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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
MARCH 1, 1999 1-12261
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Date of Report Commission File Number
(Date of earliest event reported)
SUPERIOR TELECOM INC.
(Exact name of registrant as specified in its charter)
DELAWARE 58-2248978
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(State or other jurisdiction I.R.S. Employer
of incorporation) Identification Number)
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
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(Address of Principal Executive Offices) (Zip Code)
(212) 757-3333
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
On March 1, 1999, Superior TeleCom Inc. issued a press release
announcing its year-end earnings for the eight months ended December 31,
1998. A copy of the press release is annexed hereto as Exhibit 1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a)-(b) Not applicable
(c) Exhibits
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Exhibit 1 - Press release dated March 1, 1999
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 1, 1999 SUPERIOR TELECOM INC.
By: /s/ David S. Aldridge
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David S. Aldridge
Chief Financial Officer
3
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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1 Press release dated March 1, 1999
4
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Exhibit 1
[Letterhead]
FOR IMMEDIATE RELEASE:
COMPANY CONTACT:
MELANIE T. HALL
CORPORATE COMMUNICATIONS
219-461-4018
SUPERIOR TELECOM ANNOUNCES RECORD REVENUES AND NET INCOME
BEFORE NON-RECURRING CHARGES FOR CALENDAR 1998 YEAR END
NEW YORK, N.Y., MARCH 1, 1999--Superior Telecom Inc. (NYSE: SUT) reported
results today for the eight months ended December 31, 1998. As previously
announced, the Company has changed its fiscal year end from April 30 to December
31. The operating results reported herein for the period ended December 31, 1998
include the results of the recently acquired operations of Essex International
Inc. (NYSE: SXC) for the one-month period ended December 31, 1998. On November
27, 1998, Superior completed a tender offer for 81% of the outstanding common
shares of Essex.
The Company is also reporting supplemental comparative unaudited
financial data consistent with its new calendar year-end reporting status. Such
supplemental data includes comparative financial operating results for (1) the
three-month periods ended December 31, 1998 and 1997 and (2) the twelve-month
periods ended December 31, 1998 and 1997.
All reported per share amounts reflect the impact of a five-for-four
stock split which was effective on February 3, 1999.
Revenues for the eight-month period ended December 31, 1998 were $486.1
million. Net income before an extraordinary charge and before other
non-recurring and unusual charges was $29.4 million or $1.42 per diluted share
for the eight-month period ended December 31, 1998. During the quarter ended
December 31, 1998, the Company incurred an after-tax extraordinary charge of
$1.2 million or $0.06 per diluted share related to the early
(MORE)
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extinguishment of debt associated with the financing of the Essex acquisition.
The quarter ended December 31, 1998 also included $13.5 million ($0.35 per
diluted share on an after-tax basis) in non-recurring and unusual charges for
(a) a $10.0 million investment advisory fee related to the Essex transaction
paid to an affiliate and (b) a $2.9 million restructuring charge recorded by
Cables of Zion Ltd. (COZ), the Company's 50.1% owned Israeli wire and cable
subsidiary, which restructuring charge was related to planned staff reductions
and manufacturing plant consolidations and rationalizations which will occur in
conjunction with COZ's recently completed acquisition of Cvalim - The Electric
Wire and Cable Company of Israel.
For the quarter ended December 31, 1998, revenues were $228.5 million,
representing an increase of 83% over revenues of $124.9 million for the quarter
ended December 31, 1997. Net income before extraordinary item and non-recurring
and unusual charges for the quarter ended December 31, 1998 was $7.8 million or
$0.38 per diluted share. This compared with net income for the quarter ended
December 31, 1997 of $9.8 million, or $0.48 per diluted share.
For the year ended December 31, 1998, revenues were $647.8 million,
representing an increase of 31% over revenues of $496.1 million for the year
ended December 31, 1997. Net income before extraordinary item and non-recurring
and unusual charges for the year ended December 31, 1998 was $44.1 million or
$2.13 per diluted share, representing an increase of 17% as compared with net
income for the year ended December 31, 1997 of $37.4 million or $1.82 per
diluted share.
Commenting on the reported results, Mr. Steven S. Elbaum, Chairman and
Chief Executive Officer, stated, "We are pleased to report record revenues and
net income before non-recurring and extraordinary charges for our December 31
calendar year reporting period. The 31% revenue growth we achieved for the 1998
calendar year reflects the impact of completed acquisitions during 1998 as well
as continued revenue gains in our North American communications cable business.
Excluding the impact of acquisitions, we achieved 8% growth in year over year
copper adjusted revenues in this market segment, despite a decline in year-end
purchasing by telephone company customers, which has resumed strongly in 1999.
