<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE AT OF
1934
FOR THE QUARTERLY PERIOD ENDED JULY 31, 1996
/ / 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 1-9078
------------------------
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 22-1620387
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1790 BROADWAY 10019-1412
NEW YORK, NEW YORK
(Address of principal (Zip code)
executive offices)
</TABLE>
Registrant's telephone number, including area code: 212-757-3333
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ____
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, OF THE LATEST PRACTICABLE DATE.
CLASS OUTSTANDING AT SEPTEMBER 11, 1996
- ------------------------------ -----------------------------------
Common Stock, $.10 Par Value 18,240,920
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been prepared
in accordance with the requirements of Form 10-Q and therefore do not include
all information and footnotes required by generally accepted accounting
principles. However, in the opinion of management, all adjustments (which,
except as disclosed elsewhere herein, consist only of normal recurring accruals)
necessary for a fair presentation of the results of operations for the relevant
periods have been made. Results for the interim periods are not necessarily
indicative of the results to be expected for the year.
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
1996 1996
--------- -----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................................ $ 1,119 $ 1,852
Marketable securities................................................ 7,713 7,828
Accounts receivable (less allowance for doubtful accounts of:
April, $506; July, $518)........................................... 60,670 58,839
Inventories.......................................................... 68,990 60,326
Other current assets................................................. 7,850 8,599
--------- -----------
Total current assets............................................. 146,342 137,444
Property, plant, and equipment, net.................................... 99,425 99,019
Long-term investments and other assets................................. 26,403 26,646
Goodwill (less accumulated amortization; April, $4,996; July,
$5,757).............................................................. 82,734 81,929
--------- -----------
Total assets..................................................... $ 354,904 $ 345,038
--------- -----------
--------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................................... $ 2,132 $ 1,217
Accounts payable..................................................... 53,167 42,950
Accrued expenses..................................................... 40,364 36,204
--------- -----------
Total current liabilities........................................ 95,663 80,371
--------- -----------
Long-term debt, less current portion................................... 207,645 209,919
--------- -----------
Other long-term liabilities............................................ 8,460 7,926
--------- -----------
Commitments and contingencies
Stockholders' equity:
8% cumulative convertible preferred stock at liquidation value....... 9,831 9,831
9% cumulative convertible preferred stock at liquidation value....... 1,927 1,927
Common stock, $.10 par value; authorized 25,000,000 shares; issued:
April, 19,307,012 shares; July, 19,355,816 shares.................. 1,931 1,980
Capital in excess of par value....................................... 113,843 114,093
Cumulative translation adjustment.................................... (82) (307)
Accumulated deficit.................................................. (78,998) (74,986)
--------- -----------
48,452 52,538
Less: shares of common stock in treasury, at cost;
April, 1,025,496 shares; July, 1,114,896 shares...................... (4,806) (5,206)
Receivable from stockholders......................................... (510) (510)
--------- -----------
Total stockholders' equity........................................... 43,136 46,822
--------- -----------
Total liabilities and stockholders' equity....................... $ 354,904 $ 345,038
--------- -----------
--------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
----------------------
1995 1996
---------- ----------
<S> <C> <C>
Net sales................................................................................. $ 128,784 $ 151,447
Cost of goods sold........................................................................ 112,456 127,483
---------- ----------
Gross profit............................................................................ 16,328 23,964
Selling, general and administrative....................................................... 7,902 9,790
Amortization of goodwill.................................................................. 673 761
---------- ----------
Operating income........................................................................ 7,753 13,413
Interest income........................................................................... 745 152
Interest (expense)........................................................................ (7,108) (6,974)
Other income (expense), net............................................................... 114 (59)
---------- ----------
Income from continuing operations before income taxes................................... 1,504 6,532
Provision for income taxes................................................................ (150) (2,286)
---------- ----------
Income from continuing operations....................................................... 1,354 4,246
Loss from discontinued operations......................................................... (379) --
---------- ----------
Income before extraordinary item........................................................ 975 4,246
Extraordinary (loss) on early extinguishment of debt...................................... (5,180) --
---------- ----------
Net income (loss)....................................................................... (4,205) 4,246
Preferred stock dividends................................................................. (354) (234)
---------- ----------
Income (loss) applicable to common stock................................................ $ (4,559) $ 4,012
---------- ----------
---------- ----------
Income (loss) per share of common stock:
Continuing operations................................................................... $ 0.06 $ 0.22
Discontinued operations................................................................. (0.02) --
Extraordinary (loss) on early extinguishment of debt.................................... (0.30) --
---------- ----------
Net income (loss) per share of common stock........................................... $ (0.26) $ 0.22
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JULY 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
9% CUMULATIVE 8% CUMULATIVE
CAPITAL CONVERTIBLE CONVERTIBLE
COMMON STOCK IN PREFERRED STOCK PREFERRED STOCK
------------------------- EXCESS ------------------------ ----------------------
SHARES AMOUNT OF PAR SHARES AMOUNT SHARES AMOUNT
------------ ----------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1996....... 19,307,012 $ 1,931 $ 113,843 1,927 $ 1,927 196,649 $ 9,831
Compensation expense related to
stock options and grants....... 146
Dividends on preferred stock....
Foreign currency translation....
Exercise of stock options....... 48,804 49 104
Purchase of treasury stock......
Net income for the three months
ended July 31, 1996............
