<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 22, 1997
REGISTRATION NO. 333-22961
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
GENERAL CABLE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 3357 06-1398235
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
4 TESSENEER DRIVE
HIGHLAND HEIGHTS, KENTUCKY 41076
(606) 572-8000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
STEPHEN RABINOWITZ
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
GENERAL CABLE CORPORATION
4 TESSENEER DRIVE
HIGHLAND HEIGHTS, KENTUCKY 41076
(606) 572-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ELLEN J. ODONER, ESQ. GEOFFREY E. LIEBMANN, ESQ.
WEIL, GOTSHAL & MANGES LLP CAHILL GORDON & REINDEL
767 FIFTH AVENUE 80 PINE STREET
NEW YORK, NEW YORK 10153 NEW YORK, NEW YORK 10005
(212) 310-8000 (212) 701-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an underwritten public offering in the United States and
Canada of 13,520,000 shares (the 'U.S. Prospectus'), and one to be used in a
concurrent underwritten public offering outside the United States and Canada of
3,380,000 shares (the 'International Prospectus'). The two prospectuses are
identical except for the front and back cover pages. The form of U.S. Prospectus
is included herein and is followed by the alternate pages to be used in the
International Prospectus. Each of the alternate pages for the International
Prospectus included herein is labeled 'International Prospectus -- Alternate
Page.' Final forms of each Prospectus will be filed with the Securities and
Exchange Commission under Rule 424(b) under the Securities Act of 1933.
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 22, 1997
16,900,000 SHARES
[LOGO]
COMMON STOCK
All of the 16,900,000 shares of common stock, par value $.01 per share (the
'Common Stock'), of General Cable Corporation ('General Cable' or the 'Company')
offered hereby are being sold by Wassall Netherlands Cable B.V., a Netherlands
corporation (the 'Selling Stockholder'), in concurrent offerings in the United
States and Canada and outside the United States and Canada (collectively, the
'Offerings'). Of such shares, 13,520,000 are initially being offered in the
United States and Canada by the U.S. Underwriters (the 'United States Offering')
and 3,380,000 are initially being offered outside the United States and Canada
by the International Underwriters (the 'International Offering'). The per share
price to the public and per share underwriting discounts and commissions for the
Offerings will be identical. See 'Underwriting.' The Company will not receive
any of the proceeds from the sale of the shares offered hereby.
Prior to the Offerings, the Company has been a wholly-owned subsidiary of
the Selling Stockholder. Following consummation of the Offerings, the Selling
Stockholder will own approximately 30% of the outstanding shares of Common Stock
(or approximately 20% of the outstanding shares of Common Stock if the U.S.
Underwriters' over-allotment option is exercised in full).
Prior to the Offerings there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price of the
Common Stock will be between $21.00 and $24.00 per share. See 'Underwriting' for
the factors to be considered in determining the initial public offering price.
The Common Stock has been approved for listing on the New York Stock Exchange
(the 'NYSE'), subject to official notice of issuance, under the symbol 'GCN'.
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE 'RISK FACTORS' ON PAGES 7 - 11.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Selling
Public Commissions* Stockholder`D'
<S> <C> <C> <C>
Per Share....................................... $ $ $
Total`DD'....................................... $ $ $
</TABLE>
- ------------------------
* The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See 'Underwriting.'
`D' Before deducting expenses of the Offerings estimated to be $ , all of
which are payable by the Selling Stockholder.
`DD' The Selling Stockholder has granted the U.S. Underwriters a 30-day option
to purchase up to 2,535,000 additional shares of Common Stock on the same
terms per share solely to cover over-allotments, if any. If such option is
exercised in full, the total price to public will be $ , the total
underwriting discounts and commissions will be $ and the total
proceeds to the Selling Stockholder will be $ . See
'Underwriting.'
------------------------
The Common Stock is being offered by the Underwriters as set forth under
'Underwriting' herein. It is expected that delivery of the Common Stock offered
hereby will be made at the offices of Dillon, Read & Co. Inc., New York, New
York, or through the facilities of The Depository Trust Company on or about
, 1997, against payment therefor. The U.S. Underwriters include:
DILLON, READ & CO. INC. MERRILL LYNCH & CO.
The date of this Prospectus is , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
<PAGE>
[Art work to be inserted]
------------------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZATION, SYNDICATE COVERING TRANSACTIONS AND
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
'UNDERWRITING.'
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements (and
the notes related thereto) included elsewhere in this Prospectus. Unless the
context otherwise requires or as otherwise specified herein, (i) all references
in this Prospectus to 'General Cable' or the 'Company' are to General Cable
Corporation and its consolidated subsidiaries and the Related Companies (as
defined herein); (ii) all information in this Prospectus assumes that the U.S.
Underwriters' over-allotment option is not exercised; and (iii) the number of
shares of Common Stock outstanding after the Offerings assumes the issuance,
pursuant to the Company's Long-Term Stock Incentive Plan (the 'Stock Incentive
Plan'), of $5.6 million of restricted stock (or 250,000 shares assuming an
initial public offering price of $22.50) expected to be issued to the Company's
executive officers and other key employees upon consummation of the Offerings
(the 'Restricted Stock Issuance').
THE COMPANY
General Cable is a leader in the development, design, manufacture,
marketing and distribution of copper wire and cable products for the
communications and electrical markets. Copper wire and cable is the most widely
used medium for the transmission of voice, data, video and control signals and
electrical current. The Company believes that several factors, including
technological innovations and the size of the installed base of copper cable,
will preserve copper's position as the medium of choice for these applications.
