-----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, H9IGaXuwRUZBPil07jvYRUrNT5rw+A0s8uIDUtreFWLEoQKmT45kQJViRjRXEqvO +pb+Mlg7rb45PE5Lu7fhsQ== 0000950134-00-002149.txt : 20000322 0000950134-00-002149.hdr.sgml : 20000322 ACCESSION NUMBER: 0000950134-00-002149 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL WIRE GROUP INC CENTRAL INDEX KEY: 0000947429 STANDARD INDUSTRIAL CLASSIFICATION: DRAWING AND INSULATING NONFERROUS WIRE [3357] IRS NUMBER: 431705942 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 033-93970 FILM NUMBER: 574096 BUSINESS ADDRESS: STREET 1: 101 SOUTH HANLEY RD STREET 2: STE 1075 CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3147261323 10-K405 1 FORM 10-K FOR FISCAL YEAR END DECEMBER 31, 1999 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________ TO ___________ COMMISSION FILE NUMBER 33-93970 ------------------------------------ INTERNATIONAL WIRE GROUP, INC. (Exact name of registrant as specified in its charter) DELAWARE 43-1705942 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 101 SOUTH HANLEY ROAD, ST. LOUIS, MISSOURI 63105 (Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 719-1000 Securities registered pursuant to Section 12(b) of the Act: NONE 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for at least the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will 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 this Form 10-K. [X] State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. NO ESTABLISHED PUBLISHED PUBLIC TRADING MARKET EXISTS FOR THE COMMON STOCK, PAR VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP, INC. ALL OF THE OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP, INC. ARE HELD BY INTERNATIONAL WIRE HOLDING COMPANY. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
OUTSTANDING AT CLASS FEBRUARY 29, 2000 ----- ----------------- Common Stock 1,000
DOCUMENTS INCORPORATED BY REFERENCE NONE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS Information set forth in this Annual Report on Form 10-K regarding expected or possible future events, including statements of the plans and objectives of management for future growth, operations, products and services and statements related to future economic performance, is forward-looking and subject to risks and uncertainties. For those statements, International Wire Group, Inc. (the "Company") claims the protection of the safe harbor for forward-looking statements provided for by Section 21E of the Securities Exchange Act of 1934, as amended. Factors that could affect the future results of the Company and could cause those results to differ materially from those expressed in the forward-looking statements are discussed at greater length herein. Forward-looking statements can be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "seeks," "pro forma," "anticipates" or "intends" or the negative of any thereof or other variations thereof or comparable terminology, or by discussions of strategy or intentions. See Item 7, "Management's Discussion and Analysis of Results of Operations and Financial Condition." PART I ITEM 1. BUSINESS GENERAL The Company, through its subsidiaries, is a leading designer, manufacturer and marketer of (i) wire products, including bare and tin-plated copper wire and insulated copper wire, and (ii) wire harnesses. The Company's products include a broad spectrum of copper wire configurations and gauges with a variety of electrical and conductive characteristics and are utilized by a wide variety of customers primarily in the appliance, automotive, computer and data communications, and industrial equipment industries. The Company manufactures and distributes its products at 35 facilities located in the United States, Mexico, Italy, the Philippines and France. The Company conducts its operations through two segments: (i) wire products, which includes both bare wire and insulated wire products, and (ii) wire harness products. Wire Products (70% of 1999 net sales) - Bare Wire Products. Bare copper wire products (or conductors) are used to transmit digital, video and audio signals or conduct electricity and are sold to a diverse customer base of approximately 2,000 insulated wire manufacturers and various industrial original equipment manufacturers ("OEMs") for use in computer and data communications products, industrial equipment, appliances, automobiles and other applications. - Insulated Wire Products. Insulated wire products (copper conductors insulated with plastic, rubber or other polymeric compounds) are incorporated in wire harnesses that control and distribute electrical current in automobiles, trucks and appliances. The Company's external sales of insulated wire are primarily to independent wire harness fabricators. These independent wire harness fabricators then sell wire harnesses to automotive and appliance OEMs. The Company divides its customers who manufacture wire harnesses into three broad groups: (a) Tier 1 suppliers to Ford Motor Company and Chrysler Corporation (General Motors Corporation ("GM") continues to purchase the majority of its wire and wire harness products from Delphi Packard, formerly a division of GM that has in-house wire and wire harness manufacturing capability); (b) suppliers to the North American facilities of Japanese automakers, that utilize "thin-wall" insulated wire which complies with Japanese Industrial Standards ("JIS"); and (c) suppliers to appliance OEMs (including the Company's appliance wire harness business). 1 3 Wire Harness Products (30% of 1999 net sales) - Wire harnesses are assemblies of wires that are terminated with connectors, switches or other electrical devices. The Company primarily sells wire harnesses to the major U.S. manufacturers of household appliances such as Amana, Frigidaire, General Electric Company ("GE"), Maytag and Whirlpool. These manufacturers utilize the Company's wire harnesses in the manufacture of refrigerators, washers, dryers, ranges and dishwashers. The principal executive offices of the Company are located at 101 South Hanley Road, Suite 400, St. Louis, Missouri 63105, and the Company's telephone number at such address is (314) 719-1000. BACKGROUND In December 1992, an investor group led by Hicks, Muse, Tate and Furst Incorporated ("Hicks Muse") and Mills & Partners, Inc. ("Mills & Partners") acquired (the "Original Wirekraft Acquisition") Kirtland Indiana, Limited Partnership ("KILP"), which was subsequently renamed Wirekraft Industries, Inc. ("Wirekraft"). KILP was engaged in the manufacturing of insulated wire and fabrication of wire harnesses. In 1993, Wirekraft purchased the wire manufacturing business of Ristance Corporation, a manufacturer of high temperature insulated copper wire. This acquisition increased Wirekraft's capacity as well as its product offering in the automotive, appliance and motor leadwire markets. In 1994, Wirekraft completed a major expansion of its wire mill in El Paso, Texas. The El Paso expansion significantly increased the copper wire fabricating capacity of Wirekraft with a valuable presence in the Southwestern U.S. In December 1994, Wirekraft acquired (the "ECM Acquisition") Electro Componentes de Mexico, S.A. de C.V. ("ECM") and certain related assets from GE. ECM functioned as the captive appliance wire harness operation for GE's domestic appliance business. ECM's Mexican presence provided Wirekraft with significant competitive advantages, as well as providing the Company with a low cost manufacturing capability in Mexico. As part of the acquisition, Wirekraft entered into a supply agreement, which expires in 2006, to supply substantially all of GE's domestic wire harness requirements for major kitchen and laundry appliances. In March 1995, an investor group led by Hicks Muse and Mills & Partners acquired Omega Wire, Inc. ("Omega"). The acquisition of Omega (the "Original Omega Acquisition") broadened the Company's product offering through the addition of a broad and diverse bare wire product offering and vertically integrated the Company by substantially reducing the Company's need to purchase outside bare wire. In June 1995, through a series of acquisitions and mergers, the Company was organized to combine the operations of Wirekraft and Omega (the "Wirekraft/Omega Combination"). In March 1996, the Company acquired (the "DWT Acquisition") the business of Hoosier Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc., a group of affiliated companies together under the trade name Dekko Wire Technology Group ("Dekko"). Dekko was engaged in the design, manufacture and marketing of insulated and bare copper wire. The DWT Acquisition increased the Company's insulated and bare wire manufacturing capabilities, as well as increased the Company's capacity to better serve its client base and expand into new markets by adding specialty products to the Company's product offering. In February 1997, the Company acquired (the "Camden Acquisition") all of the issued and outstanding common stock of Camden Wire Co., Inc. ("Camden"), a designer, manufacturer and marketer of bare and tin-plated copper wire. The Camden Acquisition allowed the Company to expand its geographic manufacturing base and to realize efficiencies through consolidation of operations and process improvements. In 1998, the Company made two strategic acquisitions, the acquisition of the assets of Spargo Wire Company, Inc. ("Spargo Wire"), which expanded the Company's offering of bare wire, and the acquisition of Italtrecce S.r.l. ("Italtrecce"), which expanded the Company's offering of specialty braid products and allowed the Company to expand its geographic manufacturing base to Italy. In addition, in July 1998, the Company completed its construction of a facility in Cebu, Philippines and began operations. The Cebu facility 2 4 allows the Company to supply global customers of the Company and to build relationships with new customers in the Asia Pacific markets. In December 1999, the Company acquired a group of French wire manufacturers (collectively, "Forissier Group"). Two of the companies manufacture specialty braids, rope and cable products and the third company manufactures insulated wire products. This acquisition will compliment the Company's existing business in Italy as well as expand sales opportunities throughout Europe. On February 11, 2000, the Company entered into a letter of intent to sell its Wire Harness Segment to Viasystems Group, Inc. ("Viasystems") for $210 million in cash. The sale is contingent upon Viasystems' initial public offering. The Company and Viasystems are commonly controlled by affiliates of Hicks Muse. As such, the Company will account for any gain or loss on the transaction through stockholder's equity. The purchase price was determined by senior management of both companies. In addition, each of the boards of directors have received opinions from nationally recognized financial advisors that the purchase price is fair, from a financial point of view, to each of the respective parties. In connection with the sale, the Company will enter into a supply agreement to supply substantially all of the Wire Harness Segment's insulated wire requirements through 2003. See Note 13 to the Company's Consolidated Financial Statements. PRODUCTS AND MARKETS The Company's products are used by a variety of end users, primarily in the appliance, automotive, computer and data communications and industrial equipment industries. See Note 12 to the Company's Consolidated Financial Statements for business segment information. The following is a description of the Company's primary products and markets served: WIRE SEGMENT Bare Wire Products The Company's bare copper wire products are primarily used to (i) transmit digital, video and audio signals that generally control motor functions in appliances, automobiles, industrial equipment, heating, ventilating and air conditioning ("HVAC") systems, safety control systems and switching equipment and (ii) conduct electricity. The Company's external sales of bare wire products are primarily to wire insulators, who apply various insulating materials to the conductors through an extrusion process. These wire insulators, in turn, sell the insulated wire to a variety of customers, many of which are in the computer and data communications industries. Within these industries, the Company's bare wire is generally used in wire and cable products that (i) connect circuit boards inside personal computers ("PCs"), (ii) join PCs to peripheral equipment and (iii) link PCs in local area and wide area networks. The Company manufactures a broad array of bare copper conductors including the following: - Single End Wire. Single end wire is an individual wire drawn to the customer's size requirements ranging from .08 to .002 inches in diameter. Single end wire is used to transmit digital, video and audio signals or low voltage current in a variety of wire products used in motor controls, local area networks, security systems, television or telephone connections inside homes and buildings and water sprinkler systems. Single end wire is capable of transmitting signals or electrical current only between two distinct end points (terminals) such as between an on-off switch and the starter to a motor. Single end wire is generally the least expensive form of wire to produce due to its simple configuration. - Stranded Wire. Stranded wire is comprised of a number of single end wires, twisted together in a specific geometric pattern, where each individual wire's relative position is preserved throughout the length of the strand. Like single end wire, stranded wire transmits digital, video and audio signals or low voltage current but is capable of connecting multiple terminals. Stranded wire is typically used in wire and cable products that (i) connect peripherals such as printers to a computer, (ii) connect the internal components of a PC, and (iii) control HVAC, security and other functions inside buildings. 3 5 - Bunched Wire. Bunched wire is comprised of a number of single end wires that are twisted in a random pattern rather than a specific geometric pattern. This type of wire is the primary wire used in appliance and automotive wire harnesses. In addition, bunched wire is commonly used for transmission of electrical current in lighting fixture cords, extension cords and power cords for portable power hand tools. This type of wire provides improved flexibility (versus single end wire) while maintaining its ability to carry electrical currents. - Shielding Wire. Shielding wire is comprised of varying numbers of single end wire which are wound together in parallel construction around a bobbin. Shielding wire does not transmit signals or voltage but rather shields the signal traveling through the core conductor from outside interference. This type of wire is primarily used in data communication applications. - Cabled Wire and Braided Wire. Cabled wire and braided wire are combinations of single, bunched or stranded wire twisted together in various patterns and thickness. These wires transmit electrical current and are typically used in mining, mass transportation, automotive and other industrial applications. Insulated Wire Products The Company's external sales of insulated wire products are primarily to companies that assemble wire harnesses for installation in automobiles or appliances. The Company manufactures a diverse array of insulated wire products including the following: - PVC Lead Wire and Cable. PVC lead wire and cable is copper wire that has been insulated with polyvinyl chloride ("PVC"). This product is used primarily in automotive wire harnesses located behind the instrument panel or in the vehicle body that control certain functions including turn signals and air bags. - JIS Wire. JIS wire is copper wire insulated with PVC that is produced according to Japanese Industrial Standards. The primary difference between domestic PVC wire and JIS wire is that JIS wire is manufactured to metric dimensions and generally has thinner insulation than products manufactured according to U.S. Society of Automotive Engineers Standards. JIS wire is used primarily in automotive wire harnesses located behind the instrument panel or in the vehicle body. - XLPE Insulated Wire. Cross-linked polyethylene ("XLPE") wire is copper wire insulated with polyethylene that is subjected to heat and steam pressure ("cross-linking") to make the wire resistant to high temperatures. This product's primary application includes use in high temperature environments such as the engine compartment of vehicles and in electric ranges. - PVC Insulated Cord. PVC insulated cord is insulated wire that is surrounded with fillers and then jacketed with PVC insulation. This product is used primarily for wall-plug applications (cord sets) in the appliance and power tool industries. - Appliance Wire. Appliance wire is copper wire primarily insulated with PVC and used in producing harnesses for a variety of appliances. The Company also manufactures high temperature wire, insulated with silicone, used primarily in electric ranges and niche applications such as resistance heaters, motor leads and lighting products. WIRE HARNESS SEGMENT A wire harness is comprised of an assembly of wires with connectors and terminals attached to their ends that transmit electricity between two or more end points. For example, a wire harness used in a washing machine will link the washing machine's control panel with its other electrical components, such as the motor. The Company supplies wire harnesses to most of the leading domestic appliance manufacturers, including Amana, Frigidaire, GE, Maytag and Whirlpool. The Company also participates in several niche businesses oriented around its expertise and marketing presence in the appliance industry, including resistance and appliance heaters. In addition, the Company produces truck trailer cable assemblies that transmit electrical current from the tractor to the trailer. 4 6 MARKETING The Company sells its products through a combination of direct (Company-employed) sales people, manufacturer's representatives and distributors. The Company's sales organization is supported by an internal marketing staff and customer service groups. Collectively, these departments act as a bridge between the Company's customers and its production and engineering staff. The Company's engineers work directly with customers in designing the wire or wire harness products to the customer's exact specifications. In addition, engineers work closely with the Company's production managers, quality supervisors and customer service representatives to ensure the timely delivery of quality products. KEY CUSTOMERS The Company sells its products primarily to major appliance manufacturers, automotive wire harness manufacturers and copper wire insulators who then sell to a diverse array of end users. A large percentage of the Company's total sales are to GE. Sales to GE accounted for approximately 15%, 15% and 14% of the Company's total sales in 1999, 1998 and 1997, respectively. In connection with the ECM Acquisition, the Company entered into a supply agreement with GE, which expires December 31, 2006, pursuant to which the Company supplies substantially all of GE's domestic wire harness requirements for major kitchen and laundry appliances. INTERNATIONAL OPERATIONS The Company has operations in Mexico, the Philippines, Italy and France. For the years ended December 31, 1999, 1998 and 1997, approximately 12%, 6% and 5% of the Company's sales originated from these foreign subsidiaries. The majority of these sales were to original equipment manufacturers in the appliance industry located in the United States or to Tier 1 automotive suppliers whose products were sold back into the United States. The Company has three operating facilities located in Mexico. In Asia, the Company has a manufacturing facility in Cebu, Philippines, and a joint venture in The People's Republic of China. In Europe, the Company has a manufacturing facility in Vinovo, Italy and three facilities near Lyon, France. See Note 12 to the Company's Consolidated Financial Statements for information regarding the Company's international operations. The Company is subject to risks generally associated with international operations, including price and exchange controls and other restrictive actions. In addition, fluctuations in currency exchange rates may affect the Company's results of operations. RAW MATERIALS The principal raw material used by the Company is copper, which is purchased in the form of 5/16 inch rod from the major copper producers in North America. Copper rod prices are based on market prices, which are generally established by reference to the New York Mercantile Exchange, Inc. ("COMEX") prices, plus a premium charged to convert copper cathode to copper rod and deliver it to the required location. As a world traded commodity, copper prices have historically been subject to fluctuations. While fluctuations in the price of copper may directly affect the per unit prices of the Company's products, these fluctuations have not had, nor are expected to have, a material impact on the Company's profitability due to copper price pass-through arrangements that the Company has with its customers. These sales arrangements are based on similar variations of monthly copper price formulas. Use of these copper price formulas minimizes the differences between raw material copper costs charged to the cost of sales and the pass-through pricing charged to customers. Other major raw materials consumed by the Company include PVC compound, plasticizer, XLPE compound, color concentrate and a wide variety of electro-mechanical components. The Company enters into long term supply agreements on a wide variety of materials consumed. Supplies on all critical materials are currently adequate to meet the Company's needs. 5 7 The Company orders material based on purchase orders received and accepted and seeks to minimize the inventory of material not identified for specific orders. The Company works with its suppliers to develop just-in-time supply systems which reduce inventory carrying costs. MANUFACTURING AND DISTRIBUTION The Company is committed to the highest quality standards for its products, a standard maintained in part by continuous improvements to its production processes and upgrades and investments to its manufacturing equipment. The Company's equipment can be adapted to satisfy the changing needs of its customers. The Company maintains advanced quality assurance and testing equipment to ensure the products it manufactures will consistently meet customer quality requirements. The following is a description of the Company's manufacturing and distribution facilities and processes for its major product lines. BARE WIRE PRODUCTS As of December 31, 1999, the Company had fourteen facilities dedicated to the production and distribution of bare wire. Six of these facilities are located in New York, two are located in Arkansas, two are located in France, one facility is located in Indiana, one facility is located in Texas, one facility is located in Italy and one distribution facility is located in California. The manufacturing of bare wire consists of one or more of the following four processes: wire drawing; plating; bunching and stranding; and cabling. - Wire Drawing Process. Wire drawing involves a multi-step process in which 5/16 inch copper rod is drawn through a series of dies of decreasing diameters. - Plating Process. After being drawn, the Company's wire products may be plated through an electroplating process. The Company has the capability to plate copper wire with tin and other metals. Approximately 25% of the Company's bare wire products are plated with tin. The plating process prevents the bare copper from oxidizing and also allows the wire to be soldered, which is an important quality in many electrical applications. - Bunching and Stranding Process. Bunching and stranding is the process of twisting together single strand wires to form a construction ranging from seven to over 200 strands. If the wire is bunched, the individual strands of wire are twisted together in a random pattern. Bunched wire is typically used in power cords for lights and appliances. Stranded wire is composed of a number of single end wires twisted together in a specific geometric pattern where each strand's relative position is maintained throughout the length of the wire. Stranded wire is typically used in security, audio and intercom systems. - Cabling Process. Cabling is the process of twisting bunched wire to form a construction ranging from 49 to 47,000 strands. Cabling is used in various industrial applications such as transportation and mining. INSULATED WIRE PRODUCTS As of December 31, 1999, the Company had fifteen manufacturing and distribution facilities used to produce and distribute insulated wire. Five of the manufacturing facilities are located in Indiana, four are located in Texas, three are located in Alabama, one is located in the Philippines and one is located in France. The Company has one distribution facility in Texas. The production of insulated wire starts with bare wire (primarily manufactured internally) and involves insulating the wire products with various polymeric insulating compounds through an extrusion process. Extrusion involves the feeding, melting and pumping of insulating compounds through a die to shape it into its final form on the wire. In order to enhance the insulation properties of some products, certain polymeric compounds can be chemically cross-linked after the extrusion process. The Company has extensive chemical cross-linking capabilities. 6 8 WIRE HARNESSES PRODUCTS As of December 31, 1999, the Company had five manufacturing facilities and one distribution facility dedicated to wire harness products. Three of the manufacturing facilities are located in Mexico, one facility is located in Ohio and one facility is located in Indiana. The Company has one distribution facility is located in Texas dedicated to wire harness products. The manufacturing of wire harnesses involves the following four-step process: - Cutting and Stripping. Insulated copper wire, obtained primarily from internal sources, is fed through cutting machines that are programmed to cut wire to a certain length, strip the end of the wire and attach terminals or connectors. - Splicing and Connecting. In the second process, the lengths of wire are spliced or joined together and additional connectors and/or terminals are attached. Splicing, like cutting and stripping, lends itself to automation. - Harness Assembly. Once these two preparatory stages have been completed, the cut and spliced wires are brought to the assembly area. Assembly boards are used to guide each employee on the assembly line in the placement of designated wires. - Quality Control. Every assembly board is equipped with 100% continuity testers that are designed into the assembly board. These testers are designed to pinpoint any defective circuits for repair or rework. After assembly, each harness is again tested for continuity and analyzed by a trained inspector. COMPETITION As a result of the diversity of the Company's segments and product lines, the Company believes that no single competitor competes with the Company across the entire spectrum of the Company's product lines. However, in each of the Company's business segments, the Company experiences competition from at least one major competitor. The Company competes primarily on the basis of quality, reliability, price, reputation, customer service and delivery time. The Company believes it maintains a leading market share position in the non-captive U.S. market for each of its business segments. Several OEMs in the end markets the Company serves have in-house or "captive" wire and wire harness production facilities. However, these captive facilities do not compete with the Company for sales to other customers. The Company also sells its products to OEMs with captive production to meet needs in excess of their internal production capacity. BACKLOG Due to the manner in which it processes its orders, the Company has no significant order backlog. The Company follows the industry practice of producing its products on an ongoing basis to meet customer demand without significant delay. Management believes the ability to supply orders in a timely fashion is a competitive factor in its market, and therefore, attempts to minimize order backlog to the extent practicable. PATENTS AND TRADEMARKS The Company has six patents, three patents pending, eleven registered trademarks and two trademark applications pending. The Company does not believe that its competitive position is dependent on patent protection or that its operations are dependent on any individual patent or trademark or group of related patents or trademarks. EMPLOYEES As of December 31, 1999, the Company employed approximately 8,100 full time employees, of which approximately 5,100 were located in Mexico. The Company believes that it has a good relationship with its employees. 7 9 SEASONALITY The Company does not believe that its business segments are subject to significant seasonal fluctuations. ENVIRONMENTAL MATTERS The Company is subject to a number of federal, state, local and foreign environmental laws and regulations relating to the storage, handling, use, emission, discharge, release or disposal of materials into the environment and the investigation and remediation of contamination associated with such materials. These laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), the Water Pollution Control Act, the Clean Air Act and the Resource Conservation and Recovery Act, the regulations promulgated thereunder, and any state analogs. The Company's operations also are governed by laws and regulations relating to employee health and safety. The Company believes that it is in material compliance with such applicable laws and regulations and that its existing environmental controls are adequate. Further, the Company has no current plans for substantial capital expenditures in this area. As is the case with most manufacturers, the Company could incur costs relating to environmental compliance, including remediation costs related to historical hazardous materials handling and disposal practices at certain facilities, although it does not believe that such costs would materially and adversely affect the Company. In the past the Company has undertaken remedial activities to address on-site soil contamination caused by historic operations. None of these activities have resulted in any material liability. Currently, the Company is involved with environmental monitoring activities at its Camden, New York and Jordan, New York facilities. The Company currently does not anticipate that compliance with environmental laws or regulations or the costs to remediate the sites discussed above will have a material adverse effect on the Company. As mentioned above, however, the risk of environmental liability and remediation costs is inherent in the nature of the Company's business and, therefore, there can be no assurances that material environmental costs, including remediation costs, will not arise in the future. In addition, it is possible that future developments (e.g., new regulations or stricter regulatory requirements) could result in the Company incurring material costs to comply with applicable environmental laws and regulations. ITEM 2. PROPERTIES The Company uses owned or leased properties as manufacturing and distribution facilities, warehouses and offices throughout the United States, Mexico, Italy, the Philippines and France. The Company's principal executive offices are located in St. Louis, Missouri. All of the Company's domestic owned properties are pledged to secure the Company's indebtedness under the Company's Amended and Restated Credit Agreement dated as of February 12, 1997, with the Chase Manhattan Bank, Bankers Trust Company and the other lenders party thereto, as amended (the "Senior Bank Facility"). 8 10 Listed below are the principal manufacturing and distribution facilities operated by the Company as of December 31, 1999:
LOCATION SQUARE FEET OWNED/LEASED PRIMARY PRODUCTS/END USE - -------- ----------- ------------ --------------------------------- BARE WIRE Camden, New York................. 450,000 Owned Single end, bunched, stranded, cabled and electroplated wire Williamstown, New York........... 210,000 Owned Single end, bunched, stranded and cabled wire Bremen, Indiana.................. 175,000 Owned Bunched wire Camden, New York................. 150,000 Leased (1) Single end, bunched, stranded and cabled wire Pine Bluff, Arkansas............. 130,000 Owned Single end, bunched, stranded and cabled wire Jordan, New York................. 120,000 Leased (1) Single end, bunched, stranded, shielding and cabled wire Rome, New York................... 112,000 Owned Bunched, stranded, cabled and electroplated wire Cazenovia, New York.............. 60,000 Owned Braided wire Saint-Chamond, France............ 60,000 Owned Specialty braids, rope and cable products El Paso, Texas................... 57,000 Owned Bunched wire Pine Bluff, Arkansas............. 40,000 Owned Shielding and braided wire Saint-Chamond, France............ 30,000 Owned Specialty braids, rope and cable products Vinovo, Italy.................... 25,000 Owned Braided wire Cerritos, California............. 19,000 Leased (5) Distribution INSULATED WIRE Cebu, Philippines................ 135,000 Owned Automotive Avilla, Indiana.................. 119,000 Owned Appliance and automotive El Paso, Texas................... 101,000 Leased (4) Appliance and automotive Beynost, France.................. 82,000 Owned Automotive Corunna, Indiana................. 72,000 Owned Appliance El Paso, Texas................... 70,000 Owned Automotive Elkmont, Alabama................. 65,000 Owned Appliance and automotive Kendallville, Indiana............ 61,000 Leased (4) Appliance and automotive Kendallville, Indiana............ 60,000 Owned Appliance and automotive El Paso, Texas................... 60,000 Owned Automotive Albion, Indiana.................. 53,000 Owned Appliance and automotive Elkmont, Alabama................. 52,000 Owned Automotive El Paso, Texas................... 50,000 Leased (3) Distribution Ardmore, Alabama................. 45,000 Owned Automotive El Paso, Texas................... 28,000 Leased (4) Automotive WIRE HARNESSES Juarez, Mexico................... 120,000 Leased (4) Appliance Chihuahua, Mexico................ 100,000 Owned Appliance Chihuahua, Mexico................ 91,000 Leased (2) Appliance Bucyrus, Ohio.................... 47,000 Leased (5) Truck Trailers, farm machinery and appliance El Paso, Texas................... 38,000 Leased (3) Distribution Mishawaka, Indiana............... 29,000 Owned Appliance, HVAC and lawn and garden
9 11 - --------------- (1) The leases on the Company's Camden, New York and Jordan, New York facilities have remaining terms of approximately 12 years. During 1997, the Company purchased the notes that were collateralized by the Camden and Jordan properties from an unrelated creditor. The Company negotiated a payment schedule with the lessor which allows the lessor to retain title to the property until the termination of the lease, at which time the Company will have the option to purchase the properties for a nominal purchase price. (2) The lease has a remaining term of approximately eight years. (3) The lease has a remaining term of approximately three years. (4) The lease has a remaining term of approximately two years. (5) The lease has a remaining term of approximately one year. The Company believes its plants and equipment include state-of-the-art technology and are well maintained. Additionally, the Company believes its facilities are suitable for their present and intended purposes and adequate for the Company's current level of operations and expected demand for the Company's products. ITEM 3. LEGAL PROCEEDINGS The Company is a party to various legal proceedings and administrative actions, all of which are of an ordinary or routine nature incidental to the operations of the Company. The Company was served with notice of an action styled Whirlpool Corporation v. Wirekraft Industries, Inc. (Case No. 97-2039-CK-T), initiated in the Second Judicial Circuit of the State of Michigan, Berrien County Trial Court, Civil Division, on August 8, 1997. This action, a product liability claim, relates to certain wire harness products supplied to Whirlpool by one of the Company's predecessors during 1991 and 1992. Such wire harness products were required by Whirlpool to include a specified AMP, Inc. ("AMP") connector. The Company has joined AMP as a third-party defendant. The complaint filed with respect to such lawsuit does not specify an amount of damages. The Company filed a motion for summary disposition (judgment) and in the fall of 1998, the trial court ruled in favor of the Company with respect to most of Whirlpool's claims. Whirlpool is attempting to appeal the trial court's action. The Company believes that its insurance coverage is applicable to any of the remaining claims and the cost of defense of such claims is being borne by the Company's insurance carriers. In the opinion of the Company's management, all such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on the Company's results of operations, financial condition or cash flows. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders in the fourth quarter of 1999. 10 12 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS All of the Company's outstanding common stock is held by International Wire Holding Company ("Holding"), and there is no established public trading market for such. The Company has paid no dividends to common stockholders since inception and does not have any present intention to commence payment of any cash dividends. The Company intends to retain earnings to provide funds for operation and expansion of the Company's business and to repay outstanding indebtedness. The Company's ability to pay such dividends is limited by the terms of its Senior Bank Facility and the Indentures relating to its 11 3/4% Senior Subordinated Notes due 2005, its 14% Senior Subordinated Notes due 2005 and its 11 3/4% Series B Senior Subordinated Notes due 2005 (collectively, the "Senior Subordinated Notes"). 11 13 ITEM 6. SELECTED FINANCIAL DATA THE COMPANY The selected financial data set forth below presents financial information for the Company for the years ended December 31, 1999, 1998, 1997 and 1996, and for the seven months ended December 31, 1995, as derived from the audited consolidated financial statements of the Company. The selected financial data should be read in conjunction with the Company's Consolidated Financial Statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," each included elsewhere herein.
