<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
<TABLE>
<C> <S>
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
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 (Zip code)
(Address of principal
executive offices)
</TABLE>
212-757-3333
Registrant's telephone number, including area code
------------------------
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, AS OF THE LATEST PRACTICABLE DATE.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT NOVEMBER 3, 2000
------------------------------- -------------------------------
<S> <C>
Common Stock, $.10 Par Value 13,747,235
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated 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. These
financial statements should be read in conjunction with the summary of
significant accounting policies and the notes to the consolidated financial
statements included in the Company's Transition Report on Form 10-K for the
eight month period ended December 31, 1999.
2
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 8,103 $ 19,542
Marketable securities..................................... 8,386 7,841
Accounts receivable (less allowance for doubtful accounts
of $3,415 and $3,193 at September 30, 2000 and December
31, 1999, respectively)................................. 294,579 261,263
Inventories............................................... 292,174 313,571
Other current assets...................................... 39,108 42,262
---------- ----------
Total current assets.................................... 642,350 644,479
Property, plant and equipment, net.......................... 538,239 515,763
Long-term investments and other assets...................... 190,983 226,606
Goodwill (less accumulated amortization of $44,154 and
$28,399 at September 30, 2000 and December 31, 1999,
respectively)............................................. 780,622 796,781
---------- ----------
Total assets............................................ $2,152,194 $2,183,629
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings..................................... $ 159,799 $ 140,369
Current portion of long-term debt......................... 88,919 85,910
Accounts payable.......................................... 164,082 147,336
Accrued expenses.......................................... 95,960 100,843
---------- ----------
Total current liabilities............................... 508,760 474,458
Long-term debt, less current portion........................ 1,223,571 1,253,020
Minority interest in subsidiaries........................... 65,645 66,459
Other long-term liabilities................................. 149,107 160,750
---------- ----------
Total liabilities....................................... 1,947,083 1,954,687
---------- ----------
Subsidiary-obligated Mandatorily Redeemable Trust
Convertible Preferred Securities of Superior Trust I
holding solely convertible debentures of Superior, net of
discount.................................................. 134,685 133,959
Commitments and contingencies
Stockholders' equity:
9% cumulative convertible preferred stock at liquidation
value................................................... 427 427
Common stock, $.10 par value; 25,000,000 shares
authorized; 21,739,614 shares and 21,633,041 shares
issued at September 30, 2000 and December 31, 1999,
respectively............................................ 2,174 2,166
Capital in excess of par value............................ 161,207 158,268
Accumulated other comprehensive income (deficit).......... (22,426) 451
Retained earnings......................................... 26,672 27,056
---------- ----------
168,054 188,368
Shares of common stock in treasury, at cost: September 30,
2000, 8,015,646 shares; December 31, 1999, 7,418,534
shares.................................................. (96,696) (92,396)
Receivable from stockholders................................ (932) (989)
---------- ----------
Total stockholders' equity................................ 70,426 94,983
---------- ----------
Total liabilities and stockholders' equity.............. $2,152,194 $2,183,629
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Net sales................................................... $504,317 $522,450
Cost of goods sold.......................................... 423,992 426,032
-------- --------
Gross profit.............................................. 80,325 96,418
Selling, general and administrative expenses................ 40,933 38,373
Amortization of goodwill.................................... 5,293 5,201
Nonrecurring and unusual charges............................ 3,915 --
-------- --------
Operating income.......................................... 30,184 52,844
Interest expense............................................ (34,552) (31,594)
Loss on sale of securities.................................. (1,565) --
Other income (expense), net................................. 2,324 (2,707)
-------- --------
Income (loss) from continuing operations before income
taxes, distributions on preferred securities of
subsidiary trust, minority interest and equity in
earnings of affiliate................................... (3,609) 18,543
Benefit (provision) for income taxes........................ 811 (7,674)
-------- --------
Income (loss) from continuing operations before
distributions on preferred securities of subsidiary
trust, minority interest and equity in earnings of
affiliate............................................... (2,798) 10,869
Distributions on preferred securities of subsidiary trust... (3,789) (3,763)
-------- --------
Income (loss) from continuing operations before minority
interest and equity in earnings of affiliate............ (6,587) 7,106
Minority interest in (earnings) losses of subsidiaries...... 1,986 (4,062)
Equity in earnings of affiliate............................. 1,570 1,440
-------- --------
Income (loss) from continuing operations.................. (3,031) 4,484
Income from discontinued operations, net of tax............. -- 35,369
-------- --------
Net income (loss)......................................... (3,031) 39,853
Preferred stock dividends................................... (10) (9)
-------- --------
Net income (loss) applicable to common stock.............. $ (3,041) $ 39,844
======== ========