------------ ----------- ---------- ----------- ----------- --------- -----------
Balance at July 31, 1996........ 19,355,816 $ 1,980 $ 114,093 1,927 $ 1,927 196,649 $ 9,831
------------ ----------- ---------- ----------- ----------- --------- -----------
------------ ----------- ---------- ----------- ----------- --------- -----------
<CAPTION>
FOREIGN TREASURY STOCK RECEIVABLE
ACCUMULATED CURRENCY ------------------------- FROM
DEFICIT TRANSLATION SHARES AMOUNT STOCKHOLDERS TOTAL
--------------- --------------- ------------ ----------- ----------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at April 30, 1996....... $ (78,998) (82) (1,025,496) $ (4,806) $ (510) $ 43,136
Compensation expense related to
stock options and grants....... 146
Dividends on preferred stock.... (234) (234)
Foreign currency translation.... (225) (225)
Exercise of stock options....... 153
Purchase of treasury stock...... (89,400) (400) (400)
Net income for the three months
ended July 31, 1996............ 4,246 4,246
--------------- ------- ------------ ----------- ------- ---------
Balance at July 31, 1996........ $ (74,986) $ (307) (1,114,896) $ (5,206) $ (510) $ 46,822
--------------- ------- ------------ ----------- ------- ---------
--------------- ------- ------------ ----------- ------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
-----------------------
1995 1996
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Income from continuing operations...................................................... $ 1,354 $ 4,246
Adjustments to reconcile income to net cash provided by operations:
Depreciation and amortization........................................................ 3,131 3,399
Amortization of deferred financing costs and accretion of debt discount.............. 490 648
Compensation expense related to stock options and grants............................. (58) 179
Other, net........................................................................... 2 25
Change in assets and liabilities:
Accounts receivable.................................................................. (589) 1,831
Inventories.......................................................................... 9,282 8,664
Other current assets................................................................. 261 (749)
Other assets......................................................................... 1,690 (560)
Accounts payable and accrued expenses................................................ 9,884 (14,377)
Other liabilities.................................................................... (54) (529)
----------- ----------
Cash provided by operating activities.................................................... 25,393 2,777
----------- ----------
Cash flows from investing activities:
Acquisitions, net of cash acquired..................................................... (93,560) --
Investment in marketable securities.................................................... (4,665) (115)
Capital expenditures................................................................... (1,590) (2,317)
Loan to PolyVision Corporation......................................................... (3,054) (315)
Other.................................................................................. (197) (175)
----------- ----------
Cash (used for) investing activities..................................................... (103,066) (2,922)
----------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JULY 31,
-----------------------
1995 1996
----------- ----------
<S> <C> <C>
Cash flows from financing activities:
Repayments of short-term borrowings.................................................... $ (21,000) $ --
Borrowings under revolving credit facilities, net...................................... 5,760 2,378
Dividends on preferred stock........................................................... (354) (234)
Capitalized financing costs............................................................ (13,249) --
Purchase of treasury shares............................................................ (1,502) (400)
Proceeds from exercise of stock options................................................ 37 153
Repayments of long-term debt........................................................... (147,200) (1,114)
Long-term borrowings................................................................... 243,234 95
----------- ----------
Cash provided by financing activities.................................................... 65,726 878
----------- ----------
Net increase (decrease) in cash and cash equivalents..................................... (11,947) 733
Cash and cash equivalents at beginning of period......................................... 15,546 1,119
----------- ----------
Cash and cash equivalents at end of period............................................... $ 3,599 $ 1,852
----------- ----------
----------- ----------
Supplemental disclosures:
Taxes paid............................................................................. $ 139 $ 745
----------- ----------
----------- ----------
Interest paid.......................................................................... $ 4,703 $ 11,370
----------- ----------
----------- ----------
Non-cash investing and financing activities:
Conversion of preferred stock into common stock........................................ $ 3,500
-----------
-----------
Dividend on preferred stock converted.................................................. $ 378
-----------
-----------
Conversion of notes into common stock.................................................. $ 300
-----------
-----------
Acquisition of business:
Assets, net of cash acquired........................................................... $ 126,127
Deferred purchase consideration........................................................ (9,909)
Liabilities assumed.................................................................... (22,658)
-----------
Net cash paid.......................................................................... $ (93,560)
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
The Alpine Group, Inc. ("Alpine" or the "Company") reflect all adjustments
which, in the opinion of management, are necessary for a fair presentation of
the results of operations for the interim periods presented. These financial
statements should be read in conjunction with the summary of accounting policies
and the notes to the financial statements included in the Company's Annual
Report on Form 10-K for the year ended April 30, 1996.
Certain reclassifications have been made to the July 31, 1995 financial
statements to conform with the July 31, 1996 presentation.
2. INVENTORIES
The components of inventories are:
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
1996 1996
--------- ---------
<S> <C> <C>
Raw materials........................................................... $ 14,885 $ 15,614
Work in process......................................................... 14,870 13,069
Finished goods.......................................................... 39,235 31,643
--------- ---------
$ 68,990 $ 60,326
--------- ---------
--------- ---------
</TABLE>
3. INCOME (LOSS) PER SHARE
For the three months ended July 31, 1995 and 1996, the number of shares used
in computing income (loss) per share were 17,456,444 and 18,612,134,
respectively, based on the weighted average number of shares outstanding.
4. COMMITMENTS AND CONTINGENCIES
J.H. France, a unit of Adience Inc. ("Adience"), a wholly owned subsidiary
of the Company, which was merged into Adience in December 1991, has been named
as party in approximately 3,000 pending lawsuits, some of which contain both
multiple claimants and multiple defendants, filed in twelve jurisdictions
principally by employees and former employees of certain customers of
J.H.France, alleging in certain cases that a single product, a plastic
insulating cement manufactured more than 20 years ago by J.H.France, caused them
to suffer from asbestosis related diseases and in other cases alleging that
products manufactured or sold by J.H.France, caused silica related diseases. The
majority of the lawsuits seek monetary damages ranging from $20,000 to $1.0
million each. J.H.France and its insurance carrier have historically settled
these lawsuits, typically for an average amount per case of less than the
minimum amount stated. Punitive damages have also been claimed in some cases.
In addition to the lawsuits against J.H.France, Adience, as successor in
interest to BMI, has been named a party in approximately 390 pending lawsuits,
some of which contain both multiple claimants and multiple defendants, filed in
the States of Pennsylvania, Ohio, Michigan, West Virginia, Wisconsin, Kentucky
and Indiana, principally by employees and former employees of certain customers
of Adience alleging that products produced by Adience caused silicosis, not
asbestosis, in such persons. The majority of such lawsuits seek unstated
monetary damages ranging from $20,000 each, which is the minimal jurisdictional
requirement for personal injury cases in a majority of such state courts, to
$1.0 million each. Adience and its insurance carriers have historically settled
these lawsuits for an average amount per case of
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1996
(UNAUDITED)
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
less than the minimum amount stated. Virtually all such claims and all costs of
defense for these cases are covered by insurance.
The insurance companies which had issued policies covering the J.H.France
cases initially denied coverage for these claims. In June 1990, the Supreme
Court of Pennsylvania held that the insurance policies covering the claims in
these J.H. France cases covered liabilities and defense costs up to the amounts
of the limits of the respective policies, without regard to the period of time
said policies were in effect. As a result of this judicial determination and
based upon Adience's experience in obtaining dismissals or settlements in closed
cases, Adience anticipates, although no assurance can be given, that the
expected costs and liabilities in such pending cases will be adequately covered
by insurance and that the aggregate limits on the insurance policies in effect
exceed the liabilities and defense costs which will be incurred in the 3,000
J.H.France cases and the other 390 cases, for which the scope of coverage has
never been an issue.
Adience's Furnco unit has recently been named, although not effectively
served, as the sole defendant in nine separate lawsuits, each of which contains
one plaintiff (i.e., either husband or husband and wife). At this time,
investigation is continuing as to the nature and extent of such suits, as well
as the extent of insurance coverage therefor.
Alpine is subject to other legal proceedings and claims which have primarily
arisen in the ordinary course of business and have not been finally adjudicated.
In the opinion of management, based on its examination of such matters and
discussions with counsel, the ultimate resolution of all pending or threatened
litigation, claims and assessments will have no material adverse effect upon
Alpine's consolidated financial position, liquidity or results of operations.
5. LONG-TERM INVESTMENTS AND OTHER ASSETS
The components of long-term investments and other assets are:
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
1996 1996
--------- ---------
<S> <C> <C>
Investment in PolyVision................................................ $ 11,502 $ 11,502
Advances to PolyVision.................................................. 3,086 3,401
Deferred financing charges.............................................. 8,483 8,689
Other assets............................................................ 3,332 3,054
--------- ---------
$ 26,403 $ 26,646
--------- ---------
--------- ---------
</TABLE>
6. SUBSEQUENT EVENT
On September 12, 1996 a newly formed subsidiary of Alpine, Superior TeleCom
Inc. ("Superior TeleCom"), filed an amendment to a registration statement with
the Securities and Exchange Commission in which it was disclosed that the
Company intends to: (i) recapitalize its wholly-owned subsidiary, Superior
Telecommunications, Inc. ("Superior") by issuing 20,000 shares of 6% Cumulative
Preferred Stock par value $1.00 per share, with a liquidation preference of
$1,000 per share, (ii) contribute all of the common stock of both Superior and
another wholly-owned subsidiary, DNE Systems, Inc. ("DNE"), to Superior TeleCom,
(iii) cause Superior and DNE to declare a dividend on its common stock in an
amount equal to the difference between $200 million and the net amount of
intercompany debt then owed by Superior and
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JULY 31, 1996
(UNAUDITED)
6. SUBSEQUENT EVENT (CONTINUED)
DNE to the Company, (iv) cause Superior and DNE to repay the net amount of
intercompany debt then owed ($102.9 million at July 31,1996) and (v) to cause
Superior TeleCom to complete an offering (the "Stock Offering") of 6,000,000
shares of its common stock (or approximately 49.9% of the outstanding shares
after such offering).