SEVEN MONTHS YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, 1999 1998 1997 1996 1995 ------------ ------------ ------------ ------------ ------------ (IN THOUSANDS) RESULTS OF OPERATIONS: Net sales......................................... $ 643,690 $ 645,921 $ 695,148 $ 546,981 $ 245,583 Cost of goods sold................................ 456,333 464,552 530,310 420,823 195,221 Selling, general and administrative expenses(1)..................................... 61,194 65,442 60,713 47,572 17,129 Depreciation and amortization..................... 44,794 42,758 36,826 31,976 11,312 Impairment, unusual and plant closing charges(2)...................................... 3,000 -- 2,000 84,250 1,750 Inventory valuation adjustment(3)................. -- -- 8,500 8,500 -- --------- --------- --------- --------- --------- Operating income (loss)........................... 78,369 73,169 56,799 (46,140) 20,171 Interest expense.................................. (49,839) (50,627) (50,939) (43,013) (19,931) Amortization of deferred financing costs.......... (3,050) (2,980) (3,132) (3,066) (1,176) Other (expense) income............................ -- 95 (103) 312 (158) --------- --------- --------- --------- --------- Income (loss) before income tax provision, cumulative effect of change in accounting principle and extraordinary item................ 25,480 19,657 2,625 (91,907) (1,094) Income tax provision.............................. 10,055 10,002 2,654 1,262 2,197 --------- --------- --------- --------- --------- Income (loss) before cumulative effect of change in accounting principle and extraordinary item............................................ 15,425 9,655 (29) (93,169) (3,291) Cumulative effect of change in accounting for start-up costs, net of tax benefit of $1,679.... (2,319)(4) -- -- -- -- --------- --------- --------- --------- --------- Income (loss) before extraordinary item........... 13,106 9,655 (29) (93,169) (3,291) Extraordinary item................................ -- -- (2,991)(5) -- -- --------- --------- --------- --------- --------- Net income (loss)........................... $ 13,106 $ 9,655 $ (3,020) $ (93,169) $ (3,291) ========= ========= ========= ========= ========= OTHER DATA: EBITDA, as adjusted(6)............................ $ 124,621 $ 120,085 $ 108,135 $ 82,273 $ 33,233 Capital expenditures.............................. 30,506 34,299 27,760 15,849 5,751 Total assets...................................... 678,107 639,114 628,048 531,020 427,920 Long-term obligations (including current maturities)..................................... 535,944 527,205 523,795 447,667 338,677 CASH FLOW DATA: Net cash from (used in) operating activities...... $ 51,475 $ 40,646 $ 33,998 $ 31,980 $ 13,334 Net cash from (used in) investing activities...... (50,506) (42,120) (86,756) (176,108) (346,797) Net cash from (used in) financing activities...... 6,456 1,474 52,758 144,128 333,463
- --------------- (1) Includes non-cash compensation expense (income) related to the stock appreciation of Holding Class A Common Stock (as defined herein) in the amount of ($1,542), $4,158, $4,010, $3,687 and $0 for the years ended December 31, 1999, 1998, 1997 and 1996 and the seven months ended December 31, 1995, respectively. See Note 15 to the Company's Consolidated Financial Statements and Item 12, "Securities Ownership." (2) Consists of charges relating to product liability claims in the amount of $3,000 in 1999, charges relating to plant closings in the amounts of $2,000, $6,000 and $1,750 in the years ended December 31, 1997 and 1996, and the seven months ended December 31, 1995, respectively, and charges related to the write-off of goodwill principally related to the Original Wirekraft Acquisition in the amount of $78,250 in the year 12 14 ended December 31, 1996. See Note 9 to the Company's Consolidated Financial Statements included herein. (3) Represents a pre-tax inventory valuation charge to reduce the last in, first out ("LIFO") valuation of copper in inventory as a result of the decline in the average price of copper during 1997 and 1996. See Note 3 to the Company's Consolidated Financial Statements included herein. (4) The cumulative effect of change in accounting principle for the ended December 31, 1999 represents a $2,319 loss related to the adoption of Financial Accounting Standards Board ("FASB") Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," (net of income tax benefit of $1,679). See Note 2 to the Company's Consolidated Financial Statements included herein. (5) The extraordinary item in the year ended December 31, 1997 represents a $2,991 loss on the early extinguishment of debt (net of income taxes of $1,995). (6) "EBITDA, as adjusted" is defined as operating income (loss) plus depreciation, amortization of intangible assets, impairment, unusual and plant closing charges and non-cash compensation expense (income). EBITDA, as adjusted, is presented because (i) it is a widely accepted indicator of a company's ability to incur and service debt and (ii) it is the basis on which the Company's compliance with certain financial covenants contained in the Indentures relating to its Senior Subordinated Notes and the Senior Bank Facility is principally determined. However, EBITDA, as adjusted, does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flow, is not a measure of financial performance under generally accepted accounting principles ("GAAP") and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to similar measures reported by other companies. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." 13 15 WIREKRAFT (A PREDECESSOR COMPANY) The selected financial data set forth below presents financial information for Wirekraft for the six months ended May 31, 1995. The data is derived from the audited consolidated financial statements of Wirekraft.
SIX MONTHS ENDED MAY 31, 1995 -------------- (IN THOUSANDS) RESULTS OF OPERATIONS: Net sales................................................. $168,053 Cost of goods sold........................................ 138,851 Selling, general and administrative expenses.............. 13,301 Depreciation and amortization............................. 6,474 Compensation expense...................................... 895(1) Expenses related to sale.................................. 501(2) Expenses related to plant closings........................ 2,000(3) -------- Operating income.......................................... 6,031 Interest expense.......................................... (8,020) Amortization of deferred financing costs.................. (1,657) -------- Income (loss) before income taxes and extraordinary item................................................... (3,646) Income tax provision (benefit)............................ (2,114) -------- Income (loss) before extraordinary item................... (1,532) Extraordinary item........................................ (7,835)(4) -------- Net income (loss)................................. $ (9,367) ======== OTHER DATA: EBITDA, as adjusted(5).................................... $ 15,901 Capital expenditures...................................... 2,914 Total assets.............................................. 241,277 Long-term obligations (including current maturities)...... 148,386 CASH FLOW DATA: Net cash from (used in) operating activities.............. $ (3,921) Net cash from (used in) investing activities.............. (47,887) Net cash from (used in) financing activities.............. 51,663
- --------------- (1) Represents payments to senior management of Wirekraft for the redemption of employee stock options in connection with the Wirekraft/Omega Combination. (2) Represents non-recurring expenses of Wirekraft associated with the Wirekraft/Omega Combination, which included, among other things, brokerage and legal fees. (3) Represents expenses related to the closing of certain domestic wire harness facilities. (4) The extraordinary item in the six months ended May 31, 1995 represents a $7,835 loss on early extinguishment of debt (net of income tax of $4,930). (5) "EBITDA, as adjusted" is defined as operating income (loss) plus depreciation, amortization of intangible assets, impairment, unusual and plant closing charges and non-cash compensation expense (income). EBITDA, as adjusted, is presented because (i) it is a widely accepted indicator of a company's ability to incur and service debt and (ii) it is the basis on which the Company's compliance with certain financial covenants contained in the Indentures relating to its Senior Subordinated Notes and the Senior Bank Facility is principally determined. However, EBITDA, as adjusted, does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flow, is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to similar measures reported by other companies. 14 16 OMEGA (A PREDECESSOR COMPANY) The selected financial data set forth below presents the financial information of Omega and its predecessor, THL-Omega Holding Corporation ("THL-Omega"), for the periods indicated. The data for the two months ended May 31, 1995, are derived from the audited consolidated financial statements of Omega. The data for the three months ended March 31, 1995 are derived from the audited consolidated financial statements of THL-Omega.
THL- OMEGA OMEGA --------- --------- TWO THREE MONTHS MONTHS ENDED ENDED MAY 31, MARCH 31, 1995(1) 1995 --------- --------- (IN THOUSANDS) RESULTS OF OPERATIONS: Net sales................................................. $ 23,295 $38,736 Cost of goods sold........................................ 17,512 29,401 Selling, general and administrative expenses.............. 1,639 2,651 Depreciation and amortization............................. 1,233 1,459 Compensation expense...................................... -- 9,715(2) Expenses related to sale.................................. -- 1,689(3) --------- ------- Operating income (loss)................................... 2,911 (6,179) Interest expense.......................................... (1,797) (1,478) Amortization of deferred financing costs.................. (238) (50) Other income.............................................. -- 32 --------- ------- Income (loss) before income taxes and extraordinary item................................................... 876 (7,675) Income tax provision...................................... 171 484 --------- ------- Income (loss) before extraordinary item................... 705 (8,159) Extraordinary item........................................ (4,044)(4) (1,148)(5) --------- ------- Net income (loss)................................. $ (3,339) $(9,307) ========= ======= OTHER DATA: EBITDA, as adjusted(6).................................... $ 4,144 $ 6,684 Capital expenditures...................................... 581 1,597 Total assets.............................................. 176,659 97,657 Long-term obligations (including current maturities)...... 128,116 54,615 CASH FLOW DATA: Net cash from (used in) operating activities.............. $ 4,987 $ 3,604 Net cash from (used in) investing activities.............. (159,661) (1,597) Net cash from (used in) financing activities.............. 154,674 (1,536)
- --------------- (1) On March 31, 1995, Omega, through the Original Omega Acquisition, acquired all of the issued and outstanding common stock of THL-Omega. (2) Represents payments to senior management for the redemption of stock options and stock that was issued immediately prior to the Original Omega Acquisition for consideration less than the fair value. (3) Represents expenses of the sellers associated with the Original Omega Acquisition. (4) The extraordinary item in the two months ended May 31, 1995 represents a $4,044 loss on early extinguishment of debt (net of income taxes of $2,082). (5) The extraordinary item in the three months ended March 31, 1995 represents a $1,148 loss on early extinguishment of debt (net of income taxes of $765). (6) "EBITDA, as adjusted" is defined as operating income (loss) plus depreciation, amortization of intangible assets, impairment, unusual and plant closing charges and non-cash compensation expense 15 17 (income). EBITDA, as adjusted, is presented because (i) it is a widely accepted indicator of a company's ability to incur and service debt and (ii) it is the basis on which the Company's compliance with certain financial covenants contained in the Indentures relating to its Senior Subordinated Notes and the Senior Bank Facility is principally determined. However, EBITDA, as adjusted, does not purport to represent cash provided by operating activities as reflected in the Company's consolidated statements of cash flow, is not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to similar measures reported by other companies. 16 18 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company conducts its operations through two segments: (i) wire products, which includes both bare wire and insulated wire products, and (ii) wire harness products. The table below sets forth the major components of the results of operations for the years ended December 31, 1999, 1998 and 1997, and should be used in reviewing the discussion and analysis of results of operations and liquidity and capital resources. See Note 12 to the Company's Consolidated Financial Statements for business segment information. Included in the year ended December 31, 1998, are the results of operations of Spargo Wire from April 1, 1998, the date Spargo Wire was acquired by the Company, and the results of operations of Italtrecce from July 1, 1998, the date Italtrecce was acquired by the Company. Included in the year ended December 31, 1997, are the results of operations of Camden from February 12, 1997, the date of the Camden Acquisition. A portion of the Company's revenues is derived from processing customer-owned ("tolled") copper. The value of tolled copper is excluded from both sales and costs of sales of the Company, as title to these materials and the related risks of ownership do not pass to the Company. The cost of copper has historically been subject to fluctuations. While fluctuations in the price of copper may directly affect the per unit prices of the Company's products, these fluctuations have not had, nor are expected to have, a material impact on the Company's profitability due to copper price pass-through arrangements that the Company has with its customers. These sales arrangements are based on similar variations of monthly copper price formulas. Use of these copper price formulas minimizes the differences between raw material copper costs charged to the cost of sales and the pass-through pricing charged to customers. RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, ------------------------------ 1999 1998 1997 -------- -------- -------- (IN THOUSANDS) STATEMENT OF OPERATIONS DATA: Wire sales................................................ $452,644 $475,528 $529,718 Wire harness sales........................................ 191,046 170,393 165,430 -------- -------- -------- Net sales......................................... 643,690 645,921 695,148 Cost of goods sold........................................ 456,333 464,552 530,310 Selling, general and administrative expenses.............. 61,194 65,442 60,713 Depreciation and amortization............................. 44,794 42,758 36,826 Unusual and plant closing charges......................... 3,000 -- 2,000 Inventory valuation adjustment............................ -- -- 8,500 -------- -------- -------- Operating income.................................. $ 78,369 $ 73,169 $ 56,799 ======== ======== ========
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 Net sales for the year ended December 31, 1999 were $643.7 million, representing a $2.2 million, or 0.3%, decrease compared to the year ended December 31, 1998. An increase in unit volume was more than offset by the impact of a decrease in the average cost and selling price of copper. The average price of copper based upon the New York Mercantile Exchange, Inc. ("COMEX") decreased to $.72 per pound during the year ended December 31, 1999 from $0.75 per pound during the year ended December 31, 1998. Wire Segment sales were $452.6 million, representing a $22.9 million, or 4.8%, decrease for the year ended December 31, 1999, as compared to the year ended December 31, 1998. Increased sales of bare wire products into the industrial market was more than offset by the decrease in the average price of copper and lower insulated wire sales to the automotive industry in the first half of 1999. This decrease in sales to the automotive industry was due primarily to a decision by some of the Company's customers, who are suppliers to 17 19 U.S. facilities of Japanese automakers, to shift some of their wire production in-house to better utilize their available capacity caused in part by the 1998 Asian financial crisis. Within the Wire Harness Segment, net sales for the year ended December 31, 1999 were $191.0 million, representing a $20.7 million, or 12.1%, increase compared to the year ended December 31, 1998. This increase in volume was due to an increase in consumer demand and production within the appliance industry and additional volume with new and existing customers. Cost of goods sold as a percentage of sales improved to 70.9% for the year ended December 31, 1999, from 71.9% for the same period in 1998. This improvement was the result of cost reductions from material savings, operating efficiencies, equipment upgrades, previous plant consolidations, increased volume at lower cost facilities in Mexico and the Philippines and the impact of lower copper prices. Because the Company's products are typically priced at a spread over the cost of copper, a lower copper price leads to a higher gross margin percentage but generally has no impact on gross margin dollars. Selling, general and administrative expenses were $61.2 million for the year ended December 31, 1999, compared to $65.4 million for the year ended December 31, 1998. This decrease was due to non-cash compensation income recognized in the current year of $1.5 million compared to a similar non-cash compensation expense recognized during 1998 of $4.2 million. This decrease was partially offset by the effect of increased costs related to the additional volume within the Wire Harness Segment and the impact of incremental costs for a full year associated with the acquisitions of Spargo Wire and Italtrecce in 1998. Selling, general and administrative expenses as a percent of net sales improved from 10.1% for the year ended December 31, 1998 to 9.5% for the year ended December 31, 1999. This decrease was primarily due to the effect of the non-cash compensation income and expense and was partially offset by the effect of lower copper prices on net sales. Depreciation and amortization was $44.8 million for the year ended December 31, 1999, as compared to $42.8 million for the same period in 1998. The increase of $2.0 million was the result of a full year of depreciation and amortization of goodwill related to the acquisitions of Spargo Wire and Italtrecce and increased capital expenditures. The Company recorded a pre-tax charge to operations of $3.0 million in the year ended December 31, 1999 for anticipated losses related to product liability claims associated with a predecessor of the Company. These claims are for a non-wire product in the appliance industry that the Company has not manufactured since 1992. In 1999, the Company reviewed the occurrence rate associated with these claims and determined that the liability originally established in the year ended December 31, 1996 needed to be increased. The Company did not have a similar charge during the year ended December 31, 1998. YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 Net sales for the year ended December 31, 1998 were $645.9 million, representing a $49.2 million, or 7.1%, decrease compared to the year ended December 31, 1997. Increases in unit volume in both segments were more than offset by the impact of a decrease in the average cost and selling price of copper, a higher mix of tolled copper and the discontinuation of a non-core product line in September 1997. The average price of copper based upon the COMEX decreased to $.75 per pound during the year ended December 31, 1998 from $1.03 per pound during the year ended December 31, 1997. Wire Segment sales were $475.5 million, representing a $54.2 million, or 10.2%, decrease for the year ended December 31, 1998, as compared to the year ended December 31, 1997. This decrease was the result of the decrease in the average price of copper offset by an increase in unit growth in sales of bare wire and cable to industrial and electronics/data communications customers. Wire Segment sales also benefited from the full year of sales related to the Camden Acquisition (acquired in February 1997) and the incremental sales related to the acquisitions of Spargo Wire and Italtrecce in 1998. Within the Wire Harness Segment, net sales for the year ended December 31, 1998 were $170.4 million, representing a $5.0 million, or 3.0%, increase compared to the year ended December 31, 1997. This increase in volume was due primarily to a general increase in domestic appliance production and sales and expanded relationships with certain customers. Volume increases were partially offset by the loss of sales from a non-core product line discontinued in September 1997. 18 20 Cost of goods sold as a percentage of sales improved to 71.9% for the year ended December 31, 1998 from 76.3% for the same period in 1997. This improvement reflected synergies related to the Camden Acquisition, savings realized from previous plant consolidations, lower current period costs achieved through the transition of certain wire harness segment business to lower-cost Mexican facilities, and the impact of lower copper prices. Because the Company's products are typically priced at a spread over the cost of copper, a lower copper price leads to a higher gross margin percentage but generally has no impact on gross margin dollars. Selling, general and administrative expenses were $65.4 million for the year ended December 31, 1998, compared to $60.7 million for the year ended December 31, 1997. This $4.7 million increase primarily reflected the addition of Camden for a full first quarter, the effect of the acquisitions of Spargo Wire and Italtrecce in 1998 and increased unit volume. Selling, general and administrative expenses as a percent of net sales increased from 8.7% for the year ended December 31, 1997 to 10.1% for the year ended December 31, 1998. This increase was primarily due to the effect of lower copper prices on net sales. Depreciation and amortization was $42.8 million for the year ended December 31, 1998, as compared to $36.8 million for the same period in 1997. The increase of $6.0 million was the result of a full year of depreciation and amortization of goodwill related to the Camden Acquisition, increased capital expenditures and additional depreciation and amortization of goodwill related to the acquisitions of Spargo Wire and Italtrecce in 1998. The Company recorded a pre-tax charge to operations of $2.0 million in the year ended December 31, 1997 related to the shut down and consolidation of certain wire segment facilities. Additionally, the Company recorded a pre-tax inventory valuation charge of $8.5 million during the year ended December 31, 1997. This charge was the result of an adjustment to the LIFO valuation of copper in inventory reflecting the decrease in the copper cost per pound during fiscal 1997. The Company did not have similar charges during the year ended December 31, 1998. LIQUIDITY AND CAPITAL RESOURCES Inflation has not been a material factor affecting the Company's business. As a result of the copper price pass-through arrangements that the Company has with its customers, fluctuations in the price of copper have not, nor are expected to have, a material impact on the Company's profitability. The Company's general operating expenses, such as salaries, employee benefits and facilities costs are subject to normal inflationary pressures. Working Capital and Cash Flows For the year ended December 31, 1999, the Company generated $51.5 million in cash from operations, received $25.0 million from the issuance of long-term debt obligations, made net repayments of $16.3 million to repay indebtedness under the Senior Bank Facility, spent $30.5 million on capital projects, used $20.0 million on the acquisition of the Forissier Group, used $2.1 million on financing fees and used $0.2 million on other financing activities. For the year ended December 31, 1998, the Company generated $40.6 million in cash from operations, made net borrowings of $2.8 million under debt obligations, spent $34.3 million on capital projects, used $7.8 million on the acquisitions of Spargo Wire and Italtrecce and used $1.4 million on other financing activities. For the year ended December 31, 1997, the Company generated $34.0 million in cash from operations and $6.0 million of net proceeds from the issuance of long-term debt obligations related to the Camden Acquisition. During 1997, the Company made net borrowings of $1.1 million under debt obligations, spent $27.8 million on capital projects, used $11.3 million related to financing fees and used $2.1 million on other financing activities. In June 1997, the Company generated $157.4 million in proceeds from the issuance of 11.75% Series B Senior Subordinated Notes due June 2005, net of financing costs of $5.8 million. The Company applied all net proceeds from this issuance to repay a portion of the Senior Bank Facility. 19 21 Financing Arrangements In connection with the acquisition of the Forissier Group, the Company amended its Senior Bank Facility to obtain an additional $25.0 million in borrowing under a Tranche A1 Loan. As amended, the Senior Bank Facility provides senior secured financing of up to $275.5 million, consisting of a $17.5 million Tranche A Loan, a $25.0 million Tranche A1 Loan and a $158.0 million Tranche B Loan (collectively, the "Term Facility") and a $75.0 million revolving credit facility (the "Revolver"). The Company is obligated to make principal payments in respect of the Term Facility of $8.0 million in 2000, $9.3 million in 2001, $48.4 million in 2002 and $134.8 million in 2003. In addition, the Senior Bank Facility may require a prepayment on the term loans based on an excess cash flow calculation as defined in the Senior Bank Facility agreement. The Revolver is available for working capital purposes including letters of credit. The commitments terminate and all amounts under the Revolver then outstanding mature in 2002. As of December 31, 1999, there was $200.5 million outstanding under the Term Facility and $52.9 million of unused borrowing capacity under the Revolver. The Company's obligations under the Senior Bank Facility bear interest at floating rates and require interest payments on varying dates depending on the interest rate option selected by the Company. At December 31, 1999, the weighted average interest rate on outstanding borrowings under the Senior Bank Facility was 8.11%. The Company has outstanding $150.0 million principal amount of 11.75% Senior Subordinated Notes due 2005 under an Indenture dated June 12, 1995 and $150 million of 11.75% Series B Senior Subordinated Notes due June 2005 under an Indenture dated June 17, 1997, priced at 108.75% for an effective interest rate of 10.15% (collectively, the "Senior Notes"). The Senior Notes bear interest at the rate of 11.75% per annum, requiring semi-annual interest payments of $17.6 million on each June 1 and December 1. The Company also has outstanding $5.0 million of 14% Senior Subordinated Notes due June 1, 2005 (the "14% Notes"). The 14% Notes bear interest at the rate of 14% per annum, requiring a semi-annual interest payment of $0.4 million on each June 1 and December 1. Neither the Senior Notes nor the 14% Notes are subject to any sinking fund requirements. In connection with the Camden Acquisition, the Company assumed debt related to two Industrial Revenue Bonds (the "IRBs") totaling $15.5 million. The IRBs are due in August 2005 and March 2016 in the amounts of $9.0 million and $6.5 million, respectively. The IRBs bear interest at a rate per annum which is tied to the Tax Exempt Money Market Index. Rates change weekly and interest is paid monthly. The IRBs are collateralized by letters of credit totaling $15.5 million. As of December 31, 1999, the weighted average interest rate on the IRBs was 4.29%. Liquidity The principal raw material used in the Company's products is copper. The market price of copper is subject to significant fluctuations. Working capital needs change whenever the Company experiences a significant change in copper prices. A $0.10 per pound change in the price of copper changes the Company's working capital by approximately $5.1 million. The Company enters into contractual relationships with most of its customers to adjust its prices based upon the prevailing market prices on the COMEX. This approach is patterned after the Company's arrangement with its copper suppliers and is designed to remove the risk associated with fluctuating copper prices. As part of an impairment charge in 1996, the Company accrued $4.2 million for anticipated losses related to product liability claims associated with the Original Wirekraft Acquisition. These claims are for a non-wire product utilized in the appliance industry that the Company has not manufactured since 1992. The Company's policy is to record the probable and reasonably estimable loss related to product liability claims. In 1996, the claims significantly increased as a result of the receipt of claims accumulated by insurance companies related to prior periods. Accordingly, the Company revised its estimated liability outstanding on actual claims reported and its estimate of claims incurred but not reported at December 31, 1999. 20 22 The Company continues to review the status of the claims and adjust the liability accordingly. In developing its estimated liability outstanding on actual claims reported, the Company considered historic settlement rates. In determining its estimate of claims incurred but not reported, the Company considered historical claim levels, amounts relative to total product shipped and historical settlement rates. The Company expected the frequency and per incident dollar value of the claims to decrease substantially in 1999 as the products are now beyond their useful life. Actual claims in 1999 did not decrease at the rate expected by the Company as several insurance carriers continued to submit claims for products beyond their expected useful life. The Company has not reached agreement on settlement for the claims on these products. Based on these recent developments, the Company reserved an additional amount of $3.0 million related to these claims. The reserve for product liability claims was $3.8 million and $2.4 million at December 31, 1999 and 1998, respectively. Due to the uncertainties associated with these product claims, the future cost of final settlement of these claims may differ from the liability currently accrued. However, in the Company's opinion, the impact of final settlement of these claims should not, individually or in the aggregate, have a material adverse effect on the Company's results of operations, financial condition or cash flows. The Company's primary sources of liquidity are cash flows from operations and borrowings under the Revolver, which are subject to a borrowing base calculation. The major uses of cash in 2000 are expected to be for debt service requirements and capital expenditures. In 2000, debt service requirements are estimated at approximately $64.3 million while capital expenditures are estimated at approximately $31.0 million. Management believes that cash from operating activities, together with available borrowings under the Revolver, if necessary, should be sufficient to permit the Company to meet these financial obligations. In the event that the sale of the Wire Harness Segment is completed, the Company anticipates that all of the proceeds from the sale will be used to pay down the outstanding Senior Bank Facility. IMPACT OF YEAR 2000 ISSUE During 1999, the Company completed the implementation of a new computer system at several of its facilities in order to become Year 2000 compliant. As of January 31, 2000, the Company is not aware of any known internal failures with the computer systems or machinery and equipment related to the Year 2000 issue nor is the Company aware of any business interruptions from external Year 2000 failures. Due to the general uncertainty inherent in the Year 2000 issue, the Company cannot be certain that there will not be system failures or business interruptions in the future related to the Year 2000 issue, and if such failures were to occur, what impact they might have on the Company's results of operations, liquidity or financial condition. RECENTLY ISSUED ACCOUNTING STANDARDS In June 1998, the FASB adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000. The Company believes that the future adoption of this statement will not have a significant impact on the results of operations or financial position of the Company. SUBSEQUENT EVENT On February 11, 2000, the Company entered into a letter of intent to sell its Wire Harness Segment to Viasystems Group, Inc. ("Viasystems") for $210 million in cash. The sale is contingent upon Viasystems' 21 23 initial public offering. The Company and Viasystems are commonly controlled by affiliates of Hicks Muse. As such, the Company will account for any gain or loss on the transaction through stockholder's equity. The purchase price was determined by senior management of both companies. In addition, each of the boards of directors have received opinions from nationally recognized financial advisors that the purchase price is fair, from a financial point of view, to each of the respective parties. In connection with the sale, the Company will enter into a supply agreement to supply substantially all of the Wire Harness Segment's insulated wire requirements through 2003. See Note 13 to the Company's Consolidated Financial Statements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company does not ordinarily hold market risk sensitive instruments for trading purposes. The Company does, however, recognize market risk from interest rate, foreign currency exchange and commodity price exposure. INTEREST RATE RISK At December 31, 1999, approximately $216 million of the Company's long-term debt, specifically, borrowings outstanding under the Senior Bank Facility and IRBs, bears interest at variable rates. Accordingly, the Company's net income and after tax cash flow are affected by changes in interest rates. Assuming the current level of borrowings at variable rates and assuming a two percentage point change in the average interest rate under these borrowings, it is estimated that the Company's 1999 interest expense would have increased by approximately $4.3 million, resulting in a decrease to the Company's net income and after tax cash flow of approximately $2.5 million. In the event of an adverse change in interest rates, management would likely take actions that would mitigate the Company's exposure; however, due to the uncertainty of the actions that would be taken and their possible effects, this analysis assumes no such actions. Further, this analysis does not consider the effects of the change in the level of overall economic activity that could exist in such an environment. Additionally, there can be no assurances that increases in interest rates will not exceed the above projected interest rates. FOREIGN CURRENCY RISK The Company has operations in Mexico, the Philippines, Italy and France. While the majority of the Company's foreign transactions are denominated in the U.S. dollar, some transactions are denominated in foreign currencies and are subject to market risk with respect to fluctuations in the relative value of currencies. The Company evaluates from time-to-time various currency hedging programs that could reduce the risk. COMMODITY PRICE RISK The principal raw material used by the Company is copper, which is purchased in the form of 5/16 inch rod from the major copper producers in North America. Copper rod prices are based on market prices, which are generally established by reference to the New York Mercantile Exchange, Inc. ("COMEX") prices, plus a premium charged to convert copper cathode to copper rod and deliver it to the required location. As a world traded commodity, copper prices have historically been subject to fluctuations. While fluctuations in the price of copper may directly affect the per unit prices of the Company's products, these fluctuations have not had, nor are expected to have, a material impact on the Company's profitability due to copper price pass-through arrangements that the Company has with its customers. These sales arrangements are based on similar variations of monthly copper price formulas. Use of these copper price formulas minimizes the differences between raw material copper costs charged to the cost of sales and the pass-through pricing charged to customers. 22 24 ITEM 8. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS
PAGE ---- INTERNATIONAL WIRE GROUP, INC Report of Independent Accountants......................... 24 Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998...................................... 25 Consolidated Statements of Operations for the years ended December 31, 1999, December 31, 1998 and December 31, 1997.......... 26 Consolidated Statements of Stockholder's Equity (Deficit) for the years ended December 31, 1999, December 31, 1998 and December 31, 1997.............................................. 27 Consolidated Statements of Cash Flows for the years ended December 31, 1999, December 31, 1998 and December 31, 1997.......... 28 Notes to Consolidated Financial Statements................ 29 Consolidated Financial Statement Schedule for the years ended December 31, 1999, December 31, 1998 and December 31, 1997: Schedule II -- Valuation and Qualifying Accounts.......... 50
23 25 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and shareholder of International Wire Group, Inc.: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of International Wire Group, Inc. and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and the financial statement schedule are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements and the financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As discussed in Note 15 to the consolidated financial statements, the accompanying consolidated financial statements have been restated. As discussed in Note 2 to the consolidated financial statements, the Company changed its method of reporting start-up activities. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania March 17, 2000 24 26 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA) AS OF DECEMBER 31, ASSETS
1999 1998 -------- -------- Current assets: Cash and cash equivalents................................. $ 7,425 -- Accounts receivable, less allowance of $2,879 and $2,633................................................. 101,310 81,369 Inventories............................................... 92,142 82,968 Prepaid expenses and other................................ 12,223 16,510 Deferred income taxes..................................... 15,436 12,107 -------- -------- Total current assets.............................. 228,536 192,954 Property, plant and equipment, net........................ 184,660 178,647 Deferred financing costs, net............................. 14,011 14,966 Intangible assets, net.................................... 243,627 246,529 Other assets.............................................. 7,273 6,018 -------- -------- Total assets...................................... $678,107 $639,114 ======== ======== LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities: Current maturities of long-term obligations............... $ 9,606 $ 6,222 Accounts payable.......................................... 48,655 34,461 Accrued and other liabilities............................. 22,654 25,094 Accrued payroll and payroll related items................. 12,858 13,240 Customers' deposits....................................... 20,987 22,588 Accrued interest.......................................... 4,041 3,674 -------- -------- Total current liabilities......................... 118,801 105,279 Long-term obligations, less current maturities............ 526,338 520,983 Deferred income taxes..................................... 21,772 13,184 Other long-term liabilities............................... 30,926 31,228 -------- -------- Total liabilities................................. 697,837 670,674 Stockholder's equity (deficit): Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding................................. 0 0 Contributed capital....................................... 124,751 126,027 Carryover of predecessor basis............................ (67,762) (67,762) Accumulated deficit....................................... (76,719) (89,825) -------- -------- Total stockholder's equity (deficit).............. (19,730) (31,560) -------- -------- Total liabilities and stockholder's equity (deficit)........................................ $678,107 $639,114 ======== ========