Net income (loss) per share of common stock:
Basic:
Income (loss) from continuing operations................ $ (0.21) $ 0.30
Income from discontinued operations, net of tax......... -- 2.39
-------- --------
Net income (loss) per basic share of common stock..... $ (0.21) $ 2.69
======== ========
Diluted:
Income (loss) from continuing operations................ $ (0.21) $ 0.25
Income from discontinued operations, net of tax......... -- 2.17
-------- --------
Net income (loss) per diluted share of common stock... $ (0.21) $ 2.42
======== ========
Weighted average shares outstanding:
Basic..................................................... 14,676 14,810
======== ========
Diluted................................................... 14,676 16,322
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------
2000 1999
---------- ----------
<S> <C> <C>
Net sales................................................... $1,547,426 $1,543,977
Cost of goods sold.......................................... 1,282,784 1,246,089
---------- ----------
Gross profit.............................................. 264,642 297,888
Selling, general and administrative expenses................ 122,672 120,092
Amortization of goodwill.................................... 15,774 14,531
Nonrecurring and unusual charges............................ 12,727 4,552
---------- ----------
Operating income.......................................... 113,469 158,713
Interest expense............................................ (102,627) (92,944)
Loss on sale of securities.................................. (1,565) --
Other income, net........................................... 5,469 2,867
---------- ----------
Income from continuing operations before income taxes,
distributions on preferred securities of subsidiary
trust, minority interest, equity in earnings of
affiliate and extraordinary (loss)...................... 14,746 68,636
Provision for income taxes.................................. (7,380) (29,058)
---------- ----------
Income from continuing operations before distributions on
preferred securities of subsidiary trust, minority
interest, equity in earnings of affiliate and
extraordinary (loss).................................... 7,366 39,578
Distributions on preferred securities of subsidiary trust... (11,348) (7,519)
---------- ----------
Income (loss) from continuing operations before minority
interest, equity in earnings of affiliate and
extraordinary (loss).................................... (3,982) 32,059
Minority interest in (earnings) losses of subsidiaries...... 474 (18,431)
Equity in earnings of affiliate............................. 3,161 2,417
---------- ----------
Income (loss) from continuing operations before
extraordinary (loss).................................... (347) 16,045
Income from discontinued operations, net of tax............. -- 32,091
---------- ----------
Income (loss) before extraordinary (loss)................. (347) 48,136
Extraordinary (loss) on early extinguishment of debt, net... -- (836)
---------- ----------
Net income (loss)......................................... (347) 47,300
Preferred stock dividends................................... (37) (28)
---------- ----------
Net income (loss) applicable to common stock.............. $ (384) $ 47,272
========== ==========
Net income (loss) per share of common stock:
Basic:
Income (loss) from continuing operations................ $ (0.03) $ 1.06
Income from discontinued operations..................... -- 2.13
Extraordinary (loss) on early extinguishment of debt,
net, net of tax....................................... -- (0.06)
---------- ----------
Net income (loss) per basic share of common stock..... $ (0.03) $ 3.13
========== ==========
Diluted:
Income (loss) from continuing operations................ $ (0.03) $ 0.90
Income from discontinued operations, net of tax......... -- 1.94
Extraordinary (loss) on early extinguishment of debt,
net................................................... -- (0.05)
---------- ----------
Net income (loss) per diluted share of common stock... $ (0.03) $ 2.79
========== ==========
Weighted average shares outstanding:
Basic..................................................... 14,859 15,090
========== ==========
Diluted................................................... 14,859 16,572
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
9% CUMULATIVE
CONVERTIBLE
COMMON STOCK CAPITAL IN PREFERRED STOCK
COMPREHENSIVE --------------------- EXCESS OF ------------------- RETAINED
LOSS SHARES AMOUNT PAR VALUE SHARES AMOUNT EARNINGS
------------- ---------- -------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999... 21,663,041 $2,166 $158,268 427 $427 $27,056
Exercise of stock options...... 18,500 2 91
Employee stock purchase plan... 44,312 4 1,174
Purchase of treasury stock.....
Compensation expense related to
stock options and grants..... 13,761 2 1,674
Dividends on preferred stock... (37)
Comprehensive loss:
Net income (loss)............ $ (347) (347)
Foreign currency translation
adjustment................. (1,762)
Realized losses on
securities, net of tax..... 963
Change in unrealized losses
on securities, net of
tax........................ (22,078)
--------
Total comprehensive loss....... $(23,224)
======== ---------- ------ -------- --- ---- -------
Balance at September 30,
2000......................... 21,739,614 $2,174 $161,207 427 $427 $26,672
========== ====== ======== === ==== =======
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE TREASURY STOCK RECEIVABLE
INCOME ------------------------ FROM
(DEFICIT) SHARES AMOUNT STOCKHOLDERS TOTAL
------------- ------------- -------- ------------ --------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1999... $ 451 (7,418,534) $(92,396) $(989) $94,983
Exercise of stock options...... 93
Employee stock purchase plan... 1,178
Purchase of treasury stock..... (647,443) (4,923) (4,923)
Compensation expense related to
stock options and grants..... 50,331 623 57 2,356
Dividends on preferred stock... (37)
Comprehensive loss:
Net income (loss)............ (347)
Foreign currency translation
adjustment................. (1,762) (1,762)
Realized losses on
securities, net of tax..... 963 963
Change in unrealized losses
on securities, net of
tax........................ (22,078) (22,078)
Total comprehensive loss.......