In connection with the aforementioned transactions, Superior TeleCom has
received a commitment from a major lending institution for a $175 million
revolving credit facility. If consummated, obligations under the revolving
credit facility will be guaranteed by Superior and DNE and secured by the common
stock of each subsidiary of Superior TeleCom along with all equipment, property,
inventory and accounts receivable of each such subsidiary. Prior to completion
of the Stock Offering, it is expected that Superior TeleCom will make an initial
draw on the revolving credit facility of approximately $155.0 million, which
amount will be used to repay the intercompany debt and pay transaction expenses
with the balance (approximately $49.0 million) used as a partial payment of the
aforementioned dividend.
Proceeds from the Stock Offering, if completed, will be used to reduce the
outstanding balance under the revolving credit facility to approximately $120
million and pay the remainder of the aforementioned dividend.
On September 3, 1996 Alpine announced that it had commenced a tender offer
to redeem 50.1% of its $153 million principal amount of 12.25% Series B Senior
Secured Notes (the "Senior Notes") due 2003 at a redemption price of 108% of the
principal amount, plus accrued interest. The Company's obligation to complete
such tender offer is contingent upon the completion of the aforementioned
reorganization and refinancing of Superior TeleCom, with the proceeds therefrom
used to complete the tender offer. The remainder of the proceeds from the
Superior TeleCom reorganization and refinancing will be used to repay amounts
outstanding under the Company's existing credit facility with the balance to be
added to existing cash reserves. Upon completion of the redemption of the Senior
Notes pursuant to the tender offer, Superior will be released as guarantor of
the Senior Notes (see Note 7).
7. SUBSIDIARY GUARANTEES
On July 21, 1995, Alpine issued the Senior Notes which are fully and
unconditionally guaranteed on a senior secured basis by Superior and Adience and
Superior Cable Corp. (a wholly-owned subsidiary of Superior Telecommunications
Inc.). The Adience subsidiary guarantee, however, is subordinated in right of
payment to $5.0 million of Adience's 11% Senior Secured Notes outstanding. The
subsidiary guarantees rank pari passu in right of payment with other senior debt
of Alpine (including its existing revolving credit facility) and other senior
debt of the subsidiary guarantors. The subsidiary guarantors have also
guaranteed the indebtedness outstanding under Alpine's revolving credit
facility. The Senior Notes, however, are effectively subordinated to the loans
and subsidiary guarantees under the revolving credit facility and to other
secured debt of Alpine and the subsidiary guarantors to the extent of the assets
securing the revolving credit facility or such other secured debt.
There are no contractual restrictions on the ability of the subsidiaries to
make distributions to Alpine to service indebtedness, including interest
payments on the Senior Notes. Separate financial statements and related
disclosures for the subsidiary guarantors are included herein as exhibits. The
following condensed consolidating information presents condensed financial
statements as of April 30, 1996 and July 31, 1996 of (a) Alpine on a parent
company basis with its investments in subsidiaries accounted for under the
equity method (Parent Company), (b) the combined subsidiary guarantors, (c) the
combined subsidiary non-guarantors, and (d) Alpine on a consolidated basis.
<PAGE>
THE ALPINE GROUP ,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF APRIL 30, 1996
-------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Assets
Current assets............................ $ 8,924 $ 124,489 $ 17,417 $ (4,488) $ 146,342
Property, plant and equipment, net........ 146 94,793 4,486 -- 99,425
Goodwill, net............................. -- 86,561 -- (3,827) 82,734
Investment in and advances to
subsidiaries............................ 217,564 (161,063) (2,474) (54,027) --
Other non-current assets.................. 23,666 2,030 707 -- 26,403
---------- ----------- ------- ----------- ------------
Total assets.......................... $ 250,300 $ 146,810 $ 20,136 $ (62,342) $ 354,904
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
Liabilities and stockholders' equity
Current liabilities....................... $ 12,413 $ 78,582 $ 5,883 $ (1,215) $ 95,663
Long-term debt............................ 189,847 12,349 5,449 -- 207,645
Other non-current liabilities............. 4,904 10,695 676 (7,815) 8,460
Equity.................................... 43,136 45,184 8,128 (53,312) 43,136
---------- ----------- ------- ----------- ------------
Total liabilities and stockholders'
equity.............................. $ 250,300 $ 146,810 $ 20,136 $ (62,342) $ 354,904
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
AS OF APRIL 30, 1996
-------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- ----------- --------------- ----------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Assets
Current assets............................ $ 9,320 $ 116,293 $ 16,319 $ (4,488) $ 137,444
Property, plant and equipment, net........ 297 94,209 4,513 -- 99,019
Goodwill, net............................. -- 85,755 -- (3,826) 81,929
Investment in and advances to
subsidiaries............................ 219,120 (158,531) (2,090) (58,499) --
Other non-current assets.................. 23,889 2,034 723 -- 26,646
---------- ----------- ------- ----------- ------------
Total assets.......................... $ 252,626 $ 139,760 $ 19,465 $ (66,813) $ 345,038
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
Liabilities and stockholders' equity
Current liabilities....................... $ 8,804 $ 67,260 $ 5,522 $ (1,215) $ 80,371
Long-term debt............................ 192,225 12,311 5,383 -- 209,919
Other non-current liabilities............. 4,904 10,271 566 (7,815) 7,926
Equity.................................... 46,693 49,918 7,994 (57,783) 46,822
---------- ----------- ------- ----------- ------------
Total liabilities and stockholders'
equity.............................. $ 252,626 $ 139,760 $ 19,465 $ (66,813) $ 345,038
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
</TABLE>
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JULY 31, 1995
--------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
----------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales.................................... $ 120,580 $ 8,204 $ 128,784
Cost of goods sold........................... 106,833 5,623 112,456
----------- ------ ------------
Gross profit............................... 13,747 2,581 16,328
Selling, general and administrative
expenses................................... $ 949 4,812 2,141 7,902
Amortization of goodwill..................... -- 673 -- 673
----------- ----------- ------ ------------
Operating income........................... (949) 8,262 440 7,753
Interest (expense), net...................... (597) (5,562) (204) (6,363)
Other income (expense), net.................. 86 (27) 55 114
----------- ----------- ------ ------------
Income from continuing operations before
income taxes............................. (1,460) 2,673 291 1,504
Equity in income from subsidiaries........... (680) 244 -- $ 436
----------- ----------- ------ ----------- ------------
(2,140) 2,917 291 436 1,504
Income tax (expense) benefit................. 1,221 (1,227) (144) -- (150)
----------- ----------- ------ ----------- ------------
Income from continuing operations.......... (919) 1,690 147 436 1,354
(Loss) from discontinued operations.......... (379) -- -- -- (379)
----------- ----------- ------ ----------- ------------
Income before extraordinary item........... (1,298) 1,690 147 436 975
Extraordinary (loss) on early extinquishment
of debt.................................... (2,919) (2,261) -- -- (5,180)
----------- ----------- ------ ----------- ------------
Net income (loss).......................... $ (4,217) $ (571) $ 147 $ 436 $ (4,205)
----------- ----------- ------ ----------- ------------
----------- ----------- ------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JULY 31, 1996
--------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
----------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales.................................... $ 142,662 $ 8,785 $ 151,447
