<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
NOVEMBER 27, 1998 1-9078
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Date of Report (Date of earliest event reported) Commission File Number
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-1620387
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(State or other jurisdiction of Identification Number)
incorporation or organization) (I.R.S. Employer
1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
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(Address of Principal Executive Offices) (Zip Code)
(212) 757-3333
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(Registrant's telephone number, including area code)
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This Current Report on Form 8-K contains financial statements
required by Item 7 of Form 8-K with respect to The Alpine Group, Inc.'s
majority-owned subsidiary, Superior TeleCom Inc.'s, acquisition of Essex
International Inc. The acquisition was initially reported in The Alpine
Group, Inc.'s Form 10-Q for the fiscal quarter ended October 31, 1998 and
filed December 14, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable
(b) Pro Forma Condensed Combined Financial Statements (Unaudited)
The Alpine Group, Inc. ("Alpine") is providing the following unaudited
pro forma financial information to give a picture of what the results of
operations and financial position of Alpine, Cables of Zion United Works Ltd.
("Cables of Zion"), acquired by Superior TeleCom Inc. on May 5, 1998, and
Essex International Inc. ("Essex") would have looked like, absent any
operational or other changes, if those businesses had been combined for the
periods and at the dates indicated.
The unaudited pro forma condensed combined financial statements of Alpine
give effect to the following as if these acquisitions had occurred on
May 1, 1997.
(i) the acquisition of Cables of Zion and
(ii) the cash tender offer whereby Superior TeleCom Inc. ("Superior")
acquired 81% of Essex on November 27, 1998.
The acquisitions are reflected using the purchase method of accounting
for business combinations. The pro forma adjustments have been applied to the
following:
(i) the historical financial statements of Alpine for the fiscal year
ended April 30, 1998, which statements have been derived from Alpine's
audited consolidated financial statements,
(ii) the unaudited condensed historical financial statements of Alpine
as of October 31, 1998 and for the six months then ended,
(iii) the unaudited condensed historical financial statements of Essex
for the twelve-month period ended March 31, 1998,
(iv) the unaudited condensed historical financial statements of Essex as
of September 30, 1998 and for the six months then ended and
(v) the unaudited condensed historical financial statements of Cables of
Zion for the twelve-month period ended March 31, 1998.
The unaudited pro forma condensed combined financial information is provided
for comparative purposes only and does not purport to be indicative of the
results that actually would have been achieved if the events set forth above had
been effected on the dates indicated or of those results that may be achieved in
the future. These pro forma financial statements are based on estimates of
values and transaction costs, among other things. Accordingly, the actual
recording of the transactions can be expected to differ from these pro forma
financial statements.
2
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED APRIL 30, 1998 (ALPINE),
MARCH 31, 1998 (ESSEX) AND MARCH 31, 1998 (CABLE OF ZION)
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL HISTORICAL CABLES OF PRO FORMA
ALPINE ESSEX ZION ADJUSTMENTS PRO FORMA
------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales..................................... $ 919,079 $ 1,675,969 $ 84,678 $ 2,679,726
Cost of goods sold............................ 741,232 1,343,228 70,370 134(a) 2,154,964
------------- ------------ ----------- ------------ -------------
Gross profit................................ 177,847 332,741 14,308 (134) 524,762
Selling, general and administrative
expenses.................................... 80,602 150,872 8,199 (690)(b) 237,983
(1,000)(b)
Restructuring charge.......................... 3,626 3,626
Amortization of goodwill...................... 4,743 4,233 79(a) 22,233
13,178(c)
------------- ------------ ----------- ------------ -------------
Operating income............................ 88,876 177,636 6,109 (11,701) 260,920
Interest expense.............................. (31,516) (33,946) (1,697) (80,296)(d) (147,455)
Other income (expense), net................... 4,322 703 (1,416) 3,609
------------- ------------ ----------- ------------ -------------
Income before income taxes and
minority interest......................... 61,682 144,393 2,996 (91,997) 117,074
Provision for income taxes.................... (24,673) (58,000) (441) 29,054(e) (54,060)
------------- ------------ ----------- ------------ -------------
Income before minority interest in
subsidiary................................ 37,009 86,393 2,555 (62,943) 63,014
Minority interest in earnings of subsidiary... (20,262) (79) (22,173)(f) (42,514)
------------- ------------ ----------- ------------ -------------
Income before extraordinary loss............ $ 16,747 $ 86,393 $ 2,476 $ (85,116) $ 20,500
------------- ------------ ----------- ------------ -------------
------------- ------------ ----------- ------------ -------------
Income per share of common stock
before extraordinary loss:
Basic:
Basic income per share of common
stock................................... $0.99 $1.21
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Average common shares outstanding......... 16,986,000 16,986,000
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Diluted:
Diluted income per share of common
stock................................... $0.89 $1.09
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Average common shares outstanding......... 18,774,000 18,774,000
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</TABLE>
See accompanying Notes to Unaudited Pro Forma Financial Statements
3
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1998 (ALPINE)