-------- ------------- -------- ----- -------
Balance at September 30,
2000......................... $(22,426) (8,015,646) $(96,696) $(932) $70,426
======== ============= ======== ===== =======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
6
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Income (loss) from continuing operations.................. $ (347) $ 16,045
Adjustments to reconcile income from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization....................... 46,941 43,194
Amortization of deferred debt issuance costs and
accretion of debt discount........................ 4,351 4,441
Compensation expense related to stock options and
grants............................................ 2,356 715
Provision for deferred income taxes................. 571 29,005
Minority interest in earnings (loss) of
subsidiaries...................................... (474) 18,431
Equity in earnings of affiliates.................... (3,161) (2,417)
Other, net.......................................... 67 (1,526)
Change in assets and liabilities, net of effects
from companies acquired:
Accounts receivable............................... (32,670) (62,255)
Inventories....................................... 21,812 18,007
Other current and non-current assets.............. 7,487 26,017
Accounts payable and accrued expenses............. 13,490 (8,859)
Other long-term liabilities....................... (2,131) 375
-------- --------
Cash flows provided by continuing operations................ 58,292 81,173
Cash flows provided by discontinued operations.............. -- 1,439
-------- --------
Cash flows provided by operating activities................. 58,292 82,612
-------- --------
Cash flows from investing activities:
Capital expenditures...................................... (60,291) (47,284)
Proceeds from sale of securities.......................... 17,315 --
Proceeds from sale of assets.............................. 5,827 18,304
Customer loans............................................ (25,524) (21,473)
Other..................................................... 876 (3,000)
-------- --------
Cash flows used for continuing operations................... (61,797) (53,453)
Cash flows used for discontinued operations................. -- (2,526)
-------- --------
Cash flows used for investing activities.................... (61,797) (55,979)
-------- --------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
7
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Borrowings under revolving credit facilities, net......... $ 3,136 $ 2,353
Short-term borrowings, net................................ 19,430 39,700
Repayment of long-term borrowings......................... (71,431) (247,683)
Long-term borrowings...................................... 44,594 240,151
Debt issuance costs....................................... -- (6,294)
Proceeds from exercise of stock options................... 93 (5,654)
Purchase of treasury shares............................... (4,923) (13,915)
Subsidiary treasury stock purchases....................... -- (12,893)
Dividends on subsidiary common stock...................... -- (1,792)
Dividends on preferred stock.............................. (37) --
Other..................................................... 1,204 3,591
-------- --------
Cash flows used for continuing operations................... (7,934) (2,436)
Cash flows provided by discontinued operations.............. -- 3,034
-------- --------
Cash flows provided by (used for) financing activities...... (7,934) 598
-------- --------
Cash flows provided by discontinued operations.............. -- 1,947
Net increase in discontinued operations cash and cash
equivalents............................................... -- 1,947
Net increase (decrease) in continuing operations cash and
cash equivalents.......................................... (11,439) 25,284
Cash and cash equivalents at beginning of period............ 19,542 26,029
-------- --------
Cash and cash equivalents at end of period.................. $ 8,103 $ 53,260
======== ========
Supplemental disclosures:
Cash paid for interest.................................... $ 87,040 $ 85,190
======== ========
Cash paid (received) for income taxes, net of refunds..... $ 8,095 $ (1,282)
======== ========
Acquisition of Essex minority interest:
Net assets acquired including goodwill.................. $ 83,044
Minority interest in subsidiary......................... 50,246
--------
Issuance of subsidiary-obligated Mandatorily Redeemable
Trust
Convertible Preferred Securities of Superior Trust I
holding solely convertible debentures of Superior (net
of discount of $33,323)............................... $133,290
========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
8
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of The Alpine Group, Inc. and its majority-owned subsidiary
(collectively, unless the context otherwise requires, "Alpine" or the
"Company"). Certain reclassifications have been made to the prior period
presentation to conform to the current period presentation.
Alpine's operations are carried out through Superior TeleCom Inc. (together
with its subsidiaries, unless the context otherwise requires, "Superior"), a
51.7% owned subsidiary, which manufactures wire and cable products for the
communications, original equipment manufacturer ("OEM") and electrical markets.
Alpine also holds a 48% common equity interest and $19.8 million of
convertible preferred stock in PolyVision Corporation, a global manufacturer of
visual communications and related products. Alpine currently accounts for its
investment in PolyVision under the equity method of accounting.
On August 6, 1999, Alpine sold its subsidiary, Premier Refractories
International Inc. ("Premier"), to Cookson Group plc. Accordingly, Premier has
been accounted for as a discontinued operation in the accompanying condensed
consolidated financial statements. The operating results of Premier for the
three and nine month periods ended September 30, 1999 have been segregated from
the Company's continuing operations and are reported as a separate line item on
the statement of operations as discontinued operations.
2. INVENTORIES
At September 30, 2000 and December 31, 1999, the components of inventories
were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Raw materials....................................... $ 57,646 $ 50,618
Work in process..................................... 45,741 42,150
Finished goods...................................... 208,631 233,142
-------- --------
312,018 325,910
LIFO reserve........................................ (19,844) (12,339)
-------- --------
$292,174 $313,571
======== ========
</TABLE>
Inventories valued using the LIFO method amounted to $158.9 million and
$167.3 million at September 30, 2000 and December 31, 1999, respectively.
9
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
3. COMPREHENSIVE INCOME
The components of comprehensive income for the three and nine months ended
September 30, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income (loss)............................... $(3,031) $39,853 $ (347) $47,300
Foreign currency translation adjustment......... (1,335) (2,688) (1,762) (2,641)
Realized losses on securities, net of tax....... 963 -- 963 --
Change in unrealized losses on securities, net
of tax........................................ (8,615) -- (22,078)
Additional minimum pension liability............ -- -- -- (694)
-------- ------- -------- -------
Comprehensive income (loss)..................... $(12,018) $37,165 $(23,224) $43,965
======== ======= ======== =======
</TABLE>
4. ACQUISITIONS
On November 27, 1998, Superior completed a cash tender offer for 81% of the
outstanding common stock of Essex International Inc. ("Essex"), at an aggregate
cash tender value of $770 million. On March 31, 1999, Superior acquired the
remaining outstanding common stock of Essex through the issuance of
approximately $167 million (face amount) of 8 1/2% Subsidiary-obligated
Mandatorily Redeemable Trust Convertible Preferred Securities of Superior
Trust I holding solely convertible debentures of Superior. The sole assets of
Superior Trust I are the $171.8 million (principal amount) of convertible
debentures of Superior, which bear interest at an annual rate of 8 1/2%. The
convertible debentures mature on March 30, 2014.
