S-1). 10.12 Change-in-Control Agreement dated May 13, 1997, between Gregory B. Kenny and the Company (incorporated by reference to Exhibit 10.10 to the Initial S-1). 10.13 Change-in-Control Agreement dated May 13, 1997, between Christopher F. Virgulak and the Company (incorporated by reference to Exhibit 10.11 to the Initial S-1). 10.14 Change-in-Control Agreement dated May 13, 1997, between Robert J. Siverd and the Company (incorporated by reference to Exhibit 10.12 to the Initial S-1). 10.15 Form of Intercompany Agreement among Wassall PLC, Netherlands Cable B.V. and the Company (incorporated by reference to Exhibit 10.14 to the Initial S-1). 10.16 Stock Purchase Agreement dated May 13, 1997, among Wassall PLC, General Cable Industries Inc. and the Company (incorporated by reference to Exhibit 10.15 to the Initial S-1). E-1 55 GENERAL CABLE CORPORATION AND SUBSIDIARIES EXHIBIT INDEX 10.17 General Cable Corporation Deferred Compensation Plan dated April 1, 1996. 10.18 Amended and Restated General Cable Corporation Deferred Compensation Plan dated December 14, 1998. 21.1 List of Subsidiaries of General Cable. 23.1 Consent of Deloitte & Touche LLP. 27.1 Financial Data Schedule. E-2 EX-10.17 2 EXHIBIT 10.17 1 EXHIBIT 10.17 GENERAL CABLE CORPORATION AND SUBSIDIARIES EXECUTIVE DEFERRED COMPENSATION PLAN As Adopted Effective April 1, 1996 2 GENERAL CABLE CORPORATION AND SUBSIDIARIES EXECUTIVE DEFERRED COMPENSATION PLAN TABLE OF CONTENTS ----------------- Section 1 Definitions Section 2 Administration Section 3 Participation Section 4 Contribution Section 5 Vesting Section 6 Special Trust fund Section 7 Participants' Accounts Section 8 Individually Directed Investments Section 9 Benefits Section 10 Special Withdrawals Section 11 Amendment and Termination Section 12 Miscellaneous Provisions 3 GENERAL CABLE CORPORATION AND SUBSIDIARIES EXECUTIVE DEFERRED COMPENSATION PLAN TABLE OF CONTENTS
1. DEFINITIONS..............................................................................................1 1.1 Administrative Committee........................................................................1 1.2 Beneficiary.....................................................................................1 1.4 Benefit Equalization Plan.......................................................................1 1.5 Benefit ........................................................................................1 1.6 Board...........................................................................................1 1.7 Bonus...........................................................................................1 1.8 CEO.............................................................................................2 1.9 Claimant........................................................................................2 1.10 Code............................................................................................2 1.11 Compensation....................................................................................2 1.12 Compensation Deferral Limit.....................................................................2 1.13 Company.........................................................................................2 1.14 Deferral Contribution...........................................................................2 1.15 Disability......................................................................................2 1.16 Educational Expense.............................................................................2 1.17 Effective Date..................................................................................2 1.18 ERISA...........................................................................................2 1.19 Executive.......................................................................................2 1.20 Final Valuation.................................................................................2 1.21 Individual Investment Account...................................................................3 1.22 Pay Date........................................................................................3 1.23 Participant.....................................................................................3 1.24 Plan............................................................................................3 1.25 Plan Year.......................................................................................3 1.26 Retirement or Retires...........................................................................3 1.27 Retirement Plan.................................................................................3 1.28 Salary..........................................................................................3 1.29 Special Trust Fund..............................................................................3 1.30 Subsidiary......................................................................................3 1.31 Trust...........................................................................................3 1.32 Trust Agreement.................................................................................3 1.33 Trustee.........................................................................................3 1.34 Unforeseen Emergency............................................................................4 2. ADMINISTRATION...........................................................................................4 2.1 Administrative Committee........................................................................4 2.2 Plan Administration.............................................................................4 2.3 Administration Expenses. ......................................................................4
4
2.4 Liability. ....................................................................................5 2.5 Self-Interest...................................................................................5 2.6 Records. ......................................................................................5 2.7 Claims and Claims Review. .....................................................................5 2.8 Denial of Claim. ..............................................................................5 2.9 Failure to Comply. ............................................................................6 3. PARTICIPATION............................................................................................6 3.1 Eligibility. ..................................................................................6 3.2 CEO Participation. ............................................................................6 3.3 Termination of CEO's Participation. ...........................................................6 3.4 Participation by Executives Other Than the CEO. ...............................................6 3.5 Termination of Participation for Executives Other than the CEO..................................6 3.6 Waiver of Participation. ......................................................................7 4. CONTRIBUTIONS............................................................................................7 4.1 Deferral Contributions. .......................................................................7 4.2 Deferral Contributions for Plan Year Ending on December 31, 1996. .............................7 4.3 Deferral Contributions for Participation that Begins After Beginning of Plan Year. ....................................................................................7 4.4 Right to Make Contributions. ..................................................................8 4.5 Application of Contributions. .................................................................8 4.6 Reduction of Compensation Deferral Limit. .....................................................8 4.7 Benefit Distribution Election. ................................................................8 4.8 Change of Benefit Distribution Election. ......................................................9 5. VESTING..................................................................................................9 5.1 Vesting of Contributions. .....................................................................9 6. SPECIAL TRUST FUND.......................................................................................9 6.1 Special Trust Fund. ...........................................................................9 6.2 Investment of Special Trust Fund. .............................................................9 6.3 Determination of Fair Market Value. ...........................................................9 7. PARTICIPANTS' ACCOUNTS..................................................................................10 7.1 Individual Investment Accounts.................................................................10 7.2 Valuation......................................................................................10 8. INDIVIDUALLY DIRECTED INVESTMENTS.......................................................................10 8.1 No Right to Direct Investments. ..............................................................10 8.2 Right to Make Recommendations. ...............................................................10 9. BENEFITS................................................................................................10 9.1 Retirement. ..................................................................................10 9.2 Death. .......................................................................................11 9.3 Disability. ..................................................................................11
5
9.4 Termination of participant's Employment. .....................................................11 9.5 Mandatory Lump Sum Payment. ..................................................................11 9.6 Failure of Trustee to Pay Benefit. ...........................................................12 9.7 Tax Withholding. .............................................................................12 9.8 Spendthrift Provision. .......................................................................12 9.9 Participants' Status as General Unsecured Creditors. .........................................12 10. SPECIAL WITHDRAWALS.....................................................................................12 10.1 Hardship Withdrawals. ........................................................................12 10.2 Educational Withdrawals........................................................................13 11. AMENDMENT AND TERMINATION...............................................................................13 11.1 Amendment......................................................................................13 11.2 Termination....................................................................................13 11.3 Distribution of Special Trust Fund.............................................................13 12. MISCELLANEOUS PROVISIONS................................................................................14 12.1 Construction. ................................................................................14 12.2 Limitation of Rights. ........................................................................14 12.3 Return of Contributions or Benefits............................................................14 12.4 Severability...................................................................................14 12.5 Representations................................................................................14 12.6 Successor Companies............................................................................14
