<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
(Amending Items 7(a) and 7(b))
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 11, 1995
THE ALPINE GROUP, INC.
----------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9078 22-1620387
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1790 Broadway, New York, NY 10019-1412
---------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code (212) 757-3333
============================================================================
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Item 7(a) is hereby amended and supplemented to include the audited
combined balance sheets of The Copper Cable Group of Alcatel NA Cable
Systems, Inc. and Alcatel Canada Wire and Cable, Inc. as of December 31, 1993
and 1994 and the related combined statements of operations, changes in
owners' investment and cash flows for each of the three years in the period
ended December 31, 1994
(b) Pro Forma Financial Information
Item 7(b) is hereby amended and supplemented to include the pro forma
information as described below.
The pro forma financial information of The Alpine Group, Inc. ("Alpine")
included herein reflects the pro forma effects of the acquisition (the
"Alcatel Acquisition") by Alpine of the U.S. and Canadian copper wire and
cable business (the "Alcatel Business") of Alcatel NA Cable Systems, Inc.
and Alcatel Canada Wire, Inc. on May 11, 1995. The acquisition has been
accounted for as a purchase transaction. The pro forma adjustments have been
applied to (i) the condensed historical financial statements of Alpine
for the fiscal year ended April 30, 1995, which statements have been
derived from Alpine's Consolidated Financial Statements, (ii) the
unaudited condensed historical statement of operations of the Alcatel
Business for the 12 month period ended March 31, 1995 and (iii) the
unaudited historical condensed balance sheet of the Alcatel Business as of
May 11, 1995.
The unaudited pro forma condensed combined balance sheet is presented as
if the transactions referred to herein had occurred on April 30, 1995. The
unaudited pro forma condensed combined statements of operations for the year
ended April 30, 1995 give effect to the transactions referred to herein as
if they had occurred on May 1, 1994.
The pro forma financial statements are based on preliminary estimates of
transaction costs, relocation costs and preliminary appraisals. The actual
recording of the transactions will be based on final appraisals, relocation
costs and transaction costs. Accordingly, the actual recording of the
transactions can be expected to differ from these pro forma financial
statements.
Such pro forma financial statements do not necessarily represent the
financial position or the results of operations that might have occurred had
the transactions been consummated as of the dates referred to above nor are
they necessarily indicative of future operations of Alpine. Such pro forma
statements should be read in conjunction with the Consolidated Financial
Statements of Alpine and the Combined Financial Statements of The Alcatel
Business, together with the respective notes thereto.
2
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 1995 (ALPINE AND ADIENCE), AND
MARCH 31, 1995 (ALCATEL BUSINESS)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL ADJUST- PRO-
ALPINE ALCATEL MENTS FORMA
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
Net sales $198,135 $204,178 $87,259 (a) $469,572
Cost and expenses
Cost of goods sold 169,125 192,979 59,352 (a) 413,228
(1,591)(b)
(2,253)(c)
(1,550)(d)
(2,854)(e)
Selling, general &
administrative 20,487 10,254 12,338 (a) 31,883
68 (b)
(2,170)(c)
(9,094)(f)
Amortization of
goodwill 1,527 693 (a) 3,041
219 (b)
602 (e)
-------- -------- ------- --------
Operating income 6,996 925 13,499 21,420
Interest income 345 64 (a) 409
Interest (expense) (8,197) (1,965) (5,154)(a) ($26,692)
(11,376)(g)
Other income (expense) 28 364 (a) 392
-------- -------- ------- --------
(Loss) from continuing
operations operation
before income
taxes (828) (1,040) (2,603) (4,471)
Provision for income taxes (348) -- (h) (348)
-------- -------- ------- --------
Net (loss) from continuing
operations applicable to
common stock ($1,176) ($1,040) ($2,603) ($4,819)
-------- -------- ------- --------
-------- -------- ------- --------
Weighted average number
of common stock
outstanding 17,857,905 17,857,905
(Loss) per share of
common stock from
continuing operations (0.11) (0.32)
</TABLE>
See accompanying Notes to the Unaudited Pro Forma
Condensed Combined Financial Statements
3
<PAGE>
UNAUDITED CONDENSED COMBINED BALANCE SHEET
AS OF APRIL 30, 1995 (ALPINE) AND MAY 11, 1995 (ALCATEL BUSINESS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUST- PRO-
ALPINE ALCATEL MENTS FORMA
-----------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 15,546 $135,400 (i) $ 35,527
(93,000)(i)
(21,919)(i)
(500)(i)
Marketable securities 1,495 1,495
Accounts receivable, net 41,255 29,177 70,432
Inventories, net 35,242 33,160 68,402
Other current assets 5,347 1,192 6,539
-------- -------- -------- --------
Total current assets 98,885 63,529 19,981 182,395
Property, plant and equipment, net 52,240 39,598 4,945 (i) 98,783
Goodwill & other intangibles, net 65,712 18,055 (i) 83,767
Long-term investments and other assets 16,941 4,600 (i) 21,404
(137)(j)
-------- -------- -------- --------
Total assets $233,778 $103,127 $47,444 $384,349
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Transaction costs
See accompanying Notes to the Unaudited Pro Forma
Condensed Combined Financial Statements
4
<PAGE>
UNAUDITED CONDENSED COMBINED BALANCE SHEET
AS OF APRIL 30, 1995 (ALPINE) AND MAY 11, 1995 (ALCATEL BUSINESS)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUST- PRO-
ALPINE ALCATEL MENTS FORMA
-----------------------------------------------------
<S> <C> <C> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 33,135 $ 33,135
Current portion of long-term debt 2,022 2,022
Accounts payable 31,655 14,964 46,619
Accrued expenses 24,993 6,908 500 (i) 32,401
Alcatel acquisition obligation 10,255 (i) 10,255
-------- -------- -------- --------
Total current liabilities 91,805 21,872 10,755 124,432
Long-term debt, less current portion 84,022 (21,919)(i) 202,103
140,000 (i)
Other long-term obligations 7,560 7,560
Adience acquisition obligation 5,733 5,733
Stockholders' equity:
Preferred stock 17,250 17,250
Common stock 1,743 1,743
Capital in excess of par 103,114 81,255 (81,255)(j) 103,114
Cumulative translation adjustments 144 144
Accumulated deficit (76,050) (76,050)
Extraordinary item (137)(j) (137)
-------- -------- -------- --------
46,201 81,255 (81,392) 46,064
Less: Treasury stock (1,229) (1,229)
Receivable from stockholder (314) (314)
-------- -------- -------- --------
Total stockholders' equity 44,658 81,255 (81,392) 44,521
-------- -------- -------- --------
Total liabilities and stockholders'
equity $223,778 $103,127 $ 47,444 $384,349
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
See accompanying Notes to the Unaudited Pro Forma
Condensed Combined Financial Statements
5
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) On December 21, 1994, Alpine completed the acquisition (the "Adience
Acquisition") of 87.2% of the outstanding capital stock of Adience, Inc.