The acquisition of Essex was accounted for using the purchase method and,
accordingly, the results of operations of Essex have been included in the
consolidated financial statements on a prospective basis from the dates of
acquisition. The purchase price was allocated based upon assessments of the fair
values of assets and liabilities at the dates of acquisition, which included
accruals for planned consolidations, overhead rationalization and loss
contingencies. The excess of the purchase price over the net assets acquired is
being amortized on a straight-line basis over 40 years.
PRO FORMA FINANCIAL DATA
Unaudited condensed pro forma results of operations for the nine months
ended September 30, 1999, which give effect to the March 31, 1999 acquisition of
the remaining 19% of the outstanding common stock of Essex as if it had occurred
on January 1, 1999, are presented below. The pro forma amounts reflect
acquisition-related purchase accounting adjustments, including adjustments to
depreciation and amortization expense and certain other adjustments, together
with related income tax effects. The pro forma financial information does not
purport to be indicative of either the results of
10
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
4. ACQUISITIONS (CONTINUED)
PRO FORMA FINANCIAL DATA (CONTINUED)
operations that would have occurred if the transaction had taken place at the
beginning of the period presented or of the future results of operations.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
----------------------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C>
Net sales................................................... $1,543,977
Income from continuing operations before income taxes,
distributions on preferred securities of subsidiary trust,
minority interest, equity in earnings of affiliate and
extraordinary (loss)...................................... 67,846
Income from continuing operations before extraordinary
(loss).................................................... 15,361
Income from discontinued operations......................... 32,091
Extraordinary (loss) on early extinguishment of debt, net... (836)
Net income applicable to common stock....................... $ 46,588
==========
Net income per diluted share of common stock:
Income from continuing operations before extraordinary
(loss).................................................. $ 0.86
Income from discontinued operations....................... 1.94
Extraordinary (loss) on early extinguishment of debt,
net..................................................... (0.05)
----------
Net income per diluted share of common stock.............. $ 2.75
==========
</TABLE>
5. RESTRUCTURING ACCRUAL
ESSEX
Since the completion of the acquisition of Essex, the Company has been
involved in the consolidation and integration of manufacturing, corporate and
distribution functions of Essex into Superior. As a result, Superior initially
accrued as part of the Essex acquisition purchase price a $29.7 million
provision, which included $11.8 million of employee termination and relocation
costs, $11.9 million of facility consolidation costs, $4.4 million of management
information system project termination costs, and $1.6 million of other exit
costs. During 1999, Superior revised its estimate and, as a result, increased
the provision for employee termination and relocation costs, facility
consolidation costs, and other exit costs by $6.1 million, $0.2 million and
$1.3 million, respectively, and decreased the provision for management
information system project termination costs by $1.4 million. The net increase
to the accrual of $6.2 million was reflected as an increase in goodwill. As of
September 30, 2000, $17.1 million, $9.8 million, $3.0 million and $2.6 million
have been incurred and paid related to employee termination and relocation
costs, facility consolidation costs, management information system project
termination costs and other exit costs, respectively. The provision for employee
termination and relocation costs was primarily associated with selling, general
and administrative functions within Essex. The provision for facility
consolidation costs included both manufacturing and distribution facility
rationalization and the related costs associated with employee severance. The
restructuring resulted in the severance of approximately 1,100 employees. All
significant aspects of the plan are complete.
11
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
5. RESTRUCTURING ACCRUAL (CONTINUED)
SUPERIOR ISRAEL
During 1999, Superior's 50.2% owned Israeli subsidiary, Superior Cables
Limited ("Superior Israel"), recorded a $1.3 million restructuring charge, which
included a provision for the consolidation of manufacturing facilities. As of
September 30, 2000, $1.3 million has been incurred and paid. The restructuring
actions eliminated approximately 35 positions, most of which were manufacturing
related employees. All aspects of the restructuring plan are complete.
During the three months ended September 30, 2000, Superior Israel recorded a
$1.8 million restructuring charge for further consolidation of manufacturing
facilities. The restructuring actions will result in the elimination of
approximately 107 positions, most of which are manufacturing related employees.
All aspects of the restructuring plan are expected to be completed by March
2001.
6. EARNINGS PER SHARE
The computation of basic and diluted earnings per share for the three and
nine months ended September 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------------
2000 1999
------------------------------- -------------------------------
NET PER SHARE NET PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
-------- -------- --------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations........................ $(3,031) $ 4,484
Less: preferred stock dividends..... (10) (9)
------- -------
Basic earnings (loss) per common
share from continuing
operations........................ (3,041) 14,676 $(0.21) 4,475 14,810 $ 0.30
====== ======
Dilutive impact of stock options,
warrants and grants............... -- -- -- 1,462
Dilution in subsidiary and affiliate
earnings from common stock
equivalents....................... (1) -- (427) --
Assumed conversion of preferred
stock............................. -- -- 9 50
------- ------ ------- ------
Diluted earnings (loss) per common
share from continuing
operations........................ $(3,042) 14,676 $(0.21) $ 4,057 16,322 $ 0.25
======= ====== ====== ======= ====== ======
</TABLE>
12
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
6. EARNINGS PER SHARE (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-----------------------------------------------------------------
2000 1999
------------------------------- -------------------------------
NET PER SHARE NET PER SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
-------- -------- --------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations........................ $ (347) $16,045
Less: preferred stock dividends..... (37) (28)
------- -------
Basic earnings (loss) per common
share from continuing
operations........................ (384) 14,859 $(0.03) 16,017 15,090 $ 1.06
====== ======
Dilutive impact of stock options,
warrants and grants............... -- -- -- 1,432
Dilution in subsidiary and affiliate
earnings from common stock
equivalents....................... (72) -- (1,107) --
Assumed conversion of preferred
stock............................. -- -- 28 50
------- ------ ------ ------- ------
Diluted earnings (loss) per common
share from continuing
operations........................ $ (456) 14,859 $(0.03) $14,938 16,572 $ 0.90
======= ====== ====== ======= ====== ======
</TABLE>
The Company has excluded from the diluted earnings per share calculation the
assumed conversion of Superior's Trust Convertible Preferred Securities as the
impact would be anti-dilutive.