See accompanying notes to the consolidated financial statements 25 27 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31,
1999 1998 1997 -------- -------- -------- Net sales................................................... $643,690 $645,921 $695,148 Operating expenses: Cost of goods sold........................................ 456,333 464,552 530,310 Selling, general and administrative expenses including non-cash compensation expense (income) of ($1,542), $4,158 and 4,010, respectively......................... 61,194 65,442 60,713 Depreciation and amortization............................. 44,794 42,758 36,826 Unusual and plant closing charges......................... 3,000 -- 2,000 Inventory valuation adjustment............................ -- -- 8,500 -------- -------- -------- Operating income............................................ 78,369 73,169 56,799 Other income (expense): Interest expense.......................................... (49,839) (50,627) (50,939) Amortization of deferred financing costs.................. (3,050) (2,980) (3,132) Other, net................................................ -- 95 (103) -------- -------- -------- Income before income tax provision, cumulative effect of change in accounting principle and extraordinary item..... 25,480 19,657 2,625 Income tax provision...................................... 10,055 10,002 2,654 -------- -------- -------- Income (loss) before cumulative effect of change in accounting principle and extraordinary item............... 15,425 9,655 (29) Cumulative effect of change in accounting for start-up costs, net of tax benefit of $1,679....................... (2,319) -- -- -------- -------- -------- Income (loss) before extraordinary item..................... 13,106 9,655 (29) Extraordinary item -- loss related to early extinguishment of debt, net of taxes of $1,995........................... -- -- (2,991) -------- -------- -------- Net income (loss)................................. $ 13,106 $ 9,655 $ (3,020) ======== ======== ========
See accompanying notes to the consolidated financial statements 26 28 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS)
CARRYOVER OF COMMON PREFERRED CONTRIBUTED PREDECESSOR ACCUMULATED STOCK STOCK CAPITAL BASIS DEFICIT TOTAL ------ --------- ----------- ------------ ----------- -------- Balance December 31, 1996, as reported........................ $ 0 $ 4 $125,340 $(67,762) $(92,773) $(35,191) Adjustment........................ -- -- 3,687 -- (3,687) -- --- --- -------- -------- -------- -------- Balance December 31, 1996, as restated........................ 0 4 129,027 (67,762) (96,460) (35,191) Capital contributed............... -- -- 451 -- -- 451 Repurchase of stock of Holding.... -- -- (700) -- -- (700) Conversion of preferred stock to debt............................ -- (4) (9,996) -- -- (10,000) Preferred stock dividend.......... -- -- (1,378) -- -- (1,378) Non-cash compensation expense..... -- -- 4,010 -- -- 4,010 Net loss.......................... -- -- -- -- (3,020) (3,020) --- --- -------- -------- -------- -------- Balance December 31, 1997......... 0 -- 121,414 (67,762) (99,480) (45,828) Capital contributed............... -- -- 455 -- -- 455 Non-cash compensation expense..... -- -- 4,158 -- -- 4,158 Net income........................ -- -- -- -- 9,655 9,655 --- --- -------- -------- -------- -------- Balance December 31, 1998......... 0 -- 126,027 (67,762) (89,825) (31,560) Capital contributed............... -- -- 496 -- -- 496 Repurchase of stock of Holding.... -- -- (230) -- -- (230) Non-cash compensation income...... -- -- (1,542) -- -- (1,542) Net income........................ -- -- -- -- 13,106 13,106 --- --- -------- -------- -------- -------- Balance December 31, 1999......... $ 0 $-- $124,751 $(67,762) $(76,719) $(19,730) === === ======== ======== ======== ========
See accompanying notes to the consolidated financial statements 27 29 INTERNATIONAL WIRE GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) FOR THE YEARS ENDED DECEMBER 31,
1999 1998 1997 -------- -------- --------- Cash flows provided by (used in) operating activities: Net income (loss)......................................... $ 13,106 $ 9,655 $ (3,020) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation........................................... 30,962 27,461 24,465 Amortization of intangibles............................ 13,832 15,297 12,361 Amortization of deferred financing costs............... 3,050 2,980 3,132 Cumulative effect of change in accounting for start-up costs................................................ 3,998 -- -- Extraordinary loss on early extinguishment of debt..... -- -- 4,986 Unusual and plant closing charges...................... 3,000 -- 2,000 Inventory valuation adjustment......................... -- -- 8,500 Non-cash compensation expense (income)................. (1,542) 4,158 4,010 Deferred income taxes.................................. 5,259 5,629 901 Change in assets and liabilities, net of acquisitions: Accounts receivable.................................. (9,823) 9,998 (456) Inventories.......................................... (4,218) (7,995) (1,835) Prepaid expenses and other........................... (5,158) (11,474) (6,273) Accounts payable..................................... 9,090 (17,686) (9,171) Accrued and other liabilities........................ (7,962) (3,824) (4,313) Customers' deposits.................................. (1,601) 1,483 4,591 Accrued interest..................................... 367 (1,160) 186 Income taxes payable/refundable...................... 3,723 (1,113) (2,976) Other long-term liabilities.......................... (4,608) 7,237 (3,090) -------- -------- --------- Net cash from operating activities................ 51,475 40,646 33,998 -------- -------- --------- Cash flows used in investing activities: Acquisitions, net of cash................................. (20,000) (7,821) (58,996) Capital expenditures...................................... (30,506) (34,299) (27,760) -------- -------- --------- Net cash used in investing activities............. (50,506) (42,120) (86,756) -------- -------- --------- Cash flows provided by (used in) financing activities: Equity proceeds........................................... 42 -- -- Proceeds from issuance of long-term obligations........... 25,000 -- 228,125 Repayment of long-term obligations........................ (7,261) (5,339) (143,836) Borrowing (repayment) on revolver......................... (9,000) 8,175 (18,165) Repurchase of stock of Holding............................ (230) -- (700) Cash dividends paid on preferred stock.................... -- -- (1,378) Financing fees and other.................................. (2,095) (1,362) (11,288) -------- -------- --------- Net cash from financing activities................ 6,456 1,474 52,758 -------- -------- --------- Net change in cash and cash equivalents........... 7,425 -- -- Cash and cash equivalents at beginning of the period........ -- -- -- -------- -------- --------- Cash and cash equivalents at end of the period.............. $ 7,425 $ -- $ -- ======== ======== =========
See accompanying notes to the consolidated financial statements 28 30 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997 (IN THOUSANDS, EXCEPT SHARE DATA) 1. COMPANY BACKGROUND AND ACQUISITIONS International Wire Group, Inc. ("Group" or the "Company"), a Delaware corporation, through its two segments, the Wire Segment and the Wire Harness Segment, is engaged in the design, manufacture and marketing of bare and insulated copper wire and wire harnesses. The Company's products are used by a wide variety of customers primarily in the appliance, automotive, computer and data communications and industrial equipment industries. The Company was formed to participate in the transactions contemplated by the Acquisitions (as described below). On June 12, 1995, Wirekraft Holdings Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire Holding Company ("Holding"), the sole common stockholder of Group, Wirekraft Acquisition Company and certain shareholders of Wirekraft and Omega entered into a series of acquisitions and mergers (the "Acquisitions") pursuant to which Group acquired all of the common equity securities (and all securities convertible into such securities) of Wirekraft and all of the common equity securities of Omega. In accordance with EITF 88-16, "Basis in Leveraged Buy Out Transactions," the Acquisitions have been accounted for at "predecessor basis." On March 5, 1996, the Company acquired the businesses of Hoosier Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc. (collectively "Dekko"), a group of affiliated companies operating together under the trade name Dekko Wire Technology Group (the "DWT Acquisition"). Dekko was engaged in the design, manufacture and marketing of insulated and bare copper wire. The DWT Acquisition was accounted for using the purchase method of accounting whereby the total acquisition cost has been allocated to the consolidated assets and liabilities based upon their estimated respective fair values. On February 12, 1997, the Company acquired all of the issued and outstanding common stock of Camden Wire Co., Inc. ("Camden"), a wholly-owned subsidiary of Oneida LTD (the "Camden Acquisition"). Camden was engaged in the design, manufacture and marketing of non-insulated bare and tin-plated copper wire. The Camden Acquisition was accounted for using the purchase method of accounting whereby the total acquisition cost has been allocated to the consolidated assets and liabilities based upon their estimated respective fair values. In 1998, the Company made two strategic acquisitions, the acquisition of the assets of Spargo Wire Company, Inc. (the "Spargo Acquisition") and the acquisition of Italtrecce S.r.l. (the "Italtrecce Acquisition"). The acquisitions were accounted for using the purchase method of accounting. The total consideration paid in connection with these acquisitions, including fees and expenses, was $7,821. On December 29, 1999, the Company acquired the business of a group of three French wire and cable manufacturers (collectively, "Forissier Group"). Two of the companies manufacture and market specialty braids, rope and cable products and the third company manufactures and markets insulated wire products. The total consideration paid in connection with these acquisitions, including fees and expenses, was approximately $20,000. This acquisition was accounted for using the purchase method of accounting whereby the total acquisition cost has been allocated to the consolidated assets and liabilities based upon their estimated respective fair values. 2. SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Group and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 29 31 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Revenue Recognition Sales and related cost of goods sold are included in income when goods are shipped to customers. Inventories Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out ("LIFO") method. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is calculated using the straight-line method. The average estimated lives utilized in calculating depreciation are as follows: building -- 25 to 40 years; building improvements -- 15 years; machinery and equipment -- 3 to 11 years; and furniture and fixtures -- 5 years. Leasehold improvements are amortized over the shorter of the term of the respective lease or the life of the respective improvement. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective accounts, and any resulting gains or losses are included in the statement of operations. Intangible Assets Intangible assets consist principally of goodwill arising from the excess of cost over the value of net assets acquired which is amortized using the straight-line method over a range of twenty to forty years. Accumulated amortization aggregated $44,305 and $36,257 at December 31, 1999 and 1998, respectively. Impairment of Long-lived Assets The Company periodically assesses the recoverability of long-lived assets (including intangible assets) based on its current and anticipated future undiscounted cash flows. In addition, the Company's policy for the recognition and measurement of any impairment of long-lived assets is to assess the current and anticipated future cash flows associated with the impaired asset. An impairment occurs when the cash flows (excluding interest) do not exceed the carrying amount of the asset. The amount of the impairment loss is the difference between the carrying amount of the asset and its estimated fair value. Deferred Financing Costs Deferred financing costs, consisting of fees and other expenses associated with debt financing are amortized over the term of the related debt using the straight-line method, which approximates the effective interest method. Accumulated amortization aggregated $13,404 and $10,354 at December 31, 1999 and 1998, respectively. Deferred Income Taxes The Company accounts for certain items of income and expense in different periods for financial reporting and income tax purposes. Provisions for deferred income taxes are made in recognition of such temporary differences, where applicable. A valuation allowance is established against deferred tax assets unless the Company believes it is more likely than not that the benefit will be realized. Non-cash Compensation Expense (Income) The Company records non-cash compensation which reflects the difference between the cost of Holding's Class A common stock, which can be converted into shares of Holding common stock at a variable rate, and the value of the common shares at the time of the valuation. Contributed capital is increased for non-cash compensation expense and decreased for non-cash compensation income. 30 32 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Foreign Currency The Company has operations in Mexico, the Philippines, Italy and France. The U.S. dollar is the functional currency for the majority of the Company's foreign transactions. All gains and losses from remeasurement and transactions are determined using a combination of current and historical rates and are included in net income. Interest Rate Hedging Arrangement As of December 31, 1998, the Company had one interest rate protection agreement for the purpose of hedging against rising interest rates. The fees the Company paid for these arrangements are included in deferred financing fees and amortized on a straight-line basis over the life of the arrangements. This agreement provided the Company with a ceiling on the three month London Interbank Offered Rate ("LIBOR") of 8.0% on $32,500 of indebtedness through March 1999. The Company estimates that the fair value approximated the carrying value of the interest rate hedging arrangement. There was no such arrangement at December 31, 1999. Fair Value of Financial Instruments The Company's financial instruments, excluding the Senior Notes (as hereinafter defined) are carried at fair value or amounts that approximate fair value. The Company has estimated the fair market value of the Senior Notes using current market data. The fair market value of the Senior Notes was approximately $308,625 and $318,750 at December 31, 1999 and 1998, respectively. Estimates and Assumptions The preparation of 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. Statement of Cash Flows For purposes of the consolidated statement of cash flows, the Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Interest paid for the years ended December 31, 1999, 1998 and 1997, was $49,480, $51,787 and $50,753, respectively. Net taxes paid (refunded) for the years ended December 31, 1999, 1998 and 1997 were ($6), $5,644 and $2,817, respectively. During the year ended December 31, 1997, the Company entered into certain non-cash investing and financing activities. In 1997, the Company exchanged $10,000 of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock for debt. In fiscal 1999, 1998 and 1997, the Company recorded capital lease obligations of $320, $1,044 and $0, respectively, for property, plant and equipment. Significant Customer A significant portion of the Company's sales were to a major customer within the Wire Harness Segment. Sales to this customer represented 15%, 15% and 14% of net sales for the years ended December 31, 1999, 1998 and 1997, respectively. 31 33 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Reclassification of Financial Information Certain items in the prior years' financial statements have been reclassified to conform with the current period presentation. Change in Accounting Principle In April 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities," which requires costs of start-up activities and organization costs to be expensed as incurred. SOP 98-5 is effective for financial statements for fiscal years beginning after December 15, 1998. The Company adopted SOP 98-5 effective January 1, 1999. The Company had $3,998 in net capitalized start-up costs remaining at December 31, 1998, which the Company expensed in accordance with SOP 98-5 at January 1, 1999. Recently Issued Accounting Standards In June 1998, the FASB adopted Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value and that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate, and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000. The Company believes that the future adoption of this statement will not have a significant impact on the results of operations or financial position of the Company. 3. INVENTORIES The composition of inventories is as follows:
DECEMBER 31, ----------------- 1999 1998 ------- ------- Raw materials............................................... $30,723 $41,777 Work-in process............................................. 19,168 13,047 Finished goods.............................................. 42,251 28,144 ------- ------- Total inventories................................. $92,142 $82,968 ======= =======
The current cost of inventories at December 31, 1999 and 1998 approximated the carrying cost. In connection with the decline in the average price of copper, the Company recorded a pre-tax inventory valuation charge of $8,500 for the year ended December 31, 1997 to reduce the LIFO valuation of copper in inventory. 32 34 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 4. PROPERTY, PLANT AND EQUIPMENT The composition of property, plant and equipment is as follows:
DECEMBER 31, --------------------- 1999 1998 --------- --------- Land........................................................ $ 3,759 $ 3,836 Buildings and improvements.................................. 51,367 53,262 Machinery and equipment..................................... 270,892 232,614 Construction in progress.................................... 2,824 7,004 --------- --------- 328,842 296,716 Less: accumulated depreciation.............................. (144,182) (118,069) --------- --------- $ 184,660 $ 178,647 ========= =========
5. FINANCING COSTS AND RELATED PARTY TRANSACTIONS In December 1999, the Company amended the Amended and Restated Credit Agreement in connection with the acquisition of Forissier Group. Accordingly, the Company recorded deferred financing costs of $2,095. In June 1997, the Company refinanced debt under the Amended and Restated Credit Agreement. Accordingly, the Company recorded an extraordinary loss of $2,601, net of income tax related to the write-off of deferred financing fees. In addition, the Company repurchased $5,000 of debt and recorded an extraordinary loss of $390, net of income tax, related to a prepayment premium. In connection with the Acquisitions and the related financing, the Company entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse Partners"), an affiliate of the Company. The Agreement provides that the Company shall pay Hicks Muse Partners an annual fee of $500, for ten years for monitoring and oversight services adjusted annually at the end of each fiscal year to an amount equal to 0.1% of the consolidated net sales of the Company, but in no event less than $500 annually. 6. LONG-TERM OBLIGATIONS The composition of long-term obligations at December 31, 1999 and 1998 is as follows:
1999 1998 -------- -------- Amended and Restated Credit Agreement: Revolving credit facility................................. $ -- $ 9,000 Term facility............................................. 200,500 180,250 Senior Subordinated Notes................................... 150,000 150,000 Series B Senior Subordinated Notes.......................... 150,000 150,000 Series B Senior Subordinated Notes Premium.................. 9,979 11,295 Industrial revenue bonds.................................... 15,500 15,500 Other....................................................... 9,965 11,160 -------- -------- 535,944 527,205 Less, current maturities.................................... 9,606 6,222 -------- -------- $526,338 $520,983 ======== ========
33 35 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The schedule of principal payments (excluding unamortized premium) for long-term obligations at December 31, 1999 is as follows: 2000........................................................ $ 9,606 2001........................................................ 10,730 2002........................................................ 48,623 2003........................................................ 134,989 2004........................................................ 125 Thereafter.................................................. 321,892 -------- Total............................................. $525,965 ========
Amended and Restated Credit Agreement In connection with the acquisition of Forissier Group, the Company amended the Amended and Restated Credit Agreement dated June 17, 1997 to obtain an additional $25,000 Term A1 Loan. The terms of the amendment require mandatory principle payments in quarterly installments. The final installment of the Term A1 Loan is due March 31, 2003. As amended, the Amended and Restated Credit Agreement provides senior secured financing of up to $275,500, consisting of a $17,500 Term A Loan, a $25,000 Term A1 Loan and a $158,000 Term B Loan (collectively, the "Term Facility") and a $75,000 revolving loan and letter of credit facility (the "Revolver"). Mandatory principal payments of the Term Facility are due in quarterly installments. The final installment of the Term A loan is due September 30, 2002, at which time the Revolver is also due. The final installment of the Term A1 Loan is due March 31, 2003 and the final installment of the Term B Loan is due September 30, 2003. Borrowings under the Term A Loan and Revolver bear interest, at the option of Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined in the Amended and Restated Credit Agreement) plus 0.25% or (b) the Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) plus 1.25%. Borrowings under the Term B Loan and Term A1 Loan bear interest, at the option of Group, at a rate per annum equal to (a) the Alternate Base Rate plus 1.0% or (b) the Eurodollar Rate plus 2.0%. The Alternate Base Rate and Eurodollar Rate margins are established quarterly based on a formula as defined in the Amended and Restated Credit Agreement. Interest payment dates vary depending on the interest rate option to which the Term Facility and the Revolver are tied, but generally interest is payable quarterly. The Amended and Restated Credit Agreement contains several financial covenants which, among other things, require Group to maintain certain financial ratios and restrict Group's ability to incur indebtedness, make capital expenditures and pay dividends. The weighted average interest rate on outstanding borrowings under the Amended and Restated Credit Agreement was 8.11% and 7.53% at December 31, 1999 and 1998, respectively. Senior Subordinated Notes and Series B Senior Subordinated Notes The Senior Subordinated Notes issued in connection with the Acquisitions and the Series B Notes issued in connection with the refinancing of the Term Facility (collectively, the "Senior Notes") were issued under similar indentures (the "Indentures") dated June 12, 1995 and June 17, 1997, respectively. The Senior Notes represent unsecured general obligations of Group and are subordinated to all Senior Debt (as defined in the Indentures) of Group. The Senior Notes are fully and unconditionally (as well as jointly and severally) guaranteed on an unsecured, senior subordinated basis by each subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro Componentes de Mexico, S.A. de C.V., Wirekraft Industries de Mexico, S.A. de C.V., IWG-Philippines, Inc., IWG International, Inc., Italtrecce-Societa Italiana Trecce & Affini S.r.l., International Wire SAS, JYM Finance, S.A., Tresse Metalique J. Forissier, S.A., Cablerie E. 34 36 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Charbonnet, S.A., Forissier Connectique, S.A., Hermitec, S.A. and Fressynet, S.A. (the "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by the Company. The Senior Notes mature on June 1, 2005. Interest on the Senior Notes is payable semi-annually on each June 1 and December 1. The Senior Notes bear interest at the rate of 11.75% per annum. The Senior Notes may not be redeemed prior to June 1, 2000, except in the event of a Change of Control (as defined) and at such applicable premium (as defined). The Senior Notes are redeemable, at the Company's option, at the redemption prices of 105.875% at June 1, 2000, and at decreasing prices to 100% at June 1, 2003, and thereafter, with accrued interest. The Senior Notes restrict, among other things, the incurrence of additional indebtedness by the Company, the payment of dividends and other distributions in respect of the Company's capital stock, the payment of dividends and other distributions by the Company's subsidiaries, the creation of liens on the properties and the assets of the Company to secure certain subordinated debt and certain mergers, sales of assets and transactions with affiliates. Industrial Revenue Bonds In connection with the Camden Acquisition, the Company assumed debt related to two Industrial Revenue Bonds (the "IRB's") totaling $15,500. The IRB's are due in August, 2005 and March, 2016 in the amounts of $9,000 and $6,500, respectively. The IRB's bear interest at a rate per annum which is tied to the Tax Exempt Money Market Index which resulted in an effective rate of 4.29% and 3.42% at December 31, 1999 and 1998, respectively. Rates change weekly and interest is paid monthly. The IRB's are collateralized by letters of credit totaling $15,500. 7. PREFERRED STOCK In connection with the DWT Acquisition, the Company issued 400,000 shares of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock, par value $.01 (the "Preferred Stock"). In accordance with the Certificate of Designation of the Preferred Stock, cumulative dividends were payable quarterly at the rate of 14% per annum. The Preferred Stock had a liquidation preference of $25.00 per share and a par value of $.01 per share. In 1997, the Company exchanged all shares of Preferred Stock for debt and paid all dividends in arrears related to the Preferred Stock. 35 37 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 8. INCOME TAXES The Company accounts for income taxes in accordance with the provisions of SFAS No. 109. The provision for income taxes is as follows:
YEAR ENDED DECEMBER 31, --------------------------- 1999 1998 1997 ------- ------- ------- Current: Federal............................................... $ 2,096 $ 2,535 $ 169 State................................................. 358 736 776 Foreign............................................... 2,342 1,102 808 ------- ------- ------- 4,796 4,373 1,753 Deferred: Federal............................................... 4,066 4,586 1,020 State................................................. 593 1,043 (119) Foreign............................................... 600 -- -- ------- ------- ------- 5,259 5,629 901 ------- ------- ------- 10,055 10,002 2,654 Tax benefit on change in accounting principle........... (1,679) -- -- Tax benefit on extraordinary item....................... -- -- (1,995) ------- ------- ------- Total provision............................... $ 8,376 $10,002 $ 659 ======= ======= =======
The components of income before income taxes, cumulative effect of change in accounting principle and extraordinary item were as follows:
YEAR ENDED DECEMBER 31, --------------------------- 1999 1998 1997 ------- ------- ------- Domestic................................................ $13,462 $24,324 $(2,371) Foreign................................................. 12,018 (4,667) 4,996 ------- ------- ------- Income (loss) before income taxes, cumulative effect of change in accounting principle and extraordinary item.................................................. $25,480 $19,657 $ 2,625 ======= ======= =======
Reconciliation between the statutory income tax rate and effective tax rate is summarized below:
YEAR ENDED DECEMBER 31, -------------------------- 1999 1998 1997 ------- ------- ------ U.S. Federal statutory rate at 35%....................... $ 8,918 $ 6,880 $ 919 State taxes, net of federal effect....................... 618 1,156 427 Foreign taxes............................................ (1,265) 736 (875) Nondeductible expenses................................... 313 (870) (163) Nondeductible amortization of intangibles................ 1,464 1,380 1,307 Nondeductible compensation expense (income).............. (540) 1,455 1,405 Other.................................................... 547 (735) (366) ------- ------- ------ $10,055 $10,002 $2,654 ======= ======= ======
36 38 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The tax effects of significant temporary differences representing deferred tax assets and liabilities are as follows:
YEAR ENDED DECEMBER 31, --------------------------- 1999 1998 1997 ------- ------- ------- Deferred tax assets: Accounts receivable reserves.......................... $ 1,110 $ 1,106 $ 720 Accrued liabilities not yet deductible................ 194 1,393 2,672 Inventories........................................... 5,872 8,808 8,608 Net operating loss carryforward....................... 6,402 799 5,077 AMT credit carryforward............................... 1,858 2,259 -- Postretirement benefits............................... 2,690 2,912 3,158 Other................................................. 215 341 315 ------- ------- ------- 18,341 17,618 20,550 Deferred tax liabilities: Depreciation and amortization......................... 24,677 18,695 15,998 ------- ------- ------- Net deferred tax asset (liability)............ $(6,336) $(1,077) $ 4,552 ======= ======= =======
The Company's net operating loss expires in periods ranging from the year 2010 through the year 2011. The Company has no present intention of remitting undistributed earnings of its foreign subsidiaries and, accordingly, no deferred tax liability has been established relative to these earnings. The Internal Revenue Service ("IRS") has examined the U.S. income tax return of Kirtland Indiana, Limited Partnership ("KILP"), a predecessor of one of the Company's subsidiaries, for the tax period ended December 21, 1992. The Company received a proposed adjustment to increase taxable income for the period under review. The Company believes that final resolution of this matter will not have a material adverse effect on the Company and that adequate amounts of taxes have been provided. 9. UNUSUAL AND PLANT CLOSING CHARGES During the development of a new business strategy in 1996, the Company formulated a plan to realign the plant capacity through plant closings and consolidations of Wire Segment facilities. To that end, the Company established a reserve for plant closings. As future costs of the 1996 plan became reasonably estimable, the Company charged an additional $2,000 to the reserve in 1997 relating to the closure of plants in the Wire Segment. The plant closing reserve includes provisions for shut-down costs from the period of the plant closure to the date of disposal, commitment costs for leased property and key personnel and severance related costs. The Company anticipates that the remaining reserve is adequate for the future expenditures related to plant closings and that all remaining costs will be incurred with in the next year. During 1999, 1998 and 1997, plant closing actions resulted in the reduction of approximately 0, 90, 300 employees, respectively. There have been ten Wire Harness Segment facilities and six Wire Segment facilities closed to date. 37 39 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes the activity in the plant closing reserve for the years ended December 31, 1999, 1998 and 1997:
YEAR ENDED DECEMBER 31, ------------------------ 1999 1998 1997 ------ ------ ------ Balance, beginning of period............................... $1,079 $1,445 $2,462 Charges to operations: Facility shut-down costs................................. -- -- 1,875 Lease commitments........................................ -- -- -- Key personnel and severance costs........................ -- -- 125 ------ ------ ------ -- -- 2,000 Costs incurred: Facility shut-down costs................................. (549) (69) (1,979) Lease commitments........................................ (90) (236) (230) Key personnel and severance costs........................ (364) (61) (808) ------ ------ ------ (1,003) (366) (3,017) ------ ------ ------ Balance, end of period..................................... $ 76 $1,079 $1,445 ====== ====== ======
The Company periodically evaluates the adequacy of the reserve balances and estimated future expenditures, including assumptions used and the period over which such costs are expected to be incurred. As part of an impairment charge in 1996, the Company accrued $4,200 for anticipated losses related to product liability claims associated with the Original Wirekraft Acquisition. These claims are for a non-wire product utilized in the appliance industry that the Company has not manufactured since 1992. The Company's policy is to record the probable and reasonably estimable loss related to product liability claims. In 1996, the claims significantly increased as a result of the receipt of claims accumulated by insurance companies related to prior periods. Accordingly, the Company revised its estimated liability outstanding on actual claims reported and its estimate of claims incurred but not reported at December 31, 1999. The Company continues to review the status of the claims and adjust the liability accordingly. In developing its estimated liability outstanding on actual claims reported, the Company considered historic settlement rates. In determining its estimate of claims incurred but not reported, the Company considered historical claim levels, amounts relative to total product shipped and historical settlement rates. The Company expected the frequency and per incident dollar value of the claims to decrease substantially in 1999 as the products have exceeded their useful life. Actual claims in 1999 did not decrease at the rate expected by the Company as several insurance carriers continued to submit claims for products beyond their expected useful life. The Company has not reached agreement on settlement for the claims on these products. Based on these recent developments, the Company reserved an additional amount of $3,000 related to these claims. The Company has estimated its liability outstanding on actual claims reported at December 31, 1999 and 1998 to be $2,739 and $1,574, respectively. Additionally, the Company considered historical settlement rates to develop its estimate for incurred but not reported claims at December 31, 1999 and 1998 of $968 and $818, respectively. Due to the uncertainties associated with these product claims, the future cost of final settlement of these claims may differ from the liability currently accrued. However, in the Company's opinion, the impact of final settlement of these claims on future operations, financial position and cash flows will not be material. 38 40 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 10. RETIREMENT BENEFITS AND STOCK OPTION PLANS The Company sponsors a number of defined contribution retirement plans which provide retirement benefits for eligible employees. Company contribution expense related to these retirement plans for the years ended December 31, 1999, 1998 and 1997 amounted to approximately $3,828, $3,837 and $3,442, respectively. Holding's Qualified and Non-Qualified Stock Option Plan (the "Option Plan") provides for the granting of up to 4,795,322 shares of common stock to officers and key employees of Holding and the Company. Under the Option Plan, options granted approximate market value of the common stock at the date of grant. Such options vest ratably over a five year period commencing on the first anniversary date after the date of grant, and vested options are exercisable at the discretion of the committee appointed to administer the Option Plan. Generally, an option may be exercised only if the holder is an officer or employee of Holding or the Company at the time of exercise. Options granted under the Option Plan are not transferable, except by will and the laws of descent and distribution. Holding and the Company also granted Performance Options (the "Performance Options") to certain key executives in 1996 and 1995. The Performance Options are exercisable only on the occurrence of certain events. The exercise price for the Performance Options is initially equal to $1.00 per share and, effective each anniversary of the grant date, the per share exercise price for the Performance Options is equal to the per share exercise price for the prior year multiplied by 1.09. The Performance Options terminate on the tenth anniversary date of the date of grant. In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation," the Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations in accounting for the Option Plan. Accordingly, no compensation cost has been recognized for the Option Plan and the Performance Options. There may be compensation expense in future periods to the extent that the fair value of the stock exceeds the exercise price of the Performance Options. Had compensation cost for the Option Plan and the Performance Options been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS No. 123, the Company's net income would approximate the following:
YEAR ENDED DECEMBER 31, -------------------------- 1999 1998 1997 ------- ------ ------- As reported.............................................. $13,106 $9,655 $(3,020) Pro forma................................................ $12,918 $9,345 $(3,210)
The minimum value of each option grant is estimated on the date of grant with the following assumptions in 1999, 1998 and 1997, respectively: (i) risk-free interest rates of 6.0% in 1999, 6.0% in 1998 and a range of 6.4% to 6.6% in 1997 and (ii) expected life of 10 years. The effects of applying SFAS No. 123 in this pro forma disclosure are not indicative of future amounts. Additional awards in future years are anticipated. 39 41 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Changes in the status of the Option Plan are summarized below:
WEIGHTED AVERAGE EXERCISE PRICE OPTIONS OPTIONS PER SHARE GRANTED VESTED ---------------- --------- --------- December 31, 1996.............................. $1.01 4,015,249 195,249 Granted...................................... $1.40 1,350,000 -- Vested....................................... $1.03 -- 915,000 Forfeitures.................................. $1.00 (888,805) (28,805) --------- --------- December 31, 1997.............................. $1.12 4,476,444 1,081,444 Granted...................................... $1.81 225,000 -- Vested....................................... $1.12 -- 885,000 Forfeitures.................................. $1.41 (304,992) (44,992) --------- --------- December 31, 1998.............................. $1.14 4,396,452 1,921,452 Granted...................................... $2.24 400,000 -- Vested....................................... $1.11 -- 755,000 Exercised.................................... $1.40 (30,000) (30,000) Forfeitures.................................. $1.33 (570,000) (140,000) --------- --------- December 31, 1999.............................. $1.22 4,196,452 2,506,452 ========= =========
Changes in the status of the Performance Options are summarized below:
WEIGHTED AVERAGE EXERCISE PRICE OPTIONS OPTIONS PER SHARE GRANTED VESTED ---------------- --------- --------- December 31, 1996.............................. $1.06 4,202,744 -- Granted...................................... $ -- -- -- --------- --------- December 31, 1997.............................. $1.16 4,202,744 -- Granted...................................... $ -- -- -- Forfeitures.................................. $1.26 (350,228) -- --------- --------- December 31, 1998.............................. $1.26 3,852,516 -- Reissued..................................... $1.26 350,228 -- --------- --------- December 31, 1999.............................. $1.38 4,202,744 -- ========= =========
The weighted average grant-date fair value of options granted during 1999, 1998 and 1997 was $1.26, $1.04 and $0.75 per share, respectively. Of the 4,196,452 options outstanding under the Option Plan at December 31, 1999, 2,925,000 have an exercise price at $1.00 per share, 625,000 at $1.40 per share, 41,452 at $1.63 per share, 205,000 at $1.81 per share and 400,000 at $2.24 per share and have weighted average remaining contractual lives of between 6 and 10 years. The weighted average exercise price of options vested at December 31, 1999 is $1.11 per share. Of the Performance Options outstanding at December 31, 1999, 2,966,178 and 1,236,566 have exercise prices of $1.41 and $1.30 respectively, and have weighted average remaining contractual lives of between 6 and 7 years. The performance options that were forfeited in 1998 were reissued to certain officers of the Company in 1999. In addition to the options granted to officers and key employees through the Option Plan, the Company also granted options to purchase 300,000 shares of Holding Common Stock at $1.00 per share to directors of the Company. These options were issued and vested in 1995. 40 42 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Holding Class A common stock may be converted in shares of Holding common stock (i) at the option of any holder thereof at any time, (ii) at the option of Holding upon the occurrence of a Triggering Event (as defined), and (iii) mandatorily at March 31, 2005. Each share of Holding's Class A common stock is convertible into a fraction of a share of Holding common stock based on a formula set forth in the Company's Certificate of Incorporation. During the years ended December 31, 1999, 1998 and 1997, the Company recorded non-cash compensation expense (income) of ($1,542), $4,158 and $4,010, respectively, which reflects the difference between the cost of the Class A common stock and the value of the defined conversion feature at those dates. 11. COMMITMENTS AND CONTINGENCIES The Company leases certain property, transportation vehicles and other equipment. Total rental expense under operating leases was $6,772, $6,511 and $5,862 for the years ended December 31, 1999, 1998 and 1997, respectively. Future minimum lease payments under capital and operating leases for the years ended December 31 are:
CAPITAL OPERATING ------- --------- 2000........................................................ $ 1,875 $ 4,115 2001........................................................ 1,567 3,536 2002........................................................ 578 2,482 2003........................................................ 433 1,794 2004........................................................ 432 1,200 Thereafter.................................................. 2,043 1,554 ------- ------- Total minimum lease payments.............................. 6,928 $14,681 ======= Less amount representing interest......................... (2,374) ------- Present value of net minimum lease payments............... $ 4,554 =======
The Company is subject to legal proceedings and claims that arise in the normal course of business. In the opinion of management, the ultimate liabilities with respect to these actions will not have a material adverse effect on the Company's financial condition, results of operations or cash flows. 12. BUSINESS SEGMENT INFORMATION The Company conducts its operations through two business segments, a Wire Segment and a Wire Harness Segment. The Wire Segment is comprised of two operating divisions. The accounting policies of the segments are the same as those described in Note 2 to the consolidated financial statements, "Significant Accounting Policies." Segment data includes intersegment revenues, as well as charges allocating corporate administrative costs to each of its operating segments. The Company evaluates the performance of its segments and allocates resources to them based on operating income. 41 43 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The table below presents information about reported segments for the years ended December 31, 1999, 1998 and 1997:
WIRE WIRE HARNESS CONSOLIDATED -------- -------- ------------ December 31, 1999 Sales............................................. $484,978 $191,046 $676,024 Intersegment sales................................ (32,334) -- (32,334) -------- -------- -------- Sales to customers................................ 452,644 191,046 643,690 Depreciation and amortization..................... 35,728 9,066 44,794 Unusual charges................................... -- 3,000 3,000 Operating income.................................. 61,144 17,225 78,369 Total assets...................................... $572,721 $105,386 $678,107 December 31, 1998 Sales............................................. $502,013 $170,393 $672,406 Intersegment sales................................ (26,485) -- (26,485) -------- -------- -------- Sales to customers................................ 475,528 170,393 645,921 Depreciation and amortization..................... 35,169 7,589 42,758 Operating income.................................. 51,757 21,412 73,169 Total assets...................................... $539,527 $ 99,587 $639,114 December 31, 1997 Sales............................................. $553,925 $165,430 $719,355 Intersegment sales................................ (24,207) -- (24,207) -------- -------- -------- Sales to customers................................ 529,718 165,430 695,148 Depreciation and amortization..................... 29,389 7,437 36,826 Plant closing charges............................. 2,000 -- 2,000 Inventory valuation adjustment.................... 8,500 -- 8,500 Operating income.................................. 36,451 20,348 56,799 Total assets...................................... $536,782 $ 91,266 $628,048
A reconciliation of total operating income for reportable segments to consolidated income (loss) before income tax provision, change in accounting principle and extraordinary item for the years ended December 31, 1998, 1997 and 1996 is as follows:
YEAR ENDED DECEMBER 31, ------------------------------ 1999 1998 1997 -------- -------- -------- Total operating income (loss) for reportable Segments........................................... $ 78,369 $ 73,169 $ 56,799 Other income (expense): Interest expense................................... (49,839) (50,627) (50,939) Amortization of deferred financing costs........... (3,050) (2,980) (3,132) Other, net......................................... -- 95 (103) -------- -------- -------- Consolidated income before income tax provision, change in accounting principle and extraordinary item............................................... $ 25,480 $ 19,657 $ 2,625 ======== ======== ========
42 44 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following is sales and long-lived asset information by geographic area as of and for the years ended December 31:
SALES LONG-LIVED ASSETS ------------------------------ ------------------- 1999 1998 1997 1999 1998 -------- -------- -------- -------- -------- United States................... $622,929 $635,253 $695,148 $400,201 $416,190 Foreign......................... 77,434 40,915 35,885 49,370 29,970 Eliminations.................... (56,673) (30,247) (35,885) -- -- -------- -------- -------- -------- -------- $643,690 $645,921 $695,148 $449,571 $446,160 ======== ======== ======== ======== ========
Foreign sales are based on the country in which the legal subsidiary is domiciled. Sales from no single foreign country were material to the consolidated sales of the Company. 13. SUBSEQUENT EVENT On February 11, 2000, the Company entered into a letter of intent to sell its Wire Harness Segment to Viasystems Group, Inc. ("Viasystems") for $210,000 in cash. The sale is contingent upon Viasystems' initial public offering. The Company and Viasystems are commonly controlled by affiliates of Hicks Muse. As such, the Company will account for any gain or loss on the transaction through stockholder's equity. The purchase price was determined by senior management of both companies. In addition, each of the boards of directors have received opinions from nationally recognized financial advisors that the purchase price is fair, from a financial point of view, to each of the respective parties. In connection with the sale, the Company will enter into a supply agreement to supply substantially all of the Wire Harness Segment's insulated wire requirements through 2003. 14. GUARANTOR SUBSIDIARIES The Senior Notes are fully and unconditionally (as well as jointly and severally) guaranteed on an unsecured, senior subordinated basis by each subsidiary of the Company other than the Non-Guarantor Subsidiaries. Each of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by the Company. The following condensed, consolidating financial statements of the Company include the accounts of the Company, the combined accounts of the Guarantor Subsidiaries and the combined accounts of the Non-Guarantor Subsidiaries. Given the size of the Non-Guarantor Subsidiaries relative to the Company on a consolidated basis, separate financial statements of the respective Guarantor Subsidiaries are not presented because management has determined that such information is not material in assessing the Guarantor Subsidiaries. 43 45 CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1999 ASSETS
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED -------- --------- --------- ------------ ------------ Cash...................................... $ -- $ 7,131 $ 294 $ -- $ 7,425 Accounts receivable....................... -- 84,278 17,284 (252) 101,310 Inventories............................... -- 83,593 8,549 -- 92,142 Other current assets...................... -- 24,456 3,203 -- 27,659 -------- --------- ------- --------- -------- Total current assets............ -- 199,458 29,330 (252) 228,536 Property, plant and equipment, net........ -- 149,212 35,448 -- 184,660 Intangible assets, net.................... 18,484 229,358 9,796 -- 257,638 Investment in subsidiaries................ 736,090 -- -- (736,090) -- Other assets.............................. -- 3,147 4,126 -- 7,273 -------- --------- ------- --------- -------- Total assets.................... $754,574 $ 581,175 $78,700 $(736,342) $678,107 ======== ========= ======= ========= ======== LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities....................... $ 11,674 $ 92,255 $15,124 $ (252) $118,801 Long term obligations, less current maturities.............................. 507,479 18,859 -- -- 526,338 Other long-term liabilities............... -- 51,849 849 -- 52,698 Intercompany (receivable) payable......... 187,389 (231,846) 44,457 -- -- -------- --------- ------- --------- -------- Total liabilities............... 706,542 (68,883) 60,430 (252) 697,837 Stockholder's equity (deficit): Common stock............................ 0 0 0 0 0 Contributed capital..................... 124,751 572,012 10,867 (582,879) 124,751 Carryover of predecessor basis.......... -- (67,762) -- -- (67,762) Retained earnings (accumulated deficit)............................. (76,719) 145,808 7,403 (153,211) (76,719) -------- --------- ------- --------- -------- Total stockholder's equity (deficit)..................... 48,032 650,058 18,270 (736,090) (19,730) -------- --------- ------- --------- -------- Total liabilities and stockholder's equity (deficit)..................... $754,574 $ 581,175 $78,700 $(736,342) $678,107 ======== ========= ======= ========= ========
44 46 CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED -------- --------- --------- ------------ ------------ Net sales............................... $ -- $622,929 $77,434 $(56,673) $643,690 Operating expenses: Cost of goods sold.................... -- 462,909 50,097 (56,673) 456,333 Selling, general and administrative expenses, including non-cash compensation income of $1,542...... (1,542) 52,550 10,186 -- 61,194 Depreciation and amortization......... 826 34,862 9,106 -- 44,794 Unusual charges....................... -- 3,000 -- -- 3,000 -------- -------- ------- -------- -------- Operating income (loss)................. 716 69,608 8,045 -- 78,369 Other income (expense): Interest expense...................... (48,839) (975) (25) -- (49,839) Amortization of deferred financing costs.............................. (3,050) -- -- -- (3,050) Equity in net income of subsidiaries....................... 64,279 -- -- (64,279) -- -------- -------- ------- -------- -------- Income before income tax provision and cumulative effect of change in accounting principle.................. 13,106 68,633 8,020 (64,279) 25,480 Income tax provision.................... -- 8,620 1,435 -- 10,055 -------- -------- ------- -------- -------- Income before cumulative effect of change in accounting principle........ 13,106 60,013 6,585 (64,279) 15,425 Cumulative effect of change in accounting for start-up costs, net of tax benefit of $1,679................. -- (2,319) -- -- (2,319) -------- -------- ------- -------- -------- Net income.............................. $ 13,106 $ 57,694 $ 6,585 $(64,279) $ 13,106 ======== ======== ======= ======== ========
CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED -------- --------- --------- ------------ ------------ Net cash from operating activities.... $ (7,772) $ 50,195 $ 4,303 $ 4,749 $ 51,475 -------- -------- ------- ------- -------- Cash flows used in investing activities: Acquisitions, net of cash........... -- (20,000) -- -- (20,000) Capital expenditures................ -- (22,096) (8,410) -- (30,506) -------- -------- ------- ------- -------- Net cash used in investing activities.......................... -- (42,096) (8,410) -- (50,506) -------- -------- ------- ------- -------- Cash flows provided by (used in) financing activities: Equity proceeds..................... 42 -- 4,749 (4,749) 42 Repurchase of stock of Holding...... (230) -- -- -- (230) Proceeds from issuance of long-term obligations...................... 25,000 -- -- -- 25,000 Borrowing (repayment) of long-term obligations and revolver......... (14,945) (968) (348) -- (16,261) Financing fees and other............ (2,095) -- -- -- (2,095) -------- -------- ------- ------- -------- Net cash from (used in) financing activities.......................... 7,772 (968) (348) -- 6,456 -------- -------- ------- ------- -------- Net change in cash.................... $ -- $ 7,131 $ 294 $ -- $ 7,425 ======== ======== ======= ======= ========
45 47 CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1998 ASSETS
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED -------- --------- --------- ------------ ------------ Cash...................................... $ -- $ -- $ -- $ -- $ -- Accounts receivable....................... -- 79,444 2,969 (1,044) 81,369 Inventories............................... -- 80,803 2,165 -- 82,968 Other current assets...................... -- 23,414 5,203 -- 28,617 -------- -------- ------- --------- -------- Total current assets............ -- 183,661 10,337 (1,044) 192,954 Property, plant and equipment, net........ -- 153,587 25,060 -- 178,647 Intangible assets, net.................... 20,265 236,725 4,505 -- 261,495 Investment in subsidiaries................ 666,004 -- -- (666,004) -- Other assets.............................. -- 5,613 405 -- 6,018 -------- -------- ------- --------- -------- Total assets.................... $686,269 $579,586 $40,307 $(667,048) $639,114 ======== ======== ======= ========= ======== LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) Current liabilities....................... $ 8,424 $ 90,215 $ 7,684 $ (1,044) $105,279 Long term obligations, less current maturities.............................. 500,795 19,840 348 -- 520,983 Other long-term liabilities............... -- 44,412 -- -- 44,412 Intercompany (receivable) payable......... 140,848 (167,245) 26,397 -- -- -------- -------- ------- --------- -------- Total liabilities............... 650,067 (12,778) 34,429 (1,044) 670,674 Stockholder's equity (deficit): Common stock............................ 0 -- -- -- 0 Contributed capital..................... 126,027 572,012 6,118 (578,130) 126,027 Carryover of predecessor basis.......... -- (67,762) -- -- (67,762) Retained earnings (accumulated deficit)............................. (89,825) 88,114 (240) (87,874) (89,825) -------- -------- ------- --------- -------- Total stockholder's equity (deficit)..................... 36,202 592,364 5,878 (666,004) (31,560) -------- -------- ------- --------- -------- Total liabilities and stockholder's equity (deficit)..................... $686,269 $579,586 $40,307 $(667,048) $639,114 ======== ======== ======= ========= ========
46 48 CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED -------- --------- --------- ------------ ------------ Net sales............................. $ -- $635,253 $ 40,915 $(30,247) $645,921 Operating expenses: Cost of goods sold.................. -- 468,918 25,881 (30,247) 464,552 Selling, general and administrative expenses including non-cash compensation expense of $4,158... 4,158 47,782 13,502 -- 65,442 Depreciation and amortization....... 826 35,754 6,178 -- 42,758 -------- -------- -------- -------- -------- Operating income (loss)............... (4,984) 82,799 (4,646) -- 73,169 Other income (expense): Interest expense.................... (49,762) (844) (21) -- (50,627) Amortization of deferred financing costs............................ (2,980) -- -- -- (2,980) Equity in net income of subsidiaries..................... 67,381 -- -- (67,381) -- Other, net.......................... -- 95 -- -- 95 -------- -------- -------- -------- -------- Income (loss) before income tax provision........................... 9,655 82,050 (4,667) (67,381) 19,657 Income tax provision.................. -- 8,900 1,102 -- 10,002 -------- -------- -------- -------- -------- Net income............................ $ 9,655 $ 73,150 $ (5,769) $(67,381) $ 9,655 ======== ======== ======== ======== ========
CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED ------- --------- --------- ------------ ------------ Net cash from operating activities..... $(4,031) $ 32,561 $ 6,036 $ 6,080 $ 40,646 ------- -------- -------- ------- -------- Cash flows used in investing activities: Acquisitions, net of cash............ -- (7,821) -- -- (7,821) Capital expenditures................. -- (22,283) (12,016) -- (34,299) ------- -------- -------- ------- -------- Net cash used in investing activities........................... -- (30,104) (12,016) -- (42,120) ------- -------- -------- ------- -------- Cash flows provided by (used in) financing activities: Equity proceeds...................... -- 100 5,980 (6,080) -- Borrowing (repayment) of long-term obligations and revolver.......... 4,031 (969) (226) -- 2,836 Financing fees and other............. -- (1,362) -- -- (1,362) ------- -------- -------- ------- -------- Net cash from (used in) financing activities........................... 4,031 (2,231) 5,754 (6,080) 1,474 ------- -------- -------- ------- -------- Net change in cash..................... $ -- $ 226 $ (226) $ -- $ -- ======= ======== ======== ======= ========
47 49 CONSOLIDATING STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED -------- --------- --------- ------------ ------------ Net sales.............................. $ -- $695,148 $35,885 $(35,885) $695,148 Operating expenses: Cost of goods sold................... -- 551,311 14,884 (35,885) 530,310 Selling, general and administrative expenses including non-cash compensation expense of $4,010.... 4,010 44,190 12,513 -- 60,713 Depreciation and amortization........ 800 33,347 2,679 -- 36,826 Plant closing charges................ -- 2,000 -- -- 2,000 Inventory valuation adjustment....... -- 8,500 -- -- 8,500 -------- -------- ------- -------- -------- Operating income (loss)................ (4,810) 55,800 5,809 -- 56,799 Other income (expense): Interest expense..................... (49,753) (1,186) -- -- (50,939) Amortization of deferred financing costs............................. (3,132) -- -- -- (3,132) Equity in net income of subsidiaries...................... 57,666 -- -- (57,666) -- Other, net........................... -- (98) (5) -- (103) -------- -------- ------- -------- -------- Income before income tax provision and extraordinary item................... (29) 54,516 5,804 (57,666) 2,625 Income tax provision................... -- 1,846 808 -- 2,654 -------- -------- ------- -------- -------- Income before extraordinary item....... (29) 52,670 4,996 (57,666) (29) Extraordinary item..................... (2,991) -- -- -- (2,991) -------- -------- ------- -------- -------- Net income................... $ (3,020) $ 52,670 $ 4,996 $(57,666) $ (3,020) ======== ======== ======= ======== ========
CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1997
TOTAL TOTAL NON- COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED --------- --------- --------- ------------ ------------ Net cash from operating activities.... $ (53,585) $ 78,917 $ 8,666 $ -- $ 33,998 --------- -------- ------- -------- --------- Cash flows used in investing activities: Acquisitions, net of cash........... -- (58,996) -- -- (58,996) Capital expenditures................ -- (19,062) (8,698) -- (27,760) --------- -------- ------- -------- --------- Net cash used in investing activities.......................... -- (78,058) (8,698) -- (86,756) --------- -------- ------- -------- --------- Cash flows provided by (used in) financing activities: Equity proceeds..................... 331 (451) 120 -- -- Proceeds from issuance of long-term obligations...................... 228,125 -- -- -- 228,125 Repayment of long-term obligations and revolver..................... (161,505) (496) -- -- (162,001) Repurchase of stock of Holding...... (700) -- -- -- (700) Cash dividends paid on preferred stock............................ (1,378) -- -- -- (1,378) Financing fees and other............ (11,288) -- -- -- (11,288) --------- -------- ------- -------- --------- Net cash from financing activities.... 53,585 (947) 120 -- 52,758 --------- -------- ------- -------- --------- Net change in cash.................... $ -- $ (88) $ 88 $ -- $ -- ========= ======== ======= ======== =========
48 50 INTERNATIONAL WIRE GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 15. RESTATEMENT OF FINANCIAL INFORMATION The Company has restated its previously issued financial statements for the years ended December 31, 1998, 1997 and 1996. These restatements were made to reflect non-cash compensation expense (income) related to Holding's Class A common stock, which is convertible into Holding common stock (see Note 2 and Note 10). The Company also made reclassifications to accumulated deficit and contributed capital to reflect the impact of the non-cash compensation expense (income). There were no net adjustments to Stockholder's equity (deficit) for the years reported. The impact of these adjustments on the Company's financial results as originally reported is summarized below:
YEARS ENDED DECEMBER 31, ---------------------------------------------------------------------------------- 1998 1997 1996 ------------------------- ------------------------- ------------------------- AS REPORTED AS RESTATED AS REPORTED AS RESTATED AS REPORTED AS RESTATED ----------- ----------- ----------- ----------- ----------- ----------- Income before income tax provision, cumulative effect of change in accounting principle and extraordinary item......... $23,815 $19,657 $6,635 $ 2,625 $(88,220) $(91,907) Net income (loss)............ $13,813 $ 9,655 $ 990 $(3,020) $(89,482) $(93,169)
These adjustments are reflected in the Company's accompanying Consolidated Statements of Operations. 49 51 INTERNATIONAL WIRE GROUP, INC. SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
ALLOWANCE FOR DOUBTFUL COLLECTION OF ACCOUNTS -- DEDUCTED FROM BALANCE AT PREVIOUSLY BALANCE AT ACCOUNTS RECEIVABLES IN THE BEGINNING WRITTEN OFF END OF BALANCE SHEET OF PERIOD PROVISION WRITE-OFFS ACCOUNTS ACQUISITIONS PERIOD - ----------------------------- ---------- --------- ---------- ------------- ------------ ---------- Year ended December 31, 1997....................... $1,363 $888 $(388) $12 $203 $2,078 Year ended December 31, 1998....................... $2,078 $787 $(250) $18 $ -- $2,633 Year ended December 31, 1999....................... $2,633 $679 $(608) $-- $175 $2,879
50 52 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS Set forth below are the names and positions of the directors and executive officers of Holding and the Company. All directors hold office until the next annual meeting of stockholders of Holding and the Company, and until their successors are duly elected and qualified. All officers serve at the pleasure of the Board of Directors.
NAME AGE POSITION(S) - ---- --- ----------- James N. Mills.............. 62 Chairman of the Board and Chief Executive Officer of Holding and the Company Charles W. Tate............. 55 Director of Holding and the Company Jack D. Furst............... 42 Director of Holding and the Company John A. Gavin............... 68 Director of Holding and the Company Thomas P. Danis............. 53 Director of Holding and the Company Richard W. Vieser........... 72 Director of Holding and the Company Joseph M. Fiamingo.......... 50 Director, President and Chief Operating Officer of Holding and the Company Rodney D. Kent.............. 52 Director of Holding and the Company, President and Chief Executive Officer of Omega David M. Sindelar........... 42 Senior Vice President and Chief Financial Officer of Holding, Senior Vice President of the Company Glenn J. Holler............. 52 Vice President-- Finance of the Company
James N. Mills is Chairman of the Board and Chief Executive Officer of the Company and of Holding and has held such position since April 1995. Mr. Mills serves as Chairman of the Board and Chief Executive Officer of Mills & Partners, Viasystems Group, Inc. and LLS Corp. Mr. Mills was Chairman of the Board and Chief Executive Officer of Berg Electronics Corp. and Chairman of the Board and sole director of Berg Electronics Group, Inc. from November 1992 through October 1998 and was Chairman of the Board and Chief Executive Officer of Crain Holding Corp. and Crain Industries, Inc. from August 1995 through December 1997 and of Jackson Holding Company and Jackson Products, Inc. from February 1993 through August 1995. Charles W. Tate is a director of the Company and has held such position since April 1995. Mr. Tate is President of Hicks Muse. Before joining Hicks Muse as a Managing Director and Principal in 1991, Mr. Tate had over 19 years of experience in investment and merchant banking with Morgan Stanley & Co. Incorporated, including ten years in the mergers and acquisitions department and the last two and one-half years as a Managing Director in Morgan Stanley & Co. Incorporated's merchant banking group. Mr. Tate also serves as a director of International Home Foods, Inc., International Outdoor Advertising Holding Company, International Seed Holdings ApS, Venezuela Cable Service Holding Ltd., CEI Citicorp Holding Sociedad Anonima, Stoneville Pedigreed Seed Company, Mahendra Hybrid Seeds Limited and five companies in Mexico (Seguros Comercial America, S.A. de C.V., Vidrio Formas, S.A. de C.V., Grupo Minsa, S.A. de C.V., Almacenadora Mercader S.A., and Fomento e Ingenieria en Comercializacion, S.A. de C.V.). Jack D. Furst is a Director of the Company and has held such position since April 1995. Mr. Furst is a Partner of Hicks Muse and has held such position since 1989. Mr. Furst has approximately 20 years of experience in leveraged acquisitions and private investments. Mr. Furst is involved in all aspects of Hicks Muse's business and has been actively involved in originating, structuring and monitoring its investments. 51 53 Mr. Furst is primarily responsible for managing the relationship with Mills & Partners. Prior to joining Hicks Muse, Mr. Furst was a Vice President and subsequently a Partner of Hicks & Haas Incorporated, a Dallas based private investment firm from 1987 to May 1989. From 1984 to 1986, Mr. Furst was a merger and acquisition/corporate finance specialist for The First Boston Corporation in New York. Before joining First Boston, Mr. Furst was a financial consultant at Price Waterhouse. Mr. Furst serves on the board of directors of American Tower Corporation, Triton Energy Limited, Home Interiors & Gifts, Inc., Hedstrom Holdings, Inc., Cooperative Computing, Inc., Globix Corporation, Viasystems Group, Inc. and LLS Corp. John A. Gavin is a director of the Company and has held such position since June 1995. Mr. Gavin is the founder and Chairman of the Board of Gamma Holdings, an international capital and consulting firm established in 1968, and is a Partner and Managing Director of Hicks, Muse, Tate & Furst (Latin America), Incorporated and has held such position since 1996. From 1987 to 1990, Mr. Gavin was President of Univisa Satellite Communications, a part of a Spanish-speaking broadcast network. Prior thereto, Mr. Gavin served as a Vice President of Atlantic Richfield Company from 1986. From 1981 to 1986, Mr. Gavin served as the United States Ambassador to Mexico. Mr. Gavin also serves as a director of Atlantic Richfield Company, Apex Mortgage Capital, Krause's and the Hotchkis and Wiley Funds. Thomas P. Danis is a director of the Company and has held such position since June 1995. Mr. Danis has been Chairman of the Board of Aon Risk Services of Missouri, Inc., a company engaged in the insurance brokerage business, since 1993. In 1979, Mr. Danis co-founded an insurance brokerage firm, a joint venture with Corroon & Black, which was ultimately purchased by Corroon & Black in 1984. Mr. Danis also serves as a director of Commerce Bank, N.A. Richard W. Vieser is a director of the Company and has held such position since September 1995. Mr. Vieser is the retired Chairman of the Board, Chief Executive Officer and President of Lear Siegler, Inc. (a diversified manufacturing company), the former Chairman of the Board and Chief Executive Officer of FL Industries, Inc. and FL Aerospace (also diversified manufacturing companies) and the former President and Chief Operating Officer of McGraw-Edison Co. He is the Chairman of the Board of Varian Associates, Inc. and is also a director of Ceridian Corporation (formerly Control Data Corporation), Dresser Industries, Inc., Harvard Industries, INDRESCO Inc., Viasystems Group, Inc. and Sybron International Corporation. Joseph M. Fiamingo is a director of the Company and has held such position since October 1996. Mr. Fiamingo also serves as President and Chief Operating Officer of the Company and has held such positions since September 1996. Previously, Mr. Fiamingo held the position of Vice President of Operations and Technology of the Company from June 1996 and President and Chief Operating Officer of Wirekraft from October 1995. Prior thereto, Mr. Fiamingo was employed by General Cable Corporation from 1972 to 1995 where he held various senior management level positions including President and Vice President and General Manager of several divisions of General Cable and most recently, Executive Vice President of Operations. Rodney D. Kent is a director of the Company and has held such position since April 1995. Mr. Kent also serves as President and Chief Executive Officer of Omega and has held such positions since 1983. Mr. Kent served as Assistant to the President of Omega from 1974 to 1983. Prior to joining Omega, Mr. Kent was employed with Flexo Wire from 1973 to 1974 and Camden Wire Company from 1970 to 1973. Mr. Kent also serves as a director of Oneida Savings Bank. David M. Sindelar is Senior Vice President and Chief Financial Officer of the Company and of Holding and has held such positions since April 1995. Mr. Sindelar is also President and Chief Operating Officer of Mills & Partners. Mr. Sindelar also serves as Senior Vice President and Chief Financial Officer of Viasystems, Inc., Viasystems Group, Inc. and LLS Corp. Mr. Sindelar was Senior Vice President and Chief Financial Officer of Berg Electronics Corp. from March 1993 through October 1998 and of Crain Industries, Inc. and Crain Holdings Corp. from August 1995 through December 1997 and of Jackson Holding Company from February 1993 through August 1995. Mr. Sindelar is a director of LLS Corp. Glenn J. Holler is Vice President -- Finance of the Company and has held such position since August 1996. Prior to joining the Company, Mr. Holler was employed by Vigoro Industries, Inc. as Vice President, 52 54 Finance from 1994 to 1996. From 1983 to 1994, Mr. Holler held several positions at Moog Automotive, Inc. including Vice President -- Finance and Senior Vice President -- Finance. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth the cash and noncash compensation earned by the Chief Executive Officer and the four other most highly compensated executive officers of Holding and the Company (the "Named Executive Officers"). Such compensation was paid by or on behalf of the Company during the years ended December 31, 1999, 1998 and 1997. The bonuses included in annual compensation were paid subsequent to year end. As of the date hereof, the Company has not granted any stock appreciation rights. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION AWARDS ANNUAL COMPENSATION SECURITIES -------------------- UNDERLYING ALL OTHER YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1) ---- --------- -------- ------------ ------------------ James N. Mills...................... 1999 685,000 685,000 175,228 -- Chairman of the Board and 1998 502,944 500,000 -- -- Chief Executive Officer of Holding 1997 395,000 548,000 -- -- Joseph M. Fiamingo.................. 1999 379,850 227,500 -- -- President and Chief Operating 1998 350,350 227,500 -- -- Officer of Holding and the Company 1997 316,502 195,000 -- -- Rodney D. Kent...................... 1999 349,700 227,305 -- 165,038(2) President and Chief Executive 1998 325,000 177,631 -- 119,671(2) Officer of Omega 1997 316,960 207,564 -- 153,196(2) David M. Sindelar................... 1999 300,000 300,000 175,000 -- Senior Vice President and 1998 223,486 177,600 -- -- Chief Financial Officer of Holding 1997 169,000 150,000 -- -- Senior Vice President of the Company Glenn J. Holler..................... 1999 245,284 117,354 -- -- Vice President -- Finance of 1998 231,030 110,225 -- -- the Company 1997 217,579 103,144 -- --
- --------------- (1) Holding and the Company provide to certain executive officers, a car allowance, reimbursement for club memberships, insurance policies and certain other benefits. The aggregate incremental cost of these benefits to Holding and the Company for each officer do not exceed the lesser of $50,000 or 10% of the total annual salary and bonus reported for each officer. (2) Represents (i) $34,904, $0 and $45,792 in premiums paid on life insurance policies for the benefit of Mr. Kent in 1999, 1998 and 1997, respectively and (ii) $52,455, $51,562 and $47,888 in annual deferred compensation and $77,679, $68,109 and $59,516 in annual interest accruals thereon earned by Mr. Kent in 1999, 1998 and 1997, respectively, pursuant to his employment agreement. 53 55 OPTION GRANTS IN LAST FISCAL YEAR Upon cancellation of 350,228 Performance Options (as hereinafter defined) granted to a previous member of the Company's management, the Company reissued those Performance Options to certain Named Executive Officers under the same terms and conditions of the cancelled options. There were no other options granted to Named Executive Officers in the current fiscal year. The following table summarizes options reissued during fiscal 1999 to Named Executive Officers:
POTENTIAL REALIZABLE NUMBER OF PERCENT OF VALUE AT ASSUMED SECURITIES TOTAL OPTIONS ANNUAL RATES OF STOCK UNDERLYING GRANTED/ PRICE APPRECIATION FOR OPTIONS REISSUED TO EXERCISE OPTION TERM(1) REISSUED EMPLOYEES IN PRICE EXPIRATION ----------------------- NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($) - ---- ---------- ------------- -------- ---------- -------- --------- James N. Mills(2).............. 81,668 11% 1.41(3) 03/31/05 0(4) 0(4) James N. Mills(2).............. 42,003 6% 1.41(3) 06/12/05 0(4) 0(4) James N. Mills(2).............. 51,557 7% 1.30(3) 03/05/06 0(4) 0(4) David M. Sindelar(2)........... 81,562 11% 1.41(3) 03/31/05 0(4) 0(4) David M. Sindelar(2)........... 41,948 6% 1.41(3) 06/12/05 0(4) 0(4) David M. Sindelar(2)........... 51,490 7% 1.30(3) 03/05/06 0(4) 0(4)
- --------------- (1) The potential realizable value portion of the foregoing table illustrates the value that might be realized upon exercise of the option immediately prior to the expiration of its term, assuming the specified compound rates of appreciation of Holding Common Stock over the term of the options. These amounts represent certain assumed rates of appreciation only. Actual gains on the exercise of options are dependent on the future performance of Holding Common Stock. (2) Reflects Performance Options (as hereinafter defined) reissued in fiscal 1999 by Holding. For a description of the material terms of such options, see "-- Benefit Plans -- Performance Options" (3) The exercise price for the Performance Options is initially equal to $1.00 per share and, effective each anniversary date of the initial grant date, the per share exercise price for the Performance Options is equal to the per share exercise price for the prior year multiplied by 1.09. The Performance Options were reissued in fiscal 1999 under the same terms and conditions of the original grant. (4) The Performance Options are exercisable only in the event that Hicks, Muse, Tate & Furst Equity Fund II, L.P. ("HM Fund II") realizes a 35% overall rate of return, compounded annually, on its equity funds invested in Holding. Accordingly, there is no potential realizable value to the Performance Options at compound appreciation rates of 5% and 10%. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES No options were exercised by the Named Executive Officers during fiscal 1999. The following table summarizes the value of unexercised options as of December 31, 1999. The per share fair market value of the Holding Common Stock used to make the calculations in the following table is $2.24, which is the fair market value attributed to the Holding Common Stock by the Board of Directors on November 9, 1999.