AND SEPTEMBER 30, 1998 (ESSEX)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
ALPINE ESSEX ADJUSTMENTS PRO FORMA
------------- ---------- ------------ -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................................................. $ 556,604 $ 756,936 $ 1,313,540
Cost of goods sold........................................ 430,791 609,266 1,040,057
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Gross profit............................................ 125,813 147,670 273,483
Selling, general and administrative expenses.............. 58,500 70,697 (500)(b) 128,697
Unusual charges (1)....................................... 6,003 6,003
Amortization of goodwill.................................. 3,316 2,150 6,589 (c) 12,055
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Operating income........................................ 63,997 68,820 (6,089) 126,728
Interest expense.......................................... (20,616) (12,804) (44,051)(d) (77,471)
Other income (expense), net............................... 359 1,298 1,657
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Income before income taxes and minority interest........ 43,740 57,314 (50,140) 50,914
Provision for income taxes................................ (17,519) (22,791) 15,752 (e) (24,558)
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Income before minority interest in subsidiary........... 26,221 34,523 (34,388) 26,356
Minority interest in earnings of subsidiary............... (14,273) (2,831)(f) (17,104)
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Net income.............................................. $ 11,948 $ 34,523 $ (37,219) $ 9,252
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Net income per share of common stock:
Basic:
Net income per share of common stock.................. $0.70 $0.54
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Average common shares outstanding..................... 17,024,000 17,024,000
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Diluted:
Net income per share of common stock.................. $0.64 $0.50
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Average common shares outstanding..................... 18,639,000 18,639,000
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</TABLE>
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(1) During its quarter ended September 30, 1998, Essex recorded unusual charges
of $3,600 ($6,003 before tax) with respect to an early retirement program
offered to certain senior executives of the company and plant closing costs.
See accompanying Notes to the Unaudited Pro Forma Financial Statements
4
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UNAUDITED CONDENSED COMBINED BALANCE SHEET
AS OF OCTOBER 31, 1998 (ALPINE) AND SEPTEMBER 30, 1998 (ESSEX)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA
ALPINE ESSEX ADJUSTMENTS PRO FORMA
---------- ---------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivelents..................................... $ 19,989 $ 7,626 $ 27,615
Marketable securities......................................... 14,238 14,238
Accounts receivable, net...................................... 163,839 204,871 368,710
Inventories................................................... 153,597 268,377 421,974
Other curent assets........................................... 33,434 13,162 46,596
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Total current assets........................................ 385,097 494,036 879,133
Property, plant equipment, net.................................. 239,361 298,377 537,738
Other assets.................................................... 48,477 6,361 (1,358)(g) 84,153
(2,127)(g)
32,800 (h)
Goodwill, net................................................... 201,950 130,550 555,873 (i) 888,373
---------- ---------- ------------ ------------
Total assets................................................ $ 874,885 $ 929,324 $ 585,188 $ 2,389,397
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................................. $ 119,238 $ 64,068 $ $ 183,306
Accrued expenses.............................................. 92,419 74,659 10,000 (i) 177,078
Notes payable to banks........................................ 157,730 (25,630)(g) 132,100
Current portion of long-term debt............................. 15,619 2,500 18,119
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Total current liabilities:.................................. 227,276 298,957 (15,630) 510,603
Long-term debt, less current portion.......................... 421,746 258,892 1,189,600 (h) 1,535,768
(334,470)(g)
Minority interest in subsidiary............................... 74,554 51,819 (j) 126,373
Other long-term liabilities................................... 77,562 72,481 150,043
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Total liabilities........................................... 801,138 630,330 891,319 2,322,787
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Stockholders' equity:
Preferred stock............................................... 427 427
Common stock.................................................. 2,000 302 (302)(i) 2,000
Capital in excess of par value................................ 137,774 198,379 (198,379)(i) 137,774
Accumulated comprehensive income.............................. (1,451) (1,451)
Accumulated deficit........................................... (20,904) 154,434 (154,434)(i) (28,041)
(2,127)(g)
(5,010)(k)
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117,846 353,115 (360,252) 110,709
Shares of common stock in treasury............................ (43,160) (54,121) 54,121 (i) (43,160)
Receivable from stockholders.................................. (939) (939)
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Total stockholders' equity.................................. 73,747 298,994 (306,131) 66,610
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Total liabilities and stockholders' equity................ $ 874,885 $ 929,324 $ 585,188 $ 2,389,397
---------- ---------- ------------ ------------
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</TABLE>
See accompanying Notes to Pro Forma Financial Statements.