("Adience"). Adience's results of operations have been consolidated with those
of Alpine from that date. This column sets forth Adience's historical results
of operations, for the period from May 1, 1994 through December 20, 1994.
(b) Reflects the changes to Adience's historical depreciation and
amortization resulting from the allocation of Alpine's purchase price.
<TABLE>
<CAPTION>
MAY 1, 1994
TO
DECEMBER 20, 1994
--------------------------
HISTORICAL ADJUSTED CHANGE
------------ ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost of goods sold. . . . . . . . . . . . . $3,670 $2,079 $(1,591)
Selling, general and administrative . . . . 180 248 68
Amortization of goodwill . . . . . . . . . 948 1,167 219
</TABLE>
(c) Reflects the elimination of certain expenses incurred by Adience
that are either directly attributable to the Adience Acquisition or would not
have been incurred if the Adience Acquisition had taken place on May 1, 1994
as follows:
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, 1995
--------------
(IN THOUSANDS)
<S> <C>
Cost of goods sold:
Inventory writedowns (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,253
------
------
Selling, general and administrative expense:
Directors' fees, public filing expenses and ESOP administrative fees (2) . . . . . $ 722
Consulting fees (3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
Executive salaries (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Adience acquisition expenses (5) . . . . . . . . . . . . . . . . . . . . . . . . . 602
Relocation of Adience corporate headquarters (6) . . . . . . . . . . . . . . . . . 337
------
$2,170
------
------
<FN>
- --------------------------
(1) At the time of the Adience Acquisition, Alpine management determined
that certain Adience product lines would be discontinued. Adience
recorded a charge to reduce the carrying value of the related inventory
to its realizable value on a liquidation basis.
(2) Adience's financial statements for the year ended April 30, 1995
included $0.7 million of expenses related to the reporting and other
expenses incurred by Adience as a public company. Following the Adience
Acquisition, the directors of Adience who were not affiliated with
Alpine resigned and Adience ceased paying directors' fees. Also
following the Adience Acquisition, Adience's obligation to file reports
with the Securities and Exchange Commission terminated and Adience
initiated the process of terminating its ESOP.
(3) Reflects $0.3 million of consulting fees paid to a partnership in which
two Alpine officers had a majority interest. The consulting agreement
was terminated in connection with the Adience Acquisition.
(4) Reflects the elimination of the salaries of Adience executives who are
no longer employed by Adience to the extent that such executives will
not be replaced.
(5) Reflects the elimination of $0.6 million of legal, investment banking
and other third-party expenses incurred by Adience during the period
from May 1, 1994 to December 20, 1994 in connection with the Adience
Acquisition.
(6) Reflects the elimination of expenses associated with Adience's corporate
headquarters, which will be relocated to the offices of one of Adience's
divisions in August 1995.
</TABLE>
6
<PAGE>
(d) Represents an aggregate of $1.6 million in costs, consisting of
$1.3 million of annual freight savings and $0.3 million of savings resulting
from a reduction in headcount at the Alcatel Business' plants. Alpine
believes that the location of the Alcatel Business' plants and the similarity
of the production capabilities of such plants and the existing plant
of Alpine's subsidiary Superior Telecommunications Inc. ("Superior") will allow
Superior management to ship products to customers in a manner designed to
reduce freight costs. Alpine estimates that freight savings at the annual
rate can be achieved within three months after the Alcatel Acquisition.
(e) Reflects the changes to historical depreciation expense and the
incremental amortization of intangibles resulting from the Alcatel
Acquisition.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1995
-------------------------------
HISTORICAL ADJUSTED CHANGE
------------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Cost of good sold: depreciation . . . . . . . $6,154 $3,300 $(2,854)
Amortization of goodwill. . . . . . . . . . . -- 602 602
</TABLE>
See Note (m) below.