7. NONRECURRING AND UNUSUAL CHARGES
The Company incurred nonrecurring and unusual charges of $3.9 million and
$12.7 million during the three and nine month periods ended September 30, 2000,
respectively. These charges related principally to the close down of plants,
consolidation of production capacity and related costs in Superior's building
wire (Electrical) operations and in the Company's Superior Israel operations.
Such costs included relocation of equipment, training of new employees and
production inefficiencies associated with the consolidation. The Company
incurred nonrecurring and unusual charges of $4.6 million during the nine month
period ended September 30, 1999, which were primarily associated with the
evaluation and termination of a management information system project at Essex.
8. BUSINESS SEGMENTS
The Company's reportable segments are strategic businesses that offer
different products and services to different customers. These include Superior's
communications, OEM and electrical segments. The communications segment includes
(i) outside plant wire and cable for voice and data transmission in the local
loop portion of the telecommunications infrastructure and (ii) datacom or
premise wire and cable for use within homes and offices for local area networks,
Internet connectivity and other applications. The OEM segment includes magnet
wire and related products. The electrical segment includes building and
industrial wire and cable, and automotive wire.
13
<PAGE>
THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2000
(UNAUDITED)
8. BUSINESS SEGMENTS (CONTINUED)
The Company evaluates segment performance based on a number of factors, with
operating income being the most critical. Intersegment sales are generally
recorded at cost, are not significant and, therefore, have been eliminated
below.
Operating results for each of the Company's three reportable segments are
presented below. Corporate and other items shown below are provided to reconcile
to the Company's condensed consolidated statements of operations and balance
sheets.
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS ENDED
ENDED SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------------
2000 1999 2000 1999
-------- -------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales:
Communications......................... $214,127 $182,743 $ 637,761 $ 574,629
OEM.................................... 150,206 154,176 468,609 447,358
Electrical............................. 139,984 185,531 441,056 521,990
-------- -------- ---------- ----------
$504,317 $522,450 $1,547,426 $1,543,977
======== ======== ========== ==========
Operating income (loss):
Communications......................... $ 29,158 $ 32,029 $ 95,128 $ 104,671
OEM.................................... 16,899 21,471 59,137 63,024
Electrical............................. (326) 10,653 7,816 31,001
Corporate and other.................... (6,339) (6,108) (20,111) (20,900)
Amortization of goodwill............... (5,293) (5,201) (15,774) (14,531)
Nonrecurring and unusual charges....... (3,915) -- (12,727) (4,552)
-------- -------- ---------- ----------
$ 30,184 $ 52,844 $ 113,469 $ 158,713
======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
<S> <C> <C>
Total assets:
Communications............................................ $ 558,982 $ 510,537
OEM....................................................... 304,730 274,103
Electrical................................................ 289,448 323,154
Corporate and other (including goodwill).................. 999,034 1,075,835
---------- ----------
$2,152,194 $2,183,629
========== ==========
</TABLE>
14
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Alpine Group, Inc. (together with its subsidiaries, unless the context
otherwise requires, "Alpine" or the "Company") is an industrial holding company
with investments in three industrial manufacturing companies.
SUPERIOR TELECOM INC.
Alpine holds a 51.7% common equity interest in its consolidated subsidiary,
Superior TeleCom Inc. (together with its subsidiaries, unless the context
otherwise requires, "Superior"), whose balance sheet accounts and results of
operations are consolidated with the financial statements of Alpine.
Superior manufactures a broad portfolio of wire and cable products grouped
into the following primary industry segments: (i) communications, (ii) original
equipment manufacturer ("OEM") and (iii) electrical. The Communications Group
includes communications wire and cable products sold to telephone companies,
distributors and systems integrators, principally in North America. In addition,
included within the Communications Group is Superior's 50.2% owned Israeli
subsidiary, Superior Cables Limited ("Superior Israel"), which manufactures a
range of wire and cable products in Israel, including communications cable,
power cable and other industrial and electronic wire and cable products. The OEM
Group includes magnet wire and accessory products for motors, transformers and
electrical controls sold primarily to OEMs. The Electrical Group includes
building and industrial wire for applications in commercial and residential
construction and industrial facilities, and to a lesser degree, automotive and
specialty wiring assemblies for automobiles and trucks. Industry segment
financial data for Superior's principal industry segments is included in Note 8
to the accompanying condensed consolidated financial statements.
Copper is one of the principal raw materials used in Superior's wire and
cable product manufacturing. Fluctuations in the price of copper do affect per
unit product pricing and related revenues. However, the cost of copper has not
had a material impact on profitability as Superior, in most cases, has the
ability to adjust prices billed for its products to properly match the copper
cost component of its inventory shipped.
POLYVISION CORPORATION
Alpine holds a 48% common equity interest and $19.8 million of convertible
preferred stock in its unconsolidated affiliate, PolyVision Corporation
("PolyVision"), a global manufacturer of visual communications and related
products for the education/office markets, menus and merchandising boards for
food service and banking institutions, and high performance wall systems used in
the education, transportation and select architectural markets.
Alpine currently accounts for its investment in PolyVision under the equity
method of accounting resulting in recognition of Alpine's proportionate share of
PolyVision's earnings as a one-line item within the statement of operations.