(2-2-2-2)
<PAGE>
This revenue growth underscores the continued commitment of our customers toward
maintaining and expanding their core copper local loop network to meet growing
access line demand and for the delivery of new high-speed bandwidth services to
their customers. Operating income for this business segment expanded almost 20%
for the 1998 calendar year, aided by an impressive copper adjusted gross profit
expansion of almost 200 basis points as compared to the 1997 calendar year.
"For the December 1998 calendar quarter, revenues in our North American
communications cable business experienced a comparative 5% revenue decline on a
copper adjusted basis. This decline was anticipated and reflected both seasonal
procurement patterns and year-end budgetary constraints at our major customers.
Despite this comparative revenue decline, operating income in this business
segment increased 9% in the December 1998 quarter as compared to the December
1997 quarter, reflecting a strong copper adjusted year over year gross margin
gain of 290 basis points. Order input for communications cable products has been
robust in January and February 1999 and we expect to see continued year over
year increase in demand levels for these products throughout the remainder of
the year."
Commenting further on the results, Mr. Elbaum stated, "As previously
indicated, Superior's 1998 results included the operating results of the
recently acquired Essex business for the one month of December 1998. While we
anticipate the Essex acquisition to be strongly accretive to our 1999 results,
the impact of the acquisition was dilutive to the results for the eight-month
period ended December 31, 1998. This was due to reduced operating income
resulting from the expected seasonal slowdown in revenues from the Essex
operations in the month of December, while we incurred the full amount of
acquisition-related fixed charges for interest expense and goodwill
amortization.
"During the December 31, 1998 quarter, we also incurred non-recurring
charges related to the Essex acquisition and a restructuring charge related to
our Israeli operations. In December 1998, our 50.1% owned Israeli subsidiary,
Cables of Zion, completed the acquisition of Cvalim, resulting in the largest
wire and cable company in Israel. This acquisition combines the largest Israeli
manufacturers of wire and cable with approximately $175 million in annual
revenues. In connection with the acquisition we recorded a $2.9
(3-3-3-3)
<PAGE>
million restructuring charge in the December 1998 quarter which includes costs
associated with the consolidation of our corporate headquarters in Israel, and
the shutdown, relocation and consolidation of certain manufacturing facilities.
These actions are expected to result in nearly $3 million of cost reductions in
1999. The overall annual cost savings of consolidating these two companies is
expected to approximate $8 million by the end of 2001.
"As previously announced, our public tender offer of Essex
International Inc. was completed on November 27, 1998, at which time we acquired
81% of Essex outstanding shares. The second stage of the transaction, which
involves the issuance of Superior's 8-1/2% Trust Convertible Preferred
Securities in exchange for the remaining 19% of the Essex outstanding shares is
expected to be completed on March 31, 1999. The Trust Convertible Preferred
Securities are exchangeable into Superior common stock beginning six months
after the exchange date at a price of $44.80 per share.
"As we move forward with the integration of Essex into Superior and the
completion of the final merger, we have become even more positive about the
strategic, operational and financial prospects for the combined entity. Our
confidence level in exceeding our original expectations as to synergies and cost
savings from the Essex acquisition has grown over the past several months and
the time frame for realization has been shortened. Similarly, administrative and
overhead reductions will exceed earlier estimates as well as enhance market and
customer responsiveness and expedite the decision-making process. Overall, we
are extremely encouraged by the timing and the estimated level of synergies
expected to be realized from this transaction.
"As we proceed with the organizational consolidation of Superior and
Essex, I am pleased to announce further management additions: MICHAEL T.
VOLLKOMMER has been appointed Vice President-Finance of Superior TeleCom Inc.
Mike will report to David Aldridge, Superior's Chief Financial Officer. Mike
joined The Alpine Group, Inc. as Vice President-Financial Development in
December, 1998. Previously, he was Vice President and Chief Financial Officer
for Alumax Inc. (NYSE: AMX), a $3 billion primary aluminum producer and
fabricator which was acquired by Alcoa in July, 1998. TRACYE C. GILLELAND has
been appointed Vice President-Controller of Superior TeleCom Inc. Tracye has
over 17 years
(4-4-4-4)
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of industry experience, and was previously Vice President-Finance of Superior's
Communications Group. JAMES D. BURCH has been appointed Superior TeleCom's
Senior Vice President-Human Resources. Jim was previously Vice President-Human
Resources of Superior's Communications Group. Prior to joining Superior he was
with Owens Corning for 21 years, where he held various human resource and labor
relations positions. Jim reports to Debra F. Minott, Senior Vice President and
General Counsel of Superior TeleCom. DAVID A. OWEN has been appointed Executive
Vice President-Finance. Dave was previously Essex Group's Chief Financial
Officer.