(f) Reflects the elimination of selling, general and administrative
expense incurred by the Alcatel Business in the historical period, of which
$5.9 million represented management fees, an allocation of administrative
charges previously paid by the Alcatel Business to its affiliates, as well as
employee costs which will not be incurred subsequent to the Alcatel
Acquisition, offset by additional annual selling, general and administrative
expense of $1.2 million which Alpine estimates will be required following the
completion of the combination of the Alcatel Business with Superior, as set
forth below.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1995
-------------------------------
HISTORICAL ADJUSTED CHANGE
------------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Management fees . . . . . . . . . . . . . . . $ 4,868 -- $(4,868)
Administrative fees . . . . . . . . . . . . . 1,064 -- (1,064)
Other selling, general and administrative . . 4,322 $1,160 (3,162)
------- ------ -------
Total . . . . . . . . . . . . . . . . . . . $10,254 $1,160 $(9,094)
------- ------ -------
------- ------ -------
</TABLE>
(g) Reflects the changes to historical interest expense assuming the
incremental interest expense resulting from the Alcatel Acquisition.
<TABLE>
<CAPTION>
YEAR ENDED
APRIL 30, 1995
--------------
(IN THOUSANDS)
<S> <C>
Interest on Superior's notes issued in connection with the Alcatel
Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,400
Amortization of deferred financing costs. . . . . . . . . . . . . . . . . . . . 1,408
Less, historical interest on indebtedness assumed to be repaid:
With respect to Alpine. . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,467)
With respect to the Alcatel Business (for the year ended March 31, 1995). . . (1,965)
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,376
-------
-------
</TABLE>
7
<PAGE>
(h) There is no tax effect attributable to the Pro Forma Adjustments
because of Alpine's net operating loss carryforwards.
(i) On May 11, 1995, Alpine completed the Alcatel Acquisition, which was
financed with the net proceeds of the sale by Superior of it's notes of
$135.4 million, after expenses aggregating $4.6 million. Of the net proceeds,
$93.0 million was paid in cash to Alcatel N.A., an estimated $0.5 million was
applied to pay transaction expenses and $21.9 million was used to retire
Superior's existing bank credit agreement. The remaining proceeds of $20
million were available to Superior for working capital and general corporate
purposes. The following reflects the preliminary allocation of the purchase
price to the net assets of the Alcatel Business based upon the estimated fair
values of such assets:
<TABLE>
<CAPTION>
Amount
--------------
(in thousands)
<S> <C>
Estimated acquisition cost .......................................... $103,755
Less, historical book value of net assets at May 11, 1995............ (81,255)
Write-up of property, plant and equipment............................ (4,945)
Accrual of Alcatel employee relocation and severance costs........... 500
--------
Acquisition goodwill (to be amortized over 30 years)................. $ 18,055
--------
--------
</TABLE>
The estimated acquisition cost of $103.8 million represents (i) $93.0
million paid in cash to Alcatel NA, (ii) a deferred amount payable to Alcatel
NA in the amount of $10.3 million, which amount is subject to adjustment
based upon the completion of a closing balance sheet audit, and (iii)
acquisition expenses estimated at $0.5 million.
(j) In connection with the repayment of Superior's bank credit agreement,
Alpine will write off the associated unamortized deferred debt issuance costs
and, as a result, will incur an extraordinary charge in the first quarter of
fiscal 1996.
8
<PAGE>
SIGNATURE
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 thereunto duly authorized.
THE ALPINE GROUP, INC.
/s/ Gary L. Edwards
------------------------------
Name: Gary L. Edwards
Title: Controller
Dated: July 25, 1995
9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Alcatel NA Cable Systems, Inc. and
Alcatel Canada Wire and Cable, Inc.:
We have audited the accompanying combined balance sheets of The Copper Cable
Group of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire and Cable, Inc.
as of December 31, 1993 and 1994, and the related combined statements of
operations, changes in owners' investment and cash flows for each of the three
years in the period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Copper Cable Group of
Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire and Cable, Inc. as of
December 31, 1993 and 1994, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles.
Arthur Andersen LLP
Greensboro, North Carolina,
February 24, 1995
(except for the matter discussed in Note 14,
as to which the date is May 11, 1995).
F-1
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
COMBINED BALANCE SHEETS
DECEMBER 31, 1993 AND 1994
ASSETS
<TABLE>
<CAPTION>
1993 1994
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current assets:
Cash........................................................................ $ 602 $ 3,124
Trade accounts receivable, less allowance for
doubtful accounts of $813 and $457, respectively........................... 19,171 29,389
Receivables from affiliates (Note 7)........................................ 7,614 1,259
Inventories (Note 4)........................................................ 36,519 36,983
Deferred income taxes (Note 6).............................................. 7,152 4,123
Other current assets........................................................ 1,474 1,861
---------- ----------
Total current assets...................................................... 72,532 76,739
Property, plant and equipment, net (Note 5)................................... 45,702 42,247
Intangible asset (Note 8)..................................................... 272 366
---------- ----------
$ 118,506 $ 119,352
---------- ----------
---------- ----------
LIABILITIES AND OWNERS' INVESTMENT
Current liabilities:
Trade accounts payable...................................................... $ 11,386 $ 13,577
Accrued liabilities......................................................... 17,386 12,184
Income taxes payable (Note 6)............................................... 664 271
Payables to affiliates (Note 7)............................................. 31,523 40,663
---------- ----------
Total current liabilities................................................. 60,959 66,695
Deferred income taxes (Note 6)................................................ 4,727 1,440
---------- ----------
Total liabilities......................................................... 65,686 68,135
Commitments and contingencies (Notes 4, 11 and 13)
Owners' investment............................................................ 52,820 51,217
---------- ----------
$ 118,506 $ 119,352
---------- ----------
---------- ----------
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these balance sheets.