DISCONTINUED OPERATIONS/COOKSON GROUP PLC
On August 6, 1999, Alpine completed the sale of its subsidiary, Premier
Refractories International Inc. ("Premier"), to Cookson Group plc ("Cookson").
The historical net operating results of Premier have been classified as
discontinued operations within the 1999 consolidated financial statements.
The sale of Premier was effected through the merger of Premier with a
wholly-owned subsidiary of Cookson. In connection with the transaction, Cookson
assumed all of Premier's existing indebtedness,
15
<PAGE>
issued to Alpine approximately 32.3 million ordinary shares of Cookson and paid
to Alpine $15.6 million in cash. Immediately prior to the sale of Premier,
Alpine acquired the 16.6% minority equity interest in Premier for approximately
$31.1 million in cash.
Alpine's current ownership of Cookson ordinary shares approximates 4%, with
such investment accounted for as an available for sale investment with
unrealized holding gains and losses reflected as a component of other
comprehensive income. Dividends paid on the Cookson ordinary shares are
recognized as other income in the statement of operations.
RESULTS OF OPERATIONS--THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AS
COMPARED TO THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1999
Sales for the quarter ended September 30, 2000 were $504.3 million, a
decrease of 3.5% as compared to sales of $522.5 million for the quarter ended
September 30, 1999. Adjusted for a constant cost of copper, the sales decline in
the September 2000 quarter as compared to the September 1999 quarter was
approximately 7.5%. The reduction in copper-adjusted sales for the
September 30, 2000 quarter was due to lower sales in Superior's Electrical and
OEM Groups partially offset by comparative sales growth in Superior's
Communications Group.
Sales for Superior's Communications Group for the September 30, 2000 quarter
were $214.1 million, an increase of 13.2% on a copper-adjusted basis over the
September 30, 1999 quarter. Sales growth in the current quarter as compared to
the prior year period was due to a 90.8% increase in sales of broadband products
(which include fiber optic, copper premise and composite cables), with such
product line reaching an annualized revenue rate of approximately
$170.0 million. Sales growth in this product line was the result of strong
industry demand trends as well as market share gains attributable to recent
capacity additions, new product introductions and broadened marketing and sales
activities. September 30, 2000 quarterly sales of copper outside plant (OSP)
cables, which are used principally by telephone companies in the local loop
segment of the telephony network, were approximately equivalent to copper-
adjusted sales for the prior year September quarter despite a comparative
decline in the current quarter associated with the loss of business under a
major customer contract. This volume decline was offset by overall industry
demand and increased sales in the distributor and international market.
Sales for Superior's OEM Group were $150.2 million for the quarter ended
September 30, 2000, reflecting a copper-adjusted decline of 6.2% as compared to
the September 30, 1999 quarter. The current quarter comparative sales decline
reflected softening demand for magnet wire from Superior's major OEM customers
due principally to industry-wide economic slowdown, particularly in the
construction, refrigeration, consumer durables and automotive sectors. The
Company believes that the impact of end market demand slowdown was exacerbated
by inventory reductions at several major customers.
Sales for Superior's Electrical Group were $140.0 million for the
September 30, 2000 quarter, representing a decline of 29.3% on a copper-adjusted
basis as compared to the quarter ended September 30, 1999. Sales volume in the
Electrical Group was impacted by lower available productive capacity, a
condition which has existed throughout 2000 as Superior has been in the process
of relocating and consolidating manufacturing equipment and balancing capacity
in its building wire operations. The Company does anticipate a modest increase
in production capacity as it completes its equipment relocation and capacity
consolidation efforts and, subject to end market demand, improving sales volume
levels.
Sales for the nine month period ended September 30, 2000 were $1.547
billion, as compared to sales of $1.544 billion for the nine month period ended
September 30, 1999. Adjusted for a constant cost of copper, sales declined in
the September 30, 2000 nine month period by 5.3% as compared to the prior year
nine month period. The comparative reduction in copper-adjusted sales was due to
a
16
<PAGE>
decline of 22.5% in Superior's Electrical Group sales partially offset by an
increase of 6.7% in Superior's Communications Group sales.
Gross profit for the September 30, 2000 quarter was $80.3 million, a decline
of $16.1 million as compared to gross profit of $96.4 million for the quarter
ended September 30, 1999. The gross profit percentage in the September 2000
quarter was 15.9%, a decline on a copper-adjusted basis of 170 basis points, as
compared to the prior year September quarter. The decline in gross profit and
gross profit percentage was principally attributable to Superior's Electrical
Group, where comparative pricing pressures, lower sales and higher per unit
production costs negatively impacted the gross profit and margin. Also impacting
gross profit in all business segments during the quarter were increased raw
material, freight and fuel costs, most of which were not recoverable through
price adjustments due to competitive market factors.
Gross profit for the nine month period ended September 30, 2000 was
$264.6 million, a decline of 11.2% as compared to the prior year nine month
period. The comparative reduction in gross profit was principally the result of
lower sales and lower gross profit margins in Superior's Electrical Group
associated with the aforementioned productivity and production efficiency
issues.
Selling, general and administrative expense ("SG&A expense") for the
September 30, 2000 quarter was $40.9 million, an increase of 6.7% as compared to
SG&A expense of $38.4 million for the September 30, 1999 quarter, with such
increase reflecting higher selling and marketing expenses to support the sales
growth of Superior's Communications Group broadband product line, higher SG&A
expense at Superior Israel resulting from acquisitions completed in late 1999
and an increase in corporate non-cash compensation expense charges. For the nine
months ended September 30, 2000, SG&A expense increased 2.1% to $122.7 million,
as compared to the prior year nine month period ended September 30, 1999. SG&A
expense for the September 30, 2000 nine month period included a comparative
decline attributable to the impact of Superior's corporate restructuring and
overhead expense reductions initiated principally in the second quarter of 1999,
offset by the aforementioned higher expense levels in the September 30, 2000
quarter.