Cost of goods sold........................... 120,913 6,570 127,483
----------- ------ ------------
Gross profit............................... 21,749 2,215 23,964
Selling, general and administrative
expenses................................... $ 1,946 5,665 2,179 9,790
Amortization of goodwill..................... -- 761 -- 761
----------- ----------- ------ ------------
Operating income (loss).................... (1,946) 15,323 36 13,413
Interest (expense), net...................... (6,279) (475) (68) (6,822)
Other (expense), net......................... -- (6) (53) (59)
Intercompany interest........................ 5,825 (5,735) (90) --
----------- ----------- ------ ------------
Income before income taxes................. (2,400) 9,107 (175) 6,532
Equity in income of subsidiaries............. 5,104 (101) -- $ (5,003) --
----------- ----------- ------ ----------- ------------
2,704 9,006 (175) (5,003) 6,532
Income tax (expense) benefit................. 1,542 (3,902) 74 -- (2,286)
----------- ----------- ------ ----------- ------------
Net income................................. $ 4,246 $ 5,104 $ (101) $ (5,003) $ 4,246
----------- ----------- ------ ----------- ------------
----------- ----------- ------ ----------- ------------
</TABLE>
<PAGE>
THE ALPINE GROUP, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JULY 31, 1995
-------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Income from operations.................... $ (919) $ 1,690 $ 147 $ 436 $ 1,354
Adjustments to reconcile income to net
cash provided by operations:
Depreciation, amortization and other
non-cash charges...................... 112 3,244 207 -- 3,563
Changes in assets and liabilities....... 2,881 20,307 (2,503) -- 20,685
Cash used for discontinued operations... (209) -- -- -- (209)
---------- ----------- ------- ----------- ------------
Cash flows provided by (used for) operating
activities................................ 1,865 25,241 (2,149) 436 25,393
---------- ----------- ------- ----------- ------------
Cash flows from investing activities:
Acquisition, net of cash.................. (326) (93,234) -- -- (93,560)
Investments in marketable securities...... (4,665) -- -- -- (4,665)
Capital expenditures...................... (41) (1,417) (132) -- (1,590)
Investment in PolyVision.................. (3,054) -- -- -- (3,054)
Other..................................... (1,350) (197) 1,350 -- (197)
---------- ----------- ------- ----------- ------------
Cash flows provided by (used for) investing
activities................................ (9,436) (94,848) 1,218 -- (103,066)
---------- ----------- ------- ----------- ------------
Cash flows from financing activities:
Long-term borrowings...................... 140,357 102,877 -- -- 243,234
Repayments of long-term borrowings........ (1,701) (145,382) (117) -- (147,200)
Repayments of short-term borrowings....... (21,000) -- -- -- (21,000)
Intercompany transactions................. (144,348) 144,818 (34) (436) --
Borrowings (repayments) under revolving
credit facilities, net.................. 34,208 (28,967) 519 -- 5,760
Other..................................... (11,853) (3,215) -- -- (15,068)
---------- ----------- ------- ----------- ------------
Cash flows provided by (used for) financing
activities................................ (4,337) 70,131 368 (436) 65,726
---------- ----------- ------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents............................... (11,908) 524 (563) -- (11,947)
---------- ----------- ------- ----------- ------------
Cash and cash equivalents at the beginning
of the period............................. 13,299 28 2,219 -- 15,546
---------- ----------- ------- ----------- ------------
Cash and cash equivalents at the end of the
period.................................... $ 1,391 $ 552 $ 1,656 $ -- $ 3,599
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
</TABLE>
<PAGE>
THE ALPINE GROUP, INC.
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED JULY 31, 1996
-------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- ----------- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Income from operations.................... $ 4,246 $ 5,104 $ (101) $ (5,003) $ 4,246
Adjustments to reconcile income to net
cash provided by operations:
Depreciation, amortization and other
non-cash charges...................... 776 3,246 204 -- 4,226
Changes in assets and liabilities....... (3,016) (3,719) 1,040 -- (5,695)
---------- ----------- ------- ----------- ------------
Cash flows provided by (used for) operating
activities................................ 2,006 4,631 1,143 (5,003) 2,777
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
Cash flows from investing activities:
Investments in marketable securities...... (115) -- -- -- (115)
Capital expenditures...................... (173) (1,915) (229) -- (2,317)
Investment in PolyVision.................. (315) -- -- -- (315)
Other..................................... -- (129) (46) -- (175)
---------- ----------- ------- ----------- ------------
Cash flows (used for) investing
activities................................ (603) (2,044) (275) -- (2,922)
---------- ----------- ------- ----------- ------------
Cash flows from financing activities:
Long-term borrowings...................... -- 73 22 -- 95
Repayments of long-term borrowings........ (804) (101) (209) -- (1,114)
Short-term borrowings..................... -- -- -- -- --
Intercompany transactions................. (4,804) 717 (916) 5,003 --
Borrowings (repayments) under revolving
credit facilities, net.................. 5,274 (3,027) 131 -- 2,378
Other..................................... (481) -- -- -- (481)
---------- ----------- ------- ----------- ------------
Cash flows provided by (used for) financing
activities................................ (815) (2,338) (972) 5,003 878
---------- ----------- ------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents............................... 588 249 (104) -- 733
---------- ----------- ------- ----------- ------------
Cash and cash equivalents at the beginning
of the period............................. 683 (350) 786 -- 1,119
---------- ----------- ------- ----------- ------------
Cash and cash equivalents at the end of the
period.................................... $ 1,271 $ (101) $ 682 $ -- $ 1,852
---------- ----------- ------- ----------- ------------
---------- ----------- ------- ----------- ------------
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
LIQUIDITY AND CAPITAL RESOURCES
Alpine, through its three subsidiaries, Superior, DNE and Adience, is
engaged in the manufacture and sale of: (i) telecommunications distribution wire
and cable products for the telecommunications industry (Superior), (ii)
specialty refractory products for the iron, steel, glass, aluminum, cement and
cogeneration industries (Adience), and (iii) data communications and electronics
products and systems for defense, governmental and commercial applications
(DNE).
RESULTS OF OPERATIONS
The following comparative table includes operating statement data for Alpine
on an industry segment basis. Such industry segment operating data is presented
on an historical reporting basis for the three months ended July 31, 1995 and
1996 and on a pro forma basis for the three months ended July 31, 1995. Pro
forma operating data is included in the table to reflect the acquisition of the
U.S. and Canadian operations of Alcatel N.A. (the "Alcatel Business") as if such
acquisition had occurred on May 1, 1995. Management believes that the pro forma
presentation provides meaningful comparability among reporting periods. The pro
forma data includes adjustments to depreciation and goodwill amortization to
reflect acquisition-related purchase accounting adjustments, as well as
adjustments to reflect reductions in selling, general, and administrative
expenses incurred by the Alcatel Business which are either not expected to recur
or have been eliminated. The pro forma adjustments described above are
consistent with those adjustments reflected in Item 7 in the Company's Annual
Report on Form 10-K for the year ended April 30, 1996. The pro forma data is not
necessarily indicative of the results that would have been achieved had such
acquisitions actually occurred on May 1, 1995, nor is it necessarily indicative
of Alpine's future results.