Based on publicly available data and internal estimates, the Company believes
that it has the most diversified product line and channels of distribution in
the U.S. wire and cable industry. General Cable's products for the
communications markets include plastic insulated cable ('PIC'), outside service
wire, high-bandwidth twisted pair data cable, multi-conductor/multi-pair
shielded and unshielded cable, coaxial cable and fiber optic cable. General
Cable's products for the electrical markets include building wire, portable cord
and cordsets for construction, industrial and consumer applications, and
automotive wire and cable. The Company sells to more than 8,500 customers,
including electrical, data communications and electronic distribution companies,
automotive, hardware and home center retail chains, and telecommunications
companies and other end users.
Since its acquisition by a subsidiary of Wassall PLC ('Wassall') in June
1994 (the 'Acquisition'), General Cable has benefitted from a significant
reorganization and capital investment program. Net sales have grown from $794.2
million in 1993 to $1,043.6 million in 1996, while operating profit has grown
from $2.3 million to $78.5 million over the same period. General Cable believes
that this program has improved the Company's market position and further
enhanced the following competitive strengths of the Company:
Breadth of product line. General Cable sells over 11,000 products, which it
believes represents the most diversified product line of any U.S. wire and cable
manufacturer. As a result, General Cable is able to offer its customers a single
source for most of their wire and cable requirements. In addition, the Company
believes that it benefits from certain economies of scale in purchasing,
manufacturing, sales, distribution, and engineering and development.
Brand recognition. General Cable has many well-established brand names,
including Carol'r', Romex'r' and Vutron'r'. According to the 1995-1996 brand
preference survey by Electrical Construction & Maintenance, an industry trade
publication, General Cable has the highest-ranked brands of building wire in the
U.S. among electrical contractors and operators of plants and facilities and the
highest ranked brands of heavy-duty portable cable and cord in the U.S. among
electrical contractors, operators of plants and facilities and engineering
firms.
Distribution strength. General Cable's network of 17 U.S. manufacturing
facilities and five regional distribution centers allows the Company to serve
customers efficiently throughout the U.S. General Cable's products are sold by
its direct sales force and commissioned agents through multiple channels,
including electrical, data communications and electronic distribution companies,
and automotive, hardware and home center retail chains, and directly to end
users in the industrial, entertainment and communications markets. The Company
believes that its combination of retail and wholesale channels has enabled it to
develop broad-based technical and marketing expertise, which contributes to
additional sales volume and market penetration.
Customer selection, sales and service. General Cable has developed supply
relationships with preferred customers who have a favorable combination of
volume, product mix, business strategy and industry position. For example, the
Company believes it is a leading supplier of wire and cable to AutoZone, the
largest retailer of automotive aftermarket parts in the United States; Graybar
Electric, one of the largest electrical and communications distributors in the
United States; W.W. Grainger, a
3
<PAGE>
<PAGE>
leading distributor of maintenance, repair and operating (MRO) supplies and
related information; U S WEST, Inc. ('U S WEST'), a Regional Bell Operating
Company ('RBOC'); ACE Hardware, a leading retail cooperative; Milwaukee Electric
Tool Corporation, a leading manufacturer of power tools; and AMP, a leading
supplier of data networking systems. The Company serves these and other
customers with a number of service and support programs, including Electronic
Data Interchange ('EDI') with over 60 of the Company's largest customers and
innovative point-of-sale merchandising display systems.
Improved operating efficiency. Since the Acquisition, General Cable has
taken a number of initiatives designed to improve its profitability and
productivity, including investment in new production equipment and information
systems; rationalization of manufacturing facilities and product lines;
consolidation of distribution locations; product redesign; improved materials
procurement and usage; and the establishment of business teams and other
organizational changes. The Company believes that these initiatives have
generated significant productivity improvements since the Acquisition and that
further productivity improvements can be achieved.
THE REFINANCING
Concurrently with consummation of the Offerings, General Cable intends to
make an initial borrowing of approximately $271.8 million under a new $350.0
million credit facility to be entered into with a syndicate of banks (the 'New
Credit Facility'). The Company intends to use the proceeds of such borrowing to
(i) repay all of its revolving bank debt (which is anticipated to be
approximately $26.1 million on the date of the consummation of the Offerings);
(ii) repay all intercompany debt and advances owed to Wassall and its
subsidiaries (which, together with accrued interest, are anticipated to amount
to approximately $200.7 million on the date of the consummation of the
Offerings); (iii) pay $42.6 million as a dividend to the Selling Stockholder
(the 'Selling Stockholder Dividend'); (iv) pay $2.0 million for the purchase of
two related companies, Carol Cable Europe Ltd. and Carol Cable Ltd. (the
'Related Companies'), from Wassall; and (v) pay estimated expenses of the
Refinancing of $0.4 million. The refinancing of bank debt and intercompany debt
and advances, Selling Stockholder Dividend and purchase of the Related Companies
are referred to herein collectively as the 'Refinancing.' See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources' and 'Certain Relationships and
Related Transactions.'
THE OFFERINGS
<TABLE>
<S> <C>
Common Stock offered by the Selling Stockholder:
United States Offering..................... 13,520,000 shares
International Offering..................... 3,380,000 shares
-----------------
Total................................. 16,900,000 shares
-----------------
-----------------
</TABLE>
<TABLE>
<S> <C>
Common Stock to be outstanding after the
Offerings..................................... 24,500,000 shares(1)
Use of Proceeds................................. The Company will not receive any proceeds from the sale of the
shares of Common Stock offered hereby.
NYSE symbol..................................... GCN
</TABLE>
- ------------
(1) Reflects the Restricted Stock Issuance. Excludes an aggregate of 1,103,750
shares of Common Stock to be reserved for issuance upon the exercise of
options expected to be granted at the initial public offering price to the
Company's executive officers and key employees upon consummation of the
Offerings pursuant to the Stock Incentive Plan. See 'Executive
Compensation -- Stock Incentive Plan.'