Superior incurred nonrecurring and unusual charges of $3.9 million and
$12.7 million for the three and nine month periods ended September 30, 2000,
respectively. The current period nonrecurring and unusual charges related
principally to the close down of plants, consolidation of production capacity
and related costs in Superior's building wire (Electrical) and Superior Israel
operations. For the nine month period ended September 30, 1999, Superior
incurred nonrecurring and unusual charges of $4.6 million, which were primarily
associated with the integration of the acquired Essex operations.
Operating income for the September 30, 2000 quarter was $30.2 million.
Before nonrecurring and unusual charges, operating income was $34.1 million, a
decline of $18.7 million as compared to the September 30, 1999 quarter. For the
nine month period ended September 30, 2000, operating income (before
nonrecurring and unusual charges) was $126.2 million, a decline of
$37.1 million as compared to the nine month period ended September 30, 1999. The
comparative decline in operating income for the current year three and nine
month periods was principally attributable to lower sales and margins in
Superior's Electrical Group and the impact of increased raw material and other
costs impacting all of the Company's business segments.
Interest expense for the three and nine month periods ended September 30,
2000 was $34.6 million and $102.6 million, respectively, representing an
increase of $3.0 million and $9.7 million, respectively, over the prior year
three and nine month periods. The increase in interest expense was the result of
higher short-term (LIBOR) interest rates in the current period and, to a lesser
degree, higher borrowings at Superior Israel associated with acquisition related
debt.
17
<PAGE>
Loss on sale of securities for both the three and nine month periods ended
September 30, 2000 was $1.6 million ($1.0 million or $0.06 per diluted share on
an after tax basis) and was due to the liquidation of 4.9 million shares of the
Company's common equity investment in Cookson.
Other income amounted to $2.3 million for the three month period ended
September 30, 2000, with such income being primarily due to currency translation
gains at Superior Israel on certain debt linked to non-functional currencies
(principally Euro-linked) as well as gains on sale of certain fixed assets and
investments. For the nine month period ended September 30, 2000 other income was
$5.5 million including $2.7 million in dividend income from the Company's common
equity investment in Cookson. Other expense amounted to $2.7 million for the
three month period ended September 30, 1999, with such expense being primarily
due to currency translation losses at Superior Israel. For the nine month period
ended September 30, 1999, other income was $2.9 million and included currency
gains at Superior Israel as well as investment income earned on certain
corporate managed fund accounts.
For the three and nine month periods ended September 30, 2000 the Company
recorded minority interest in net losses of subsidiary of $2.0 million and
$0.5 million, respectively, reflecting the minority common equity interest in
the losses incurred by Superior Israel net of the minority common equity
interest in the earnings of Superior for such periods. The Company reflected
similar charges for the prior year three and nine month periods totaling
$4.1 million and $18.4 million, respectively.
Equity in earnings of affiliate represents accrued dividend income earned on
Alpine's investment in PolyVision preferred stock and Alpine's proportionate
common equity interest in the net earnings of PolyVision for the applicable
reporting periods. Total income recorded from the Company's investment in
PolyVision amounted to $1.6 million and $3.2 million respectively, for the three
and nine month periods ended September 30, 2000.
The Company incurred a loss before nonrecurring and unusual charges for the
quarter ended September 30, 2000 of $2.1 million or $0.15 per diluted share
which included a $0.06 per diluted share after tax loss on sale of securities.
For the quarter ended September 30, 1999, income from continuing operations
before nonrecurring and unusual charges was $4.5 million or $0.25 per diluted
share. For the nine month period ended September 30, 2000, income before
nonrecurring and unusual charges was $3.2 million or $0.21 per diluted share as
compared to income from continuing operations before nonrecurring, unusual and
extraordinary charges of $17.3 million or $0.98 per diluted share for the nine
months ended September 30, 1999. The reduction in net income in the current year
three and nine month periods was principally due to lower operating income in
Superior's Electrical Group, net losses incurred in Superior's 50.2% owned
subsidiary, Superior Israel, and higher interest charges related to higher
short-term (LIBOR) interest rates.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
For the nine months ended September 30, 2000, the Company generated
$58.3 million in cash flow from continuing operating activities. Cash flows from
operating activities consisted of $50.2 million in operating cash flow (net loss
plus non-cash charges) and $8.1 million in cash flow provided by net working
capital reductions, including a $21.8 million inventory reduction (7.0%
reduction) resulting from Superior's efforts to lower overall inventory levels
and increase inventory turns, particularly in its building wire operations. Cash
used for investing activities amounted to $61.8 million and consisted
principally of capital expenditures and pre-arranged long-term loans ("Superior
Israel Customer Loans") made to one of Superior Israel's principal customers
partly offset by cash received from the sale of assets, including $17.3 million
in cash proceeds from the sale of 4.9 million Cookson ordinary shares. Cash used
for financing activities amounted to $7.9 million. The major components were a
net increase of borrowings of Superior Israel of $29.7 million (including $25.5
million related to Superior
18
<PAGE>
Israel Customer Loans), other debt reductions of $34.0 million, and treasury
stock repurchases of $4.9 million.
SUPERIOR TELECOM
Superior finances its operating activities and other capital requirements
(principally capital expenditures) from operating cash flow and funding
availability under Superior's $1.15 billion credit agreement (the "Superior
Credit Agreement") and Superior Israel's credit facilities (the "Israel Credit
Agreements"). Total undrawn funding availability under the Superior Credit
Agreement and the Israel Credit Agreements amounted to $153.5 million and
$11.2 million, respectively, at September 30, 2000.