The discussion following the attached table compares the results of
operations for the quarter ended July 31, 1996 with the pro forma results of
operations for the quarter ended July 31, 1995.
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED QUARTER ENDED
JULY 31, 1995 JULY 31, 1996
----------------------- --------------
HISTORICAL PRO FORMA HISTORICAL
---------- ----------- --------------
<S> <C> <C> <C>
Net sales
Superior............................................................... $ 94,059 $ 101,580 $ 117,969
DNE.................................................................... 5,265 5,265 5,855
Adience................................................................ 29,460 29,460 27,623
---------- ----------- --------------
Consolidated....................................................... $ 128,784 $ 136,305 $ 151,447
---------- ----------- --------------
---------- ----------- --------------
Gross Profit
Superior............................................................... $ 7,910 $ 8,505 $ 16,859
DNE.................................................................... 1,593 1,593 1,518
Adience................................................................ 6,825 6,825 5,587
---------- ----------- --------------
Consolidated....................................................... $ 16,328 $ 16,923 $ 23,964
---------- ----------- --------------
---------- ----------- --------------
Gross Margin Percentage
Superior............................................................... 8.4% 8.4% 14.3%
DNE.................................................................... 30.3% 30.3% 25.9%
Adience................................................................ 23.2% 23.2% 20.2%
---------- ----------- --------------
Consolidated....................................................... 12.7% 12.4% 15.8%
---------- ----------- --------------
---------- ----------- --------------
Selling, general and administrative expenses
Superior............................................................... $ 1,716 $ 1,744 $ 2,322
DNE.................................................................... 1,583 1,593 1,566
Adience................................................................ 3,654 3,654 3,956
Corporate.............................................................. 949 949 1,946
---------- ----------- --------------
Consolidated....................................................... $ 7,902 $ 7,940 $ 9,790
---------- ----------- --------------
---------- ----------- --------------
Amortization of goodwill
Superior............................................................... $ 362 $ 388 $ 432
Adience................................................................ 311 311 329
---------- ----------- --------------
Consolidated....................................................... $ 673 $ 699 $ 761
---------- ----------- --------------
---------- ----------- --------------
Operating income
Superior............................................................... $ 5,820 $ 6,363 $ 14,105
DNE.................................................................... 10 10 (48)
Adience................................................................ 2,860 2,860 1,302
Corporate.............................................................. (937) (937) (1,946)
---------- ----------- --------------
Consolidated....................................................... $ 7,753 $ 8,296 $ 13,413
---------- ----------- --------------
---------- ----------- --------------
</TABLE>
<PAGE>
NET SALES
For the quarter ended July 31, 1996 net sales were $151.4 million,
representing an increase of $15.1 million or 11.1% over pro forma net sales of
$136.3 million for the quarter ended July 31, 1995.
Superior's net sales of $118.0 million for the July 1996 quarter were $16.4
million, or 16.1% greater than pro forma net sales of $101.6 million for the
quarter ended July 1995. After adjusting for the contractual pass through, in
the form of reduced selling prices resulting from lower copper costs during the
quarter ended July 1996, net sales would have increased by approximately $21.4
million or 21.1% as compared to the quarter ended July 1995. Approximately $16.5
million of the adjusted increase in net sales resulted from higher unit sales of
both wire and cable products. This increase was attributable to additional sales
volume under new multi-year supply agreements entered into during the second
half of fiscal 1996, as well as to the continued increase in demand for copper
wire and cable products. The remaining $4.9 million increase in net sales
resulted from non-copper based price increases instituted under multi-year
supply agreements during the latter half of fiscal 1996.
DNE's net sales for the quarter ended July 1996 were $5.9 million,
representing an increase of $0.6 million, or 11.2%, as compared to net sales of
$5.3 million for the quarter ended July 1995. Sales in DNE's contract
manufacturing service operations increased in the current fiscal quarter by $1.4
million, offset somewhat by a $0.7 million decline in sales of military avionics
products.
Adience's net sales for the quarter ended July 1996 were $27.6 million,
which represents a decline of $1.8 million, or 6.2%, as compared to the quarter
ended July 1995. The decline in net sales was principally attributable to a $2.5
million decrease in net sales at Adience's BMI-France unit, which supplies
refractory products directly to end users as well as providing contract
refractory installation services. This decline in revenues is the result of
cyclical demand within the Company's customer product mix and is not believed to
represent an industry trend. The decline in net sales was offset by increased
activity at Adience's Furnco division, which supplies contract services for the
rebuilding of coke ovens, and at Adience's Findlay division, which supplies
refractory block products to the plate glass industry.
GROSS PROFIT
Gross profit for the quarter ended July 1996 was $24.0 million, representing
an increase of $7.0 million, or 41.6% over pro forma gross profit of $16.9
million for the quarter ended July 1995.
Superior's gross profit increased by $8.4 million, or 98.2% to $16.9 million
for the quarter ended July 1996, as compared to pro forma gross profit of $8.5
million for the quarter ended July 1995. Superior's gross margin increased to
14.3% (13.7%, if adjusted to reflect the contractual pass through of lower
copper prices) for the quarter ended July 28, 1996, as compared to 8.4% for the
same quarter of the prior fiscal year. Superior's gross margins in the fiscal
quarter ended July 31, 1996 reflected a continuing trend of steadily improving
margins that began early in fiscal 1996. Superior's gross margins have improved
from 8.9% in the second quarter of fiscal 1996 to 10.6% and 13.3% in the third
and fourth quarters of fiscal 1996, respectively. The continuing increase in
gross margins results principally from the aforementioned fiscal 1996 increase
in selling prices instituted on a majority of Superior's multi-year supply
agreements, as well as production efficiencies resulting from higher production
levels and the impact of cost savings realized from the integration of the
Alcatel business operations.
DNE's gross profit was $1.5 million for the quarter ended July 1996,
representing a decline of $0.1 million, or 4.7%, as compared to $1.6 million for
the quarter ended July 1995. DNE's gross margin decreased from 30.3% to 25.9%
due to the trend toward contract manufacturing operations which have a lower
gross margin than DNE's other operations.
Adience's gross profit was $5.6 million for the quarter ended July 1996,
representing a decline of $1.2 million, or 18.1%, as compared to $6.8 million
for the quarter ended July 1995. Adience's gross margin decreased to 20.2% for
the quarter ended July 1996 as compared to 23.2% for the quarter ended July
1995. The decline in margin resulted primarily from a reduction in gross margin
at Adience's BMI-France division. The margin reduction at BMI-France resulted
from a more competitive pricing environment in the iron and steel industry and
from the impact of one installation contract which is now complete.
<PAGE>
The decline in gross margin was partially offset by increased revenues and gross
profit at Adience's Furnco and Findlay divisions both of which generate higher
gross margins than the BMI-France division.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE ("SG&A EXPENSE")
For the quarter ended July 1996, SG&A Expense was $9.8 million, representing
an increase of $1.9 million, or 23.3% over pro forma SG&A Expense of $7.9
million for the quarter ended July 1995.