6 GENERAL CABLE CORPORATION AND SUBSIDIARIES EXECUTIVE DEFERRED COMPENSATION PLAN W I T N E S S E T H ------------------- WHEREAS, General Cable Corporation wishes to establish and adopt a deferred compensation plan that will provide retirement benefits to certain executives; and WHEREAS, General Cable Corporation intends that this deferred compensation plan be (i) a nonqualified deferred compensation plan for purposes of Section 401(a) of the Internal Revenue Code of 1986, as amended, and (ii) an unfunded plan which is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended; and NOW, THEREFORE, effective as of April 1, 1996, General Cable Corporation hereby establishes the General Cable Corporation and Subsidiaries Executive Deferred Compensation Plan. 1. DEFINITIONS 1.1 "Administrative Committee" shall mean the committee appointed by the Board to administer the Plan pursuant to Section 2.1 below. 1.2 "Beneficiary" shall mean the person designated in writing by a Participant to be entitled to receive a Death Benefit in the event of the Participant's death pursuant to Section 9.2 below. 1.3 "Benefit Distribution Election" shall mean the election by a Participant of a Benefit distribution option pursuant to Section 4.7 below. 1.4 "Benefit Equalization Plan" shall mean the General Cable Corporation and Subsidiaries Benefit Equalization Plan, as adopted effective July 1, 1992. 1.5 "Benefit" shall mean the benefit payable to a Participant or Beneficiary pursuant to Section 9 below. 1.6 "Board" shall mean the board of directors of the Company. 1.7 "Bonus" shall mean the annual incentive bonus paid to a Participant in respect of a Plan Year without taking into account (i) deferrals made to all Company retirement and/or deferred compensation plans and (ii) deferrals made pursuant to Code Section 125. 7 1.8 "CEO" shall mean the chief executive officer of the Company. 1.9 "Claimant" shall mean a person making a claim pursuant to Section 2.7 below. 1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto. 1.11 "Compensation" shall mean (i) Salary and/or (ii) Bonus, paid to a Participant in respect of a Plan Year. 1.12 "Compensation Deferral Limit" shall mean 50 percent of a Participant's Salary in respect of a Plan Year, unless such percentage is reduced pursuant to Section 4.6 below. 1.13 "Company" shall mean General Cable Corporation, a Delaware corporation, and its Subsidiaries. 1.14 "Deferral Contribution" shall mean a contribution by the Company to the Trust of a portion of a Participant's Compensation pursuant to Section 4.1, 4.2 or 4.3 below. 1.15 "Disability" shall mean a disability as defined under the Company's then existing long-ten-n disability plan or program. 1.16 "Educational Expense" shall mean an expense incurred by the Participant with respect to the education of the Participant and/or any member of the Participant's immediate family. 1.17 "Effective Date" shall mean April 1, 1996. 1.18 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto. 1.19 "Executive" shall mean an employee of the Company who performs managerial and/or executive services. 1.20 "Final Valuation" shall mean the fair market value of the assets of the Special Trust Fund allocated to each Participant's Individual Investment Account as of the date immediately following the date of the Participant's Retirement, death or termination of employment. -2- 8 1.21 "Individual Investment Account" shall mean an notional investment account established and maintained for each Participant pursuant to Section 7.1 below. 1.22 "Pay Date" shall mean the date a Participant is paid Compensation in accordance with the standard payroll practices of the Company. 1.23 "Participant" shall mean an Executive who is a participant in the Plan. 1.24 "Plan" shall mean the General Cable Corporation and Subsidiaries Executive Deferred Compensation Plan. 1.25 "Plan Year" shall mean a calendar year. 1.26 "Retirement" or "Retires" shall mean a retirement by the Participant under the Retirement Plan. 1.27 "Retirement Plan" shall mean the General Cable Corporation Retirement and Savings Plan, effective January 1, 1994. 1.28 "Salary" shall mean the salary paid to a Participant in respect of a Plan Year without taking into account (i) deferrals made to all Company retirement and/or deferred compensation plans and (ii) deferrals made pursuant to Code Section 125. 1.29 "Special Trust Fund" shall mean the assets of the Trust held by the Trustee under the Trust Agreement that are allocable to (i) Deferral Contributions made by the Company to the Trust pursuant to Section 4 below and (i) income resulting from such Deferral Contributions. 1.30 "Subsidiary" shall mean a corporation of which the Company owns more than 50 percent of such corporation's common stock or any other business entity in which the Company directly or indirectly has an ownership interest of more than 50 percent. 1.31 "Trust" shall mean the General Cable Corporation Rabbi Trust, as established by the Trust Agreement. 1.32 "Trust Agreement" shall mean the General Cable Corporation Rabbi Trust Agreement by and between General Cable Corporation and NationsBank of North Carolina, N.A., dated May 2, 1994, as amended from time to time, or any successor trust agreement. -3- 9 1.33 "Trustee" shall mean the trustee or trustees designated as such pursuant to the Trust Agreement. 1.34 "Unforeseen Emergency" shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant or Beneficiary and that would result in severe financial hardship to the individual if early withdrawal were not permitted. 2. ADMINISTRATION 2.1 Administrative Committee. The Board shall appoint an Administrative Committee which shall consist of such number of persons as shall from time to time be determined by the Board. Members of the Administrative Committee may be employees of the Company and shall hold office at the pleasure of the Board and shall serve without compensation unless otherwise directed by the Board. Any member of the Administrative Committee may resign by giving notice thereof to the Company and to the Administrative Committee and such resignation shall become effective at delivery or at any later date specified therein. 2.2 Plan Administration. The Administrative Committee shall be charged with overseeing the operation and administration of the Plan, including making determinations with respect to payment of benefits and deciding any dispute arising under the Plan. The Administrative Committee shall have all the powers necessary to discharge its duties under the Plan, but not by way of limitation, the power to hire consultants for the Plan and the power to interpret or construe the Plan. The Administrative Committee may delegate to any agent such duties and powers, both ministerial and discretionary, as it deems appropriate; provided, however, that all disputes arising under the Plan shall be determined by the Administrative Committee. In exercising any discretion, the Administrative Committee shall have sole, absolute and discretionary authority, final and binding on all Participants and all other parties to the maximum extent allowed by law. A majority of the Administrative Committee then in office shall constitute a quorum for the transaction of business. Any determination of the Administrative Committee shall be made by a majority of the members then in office and such determination shall be final. If there are only two members and they are unable to agree, any action required of the Administrative Committee shall be decided by the Board, and its decision shall be final. 2.3 Administration Expenses. The members of the Administrative Committee shall be reimbursed by the Company for any necessary expenditures -4- 10 incurred in the discharge of their duties as members of the Administrative Committee. The compensation, if any, of all agents, counsel or other persons retained or employed by the Administrative Committee shall be subject to the approval of the Company and shall be paid by the Company. 2.4 Liability. The members of the Administrative Committee and the Company shall be entitled to rely upon all valuations, certificates and reports furnished by any trustee,, insurer, actuary, accountant or physician selected by the Administrative Committee and approved by the Company, and upon all opinions given by any legal counsel selected by the Administrative Committee and approved by the Company or selected by the Company, and the members of the Administrative Committee and the Company shall be fully protected with respect to any action taken or suffered by their having relied in good faith upon such trustee, insurer, actuary, physician or counsel and all action so taken or suffered shall be conclusive upon each of them and upon all Participants and former Participants and their Beneficiaries and all other persons. 2.5 Self-Interest. No member of the Administrative Committee shall have any right to vote or decide upon any matter relating solely to himself or herself, or solely to any of his or her fights or benefits under the Plan, unless such member is the only member of the Administrative Committee. 2.6 Records. The Administrative Committee shall keep or cause to be kept a record of all of its proceedings and shall keep or cause to be kept such other records and data as may be necessary for the administration of the Plan and to determine the amount of all Benefits payable hereunder. 2.7 Claims and Claims Review. If any Participant or Beneficiary, or their legal representative, has a claim for Benefits which is not being paid, such Claimant may file a written claim with the Administrative Committee setting forth the amount and nature of the claim, supporting facts, and the Claimant's address. Written notice of the disposition of a claim by the Administrative Committee shall be furnished to the Claimant within 90 days after the claim is filed. In the event of special circumstances, the Administrative Committee may extend the period for determination for up to an additional 90 days, in which case it shall so advise the Claimant. If the claim is denied, the reasons for the denial shall be specifically set forth in writing, pertinent provisions of the Plan shall be cited, including an explanation of the Plan's claim review procedure, and, if the claim is perfectible, an explanation as to how the Claimant can perfect the claim shall be provided. -5- 11 2.8 Denial of Claim. If a Claimant whose claim has been denied wishes further consideration of his or her claim, he or she may request the Administrative Committee to review his or her claim in a written statement of the Claimant's position filed with the Administrative Committee no later than 60 days after receipt of the written notification provided for in Section 2.7 above. The Administrative Committee shall fully and fairly review the matter and shall promptly advise the Claimant, in writing, of its decision within the next 60 days. Due to special circumstances, the Administrative Committee may extend the period for determination for up to an additional 60 days. 2.9 Failure to Comply. Failure on the part of any Participant or Beneficiary to comply with the Administrative Committee's request for information shall be sufficient grounds for delay in the payment of Benefits until such information is received. 3. PARTICIPATION 3.1 Eligibility. Each Executive shall be eligible to participate in the Plan, subject to Section 4.4 below. 3.2 CEO Participation. The CEO shall automatically become a Participant in the Plan on the Effective Date. Any person who becomes the CEO after the Effective Date shall automatically become a Participant. 3.3 Termination of CEO's Participation. The CEO shall remain a Participant until the earlier of (i) the date the CEO is notified in writing by the Board that he or she no longer is a Participant or (ii) the date the entire amount of the Benefit is distributed to the CEO or - in the event of the CEO's death - to his or her Beneficiary. A CEO who has been terminated as a Participant shall continue to be entitled to (i) receive Benefits pursuant to Section 9 below and (ii) make recommendations pursuant to Section 8.2 below. 