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should carefully
consider all information set forth in this Prospectus, including the information
set forth in 'Risk Factors' on pages 7-11, prior to making an investment
decision.
4
<PAGE>
<PAGE>
SUMMARY FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AND CERTAIN OTHER DATA)
The summary financial data set forth in the following table have been
derived from the combined financial statements of the Company and the
consolidated financial statements of the Predecessor (as defined herein). As a
result of the Acquisition, which was accounted for as a purchase, the Company's
results of operations, cash flows and financial position for periods after June
8, 1994 are not comparable to prior periods. Certain reclassifications have been
made to the financial data of the Predecessor to conform to the presentation of
such data by the Company.
The pro forma statement of operations data give pro forma effect to the
Refinancing as if it had occurred on January 1, 1996. The pro forma balance
sheet data give pro forma effect to the Refinancing and the Restricted Stock
Issuance as if they had occurred on March 31, 1997. The pro forma financial
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. Such pro forma data are for informational
purposes only and may not be indicative of the results of operations or
financial position of the Company had the Refinancing and the Restricted Stock
Issuance actually occurred on such dates.
The following summary financial data should be read in conjunction with
'Selected Financial Data,' 'Unaudited Pro Forma Financial Data,' 'Management's
Discussion and Analysis of Financial Condition and Results of Operations,' the
combined financial statements of the Company and related notes thereto and the
consolidated financial statements of the Predecessor and related notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
------------ -------------------------------------------------------------
YEAR ENDED THREE MONTHS ENDED
JANUARY 1 TO JUNE 9 TO DECEMBER 31, MARCH 31,
JUNE 8, DECEMBER 31, ---------------------- -------------------
1994 1994 1995 1996 1996 1997
------------ ------------ -------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $355.0 $543.3 $1,061.3 $1,043.6 $258.0 $251.0
Gross profit.................................. 44.2 73.4 138.7 188.3 36.0 48.8
Operating income.............................. 1.1 20.3 44.5 78.5 8.9 19.2
Interest expense, net......................... (12.1) (11.0) (20.7) (19.6) (5.2) (4.9)
Earnings (loss) before income taxes........... (11.0) 9.3 23.8 58.9 3.7 14.3
Income tax benefit (provision)................ .1 (6.5) 1.5(1) (19.7) (1.2) (5.7)
Net income (loss)............................. (10.9) 2.8 25.3 39.2 2.5 8.6
Earnings per share(2)......................... $ .12 $ 1.04 $ 1.62 $ .10 $ .35
Weighted average number of shares
outstanding(2).............................. 24.3 24.3 24.3 24.3 24.3
PRO FORMA STATEMENT OF OPERATIONS DATA:
Operating income.............................. $ 78.5 $ 19.2
Interest expense, net(3)...................... (14.1) (3.4)
Net income.................................... 42.5 9.5
Earnings per share(2)......................... $ 1.75 $ .39
OTHER DATA:
Average daily New York Commodity Exchange
('COMEX') price per pound of copper
cathode..................................... $ 0.91 $ 1.20(4) $ 1.35 $ 1.06 $ 1.18 $ 1.11
Capital expenditures.......................... $ 6.2 $ 9.1 $ 26.2 $ 30.0 $ 5.6 $ 4.0
Depreciation and amortization of fixed
assets...................................... 7.5 6.7 11.7 12.1 3.0 3.3
Number of employees (end of period)........... 4,200 4,100 3,900 4,100 3,800
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------- ---------
1994 1995 1996 1997
------------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................... $224.8 $ 234.4 $ 205.6 $214.9
Total assets.................................. 518.7 535.6 513.6 540.3
Long-term debt................................ 206.5 205.9 205.1 204.9
Shareholders' equity.......................... 97.6 122.9 107.4(5) 115.8
PRO FORMA BALANCE SHEET DATA:
Working capital............................... $214.9
Total assets(6)............................... 540.7
Long-term debt(7)............................. 251.6
Shareholders' equity(8)....................... 78.8
</TABLE>
(footnotes on following page)
5
<PAGE>
<PAGE>
(footnotes from previous page)
(1) At December 31, 1995, the Company recognized the full value of its net
deferred tax assets; accordingly, goodwill recorded in the Acquisition was
eliminated and the Company recognized a tax benefit of $1.7 million. See
Note 11 to combined financial statements.
(2) Earnings per share was computed based on the weighted average common shares
outstanding for each period, adjusted for a 121,250-for-1 stock split.
(3) Adjusted to reflect a net decrease in interest expense resulting from
consummation of the Refinancing. The adjustments include: (i) elimination of
interest expense to related parties of $19.6 million for 1996 and $4.8
million for the three months ended March 31, 1997 resulting from the
expected repayment of $195.8 million of intercompany long-term debt with a
weighted average interest rate of 9.9% per annum; (ii) interest expense on
the New Credit Facility of $13.7 million for 1996 and $3.3 million for the
three months ended March 31, 1997 reflecting an interest rate of 5.75% per
annum (representing a 37.5 basis point spread over the one month London
interbank offered rate ('LIBOR')) and $242.1 million of average borrowings
assumed to be outstanding during 1996 and $245.1 million of average
borrowings assumed to be outstanding during the three months ended March 31,
1997 (based upon the estimated initial borrowing of $242.4 million as of
January 1, 1996) and General Cable's actual borrowing and repayment
experience in 1996 and the three months ended March 31, 1997; and (iii)
amortization of deferred financing costs. Historical interest income in 1996
included $0.4 million of earnings on excess cash, which were assumed to have
been eliminated as a result of the Refinancing.
(4) The average daily COMEX price per pound for the full year 1994 was $1.07.
(5) After the payment of dividends totaling $55.1 million.