Superior's SG&A Expense for the quarter ended July 1996 was $2.3 million,
representing an increase of $0.6 million, or 33.1% over SG&A Expense of $1.7
million for the quarter ended July 1995. This increase in SG&A Expense
reflected, among other factors, the incremental sales and marketing staff
required to support the increased level of sales and the expansion of
international and other marketing activities associated with new product lines
and entering new geographic markets.
DNE's SG&A Expense for the quarter ended July 1996 was $1.6 million which is
comparable to the corresponding period of fiscal 1996.
Adience's SG&A Expense for the quarter ended July 1996 was $4.0 million, an
increase of $0.3 million, or 8.3% over SG&A Expense of $3.7 million for the
quarter ended July 1995. This increase in SG&A Expense reflects one time
expenses associated with the reorganization of Adience's selling forces. This
reorganization, which consolidated the sales and marketing staff across product
lines and markets, has now been completed.
OPERATING INCOME
Operating income for the quarter ended July 1996 was $13.4 million,
representing an increase of $5.1 million, or 61.7% over pro forma operating
income of $8.3 million for the quarter ended July 1995.
Superior's operating income increased to $14.1 million for the quarter ended
July 1996 compared to pro forma operating income of $6.4 million for the quarter
ended July 1995, an increase of $7.7 million, or 121.7%. The increase was due to
higher sales and higher gross margins offset somewhat by slightly higher SG&A
Expenses.
DNE experienced an operating loss of $48,000 for the quarter ended July 1996
compared to operating income of $10,000 for the quarter ended July 1995.
Adience's operating income decreased to $1.3 million for the quarter ended
July 1996 as compared to $2.9 million for the quarter ended July 1995. The
decline was due to lower sales and gross margins combined with higher SG&A
Expenses.
INTEREST EXPENSE
For the quarter ended July 1996, interest expense was $7.0 million
representing a decrease of $0.1 million, or 1.9%, from interest expense of $7.0
million for the quarter ended July 1995.
INCOME TAX EXPENSE
For the quarter ended July 1996, income tax expense was $2.3 million,
representing an effective tax rate of approximately 35%. Income tax expense for
the July 1995 quarter was $0.2 million, representing an effective tax rate of
10%. The lower effective tax rate in the July 1995 quarter was due to the
availability of tax loss carryforwards to offset substantially all of the
Company's Federal income tax liability, with only limited tax loss carryforwards
available to reduce Federal income tax expense in the July 1996 quarter.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended July 31, 1996, the Company generated $2.8 million
in cash flow from operating activities consisting of $8.5 million in income
generated from operations (net income plus non-cash charges) offset by $5.7
million in cash flow used for net working capital changes. Such working capital
changes consisted principally of a $14.4 million reduction in accounts payable
and accrued expenses offset by a $8.6 million reduction in inventories and a
$1.8 million reduction in accounts receivable. Cash used for investing
activities amounted to $2.9 million, which included $2.3 million in capital
expenditures and $0.3 million in loans to PolyVision Corporation. Cash provided
by financing activities amounted to $0.9 million, consisting of $2.4 million in
borrowings under the Company's revolving credit facility offset by $1.1 million
in repayments of long-term debt and $0.4 million in open market repurchases of
Alpine common stock.
At July 31, 1996, the Company had $50.8 million outstanding under its bank
credit facility with additional funds availability as of such date of
approximately $24.9 million. As of July 31, 1996, total cash (including
marketable securities) and credit availability amounted to approximately $34.5
million.
Over the next twelve months the Company has mandatory principal repayments
on its long-term debt of $1.2 million. The Company also expects to invest $6
million to $9 million in capital expenditures during this same period, resulting
in total principal debt service and capital expenditure commitments of $7.2
million to $10.2 million. The Company expects to generate sufficient cash flows
from operating activities over the next twelve month period to meet the
principal debt service commitments and planned capital expenditures. However,
should any shortfall occur, seasonal or otherwise, the Company's cash reserves
and excess credit availability should be sufficient to fund any shortfall over
the next twelve month period.
On September 3, 1996, the Company announced a tender offer (the "Tender
Offer") for the redemption of 50.1% of its Senior Notes (see Note 6 to the
Condensed Consolidated Financial Statements). Consummation of the Tender Offer
is contingent upon completion of a reorganization of Superior and DNE (including
the creation of a wholly-owned subsidiary, Superior TeleCom, which will
incorporate the operations of Superior and DNE) and the consummation of a
refinancing which will include a new $175 million Superior TeleCom Revolving
Credit Facility (the "Superior Credit Facility"). Superior TeleCom intends to
initially draw approximately $155 million under the Superior Credit Facility,
with $152 million of such proceeds being paid to Alpine and applied as follows:
(i) approximately $86.0 million will be used to complete the Tender Offer
(including payment of accrued interest and transaction expenses), (ii)
approximately $51.0 million will be used to repay the Company's existing
revolving credit facility (based on the balance of such facility at July 31,
1996), and (iii) the balance of funds (approximately $15.0 million) will be
added to Alpine's existing cash reserves.
Upon completion of the aforementioned reorganization and refinancing, the
Company intends to proceed with an offering (the "Stock Offering") of 6,000,000
shares of Superior TeleCom's common stock (reducing Alpine's ownership of
Superior TeleCom to 50.1%). Subject to completion of the Stock Offering proceeds
therefrom are expected to range from $83 million to $94 million, with $35
million being used to pay down the Superior Credit Facility to an amount of
$120.0 million and the balance being paid to Alpine to be used for general
corporate purposes.
The Company believes the aforementioned reorganization, refinancing, and
Tender Offer will improve the Company's consolidated financial condition and
liquidity by reducing annual consolidated interest expense by approximately $4.0
million, and increase existing cash reserves by approximately $15 million.
Further completion of the Stock Offering will have the impact of: (i) increasing
the Company's consolidated equity capital; (ii) further reducing the Company's
consolidated interest expense, and (iii) further increasing the Company's
existing cash reserves. While these transactions will partially limit the
availability of Superior and DNE's cash flow for debt service under the Senior
Notes, the Company believes that such cash flow that will be available from
Superior and DNE along with cash flow generated from the operations of Adience
and existing cash reserves will be sufficient to meet the Company's obligations,
including debt service under the Senior Notes, for the foreseeable future.
<PAGE>
PART II. OTHER INFORMATION
ITEM 3. DEFAULTS ON SENIOR SECURITIES
(a) None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT 27--FINANCIAL DATA SCHEDULE
EXHIBIT 28--Alpine is herewith filing as exhibits the following financial
statements relating to Alpine's subsidiaries, Superior and Adience, each of the
which has guaranteed Alpine's 12-1/2% Series B Senior Secured Notes due 2003,
and the stock of each of such subsidiaries has been pledged to secure such
Notes:
ADIENCE, INC.
Unaudited Condensed Consolidated Financial Statements:
Condensed consolidated balance sheets at April 30, 1996 and July 31, 1996
Condensed consolidated statements of operations for the three months ended
July 31, 1995 and 1996
Condensed consolidated statement of shareholder's equity for the three
months ended July 31, 1996
Condensed consolidated statements of cash flows for the three months ended
July 31, 1996
Notes to condensed consolidated financial statements
SUPERIOR TELECOMMUNICATIONS INC.
Unaudited Condensed Consolidated Financial Statements:
Condensed consolidated balance sheets at April 30, 1996 and July 31, 1996
Condensed consolidated statements of operations and retained earnings for
the three months ended July 31, 1995 and 1996
Condensed consolidated statements of cash flows for the three months ended
July 31, 1995 and 1996
Notes to condensed consolidated financial statements
(b) Reports on Form 8-K
None
<PAGE>
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 thereunto duly authorized.