3.4 Participation by Executives Other Than the CEO. An Executive, other than an Executive who is the CEO, shall participate in the Plan only if such Executive has been selected by the CEO, in the exercise of his or her sole discretion, for participation in the Plan. 3.5 Termination of Participation for Executives Other Than the CEO. An Executive other than the CEO who has become a Participant shall remain a Participant until the earlier of (i) the date the Executive is notified in writing by the CEO that he or she no longer is a Participant or (ii) the date the entire amount of the Benefit is distributed to the Participant or - in the -6- 12 event of the Participant's death - to his or her Beneficiary. An Executive who has been terminated as a Participant shall continue to be entitled to (i) receive Benefits pursuant to Section 9 below and (ii) make recommendations pursuant to Section 8.2 below. 3.6 Waiver of Participation. An Executive may waive participation in the Plan with respect to any Plan Year by executing a written waiver of participation and providing it to the Company. Any such waiver of participation shall be irrevocable. 4. CONTRIBUTIONS 4.1 Deferral Contributions. Prior to the first day of a Plan Year other than the Plan Year that ends on December 31, 1996, a Participant may elect in a written notification to the Company to defer (i) a percentage of his or her Compensation or (ii) a specific dollar amount from his or her Compensation, up to the Compensation Deferral Limit. The amount that the Participant elects to defer shall be contributed by the Company to the Trust. Deferral Contributions may be taken from Salary or Bonus or from a combination of both, as specified by the Participant in his or her written deferral election. Deferral Contributions shall be contributed by the Company to the Trust and allocated to the Participant's Individual Investment Account on or about each Pay Date applicable to the payment of the Compensation. 4.2 Deferral Contributions for Plan Year Ending on December 31, 1996. With respect to the Plan Year ending on December 31, 1996, a Participant may elect in a written notification to the Company to defer (i) a percentage of his or her Compensation or (ii) a specific dollar amount from his or her Compensation, up to the Compensation Deferral Limit; provided, however, that the Company receives such written notification prior to April 30, 1996. For purposes of this Section 4.2, only Compensation earned by the Participant after the date the Participant elects to defer shall be subject to deferral. The amount that the Participant elects to defer shall be contributed by the Company to the Trust. Deferral Contributions may be taken from Salary or Bonus or from a combination of both, as specified by the Participant in his or her written deferral election. Deferral Contributions shall be contributed by the Company to the Trust and allocated to the Participant's Individual Investment Account on or about each Pay Date applicable to the payment of the Compensation. 4.3 Deferral Contributions for Participation That Begins After Beginning of Plan Year. In the event an Executive becomes a Participant after the beginning of a Plan Year, such Participant may elect in a written notification to the Company to defer (i) a percentage of his or her -7- 13 Compensation or (ii) a specific dollar amount from his or her Compensation, up to the Compensation Deferral Limit; provided, however, that the Company receives such written notification prior to the end of the 30-day period following the date the Executive becomes a Participant. For purposes of this Section 4.3, only Compensation earned by the Participant after the date the Participant elects to defer shall be subject to deferral. The amount that the Participant elects to defer shall be contributed by the Company to the Trust. Deferral Contributions may be taken from Salary or Bonus or from a combination of both, as specified by the Participant in his or her written deferral election. Deferral Contributions shall be contributed by the Company to the Trust and allocated to the Participant's Individual Investment Account on or about each Pay Date applicable to the payment of the Compensation. 4.4 Right to Make Contributions. A Participant who is a participant in the Retirement Plan at the time he or she elects to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above shall make such election to defer only if the Participant has elected to defer the maximum amount of Compensation (as such ten-n is defined in Section 1. 13 of the Retirement Plan) which such Participant may defer as a Before-Tax Deferral (as such term is defined in Section 1.5 of the Retirement Plan) under the Retirement Plan. 4.5 Application of Contributions. The Administrative Committee shall establish procedures whereby amounts deferred by a Participant shall first be applied as excess contributions with respect to amounts that otherwise would have qualified as a Before-Tax Deferral under the Retirement Plan but for the limitation on contributions imposed by Article 4 of the Retirement Plan. 4.6 Reduction of Compensation Deferral Limit. Notwithstanding anything contained in the Plan to the contrary, the Board may reduce the CEO's Compensation Deferral Limit from 50 percent to any percentage below 50 percent with respect to any specific Plan Year; provided, however, that such reduction is made pursuant to a Board resolution which is communicated in writing to the CEO and the Administrative Committee at least ten days prior to the effective date of such reduction. The CEO may reduce the Compensation Deferral Limit of any Participant (other than the CEO) from 50 percent to any percentage below 50 percent with respect to any specific Plan Year; provided, however, that such reduction is communicated in writing to the Participant and the Administrative Committee at least ten days prior to the effective date of such reduction. -8- 14 4.7 Benefit Distribution Election. At the time the Participant elects to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above, the Participant shall also make a Benefit Distribution Election, subject to Section 10.2 below, which shall apply to all Deferral Contributions for a specific Plan Year. The Participant shall elect one of the following two Benefit distribution options: (a) Option A: a lump sum payment; or (b) Option B: equal annual installments from between one and ten years. 4.8 Change of Benefit Distribution Election. With respect to a Participant who wishes to change his or her Benefit Distribution Election subsequent to delivering the written notification electing to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above, the Administrative Committee shall establish procedures to permit or deny the Participant from making such change. 5. VESTING 5.1 Vesting of Contributions. Each Participant shall be fully vested in all Deferral Contributions which have been contributed by the Company to the Trust and allocated to a Participant's Individual Investment Account. 6. SPECIAL TRUST FUND 6.1 Special Trust Fund. The Benefits payable under the Plan pursuant to Section 9 below shall first be provided by the Special Trust Fund. The Special Trust Fund shall consist of all Deferral Contributions, all investments made therewith, all proceeds thereof and all earnings and profits thereon, less payments made therefrom, all of which shall be accounted for separately from any and all contributions contributed by the Company to the Trust under the Benefit Equalization Plan. The Special Trust Fund shall be held in accordance with the Plan and the Trust Agreement entered into between the Company and the Trustee. The Trust Agreement may from time to time be amended in the manner therein provided. 6.2 Investment of Special Trust Fund. The Special Trust Fund, both principal and income, shall be invested by the Trustee in stocks, bonds, securities or other investments, including insurance company group annuity contracts pursuant to the terms of the Trust Agreement. -9- 15 6.3 Determination of Fair Market Value. The Trustee shall determine the fair market value of the assets of the Special Trust Fund as of the last day of each calendar quarter, and a statement of the cost and fair market value of the assets comprising the Special Trust Fund shall be promptly provided to the Company. 7. PARTICIPANTS' ACCOUNTS 7.1 Individual Investment Accounts. The Trustee shall establish and cause to be maintained a separate account for each Participant to be known as the Participant's Individual Investment Account, which shall consist of: (a) Deferral Contributions allocable to the Participant; and (b) the Participant's allocable share of the income and expenses and realized and unrealized gains and losses of the Special Trust Fund. Participants' Individual Investment Accounts shall be established by the Company for bookkeeping purposes only, and no separate funds shall be segregated by the Company for the benefit of the Participant, except under the terms of the Trust. 7.2 Valuation. The Trustee shall determine the fair market value of the assets of the Special Trust Fund allocated to each Participant's Individual Investment Account as of the last day of each calendar quarter, and a statement of such fair market value shall be promptly provided to the Participant. In addition, the Trustee shall determine the Final Valuation with respect to the fair market value of the assets of the Special Trust Fund allocated to each Participant's Individual Investment Account as of the date immediately following the date of the Participant's Retirement, death or termination of employment. 8. INDIVIDUALLY DIRECTED INVESTMENTS 8.1 No Right to Direct Investments. A Participant shall not have the right to exercise independent control over the assets in the Special Trust Fund allocated to his or her Individual Investment Account. 8.2 Right to Make Recommendations. The Administrative Committee shall establish procedures so that a Participant may recommend to the Trustee in writing or by any other means regarding any and all actions that the Participant desires the Trustee to take with respect to the assets in the Special Trust Fund allocated to his or her Individual Investment Accounts. -10- 16 9. BENEFITS 9.1 Retirement. The Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to each Participant who Retires. The Benefit shall be based on the Final Valuation. The Benefit shall be paid pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above. Payment of the Benefit shall commence not later than the first day of the third month following the date the Participant Retires. 9.2 Death. In the event of the death of the Participant prior to the Participant's Retirement or termination of employment, the Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to the Beneficiary. The Benefit shall be based on the Final Valuation. The Benefit shall be paid in a lump sum not later than the first day of the third month following the date of death. 9.3 Disability. In the event that a Participant's employment is terminated due to Disability prior to his or her Retirement, the Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to each Participant whose employment is terminated due to Disability. The Benefit shall be based on the Final Valuation. The Benefit shall be paid pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above. Payment of the Benefit shall commence not later than the first day of the third month following the date the Participant's employment terminates. 9.4 Termination of participant's Employment. In the event that a Participant's employment is terminated for any reason other than Retirement under Section 9.1 above, death under Section 9.2 above or Disability under Section 9.3 above, the Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to each Participant whose employment terminates. The Benefit shall be based on the Final Valuation. The Benefit shall be paid pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above. Payment of the Benefit shall commence not later than the first day of the third month following the date the Participant's employment terminates. 