(6) Adjusted to reflect capitalization of estimated deferred financing costs
related to the Refinancing.
(7) Adjusted to reflect an initial borrowing under the New Credit Facility of
$267.7 million at March 31, 1997 and the use of the proceeds as follows: (i)
repayment of intercompany indebtedness of $195.8 million; (ii) repayment of
$25.2 million of outstanding bank debt; (iii) payment of $42.6 million as
the Selling Stockholder Dividend; (iv) payment of $2.0 million for the
purchase of the Related Companies; (v) repayment of $1.7 million of
intercompany advances owed by the Related Companies to Wassall; and (vi)
payment of $0.4 million of estimated expenses of the Refinancing.
(8) Adjusted to reflect (i) the Selling Stockholder Dividend of $42.6 million;
and (ii) the Restricted Stock Issuance.
6
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<PAGE>
RISK FACTORS
In addition to the other information set forth in this Prospectus,
prospective purchasers of the Common Stock offered hereby should carefully
consider the following factors before making an investment in the Common Stock.
PRICE AND OTHER COMPETITIVE FACTORS
Price competition for many of the Company's products is intense,
particularly in certain segments of the building wire and cordset markets, and
many of the Company's products are essentially functionally interchangeable with
those of competitors. A substantial portion of General Cable's sales of building
wire, including its thermoplastic-insulated temperature-resistant nylon ('THHN')
and Romex'r' products, which collectively accounted for approximately one-third
of the Company's 1996 net sales, are made to customers who purchase their
requirements on an as-needed basis. These customers typically contact several
potential suppliers and make their purchases based, at least in part, upon the
lowest quoted price. Although a favorable pricing environment for these products
existed in the second half of 1996 and the first quarter of 1997, there can be
no assurance that this pricing environment will continue.
The markets for all of General Cable's product categories are highly
competitive. Certain of the Company's competitors may have greater financial and
other resources than the Company and, among other things, may be less affected
by reductions in margins resulting from price competition. These competitors can
also be expected to continue to improve the design and performance of their
products and to introduce new products with competitive price and performance
characteristics. The Company expects that it will be required to continue to
invest in product development, productivity improvements and customer service
and support in order to compete in its markets. See ' -- Dependence on New
Products and Product Improvements; Vulnerability to Technological Change' below.
ECONOMIC CONSIDERATIONS
Many of General Cable's customers use the Company's products as components
in their own products or in projects undertaken for their customers.
Accordingly, a downturn in the business of a particular group of customers,
particularly those engaged in non-residential construction, could adversely
affect the Company's results of operations, cash flows and financial position.
Furthermore, an overall softening in the U.S. economy could adversely affect
generally all the markets General Cable serves.
CUSTOMER CONCENTRATION AND RELIANCE ON INDEPENDENT NON-EXCLUSIVE DISTRIBUTION
SYSTEM
Although General Cable sold products to approximately 8,500 customers
during 1996, approximately 60% of its net sales were generated by its 50 largest
customers, approximately 38% of its net sales were generated by its ten largest
customers and approximately 10% of its net sales were generated by its largest
customer, U S WEST, one of the RBOCs. The loss of one or more of these customers
could have a material adverse effect on the Company's results of operations,
cash flows and financial position. The Company expects that its customer
concentration will continue to increase as the Company pursues its strategy of
developing supply relationships with preferred customers.
In 1996, approximately 55% of General Cable's net sales were generated by
independent distributors and six of its ten largest customers were independent
distributors. These distributors are not contractually obligated to carry the
Company's product lines exclusively or for any significant period of time.
Therefore, these distributors may purchase products that compete with the
Company's products or cease purchasing the Company's products at any time. The
loss of one or more large distributors could have a material adverse effect on
the Company's results of operations, cash flows and financial position.
IMPACT OF COPPER PRICES
The principal raw material used by General Cable to manufacture wire and
cable products is copper. Copper accounted for approximately 43%, 50%, 44% and
45% of the Company's cost of goods sold in 1994, 1995, 1996 and the first
quarter of 1997, respectively, and the Company expects that copper will continue
to account for a significant portion of these costs in the future. The cost of
copper has
7
<PAGE>
<PAGE>
been subject to considerable volatility over the past several years, ranging
between $0.78 and $1.40 per pound in 1994, between $1.21 and $1.46 per pound in
1995, between $0.87 and $1.30 per pound in 1996 and between $1.02 and $1.20 per
pound in the first quarter of 1997. There can be no assurance that the Company
will be able to maintain a satisfactory differential between finished product
prices and copper costs or achieve acceptable gross profit margins in the future
and, if it is unable to do so, its operating results will be adversely affected.
In addition, certain of the Company's variable selling expenses are based on a
percentage of gross sales and, therefore, increase with increases in the price
of copper. Sharp increases in the price of copper could temporarily reduce
demand for the Company's products if customers decide to defer their purchases
of wire and cable products until copper prices decline. Increases in copper
prices may also have an adverse effect on the Company's working capital
position. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' and 'Business -- Raw Materials.'
DEPENDENCE ON NEW PRODUCTS AND PRODUCT IMPROVEMENTS; VULNERABILITY TO
TECHNOLOGICAL CHANGE
Many of the communications markets that General Cable serves are affected
by advances in information processing and communications capabilities which
require increased data transmission speeds and greater bandwidth. These trends
require ongoing improvements in the capabilities of wire and cable products. The
Company believes that its future success will depend in part upon its ability to
enhance existing products and to develop and manufacture new products that meet
or anticipate such changes. The failure to introduce successfully new or
enhanced products on a timely and cost-competitive basis could have an adverse
impact on the Company's results of operations, cash flows and financial
position.