F-2
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
<TABLE>
<CAPTION>
1992 1993 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales........................................................ $ 228,852 $ 212,610 $ 194,651
Cost of goods sold............................................... 207,476 189,940 182,264
Restructuring costs (Note 3)..................................... 12,000 0 0
---------- ---------- ----------
Gross margin................................................. 9,376 22,670 12,387
Selling expenses................................................. 2,907 2,961 2,415
General and administrative expenses.............................. 2,767 2,677 2,332
Management fees to affiliates (Note 7)........................... 3,534 5,907 4,971
Administrative fees to affiliates (Note 7)....................... 3,389 2,179 1,254
---------- ---------- ----------
Income (loss) from operations................................ (3,221) 8,946 1,415
Interest expense to affiliates, net (Note 7)..................... 1,766 1,944 1,980
---------- ---------- ----------
Income (loss) before provision (benefit) for income taxes........ (4,987) 7,002 (565)
Provision (benefit) for income taxes (Note 6).................... (1,069) 2,191 29
---------- ---------- ----------
Net income (loss)................................................ $ (3,918) $ 4,811 $ (594)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-3
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
COMBINED STATEMENTS OF CHANGES IN OWNERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Balance, December 31, 1991......................................................... $ 54,463
Net loss......................................................................... (3,918)
Currency translation adjustment.................................................. (1,444)
Pension equity adjustment (Note 8)............................................... (28)
---------
Balance, December 31, 1992......................................................... 49,073
Net income....................................................................... 4,811
Currency translation adjustment.................................................. (916)
Pension equity adjustment (Note 8)............................................... (148)
---------
Balance, December 31, 1993......................................................... 52,820
Net loss......................................................................... (594)
Currency translation adjustment.................................................. (1,089)
Pension equity adjustment (Note 8)............................................... 80
---------
Balance, December 31, 1994......................................................... $ 51,217
---------
---------
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-4
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992, 1993 AND 1994
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................................. $ (3,918) $ 4,811 $ (594)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities --
Depreciation................................................................ 5,838 6,208 6,219
Deferred income taxes....................................................... (5,285) 873 (330)
Restructuring costs (Note 3)................................................ 12,000 0 0
(Gain) loss on sale of property, plant and equipment........................ (3) (2) 2
Other....................................................................... (764) (540) (417)
Change in current assets and liabilities --
(Increase) decrease in:
Trade accounts receivable................................................... (6,248) (2,375) (10,218)
Receivables from affiliates................................................. (83) (7,502) 6,355
Inventories................................................................. 1,056 105 (464)
Other current assets........................................................ (322) (533) (387)
Increase (decrease) in:
Trade accounts payable...................................................... 6,145 (5,625) 2,191
Accrued liabilities......................................................... 6,770 (5,230) (5,383)
Income taxes payable........................................................ (2,291) 2,224 (393)
Payables to affiliates...................................................... (5,322) 13,143 9,140
--------- --------- ----------
Net cash provided by operating activities................................. 7,573 5,557 5,721
--------- --------- ----------
Cash flows from investing activities:
Purchases of property, plant and equipment.................................... (7,076) (7,569) (4,294)
Proceeds from sales of property, plant and equipment.......................... 319 1,603 1,095
--------- --------- ----------
Net cash used for investing activities.................................... (6,757) (5,966) (3,199)
--------- --------- ----------
Net increase (decrease) in cash................................................. 816 (409) 2,522
Cash, beginning of year......................................................... 195 1,011 602
--------- --------- ----------
Cash, end of year............................................................... $ 1,011 $ 602 $ 3,124
--------- --------- ----------
--------- --------- ----------
</TABLE>
The accompanying notes to combined financial statements
are an integral part of these statements.
F-5
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
1. ORGANIZATION:
The Copper Cable Group (the "Alcatel Business") is comprised of the
operating divisions of both Alcatel NA Cable Systems, Inc. ("ACS") and its
affiliate, Alcatel Canada Wire and Cable, Inc. ("ACW"), which manufacture and
market copper cable products used in the telecommunications industry. The
Alcatel Business is headquartered in Claremont, North Carolina, and is
controlled by Alcatel Alsthom, a Brussels-based corporation. Various
subsidiaries of Alcatel Alsthom own 100% of the common stock of both ACS and
ACW.
2. SIGNIFICANT ACCOUNTING POLICIES:
Significant accounting policies followed by the Company are as follows:
PRINCIPLES OF COMBINATION
The combined financial statements include the copper cable operations of ACW
which are located in Winnipeg, Manitoba, and the copper cable operations of ACS
which are located in Tarboro, North Carolina; Elizabethtown, Kentucky; Fordyce,
Arkansas and Claremont, North Carolina. The combined financial statements also
include fiber optic cable and data cable operations that are part of the ACW
facility located in Winnipeg, Manitoba. These operations are not material to
Alcatel Business's operating results as presented herein. All of these
operations are managed by ACS management. All significant intercompany accounts
and transactions have been eliminated.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by
the first-in, first-out (FIFO) method for all inventories.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated
depreciation and amortization. Expenditures for repairs and betterments which
increase the estimated useful life or capacity of assets are capitalized;
expenditures for repairs and maintenance are charged to operations as incurred.
Gains and losses on routine dispositions are included in operations as general
and administrative expenses.
Depreciation is computed using the straight-line method over the estimated
useful lives of the various classes of assets as follows: land improvements --
10 years; buildings -- 20 to 40 years; machinery and equipment -- 3 to 15 years;
furniture and fixtures -- 10 years and transportation equipment -- 5 years.
INCOME TAXES
The U.S. operations of Alcatel Business are included in the consolidated
federal income tax return of Alcatel USA Corp. Pursuant to an income tax sharing
agreement between ACS and Alcatel USA Corp., U.S. federal income taxes are
determined as if Alcatel Business filed its U.S. federal income tax return as a
separate entity. The Canadian operations of Alcatel Business are included in the
Canadian income tax return of ACW, and Canadian income taxes are determined as
if Alcatel Business filed its Canadian income tax return as a separate entity.