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END ACQUIRED ON VALUE --------------------------- --------------------------- EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE NAME (#) ($) (#) (#) ($) ($) - ---- ----------- -------- ----------- ------------- ----------- ------------- James N. Mills............ 0 0 0 1,576,027 0 1,355,481 Joseph M. Fiamingo........ 0 0 680,000 320,000 843,200 396,800 Rodney D. Kent............ 0 0 320,000 80,000 396,800 99,200 David M. Sindelar......... 0 0 0 1,225,804 0 1,054,093 Glenn J. Holler........... 0 0 150,000 100,000 186,000 124,000
54 56 EMPLOYMENT AGREEMENTS James N. Mills Employment Agreement. Mr. James N. Mills entered into an employment agreement with Holding and the Company on June 12, 1995. Pursuant to such employment agreement, Mr. Mills will serve as the Chairman of the Board and Chief Executive Officer of Holding and the Company through June 11, 2000. Mr. Mills is required to devote such business time and attention to the transaction of the Company's business as is reasonably necessary to discharge his duties under the employment agreement. Subject to the foregoing limitation on his activities, Mr. Mills is free to participate in other business endeavors. The compensation provided to Mr. Mills under his employment agreement includes an annual base salary of not less than $300,000, subject to adjustment at the sole discretion of the Board of Directors of Holding, and such benefits as are customarily accorded the executives of Holding and the Company for as long as the employment agreement is in force. In addition, Mr. Mills is entitled to an annual bonus in an amount to be determined at the sole discretion of the Board of Directors of Holding. Mr. Mills' employment agreement also provides that if Mr. Mills' employment is terminated without cause, Mr. Mills will continue to receive his then current salary for the longer of the remainder of the employment period or 18 months following such termination. In addition, Mr. Mills' employment agreement provides that if Mr. Mills is terminated due to death or disability, Mr. Mills' estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of 18 months from the date of termination. Joseph M. Fiamingo Employment Agreement. Mr. Joseph M. Fiamingo entered into an employment agreement with Holding and the Company on November 13, 1999. Pursuant to such employment agreement, Mr. Fiamingo will serve as President and Chief Operating Officer of Holding and the Company through November 12, 2002. The compensation provided to Mr. Fiamingo under his employment agreement includes an annual base salary of not less than $350,000, subject to adjustment at the sole direction of the Chief Executive Officer of Holding, and such benefits as are customarily accorded the executives of Holding and the Company for as long as the employment agreement is in force. In addition, Mr. Fiamingo is entitled to an annual bonus in an amount to be determined by the Chief Executive Officer of Holding of up to sixty-five percent of his base compensation. Mr. Fiamingo's employment agreement also provides that if Mr. Fiamingo's employment is terminated without cause, Mr. Fiamingo will continue to receive his then current salary for the remainder of such employment agreement. In addition, Mr. Fiamingo's employment agreement provides that if Mr. Fiamingo is terminated due to death or disability, Mr. Fiamingo's estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of 12 months from the date of termination. Rodney D. Kent Employment Agreement. Mr. Kent entered into an employment agreement with Omega on March 14, 1995. Pursuant to such employment agreement, Mr. Kent will serve as President and Chief Executive Officer of Omega through March 28, 2000. Mr. Kent is required to devote substantially all of his business time and attention to the performance of his duties under the employment agreement. The compensation provided to Mr. Kent under his employment agreement includes an annual base salary of not less than $349,700, subject to increase at the sole discretion of the Board of Directors of Omega, and certain other benefits for as long as the employment agreement is in force. In addition, during each year of employment, an additional 15% of the annual base salary is credited to a deferred compensation account for the benefit of Mr. Kent, which deferred compensation account is annually credited with an interest accrual of 8% on the balance of the account for the prior year. Further, Mr. Kent is entitled to an annual bonus in an amount to be determined at the sole discretion of the Chairman of the Board of Holding of up to sixty-five percent of his annual base salary. Mr. Kent's employment agreement also provides that if Mr. Kent's employment is terminated by Omega without cause or due to disability or death, Mr. Kent or his estate, heirs or beneficiaries, as applicable, will 55 57 receive, in addition to any other benefits provided him or them under any benefit plan, Mr. Kent's then current salary for a period of 24 months from Mr. Kent's termination without cause or his disability or death. In the event that Mr. Kent terminates his employment and receives a bona fide offer of employment from a competitor of the Company, Mr. Kent will receive, in addition to any other benefits provided under any benefit plan, Mr. Kent's then current salary for a period of 24 months from such termination, but only in the event that Omega elects to enforce certain non-competition provisions of the employment agreement. David M. Sindelar Employment Agreement. Mr. David M. Sindelar entered into an employment agreement with Holding and the Company on June 12, 1995. Pursuant to such employment agreement, Mr. Sindelar will serve as the Senior Vice President and Chief Financial Officer of Holding and Senior Vice President of the Company through June 11, 2000. Mr. Sindelar is required to devote such business time and attention to the transaction of the Company's business as is reasonably necessary to discharge his duties under the employment agreement. Subject to the foregoing limitation on his activities, Mr. Sindelar is free to participate in other business endeavors. The compensation provided to Mr. Sindelar under his employment agreement includes an annual base salary of not less than $150,000, subject to adjustment at the sole discretion of the Board of Directors of Holding, and such benefits as are customarily accorded the executives of Holding and Senior Vice President of the Company for as long as the employment agreement is in force. In addition, Mr. Sindelar is entitled to an annual bonus in an amount to be determined at the sole discretion of the Board of Directors of Holding. Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's employment is terminated without cause, Mr. Sindelar will continue to receive his then current salary for the longer of the remainder of the employment period or 18 months following such termination. In addition, Mr. Sindelar's employment agreement provides that if Mr. Sindelar is terminated due to death or disability, Mr. Sindelar's estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of 18 months from the date of termination. Glenn J. Holler Employment Agreement. Mr. Glenn J. Holler entered into an employment agreement with the Company on November 13, 1999. Pursuant to such employment agreement, Mr. Holler will serve as Vice President -- Finance of the Company through November 12, 2000. The compensation provided to Mr. Holler under his employment agreement includes an annual base salary of not less than $244,000, subject to adjustment at the sole direction of the Chief Executive Officer of Holding, and such benefits as are customarily accorded the executives of the Company for as long as the employment agreement is in force. In addition, Mr. Holler is entitled to an annual bonus in an amount to be determined by the Chief Executive Officer of Holding of up to fifty percent of his base compensation. Mr. Holler's employment agreement also provides that if Mr. Holler's employment is terminated without cause, Mr. Holler will continue to receive his then current salary for one year. In addition, Mr. Holler's employment agreement provides that if Mr. Holler is terminated due to death or disability, Mr. Holler's estate, heirs, or beneficiaries, as applicable, will receive, in addition to any other benefits provided under any benefit plan, his then current salary for a period of six months from the date of termination. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Compensation decisions are made by the Board of Directors. Messrs. James N. Mills, Joseph M. Fiamingo and Rodney D. Kent served as both executive officers and directors during 1999, and are expected to serve in such capacities in 2000. COMPENSATION OF DIRECTORS Directors who are officers, employees or otherwise an affiliate of Holding or the Company receive no compensation for their services as directors. Each director of Holding and the Company who is not also an officer, employee or an affiliate of Holding or the Company (an "Outside Director") will receive an annual retainer of $12,000 and a fee of $1,000 for each meeting of the board of directors at which the director is present. Directors of Holding and the Company are entitled to reimbursement of their reasonable out-of- 56 58 pocket expenses in connection with their travel to and attendance at meetings of the board of directors or committees thereof. BENEFIT PLANS Stock Option Plan Holding's qualified and non-qualified stock option plan (the "Option Plan") provides for the granting of up to 4,795,322 shares of Holding Common Stock to officers and key employees of Holding and the Company. Under the Option Plan, as of January 31, 2000, Holding has granted options to purchase 4,196,452 shares of Holding common stock, 2,925,000 at $1.00 per share, 625,000 at $1.40 per share, 41,452 at $1.625 per share, 205,000 at $1.81 per share and 400,000 at $2.24 per share, the fair market value of Holding Common Stock at the date of grant as determined by the Board of Directors of Holding. Such options vest ratably over a five year period commencing on the first anniversary date after the date of grant, subject to acceleration in the discretion of the committee appointed to administer the Option Plan in the event of a Change of Control (as defined in the Option Plan). Generally, an option may be exercised only if the holder is an officer or employee of Holding or the Company at the time of exercise. Options granted under the Option Plan are not transferable, except by will and the laws of descent and distribution. Except as expressly provided otherwise in any optionee's agreement relating to the grant of options under the Option Plan, in the event an optionee's employment with Holding, the Company or a related entity terminates at any time, Holding or its designees shall have the right to repurchase from the optionee (or optionee's representatives) (i) the number of shares of Holding Common Stock acquired upon exercise of an option and (ii) the optionee's right to acquire that number of shares of Holding Common Stock which an optionee can acquire upon exercise immediately prior to such repurchase. The purchase price to be paid is calculated on the basis of the fair market value (as defined in the Option Plan) of Holding Common Stock multiplied by the number of shares of Holding Common Stock to be acquired (less the aggregate exercise price in the event such repurchase option is exercised by Holding with respect to the optionee's right to acquire Holding Common Stock). Performance Options On March 31, 1995, Omega granted options (the "Performance Options") to purchase 1,958,762 shares of common stock of Omega ("Omega Common Stock"). Mr. Mills was granted Performance Options to purchase 652,921 shares of Omega Common Stock, Mr. Sindelar was granted Performance Options to purchase 489,691 shares of Omega Common Stock and Performance Options to purchase the remaining 816,150 shares of Omega Common Stock were granted to certain officers of Omega who are also affiliated with Mills & Partners. In connection with the Wirekraft/Omega Combination and pursuant to the terms of the option agreements (the "Performance Option Agreements") related to the Performance Options, the Performance Options became options to purchase an identical number of shares of Holding Common Stock. During the year ended December 31, 1998, a member of the Company's management forfeited 163,230 Performance Options. In 1999, the Company reissued these Performance Options with the same terms and conditions to Mr. Mills and Mr. Sindelar. Mr. Mills was granted Performance Options to purchase 81,668 shares of Holding Common Stock and Mr. Sindelar was granted Performance Options to purchase 81,562 shares of Holding Common Stock. On June 12, 1995, the Company granted Performance Options to purchase 1,007,416 shares of Holding Common Stock. Mr. Mills was granted Performance Options to purchase 335,804 shares of Holding Common Stock, Mr. Sindelar was granted Performance Options to purchase 251,856 shares of Holding Common Stock and Performance Options to purchase the remaining 419,756 shares of Holding Common Stock were granted to certain officers of the Company who are also affiliated with Mills & Partners. During the year ended December 31, 1998, a member of the Company's management forfeited Performance Options to purchase 83,951 shares of Holding Common Stock. In 1999, the Company reissued these Performance Options with the same terms and conditions to Mr. Mills and Mr. Sindelar. Mr. Mills was granted Performance Options to purchase 42,003 shares of Holding Common Stock and Mr. Sindelar was granted Performance Options to purchase 41,948 shares of Holding Common Stock. 57 59 On March 5, 1996, the Company granted Performance Options to purchase 1,236,566 shares of Holding Common Stock. Mr. Mills was granted Performance Options to purchase 412,188 shares of Holding Common Stock, Mr. Sindelar was granted Performance Options to purchase 309,143 shares of Holding Common Stock and Performance Options to purchase the remaining 515,235 shares of Holding Common Stock were granted to certain officers of the Company who are also affiliated with Mills & Partners. During the year ended December 31, 1998, a member of the Company's management forfeited Performance Options to purchase 103,047 shares of Holding Common Stock. In 1999, the Company reissued these Performance Options with the same terms and conditions to Mr. Mills and Mr. Sindelar. Mr. Mills was granted Performance Options to purchase 51,557 shares of Holding Common Stock and Mr. Sindelar was granted Performance Options to purchase 51,490 shares of Holding Common Stock. The Performance Options are exercisable only in the event that Hicks, Muse, Tate and Furst Equity Fund II, L.P. ("HM Fund II") has realized an overall rate of return of at least 35% per annum, compounded annually, on all equity funds invested by it in Holding. Subject to the foregoing, the Performance Options are exercisable (i) immediately prior to a Liquidity Event (as hereinafter defined), (ii) concurrently with the consummation of a Qualified IPO (as hereinafter defined), or (iii) on December 31, 2004 (with respect to the Performance Options granted on March 31, 1995 and June 12, 1995) or on December 31, 2005 (with respect to the Performance Options granted on March 5, 1996). A "Liquidity Event" generally means (i) one or more sales or other dispositions of Holding Common Stock if, thereafter, the amount of Holding Common Stock owned by HM Fund II is reduced by 50%, (ii) any merger, consolidation or other business combination of Holding pursuant to which any person or group acquires a majority of the common stock of the resulting entity, or (iii) any sale of all or substantially all of the assets of Holding. A "Qualified IPO" means a firm commitment underwritten public offering of Holding Common Stock for gross proceeds of at least $25.0 million. The exercise price for the Performance Options is initially equal to $1.00 per share and, effective each anniversary of the grant date, the per share exercise price for the Performance Options is equal to the per share exercise price for the prior year multiplied by 1.09. The exercise price of the Performance Options and the number of shares of Holding Common Stock for which the Performance Options are exercisable is subject to adjustment in the event of certain fundamental changes in the capital structure of Holding. The Performance Options terminate on the tenth anniversary of the date of grant. 58 60 ITEM 12. SECURITIES OWNERSHIP SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT All of the issued and outstanding shares of common stock of the Company are held by Holding. The following table sets forth as of December 31, 1999 certain information regarding the beneficial ownership of the voting securities of Holding by each person who beneficially owns more than 5% of any class of Holding voting securities and by the directors and certain executive officers of Holding, individually, and by the directors and executive officers of Holding as a group. The Class A Common Stock, par value $0.01 per share, of Holding ("Holding Class A Common Stock") votes together with the Holding Common Stock as a single class and is entitled to one vote for each share.
SHARES BENEFICIALLY OWNED(1) --------------------------------------------------------------- HOLDING CLASS A HOLDING COMMON STOCK COMMON STOCK ------------------------ ----------------------- NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF SHARES CLASS SHARES CLASS TOTAL ----------- ---------- ---------- ---------- ---------- 5% STOCKHOLDERS: HM Parties(2)...................... 118,766,452 100.0% -- -- 90.1% c/o Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 Rodney D. Kent(3).................... 6,020,000 5.1% -- -- 4.6% c/o Omega Wire, Inc. 12 Masonic Avenue Camden, New York 13316 OFFICERS AND DIRECTORS: James N. Mills(4).................... 1,702,034 1.4% 13,000,000 100.0% 11.2% Thomas P. Danis(5)................... 200,000 * -- -- * Jack D. Furst(2)..................... 118,766,452 100.0% -- -- 90.1% John A. Gavin(6)..................... 235,957 * -- -- * Charles W. Tate(2)................... 118,766,452 100.0% -- -- 90.1% Rodney D. Kent(3).................... 6,020,000 5.1% -- -- 4.6% Richard W. Vieser(7)................. 235,957 * -- -- * Joseph M. Fiamingo(8)................ 680,000 * -- -- * David M. Sindelar(9)................. -- -- 3,648,482 28.1% 2.8% Glenn J. Holler(10).................. 150,000 * -- -- * All executive officers and directors as a group (10 persons)(11)........ 118,766,452 100.0% 13,000,000 100.0% 100.0%
- --------------- * Less than one percent. (1) Holding Class A Common Stock is convertible into Holding Common Stock (i) at the option of any holder thereof at any time, (ii) at the option of Holding upon the occurrence of a Triggering Event (as defined below), and (iii) mandatorily at March 31, 2005. A "Triggering Event" means any sale of substantially all of the assets of Holding or any merger, consolidation or other business combination of Holding in which Hicks Muse and its affiliates cease to own at least 50% of the resulting entity. Each share of Holding Class A Common Stock is convertible into a fraction of a share of Holding Common Stock equal to the quotient of (i) the fair market value of a share of Holding Common Stock at the time of conversion less the sum of $0.99 plus imputed interest thereon at a rate of 9% per annum, compounded annually, at the time of conversion, divided by (ii) the fair market value of a share of Holding Common Stock at the time of conversion. Because the fraction of a share of Holding Common Stock into which Holding Class A Common Stock is convertible is determinable only at the time of a conversion, shares of Class A Holding Common Stock are not included in the shares of Holding Common Stock beneficially owned in the foregoing table. 59 61 (2) Includes (i) shares owned of record by HM Fund II, a limited partnership of which the sole general partner is HM2/GP Partners, L.P., a limited partnership of which the sole general partner is Hicks, Muse GP Partners, L.P., a limited partnership of which the sole general partner is Hicks, Muse, Tate & Furst Fund II Incorporated, a corporation affiliated with Hicks Muse; (ii) shares owned of record by HM2/Wire/Hunt Partners, L.P., HM2/Wire/Sunwestern Partners, L.P. and HM2/Wire/Hubbard Partners, L.P., limited partnerships of which the sole general partner is HM2/GP Partners, L.P.; (iii) shares owned of record by certain individuals that Hicks Muse has the power to direct the voting of with respect to the election of directors; and (iv) shares owned of record by certain individuals subject to an irrevocable proxy in favor of Hicks Muse. Thomas O. Hicks is a controlling stockholder of Hicks Muse and serves as Chairman of the Board, Chief Executive Officer and Partner of Hicks Muse. Accordingly, Mr. Hicks may be deemed to be the beneficial owner of Holding Common Stock held by HM Fund II. John R. Muse, Charles W. Tate, Jack D. Furst, Lawrence D. Stuart, Michael J. Levitt, David B. Deniger and Dan H. Blanks are officers, directors and minority stockholders of Hicks Muse and as such may be deemed to share with Mr. Hicks the power to vote or dispose of Holding Common Stock held by HM Fund II. Each of Messrs. Hicks, Muse, Tate, Furst, Stuart, Levitt, Deniger and Blanks disclaims the existence of a group and disclaims beneficial ownership of Holding Common Stock not respectively owned of record by him. (3) Includes 320,000 shares of Holding Common Stock issuable to Mr. Kent upon exercise of options granted under the Option Plan that are currently exercisable. Does not include 80,000 shares of Holding Common Stock issuable to Mr. Kent upon exercise of options granted under the Option Plan that are not currently exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option Plan." (4) Includes shares of Holding Class A Common Stock held by James N. Mills and shares of Holding Class A Common Stock that Mr. Mills has the power to vote by proxy. Does not include 1,576,141 shares of Holding Common stock issuable to Mr. Mills upon the exercise of Performance Options that are not currently exercisable. See "Executive Compensation -- Benefit Plans -- Performance Options." (5) Includes 100,000 shares of Holding Common Stock issuable to Mr. Danis upon exercise of options granted in 1995 that are currently exercisable. (6) Includes 100,000 shares of Holding Common Stock issuable to Mr. Gavin upon exercise of options granted in 1995 that are currently exercisable. (7) Includes 100,000 shares of Holding Common Stock issuable to Mr. Vieser upon exercise of options granted in 1995 that are currently exercisable. (8) Consists of 680,000 shares of Holding Common Stock issuable to Mr. Fiamingo upon exercise of options granted under the Option Plan that are currently exercisable. Does not include 320,000 shares of Holding Common Stock issuable to Mr. Fiamingo upon exercise of options granted under the option plan that are not currently exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option Plan." (9) Does not include 1,225,690 shares of Holding Common Stock issuable to Mr. Sindelar upon exercise of Performance Options that are not currently exercisable. See "Executive Compensation -- Benefit Plans -- Performance Options." (10) Consists of 150,000 shares of Holding Common Stock issuable to Mr. Holler upon exercise of options granted under the Option Plan that are currently exercisable. Does not include 100,000 shares of Holding Common Stock issuable to Mr. Holler upon exercise of options granted under the Option Plan that are not currently exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option Plan." (11) Includes (i) shares of Holding Class A Common Stock held by executive officers and directors and shares of Holding Class A Common Stock as to which Hicks Muse has the power to direct the voting of with respect to the election of directors and to which Mr. Mills has the power to vote by proxy and (ii) 2,806,452 shares of Holding Common Stock issuable upon exercise of options that are currently exercisable. Does not include 4,202,744 shares of Holding Common Stock issuable to executive officers of Holding upon the exercise of Performance Options and options under the Option Plan that are not currently exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option Plan" and "-- Performance Options." 60 62 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS RELATIONSHIPS WITH HICKS MUSE Monitoring and Oversight Agreement On June 12, 1995, Holding and the Company entered into a ten-year agreement (the "Monitoring and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P. ("Hicks Muse Partners"), a limited partnership of which the sole general partner is HM Partners Inc., a corporation affiliated with Hicks Muse, pursuant to which they pay an annual fee of $500,000 for oversight and monitoring services to Holding and the Company. The annual fee is adjustable at the end of each fiscal year to an amount equal to 0.1% of the consolidated net sales of the Company, but in no event less than $500,000. Hicks Muse Partners also will be entitled to receive a fee equal to 1.5% of the transaction value (as defined) for each add-on transaction (as defined) in which the Company is involved. The term "transaction value" means the total value of any add-on transaction, including, without limitation, the aggregate amount of the funds required to complete the add-on transaction (excluding any fees payable pursuant to the Monitoring and Oversight Agreement and any fees, if any, paid to any other person or entity for financial advisory, investment banking, brokerage, or any other similar services rendered in connection with such add-on transaction) including the amount of any indebtedness, preferred stock or similar items assumed (or remaining outstanding). The term "add-on transaction" means any future proposal for a tender offer, acquisition, sale, merger, exchange offer, recapitalization, restructuring, or other similar transaction directly or indirectly involving Holding, the Company, or any of their respective subsidiaries and any other person or entity. In January 2000, the Company paid Hicks Muse Partners cash financial advisory fees of approximately $161,000 as compensation for its services as financial advisor in connection with the 1999 acquisition of the Forissier Group. Messrs. Tate and Furst, directors of Holding and the Company, are each principals of Hicks Muse Partners. In addition, Holding and the Company have agreed to indemnify Hicks Muse Partners, its affiliates and shareholders, and their respective directors, officers, agents, employees and affiliates from and against all claims, actions, proceedings, demands, liabilities, damages, judgments, assessments, losses and costs, including fees and expenses, arising out of or in connection with the services rendered by Hicks Muse Partners in connection with the Monitoring and Oversight Agreement. The Monitoring and Oversight Agreement makes available the resources of Hicks Muse Partners concerning a variety of financial and operational matters. The services that have been and will continue to be provided by Hicks Muse Partners could not otherwise be obtained by Holding and the Company without the addition of personnel or the engagement of outside professional advisors. In management's opinion, the fees provided for under this agreement reasonably reflect the benefits received and to be received by Holding and the Company. Stockholders Agreement Each investor in any class of common stock of Holding has entered into a stockholders agreement (the "Stockholders Agreement"). The Stockholders Agreement, among other things, grants preemptive rights and certain registration rights to the parties thereto and contains provisions requiring the parties thereto to sell their shares of common stock in connection with certain sales of Holding's common stock by Hicks Muse ("drag-along right") and granting the parties thereto the right to include a portion of their shares of common stock in certain sales in which Hicks Muse does not exercise its drag-along rights ("tag-along rights"). In addition, the Stockholders agreement contains an irrevocable proxy pursuant to which all parties to the Stockholders Agreement grant to Hicks Muse the power to vote all shares of Holding Common Stock held by such parties. The Stockholders Agreement terminates on its tenth anniversary date, although the preemptive rights, drag-along rights and tag-along rights contained therein terminate earlier upon the consummation of a firm commitment underwritten public offering of Holding Common Stock. 61 63 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K. See Index to Financial Statements and Financial Schedules on page 23 of this report. Exhibits
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 -- Agreement and Plan of Merger dated as of June 2, 1995, among Omega Wire Corp., Wirekraft Holdings Corp., International Wire Holding Company, International Wire Group, Inc. and Wirekraft Acquisition Company(1) 2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996, among Hoosier Wire, Inc., International Wire Group, Inc., and Wire Technologies, Inc.(2) 2.3 -- Asset Purchase Agreement, dated as of March 5, 1996, among Dekko Automotive Wire, Inc., International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc.(2) 2.4 -- Asset Purchase Agreement, dated as of March 5, 1996, among International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc.(2) 2.5 -- Asset Purchase Agreement, dated as of March 5, 1996, among Silicones, International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc.(2) 3.1 -- Restated Certificate of Incorporation of International Wire Group, Inc.(4) 3.2 -- By-Laws of International Wire Group, Inc.(1) 4.1 -- Indenture, dated as of June 12, 1995, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank & Trust Company, as Trustee.(1) 4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1, Exhibit A) 4.3 -- Exchange and Registration Rights Agreement, dated as of June 12, 1995, among International Wire Group, Inc., the Subsidiary Guarantors (as therein defined), Chemical Securities Inc. and BT Securities Corporation.(1) 4.4 -- First Supplemental Indenture, dated as of March 5, 1996, by and among International Wire Group, Inc., Wire Technologies, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank & Trust Company, as Trustee.(2) 4.5 -- Certificate of Designation of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock of International Wire Group, Inc.(2) 4.6 -- Second Supplemental Indenture, dated as of December 20, 1996, by International Wire Group, Inc. the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.(4) 4.7 -- Indenture, dated as of February 12, 1997, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A). 4.9 -- Preferred Stock and Warrant Purchase Agreement dated as of March 5, 1996, by and among International Wire Holding Company, International Wire Group, Inc., Chemical Equity Associates and Hicks, Muse, Tate & Furst Equity Fund II, L.P.(5)
62 64
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.10 -- Third Supplemental Indenture, dated as of February 12, 1997, by and among International Wire Group, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.11 -- First Supplemental Indenture, dated as of June 10, 1997, by and among International Wire Group, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.12 -- Indenture, dated as of June 17, 1997, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.13 -- Form of 11 3/4% Series B Note (included in Exhibit 4.12, Exhibit (A)) 10.1 -- Parts Sourcing Contract, dated as of December 2, 1994, among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit).(1) 10.2 -- Schedule of Substantially Identical Domestic Subsidiary Security Agreements.(1) 10.3 -- Agreement of Sublease, dated as of December 31, 1991, between Oneida County Industrial Development Agency and OWI Corporation.(1) 10.4 -- Agreement of Sublease, dated as of December 31, 1991, between Onondaga County Industrial Development Agency and OWI Corporation.(1) 10.5 -- Sublease Agreement, dated as of March 31, 1994, between Productos de Control, S.A. de C.V. and Wirekraft Industries, Inc.(1) 10.6 -- Lease Contract, dated as of August 1, 1994, between Parques Industriales Mexicanos, S.A. de C.V. and Electro Componentes de Mexico, S.A. de C.V.(1) 10.7 -- Lease Contract, dated as of March 15, 1998, between Parques Industriales Mexicanos, S.A. de C.V. and Electro Componentes de Mexico, S.A. de C.V.(6) 10.8+ -- Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and James N. Mills.(3) 10.9+ -- Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and David M. Sindelar.(3) 10.10+ -- Employment Agreement, dated as of March 14, 1995, between Omega Wire, Inc. and Rodney D. Kent.(1) 10.11+ -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and James N. Mills.(1) 10.12+ -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and David M. Sindelar.(1) 10.13+ -- Option Agreement dated as of June 12, 1995, between Omega Wire Corp. and David M. Sindelar.(1) 10.14+ -- Option Agreement dated as of June 12, 1995, between International Wire Group, Inc. and David M. Sindelar.(1) 10.15 -- Stockholders Agreement dated as of June 12, 1995, among International Wire Holding Company and the Stockholders signatories thereto.(1) 10.16 -- Monitoring and Oversight Agreement dated as of June 12, 1995, among International Wire Holding Company, International Wire Group, Inc. and Hicks, Muse & Co. Partners, L.P.(1) 10.17+ -- 1995 Stock Option Plan of International Wire Holding Company.(3)
63 65