The communications industry is undergoing rapid and intense technological
change and participants in this industry, including telephone companies, are
evaluating alternative technologies, such as coaxial and fiber optic cable and
wireless technologies, for certain applications. Cable television companies are
exploring opportunities to enter the telephone market through existing coaxial
cable networks. Fiber optic technology represents a potential substitute for
certain of the copper-based communications products that contributed
approximately 17% of General Cable's 1996 net sales. Although fiber optic cables
have not, to date, significantly penetrated the primary markets served by the
Company due to the high relative cost required to interface electronic and light
signals and the high cost of fiber termination and connection, a significant
decrease in the cost of fiber optic systems could make such systems superior on
a price/performance basis to copper systems. Such a significant decrease in the
cost of fiber optic systems would likely have an adverse effect on the Company.
In addition, wireless communications technology could reduce the demand for both
copper and fiber optic-based systems by reducing the need for communications
wiring.
MANUFACTURING CAPACITY
General Cable is currently operating its manufacturing facilities at high
utilization rates. In order to meet growing customer demand, the Company will
need to invest in additional manufacturing equipment. Failure to have new
equipment operational in a timely manner or shut-downs of existing capacity due
to breakdowns or other reasons could adversely affect the Company's results of
operations, cash flows and financial position.
CHANGES IN INDUSTRY STANDARDS AND REGULATORY ENVIRONMENT
General Cable, as a manufacturer and distributor of wire and cable
products, is subject to a number of industry standard-setting authorities, such
as Underwriters Laboratories ('UL'), the Telecommunications Industry Association
and the Electronics Industries Association. In addition, many of the markets
served by General Cable's products are subject to standard-setting authorities
as well as the requirements of federal, state and local regulatory authorities.
Changes in the standards and requirements imposed by such authorities could have
an adverse affect on the Company. In addition, changes in the legislative
environment, such as the recently enacted Telecommunications Reform Act of 1996,
could affect the growth and other aspects of important markets served by the
Company. It is not possible at this time to predict the impact that this
legislation, or other changes in laws or industry
8
<PAGE>
<PAGE>
standards that may be adopted in the future, could have on the Company's results
of operations, cash flows or financial position.
ENVIRONMENTAL MATTERS
General Cable is subject to federal, state, local and foreign environmental
protection laws and regulations governing its operations and the use, handling,
disposal and remediation of hazardous substances currently or formerly used by
the Company or its predecessors. Under certain environmental laws, including but
not limited to the Comprehensive Environmental Response & Liability Act
('CERCLA'), the Company or its subsidiaries could be held jointly and severally
responsible for the remediation of any hazardous substance contamination at its
or its predecessors' past or present facilities and at third party waste
disposal sites and could also be held liable for any consequences arising out of
human exposure to such substances or other environmental damage. Subsidiaries of
the Company have been named as potentially responsible parties ('PRPs') in
certain proceedings that involve environmental remediation. In addition,
subsidiaries of the Company have been named as defendants in lawsuits alleging
exposure to asbestos in certain of their products. See 'Business --
Environmental Matters' and 'Business -- Legal Proceedings.' There can be no
assurance that the costs of complying with environmental and health and safety
laws in current operations or the liabilities arising from past releases of, or
exposure to, hazardous substances, will not result in future expenditures by the
Company that could materially adversely affect the Company's results of
operations, cash flows and financial position.
BENEFITS ACCRUING TO AND CONTINUING RELATIONSHIPS WITH THE SELLING STOCKHOLDER
AND ITS AFFILIATES
The entire net proceeds of the Offerings will be received by the Selling
Stockholder, which is a wholly-owned subsidiary of Wassall. The Company intends
to use a portion of the proceeds of the initial borrowing under the New Credit
Facility to (i) repay all intercompany debt and advances owed to Wassall and its
subsidiaries (which, together with accrued interest, are anticipated to amount
to approximately $200.7 million on the date of the consummation of the
Offerings); (ii) pay $42.6 million as the Selling Stockholder Dividend; and
(iii) pay $2.0 million for the purchase of the Related Companies from Wassall.
Since the Acquisition, the Company has been controlled by Wassall.
Following the consummation of the Offerings, the Company will no longer be able
to rely on Wassall for financial, management or other support.
Following consummation of the Offerings, the Selling Stockholder will own
approximately 30% of the outstanding shares of Common Stock (or approximately
20% of the outstanding shares of Common Stock if the U.S. Underwriters'
over-allotment option is exercised in full). At least one director designated by
the Selling Stockholder initially will serve as a director of General Cable. In
addition, the Selling Stockholder will have the right to (i) approve the
directors to be appointed to the Company's Board of Directors prior to the first
annual meeting of stockholders following consummation of the Offerings and (ii)
designate one individual (or, if the Board of Directors of the Company shall
consist of more than eight members, two individuals) for nomination to the
Company's Board of Directors for so long as the Selling Stockholder and its
affiliates continue to own at least 10% of the outstanding capital stock of the
Company. As a result, the Selling Stockholder may be in a position to exercise
influence over General Cable after the consummation of the Offerings.
In connection with the Offerings, the Company, the Selling Stockholder and
certain of its affiliates are entering into agreements providing certain rights
in favor of the Selling Stockholder and such affiliates including (i) the right
to require the Company to register for public offering all or a portion of the
Common Stock held by the Selling Stockholder following consummation of the
Offerings, (ii) certain indemnification rights with respect to the business and
assets of the Company, its subsidiaries and their respective predecessors and
with respect to liabilities under the federal securities laws in connection with
the Offerings and (iii) the Selling Stockholder's rights, referred to above, to
approve the Company's additional directors appointed following consummation of
the Offerings and to designate one individual (or, in the circumstances
described above, two individuals) for nomination to the Company's Board of
Directors. See 'Certain Relationships and Related Transactions.'