5
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(a) Reflects the changes to historical depreciation and the incremental goodwill
amortization resulting from the acquisition of Cables of Zion which was
completed in May 1998.
(b) Reflects the elimination of management fees allocated by the controlling
shareholders of Cables of Zion ($690,000) and Essex ($1 million) for the
twelve months ended March 31, 1998. Net sales and expenses of Cables of
Zion and Essex would not have materially changed without the management
services provided by the respective controlling shareholders.
(c) Reflects the incremental goodwill amortization resulting from the
acquisition of Essex.
(d) Reflects the adjustment to interest expense resulting from debt incurred.
The effect on net income, net of tax, of a 1/8% variance in the interest
rates related to the term loans, revolving credit facility and senior
subordinated debt would be approximately $0.9 million for the twelve
months ended April 30, 1998 and approximately $0.4 million for the six
months ended October 31, 1998.
(e) Reflects the pro forma adjustment to income tax expense resulting from the
Cables of Zion and Essex transactions. The pro forma effective tax rate of
44.9% and 46.1% for the twelve months ended April 30, 1998 and the six
months ended October 31, 1998, respectively, reflects the non-deductibility
of purchased goodwill.
(f) Reflects the adjustment to minority interest in earnings of subsidiaries
to reflect (i) the approximate 49.9% minority interest in Superior for
the twelve months ended April 30, 1998 and the six months ended October 31,
1998, (ii) Superior's 49% minority interest in Cables of Zion for the
twelve months ended April 30, 1998 and (iii) Superior's 19% minority
interest in Essex for the twelve months ended April 30, 1998 and the six
months ended October 31, 1998.
(g) Reflects the debt extinguished in connection with the financing described in
Note (h) and the write-off of $1.4 million and $2.1 million, respectively,
in deferred financing charges previously capitalized by Essex and Superior.
(h) Represents the proceeds from Superior's initial borrowings under the new
facilities as follows:
AMOUNT
(IN MILLIONS)
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Term Loan A....................................... $ 500.0
Term Loan B....................................... 425.0
Revolving credit facility*........................ 64.6
Senior subordinated notes......................... 200.0
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$ 1,189.6
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*Total availability under Superior's revolving credit facility
amounts to $225 million.
The use of these proceeds from Superior's initial borrowings are as follows,
with no net impact to cash.
AMOUNT
(IN MILLIONS)
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Use of proceeds:
Purchase 81% of Essex common stock................ $ 722.0
Repay Essex existing long-term debt............... 270.1
Repay Superior existing long-term debt............ 90.0
Redemption of Essex unexercised stock options..... 47.5
Transaction fees and other expenses............... 60.0
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Total use of proceeds......................... $ 1,189.6
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In connection with the above facilities, Superior estimates that deferred
financing charges will amount to approximately $32.8 million.
6
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(i) Reflects the preliminary allocation of the purchase price to 81% of the
net assets of Essex based upon estimated fair values of such assets:
AMOUNT
(IN MILLIONS)
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Estimated acquisition cost (including $17.2m in expense)........ $ 739.2
Less: historical book values of net assets at September 30, 1998 (299.0)
Add: Minority interest in Essex................................. 56.8
Redemption of Essex unexercised stock options.............. 47.5
Accrual of expenses........................................ 10.0
Write-off of Essex's deferred financing charges............ 1.4
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Acquisition goodwill (to be amortized over 40 years)............ $ 555.9
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(j) Reflects Superior's 19% minority interest in Essex as of September 30, 1998.
(k) Reflects the impact to Alpine's retained earnings and the minority interest
holders of Superior for the $10.0 million transaction fee paid by Superior
to Alpine with respect to the Essex acquisition. The fee paid to Alpine is
a direct acquisition cost of Essex and, accordingly, is being expensed by
Superior as a nonrecurring internal acquisition cost.
(c) Exhibits
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Exhibit 1 Consent of Ernst & Young LLP, independent auditors, with
respect to financial statements of Essex International Inc.
Reference is made to the exhibits to Alpine's Form 10-Q for the fiscal
quarter ended October 31, 1998, which are incorporated herein by reference.
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 10, 1999 THE ALPINE GROUP, INC.
By: /s/ David S. Aldridge
-----------------------------
David S. Aldridge
Chief Financial Officer
8
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EXHIBIT INDEX
Exhibit 1 Consent of Ernst & Young LLP, independent auditors, with respect
to financial statements of Essex International Inc.
9
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EXHIBIT 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Current Report on Form
8-K of The Alpine Group, Inc. of our report dated January 27, 1998, with
respect to the consolidated financial statements and schedules of Essex
International Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1997, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Indianapolis, Indiana
February 8, 1999