9.5 Mandatory Lump Sum Payment. Notwithstanding anything contained in the Plan to the contrary, if the Final Valuation of a Participant's Individual Investment Account as of the date immediately following the date of the Participant's Retirement (pursuant to Section 9.1 above), death (pursuant to Section 9.2 above) or termination of employment (pursuant to Section -11- 17 9.3 or 9.4 above) is below $25,000, then the Benefit shall be paid in a lump sum irrespective of the Participant's Benefit Distribution Election. In addition, if the Participant is required under the terms of the Benefit Equalization Plan to receive a benefit under the Benefit Equalization Plan in a lump sum, then the Benefit shall be paid as a lump sum irrespective of the Participant's Benefit Distribution Election. 9.6 Failure of Trustee to Pay Benefit. Notwithstanding anything contained in the Plan to the contrary, the Company shall be obligated to pay the Benefit to the Participant or Beneficiary pursuant to this Section 9 in the event the Trustee fails to pay the Benefit to the Participant or Beneficiary from the Special Trust Fund. 9.7 Tax Withholding. The Company has the right to withhold taxes from any payment made pursuant to this Plan or make such other provisions as it deems necessary or appropriate to satisfy its obligations to withhold federal, state, local or foreign income or other taxes incurred by reason of Benefit payments or accruals pursuant to this Plan. In lieu thereof, the Company shall have the fight, to the extent permitted by law, to withhold the amount of any such taxes from any other amounts payable by the Company to the Participant upon such terms and conditions as the Administrative Committee shall prescribe. The Company shall notify the Trustee of any tax withholding obligation. Upon payment of any Benefit by the Trustee, the Trustee shall first deduct from the amount of the Benefit such amount designated by the Company to be withheld, and the Trustee shall pay such designated amount to the Company. The Company shall have the fight to require a Participant, former Participant or Beneficiary who has received a Benefit under the Plan to reimburse the Company for any taxes subsequently required to be withheld or otherwise deducted or paid by the Company in respect of such Benefit previously paid to such Participant, former Participant or Beneficiary. 9.8 Spendthrift Provision. No Benefit payable under this Plan shall be subject in any manner by the Participant or Beneficiary or creditors of any Participant or Beneficiary to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. 9.9 Participants' Status as General Unsecured Creditors. Participants shall have the status of general unsecured creditors of the Company. The obligations of the Company to pay Benefits under the Plan constitute a mere promise by the Company to make such Benefit payments. 10. SPECIAL WITHDRAWALS -12- 18 10.1 Hardship Withdrawals. In an event of an Unforeseen Emergency, a Participant may withdraw from his or her Individual Investment Account an amount (i) equal to or less than the aggregate of all Deferral Contributions and (ii) necessary to meet the Unforeseen Emergency. The Administrative Committee shall establish procedures to effect such Withdrawals. In addition, the withdrawal shall be subject to the rules and conditions contained in the regulations promulgated under Code Section 457, Treasury Regulation Sections 1.457-2(h)(4) and (5); provided, however, that such rules and conditions are consistent with the Plan. 10.2 Educational Withdrawals. Notwithstanding anything contained in this Plan to the contrary, a Participant may elect at the time he or she elects to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above to withdraw at a specified date or dates a specified amount from his or her Individual Investment Account for the purposes of paying a Participant's Educational Expenses with respect to any designated Plan Year. The Administrative Committee shall establish procedures to effect such Withdrawals. 11. AMENDMENT AND TERMINATION 11.1 Amendment. The Company may amend the Plan at any time and from time to time and any amendment may have retroactive effect, including, without limitation, amendments to the amount of contributions; provided, however, that no amendment shall (i) reduce the value of a Participant's Individual Investment Account or (ii) change the form or timing of payment of the Benefit with respect to contributions contributed prior to the date of amendment. 11.2 Termination. While the Plan is intended to be permanent, the Company may at any time terminate or partially terminate the Plan. Written notice of such termination or partial termination, setting forth the date and terms thereof, shall be given to the Administrative Committee. Upon a termination of the Plan, whether in writing or in operation, or upon a complete discontinuance of allocations thereunder, (i) the Administrative Committee shall remain in existence and (ii) all of the provisions of the Plan shall remain in full force to the extent not inconsistent with the termination, so long as Individual Investment Accounts remain unpaid. 11.3 Distribution of Special Trust Fund. Upon termination of the Plan, the Company, in its sole discretion, may elect to terminate the Trust. Upon termination of the Plan, the Company, in its sole discretion, may elect to distribute the balance of each Participant's Individual Investment Account. Such distribution may be (i) in the form pursuant to the Benefit Distribution -13- 19 Election made by the Participant under Section 4.7 above, including any subsequent changes if allowed pursuant to Section 4.8 above or (ii) in a lump sum payment. In such event the payment of each Participant's Individual Investment Account to such Participant or Beneficiary shall commence or be made, as the case may be, as soon as practicable after the determination of the value of the Participant's Individual Investment Account. 12. MISCELLANEOUS PROVISIONS 12.1 Construction. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the Commonwealth of Kentucky without reference to principles of conflict of laws, except as may be preempted by ERISA or other Federal law. 12.2 Limitation of Rights. The establishment and maintenance of the Plan shall not be deemed to constitute a contract of employment between the Company and any Executive, and nothing herein contained shall be deemed to give to any Executive the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge any Executive at any time. 12.3 Return of Contributions or Benefits. Any Deferral Contribution contributed by the Company under a mistake of fact, or any Benefit paid by the Trustee or the Company under a mistake in fact, shall be returned to the Company within six years after the payment of the Deferral Contribution or Benefit. 12.4 Severability. If a court of competent jurisdiction holds any provision of the Plan to be invalid or unenforceable, the remaining provisions of the Plan shall continue to be fully effective. 12.5 Representations. The Company does not represent or guarantee that any particular federal or state income, payroll, personal property or other tax consequence will result from participation in the Plan. A Participant should consult with professional tax advisors to determine the tax consequences of his or her participation. In addition, the Company does not represent or guarantee successful investment of Deferral Contributions by the Trustee and shall not be required to restore any loss which may result from such investment or lack of investment. 12.6 Successor Companies. Any business entity which succeeds to all or any part of the business or assets of the Company may, by resolution of its -14- 20 board of directors (or like controlling body), adopt the Plan and shall thereupon succeed to such rights and assume such obligations hereunder as such business entity and the Board shall have agreed upon in writing. -15- EX-10.18 3 EXHIBIT 10.18 1 EXHIBIT 10.18 GENERAL CABLE CORPORATION AND SUBSIDIARIES DEFERRED COMPENSATION PLAN As Adopted Effective April 1, 1996 and Amended and Restated on December 14, 1998 2 GENERAL CABLE CORPORATION AND SUBSIDIARIES DEFERRED COMPENSATION PLAN TABLE OF CONTENTS Section 1 Definitions Section 2 Administration Section 3 Participation Section 4 Contribution Section 5 Vesting Section 6 Special Trust fund Section 7 Participants' Accounts Section 8 Individually Directed Investments Section 9 Benefits Section 10 Special Withdrawals Section 11 Amendment and Termination Section 12 Miscellaneous Provisions 3 GENERAL CABLE CORPORATION AND SUBSIDIARIES DEFERRED COMPENSATION PLAN TABLE OF CONTENTS
1. DEFINITIONS..............................................................................................1 1.1 "Administrative Committee.......................................................................1 1.2 "Beneficiary....................................................................................1 1.3 "Benefit Distribution Election..................................................................1 1.4 "Benefit Equalization Plan......................................................................1 1.5 "Benefit" ......................................................................................1 1.6 "Board".........................................................................................1 1.7 "Bonus..........................................................................................1 1.8 "CEO"...........................................................................................2 1.9 "Claimant.......................................................................................2 1.10 "Code...........................................................................................2 1.11 "Compensation...................................................................................2 1.12 "Compensation Deferral Limit"...................................................................2 1.13 "Company........................................................................................2 1.14 "Deferral Contribution..........................................................................2 1.15 "Disability.....................................................................................2 1.16 "Educational Expense............................................................................2 1.17 "Effective Date.................................................................................2 1.18 "ERISA..........................................................................................2 1.19 "Executive......................................................................................2 1.20 "Final Valuation................................................................................2 1.21 "Individual Investment Account..................................................................3 1.22 "Pay Date.......................................................................................3 1.23 "Participant....................................................................................3 1.24 "Plan...........................................................................................3 1.25 "Plan Year......................................................................................3 1.26 "Retirement" or "Retires........................................................................3 1.27 "Retirement Plan"...............................................................................3 1.28 "Salary.........................................................................................3 1.29 "Special Trust Fund.............................................................................3 1.30 "Subsidiary.....................................................................................3 1.31 "Trust..........................................................................................3 1.32 "Trust Agreement................................................................................4 1.33 "Trustee........................................................................................4 1.34 "Unforeseen Emergency...........................................................................4 1.35 "Executive Officer".............................................................................4 1.36 "Restricted Stock...............................................................................4 1.37 "Restricted Stock Agreement.....................................................................4 1.38 "Stock Incentive Plan...........................................................................4