9
<PAGE>
<PAGE>
NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the Offerings, there has been no public market for the Common
Stock. Although the Common Stock has been approved for listing on the NYSE,
subject to official notice of issuance, there can be no assurance that an active
public market for the Common Stock will develop or, if such market develops,
that it will continue. The initial public offering price of the Common Stock
will be determined through negotiations between the Selling Stockholder and the
U.S. Managing Underwriters and the International Managing Underwriters, and may
not be indicative of the market price for the Common Stock after consummation of
the Offerings. The market price of the Common Stock could be subject to
significant fluctuations in response to variations in quarterly operating
results and various other factors such as announcements of new contracts,
technological innovations or new products by the Company or its competitors,
changes in government regulations, developments in patent or other proprietary
rights and developments in the Company's relationships with its customers. In
addition, the stock markets have in recent years experienced significant price
fluctuations. Those fluctuations often have been unrelated to the operating
performance of the specific companies whose stock is traded. Market
fluctuations, as well as economic conditions, may adversely affect the market
price of the Common Stock.
DILUTION
The initial public offering price per share of Common Stock will exceed the
net tangible book value per share of the Common Stock. In addition, the net
tangible book value per share of the Common Stock will decrease as a result of
the Refinancing and the Restricted Stock Issuance. Accordingly, purchasers of
the Common Stock offered hereby will incur an immediate and substantial
dilution. See 'Dilution.'
CERTAIN ANTI-TAKEOVER EFFECTS
The Company's Certificate of Incorporation and By-Laws and the Delaware
General Corporation Law (the 'DGCL') contain several provisions that could have
the effect of delaying or preventing a change of control of the Company in a
transaction not approved by the Company's Board of Directors. Accordingly,
stockholders of the Company could be prevented from realizing a premium on their
shares in a transaction not approved by the Company's Board of Directors. See
'Description of Capital Stock -- Certain Anti-Takeover Matters.' The Company's
agreements with certain of its executive officers may have the effect of making
such a change of control more expensive. See 'Executive Compensation.' In
addition, a change of control will constitute an event of default under the New
Credit Facility.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the Offerings, the Selling Stockholder will
beneficially own 7,350,000 shares or approximately 30% (4,815,000 shares, or
approximately 20%, if the U.S. Underwriters exercise their over-allotment option
in full) of the outstanding shares of Common Stock of the Company. No prediction
can be made as to the effect, if any, that future sales of Common Stock, or the
availability of Common Stock for future sale, will have on the market price of
the Common Stock prevailing from time to time. Sales of substantial amounts of
Common Stock or the perception that sales could occur could adversely affect
prevailing market prices for the Common Stock. The Company and the Selling
Stockholder have agreed, subject to certain limited exceptions, not to offer,
sell, contract to sell, grant any option to purchase, transfer or otherwise
dispose of, directly or indirectly, any shares of Common Stock (or securities
convertible into or exercisable or exchangeable for Common Stock or any warrants
or other rights to purchase or acquire Common Stock) for a period of 180 days
after the date of this Prospectus, without the prior written consent of Dillon,
Read & Co. Inc. Following such time period, the shares of Common Stock owned by
the Selling Stockholder may be sold (i) in accordance with Rule 144 promulgated
under the Securities Act of 1933, as amended (the 'Securities Act'), (ii) in
private offerings or (iii) upon registration under the Securities Act without
regard to the volume limitations of Rule 144. In connection with the Offerings,
the Company and the Selling Stockholder will enter into an agreement that
provides the Selling Stockholder with certain rights to have the shares of
Common
10
<PAGE>
<PAGE>
Stock owned by it after the Offerings registered by the Company under the
Securities Act in order to permit the public sale of such shares. See 'Certain
Relationships and Related Transactions' and 'Shares Eligible For Future Sale.'
THE COMPANY
General Cable is a leader in the development, design, manufacture,
marketing and distribution of copper wire and cable products for the
communications and electrical markets. Copper wire and cable is the most widely
used medium for the transmission of voice, data, video and control signals and
electrical current. The Company believes that several factors, including
technological innovations and the size of the installed base of copper cable,
will preserve copper's position as the medium of choice for these applications.
Based on publicly available data and internal estimates, the Company believes
that it has the most diversified product line and channels of distribution in
the U.S. wire and cable industry. General Cable's products for the
communications markets include PIC, outside service wire, high-bandwidth twisted
pair data cable, multi-conductor/multi-pair shielded and unshielded cable,
coaxial cable and fiber optic cable. General Cable's products for the electrical
markets include building wire, portable cord and cordsets for construction,
industrial and consumer applications, and automotive wire and cable. The Company
sells to more than 8,500 customers, including electrical, data communications
and electronic distribution companies, automotive, hardware and home center
retail chains, and telecommunications companies and other end users.
General Cable and its predecessors have served the communications and
electrical markets for over 150 years. Predecessors of the Company supplied wire
and cable for such notable projects as Samuel Morse's telegraph link-up between
Washington and Baltimore, the Hoover Dam and the Statue of Liberty.
The Company's immediate predecessor (the 'Predecessor'), a subsidiary of
the Company now known as GCC Corporation ('GCC'), was formed in April 1992 to
hold the wire and cable and heavy equipment businesses of American Premier
Underwriters, Inc. ('American Premier'), then known as The Penn Central
Corporation ('PCC'). American Premier entered the wire and cable business in
1981, when it acquired the successor to the original General Cable Corporation,
and significantly expanded the business between 1988 and 1991 by acquiring Carol
Cable Company and other wire and cable businesses and facilities. In July 1992,
American Premier distributed 88% of the outstanding common stock of GCC to
American Premier's stockholders, retaining the balance of GCC's common stock. As
a result, GCC became a public company with its common stock traded on the Nasdaq
National Market. In June 1994, the Company and its affiliates acquired GCC by
means of a tender offer for the publicly-held GCC common stock and private
purchases of a $169.8 million GCC subordinated promissory note and the GCC
common stock held by American Premier and its affiliate.