Effective January 1, 1993, the Alcatel Business adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes", which requires an asset and liability approach to
financial accounting and reporting for income taxes. Deferred income tax assets
and liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation
F-6
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
2. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. The provision (benefit) for income taxes is the
tax payable or refundable for the period plus or minus the change during the
period in deferred tax assets and liabilities.
The effect of adopting SFAS No. 109 in 1993 was not material.
PENSION PLANS
The Alcatel Business has various noncontributory pension plans which cover
substantially all employees. Plans covering salaried and certain hourly
employees provide pension benefits that are based on employee compensation.
Other plans, covering most hourly employees and union members, generally provide
benefits of stated amounts for each year of service. The costs of the various
plans are provided over the service life of the employees using an actuarial
method which includes amortization of past service costs. The costs of the
various plans are funded by means of deposits with trustees of the plans.
POSTRETIREMENT BENEFITS
The Alcatel Business provides certain health care and life insurance
benefits for eligible retired employees in the U.S. Substantially all salaried
employees become eligible for these benefits if they reach age 55 while working
for the Company and satisfy certain years of service requirements.
Effective January 1, 1993, the Alcatel Business adopted SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions". Under
this statement, the Alcatel Business is required to accrue the estimated cost of
retiree health and life insurance benefits over the years that the employees
render service. The Alcatel Business previously expensed the cost of these
benefits as claims were incurred. The Alcatel Business elected to recognize the
initial accumulated liability, measured as of January 1, 1993, over a 20-year
amortization period as permitted by SFAS No. 106. As a result, the cumulative
effect on prior years of this change in accounting principle was not material.
The effect of this change on 1993 operating results was not significant.
FOREIGN CURRENCY TRANSLATION
The financial statements of the Winnipeg, Manitoba, operations of ACW have
been translated into U.S. dollars at the year-end rate of exchange for asset and
liability accounts and the average rate of exchange for the year for income
statement accounts. Resulting translation gains or losses are included as a
component of owners' investment in the accompanying balance sheet and do not
affect the results of operations. Cumulative currency translation losses were
$2,360 at December 31, 1993, and $3,449 at December 31, 1994.
FINANCIAL INSTRUMENTS
In the normal course of business, the Alcatel Business employs a variety of
off-balance sheet financial instruments to reduce its exposure to changes in
foreign currency exchange rates and commodity prices, including foreign currency
forward exchange contracts and commodity futures contracts.
Realized and unrealized gains and losses on foreign currency forward
exchange contracts that qualify as designated hedges are deferred. Gains and
losses realized on foreign currency transactions that do not qualify as
designated hedges are included in operations.
Changes in the market values of commodity futures contracts are included as
a component of inventory cost. Gains and losses resulting from changes in the
market value of commodity futures contracts are recognized when the related
inventory is sold.
F-7
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
3. RESTRUCTURING COSTS:
As a result of management's review of its operating strategies and to
improve competitiveness and future profitability, the Alcatel Business recorded
a restructuring charge of $12,000 in December 1992 for expected costs associated
with the planned shut-down of its Fordyce, Arkansas, manufacturing facility. The
charge included provisions for the write-down of fixed assets ($4,750),
relocation of equipment and employees ($2,840), employee severance costs ($910),
employee benefit plan costs ($1,970) and other costs ($1,530).
The Fordyce facility was closed in late 1993. At that time substantially all
132 employees of the facility were terminated. As a result, all of the severance
costs recorded as part of the restructuring charge were expended in 1993 and
1994. Approximately $520 of the employee benefit plan costs were expended in
1993 and 1994. The remaining employee benefit plan costs will be expended when
required by the funding provisions of the Internal Revenue Service and the
Department of Labor regulations. All other components of the restructuring
charge were expended during 1993 and 1994 with the exception of the $4,750
charge to fixed assets, which was a noncash charge to write-down the book value
of those assets to estimated fair value. All fixed assets at the Fordyce
facility have been disposed or relocated to the Alcatel Business's other
manufacturing facilities as of December 31, 1994. As a result of the
restructuring, the Alcatel Business expects to eliminate most of the fixed costs
previously incurred at the Fordyce facility which are estimated to be $2,000
annually.
4. INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Raw materials................................................. $ 4,478 $ 5,747
Work-in-process............................................... 6,645 5,965
Finished goods................................................ 25,396 25,271
--------- ---------
$ 36,519 $ 36,983
--------- ---------
--------- ---------
</TABLE>
At December 31, 1994, the Alcatel Business had contractual commitments for
purchases of copper of approximately $11,100 and for purchases of other raw
materials of approximately $1,100.
5. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Land and improvements......................................... $ 2,725 $ 2,706
Buildings..................................................... 11,663 12,336
Machinery and equipment....................................... 60,029 61,717
Furniture and fixtures........................................ 687 708
Transportation equipment...................................... 151 151
Construction-in-progress...................................... 1,802 1,943
--------- ---------
77,057 79,561
Less -- Accumulated depreciation.............................. (31,355) (37,314)
--------- ---------
$ 45,702 $ 42,247
--------- ---------
--------- ---------
</TABLE>
F-8
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
6. INCOME TAXES:
Provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Current --
U.S.:
Federal............................................ $ 3,489 $ 1,053 $ 609
State.............................................. 727 265 (250)
--------- --------- ---------
4,216 1,318 359
--------- --------- ---------
Deferred --
U.S.:
Federal............................................ (4,440) 737 (659)
State.............................................. (845) 136 329
--------- --------- ---------
(5,285) 873 (330)
--------- --------- ---------
$ (1,069) $ 2,191 $ 29
--------- --------- ---------
--------- --------- ---------
</TABLE>
Provision (benefit) for income taxes differed from the amount computed by
applying the federal statutory income tax rate due to:
<TABLE>
<CAPTION>
1992 1993 1994
---------------------- ---------------------- ------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income taxes at U.S. federal statutory
rate..................................... $ (1,696) (34.0)% $ 2,451 35.0% $ (198) (35.0)%
State income taxes, net of federal income
tax benefit.............................. (77) (1.5) 261 3.7 51 9.0
Canadian losses........................... 934 18.7 29 0.4 242 42.8
Reduction of income tax reserves.......... (264) (5.3) (600) (8.5) (100) (17.7)
Other, net................................ 34 0.7 50 0.7 34 6.0
--------- ----- --------- ----- ----- -----
$ (1,069) (21.4)% $ 2,191 31.3% $ 29 5.1%
--------- ----- --------- ----- ----- -----
--------- ----- --------- ----- ----- -----
</TABLE>
The Alcatel Business's Canadian operations generated losses of $2,741 in
1992, $83 in 1993 and $690 in 1994, which will be available to offset Canadian
taxable income, if any, through 1999. Because of uncertainties regarding
realization of the tax benefit of these losses in the future, valuation
allowances were established to fully reserve the related net deferred tax asset.
F-9
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
6. INCOME TAXES: (CONTINUED)
The components of the net deferred tax asset were as follows:
<TABLE>
<CAPTION>
1993 1994
--------- ---------
<S> <C> <C>
Deferred tax assets --
Accounts receivable.......................................... $ 324 $ 160
Inventories.................................................. 1,021 856
Self-insurance reserves...................................... 283 468
Workers' compensation reserves............................... 836 764
Accrued EPA claims........................................... 112 0
Deferred compensation and other compensation-related
accruals.................................................... 3,025 2,016
Canadian loss carry forwards (expiring from 1996 to 1999).... 1,331 1,194
Other reserves............................................... 1,753 454
Less -- Valuation allowance.................................. (1,533) (1,789)
--------- ---------
7,152 4,123
Deferred tax liabilities -- Property, plant and equipment...... (4,727) (1,440)
--------- ---------
Net deferred tax asset..................................... $ 2,425 $ 2,683
--------- ---------
--------- ---------
</TABLE>
In management's opinion, income tax amounts presented in the accompanying
financial statements would not be materially different if the Alcatel Business
had not been eligible to be included in the consolidated income tax return of
Alcatel USA Corp. or in the income tax return of ACW.
7. RELATED PARTIES:
In the normal course of business, the Alcatel Business engages in various
arms-length transactions with its affiliates. Inventories purchased from
affiliates, consisting primarily of copper rod purchases from a division of ACW,
totaled $17,183 in 1992, $20,967 in 1993 and $14,532 in 1994 and sales to
affiliates totaled $583 in 1992, and $1,751 in 1993 and $5,530 in 1994.
The Alcatel Business obtains working capital through the treasury function
provided by ACS. To the extent that the Alcatel Business is in a net borrowing
position with ACS, interest expense is allocated to ACS at ACS's effective
borrowing rate. The net borrowing position is calculated as the average monthly
outstanding net payable balance to ACS. Average short-term borrowings during
1992, 1993 and 1994 were $29,433, $52,540 and $44,000, respectively; and the
weighted average interest rates were 6.0%, 3.7% and 4.5%, respectively.
Under agreements with affiliated companies, the Alcatel Business pays
service charges, research and development assessments and other service fees
(management fees). Management fees incurred by the Alcatel Business under these
agreements totaled $3,534 in 1992, $5,907 in 1993 and $4,971 in 1994.
Alcatel NA, Inc. and ACW provide legal, accounting, tax, treasury,
insurance, employee benefits, data processing, transportation and other services
to the Alcatel Business. Expenses that are directly attributable to the Alcatel
Business are charged directly to the Alcatel Business. Expenses that are not
directly attributable to a particular subsidiary or business unit of Alcatel NA,
Inc. or ACW are allocated each month to all subsidiaries and business units
receiving the services. Amounts allocated are based on a particular subsidiary
or business unit's relative percentage of net sales, payroll expenses and
average total assets to the net sales,
F-10
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
7. RELATED PARTIES: (CONTINUED)
payroll expenses and average total assets of all the subsidiaries and business
units receiving services. Administrative fees allocated to the Alcatel Business
for these services totaled $3,389 in 1992, $2,179 in 1993 and $1,254 in 1994.
Management believes that the administrative fees for these services would not
have been materially different if they had been incurred directly by the Alcatel
Business.
8. EMPLOYEE BENEFIT PLANS:
The Alcatel Business has various noncontributory pension plans which cover
substantially all employees. Financial information related to these plans was
determined by the Alcatel Business's actuary, William M. Mercer Incorporated.