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1.39 "Director"......................................................................................4 1.40 "Director's Fees"...............................................................................4 1.41 "Stock Award"...................................................................................4 1.42 "Stock Unit"....................................................................................4 2. ADMINISTRATION...........................................................................................5 2.1 Administrative Committee........................................................................5 2.2 Plan Administration.............................................................................5 2.3 Administration Expenses. ......................................................................5 2.4 Liability. ....................................................................................5 2.5 Self-Interest...................................................................................6 2.6 Records. ......................................................................................6 2.7 Claims and Claims Review. .....................................................................6 2.8 Denial of Claim. ..............................................................................6 2.9 Failure to Comply. ............................................................................7 3. PARTICIPATION............................................................................................7 3.1 Eligibility. ..................................................................................7 3.2 Executive Officer Participation. ..............................................................7 3.3 Termination of Executive Officer's Participation. .............................................7 3.4 Participation by Executives Other Than Executive Officers. ....................................7 3.5 Termination of Participation for Executives Other Than Executive Officers. ...........................................................................7 3.6 Waiver of Participation. ......................................................................8 4. CONTRIBUTIONS............................................................................................8 4.1 Deferral Contribution of Compensation and Director's Fees. .....................................8 4.2 Deferral Contributions for Plan Year Ending on December 31, 1996. .............................8 4.3 Deferral Contributions for Participation That Begins After Beginning of Plan Year. ....................................................................................9 4.4 Right to Make Contributions. ..................................................................9 4.5 Application of Contributions. .................................................................9 4.6 Benefit Distribution Election. ................................................................9 4.7 Change of Benefit Distribution Election. .....................................................10 4.8 Deferral Contribution of Restricted Stock......................................................10 4.9 Special Election for Outstanding Restricted Stock. ...........................................10 4.10 Deferral Contribution of Stock Awards and Stock Units..........................................11 4.11 Change in Deferral Election....................................................................11 5. VESTING.................................................................................................11 5.1 Vesting of Contributions. ....................................................................11 6. SPECIAL TRUST FUND......................................................................................11 6.1 Special Trust Fund. ..........................................................................11 6.2 Investment of Special Trust Fund. ............................................................12 6.3 Determination of Fair Market Value. ..........................................................12
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6.4 Change in Control..............................................................................12 7. PARTICIPANTS' ACCOUNTS..................................................................................12 7.1 Individual Investment Accounts.................................................................12 7.2 Valuation......................................................................................12 8. INDIVIDUALLY DIRECTED INVESTMENTS.......................................................................13 8.1 No Right to Direct Investments. ..............................................................13 8.2 Right to Make Recommendations. ...............................................................13 9. BENEFITS................................................................................................13 9.1 Retirement. ..................................................................................13 9.2 Death. .......................................................................................13 9.3 Disability. ..................................................................................13 9.4 Termination of Participant's Employment. .....................................................14 9.5 Mandatory Lump Sum Payment. ..................................................................14 9.6 Failure of Trustee to Pay Benefit. ...........................................................14 9.7 Tax Withholding. .............................................................................14 9.8 Spendthrift Provision. .......................................................................15 9.9 Participants' Status as General Unsecured Creditors. .........................................15 9.10 Director's Benefits............................................................................15 10. SPECIAL WITHDRAWALS.....................................................................................15 10.1 Hardship Withdrawals. ........................................................................15 10.2 Educational Withdrawals........................................................................15 11. AMENDMENT AND TERMINATION...............................................................................16 11.1 Amendment......................................................................................16 11.2 Termination....................................................................................16 11.3 Distribution of Special Trust Fund.............................................................16 12. MISCELLANEOUS PROVISIONS................................................................................16 12.1 Construction. ................................................................................16 12.2 Limitation of Rights. ........................................................................17 12.3 Return of Contributions or Benefits............................................................17 12.4 Severability...................................................................................17 12.5 Representations................................................................................17 12.6 Successor Companies............................................................................17
6 GENERAL CABLE CORPORATION AND SUBSIDIARIES DEFERRED COMPENSATION PLAN W I T N E S S E T H ------------------- WHEREAS, General Cable Corporation wishes to establish and adopt a deferred compensation plan that will provide retirement benefits to certain executives; and WHEREAS, General Cable Corporation intends that this deferred compensation plan be (i) a nonqualified deferred compensation plan for purposes of Section 401(a) of the Internal Revenue Code of 1986, as amended, and (ii) an unfunded plan which is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended; and NOW, THEREFORE, effective as of April 1, 1996, General Cable Corporation hereby establishes the General Cable Corporation and Subsidiaries Deferred Compensation Plan. 1. DEFINITIONS 1.1 "Administrative Committee" shall mean the committee appointed by the Board to administer the Plan pursuant to Section 2.1 below. 1.2 "Beneficiary" shall mean the person designated in writing by a Participant to be entitled to receive a Death Benefit in the event of the Participant's death pursuant to Section 9.2 below. 1.3 "Benefit Distribution Election" shall mean the election by a Participant of a Benefit distribution option pursuant to Section 4.7 below. 1.4 "Benefit Equalization Plan" shall mean the General Cable Corporation and Subsidiaries Benefit Equalization Plan, as adopted effective July 1, 1992. 1.5 "Benefit" shall mean the benefit payable to a Participant or Beneficiary pursuant to Section 9 below. 1.6 "Board" shall mean the board of directors of the Company. 1.7 "Bonus" shall mean the annual incentive bonus paid to a Participant in respect of a Plan Year without taking into account (i) deferrals made to all Company retirement and/or deferred compensation plans and (ii) deferrals made pursuant to Code Section 125. -1- 7 1.8 "CEO" shall mean the chief executive officer of the Company. 1.9 "Claimant" shall mean a person making a claim pursuant to Section 2.7 below. 1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto. 1.11 "Compensation" shall mean (i) Salary and/or (ii) Bonus, paid to a Participant in respect of a Plan Year. 1.12 "Compensation Deferral Limit" shall mean 100 percent of a Participant's Salary with respect to a Plan Year. 1.13 "Company" shall mean General Cable Corporation, a Delaware corporation, and its Subsidiaries. 1.14 "Deferral Contribution" shall mean a contribution by the Company to the Trust of a portion of a Participant's Compensation, Restricted Stock, Stock Awards and/or Stock Units pursuant to Article 4 below. With respect to a Participant who is a Director, Deferral Contribution shall mean a contribution by the Company to the Trust, pursuant to Article 4 below, of all or any portion of Director's Fees or Stock Awards payable to such Director. 1.15 "Disability" shall mean a disability as defined under the Company's then existing long-term disability plan or program. 1.16 "Educational Expense" shall mean an expense incurred by the Participant with respect to the education of the Participant and/or any member of the Participant's immediate family. 1.17 "Effective Date" shall mean April 1, 1996. 1.18 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto. 1.19 "Executive" shall mean all Executive Officers and any other employee of the Company who performs managerial and/or executive services. 1.20 "Final Valuation" shall mean the fair market value of the assets of the Special Trust Fund allocated to each Participant's Individual Investment -2- 8 Account as of the date immediately following the date of the Participant's Retirement, death or termination of employment. 1.21 "Individual Investment Account" shall mean an notional investment account established and maintained for each Participant pursuant to Section 7.1 below. 1.22 "Pay Date" shall mean the date a Participant is paid Compensation or Director's Fees in accordance with the standard payroll practices of the Company. 