Since the Acquisition, General Cable has benefitted from a significant
reorganization and capital investment program. Net sales have grown from $794.2
million in 1993 to $1,043.6 million in 1996, while operating profit has
increased from $2.3 million to $78.5 million over the same period. Factors
contributing to this improved performance include investment in new production
equipment and information systems; rationalization of manufacturing facilities
and product lines; consolidation of distribution locations; product redesign;
improved materials procurement and usage; and the establishment of business
teams and other organizational changes. The Company believes that these
initiatives have generated significant productivity improvements since the
Acquisition and that further productivity improvements can be achieved.
The Company, a Delaware corporation, was organized in April 1994 to effect
the Acquisition. Its principal executive offices are located at 4 Tesseneer
Drive, Highland Heights, Kentucky 41076 and its telephone number is (606)
572-8000.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of shares of
Common Stock offered hereby, all of which will be received by the Selling
Stockholder.
11
<PAGE>
<PAGE>
DIVIDEND POLICY
The Company currently intends to pay quarterly cash dividends on its Common
Stock, beginning with an initial quarterly dividend of $.05 per share payable in
the fourth calendar quarter of 1997, subject to the declaration by the Company's
Board of Directors. The payment of dividends (including the initial dividend) is
subject to the discretion of the Board of Directors and the requirements of
Delaware law and will depend upon general business conditions, the financial
performance of the Company and other factors the Board of Directors may deem
relevant. The New Credit Facility will contain certain provisions that will
restrict the ability of the Company to pay dividends on or to repurchase its
Common Stock. In the fourth quarter of 1996, the Company paid dividends totaling
$55.1 million and, concurrently with consummation of the Offerings, it intends
to pay the Selling Stockholder Dividend. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources.'
DILUTION
The Company's net tangible book value as of March 31, 1997 was $115.8
million, or $4.78 per share of Common Stock. After giving effect to (i) the
Refinancing (including the payment of the Selling Stockholder Dividend) and (ii)
the Restricted Stock Issuance, the Company's pro forma net tangible book value
at March 31, 1997 would have been $78.8 million, or $3.22 per share of Common
Stock. Based upon an assumed initial public offering price of $22.50 per share
(the mid-point of the price range set forth on the cover page of this
Prospectus), new investors purchasing Common Stock in the Offerings ('New
Investors') will experience immediate dilution of $19.28 per share, which is
equal to the difference between the assumed initial public offering price of
$22.50 and such pro forma net tangible book value per share of Common Stock of
$3.22.
The following table illustrates the calculation of the per share dilution
described above.
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share....................................... $22.50
------
Actual net tangible book value per share at March 31, 1997....................... $4.78
-----
Decrease in net tangible book value per share attributable to the Refinancing
(including the payment of the Selling Stockholder Dividend) and the Restricted
Stock Issuance.................................................................. 1.56
-----
Pro forma net tangible book value per share........................................... 3.22
------
Dilution per share to New Investors................................................... $19.28
------
------
</TABLE>
12
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997 and as adjusted to give effect to the Refinancing and the
Offerings. This table should be read in conjunction with 'Unaudited Pro Forma
Financial Data,' 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' and the combined financial statements of the Company
and related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1997
------------------------
ACTUAL AS ADJUSTED(1)
------ --------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt............................................................... $ 25.2 $ 25.2
------ -------
------ -------
Long-term debt:
Notes payable to related parties......................................... $195.8 $ --
Other.................................................................... 9.1 9.1
New Credit Facility...................................................... -- 242.5
------ -------
Total long-term debt................................................ 204.9 251.6
------ -------
Shareholders' equity:
Common Stock, par value $.01, 75,000,000 shares authorized, 24,250,000
shares issued and outstanding, actual, 24,500,000 shares issued and
outstanding, as adjusted............................................... .2 .2
Additional paid-in capital............................................... 94.7 78.6
Retained earnings........................................................ 20.9 --
------ -------
Total shareholders' equity.......................................... 115.8 78.8
------ -------
Total capitalization...................................... $320.7 $330.4
------ -------
------ -------
</TABLE>
- ------------
(1) Reflects the Selling Stockholder Dividend and the Restricted Stock Issuance.
Excludes an aggregate of 1,103,750 shares of Common Stock to be reserved for
issuance upon the exercise of options expected to be granted at the initial
public offering price to the Company's executive officers and key employees
upon consummation of the Offerings pursuant to the Stock Incentive Plan. See
'Executive Compensation -- Stock Incentive Plan.'
13
<PAGE>
<PAGE>
SELECTED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AND CERTAIN OTHER DATA)
The selected financial data set forth in the following table for the years
ended December 31, 1992 and 1993, the periods January 1, 1994 to June 8, 1994
and June 9, 1994 to December 31, 1994, and the years ended December 31, 1995 and
1996 and at December 31, 1992, 1993, 1994, 1995 and 1996 have been derived from
the audited combined financial statements of the Company and the audited
consolidated financial statements of the Predecessor. The data presented for the
three months ended March 31, 1996 and 1997 and at March 31, 1997 are derived
from the unaudited combined financial statements of the Company and include, in
the opinion of management, all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of the data for such periods.
Results of operations for the period ended March 31, 1997 are not necessarily
indicative of results that may be expected for the full year. As a result of the
Acquisition, which was accounted for as a purchase, the Company's results of
operations, cash flows and financial position for the periods after June 8, 1994
are not comparable to prior periods.