THE ALPINE GROUP, INC.
(Registrant)
Date: September 14, 1996 By: /s/ DAVID S. ALDRIDGE
-----------------------------------------
David S. Aldridge
CHIEF FINANCIAL OFFICER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-28-1996
<CASH> 1,852
<SECURITIES> 7,828
<RECEIVABLES> 59,357
<ALLOWANCES> (518)
<INVENTORY> 60,326
<CURRENT-ASSETS> 137,444
<PP&E> 118,016
<DEPRECIATION> (18,997)
<TOTAL-ASSETS> 345,038
<CURRENT-LIABILITIES> 80,371
<BONDS> 152,925
0
11,758
<COMMON> 1,927
<OTHER-SE> 33,084
<TOTAL-LIABILITY-AND-EQUITY> 345,038
<SALES> 151,447
<TOTAL-REVENUES> 151,447
<CGS> 127,483
<TOTAL-COSTS> 127,483
<OTHER-EXPENSES> 59
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,974
<INCOME-PRETAX> 6,532
<INCOME-TAX> 2,286
<INCOME-CONTINUING> 4,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,246
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
</TABLE>
<PAGE>
EXHIBIT 28
SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF THE ALPINE GROUP, INC.)
UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JULY 31, 1996
<PAGE>
SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
PRO FORMA
APRIL 28, JULY 28, JULY 28,
1996 1996 1996
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents....................... $ 11 $ 11 $ (99,230 )
Accounts receivable (less allowance for doubtful
accounts; April 28, 1996 and July 31, 1996,
$151.......................................... 47,936 49,833 49,833
Inventories..................................... 51,721 40,806 40,806
Other current assets............................ 4,656 4,558 4,558
------------ ------------ ------------
Total current assets.......................... 104,324 95,208 (4,033 )
------------ ------------ ------------
Property, plant and equipment, net................ 72,877 72,450 72,450
Goodwill (less accumulated amortization; July,
$3,546, April, $3,114).......................... 48,414 47,897 47,897
Due from parent................................... 15,103 14,474 14,474
Other long-term assets............................ 431 421 421
------------ ------------ ------------
Total assets.................................. $ 241,149 $ 230,450 $ 131,209
------------ ------------ ------------
------------ ------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable................................ $ 43,464 $ 36,597 $ 36,597
Accrued expenses and other liabilities.......... 11,164 11,807 11,807
------------ ------------ ------------
Total current liabilities..................... 54,628 48,404 48,404
------------ ------------ ------------
Notes payable to parent........................... 122,154 111,655 111,655
------------ ------------ ------------
Note payable to affiliate......................... 1,981 1,964 1,964
------------ ------------ ------------
Long-term debt, less current portion.............. 6,170 6,160 6,160
------------ ------------ ------------
Deferred income taxes............................. 5,893 5,991 5,991
------------ ------------ ------------
Other long-term liabilities....................... 1,493 1,493 1,493
------------ ------------ ------------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $.01; 10,000 shares
authorized,
1,000 shares issued........................... -- --
Additional paid-in capital...................... 41,144 41,144 41,144
Cumulative translation adjustment............... (215) (406 ) (406 )
Retained earnings............................... 7,901 14,045 (85,196 )
------------ ------------ ------------
Total stockholder's equity.................... 48,830 54,783 (44,458 )
------------ ------------ ------------
Total liabilities and stockholder's equity.... $ 241,149 $ 230,450 $ 131,209
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
JULY 29, JULY 28,
1995 1996
------------ ------------
<S> <C> <C>
Net sales......................................... $ 94,059 $ 117,969
Cost of good sold................................. 86,149 101,110
------------ ------------
Gross profit.................................... 7,910 16,859
Selling, general, and administrative expense...... 1,716 2,322
Amortization of goodwill.......................... 374 432
------------ ------------
Operating income................................ 5,820 14,105
Interest expense, net............................. 3,530 4,059
------------ ------------
Income before income taxes and extraordinary
item.......................................... 2,290 10,046
Income tax expense................................ 519 3,902
------------ ------------
Income before extraordinary item................ 1,771 6,144
Extraordinary (loss) on early extinguishment of
debt............................................ (2,811) --
------------ ------------
Net income (loss)............................... (1,040) 6,144
Retained earnings at beginning of period........ 3,117 7,901
------------ ------------
Retained earnings at end of period.............. $ 2,077 $ 14,045
------------ ------------
------------ ------------
Income (loss) per share of common stock:
Income before extraordinary item................ $ 1,771.00 $ 6,144.00
Extraordinary (loss) on early extinguishment of
debt.......................................... (2,811.00) --
------------ ------------
Net income (loss) per share of common stock..... $ (1,040.00) $ 6,144.00
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
JULY 29, JULY 28,
1995 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income before extraordinary item............ $ 1,771 $ 6,144
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 1,783 2,041
Amortization of deferred financing costs...... 320 12
Change in assets and liabilities:
Accounts receivable........................... (653) (1,897)
Inventories................................... 10,529 10,915
Other current assets.......................... 324 143
Accounts payable.............................. 11,285 (6,866)
Accrued expenses and other liabilities........ (602) 701
------------ ------------
Cash provided by operating activities............. 24,757 11,193
------------ ------------
Cash flows from investing activities:
Acquisitions, net of cash acquired.............. (93,234) --
Capital expenditures............................ (1,108) (1,298)
Other........................................... -- (38)
------------ ------------
Cash (used for) investing activities.............. (94,342) (1,336)
------------ ------------
Cash flows from financing activities:
Borrowings (repayments) under revolving credit
facilities, net............................... (16,533) (10,741)
Borrowings (advances) from/to Parent............ 95,243 657
Long-term borrowings............................ 140,000 --
Repayments of long-term borrowings.............. (145,386) (10)
Capitalized financing costs..................... (3,215) --
------------ ------------
Cash provided by (used for) financing
activities...................................... 70,109 (10,094)
------------ ------------
Net increase in cash and cash equivalents......... 524 (237)
Cash at beginning of period....................... 4 248
------------ ------------
Cash at end of period............................. $ 528 $ 11
------------ ------------
------------ ------------
Supplemental disclosures:
Cash interest paid or charged by Parent during
the period.................................... $ 2,825 $ 4,064
------------ ------------
------------ ------------
Cash paid during the period for income taxes.... $ 318 $ 382
------------ ------------
------------ ------------
Non-cash investing and financing activities:
Acquisition of business:
Assets, net of cash acquired.................. $ 126,127
Deferred purchase consideration............... (9,909)
Liabilities assumed........................... (22,984)
------------
Net cash paid............................... $ (93,234)
------------
------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 28, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Superior Telecommunications Inc. (the "Company") reflect all adjustments which,
in the opinion of management, are necessary for a fair presentation of the
results of operations for the interim periods presented. The Company is a
wholly-owned subsidiary of The Alpine Group, Inc. ("Alpine"). These financial
statements should be read in conjunction with the summary of accounting policies
and the notes to the financial statements included in the Company's financial
statements for the year ended April 28, 1996.