1.23 "Participant" shall mean an Executive or a Director who is a participant in the Plan. 1.24 "Plan" shall mean the General Cable Corporation and Subsidiaries Deferred Compensation Plan. 1.25 "Plan Year" shall mean the twelve-month period beginning each June 1 and ending the subsequent May 31. The Plan Year that begins on January 1, 1997 shall end on May 31, 1997. 1.26 "Retirement" or "Retires" shall mean a retirement by the Participant under the Retirement Plan. 1.27 "Retirement Plan" shall mean the General Cable Corporation Retirement and Savings Plan, effective January 1, 1994. 1.28 "Salary" shall mean the annualized base compensation paid to a Participant determined as of each May 1st. A Participant's Salary is not reduced by amounts deferred under the Company's retirement plan(s), deferred compensation plan(s) and/or plans subject to Code Section 125. 1.29 "Special Trust Fund" shall mean the assets of the Trust held by the Trustee under the Trust Agreement that are allocable to (i) Deferral Contributions made by the Company to the Trust pursuant to Section 4 below and (i) income resulting from such Deferral Contributions. 1.30 "Subsidiary" shall mean a corporation of which the Company owns more than 50 percent of such corporation's common stock or any other business entity in which the Company directly or indirectly has an ownership interest of more than 50 percent. 1.31 "Trust" shall mean the General Cable Corporation Rabbi Trust, as established by the Trust Agreement. -3- 9 1.32 "Trust Agreement" shall mean the General Cable Corporation Rabbi Trust Agreement by and between General Cable Corporation and NationsBank of North Carolina, N.A., dated May 2, 1994, as amended from time to time, or any successor trust agreement. 1.33 "Trustee" shall mean the trustee or trustees designated as such pursuant to the Trust Agreement. 1.34 "Unforeseen Emergency" shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant or Beneficiary and that would result in severe financial hardship to the individual if early withdrawal were not permitted. 1.35 "Executive Officer" shall mean the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and General Counsel. 1.36 "Restricted Stock" shall mean common stock of the Company which is awarded to an Executive pursuant to the Stock Incentive Plan subject to restrictions as set forth in the Executive's Restricted Stock Agreement. 1.37 "Restricted Stock Agreement" shall mean an agreement between the Company and an Executive which sets forth the terms and conditions under which shares of the common stock of the Company shall be granted to such Executive. 1.38 "Stock Incentive Plan" shall mean the General Cable Corporation 1997 Stock Incentive Plan. 1.39 "Director" shall mean any individual who is a member of the Board provided that such individual is not an employee of the Company. 1.40 "Director's Fees" shall mean payments to a Director as remuneration for his or her services as a Director exclusive of Stock Awards. 1.41 "Stock Award" shall mean common stock of the Company which is awarded to an Executive or Director. 1.42 "Stock Unit" shall mean a notional account representing one share of common stock of the Company. -4- 10 2. ADMINISTRATION 2.1 Administrative Committee. The Board shall appoint an Administrative Committee which shall consist of such number of persons as shall from time to time be determined by the Board. Members of the Administrative Committee may be employees of the Company and shall hold office at the pleasure of the Board and shall serve without compensation unless otherwise directed by the Board. Any member of the Administrative Committee may resign by giving notice thereof to the Company and to the Administrative Committee and such resignation shall become effective at delivery or at any later date specified therein. 2.2 Plan Administration. The Administrative Committee shall be charged with overseeing the operation and administration of the Plan, including making determinations with respect to payment of benefits and deciding any dispute arising under the Plan. The Administrative Committee shall have all the powers necessary to discharge its duties under the Plan, but not by way of limitation, the power to hire consultants for the Plan and the power to interpret or construe the Plan. The Administrative Committee may delegate to any agent such duties and powers, both ministerial and discretionary, as it deems appropriate; provided, however, that all disputes arising under the Plan shall be determined by the Administrative Committee. In exercising any discretion, the Administrative Committee shall have sole, absolute and discretionary authority, final and binding on all Participants and all other parties to the maximum extent allowed by law. A majority of the Administrative Committee then in office shall constitute a quorum for the transaction of business. Any determination of the Administrative Committee shall be made by a majority of the members then in office and such determination shall be final. If there are only two members and they are unable to agree, any action required of the Administrative Committee shall be decided by the Board, and its decision shall be final. 2.3 Administration Expenses. The members of the Administrative Committee shall be reimbursed by the Company for any necessary expenditures incurred in the discharge of their duties as members of the Administrative Committee. The compensation, if any, of all agents, counsel or other persons retained or employed by the Administrative Committee shall be subject to the approval of the Company and shall be paid by the Company. 2.4 Liability. The members of the Administrative Committee and the Company shall be entitled to rely upon all valuations, certificates and reports furnished by any trustee,, insurer, actuary, accountant or physician -5- 11 selected by the Administrative Committee and approved by the Company, and upon all opinions given by any legal counsel selected by the Administrative Committee and approved by the Company or selected by the Company, and the members of the Administrative Committee and the Company shall be fully protected with respect to any action taken or suffered by their having relied in good faith upon such trustee, insurer, actuary, physician or counsel and all action so taken or suffered shall be conclusive upon each of them and upon all Participants and former Participants and their Beneficiaries and all other persons. 2.5 Self-Interest. No member of the Administrative Committee shall have any right to vote or decide upon any matter relating solely to himself or herself, or solely to any of his or her fights or benefits under the Plan, unless such member is the only member of the Administrative Committee. 2.6 Records. The Administrative Committee shall keep or cause to be kept a record of all of its proceedings and shall keep or cause to be kept such other records and data as may be necessary for the administration of the Plan and to determine the amount of all Benefits payable hereunder. 2.7 Claims and Claims Review. If any Participant or Beneficiary, or their legal representative, has a claim for Benefits which is not being paid, such Claimant may file a written claim with the Administrative Committee setting forth the amount and nature of the claim, supporting facts, and the Claimant's address. Written notice of the disposition of a claim by the Administrative Committee shall be furnished to the Claimant within 90 days after the claim is filed. In the event of special circumstances, the Administrative Committee may extend the period for determination for up to an additional 90 days, in which case it shall so advise the Claimant. If the claim is denied, the reasons for the denial shall be specifically set forth in writing, pertinent provisions of the Plan shall be cited, including an explanation of the Plan's claim review procedure, and, if the claim is perfectible, an explanation as to how the Claimant can perfect the claim shall be provided. 2.8 Denial of Claim. If a Claimant whose claim has been denied wishes further consideration of his or her claim, he or she may request the Administrative Committee to review his or her claim in a written statement of the Claimant's position filed with the Administrative Committee no later than 60 days after receipt of the written notification provided for in Section 2.7 above. The Administrative Committee shall fully and fairly review the matter and shall promptly advise the Claimant, in writing, of its decision within the next 60 days. Due to special circumstances, the Administrative Committee may extend the period for determination for up to an additional 60 days. -6- 12 2.9 Failure to Comply. Failure on the part of any Participant or Beneficiary to comply with the Administrative Committee's request for information shall be sufficient grounds for delay in the payment of Benefits until such information is received. 3. PARTICIPATION 3.1 Eligibility. Each Executive whose annual compensation is $80,000 or more shall be eligible to participate in the Plan, subject to Sections 3.4 and 4.4 below. In addition, each Director shall be eligible to participate in the Plan. 3.2 Executive Officer Participation. An Executive Officer shall automatically become a Participant in the Plan if his or her participation is provided for in the employment agreement between such Executive Officer and the Company. 3.3 Termination of Executive Officer's Participation. An Executive Officer shall remain a Participant until the earlier of: (i) the date the Executive Officer is notified in writing by the Compensation Committee of the Board that, pursuant to the terms of his or her employment contract, he or she is not a Participant in the Plan; or (ii) the date the entire amount of the Benefit is distributed to the Executive Officer or, in the event of the Executive Officer's death, to his or her Beneficiary. An Executive Officer who has been terminated as a Participant shall continue to be entitled to: (i) receive Benefits pursuant to Section 9 below; and (ii) make recommendations pursuant to Section 8.2 below. 3.4 Participation by Executives Other Than Executive Officers. An Executive, other than an Executive who is an Executive Officer, shall participate in this Plan only if such Executive has been selected by the CEO, in the exercise of his or her sole discretion, for participation in the Plan. 3.5 Termination of Participation for Executives Other Than Executive Officers. An Executive other than an Executive Officer who has become a Participant shall remain a Participant until the earlier of (i) the date the Executive is notified in writing by the CEO that he or she no longer is a Participant or (ii) the date the entire amount of the Benefit is distributed to the Participant or - in the event of the Participant's death - to his or her Beneficiary. An Executive who has been terminated as a Participant shall continue to be entitled to (i) receive Benefits pursuant to Section 9 below and (ii) make recommendations pursuant to Section 8.2 below. -7- 13 3.6 Waiver of Participation. An Executive may waive participation in the Plan with respect to any Plan Year by executing a written waiver of participation and providing it to the Company. Any such waiver of participation shall be irrevocable. 