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.18+ -- Form of Option Agreement of International Wire Holding Company under 1995 Stock Option Plan.(3) 10.19 -- Agreement dated as of December 29, 1995 among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit).(3) 10.20 -- Amended and Restated Credit Agreement, dated as of February 12, 1997, among International Wire Group, Inc., International Wire Holding Company, the several lenders from time to time parties thereto, Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.(4) 10.21+ -- Employment Agreement, dated as of September 25, 1996, among International Wire Holding Company and International Wire Group, Inc. and Joseph M. Fiamingo.(4) 10.22+ -- Option Agreement, dated as of November 5, 1995, between International Wire Holding Company and Joseph M. Fiamingo.(4) 10.23+ -- Option Agreement, dated as of November 6, 1996, between International Wire Holding Company and Joseph M. Fiamingo.(4) 10.24 -- First Amendment to Amended and Restated Credit Agreement, dated as of June 17, 1997, among International Wire Group, Inc., International Wire Holding Company, the Several Lenders from time to time parties thereto, the Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.(5) 10.25 -- Second Amendment and Waiver to Amended and Restated Credit Agreement, dated as of September 29, 1997, among International Wire Group, Inc., International Wire Holding Company, the Several Lenders from time to time parties thereto, the Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.(6) 10.26+ -- Option Agreement, dated as of August 6, 1996, between International Wire Holding Company and Glenn J. Holler.(6) 10.27 -- Fourth Amendment to Amended and Restated Credit Agreement, dated as of December 29, 1999, among International Wire Group, Inc., International Wire Holding Company, Camden Wire Co., Inc., the Several Lenders from time to time parties thereto, the Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.* 10.28+ -- Employment Agreement, dated as of November 13, 1999, among International Wire Holding Company and International Wire Group, Inc. and Glenn J. Holler. * 10.29+ -- Employment Agreement, dated as of November 13, 1999, among International Wire Holding Company and International Wire Group, Inc. and Joseph M. Fiamingo. * 21.1 -- Subsidiaries of International Wire Group, Inc.* 27.0 -- Financial Data Schedule.*
- --------------- (1) Incorporated by reference to the Registration Statement on Form S-1 (33-93970) of International Wire Group, Inc. as declared effective by the Securities and Exchange Commission on September 29, 1995. (2) Incorporated by reference to the Current Report on Form 8-K of International Wire Group, Inc. as filed with the Securities Exchange Commission on March 20, 1996. (3) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1995. 64 66 (4) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1996. (5) Incorporated by reference to the Registration Statement on Form S-1 (333-26925) of International Wire Group, Inc. as declared effective by the Securities and Exchange Commission on November 12, 1997. (6) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1997. * Filed herewith. + Indicates compensatory plan or arrangement. (b) Reports on Form 8-K The Company did not file any report on Form 8-K with the Securities and Exchange Commission during the quarter ended December 31, 1999. 65 67 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INTERNATIONAL WIRE GROUP, INC. Date: March 20, 2000 By: /s/ GLENN J. HOLLER ---------------------------------- Glenn J. Holler, Vice President -- Finance 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.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JAMES N. MILLS Chairman of the Board of March 20, 2000 - ----------------------------------------------------- Directors and Chief Executive (James N. Mills) Officer (Principal Executive Officer) /s/ DAVID M. SINDELAR Senior Vice President and Chief March 20, 2000 - ----------------------------------------------------- Financial Officer (Principal (David M. Sindelar) Financial Officer) /s/ GLENN J. HOLLER Vice President -- Finance March 20, 2000 - ----------------------------------------------------- (Principal Accounting Officer) (Glenn J. Holler) /s/ THOMAS P. DANIS Director March 20, 2000 - ----------------------------------------------------- (Thomas P. Danis) /s/ JACK D. FURST Director March 20, 2000 - ----------------------------------------------------- (Jack D. Furst) /s/ JOHN A. GAVIN Director March 20, 2000 - ----------------------------------------------------- (John A. Gavin) /s/ CHARLES W. TATE Director March 20, 2000 - ----------------------------------------------------- (Charles W. Tate) /s/ RICHARD W. VIESER Director March 20, 2000 - ----------------------------------------------------- (Richard W. Vieser) /s/ RODNEY D. KENT Director March 20, 2000 - ----------------------------------------------------- (Rodney D. Kent) /s/ JOSEPH M. FIAMINGO Director, President and Chief March 20, 2000 - ----------------------------------------------------- Operating Officer (Joseph M. Fiamingo)
66 68 SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT The registrant has not sent to its security holders any annual report to security holders covering the registrant's last fiscal year or sent any proxy statement, form of proxy or other proxy soliciting material with respect to any annual or special meeting of security holders to more than ten of the registrant's security holders. 67 69 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 -- Agreement and Plan of Merger dated as of June 2, 1995, among Omega Wire Corp., Wirekraft Holdings Corp., International Wire Holding Company, International Wire Group, Inc. and Wirekraft Acquisition Company(1) 2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996, among Hoosier Wire, Inc., International Wire Group, Inc., and Wire Technologies, Inc.(2) 2.3 -- Asset Purchase Agreement, dated as of March 5, 1996, among Dekko Automotive Wire, Inc., International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc.(2) 2.4 -- Asset Purchase Agreement, dated as of March 5, 1996, among International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc.(2) 2.5 -- Asset Purchase Agreement, dated as of March 5, 1996, among Silicones, International Wire Holding Company, International Wire Group, Inc., and Wire Technologies, Inc.(2) 3.1 -- Restated Certificate of Incorporation of International Wire Group, Inc.(4) 3.2 -- By-Laws of International Wire Group, Inc.(1) 4.1 -- Indenture, dated as of June 12, 1995, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank & Trust Company, as Trustee.(1) 4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1, Exhibit A) 4.3 -- Exchange and Registration Rights Agreement, dated as of June 12, 1995, among International Wire Group, Inc., the Subsidiary Guarantors (as therein defined), Chemical Securities Inc. and BT Securities Corporation.(1) 4.4 -- First Supplemental Indenture, dated as of March 5, 1996, by and among International Wire Group, Inc., Wire Technologies, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank & Trust Company, as Trustee.(2) 4.5 -- Certificate of Designation of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock of International Wire Group, Inc.(2) 4.6 -- Second Supplemental Indenture, dated as of December 20, 1996, by International Wire Group, Inc. the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.(4) 4.7 -- Indenture, dated as of February 12, 1997, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A). 4.9 -- Preferred Stock and Warrant Purchase Agreement dated as of March 5, 1996, by and among International Wire Holding Company, International Wire Group, Inc., Chemical Equity Associates and Hicks, Muse, Tate & Furst Equity Fund II, L.P.(5) 4.10 -- Third Supplemental Indenture, dated as of February 12, 1997, by and among International Wire Group, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.11 -- First Supplemental Indenture, dated as of June 10, 1997, by and among International Wire Group, Inc., the subsidiary guarantors party thereto, and IBJ Schroder Bank and Trust Company, as Trustee.(5)
70
EXHIBIT NUMBER DESCRIPTION ------- ----------- 4.12 -- Indenture, dated as of June 17, 1997, among International Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as therein defined) and IBJ Schroder Bank and Trust Company, as Trustee.(5) 4.13 -- Form of 11 3/4% Series B Note (included in Exhibit 4.12, Exhibit (A)) 10.1 -- Parts Sourcing Contract, dated as of December 2, 1994, among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit).(1) 10.2 -- Schedule of Substantially Identical Domestic Subsidiary Security Agreements.(1) 10.3 -- Agreement of Sublease, dated as of December 31, 1991, between Oneida County Industrial Development Agency and OWI Corporation.(1) 10.4 -- Agreement of Sublease, dated as of December 31, 1991, between Onondaga County Industrial Development Agency and OWI Corporation.(1) 10.5 -- Sublease Agreement, dated as of March 31, 1994, between Productos de Control, S.A. de C.V. and Wirekraft Industries, Inc.(1) 10.6 -- Lease Contract, dated as of August 1, 1994, between Parques Industriales Mexicanos, S.A. de C.V. and Electro Componentes de Mexico, S.A. de C.V.(1) 10.7 -- Lease Contract, dated as of March 15, 1998, between Parques Industriales Mexicanos, S.A. de C.V. and Electro Componentes de Mexico, S.A. de C.V.(6) 10.8+ -- Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and James N. Mills.(3) 10.9+ -- Employment Agreement, dated as of June 12, 1995, among International Wire Holding Company, International Wire Group Inc. and certain of its subsidiaries and David M. Sindelar.(3) 10.10+ -- Employment Agreement, dated as of March 14, 1995, between Omega Wire, Inc. and Rodney D. Kent.(1) 10.11+ -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and James N. Mills.(1) 10.12+ -- Option Agreement, dated as of March 31, 1995, between Omega Wire Corp. and David M. Sindelar.(1) 10.13+ -- Option Agreement dated as of June 12, 1995, between Omega Wire Corp. and David M. Sindelar.(1) 10.14+ -- Option Agreement dated as of June 12, 1995, between International Wire Group, Inc. and David M. Sindelar.(1) 10.15 -- Stockholders Agreement dated as of June 12, 1995, among International Wire Holding Company and the Stockholders signatories thereto.(1) 10.16 -- Monitoring and Oversight Agreement dated as of June 12, 1995, among International Wire Holding Company, International Wire Group, Inc. and Hicks, Muse & Co. Partners, L.P.(1) 10.17+ -- 1995 Stock Option Plan of International Wire Holding Company.(3) 10.18+ -- Form of Option Agreement of International Wire Holding Company under 1995 Stock Option Plan.(3) 10.19 -- Agreement dated as of December 29, 1995 among Wirekraft Industries, Inc. and General Electric Company (Confidential treatment has been granted with respect to certain portions of this exhibit).(3)
71
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.20 -- Amended and Restated Credit Agreement, dated as of February 12, 1997, among International Wire Group, Inc., International Wire Holding Company, the several lenders from time to time parties thereto, Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.(4) 10.21+ -- Employment Agreement, dated as of September 25, 1996, among International Wire Holding Company and International Wire Group, Inc. and Joseph M. Fiamingo.(4) 10.22+ -- Option Agreement, dated as of November 5, 1995, between International Wire Holding Company and Joseph M. Fiamingo.(4) 10.23+ -- Option Agreement, dated as of November 6, 1996, between International Wire Holding Company and Joseph M. Fiamingo.(4) 10.24 -- First Amendment to Amended and Restated Credit Agreement, dated as of June 17, 1997, among International Wire Group, Inc., International Wire Holding Company, the Several Lenders from time to time parties thereto, the Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.(5) 10.25 -- Second Amendment and Waiver to Amended and Restated Credit Agreement, dated as of September 29, 1997, among International Wire Group, Inc., International Wire Holding Company, the Several Lenders from time to time parties thereto, the Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.(6) 10.26+ -- Option Agreement, dated as of August 6, 1996, between International Wire Holding Company and Glenn J. Holler.(6) 10.27 -- Fourth Amendment to Amended and Restated Credit Agreement, dated as of December 29, 1999, among International Wire Group, Inc., International Wire Holding Company, Camden Wire Co., Inc., the Several Lenders from time to time parties thereto, the Chase Manhattan Bank, as Administrative Agent, and Bankers Trust Company, as Documentation Agent.* 10.28+ -- Employment Agreement, dated as of November 13, 1999, among International Wire Holding Company and International Wire Group, Inc. and Glenn J. Holler. * 10.29+ -- Employment Agreement, dated as of November 13, 1999, among International Wire Holding Company and International Wire Group, Inc. and Joseph M. Fiamingo. * 21.1 -- Subsidiaries of International Wire Group, Inc.* 27.0 -- Financial Data Schedule.*
- --------------- (1) Incorporated by reference to the Registration Statement on Form S-1 (33-93970) of International Wire Group, Inc. as declared effective by the Securities and Exchange Commission on September 29, 1995. (2) Incorporated by reference to the Current Report on Form 8-K of International Wire Group, Inc. as filed with the Securities Exchange Commission on March 20, 1996. (3) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1995. (4) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1996. (5) Incorporated by reference to the Registration Statement on Form S-1 (333-26925) of International Wire Group, Inc. as declared effective by the Securities and Exchange Commission on November 12, 1997. 72 (6) Incorporated by reference to the Annual Report on Form 10-K of International Wire Group, Inc. for the fiscal year ended December 31, 1997. * Filed herewith. + Indicates compensatory plan or arrangement. EX-10.27 2 4TH AMENDMENT TO RESTATED CREDIT AGREEMENT 1 EXHIBIT 10.27 =============================================================================== FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT among INTERNATIONAL WIRE GROUP, INC., as Borrower, INTERNATIONAL WIRE HOLDING COMPANY, as Guarantor, CAMDEN WIRE CO., INC., THE SEVERAL LENDERS FROM TIME TO TIME PARTIES HERETO, THE CHASE MANHATTAN BANK, as Administrative Agent, and BANKERS TRUST COMPANY, as Documentation Agent ------------------------------------- CHASE SECURITIES INC. as Arranger ------------------------------------- DATED AS OF DECEMBER 29, 1999 =============================================================================== 2 FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT FOURTH AMENDMENT, dated as of December 29, 1999 (this "Amendment"), to the Amended and Restated Credit Agreement, dated as of February 12, 1997 (as amended, supplemented or otherwise modified prior to the date hereof, the "Credit Agreement"), among INTERNATIONAL WIRE GROUP, INC., a Delaware corporation (the "Borrower"), INTERNATIONAL WIRE HOLDING COMPANY, a Delaware corporation ("Holdings"), CAMDEN WIRE CO., INC., a New York corporation ("Camden"), the several banks and other financial institutions from time to time parties thereto (the "Lenders"), THE CHASE MANHATTAN BANK, a New York banking corporation, as administrative agent for the Lenders thereunder (in such capacity, the "Administrative Agent"), and BANKERS TRUST COMPANY, as documentation agent for the Lenders thereunder (in such capacity, the "Documentation Agent"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, Holdings, the Lenders, the Administrative Agent and the Documentation Agent are parties to the Credit Agreement; WHEREAS, the Borrower intends to acquire (the "Forissier Acquisition") all of the capital stock of JYM Finance, s.a., a French corporation ("JYM Finance"), and TM J. Forissier, s.a. a French corporation ("Forissier") pursuant to the stock purchase agreement, dated as of December 29, 1999 (the "Forissier Stock Purchase Agreement"), among International Wire SAS and the Sellers (as defined in the Forissier Stock Purchase Agreement). WHEREAS, the Borrower intends to make other Permitted Acquisitions; WHEREAS, the Borrower has requested certain amendments to the Credit Agreement to permit the Forissier Acquisition and other Permitted Acquisitions and to make other changes to the Credit Agreement as set forth herein; NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows: 1. Definitions. Terms defined in the Credit Agreement are used herein with the respective meanings given to them therein. 2. Amendments to Section 1.1 of the Credit Agreement. (a) Section 1.1 of the Credit Agreement is hereby amended by inserting the following new definitions in the proper alphabetical order: 3 Page 2 ""Approved Fund": with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such lender or by an affiliate of such investment advisor. "Fourth Amendment": that certain Fourth Amendment to the Agreement dated as of December 29, 1999 by and among the Borrower, Holdings, Camden, the Lenders, the Administrative Agent and the Documentation Agent. "Fourth Amendment Effective Date": as defined in the Fourth Amendment. "Tranche A1 Term Loan Commitment": as to any Tranche A1 Term Loan Lender, its obligation to make a Tranche A1 Term Loan to the Borrower pursuant to subsection 2.6 in an aggregate amount not to exceed the amount set forth opposite such Tranche A1 Term Loan Lender's name in Schedule 1.1 under the heading "Total Tranche A1 Term Loan Commitment." "Tranche A1 Term Loan Commitment Percentage": as to any Tranche A1 Term Loan Lender, the percentage of the aggregate Tranche A1 Term Loan Commitments constituted by its Tranche A1 Term Loan Commitment. "Tranche A1 Term Loan Lender": any Lender having a Tranche A1 Term Loan Commitment hereunder or that holds outstanding Tranche A1 Term Loans. "Tranche A1 Term Loans": as defined in subsection 2.6. "Tranche A1 Term Note": as defined in subsection 2.7(a). (b) Subsection 1.1 of the Credit Agreement is hereby amended by (a) deleting the definitions of "Acquisition", "Acquisition Documentation", "Applicable Margin", "Consolidated EBITDA", "ECF Percentage", "Excess Cash Flow", "Term Loan Commitments", "Term Loan Lender", "Term Note" and "Total Credit Percentages"; appearing therein in their entirety and substituting in lieu thereof the following new definitions: ""Acquisition": the collective reference to the Silicones Acquisition, the DAW Acquisition, the Albion Acquisition, the Hoosier Merger and the Forissier Acquisition. "Acquisition Documents": the collective reference to the DAW Asset Purchase Agreement, Albion Asset Purchase Agreement, Hoosier Merger Agreement, Silicones Asset Purchase Agreement, Dekko Escrow Agreement, the Forissier Stock Purchase Agreement and all other agreements, instruments or certificates executed in connection with any Acquisition, as the same may be amended, supplemented or otherwise modified from time to time in accordance with subsection 8.16. "Applicable Margin": for each Type of Loan, the rate per annum set forth under the relevant column heading below: 4 Page 3
Alternate Base Rate Loans ------------------------- Type Applicable Margin ---- ----------------- Tranche A Term Loans 1/2% Tranche A1 Term Loans 1% Tranche B Term Loans 1% Revolving Credit Loans 1/2% (including Swing Line Loans)
Eurodollar Rate Loans --------------------- Type Applicable Margin ---- ----------------- Tranche A Term Loans 1-1/2% Tranche A1 Term Loans 2% Tranche B Term Loans 2% Revolving Credit Loans 1-1/2%
; provided that in the event that the ratio of Consolidated Senior Debt of the Borrower as of the most recent fiscal quarter to Consolidated EBITDA (calculated in accordance with subsection 8.1(c)) of the Borrower, is as set forth in the relevant column heading below for any quarterly period, any such Applicable Margin with respect to Tranche A Term Loans, Tranche B Term Loans and Revolving Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line Loans) shall be as provided in the relevant column heading below:
- ------------------------------------------------------------------------ Applicable Applicable Margin For Margin for Revolving Credit Revolving Credit Relevant Ratio of Consolidated and Tranche A and Tranche A Senior Debt to Consolidated Eurodollar Alternate Base EBITDA Loans Rate Loans - ------------------------------------------------------------------------ 1.75x and above 1-1/2% 1/2% - ------------------------------------------------------------------------ 1.50x to but excluding 1.75x 1-1/4% 1/4% - ------------------------------------------------------------------------ Below 1.50x 1% 0% - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ Applicable Applicable Margin for Relevant Ratio of Margin For Tranche B Consolidated Senior Debt to Tranche B Alternate Base Consolidated EBITDA Eurodollar Loans Rate Loans - ------------------------------------------------------------------------ Above 2.00x 2-1/4% 1-1/4% - ------------------------------------------------------------------------ 2.00x and below 2% 1% - ------------------------------------------------------------------------
5 Page 4 If the financial statements required to be delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the related compliance certificate required to be delivered pursuant to subsection 7.2(b), are delivered on or prior to the date when due (or, in the case of the fourth quarterly period of each fiscal year of the Borrower, if financial statements which satisfy the requirements of, and are delivered within the time period specified in, subsection 7.l(b) and a related compliance certificate which satisfies the requirements of, and is delivered within the time period specified in, subsection 7.2(b), with respect to any such quarterly period are so delivered within such time periods), then the Applicable Margin in respect of the Revolving Credit Loans, the Tranche A Term Loans and the Tranche B Term Loans from the date upon which such financial statements were delivered shall be the Applicable Margin as set forth in the relevant column heading above; provided, however, that in the event that the financial statements delivered pursuant to subsection 7.1(a) or 7.1(b), as applicable, and the related compliance certificate required to be delivered pursuant to subsection 7.2(b), are not delivered when due, then: (a) if such financial statements and certificate are delivered after the date such financial statements and certificate were required to be delivered (without giving effect to any applicable cure period) and the Applicable Margin increases from that previously in effect as a result of the delivery of such financial statements and certificate, then the Applicable Margin in respect of Revolving Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line Loans), Tranche A Term Loans and Tranche B Term Loans during the period from the date upon which such financial statements and certificate were required to be delivered (without giving effect to any applicable cure period) until the date upon which they actually are delivered shall, except as otherwise provided in clause (c) below, be the Applicable Margin as so increased; (b) if such financial statements and certificate are delivered after the date such financial statements and certificate were required to be delivered (without giving effect to any applicable cure period) and the Applicable Margin decreases from that previously in effect as a result of the delivery of such financial statements and certificate, then such decrease in the Applicable Margin shall not become applicable until the date upon which such financial statements and certificate actually are delivered; and (c) if such financial statements and certificate are not delivered prior to the expiration of the applicable cure period, then, effective upon such expiration, for the period from the date upon which such financial statements and certificate were required to be delivered (after the expiration of the applicable cure period) until two Business Days following the date upon which they actually are delivered, the Applicable Margin in respect of Revolving Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line Loans) and Tranche A Term Loans shall be 1-1/2%, in the case of Eurodollar Loans, and 1/2%, in the case of Alternate Base Rate Loans and the Applicable Margin in respect of Tranche B Term Loans shall be 2-1/4%, in the case of Eurodollar Loans, and 1-1/4% in the 6 Page 5 case of Alternate Base Rate Loans (it being understood that the foregoing shall not limit the rights of the Administrative Agent and the Lenders set forth in Section 9). "Consolidated EBITDA": for any period, with respect to any Person, Consolidated Net Income of such Person for such period (A) plus, without duplication and to the extent reflected as a charge in the statement of such Consolidated Net Income for such period, the sum of (i) total income and franchise tax expense, (ii) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions and discounts and other fees and charges associated with Indebtedness, (iii) depreciation and amortization expense, (iv) amortization of intangibles (including, but not limited to, goodwill and organization costs (including, with respect to the Borrower, costs associated with the Camden Acquisition, the Acquisition, the Omega Acquisition, the Mergers and the Wirekraft Acquisition)), (v) other noncash charges (including non-cash currency exchange losses), (vi) any extraordinary and unusual losses (including losses on sales of assets other than inventory sold in the ordinary course of business) other than any loss from any discontinued operation and (vii) restructuring costs expensed in fiscal years 1996 and 1997 as contemplated in connection with the Acquisition in an aggregate amount not exceeding $8,000,000, which shall include, but not be limited to costs associated with plant shutdowns, severance and relocations, and (B) minus, without duplication and to the extent reflected as a credit or gain in the statement of such Consolidated Net Income for such period, the sum of (i) any extraordinary and unusual gains (including gains on the sales of assets, other than inventory sold in the ordinary course of business) other than any income from discontinued operations and (ii) other noncash credits or gains (including non-cash currency exchange gains). For purposes of calculating the financial covenants set forth in Section 8, if an acquisition or disposition has occurred during the relevant period, Consolidated EBITDA will be determined giving pro forma effect thereto (without giving effect to synergies and cost savings) as if such acquisition or disposition and any related incurrence of Indebtedness or issuance of preferred stock had occurred at the beginning of the relevant period. "ECF Percentage": 50%; provided that the percentage will be reduced to zero if the ratio of Consolidated Total Debt of the Borrower and its Subsidiaries to Consolidated EBITDA of the Borrower and its Subsidiaries, for the most recently completed fiscal year (determined in accordance with subsection 8.1(c)) is < 3.75:1.0. "Excess Cash Flow": for any fiscal year of the Borrower, the excess of (a) the sum, without duplication, of (i) Consolidated EBITDA for such fiscal year (calculated for purposes of this definition without giving effect to clause (vii) of the definition of Consolidated EBITDA), (ii) the amount of returned surplus assets of any Plan during such fiscal year to the extent not included in Consolidated Net Income to determine Consolidated EBITDA for such fiscal year, (iii) decreases in Consolidated Working Capital of the Borrower and its Subsidiaries for such fiscal year, (iv) the amount of any refund received by the Borrower and its Subsidiaries on taxes paid by the Borrower and its Subsidiaries (other than the Sellers Tax Escrow Amount), (v) cash dividends, cash 7 Page 6 interest and other similar cash payments received by the Borrower in respect of investments to the extent not included in Consolidated Net Income to determine Consolidated EBITDA for such fiscal year and (vi) extraordinary cash gains to the extent subtracted or otherwise not included in Consolidated Net Income to determine Consolidated EBITDA for such fiscal year over (b) the sum, without duplication, of (i) the aggregate amount of cash Capital Expenditures made by the Borrower and its Subsidiaries during such fiscal year and permitted hereunder (other than Capital Expenditures permitted under subsection 8.8(b)), (ii) the aggregate amount of all reductions of the Revolving Credit Commitments (to the extent such reductions are accompanied by prepayment of Revolving Credit Loans, Swing Line Loans and/or L/C Obligations) or payments or prepayments of the Term Loans during such fiscal year other than pursuant to subsection 2.12(a), (b) or (c), (iii) the aggregate amount of payments of principal in respect of any Indebtedness (other than revolving credit Indebtedness to the extent the related commitment is not permanently reduced) permitted hereunder during such fiscal year (other than under this Agreement), (iv) increases in Consolidated Working Capital of the Borrower and its Subsidiaries for such fiscal year, (v) cash interest expense of the Borrower and its Subsidiaries for such fiscal year, (vi) taxes actually paid in such fiscal year or to be paid in the subsequent fiscal year on account of such fiscal year to the extent added to Consolidated Net Income to determine Consolidated EBITDA for such fiscal year, (vii) extraordinary cash losses to the extent added to Consolidated Net Income to determine Consolidated EBITDA for such fiscal year, (viii) the amount of all Investments made in such fiscal year as permitted by clauses (d), (h) and (j) of subsection 8.9 and (ix) dividends or other direct payments paid by the Borrower to or for the benefit of Holdings to the extent permitted by subsection 8.7(a) to the extent not subtracted in the determination of Consolidated Net Income of the Borrower for such fiscal year and (x) the aggregate principal amount of any optional prepayments of the Revolving Credit Loans for such fiscal year (to the extent accompanied by a corresponding permanent reduction of the Revolving Credit Commitments) and any optional prepayments of the Term Loans for such fiscal year. For purposes of determining changes in Consolidated Working Capital, the working capital acquired in connection with the Acquisition and the Camden Acquisition will be excluded. "Term Loan Commitments": the collective reference to the Tranche A Term Loan Commitments, the Tranche A1 Term Loan Commitments and the Tranche B Term Loan Commitments; collectively, as to all the Term Loan Lenders, the "Term Commitments." "Term Loan Lender": the collective reference to the Tranche A Term Loan Lenders, the Tranche A1 Term Loan Lenders and the Tranche B Term Loan Lenders. "Term Note" and "Term Notes": as defined in subsection 2.9(a). "Total Credit Percentage": as to any Lender at any time, the percentage of the aggregate Revolving Credit Commitments, outstanding Tranche A Term Loans, outstanding Tranche A1 Term Loans and outstanding Tranche B Term Loans then constituted by its Revolving Credit Commitment, outstanding Tranche A Term Loans, outstanding Tranche A1 Term Loans and outstanding Tranche B Term Loans, respectively (or, if the Revolving Credit Commitments have terminated or expired, the percentage of the aggregate outstanding Revolving Credit Loans, outstanding Tranche A Term Loans and, 8 Page 7 outstanding Tranche A1 Term Loans and outstanding Tranche B Term Loans and risk interests in the Letter of Credit Outstandings and Swing Line Loans then constituted by its outstanding Revolving Credit Loans, outstanding Tranche A Term Loans, outstanding Tranche A1 Term Loans and outstanding Tranche B Term Loans and risk interest in Letter of Credit Outstandings and Swing Line Loans)." 3. Amendment to Subsection 2.6 of the Credit Agreement. Subsection 2.6 of the Credit Agreement is hereby amended by deleting such subsection in its entirety and inserting in lieu thereof the following: "2.6 Term Loans. (a) Each Tranche A Term Loan Lender identified on Schedule 1.1 hereto has made a term loan (a "Tranche A Term Loan") to the Borrower the outstanding principal balance of which is set forth opposite such Lender's name in Schedule 1.1 under the heading "Tranche A Term Loan" (collectively, the "Tranche A Term Loans"). (b) Each Tranche B Term Loan Lender identified on Schedule 1.1 hereto has made a Tranche B term loan (a "Tranche B Term Loan") to the Borrower the outstanding principal balance of which is set forth opposite such Lender's name in Schedule 1.1 under the heading "Tranche B Term Loan" (collectively, the "Tranche B Term Loans"). (c) Subject to the terms and conditions hereof, each Tranche A1 Term Loan Lender identified on Schedule 1.1 as having a "Tranche A1 Term Loan Commitment" severally agrees to make a term loan (a "Tranche A1 Term Loan", together with the Tranche A Term Loans and the Tranche B Term Loans, the "Term Loans") on the Fourth Amendment Effective Date in an aggregate principal amount set forth opposite such Lender's name in Schedule 1.1 under the heading "Tranche A1 Term Loan Commitment." (d) The Term Loans may from time to time be (i) Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as determined by the Borrower and notified to the Administrative Agent in accordance with subsection 2.10." 4. Amendment to Subsection 2.8 of the Credit Agreement. Subsection 2.8 of the Credit Agreement is hereby amended by deleting the words "Tranche A Term Notes, and Tranche B Term Notes when hereafter referred to collectively shall be referred to as "Term Notes"" beginning on the fifth line of such subsection. 5. Amendment of Subsection 2.9 of the Credit Agreement. Subsection 2.9 of the Credit Agreement is hereby amended by deleting such subsection in its entirety and inserting in lieu thereof the following: 9 Page 8 "2.9 Tranche A1 Term Notes. (a) The Borrower agrees that, upon the request to the Administrative Agent by any Tranche A1 Term Loan Lender, in order to evidence such Lender's Tranche A1 Term Loan the Borrower will execute and deliver to such Lender a promissory note substantially in the form of Exhibit A-3 (each, as amended, supplemented, replaced or otherwise modified from time to time, a "Tranche A1 Term Note"; Tranche A Term Notes, Tranche A1 Term Notes and Tranche B Term Notes when hereinafter referred to collectively shall be referred to as "Term Notes"), with appropriate insertions therein as to payee, date and principal amount, payable to the order of such Tranche A1 Term Loan Lender and in a principal amount equal to the amount set forth opposite such Tranche A1 Term Loan Lender's name on Schedule 1.1 under the heading "Tranche A1 Term Loan Commitment". Each Tranche A1 Term Loan Lender is hereby authorized to record the date, Type and amount of its Tranche A1 Term Loan, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal of its Tranche A1 Term Loan and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedules annexed to and constituting a part of its Tranche A1 Term Note, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure by any Tranche A1 Term Loan Lender to make any such recordation shall not affect any of the obligations of the Borrower under such Tranche A1 Term Note or this Agreement. Any Tranche A1 Term Note shall (i) be dated the Fourth Amendment Effective Date, (ii) be payable as provided in subsection 2.7(b) and (iii) provide for the payment of interest in accordance with subsection 4.1. (b) The aggregate Tranche A1 Term Loans of all the Tranche A1 Term Loan Lenders shall be payable in four consecutive installments on the dates and in a principal amount equal to the amount set forth below (together with all accrued interest thereon) opposite the applicable installment date (or, if less, the aggregate amount of the Tranche A1 Term Loans then outstanding):