2. INVENTORIES
The components of inventories are:
<TABLE>
<CAPTION>
APRIL 28, JULY 28,
1996 1996
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Raw material........................................... $ 8,669 $ 8,233
Work-in-process........................................ 9,807 7,904
Finished goods......................................... 33,245 24,669
--------- --------
$ 51,721 $ 40,806
--------- --------
--------- --------
</TABLE>
3. SUBSEQUENT EVENT
In September 1996 a newly formed subsidiary of Alpine, Superior TeleCom Inc.
("Superior TeleCom") filed an amendment to a registration statement with the
Securities and Exchange Commission in which it disclosed Alpine's intention to:
(i) recapitalize the Company by issuing 20,000 shares of 6% Cumulative Preferred
Stock par value $1.00 per share with a liquidation preference of $1,000 per
share, (ii) contribute all of the common stock of both the Company and DNE
Systems, Inc. ("DNE"), a fellow subsidiary, to Superior TeleCom, (iii) cause the
Company and DNE to declare dividends on their common stock in an aggregate
amount equal to the difference between $205 million and the net amount of
intercompany debt then owed by the Company and DNE to Alpine and (iv) to cause
Superior TeleCom to complete an offering of 6,000,000 shares of common stock (or
approximately 49.9% of the outstanding shares after such offering) assuming no
exercise of the underwriters' over-allotment option.
In order to finance the payment of the intercompany debt, the dividend and
future working capital needs, Superior TeleCom has received a commitment from
Bankers Trust Company, acting as administrative agent, and Bank of Boston,
acting as co-agent, to enter into a revolving facility (the "Bank Credit
Facility") which will initially provide for a credit line of $175 million,
however, on completion of the Offering the facility will be reduced to $150
million. Interest will be payable monthly based upon prime rate plus 0.5% or
Eurodollar rate plus 1.5%; the variable components of these rates after the
first anniversary of the closing of the facilities are subject to periodic
adjustment based on Superior TeleCom's debt to EBITDA ratio on a trailing twelve
month basis. The initial rate of interest is expected to be approximately 7.5%.
Obligations under the Bank Credit Facility are expected to be guaranteed by each
of Superior TeleCom's direct and indirect subsidiaries and secured by all the
common stock, equipment, property, inventory and accounts receivable of each
such subsidiary.
The proposed dividends on the common stock of the Company and DNE discussed
above has been reflected in the accompanying pro forma balance sheet excluding
the effects of offering proceeds and other transactions occurring simultaneous
with this Offering described above, in accordance with the Securities and
Exchange Commission Staff Accounting Bulletin No. 55.
<PAGE>
ADIENCE, INC.
(A WHOLLY-OWNED SUBSIDIARY OF THE ALPINE GROUP, INC.)
UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JULY 31, 1996
<PAGE>
ADIENCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
1996 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................... $ 412 $ 581
Accounts receivable (less allowance for doubtful
accounts; April, $340; July $349)............. 17,183 16,083
Inventories..................................... 11,264 12,589
Other current assets............................ 5,668 6,867
------------ ------------
Total current assets.......................... 34,527 36,120
------------ ------------
Property, plant and equipment, net................ 22,751 22,579
Goodwill (less accumulated amortization; April,
$1,761; July, $2,090)........................... 38,030 37,858
Note receivable from affiliate.................... 2,049 2,070
Other long-term assets............................ 1,603 1,616
------------ ------------
Total assets.................................. $ 98,960 $ 100,243
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion of long-term debt............... $ 844 $ 853
Accounts payable................................ 7,909 8,428
Accrued expenses and other liabilities.......... 18,203 16,529
------------ ------------
Total current liabilities..................... 26,956 25,810
------------ ------------
Notes payable to parent........................... 54,908 58,329
------------ ------------
Due to parent..................................... 6,133 6,257
------------ ------------
Long-term debt, less current portion.............. 6,258 6,219
------------ ------------
Other long-term liabilities....................... 2,968 2,788
------------ ------------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $1.00; 1,000 authorized,
10 shares issued at April 30, 1996 and July
31, 1996...................................... -- --
Additional paid-in capital...................... 5,710 5,710
Cumulative translation adjustment............... 132 99
Accumulated deficit............................. (4,105) (4,969 )
------------ ------------
Total stockholder's equity.................... 1,737 840
------------ ------------
Total liabilities and stockholder's equity.... $ 98,960 $ 100,243
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
ADIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------
JULY 31, JULY 31,
1995 1996
--------- ---------
<S> <C> <C>
Net sales................................................................................... $ 29,460 $ 27,623
Cost of good sold........................................................................... 22,635 22,036
--------- ---------
Gross Profit.............................................................................. 6,825 5,587
Selling, general, and administrative expense................................................ 3,654 3,956
Amortization of goodwill.................................................................... 311 329
--------- ---------
Operating Income.......................................................................... 2,860 1,302
Interest income............................................................................. 115 30
Interest (expense).......................................................................... (2,148) (2,140)
Other income (expense)...................................................................... -- (6)
--------- ---------
Income (loss) before income taxes and extraordinary item.................................. 827 (814)
Income taxes................................................................................ (212) (50)
--------- ---------
Income (loss) before extraordinary item................................................... 615 (864)
Extraordinary (loss) on early extinguishment of debt........................................ (158) --
--------- ---------
Net income (loss)......................................................................... $ 457 $ (864)
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
ADIENCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------
JULY 31, JULY 31,
1995 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) before extraordinary item............................................. $ 615 $ (864)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization......................................................... 985 1,166
Amortization of deferred financing costs.............................................. 146 13
Change in assets and liabilities:
Accounts receivable................................................................... 175 1,100
Inventories........................................................................... (1,217) (1,325)
Other assets.......................................................................... (467) (1,192)
Accounts payable...................................................................... 967 519
Accrued expenses and other liabilities................................................ (1,298) (1,901)
---------- ----------
Cash used by operating activities......................................................... (94) (2,484)
---------- ----------
Cash flow from investing activities:
Capital expenditures.................................................................... (345) (633)
Other................................................................................... (197) (91)
---------- ----------
Cash used for investing activities........................................................ (542) (724)
---------- ----------
Cash flow from financing activities:
Borrowings (repayments) under revolving credit facilities, net.......................... (12,434) 4,349
Borrowings (advances) from/to Parent.................................................... 49,812 (942)
Long-term borrowings.................................................................... -- 73
Repayments of long-term borrowings...................................................... (37,123) (103)
---------- ----------
Cash provided by financing activities..................................................... 255 3,377
---------- ----------
Net increase (decrease) in cash and cash equivalents.................................. (381) 169
Cash at beginning of period............................................................... 1,974 412
---------- ----------
Cash at end of period..................................................................... $ 1,593 $ 581
---------- ----------
---------- ----------
Supplemental disclosures:
Cash interest paid or charged by Parent during the period............................... $ 794 $ 2,206
---------- ----------
---------- ----------
Cash paid during the period for income taxes............................................ $ 139 $ 2
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
ADIENCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Adience reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation of the results of operations for the interim
periods presented. These financial statements should be read in conjunction with
the summary of significant accounting policies and the notes to the financial
statements included in Adience's audited financial statements for the year ended
April 30, 1996.
2. INVENTORIES
The components of inventories are:
<TABLE>
<CAPTION>
APRIL 30, JULY 31,
1996 1996
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Raw material............................................................ $ 3,799 $ 4,224
Work-in-process......................................................... 1,654 1,779
Finished goods.......................................................... 5,811 6,586
--------- ---------
$ 11,264 $ 12,589
--------- ---------
--------- ---------
</TABLE>