4. CONTRIBUTIONS 4.1 Deferral Contribution of Compensation and Director's Fees. (a) DEFERRAL OF COMPENSATION: Prior to the first day of a Plan Year, a Participant may elect, in a written notification to the Company to defer: (i) a percentage of his or her Compensation; or (ii) a specific dollar amount from his or her Compensation, up to the Compensation Deferral Limit. Deferral Contributions may be taken from Salary, Bonus or from a combination of both, as specified by the Participant in his or her written deferral election. That portion of a Deferral Contribution which consists of Compensation shall be contributed to the Trust and allocated to the Participant's Individual Investment Account on or about each Pay Date applicable to the payment of the Compensation. This Section shall not apply to the deferral of Restricted Stock, Stock Awards or Stock Units. The deferral of Restricted Stock, Stock Awards or Stock Units shall be governed by Section 4.8 and Section 4.10 of the Plan. (b) DEFERRAL OF DIRECTOR'S FEES: Prior to the first day of a calendar year, a Participant who is a Director may elect, in a written notification to the Company, to defer all or any portion of his or her Director's Fees payable in such calendar year. 4.2 Deferral Contributions for Plan Year Ending on December 31, 1996. With respect to the Plan Year ending on December 31, 1996, a Participant may elect in a written notification to the Company to defer (i) a percentage of his or her Compensation or (ii) a specific dollar amount from his or her Compensation, up to the Compensation Deferral Limit; provided, however, that the Company receives such written notification prior to April 30, 1996. For purposes of this Section 4.2, only Compensation earned by the Participant after the date the Participant elects to defer shall be subject to deferral. The amount that the Participant elects to defer shall be contributed by the Company to the Trust. Deferral Contributions may be taken from Salary or Bonus or from a combination of both, as specified by the Participant in his or her written deferral election. Deferral -8- 14 Contributions shall be contributed by the Company to the Trust and allocated to the Participant's Individual Investment Account on or about each Pay Date applicable to the payment of the Compensation. 4.3 Deferral Contributions for Participation That Begins After Beginning of Plan Year. In the event an Executive becomes a Participant after the beginning of a Plan Year, such Participant may elect in a written notification to the Company to defer (i) a percentage of his or her Compensation or (ii) a specific dollar amount from his or her Compensation, up to the Compensation Deferral Limit; provided, however, that the Company receives such written notification prior to the end of the 30-day period following the date the Executive becomes a Participant. For purposes of this Section 4.3, only Compensation earned by the Participant after the date the Participant elects to defer shall be subject to deferral. The amount that the Participant elects to defer shall be contributed by the Company to the Trust. Deferral Contributions may be taken from Salary or Bonus or from a combination of both, as specified by the Participant in his or her written deferral election. Deferral Contributions shall be contributed by the Company to the Trust and allocated to the Participant's Individual Investment Account on or about each Pay Date applicable to the payment of the Compensation. 4.4 Right to Make Contributions. A Participant who is a participant in the Retirement Plan at the time he or she elects to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above shall make such election to defer only if the Participant has elected to defer the maximum amount of Compensation (as such term is defined in Section 1.13 of the Retirement Plan) which such Participant may defer as a Before-Tax Deferral (as such term is defined in Section 1.5 of the Retirement Plan) under the Retirement Plan. The above notwithstanding, a Participant may elect to defer Restricted Stock, Stock Awards or Stock Units regardless of whether he or she has elected to make a deferral under the Retirement Plan. 4.5 Application of Contributions. The Administrative Committee shall establish procedures whereby amounts deferred by a Participant shall first be applied as excess contributions with respect to amounts that otherwise would have qualified as a Before-Tax Deferral under the Retirement Plan but for the limitation on contributions imposed by Article 4 of the Retirement Plan. 4.6 Benefit Distribution Election. At the time the Participant elects to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above, the Participant shall also make a Benefit Distribution Election, subject to -9- 15 Sections 9.5 and 10.2, which shall apply to all Deferral Contributions for a specific Plan Year. The Participant shall elect one of the following two Benefit distribution options: (a) Option A: a lump sum payment; or (b) Option B: equal annual installments from between one and ten years. 4.7 Change of Benefit Distribution Election. With respect to a Participant who wishes to change his or her Benefit Distribution Election subsequent to delivering the written notification electing to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above, the Administrative Committee shall establish procedures to permit or deny the Participant from making such change. 4.8 Deferral Contribution of Restricted Stock. A Participant may elect, in a written notification to the Company, to contribute all or any portion of his or her Restricted Stock which is granted in a Plan Year. Such election must be made before the date on which all restrictions on transferability under the applicable Restricted Stock Agreement lapse and before the first day of the Plan Year in which restrictions on the Restricted Stock terminate or are satisfied. Upon such election, the appropriate number of shares of common stock of the Company (or, at the discretion of the Company, the cash equivalent of such shares) shall be credited to a sub-account of the Participant's Individual Investment Account. Any restrictions on transferability and/or events of forfeiture applicable to such Restricted Stock under the Restricted Stock Agreement shall continue in full force and effect with regard to amounts allocated to the sub-account. Upon expiration of all restrictions on transferability, the sub-account shall be eliminated and the common stock of the Company (or its cash equivalent) shall be administered as part of the Participant's Individual Investment Account. 4.9 Special Election for Outstanding Restricted Stock. Except as noted otherwise below, a Participant may also elect, in a written notification to the Company, to contribute all or any portion of his or her Restricted Stock granted pursuant to a Restricted Stock Agreement which is in effect on May 20, 1998. Such election must be made before the date on which all restrictions on transferability under the applicable Restricted Stock Agreement lapse and within thirty (30) days following the effective date of this amendment. With respect to Restricted Stock which: (i) was granted as provided in the prospectus relating to the initial public offering of common stock of the Company and (ii) contains restrictions on -10- 16 transferability which lapse on or after January 1, 2000; such election must be made before June 1, 1999. 4.10 Deferral Contribution of Stock Awards and Stock Units. A Participant may elect, in a written notification to the Company, to contribute all or any portion of his or her Stock Awards or Stock Units granted in a Plan Year. Such election must be made before the first day of the Plan Year in which the Stock Awards or Stock Units are granted except for Stock Awards or Stock Units subject to restrictions or conditions which will be governed by Section 4.8. A Participant who is a Director may elect, in a written notification to the Company, to contribute all or any portion of his or her Stock Awards granted in a calendar year. Such election must be made before the first day of the calendar year in which the Stock Awards are granted except as otherwise provided. Upon an election to defer Stock Awards and/or Stock Units, the appropriate number of shares of common stock of the Company (or, at the discretion of the Company, the cash equivalent of such shares) shall be credited to a sub-account of the Participant's Individual Investment Account. 4.11 Change in Deferral Election. Except as otherwise provided herein or as permitted by the Administrative Committee, Compensation deferral elections by Participants may not be changed and are intended to be irrevocable. The Administrative Committee may establish additional procedures and/or limitations as it deems necessary to facilitate the administration of this Section. 5. VESTING 5.1 Vesting of Contributions. Each Participant shall be fully vested in all Deferral Contributions which have been contributed by the Company to the Trust and allocated to a Participant's Individual Investment Account. 6. SPECIAL TRUST FUND 6.1 Special Trust Fund. The Benefits payable under the Plan pursuant to Section 9 below shall first be provided by the Special Trust Fund. The Special Trust Fund shall consist of all Deferral Contributions, all investments made therewith, all proceeds thereof and all earnings and profits thereon, less payments made therefrom, all of which shall be accounted for separately from any and all contributions contributed by the Company to the Trust under the Benefit Equalization Plan. The Special Trust Fund shall be held in accordance with the Plan and the Trust Agreement entered into between the Company and the Trustee. The -11- 17 Trust Agreement may from time to time be amended in the manner therein provided. 6.2 Investment of Special Trust Fund. The Special Trust Fund, both principal and income, shall be invested by the Trustee in stocks (including common stock of General Cable Corporation), bonds, securities or other investments, including insurance company group annuity contracts pursuant to the terms of the Trust Agreement. 6.3 Determination of Fair Market Value. The Trustee shall determine the fair market value of the assets of the Special Trust Fund as of the last day of each calendar quarter, and a statement of the cost and fair market value of the assets comprising the Special Trust Fund shall be promptly provided to the Company. 6.4 Change in Control. In the event of a Change in Control, as defined in the General Cable Corporation Rabbi Trust Agreement, obligations of the Employer and any successor thereto with regard to the Special Trust Fund shall be determined pursuant to the terms of the General Cable Corporation Rabbi Trust Agreement. 7. PARTICIPANTS' ACCOUNTS 7.1 Individual Investment Accounts. The Trustee shall establish and cause to be maintained a separate account for each Participant to be known as the Participant's Individual Investment Account, which shall consist of: (a) Deferral Contributions allocable to the Participant; and (b) the Participant's allocable share of the income and expenses and realized and unrealized gains and losses of the Special Trust Fund. Participants' Individual Investment Accounts shall be established by the Company for bookkeeping purposes only, and no separate funds shall be segregated by the Company for the benefit of the Participant, except under the terms of the Trust. 7.2 Valuation. The Trustee shall determine the fair market value of the assets of the Special Trust Fund allocated to each Participant's Individual Investment Account as of the last day of each calendar quarter, and a statement of such fair market value shall be promptly provided to the Participant. In addition, the Trustee shall determine the Final Valuation with respect to the fair market value of the assets of the Special Trust Fund allocated to each Participant's Individual Investment Account as of -12- 18 the date immediately following the date of the Participant's Retirement, death or termination of employment. 8. INDIVIDUALLY DIRECTED INVESTMENTS 8.1 No Right to Direct Investments. A Participant shall not have the right to exercise independent control over the assets in the Special Trust Fund allocated to his or her Individual Investment Account. 8.2 Right to Make Recommendations. The Administrative Committee shall establish procedures so that a Participant may recommend to the Trustee in writing or by any other means regarding any and all actions that the Participant desires the Trustee to take with respect to the assets in the Special Trust Fund allocated to his or her Individual Investment Accounts. The above notwithstanding, a Participant shall have no right to make recommendations with regard to that portion of his or her Individual Investment Account which consists of Restricted Stock, Stock Awards or Stock Units. 