Net pension cost for the U.S. plans is summarized as follows:
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Service cost......................................................... $ 304 $ 286 $ 361
Interest cost........................................................ 186 213 279
Return on plan assets................................................ (86) (267) 17
Other................................................................ (76) 251 (235)
--------- --------- ---------
$ 328 $ 483 $ 422
--------- --------- ---------
--------- --------- ---------
</TABLE>
The funded status and accrued pension cost for the U.S. plans are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
------------- -------------
<S> <C> <C>
Fair value of plan assets....................................... $ 1,492 $ 1,050
Projected benefit obligation.................................... 2,389 1,383
------ ------
Projected benefit obligation in excess of plan assets........... (897) (333)
Unrecognized net loss........................................... 378 326
Unrecognized prior service cost................................. (47) 43
Adjustment required to recognize minimum liability.............. 0 (371)
------ ------
Accrued pension cost............................................ $ (566) $ (335)
------ ------
------ ------
Accumulated benefits............................................ $ 1,377 $ 1,383
------ ------
------ ------
Vested benefits................................................. $ 1,260 $ 1,205
------ ------
------ ------
</TABLE>
F-11
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS: (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1994
----------------------------
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
------------- -------------
<S> <C> <C>
Fair value of plan assets....................................... $ 1,994 $ 1,280
Projected benefit obligation.................................... 2,032 1,324
------ ------
Projected benefit obligation in excess of plan assets........... (38) (44)
Unrecognized net (gain) loss.................................... (212) 154
Unrecognized prior service cost................................. (43) 34
Adjustment required to recognize minimum liability.............. 0 (186)
------ ------
Accrued pension cost............................................ $ (293) $ (42)
------ ------
------ ------
Accumulated benefits............................................ $ 1,306 $ 1,324
------ ------
------ ------
Vested benefits................................................. $ 1,220 $ 1,224
------ ------
------ ------
</TABLE>
Actuarial assumptions used for the U.S. plans are as follows:
<TABLE>
<CAPTION>
1992 1993 1994
----------- ----------- -----------
<S> <C> <C> <C>
Assumed discount rate................................................ 9.0% 8.0% 9.0%
Assumed rate of compensation increase -- salaried plan............... 5.5 5.5 5.0
Expected rate of return on plan assets............................... 8.0 8.0 8.0
-- -- --
-- -- --
</TABLE>
Net pension cost for the Canadian plans is summarized as follows:
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Service cost........................................................ $ 134 $ 113 $ 106
Interest cost....................................................... 224 224 227
Return on plan assets............................................... (207) (194) (214)
Other............................................................... 13 19 11
--------- --------- ---------
$ 164 $ 162 $ 130
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-12
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS: (CONTINUED)
The funded status and accrued pension cost for the Canadian plans are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
------------- -------------
<S> <C> <C>
Fair value of plan assets....................................... $ 1,071 $ 1,720
Projected benefit obligation.................................... 1,045 1,856
------ ------
Projected benefit obligation exceeded by (in excess) of plan
assets......................................................... 26 (136)
Unrecognized net gain........................................... (109) (130)
Unrecognized prior service cost................................. 0 320
Adjustment required to recognize minimum liability.............. 0 (190)
------ ------
Accrued pension cost............................................ $ (83) $ (136)
------ ------
------ ------
Accumulated benefits............................................ $ 725 $ 1,856
------ ------
------ ------
Vested benefits................................................. $ 724 $ 1,763
------ ------
------ ------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1994
----------------------------
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS
------------- -------------
<S> <C> <C>
Fair value of plan assets....................................... $ 909 $ 1,584
Projected benefit obligation.................................... 1,061 1,851
------ ------
Projected benefit obligation in excess of plan assets........... (152) (267)
Unrecognized net loss........................................... 21 34
Unrecognized prior service cost................................. 0 284
Adjustment required to recognize minimum liability.............. 0 (317)
------ ------
Accrued pension cost............................................ $ (131) $ (266)
------ ------
------ ------
Accumulated benefits............................................ $ 740 $ 1,851
------ ------
------ ------
Vested benefits................................................. $ 739 $ 1,758
------ ------
------ ------
</TABLE>
Actuarial assumptions used for the Canadian plans are as follows:
<TABLE>
<CAPTION>
1992 1993 1994
----------- ----------- -----------
<S> <C> <C> <C>
Assumed discount rate................................................ 8.0% 8.0% 8.0%
Assumed rate of compensation increase -- salaried plan............... 5.8 5.8 5.8
Expected rate of return on plan assets............................... 8.0 8.0 8.0
-- -- --
-- -- --
</TABLE>
The provisions of SFAS No. 87, "Employers' Accounting for Pensions," require
companies with any plans that have an unfunded accumulated benefit obligation to
recognize an additional minimum pension liability, an offsetting intangible
pension asset and, in certain situations, an adjustment to owners' investment,
net of the related deferred tax benefit. In accordance with the provisions of
SFAS No. 87, the
F-13
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS: (CONTINUED)
combined balance sheets at December 31, 1993 and 1994, include an intangible
pension asset of $272 and $366, an additional minimum pension liability of $561
and $503 and a cumulative adjustment to owners' investment, net of the related
deferred tax benefit of $176 and $96, respectively.
9. POSTRETIREMENT BENEFIT OBLIGATIONS OTHER THAN PENSIONS:
The Alcatel Business provides certain health care and life insurance
benefits for eligible retired employees in the U.S.. Financial information
related to this plan was determined by the Company's actuaries, William M.
Mercer, Incorporated.
Net periodic postretirement benefit costs include the following components:
<TABLE>
<CAPTION>
1993 1994
----- -----
<S> <C> <C>
Service cost.................................................................... $ 38 $ 37
Interest cost................................................................... 36 36
Amortization of the transition obligation....................................... 20 20
--- ---
$ 94 $ 93
--- ---
--- ---
</TABLE>
The funded status and accrued cost for the plan is as follows:
<TABLE>
<CAPTION>
DECEMBER 31
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Accumulated postretirement benefit obligation --
Retirees................................................................... $ 33 $ 31
Fully eligible active plan participants.................................... 100 117
Other active participants.................................................. 369 321
--------- ---------
Accumulated benefit obligation............................................... 502 469
Unrealized net gain (loss)................................................... (30) 76
Unrecognized transition obligation........................................... (378) (358)
--------- ---------
Accrued postretirement cost.................................................. $ 94 $ 187
--------- ---------
--------- ---------
</TABLE>
The accumulated postretirement benefit obligations were computed using an
assumed discount rate of 8.0% in 1993 and 9.0% in 1994. The health care cost
trend rate was assumed to be 13.0% for 1993 and 12.125% for 1994, then the trend
rate was assumed to decline by approximately 1% for each year to 6%, which would
continue for year 2001 and beyond.