Installment Amount ----------- ------- December 31, 2000 $2,000,000.00 December 31, 2001 $2,000,000.00 December 31, 2002 $2,000,000.00 March 31, 2003 $19,000,000.00"
6. Amendment to Subsection 2.10 of the Credit Agreement. Subsection 2.10 (a) is hereby amended by inserting the following: "(a) The Borrower shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to 10:00 A.M., New York City time, one Business Day prior to the Fourth Amendment Effective Date) 10 Page 9 requesting that the Tranche A1 Term Loan Lenders make the Tranche A1 Term Loans on the Fourth Amendment Effective Date and specifying the amount to be borrowed. Upon receipt of such notice the Administrative Agent shall promptly notify each Tranche A1 Term Loan Lender thereof. On the Fourth Amendment Effective Date each Tranche A1 Term Loan Lender shall make available to the Administrative Agent at its office specified in subsection 12.2 an amount in immediately available funds equal to the Tranche A1 Term Loan to be made by such Tranche A1 Term Loan Lender. The Administrative Agent shall on such date credit the account of the Borrower on the books of such office of the Administrative Agent with the aggregate of the amounts made available to the Administrative Agent by the Tranche A1 Term Loan Lenders." and (b) Subsection 2.10(b) is hereby amended by deleting the word "and" at the end of clause (iii) and inserting the following at the end of clause (iv): "and (v) each Tranche A1 Term Loan Lender, such Tranche A1 Term Loan Lender's Tranche A1 Term Loan Commitment Percentage of the amounts specified in subsection 2.9(b) (or, if less, the aggregate amount of the Tranche A1 Term Loans of such Tranche A1 Term Loan Lender then outstanding), on the dates specified in subsection 2.9(b) (or such earlier date on which the Tranche A Term Loans become due and payable pursuant to Section 9)." 7. Amendment to Subsection 2.11 of the Credit Agreement. (a) Subsection 2.11(a) is hereby amended by inserting the words ", the Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the sixth, seventeenth, eighteenth and twentieth lines of such subsection and by deleting the amounts $10,000,000 contained therein and inserting in lieu thereof the amount $15,000,000 and (b) subsection 2.11(b) is hereby amended by inserting the words ", the Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the third, fifth, seventh and ninth lines of such subsection and by deleting the amounts $10,000,000 contained therein and inserting in lieu thereof the amount $15,000,000. 8. Amendment to Subsection 2.12 of the Credit Agreement. (a) Subsection 2.12(a) is hereby amended by inserting the words ", the Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the third line of such subsection, (b) subsection 2.12(b) is hereby amended by inserting the words ", the Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the first line of such subsection, (c) subsection 2.12(c) is hereby amended by inserting the words ", the Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the first line of such subsection and (d) subsection 2.12(d) is hereby amended by inserting the words ", the Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the sixth and ninth lines of the first paragraph of such subsection and the second, third, fifth, seventh and ninth lines of the second 11 Page 10 paragraph of such subsection and by adding the following at the end of such subsection (d); "Notwithstanding the foregoing, the first $15,000,000 in the aggregate of mandatory prepayments may be applied as the Borrower may elect in accordance with subsection 2.11." 9. Amendment to Subsection 5.14 of the Credit Agreement. Subsection 5.14 of the Credit Agreement is hereby amended by deleting therefrom the phrase "As of the date hereof," and substituting therefor the phrase "As of the Fourth Amendment Date,". 10. Amendment to Subsection 5.15 of the Credit Agreement. Subsection 5.15 of the Credit Agreement is hereby amended by (a) deleting the first sentence thereof and replacing it with the following sentence: "The proceeds of the Term Loans (other than the Additional Term Loans, the Second Additional Term Loans and the Tranche A1 Term Loans) shall be used to finance a portion of the Mergers and the Wirekraft Acquisition and the transaction costs associated therewith and to refinance the credit facilities under the Omega Credit Agreement." and (b) adding the following sentence to the end of such subsection: "The proceeds of the Tranche A1 Term Loans shall be used to finance a portion of the Forissier Acquisition and other Permitted Acquisitions." 11. Amendment to Section 7.9 of the Credit Agreement. Subsection 7.9 of the Credit Agreement is hereby amended by adding thereto, after the term "thereafter" in the eighth line in the paragraph, the phrase "other than leased real property not having a material value". 12. Amendment to Subsection 8.1 of the Credit Agreement. (a) Subsection 8.1(a) of the Credit Agreement is hereby amended by deleting the table set forth therein in its entirety, and inserting in lieu thereof the following: "1999 4th 2.20 to 1.00 2000 1st 2.20 to 1.00 2nd 2.20 to 1.00 3rd 2.20 to 1.00 4th 2.30 to 1.00 2001 1st 2.30 to 1.00 2nd 2.30 to 1.00 3rd 2.30 to 1.00 4th 2.45 to 1.00 2002 1st 2.45 to 1.00 2nd 2.45 to 1.00
12 Page 11 3rd 2.45 to 1.00 4th 2.60 to 1.00 2003 1st 2.60 to 1.00 2nd 2.60 to 1.00 3rd 2.60 to 1.00 4th 3.00 to 1.00"
and (b) Subsection 8.1(c) of the Credit Agreement is hereby amended by deleting the table set forth therein in its entirety and inserting in lieu thereof the following: "1999 4th 4.75 to 1.00 2000 1st 4.75 to 1.00 2nd 4.75 to 1.00 3rd 4.75 to 1.00 4th 4.50 to 1.00 2001 1st 4.50 to 1.00 2nd 4.50 to 1.00 3rd 4.50 to 1.00 4th 4.00 to 1.00 2002 1st 4.00 to 1.00 2nd 4.00 to 1.00 3rd 4.00 to 1.00 4th 3.75 to 1.00 2003 1st 3.75 to 1.00 2nd 3.75 to 1.00 3rd 3.75 to 1.00 4th 3.25 to 1.00"
13. Amendment to Subsection 8.2 of the Credit Agreement. (a) Subsection 8.2(c) is hereby amended by deleting therefrom the phrase "Second Amendment Closing Date" and substituting therefor the phrase "Fourth Amendment Effective Date". (b) Subsection 8.2(i) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following: "(i) Indebtedness (i) of ECM to Wirekraft Industries evidenced by the ECM Notes (provided that the ECM Notes are pledged by Wirekraft Industries to the Administrative Agent for the ratable benefit of the Lenders pursuant to the Wirekraft Note Pledge Agreement); (ii) of ECM and any other Foreign Subsidiary 13 Page 12 of the Borrower to the Borrower or any Domestic Subsidiary of the Borrower (other than Indebtedness evidenced by the ECM Notes) (provided that any such intercompany notes are pledged by the Borrower or any such Domestic Subsidiary of the Borrower, as the case may be, to the Administrative Agent for the ratable benefit of the Lenders pursuant to a pledge agreement in form and substance reasonably satisfactory to the Administrative Agent) (iii) of ECM and any other Foreign Subsidiary of the Borrower consisting of unsecured overdraft facilities provided by local financial institutions for working capital purposes (other than the Philippines Project Indebtedness) the aggregate commitments of which are not to exceed $10,000,000, (iv) of any Foreign Subsidiary of the Borrower for financing under the Philippines Project Indebtedness and (v) Indebtedness of any Foreign Subsidiary to any other Foreign Subsidiary; provided that the aggregate principal amount of Indebtedness described in clauses (i) and (ii) above shall in no event exceed $40,000,000 at any one time (other than Indebtedness incurred pursuant to subsection 8.9(j) of the Credit Agreement) and provided further that the aggregate amount of the Philippines Project Indebtedness described in subclause (iv) shall in no event exceed $18,000,000 at any one time." (c) Subsection 8.2(o) is hereby amended by deleting the word "and" at the end of the second proviso. (d) Subsection 8.2(p) is hereby amended by deleting the period at the end of the proviso and inserting in lieu thereof a semi-colon followed by the word "and". (e) Section 8.2 of the Credit Agreement is hereby amended by adding the following paragraph in the proper alphabetical order: "(q) Indebtedness incurred in connection with any Investment made pursuant to Section 8.9(j)." 14. Amendment to Subsection 8.3 of the Credit Agreement. (a) Subsection 8.3(g) is hereby amended by deleting therefrom the phrase "Second Amendment Closing Date" and substituting therefor the phrase "Fourth Amendment Effective Date". (b) Subsection 8.3(p) is hereby amended by deleting the phrase "subsections 8.2(i), (ii) and (iii)" and substituting therefor the phrase "subsections 8.2(i), (ii), (iii) and (v)". (c) Subsection 8.3(q) of the Credit Agreement is hereby amended by deleting the amount $2,000,000 contained therein and inserting in lieu thereof the amount $5,000,000. 15. Amendment to Subsection 8.4 of the Credit Agreement. (a) Subsection 8.4(b) is hereby amended by deleting therefrom the phrase "Second Amendment Closing Date" and substituting therefor the phrase "Fourth Amendment Effective Date". 14 Page 13 (b) Subsection 8.4 of the Credit Agreement is hereby amended by deleting the "and" at the end of 8.4(j), deleting the period at the end of 8.4(k) and inserting in lieu thereof the following: "; and (l) Guarantee Obligations made in the ordinary course of business that do not have a Material Adverse Effect." 16. Amendment to Subsection 8.5 of the Credit Agreement. Subsection 8.5 of the Credit Agreement is hereby deleted in its entirety and the following substituted therefor: "8.5 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business, except that the Borrower and/or any of its Subsidiaries shall be able to enter into one or more transactions (i) creating a new Subsidiary, (ii) changing the jurisdiction of the Borrower or any Subsidiary from one state to another state or from one country to another country, (iii) changing the form of the Borrower or any Subsidiary from a corporation to any other Person or (iv) merging, consolidating or dissolving the Borrower and/or any Subsidiary, provided that (X) notice of such transaction is provided to the Administrative Agent and each Lender at least 10 days prior to the effective date of such transaction and (Y) such transaction does not, in the reasonable opinion of the Administrative Agent, as evidenced by its written consent (such consent not to be unreasonably withheld) materially and adversely affect the Administrative Agent's or any Lender's remedies under this Agreement and the other Loan Documents, or otherwise have a Material Adverse Effect or, in the case of a change in the Borrower's jurisdiction, impair any Lender's ability to legally make or participate in Loans." 17. Amendment to Subsection 8.8 of the Credit Agreement. (a) Subsection 8.8(a) of the Credit Agreement is hereby amended by deleting the table set therein and inserting in lieu thereof the following table:
"Fiscal Year Amount ------------ ------ 1999 and thereafter $35,000,000"
and (b) Subsection 8.8(c) of the Credit Agreement is hereby amended by deleting the amount $27,000,000 contained therein and inserting in lieu thereof the amount $35,000,000. 18. Amendment to Subsection 8.9 of the Credit Agreement. (a) Subsection 8.9(e) is hereby amended by deleting therefrom the phrase "Second Amendment Closing Date" and substituting therefor the phrase "Fourth Amendment Effective Date". 15 Page 14 (b) Subsection 8.9(j) of the Credit Agreement is hereby amended by deleting it in its entirety and inserting in lieu thereof the following: "(j) In addition to the foregoing, Investments made after the Fourth Amendment Effective Date (at cost, without regard to any write down or write up thereof) in an aggregate amount not exceeding the sum of (a) $50,000,000, (b) common stock issued by the Borrower in connection with such Investments and (c) that portion of Excess Cash Flow retained, and not otherwise utilized under any other exception to any negative covenant, by the Borrower at any time outstanding;" (c) Subsection 8.9(k) is hereby amended by deleting the word "and" at the end of such subsection and (d) Subsection 8.9(l) is amended by deleting the period at the end of such subsection and inserting in lieu thereof: "; and (m) Investments pursuant to the Forissier Acquisition." 19 Amendment to Section 9 of the Credit Agreement. (a) Subsection 9(e) of the Credit Agreement is hereby amended by deleting the amount $2,000,000 set forth therein and inserting in lieu thereof the amount $5,000,000 and (b) subsection 9(h) is hereby amended by deleting the amount $2,000,000 set forth therein and inserting in lieu thereof the amount $5,000,000. 20 Amendment to Section 12.6 of the Credit Agreement. Subsection 12.6(c) of the Credit Agreement is hereby amended by inserting at the end of the first clause (x) of such subsection the following: ",or any other lesser amount, provided that the assignment of such lesser amount is consented to by the Borrower and the Administrative Agent" 21 Amendment to Schedules. Each Schedule to the Credit Agreement is hereby amended as set forth in the corresponding schedule hereto. 22 Conditions to Effectiveness of this Amendment. This Amendment shall become effective on and as of the date hereof upon the satisfaction of the following conditions precedent (such date the "Fourth Amendment Effective Date"): (a) All documentation in connection with the Amendment and the transactions contemplated hereby (including the Forissier Acquisition) shall have been executed by each of Holdings, the Borrower and its Subsidiaries, as applicable. (b) The Borrower shall have consummated the Forissier Acquisition in accordance with the Forissier Stock Purchase Agreement. 16 Page 15 (c) The execution and delivery of the Amendment by (i) Holdings, (ii) the Borrower, (iii) all of the Tranche A1 Term Loan Lenders, (iv) the Revolving Credit Lenders and the Tranche A Term Loan Lenders the Total Credit Percentages (calculated for this purpose without reference to outstanding Tranche B Term Loans and Tranche A1 Term Loan Loans) of which aggregate at least a majority and (v) the Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which aggregate at least a majority. (d) The Borrower shall have paid all fees and expenses in connection with the Amendment. (e) No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the transactions contemplated herein. (f) Each of the representations and warranties made by the Credit Parties and their Subsidiaries in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of the date hereof as if made on and as of the date hereof, except for any representation and warranty which is expressly made as of an earlier date, which representation and warranty shall have been true and correct in all material respects as of such earlier date. (g) The Administrative Agent shall have received, with a copy for each Lender, the Acknowledgement and Consent to the Fourth Amendment attached hereto as Exhibit A, executed by each of the Domestic Subsidiaries. (h) The Administrative Agent shall have received, with a counterpart for each Lender, the executed legal opinion of Weil, Gotshal & Manges LLP, counsel to the Credit Parties, substantially in the form of Exhibit B hereto, dated the Fourth Amendment Effective Date and covering such other matters incident to the transactions contemplated by this Amendment as the Administrative Agent may require. 23 Confirmation of Guarantees (a) Holdings hereby acknowledges and confirms its obligations under Section 11 of the Credit Agreement, and agrees that its guarantee shall continue at all times to support the Borrower's obligations under all of the Loan Documents, including, without limitation, as such documents have been heretofore amended or modified, and, to the extent permitted by applicable law, as may be further amended or modified from time to time. (b) The Borrower hereby acknowledges and confirms its obligations under the Borrower Guarantee and agrees that its guarantee shall continue at all times to support Camden's obligations and liabilities under any Letters of Credit issued for the account of Camden. (c) Camden hereby acknowledges and confirms its obligations under the Camden Guarantee, and agrees that its guarantee shall continue at all times to support the Borrower's obligations under all of the Loan Documents, including, without limitation, as such documents have been heretofore amended or modified, and, to the extent permitted by applicable law, as may be further amended or modified from time to time. 17 Page 16 24 Miscellaneous. (a) Effect. Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Loan Documents shall remain unamended and not waived and shall continue to be in full force in effect. (b) Counterparts. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Amendment signed by all the parties shall be lodged with the Borrower and the Administrative Agent. (c) Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (d) Integration. This Amendment and the other Loan Documents represent the agreement of the Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. (E) GOVERNING LAW. THIS AMENDMENT, ANY NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT AND ANY NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 18 Page 17 IN WITNESS WHEREOF, the parties hereto have caused this Amendment and Waiver to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. INTERNATIONAL WIRE GROUP, INC., as Borrower By: /s/ DAVID J. WEBSTER --------------------------------------- Name: David J. Webster Title: Senior Vice President INTERNATIONAL WIRE HOLDING COMPANY, as Guarantor By: /s/ DAVID J. WEBSTER --------------------------------------- Name: David J. Webster Title: Senior Vice President CAMDEN WIRE CO., INC. By: /s/ DAVID J. WEBSTER --------------------------------------- Name: David J. Webster Title: Senior Vice President THE CHASE MANHATTAN BANK, as Administrative Agent and as a Lender, as Swing Line Lender and as Issuing Lender By: /s/ MARIAN N. SCHILLMAN --------------------------------------- Name: Marian N. Schillman Title: Vice President ABN AMRO BANK By: /s/ THOMAS COMFORT -------------------------------------- Name: Thomas Comfort Title: Group Vice President By: /s/ BERNARD J. MCGUIGER -------------------------------------- Name: Bernard J. McGuiger Title: Group Vice President and Director
19 Page 18 BANKERS TRUST COMPANY By: /s/ GREGORY SHEFRIN --------------------------------------- Name: Gregory Shefrin Title: Principal THE BANK OF NEW YORK By: /s/ DAVID G. SHEDD --------------------------------------- Name: David G. Shedd Title: Vice President BANK OF SCOTLAND By: /s/ ANNIE GLYNN --------------------------------------- Name: Annie Glynn Title: Senior Vice President PARIBAS CAPITAL FUNDING LLC By: /s/ M.S. ALEXANDER --------------------------------------- Name: M.S. Alexander Title: Director
20 Page 19 CREDIT AGRICOLE INDOSUEZ By: /s/ RAYMOND [ILLEGIBLE] --------------------------------------- Name: Raymond [ILLEGIBLE] Title: Vice President Senior Relationship Manager By: /s/ SUSAN KNIGHT --------------------------------------- Name: Susan Knight Title: Vice President
21 Page 20 GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ GREGORY HONG --------------------------------------- Name: Gregory Hong Title: Duly Authorized Signatory HELLER FINANCIAL, INC. By: /s/ SCOTT ZAMBA --------------------------------------- Name: Scott Zamba Title: Assistant Vice President THE INDUSTRIAL BANK OF JAPAN LIMITED By: /s/ TAKOYA [ILLEGIBLE] --------------------------------------- Name: Takoya [ILLEGIBLE] Title: Senior Vice President KZH SHENKMAN By: --------------------------------------- Name: Title: KZH-CRESCENT LLC By: /s/ PETER CHIN --------------------------------------- Name: Peter Chin Title: Authorized Agent THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH By: --------------------------------------- Name: Title:
22 Page 21 MEDICAL LIABILITY MUTUAL INSURANCE CO. By: INVESCO Senior Secured Management, Inc. as Investment Manager By: /s/ JOSEPH ROTONDO -------------------------------------- Name: Joseph Rotondo Title: Authorized Signatory ML DEBT STRATEGIES FUND, INC. By: -------------------------------------- Name: Title: MERRILL LYNCH PRIME RATE PORTFOLIO By: Merrill Lynch Asset Management, L.P. as Investment Advisor By: -------------------------------------- Name: Title: MERRILL LYNCH SENIOR FLOATING RATE FUND, INC. By: -------------------------------------- Name: Title: THE MITSUBISHI TRUST AND BANKING CORPORATION By: /s/ BEATRICE E. KOSSODO -------------------------------------- Name: Beatrice E. Kossodo Title: Senior Vice President
23 Page 22 By: -------------------------------------- Name: Title: BANK OF TOKYO-MITSUBISHI TRUST COMPANY By: /s/ HIDEKAZU KOJIMA --------------------------------------- Name: Hidekazu Kojima Title: Vice President NATEXIS BANQUE BFCE By: /s/ JORDAN SADLER --------------------------------------- Name: Jordan Sadler Title: Associate By: /s/ FRANK H. MADDEN, JR. -------------------------------------- Name: Frank H. Madden, Jr. Title: Vice President & Group Manager MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST By: -------------------------------------- Name: Title: SENIOR DEBT PORTFOLIO By: BOSTON MANAGEMENT & RESEARCH, as Investment Advisor By: -------------------------------------- Name: Title:
24 Page 23 VAN KAMPEN PRIME RATE INCOME TRUST By: Van Kampen Investment Advisory Corp. By: /s/ DARVIN D.PIERCE -------------------------------------- Name: Darvin D. Pierce Title: Vice President
25 Page 24 VAN KAMPEN SENIOR INCOME TRUST By: Van Kampen Investment Advisory Corp. By: /s/ DARVIN D. PIERCE -------------------------------------- Name: Darvin D. Pierce Title: Vice President VAN KAMPEN CLO I, LIMITED BY: VAN KAMPEN MANAGEMENT INC., as Collateral Manager By: /s/ DARVIN D. PIERCE -------------------------------------- Name: Darvin D. Pierce Title: Vice President DEEPROCK & COMPANY By: Eaton Vance Management, as Investment Advisor By: -------------------------------------- Name: Title: CITY NATIONAL BANK By: /s/ [ILLEGIBLE] -------------------------------------- Name: [ILLEGIBLE] Title: Vice President KZH-SOLEIL CORPORATION (formerly known as KZH Holding Corporation) By: -------------------------------------- Name: Title: EATON VANCE SENIOR INCOME TRUST
26 Page 25 PACIFICA PARTNERS By: -------------------------------------- Name: Title: IMPERIAL BANK By: /s/ RAY VADSIMA -------------------------------------- Name: Ray Vadsima Title: Senior Managing Director KZH CRESCENT-3 LLC By: -------------------------------------- Name: Title: SEQUILS I, LTD. By: TCW Advisors, Inc. as its Collateral Manager By: /s/ MARK L. GOLD -------------------------------------- Name: Mark L. Gold Title: Managing Director By: /s/ JONATHAN I. BERG -------------------------------------- Name: Jonathan I. Berg Title: Assistant Vice President
27 Page 26 UNITED OF OMAHA LIFE INSURANCE COMPANY By: TCW Asset Management Company, its Investment Advisor By: /s/ MARK L. GOLD -------------------------------------- Name: Mark L. Gold Title: Managing Director By: /s/ JONATHAN I. BERG -------------------------------------- Name: Jonathan I. Berg Title: Assistant Vice President
28 Page 27 UNITED OF OMAHA LIFE INSURANCE COMPANY By: TCW Asset Management Company, its Investment Advisor By: -------------------------------------- Name: Title: By: -------------------------------------- Name: Title: AVALON CAPITAL LTD. By: INVESCO Senior Secured Management, Inc. as Portfolio Advisor By: /s/ JOSEPH [ILLEGIBLE] -------------------------------------- Name: Title:
29 Page 28 FIRST UNION NATIONAL BANK By: /s/ THOMAS CAMEL -------------------------------------- Name: Thomas Camel Title: Vice President By: -------------------------------------- Name: Title:
30 EXHIBIT A ACKNOWLEDGEMENT AND CONSENT TO THE FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT December 29, 1999 To the Lenders Parties to the Amended and Restated Credit Agreement Reference is made to the following documents: (1) AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 12, 1997 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Amended and Restated Credit Agreement") among International Wire Group, Inc., a Delaware corporation (the "Borrower"), International Wire Holding Company, a Delaware corporation, Camden Wire Co., Inc., a New York corporation, THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the "Administrative Agent") for the lenders (the "Lenders") from time to time parties to the Amended and Restated Credit Agreement and Bankers Trust Company, as Documentation Agent. (2) DOMESTIC SUBSIDIARIES' GUARANTEE, dated as of June 12, 1995 (the "Domestic Guarantee"), made by each of the parties that are signatories thereto (the "Domestic Guarantors"), in favor of the Administrative Agent for the ratable benefit of the Lenders. (3) WIRE TECHNOLOGIES GUARANTEE, dated as of March 5, 1996 (the "Wire Technologies Guarantee", and together with the Domestic Guarantee, each, a "Guarantee" and collectively, the "Guarantees"), made by Wire Technologies, Inc. (and together with the Domestic Guarantors, each, a "Guarantor" and collectively, the "Guarantors"), in favor of the Administrative Agent for the ratable benefit of the Lenders. Terms not defined herein shall have the definitions ascribed thereto in the Amended and Restated Credit Agreement or the Guarantee. Each Guarantor hereby acknowledges and consents to the Fourth Amendment to Amended and Restated Credit Agreement, including, but not limited to, the amendment of the definition of "Obligations" contained therein, and the effect of the Fourth Amendment on its obligations and the collateral security provided by it under the Loan Documents. Each Guarantor hereby acknowledges and confirms its obligations under the Guarantee to which it is a party, and agrees that the Guarantee to which it is a party shall continue at all times to support the Borrower's obligations under all of the Loan Documents, including, without limitation, as such documents have been heretofore amended or modified, and, to the extent permitted by applicable law, as may be further amended or modified from time to time. Nothing herein or in any of the Loan Documents shall be deemed to discharge, terminate or extinguish the Guarantee to which it 31 is a party or the obligations and liabilities of such Guarantor under the Guarantee to which it is a party, which shall remain in full force and effect. This Acknowledgement and Consent is being delivered in, and shall be governed by and construed and interpreted in accordance with the laws of, the State of New York. The provisions of Section 3 of the Guarantee and Section 3 of the Wire Technologies Guarantee are hereby incorporated herein by reference and made applicable to this Acknowledgement and Consent. Very truly yours, OMEGA WIRE, INC. OWI CORPORATION WIREKRAFT INDUSTRIES, INC. ECM HOLDING COMPANY WIREKRAFT EMPLOYMENT COMPANY WIRE TECHNOLOGIES, INC. INTERNATIONAL WIRE ROME OPERATIONS., INC. By: /s/ DAVID J. WEBSTER ----------------------------------- Name: David J. Webster Title: Senior Vice President WIRE HARNESS INDUSTRIES, INC. By: /s/ DAVID J. WEBSTER ------------------------------------ Name: David J. Webster Title: Senior Vice President
32 Amendment to Schedule 1.1 to the Credit Agreement ADDRESSES FOR NOTICES; TRANCHE A-1 TERM LOAN COMMITMENTS ABN -AMRO BANK Address for Notice: Attention: Telecopy: Tranche A-1 Term Loan Commitment: $2,500,000.00 BANK OF TOKYO-MITSUBISHI TRUST COMPANY Address for Notice: 1251 Avenue of the Americas New York, NY 10020 Attention: Hidekazu Kojima Telecopy: (212) 782-4981 Tranche A-1 Term Loan Commitment: $2,500,000.00 BANKERS TRUST COMPANY Address for Notice: 130 Liberty Street New York, NY 10006 Attention: Gina Thompson Telecopy: (212) 250-7218 Tranche A-1 Term Loan Commitment: $2,500,000.00 33 PARIBAS CAPITAL FUNDING LLC Address for Notice: 2121 San Jacinto Street Suite 930 Dallas, TX 75201 Attention: Deanna Walker Telecopy:(214) 969-0260 Tranche A-1 Term Loan Commitment: $2,500,000.00 FIRST UNION NATIONAL BANK Address for Notice: Attention: Telecopy: Tranche A-1 Term Loan Commitment: $2,500,000.00 THE CHASE MANHATTAN BANK Address for Notice: c/o Chase Securities Inc. 10 South LaSalle Street 23rd Floor Chicago, Illinois 60603 Attention: Jonathan Twichell Telecopy:(312) 346-9310 Tranche A-1 Term Loan Commitment: $2,500,000.00(1) - ------------------ 1/ $10,000,000.00 on the Fourth Amendment Effective Date, $2,500,000 of which is to be transferred via assignment to Captiva II Finance Ltd. on the day following the Fourth Amendment Effective Date, $2,000,000 of which is to be transferred via assignment to Senior Debt Portfolio on the Fourth Amendment Effective Date, $500,000 of which is to be transferred via assignment to Oxford Strategic Income Trust on the Fourth Amendment Effective Date, and $2,500,000 of which is to be transferred to Mitsubishi Trust and Banking Corporation on January 12, 2000. 34 CAPTIVA II FINANCE LTD. Address for Notice: c/o Trust Company of the West 200 Park Avenue, Suite 2200 New York, New York 10166-0228 Attention: Mark Gould/ Justin Driscoll Telecopy: (212) 771-4159 c/o Deutsche Bank (Cayman) Limited P.O. Box 1984 GT, Elizabeth Square Grand Cayman, Cayman Islands Attn: Director c/o State Street Bank & Trust Co. 2nd Avenue de Lafayette Place Boston, MA 02111 Attention: Greg Monaghan Telecopy:(617) 664-6367/5368 Tranche A-1 Term Loan Commitment: $2,500,000.00(2) SENIOR DEBT PORTFOLIO Address for Notice: 24 Federal Street, 6th floor Boston, MA 02110 Attention: Gretchan Bergstresser Telecopy:(617) 695-9594 Tranche A-1 Term Loan Commitment: $2,000,000.00(3) - -------------- 2/ Represents $2,500,000.00 to be transferred via assignment from The Chase Manhattan Bank on the day following the Fourth Amendment Effective Date. 3/ Represents $2,000,000.00 to be transferred via assignment from The Chase Manhattan Bank on the Fourth Amendment Effective Date. 35 OXFORD STRATEGIC INCOME TRUST 24 Federal Street, 6th floor Boston, MA 02110 Attention: Gretchan Bergstresser Telecopy:(617) 695-9594 Tranche A-1 Term Loan Commitment: $500,000.00(4) THE MITSUBISHI TRUST AND BANKING CORPORATION Address for Notice: 520 Madison Avenue 25th Floor New York, NY 10022 Attention: Anthony James Rock Telecopy: (212) 644-6825 Tranche A-1 Term Loan Commitment: $2,500,000.00(5) NATEXIS BFCE Address for Notice: Attention: Telecopy: Tranche A-1 Term Loan Commitment: $2,500,000.00 - --------------------- 4/ Represents $500,000.00 to be transferred via assignment from The Chase Manhattan Bank on the Fourth Amendment Effective - Date. 5/ Represents $2,500,000.00 to be transferred via assignment from The Chase Manhattan Bank on January 12, 1999. EX-10.28 3 EMPLOYMENT AGREEMENT - GLENN J. HOLLER 1 EXHIBIT 10.28 EMPLOYMENT AGREEMENT This agreement (the "Agreement") is made and entered into as of November 13, 1999 by and between International Wire Group, Inc. ("Employer") and Glenn J. Holler ("Employee"). W I T N E S S E T H : WHEREAS, Employer is a direct wholly-owned subsidiary of International Wire Holding Company ("International"); WHEREAS, Employer desires to continue to retain the services of Employee upon the terms set forth herein; and WHEREAS, Employee desires to continue to be employed by Employer, to appropriately memorialize the terms and conditions of such employment. NOW, THEREFORE, Employee and Employer, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 1. BASIC EMPLOYMENT PROVISIONS. (a) Employment and Term. Employer hereby agrees to employ Employee (hereinafter referred to as the "Employment") as Vice President - Finance of Employer (the "Position") and Employee agrees to be employed by Employer in such Position for a period of one (1) year ending on the 12th day of November, 2000 (the "Termination Date"), unless terminated earlier as provided herein (the "Employment Period"). In the event that termination (as hereinafter provided) has not occurred prior to the last day of the Employment Period, unless either party shall have given written notice to the contrary at least thirty (30) days prior to the end of the Employment Period or any extension thereof, the Employment Period shall annually renew for a successive one (1) year period until terminated. (b) Duties. Employee in the Position shall be subject to the direction and supervision of the President or his designee and shall have those duties and responsibilities which are assigned to him during the Employment Period by the President consistent with the Position, provided that the President shall not assign any greater duties or responsibilities to the Employee than are necessary for the Employee's faithful and adequate performance of the duties and responsibilities assigned. The parties expressly acknowledge that the Employee shall devote all of Employee's business time and attention to the transaction of the Employer's businesses as is reasonably necessary to discharge Employee's responsibilities hereunder. Employee agrees to perform faithfully the duties assigned to the best of Employee's ability. 