"As has always been the case at Superior, we are committed to
establishing the most effective, entrepreneurial and customer-oriented
management team for our expanded operations with the strategic, financial and
operational skills to deliver value to shareholders and customers," said Mr.
Elbaum.
Superior TeleCom Inc. is the largest domestic wire and cable
manufacturer and the fourth-largest wire and cable manufacturer in the world.
Superior TeleCom manufactures a broad portfolio of products with primary
applications in the communications, original equipment manufacturer and
electrical wire and cable markets. It is a leading manufacturer and supplier of
telecommunications cable and wire products to telephone companies, distributors
and system integrators; magnet wire and electrical insulation materials for
motors, transformers and electrical controls; industrial wire for applications
in appliances, construction, recreational vehicles and industrial facilities;
and automotive wire and specialty wiring assemblies for automobiles and trucks.
Except for historical information herein, the matters discussed in this
news release include forward-looking statements that may involve a number of
risks and uncertainties. Actual results may vary significantly based on a number
of factors, including, but not limited to, risks in product and technology
development, market acceptance of new products and continuing product demand,
the impact of competitive products and pricing, changing economic conditions,
including changes in short-term interest rates and foreign currency
fluctuations, and other risk factors detailed in Superior's and Essex's most
recent annual reports and other filings with the Securities and Exchange
Commission.
(5-5-5-5)
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SUPERIOR TELECOM INC.
(UNAUDITED)
<TABLE>
<CAPTION>
COMPARATIVE INCOME STATEMENT DATA
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EIGHT MONTHS
THREE MONTHS ENDED YEAR ENDED ENDED
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12/31/98 12/31/97 12/31/98 12/31/97 12/31/98
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(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Net sales $228,472 $124,901 $647,802 $496,117 $486,101
Gross profit 46,631 23,798 136,747 93,002 102,995
Selling, general and administrative expenses 18,046 5,295 39,382 20,548 32,333
Non-recurring and unusual charges 13,511 -- 13,511 -- 13,511
Amortization of goodwill 1,704 429 3,009 1,719 2,447
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Operating income 13,370 18,074 80,845 70,735 54,704
Interest expense (13,003) (1,874) (18,807) (9,242) (16,651)
Other income (expense), net 385 48 (13) 208 (346)
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Income before income tax expense, minority
Interest and extraordinary (loss) 752 16,248 62,025 61,701 37,707
Provision for income taxes (880) (6,402) (25,368) (24,299) (15,544)
Minority interest in earnings of subsidiaries 723 -- 219 -- 93
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Income before extraordinary (loss) 595 9,846 36,876 37,402 22,256
Extraordinary (loss) (1,243) ---- (1,243) ---- (1,243)
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Net income (loss) $ (648) $ 9,846 $35,633 $ 37,402 $21,013
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Net income per share of common stock:
Basic:
Income before extraordinary (loss) and
non-recurring and unusual charges $ 0.39 $ 0.49 $ 2.19 $ 1.85 $ 1.46
Non-recurring and unusual charges (0.36) -- (0.36) -- (0.36)
Extraordinary (loss) on early
extinguishment of debt (0.06) -- (0.06) -- (0.06)
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Net income per share of common stock $ (0.03) $ 0.49 $ 1.77 $ 1.85 $ 1.04
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Diluted:
Income before extraordinary (loss) and
non-recurring and unusual charges $ 0.38 $ 0.48 $ 2.13 $ 1.82 $ 1.42
Non-recurring and unusual charges (0.35) -- (0.35) -- (0.35)
Extraordinary (loss) on early
extinguishment of debt (0.06) -- (0.06) -- (0.06)
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Net income per share of common stock $ (0.03) $ 0.48 $ 1.72 $ 1.82 $ 1.01
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Average common shares outstanding:
Basic 20,074,243 20,207,259 20,146,000 20,201,000 20,130,849
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Diluted 20,689,063 20,671,299 20,739,000 20,597,000 20,725,908
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(6-6-6-6)
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SUPERIOR TELECOM INC.
(UNAUDITED)
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COMPARATIVE BALANCE SHEET DATA
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12/31/98 4/30/98
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(in thousands)
<S> <C> <C>
Current assets $ 629,953 $100,847
Property, plant and equipment, net 513,433 83,121
Goodwill, net 694,665 44,483
Long-term investments and other assets 48,505 3,792
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Total assets $1,886,556 $232,243
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Current liabilities $ 397,556 $62,315
Long-term debt, less current portion 1,215,594 74,883
Minority interest in subsidiaries 64,571 --
Other long-term obligations 117,455 12,839
Stockholders' equity 91,380 82,206
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Total liabilities and stockholders' equity $1,886,556 $232,243
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