If the health care cost trend rate were increased one percent for all future
years, the accumulated postretirement benefit obligation would have increased
20% as of December 31, 1993, and 18% as of December 31, 1994. The effect of this
change on the aggregate of service and interest cost for 1993 would have been an
increase of 23.16% and for 1994 would have been an increase of 20.23%.
10. SUPPLEMENTAL CASH FLOW INFORMATION:
Cash payments for interest and income taxes were as follows:
<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest paid.................................................... $ 1,766 $ 1,944 $ 1,980
Income taxes paid (received)..................................... 6,507 (906) 752
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-14
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
11. FINANCIAL INSTRUMENTS AND CREDIT RISK:
The Alcatel Business's activities are primarily concentrated in the
telecommunications industry. As of December 31, 1994, a substantial portion of
the Alcatel Business's trade accounts receivables were from companies in that
industry.
In 1992, sales to these five customers comprised 0%, 4.9%, 10.1%, 24.0% and
14.3% of net sales. In 1993, sales to these five customers comprised 2.7%,
10.8%, 13.5%, 14.4% and 15.2% of net sales. In 1994, net sales to five customers
comprised 22.7%, 13.5%, 12.8%, 4.6% and .6%, respectively, of net sales.
Approximately 79.5% of net sales in 1992, 80.2% of net sales in 1993 and 81.2%
of net sales in 1994 were to 10 customers. Net export sales approximated 2.4% of
net sales in 1992, 15.5% in 1993 and 12.7% in 1994.
At December 31, 1994, the Alcatel Business had $6,027 of foreign currency
forward exchange contracts outstanding to hedge sales denominated in foreign
currencies. The forward exchange contracts' maturity dates do not exceed 12
months and require the Alcatel Business to exchange U.S. dollars for foreign
currencies at maturity, at rates agreed to at inception of the contracts.
The Alcatel Business enters into futures contracts to hedge certain copper
raw material purchases to minimize costs risks due to market fluctuations. At
December 31, 1994, the Alcatel Business had $2,400 million of copper futures
contracts that fix the price for a small portion of 1995 copper purchases.
SFAS No. 107, "Disclosure About Fair Value of Financial Instruments,"
requires the disclosure of estimated fair values for financial instruments. The
statement requires all entities to disclose the fair value of financial
instruments, both assets and liabilities recognized and not recognized in the
balance sheet, for which it is practicable to estimate fair value. Quoted market
prices, if available, are utilized as an estimate of the fair value of financial
instruments.
COMMODITY FUTURES CONTRACTS
The fair value is estimated by obtaining market rate quotes. The contract
value of $2,400 at December 31, 1994, approximates market value.
FOREIGN CURRENCY FORWARD EXCHANGE CONTRACTS
The contract value of $6,027 approximates market value.
F-15
<PAGE>
THE COPPER CABLE GROUP OF ALCATEL NA CABLE SYSTEMS, INC. AND
ALCATEL CANADA WIRE AND CABLE, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992, 1993 AND 1994
(DOLLARS IN THOUSANDS)
12. GEOGRAPHIC AREA INFORMATION:
The Alcatel Business is engaged principally in one line of business --
copper telecommunications cable -- which represents substantially all of the
combined net sales. The following table presents information about the Alcatel
Business by geographic area. There were no material amounts of sales or
transfers among geographic areas.
<TABLE>
<CAPTION>
UNITED
STATES CANADA TOTAL
---------- --------- ----------
<S> <C> <C> <C>
1992 --
Net sales................................................ $ 192,999 $ 35,853 $ 228,852
Pretax loss.............................................. (2,246) (2,741) (4,987)
Assets................................................... 82,964 23,605 106,569
1993 --
Net sales................................................ 177,519 35,091 212,610
Pretax income (loss)..................................... 7,085 (83) 7,002
Assets................................................... 91,789 26,717 118,506
1994 --
Net sales................................................ 164,062 30,589 194,651
Pretax income (loss)..................................... 125 (690) (565)
Assets................................................... 99,465 19,887 119,352
---------- --------- ----------
---------- --------- ----------
</TABLE>
Net export sales included in the United States net sales amounts above were
$5,401 in 1992, $20,772 in 1993 and $18,264 in 1994. Net export sales included
in the Canadian net sales amounts above were $0 in 1992, $12,107 in 1993 and
$6,431 in 1994.
13. CONTINGENCIES:
The Alcatel Business is involved in various litigation arising in the
ordinary course of business. Although the final outcome of these legal matters
cannot be determined, based on the facts presently known, it is management's
opinion that these matters are not significant and that their final resolution
will not have a material adverse effect on the Alcatel Business's financial
position or future results of operations.
14. SUBSEQUENT EVENTS:
In May 1995, ACS and ACW sold substantially all of the assets of the Alcatel
Business other than accounts receivable from affiliates to Superior TeleTec Inc.
("Superior"), a wholly owned subsidiary of The Alpine Group, Inc., and Superior
assumed certain liabilities of the Alcatel Business which did not include
amounts payable to affiliates.
F-16