9. BENEFITS 9.1 Retirement. The Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to each Participant who Retires. The Benefit shall be based on the Final Valuation. The Benefit shall be paid pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above. Payment of the Benefit shall commence not later than the first day of the third month following the date the Participant Retires. 9.2 Death. In the event of the death of the Participant prior to the Participant's Retirement or termination of employment, the Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to the Beneficiary. The Benefit shall be based on the Final Valuation. The Benefit shall be paid in a lump sum not later than the first day of the third month following the date of death. 9.3 Disability. In the event that a Participant's employment is terminated due to Disability prior to his or her Retirement, the Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to each Participant whose employment is terminated due to Disability. The Benefit shall be based on the Final Valuation. The Benefit shall be paid pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above. Payment of -13- 19 the Benefit shall commence not later than the first day of the third month following the date the Participant's employment terminates. 9.4 Termination of Participant's Employment. In the event that a Participant's employment is terminated for any reason other than Retirement under Section 9.1 above, death under Section 9.2 above or Disability under Section 9.3 above, the Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Participant's Individual Investment Account to each Participant whose employment terminates. The Benefit shall be based on the Final Valuation. The Benefit shall be paid pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above. Payment of the Benefit shall commence not later than the first day of the third month following the date the Participant's employment terminates. 9.5 Mandatory Lump Sum Payment. Notwithstanding anything contained in the Plan to the contrary, if the Final Valuation of a Participant's Individual Investment Account as of the date immediately following the date of the Participant's Retirement (pursuant to Section 9.1 above), death (pursuant to Section 9.2 above) or termination of employment (pursuant to Section 9.3 or 9.4 above) is below $25,000, then the Benefit shall be paid in a lump sum irrespective of the Participant's Benefit Distribution Election. In addition, if the Participant is required under the terms of the Benefit Equalization Plan to receive a benefit under the Benefit Equalization Plan in a lump sum, then the Benefit shall be paid as a lump sum irrespective of the Participant's Benefit Distribution Election. 9.6 Failure of Trustee to Pay Benefit. Notwithstanding anything contained in the Plan to the contrary, the Company shall be obligated to pay the Benefit to the Participant or Beneficiary pursuant to this Section 9 in the event the Trustee fails to pay the Benefit to the Participant or Beneficiary from the Special Trust Fund. 9.7 Tax Withholding. The Company has the right to withhold taxes from any payment made pursuant to this Plan or make such other provisions as it deems necessary or appropriate to satisfy its obligations to withhold federal, state, local or foreign income or other taxes incurred by reason of Benefit payments or accruals pursuant to this Plan. In lieu thereof, the Company shall have the fight, to the extent permitted by law, to withhold the amount of any such taxes from any other amounts payable by the Company to the Participant upon such terms and conditions as the Administrative Committee shall prescribe. The Company shall notify the Trustee of any tax withholding obligation. Upon payment of any Benefit by the Trustee, the Trustee shall first deduct from the amount of the -14- 20 Benefit such amount designated by the Company to be withheld, and the Trustee shall pay such designated amount to the Company. The Company shall have the fight to require a Participant, former Participant or Beneficiary who has received a Benefit under the Plan to reimburse the Company for any taxes subsequently required to be withheld or otherwise deducted or paid by the Company in respect of such Benefit previously paid to such Participant, former Participant or Beneficiary. 9.8 Spendthrift Provision. No Benefit payable under this Plan shall be subject in any manner by the Participant or Beneficiary or creditors of any Participant or Beneficiary to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. 9.9 Participants' Status as General Unsecured Creditors. Participants shall have the status of general unsecured creditors of the Company. The obligations of the Company to pay Benefits under the Plan constitute a mere promise by the Company to make such Benefit payments. 9.10 Director's Benefits. The Trustee shall pay a Benefit from the assets of the Special Trust Fund allocable to the Individual Investment Account of each Participant who is a Director upon his or her termination of service as a Director. The Benefit shall be paid as provided in Section 9.1. 10. SPECIAL WITHDRAWALS 10.1 Hardship Withdrawals. In an event of an Unforeseen Emergency, a Participant may withdraw from his or her Individual Investment Account an amount (i) equal to or less than the aggregate of all Deferral Contributions and (ii) necessary to meet the Unforeseen Emergency. The Administrative Committee shall establish procedures to effect such Withdrawals. In addition, the withdrawal shall be subject to the rules and conditions contained in the regulations promulgated under Code Section 457, Treasury Regulation Sections 1.457-2(h)(4) and (5); provided, however, that such rules and conditions are consistent with the Plan. 10.2 Educational Withdrawals. Notwithstanding anything contained in this Plan to the contrary, a Participant may elect at the time he or she elects to make Deferral Contributions pursuant to Section 4.1, 4.2 or 4.3 above to withdraw at a specified date or dates a specified amount from his or her Individual Investment Account for the purposes of paying a Participant's Educational Expenses with respect to any designated Plan Year. The Administrative Committee shall establish procedures to effect such Withdrawals. A Participant may not elect to withdraw that portion of his or -15- 21 her Individual Investment Account which consists of Restricted Stock, Stock Awards or Stock Units. 11. AMENDMENT AND TERMINATION 11.1 Amendment. The Company may amend the Plan at any time and from time to time and any amendment may have retroactive effect, including, without limitation, amendments to the amount of contributions; provided, however, that no amendment shall (i) reduce the value of a Participant's Individual Investment Account or (ii) change the form or timing of payment of the Benefit with respect to contributions contributed prior to the date of amendment. 11.2 Termination. While the Plan is intended to be permanent, the Company may at any time terminate or partially terminate the Plan. Written notice of such termination or partial termination, setting forth the date and terms thereof, shall be given to the Administrative Committee. Upon a termination of the Plan, whether in writing or in operation, or upon a complete discontinuance of allocations thereunder, (i) the Administrative Committee shall remain in existence and (ii) all of the provisions of the Plan shall remain in full force to the extent not inconsistent with the termination, so long as Individual Investment Accounts remain unpaid. 11.3 Distribution of Special Trust Fund. Upon termination of the Plan, the Company, in its sole discretion, may elect to terminate the Trust. Upon termination of the Plan, the Company, in its sole discretion, may elect to distribute the balance of each Participant's Individual Investment Account. Such distribution may be (i) in the form pursuant to the Benefit Distribution Election made by the Participant under Section 4.7 above, including any subsequent changes if allowed pursuant to Section 4.8 above or (ii) in a lump sum payment. In such event the payment of each Participant's Individual Investment Account to such Participant or Beneficiary shall commence or be made, as the case may be, as soon as practicable after the determination of the value of the Participant's Individual Investment Account. 12. MISCELLANEOUS PROVISIONS 12.1 Construction. All questions pertaining to the construction, regulation, validity and effect of the provisions of the Plan shall be determined in accordance with the laws of the Commonwealth of Kentucky without reference to principles of conflict of laws, except as may be preempted by ERISA or other Federal law. -16- 22 12.2 Limitation of Rights. The establishment and maintenance of the Plan shall not be deemed to constitute a contract of employment between the Company and any Executive, and nothing herein contained shall be deemed to give to any Executive the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge any Executive at any time. 12.3 Return of Contributions or Benefits. Any Deferral Contribution contributed by the Company under a mistake of fact, or any Benefit paid by the Trustee or the Company under a mistake in fact, shall be returned to the Company within six years after the payment of the Deferral Contribution or Benefit. 12.4 Severability. If a court of competent jurisdiction holds any provision of the Plan to be invalid or unenforceable, the remaining provisions of the Plan shall continue to be fully effective. 12.5 Representations. The Company does not represent or guarantee that any particular federal or state income, payroll, personal property or other tax consequence will result from participation in the Plan. A Participant should consult with professional tax advisors to determine the tax consequences of his or her participation. In addition, the Company does not represent or guarantee successful investment of Deferral Contributions by the Trustee and shall not be required to restore any loss which may result from such investment or lack of investment. 12.6 Successor Companies. Any business entity which succeeds to all or any part of the business or assets of the Company may, by resolution of its board of directors (or like controlling body), adopt the Plan and shall thereupon succeed to such rights and assume such obligations hereunder as such business entity and the Board shall have agreed upon in writing. -17- EX-21.1 4 EXHIBIT 21.1 1 EXHIBIT 21.1 GENERAL CABLE CORPORATION AND SUBSIDIARIES LIST OF SUBSIDIARIES JURISDICTION NAME OF INCORPORATION ---- ---------------- GK Technologies, Inc. New Jersey General Cable Industries, Inc. Delaware General Cable de Mexico del Norte Mexico General Cable Resources Corp. Delaware Genca Corporation Delaware Marathon Manufacturing Holdings, Inc. Delaware General Cable Company Canada, Ltd. Ontario, Canada General Cable Technologies Corp. Delaware General Cable Export Sales Corp. Barbados Carol Cable, Ltd. England Carol Cable Europe, Ltd. England General Cable Holdings de Mexico Mexico General Cable Industries L.L.C. Delaware General Photonics L.L.C. (50% owned) Delaware Diversified Contractors, Inc. Delaware MLTC Company Delaware Marathon Steel Co. Arizona EX-23.1 5 EXHIBIT 23.1 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT GENERAL CABLE CORPORATION We consent to the incorporation by reference in Registration Statements No. 333-28965, 333-31865, 333-31867, 333-31869, and 333-31871 of General Cable Corporation on Forms S-8 of our report dated January 28, 1999 appearing in this Annual Report on Form 10-K of General Cable Corporation for the year ended December 31, 1998. DELOITTE & TOUCHE LLP Cincinnati, Ohio March 23, 1999 EX-27.1 6 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DECEMBER 31, 1998 CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 3,400 0 170,400 7,000 198,500 390,300 269,800 59,000 651,000 156,500 0 0 0 400 176,800 651,000 1,150,500 1,150,500 900,700 900,700 0 0 16,600 113,900 42,700 71,200 0 0 0 71,200 1.93 1.90
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