2 2. COMPENSATION. (a) Salary. During the employment period, Employer shall pay to Employee a salary as basic compensation for the services to be rendered by Employee hereunder. The initial amount of such basic compensation shall be Two Hundred Forty Four Thousand Dollars ($244,000) per year. Such salary shall be reviewed from time to time by the Chief Executive Officer ("CEO") of the Employer and may be increased in the CEO's sole discretion. Such salary shall accrue and be payable in accordance with the payroll practices of Employer in effect from time to time. All such payments shall be subject to deductions and withholdings authorized or required by applicable law. (b) Bonus. During the Employment Period, Employee shall be eligible to receive an annual bonus (payable by the Employer) in an amount to be determined by the CEO of Employer, in the CEO's sole discretion, of up to fifty percent (50%) of Employee's annual basic compensation as set forth above. (c) Benefits. During the Employment Period, Employee shall be entitled to such other benefits as are determined by the CEO, including without limitation, group life, health, executive medical supplement and other insurance, paid vacations, annual executive physical, reimbursement for tax preparation costs and executive lunches. (d) Auto Allowance. Employer shall pay Employee an allowance to own and maintain an automobile in an amount sufficient so that, after the effect of federal and state income taxes, Employee shall net Five Hundred Dollars ($500) per month. (e) Country Club Membership. Employer shall reimburse Employee for the initiation fee and monthly dues expense for Employee to belong to a country club in St. Louis, Missouri area reasonably acceptable to Employer and for the initiation fee and monthly dues expense for that Club, but not for any charges made by Employee at the club, unless such qualify as reimbursable business entertainment expenses. 3. TERMINATION. (a) Death or Disability. This Agreement shall terminate automatically upon the death or total disability of Employee. For the purpose of this Agreement, "total disability" shall be deemed to have occurred if Employee shall have been unable to perform the assigned duties due to mental or physical incapacity for a period of three (3) consecutive months or for any sixty (60) working days out of a six (6) month consecutive period. (b) Cause. Employer may terminate the employment of Employee under this Agreement for Cause. For the purpose of this Agreement, "Cause" shall be deemed to be fraud, dishonesty, competition with Employer, unauthorized use of any of Employer's trade secrets or confidential information, or failure to properly perform the duties assigned to Employee, in the reasonable judgment of Employer. (c) Without Cause. Employer may terminate the employment of Employee under this Agreement without Cause, subject to the continuing rights of Employee pursuant to Section 4(c) below. -2- 3 4. COMPENSATION UPON TERMINATION. (a) Death or Disability. If the Employment Period is terminated pursuant to the provisions of Section 3(a) above, this Agreement shall terminate and no further compensation shall be payable to Employee, except that Employee or Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in addition to any other benefits specifically provided to them or Employee under any benefit plan, to receive Employee's then current salary for a period of six (6) months from the date the Employment Period terminates. (b) Termination for Cause or Voluntary Termination by Employee. If the employment of Employee under this Agreement is terminated for Cause pursuant to the provisions of Section 3(b) above or if Employee voluntarily terminates Employee's employment, no further compensation shall be paid to Employee after the date of termination. (c) Termination Without Cause. If the Employment of Employee under this Agreement is terminated pursuant to Section 3(c) above, Employee shall be entitled to continue to receive from Employer the then current basic compensation hereunder [which shall not be less than the amount specified in Section 2(a) above] until the longer of one (1) year or the Termination Date, such amount to be paid in accordance with the payroll practices of Employer, and shall further be entitled to continue to receive the benefits to which Employee would otherwise be entitled pursuant to Section 2(c) above, but no other benefits. (d) In the event the Employment of Employee is terminated for any reason other then death or disability or cause as provided herein above, within one (1) year of a change of control of Employer or of International Wire Holding Company (the parent of Employer), Employee shall be entitled to continue to receive from Employer or its successor in interest the then current basis compensation hereunder [but not less then the amount specified in Section 2(a) above] for one (1) year from the date of such termination. As used herein the term "change of control" shall mean be deemed to have occurred if, subsequent to the November 13, 1999 (A) any "person" (as such term is defined in Section 13(d) of the Exchange Act), other than Hicks, Muse, Tate & Furst Equity Fund II, L. P. and/or Mills & Partners Inc., and/or their respective affiliates, employees, officers, directors or successors (the "HMTF Group"), is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing a majority of the combined voting power of the Company's then outstanding voting securities, or (B) a majority of the Board of Directors shall consist of persons who are not continuing Directors. 5. EXPENSE REIMBURSEMENT. Upon submission of properly documented expense account reports, Employer shall reimburse Employee for all reasonable travel and entertainment expenses incurred by Employee in the course of his employment with Employer. 6. ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, -3- 4 but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, except that this Agreement and all of the provisions hereof may be assigned by Employer to any successor to all or substantially all of its assets (by merger or otherwise) and may otherwise be assigned upon the prior written consent of Employee. 7. CONFIDENTIAL INFORMATION. (a) Non-Disclosure. During the Employment Period or at any time thereafter, irrespective of the time, manner or cause of the termination of employment, Employee will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized officers, directors and employees of the Employer, in any manner whatsoever, any Confidential Information (as hereinafter defined) of Employer without the prior written consent of the CEO. (b) Definition. As used herein, "Confidential Information" means information disclosed to or known by Employee as a direct or indirect consequence of or through the Employment about Employer or its respective businesses, products and practices, which information is not generally known in the business in which Employer is or may be engaged. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Employee, (ii) released in writing by Employer to the public or to persons who are not under a similar obligation of confidentiality to Employer and who are not parties to this Agreement, (iii) obtained by Employee from a third party not under a similar obligation of confidentiality to Employer, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by Employer for the benefit of Employee. (c) Return of Property. Upon termination of the Employment, Employee will surrender to Employer all Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of the Employer, and all copies thereof, and all other property belonging to the Employer shall be accorded reasonable access to such Confidential Information subsequent to the Employment Period for any proper purpose as determined in the reasonable judgment of Employer. 8. AGREEMENT NOT TO COMPETE. (a) Employee agrees: (i) To give the President thirty (30) days' written advance notice of voluntary termination of employment with Employer. Such notice shall include Employee's future employment or self-employment intentions, identification of the prospective employer and the general nature of the prospective employment or self-employment, if known. Employer shall continue to pay the then-current salary to Employee until the end of such notice period. (ii) To participate in an exit interview conducted by a member of the personnel department of Employer and/or by a representative of Employer, at the time of or prior to the termination of Employment with Employer. -4- 5 (iii) That for one (1) year following the termination of the Employment, Employee shall promptly notify Employer of any change in the identification of Employee's employer or the nature of such employment or of self-employment. (iv) Subject to the conditions hereinafter stated, Employee will not, within one (1) year after leaving the employ of Employer, engage or enter into employment by, or into self-employment or gainful occupation as, a Competing Business or act directly or indirectly as an advisor, consultant, sales agent or broker for a Competing Business. As used herein, "Competing Business" means a business which is engaged in the manufacture, sale or other disposition of a product or service or has under development a product or service which is in direct competition with a product or service, whether existing or under development, of the Employer. Employee acknowledges that Employer does not have an adequate remedy at law in the event Employee violates this provision and, therefor, Employee agrees that, in such an event, Employer shall be entitled to equitable relief, including but not limited to, injunctive relieve and to withhold all payments due to Employee hereunder pending a judicial determination of whether Employee has violated this Agreement. (v) The terms of 8(a)(i) - 8(a)(iv) shall apply whether the termination is voluntary or involuntary for whatever reason. (b) Employer agrees: (i) That within fifteen (15) business days after receiving identification of the prospective employer, the nature of the employment or self-employment pursuant to Paragraph 8(a)(i) above, or any change therein pursuant to Paragraph 8(a)(iii) above, Employer will advise Employee as to whether such employment constitutes a Competing Business as defined in Paragraph 8(a)(iv) above. (ii) In the event Employer advises Employee that such employment constitutes a Competing Business, to forward to Employee at the end of each of the twelve (12) successive calendar months following the month in which Employment by Employer terminates, a check in the amount equal to one-half (1/2) of the monthly salary of Employee (exclusive of extra compensation of any kind) as of the Termination Date. If notice is received pursuant to Paragraph 8(b) and the Employer advises Employee that such employment constitutes a Competing Business, the aforementioned monthly checks shall be forwarded for the remaining number of the aforesaid twelve (12) successive calendar months. Provided, however, that all payments due under this Paragraph 8(b)(ii) shall not be required during any periods that Employee is receiving payments under either Paragraphs 4(a) or 4(c) or payment for service from a Competing Business. 9. WAIVER OF AGREEMENT NOT TO COMPETE. The Employer, based on the facts revealed to it by the Employee regarding the new employment and in its discretion upon written notification to Employee, may at any time waive or elect not to enforce the provisions of Paragraph 8(a)(iv), in which event the obligations of Paragraph 8(b)(ii) above shall thereafter not apply and Employee may -5- 6 be engaged by or enter into the employment of the identified Competing Business, but only such identified Competing Business. 10. AGREEMENT NOT TO SOLICIT EMPLOYEES. Employee agrees that, for a period of one (1) year following the termination of the Employment Period, Employee shall not, on behalf of any business, solicit or induce, or in any manner attempt to solicit or induce, either directly or indirectly, any person employed by, or any agent of, Employer to terminate such employment or agency, as the case may be, with Employer. In the event of violation hereof, Employer may terminate any payments due to Employee hereunder. 11. NO VIOLATION. Employee hereby represents and warrants to Employer that the execution, delivery and performance of this Agreement or the passage of time, or both, will not conflict with, result in a default, right to accelerate or loss of rights under any provision of any agreement or understanding to which the Employee or, to the best knowledge of Employee, any of Employee's affiliates are a party or by which Employee, or to the best knowledge of Employee, Employee's affiliates may be bound or affected. 12. CAPTIONS. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way affect, limit or amplify the provisions hereof. 13. NOTICES. All notices required or permitted to be given hereunder shall be in writing and shall be deemed delivered, whether or not actually received, two days after being deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the party to whom notice is being given at the specified address or at such other address as such party may designate by notice: Employer: International Wire Group, Inc. 101 South Hanley Road St. Louis, Missouri 63105 Attn: Chief Executive Officer Employee: Glenn J. Holler 226 Grimsley Station Bluff Drive St. Louis, Missouri 63129 14. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provisions shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance of this Agreement. In lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. -6- 7 15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, including the Prior Agreement, which is fully replaced hereby. This Agreement may be amended, in whole or in part only, by an instrument in writing setting forth the particulars of such amendment and duly executed by an officer of Employer expressly authorized by the CEO to do so and by Employee. 16. WAIVER. No delay or omission by any party hereto to exercise any right or power hereunder shall impair such right or power to be construed as a waiver thereof. A waiver by any of the parties hereto of any of the covenants to be performed by any other party or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant herein contained. Except as otherwise expressly set forth herein, all remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to any party at law, in equity or otherwise. 17. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement. 18. GOVERNING LAW. This Agreement shall be construed and enforced according to the laws of the state of Missouri. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written.
EMPLOYER: EMPLOYEE: INTERNATIONAL WIRE GROUP, INC. By /s/ JAMES N. MILLS /s/ GLENN J. HOLLER -------------------------- -------------------------- James N. Mills, Chairman Glenn J. Holler
-7- EX-10.29 4 EMPLOYMENT AGREEMENT - JOSEPH M. FIAMINGO 1 EXHIBIT 10.29 EMPLOYMENT AGREEMENT This agreement (the "Agreement") is made and entered into as of November 13, 1999 by and between International Wire Group, Inc. ("Employer") and Joseph M. Fiamingo ("Employee") and fully replaces that certain Employment Agreement (the "Prior Agreement") dated as of September 25, 1995 between Wirekraft Industries, Inc. and Employee. W I T N E S S E T H : WHEREAS, Employer is a direct wholly-owned subsidiary of International Wire Holding Company ("International"); WHEREAS, Employee has previously entered into the Prior Agreement, which Prior Agreement expired by its term on September 24, 1999; WHEREAS, Employer desires to retain the services of Employee upon the terms set forth herein; and WHEREAS, Employee desires to be employed by Employer, to appropriately memorialize the terms and conditions of such employment. NOW, THEREFORE, Employee and Employer, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 1. BASIC EMPLOYMENT PROVISIONS. (a) Employment and Term. Employer hereby agrees to employ Employee (hereinafter referred to as the "Employment") as President and Chief Operating Officer of Employer (the "Position") and Employee agrees to be employed by Employer in such Position for a period of three (3) years ending on the 12th day of November, 2002 (the "Termination Date"), unless terminated earlier as provided herein (the "Employment Period"). In the event that termination (as hereinafter provided) has not occurred prior to the last day of the Employment Period, unless either party shall have given written notice to the contrary at least thirty (30) days prior to the end of the Employment Period or any extension thereof, the Employment Period shall annually renew for a successive one (1) year period until terminated. (b) Duties. Employee in the Position shall be subject to the direction and supervision of the Chief Executive Officer of Employer (the "CEO") or his designee and shall have those duties and responsibilities which are assigned to him during the Employment Period by the CEO consistent with the Position, provided that the CEO shall not assign any greater duties or responsibilities to the Employee than are necessary for the Employee's faithful and adequate performance of the duties and responsibilities assigned. The parties expressly acknowledge that the Employee shall devote all of Employee's business time and attention to the transaction of the Employer's businesses as is 2 confidential reasonably necessary to discharge Employee's responsibilities hereunder. Employee agrees to perform faithfully the duties assigned to the best of Employee's ability. 2. COMPENSATION. (a) Salary. During the employment period, Employer shall pay to Employee a salary as basic compensation for the services to be rendered by Employee hereunder. The initial amount of such basic compensation shall be Three Hundred Fifty Thousand Dollars ($350,000) per year. Such salary shall be reviewed from time to time by the CEO of the Employer and may be increased in the CEO's sole discretion. Such salary shall accrue and be payable in accordance with the payroll practices of Employer in effect from time to time. All such payments shall be subject to deductions and withholdings authorized or required by applicable law. (b) Bonus. During the Employment Period, Employee shall be eligible to receive an annual bonus (payable by the Employer) in an amount to be determined by the CEO of Employer, in the CEO's sole discretion, of up to sixty-five percent (65%) of Employee's annual basic compensation as set forth above. (c) Benefits. During the Employment Period, Employee shall be entitled to such other benefits as are determined by the CEO, including without limitation, group life, hospitalization and other insurance, paid vacations, executive medical supplement, annual executive physical, reimbursement for tax preparation costs and executive lunches. (d) Auto Allowance. Employer shall pay Employee an allowance to own and maintain an automobile in an amount sufficient so that, after the effect of federal and state income taxes, Employee shall net One Thousand Five Hundred Dollars ($1,500) per month. (e) Country Club & Dining Club Membership. Employer shall reimburse Employee for the initiation fee and monthly dues expense for Employee to belong to a country club in the St. Louis, Missouri area reasonably acceptable to Employer and for the initiation fee and monthly dues expense for the Saint Louis Club, but not for any charges made by Employee at either club, unless such qualify as reimbursable business entertainment expenses. 3. TERMINATION. (a) Death or Disability. This Agreement shall terminate automatically upon the death or total disability of Employee. For the purpose of this Agreement, "total disability" shall be deemed to have occurred if Employee shall have been unable to perform the assigned duties due to mental or physical incapacity for a period of three (3) consecutive months or for any sixty (60) working days out of a six (6) month consecutive period. (b) Cause. Employer may terminate the employment of Employee under this Agreement for Cause. For the purpose of this Agreement, "Cause" shall be deemed to be fraud, dishonesty, competition with Employer, unauthorized use of any of Employer's trade secrets or confidential -2- 3 information, or failure to properly perform the duties assigned to Employee, in the reasonable judgment of Employer. (c) Without Cause. Employer may terminate the employment of Employee under this Agreement without Cause, subject to the continuing rights of Employee pursuant to Section 4(c) below. 4. COMPENSATION UPON TERMINATION. (a) Death or Disability. If the Employment Period is terminated pursuant to the provisions of Section 3(a) above, this Agreement shall terminate and no further compensation shall be payable to Employee, except that Employee or Employee's estate, heirs or beneficiaries, as applicable, shall be entitled, in addition to any other benefits specifically provided to them or Employee under any benefit plan, to receive Employee's then current salary for a period of twelve (12) months from the date the Employment Period terminates. (b) Termination for Cause or Voluntary Termination by Employee. If the employment of Employee under this Agreement is terminated for Cause pursuant to the provisions of Section 3(b) above or if Employee voluntarily terminates Employee's employment, no further compensation shall be paid to Employee after the date of termination. (c) Termination Without Cause. If the Employment of Employee under this Agreement is terminated pursuant to Section 3(c) above, Employee shall be entitled to continue to receive from Employer the then current basic compensation hereunder [which shall not be less than the amount specified in Section 2(a) above] until the Termination Date, such amount to be paid in accordance with the payroll practices of Employer, and shall further be entitled to continue to receive the benefits to which Employee would otherwise be entitled pursuant to Section 2(c) above, but no other benefits. 5. EXPENSE REIMBURSEMENT. Upon submission of properly documented expense account reports, Employer shall reimburse Employee for all reasonable travel and entertainment expenses incurred by Employee in the course of his employment with Employer. 6. ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, except that this Agreement and all of the provisions hereof may be assigned by Employer to any successor to all or substantially all of its assets (by merger or otherwise) and may otherwise be assigned upon the prior written consent of Employee. 7. CONFIDENTIAL INFORMATION. (a) Non-Disclosure. During the Employment Period or at any time thereafter, irrespective of the time, manner or cause of the termination of employment, Employee will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized -3- 4 officers, directors and employees of the Employer, in any manner whatsoever, any Confidential Information (as hereinafter defined) of Employer without the prior written consent of the CEO. (b) Definition. As used herein, "Confidential Information" means information disclosed to or known by Employee as a direct or indirect consequence of or through the Employment about Employer or its respective businesses, products and practices, which information is not generally known in the business in which Employer is or may be engaged. However, Confidential Information shall not include under any circumstances any information with respect to the foregoing matters which is (i) available to the public from a source other than Employee, (ii) released in writing by Employer to the public or to persons who are not under a similar obligation of confidentiality to Employer and who are not parties to this Agreement, (iii) obtained by Employee from a third party not under a similar obligation of confidentiality to Employer, (iv) required to be disclosed by any court process or any government or agency or department of any government, or (v) the subject of a written waiver executed by Employer for the benefit of Employee. (c) Return of Property. Upon termination of the Employment, Employee will surrender to Employer all Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of the Employer, and all copies thereof, and all other property belonging to the Employer shall be accorded reasonable access to such Confidential Information subsequent to the Employment Period for any proper purpose as determined in the reasonable judgment of Employer. 8. AGREEMENT NOT TO COMPETE. (a) Employee agrees: (i) To give the CEO thirty (30) days' written advance notice of voluntary termination of employment with Employer. Such notice shall include Employee's future employment or self-employment intentions, identification of the prospective employer and the general nature of the prospective employment or self-employment, if known. Employer shall continue to pay the then-current salary to Employee until the end of such notice period. (ii) To participate in an exit interview conducted by a member of the personnel department of Employer and/or by a representative of Employer, at the time of or prior to the termination of Employment with Employer. (iii) That for two (2) years following the termination of the Employment, Employee shall promptly notify Employer of any change in the identification of Employee's employer or the nature of such employment or of self-employment. (iv) Subject to the conditions hereinafter stated, Employee will not, within two (2) years after leaving the employ of Employer, engage or enter into employment by, or into self-employment or gainful occupation as, a Competing Business or act directly or indirectly as an advisor, consultant, sales agent or broker for a Competing Business. As used herein, "Competing Business" means a business which is engaged in the manufacture, sale or other -4- 5 disposition of a product or service or has under development a product or service which is in direct competition with a product or service, whether existing or under development, of the Employer. Employee acknowledges that Employer does not have an adequate remedy at law in the event Employee violates this provision and, therefor, Employee agrees that, in such an event, Employer shall be entitled to equitable relief, including but not limited to, injunctive relieve and to withhold all payments due to Employee hereunder pending a judicial determination of whether Employee has violated this Agreement. (v) The terms of 8(a)(i) - 8(a)(iv) shall apply whether the termination is voluntary or involuntary for whatever reason. (b) Employer agrees: (i) That within fifteen (15) business days after receiving identification of the prospective employer, the nature of the employment or self-employment pursuant to Paragraph 8(a)(i) above, or any change therein pursuant to Paragraph 8(a)(iii) above, Employer will advise Employee as to whether such employment constitutes a Competing Business as defined in Paragraph 8(a)(iv) above. (ii) In the event Employer advises Employee that such employment constitutes a Competing Business, to forward to Employee at the end of each of the twenty-four (24) successive calendar months following the month in which Employment by Employer terminates, a check in the amount equal to one-half (1/2) of the monthly salary of Employee (exclusive of extra compensation of any kind) as of the Termination Date. If notice is received pursuant to Paragraph 8(b) and the Employer advises Employee that such employment constitutes a Competing Business, the aforementioned monthly checks shall be forwarded for the remaining number of the aforesaid twenty-four (24) successive calendar months. Provided, however, that all payments due under this Paragraph 8(b)(ii) shall not be required during any periods that Employee is receiving payments under either Paragraphs 4(a) or 4(c) or payment for service from a Competing Business. 9. WAIVER OF AGREEMENT NOT TO COMPETE. The Employer, based on the facts revealed to it by the Employee regarding the new employment and in its discretion upon written notification to Employee, may at any time waive or elect not to enforce the provisions of Paragraph 8(a)(iv), in which event the obligations of Paragraph 8(b)(ii) above shall thereafter not apply and Employee may be engaged by or enter into the employment of the identified Competing Business, but only such identified Competing Business.. 10. AGREEMENT NOT TO SOLICIT EMPLOYEES. Employee agrees that, for a period of two (2) years following the termination of the Employment Period, Employee shall not, on behalf of any business, solicit or induce, or in any manner attempt to solicit or induce, either directly or indirectly, any person employed by, or any agent of, Employer to terminate such employment or agency, as the case may be, with Employer. In the event of violation hereof, Employer may terminate any payments due to Employee hereunder. -5- 6 11. NO VIOLATION. Employee hereby represents and warrants to Employer that the execution, delivery and performance of this Agreement or the passage of time, or both, will not conflict with, result in a default, right to accelerate or loss of rights under any provision of any agreement or understanding to which the Employee or, to the best knowledge of Employee, any of Employee's affiliates are a party or by which Employee, or to the best knowledge of Employee, Employee's affiliates may be bound or affected. 12. CAPTIONS. The captions, headings and arrangements used in this Agreement are for convenience only and do not in any way affect, limit or amplify the provisions hereof. 13. NOTICES. All notices required or permitted to be given hereunder shall be in writing and shall be deemed delivered, whether or not actually received, two days after being deposited in the United States mail, postage prepaid, registered or certified mail, return receipt requested, addressed to the party to whom notice is being given at the specified address or at such other address as such party may designate by notice: Employer: International Wire Group, Inc. 101 South Hanley Road St. Louis, Missouri 63105 Attn: Chief Executive Officer Employee: Joseph M. Fiamingo 17724 Greystone Terrace Chesterfield, Missouri 63005 14. INVALID PROVISIONS. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provisions shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance of this Agreement. In lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, including the Prior Agreement, which is fully replaced hereby. This Agreement may be amended, in whole or in part only, by an instrument in writing setting forth the particulars of such amendment and duly executed by an officer of Employer expressly authorized by the CEO to do so and by Employee. 16. WAIVER. No delay or omission by any party hereto to exercise any right or power hereunder shall impair such right or power to be construed as a waiver thereof. A waiver by any of the parties hereto of any of the covenants to be performed by any other party or any breach thereof shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant -6- 7 herein contained. Except as otherwise expressly set forth herein, all remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to any party at law, in equity or otherwise. 17. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same agreement. 18. GOVERNING LAW. This Agreement shall be construed and enforced according to the laws of the state of Missouri. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. EMPLOYER: EMPLOYEE: INTERNATIONAL WIRE GROUP, INC. By /s/ JAMES N. MILLS /s/ JOSEPH M. FIAMINGO --------------------------- --------------------------- James N. Mills, Chairman Joseph M. Fiamingo -7- EX-21.1 5 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 SUBSIDIARIES OF INTERNATIONAL WIRE GROUP, INC.
JURISDICTION OF INCORPORATION OR SUSIDIARY ORGANIZATION Wirekraft Industries, Inc................................. Delaware ECM Holding Company....................................... Delaware Wirekraft Employment Company.............................. Delaware Electro Componentes de Mexico, S.A. de C.V................ Mexico Wirekraft Industries de Mexico, S.A. de C.V............... Mexico Omega Wire, Inc........................................... Delaware OWI Corporation........................................... New York Wire Technologies, Inc.................................... Indiana Wire Harness Industries, Inc.............................. Delaware Camden Wire Company, Inc.................................. New York IWG-Philippines, Inc...................................... Philippines IWG International, Inc.................................... Barbados International Wire Rome Operations, Inc................... Delaware Italtrecce-Societa Italiana Trecce & Affini S.r.l......... Italy International Wire Leasing, Inc........................... Delaware IWG Resources, Inc........................................ Nevada International Wire SAS.................................... France JYM Finance............................................... France T.M.J. Forissier.......................................... France Cablerie E. Charbonnet.................................... France Hermitek.................................................. France Fressynet................................................. France
EX-27.0 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-31-1999 DEC-31-1999 7,425 0 104,189 2,879 101,310 228,536 328,842 144,182 678,107 118,801 526,338 0 0 0 (19,730) 678,107 643,690 643,690 456,333 456,333 47,794 0 52,889 25,480 10,055 15,425 0 0 (2,319) 13,106 0 0
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