In addition to financing provided by Superior's credit facilities, Superior
has financing availability under a receivable securitization program providing
for up to $160.0 million in short-term financing (subject to the level of
contractually defined eligible receivables) through the issuance of secured
commercial paper. At September 30, 2000, $159.8 million was outstanding under
this program.
Superior's principal debt service commitments for the next 12 months amount
to $88.8 million and capital expenditures are expected to approximate
$40.0-$45.0 million. Management anticipates that Superior will continue to
generate positive cash flows from its operating activities over the next twelve
months and that such operating cash flows plus excess funds available under
Superior's credit facilities will be sufficient to fund its aforementioned debt
service obligations and its estimated capital expenditure levels.
ALPINE CORPORATE
As of September 30, 2000, Alpine had corporate cash, cash equivalents and
marketable securities (excluding its investments in Superior, PolyVision and
Cookson) of approximately $8.5 million. Alpine also owns approximately
10.5 million common shares (representing 51.7% common share ownership) of
Superior (NYSE:SUT) with a market value on November 7, 2000 of approximately
$51.0 million. Additionally, at November 7, 2000, Alpine's investments in
Cookson ordinary shares (FTSE: CKSN.L) and PolyVision common stock (AMEX: PLI)
and preferred stock amounted to approximately $81.1 million and $33.0 million,
respectively.
Alpine's primary commitments over the next twelve month period include
funding of corporate overhead expenses and interest payments on approximately
$78.0 million in Alpine corporate debt. Total annual funding for Alpine
corporate overhead and interest expense is expected to approximate
$13.0-$14.0 million.
Alpine has a corporate credit facility providing for borrowings up to $100
million (subject to collateral availability). As of September 30, 2000,
$65.1 million was outstanding under this facility. The Company has pledged
substantially all of its common share and ordinary share ownership in Superior
and Cookson, respectively, as security for this credit facility.
For the next 12 month period, Alpine expects to fund its aforementioned
annual commitments from allowable management fees payable by Superior to Alpine,
cash dividends from Cookson and from interest income, with any shortfall funded
from existing corporate cash, cash equivalents and marketable securities
reserves.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2000, the Emerging Issues Task Force ("EITF") reached a
consensus on EITF Issue 00-10--ACCOUNTING FOR SHIPPING AND HANDLING FEES AND
COSTS. The EITF consensus establishes guidance on the income statement
classification of amounts charged to customers for shipping and handling, as
well as for costs incurred related to shipping and handling. The EITF concluded
that amounts billed to a customer in a sale transaction related to shipping and
handling should be classified as revenue. The
19
<PAGE>
EITF consensus also requires an entity to disclose the amount of shipping and
handling costs and the line item on the income statement which includes such
costs if the costs are not included in cost of sales and are significant. This
consensus is effective for the fourth quarter of 2000 and requires
reclassification of prior period financial statements presented for comparative
purposes to comply with the classification guidelines of the consensus. The
Company anticipates that the changes in classification in the statement of
operations will not be material.
In December 1999, the Securities and Exchange Commission ("SEC") released
Staff Accounting Bulletin No. 101 REVENUE RECOGNITION IN FINANCIAL STATEMENTS
("SAB 101") which provides the SEC's views regarding revenue recognition in
financial statements, including income statement presentation and disclosure.
SAB 101 clarifies that revenue generally is realized or realizable when
pervasive evidence of an arrangement exists, delivery has occurred or services
have been rendered, the seller's price to the buyer is fixed or determinable and
collectibility is reasonably assured. The SEC subsequently released SAB 101B
deferring implementation of SAB 101 to the fourth quarter of 2000. The Company
is currently in compliance with the provisions of SAB 101.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk primarily relates to interest rates on
long-term debt. There have been no material changes in market risk since
December 31, 1999.
------------------------
EXCEPT FOR THE HISTORICAL INFORMATION HEREIN, THE MATTERS DISCUSSED IN THIS
FORM 10-Q INCLUDE FORWARD-LOOKING STATEMENTS THAT MAY INVOLVE A NUMBER OF RISKS
AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY SIGNIFICANTLY BASED ON A NUMBER OF
FACTORS, INCLUDING, BUT NOT LIMITED TO, RISKS IN PRODUCT AND TECHNOLOGY
DEVELOPMENT, MARKET ACCEPTANCE OF NEW PRODUCTS AND CONTINUING PRODUCT DEMAND,
PREDICTION AND TIMING OF CUSTOMER ORDERS, THE IMPACT OF COMPETITIVE PRODUCTS AND
PRICING, CHANGING ECONOMIC CONDITIONS, INCLUDING CHANGES IN SHORT-TERM INTEREST
RATES AND FOREIGN EXCHANGE RATES, AND OTHER RISK FACTORS DETAILED IN THE
COMPANY'S MOST RECENT FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
20
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
10.1*Amendment No. 3, dated as of May 1, 1999, to the Services Agreement
between The Alpine Group, Inc. and Superior TeleCom Inc.
27* Financial Data Schedule
(B) REPORTS ON FORM 8-K
None.
------------------------
* Filed herewith
21
<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.
<TABLE>
<S> <C> <C>
THE ALPINE GROUP, INC.
By: /s/ DAVID S. ALDRIDGE
-----------------------------------------
David S. Aldridge
CHIEF FINANCIAL OFFICER AND TREASURER
(DULY AUTHORIZED OFFICER AND PRINCIPAL
Date: November 14, 2000 FINANCIAL AND ACCOUNTING OFFICER)
</TABLE>
22