The pro forma statement of operations data give pro forma effect to the
Refinancing as if it had occurred on January 1, 1996. The pro forma balance
sheet data give pro forma effect to the Refinancing and the Restricted Stock
Issuance as if they had occurred on March 31, 1997. The pro forma financial
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. Such pro forma data are for informational
purposes only and may not be indicative of the results of operations or
financial position of the Company had the Refinancing and the Restricted Stock
Issuance actually occurred on such dates.
The following selected financial data should be read in conjunction with
'Unaudited Pro Forma Financial Data,' 'Management's Discussion and Analysis of
Financial Condition and Results of Operations,' the combined financial
statements of the Company and related notes thereto and the audited consolidated
financial statements of the Predecessor and related notes thereto included
elsewhere in this Prospectus. Certain reclassifications have been made to the
financial data of the Predecessor to conform to the presentation of such data by
the Company.
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
--------------------------------- -------------------------------------------------
THREE MONTHS
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, JANUARY 1 TO JUNE 9 TO DECEMBER 31, MARCH 31,
------------------ JUNE 8, DECEMBER 31, ------------------ -----------------
1992 1993 1994 1994 1995 1996 1996 1997
------ ------ ------------ ------------ -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............................... $834.4 $794.2 $355.0 $543.3 $1,061.3 $ 1,043.6 $258.0 $ 251.0
Gross profit............................ 81.7 97.7 44.2 73.4 138.7 188.3 36.0 48.8
Operating income (loss)................. (44.4)(1) 2.3 1.1 20.3 44.5 78.5 8.9 19.2
Interest expense, net(6)................ (14.4) (29.0) (12.1) (11.0) (20.7) (19.6) (5.2) (4.9)
Earnings (loss) before income taxes..... (69.2) (26.3) (11.0) 9.3 23.8 58.9 3.7 14.3
Loss from discontinued operations(2).... (2.7) (31.3) -- -- -- -- -- --
Cumulative effect of accounting
change(3)............................. 7.5 -- -- -- -- -- -- --
Income tax benefit (provision).......... -- -- .1 (6.5) 1.5(4) (19.7) (1.2) (5.7)
Net income (loss)....................... (64.4) (57.6) (10.9) 2.8 25.3 39.2 2.5 8.6
Earnings per share(5)................... $ .12 $ 1.04 $ 1.62 $ .10 $ .35
Weighted average number of shares
outstanding(5)........................ 24.3 24.3 24.3 24.3 24.3
PRO FORMA STATEMENT OF OPERATIONS DATA:
Operating income........................ $ 78.5 $ 19.2
Interest expense, net(6)................ (14.1) (3.4)
Net income.............................. 42.5 9.5
Earnings per share(5)................... $ 1.75 $ .39
OTHER DATA:
Average daily COMEX price per pound of
copper cathode........................ $ 1.03 $ 0.85 $ 0.91 $ 1.20(7) $ 1.35 $ 1.06 $ 1.18 $ 1.11
Capital expenditures.................... $ 15.5 $ 11.7 $ 6.2 $ 9.1 $ 26.2 $ 30.0 $ 5.6 $ 4.0
Depreciation and amortization of fixed
assets................................ 19.8 17.4 7.5 6.7 11.7 12.1 3.0 3.3
Number of employees (at end of period).. 4,400 4,500 4,200 4,100 3,900 4,100 3,800
<CAPTION>
DECEMBER 31 DECEMBER 31,
------------------- --------------------------------- MARCH 31,
1992 1993 1994 1995 1996 1997
------ --------- --------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......................... $206.8 $227.7 $224.8 $ 234.4 $ 205.6 $214.9
Net assets of discontinued operations(2) 82.8 48.4 -- -- -- --
Total assets............................ 710.7 620.4 518.7 535.6 513.6 540.3
Long-term debt.......................... 262.2 293.4 206.5 205.9 205.1 204.9
Other long-term liabilities............. 70.8 76.7 94.1 71.9 71.0 72.1
Shareholders' equity.................... 218.7 139.9 97.6 122.9 107.4(8) 115.8
PRO FORMA BALANCE SHEET DATA:
Working capital......................... $214.9
Total assets(9)......................... 540.7
Long-term debt(10)...................... 251.6
Shareholders' equity(11)................ 78.8
</TABLE>
(footnotes on following page)
14
<PAGE>
<PAGE>
(footnotes from previous page)
(1) Includes (i) an $11.5 million restructuring provision for the consolidation
of general and administrative functions and the reconfiguration of certain
manufacturing plants and (ii) a $10.0 million loss on the sale of the
Predecessor's Indiana Steel & Wire Company subsidiary.
(2) Represents the Predecessor's loss from operations and loss on the sale of
the assets of its Marathon LeTourneau Company heavy equipment manufacturing
subsidiary. The net assets sold are reflected as net assets of discontinued
operations.
(3) Reflects the benefit of the cumulative effect of implementing Statement of
Financial Accounting Standards ('SFAS') No. 109, 'Accounting for Income
Taxes'.
(4) At December 31, 1995, the Company recognized the full value of its net
deferred tax assets; accordingly, goodwill recorded in the Acquisition was
eliminated and the Company recognized a tax benefit of $1.7 million. See
Note 11 to combined financial statements.
(5) Earnings per share was computed based on the weighted average common shares
outstanding for each period, adjusted for a 121,250-for-1 stock split.
(6) See footnote (2) to 'Unaudited Pro Forma Financial Data'.
(7) The average daily COMEX price per pound for the full year 1994 was $1.07.
(8) After the payment of dividends totaling $55.1 million.
(9) Adjusted to reflect capitalization of estimated deferred financing costs
related to the Refinancing.
(10) Adjusted to reflect an initial borrowing under the New Credit Facility of
$267.7 million at March 31, 1997 and the use of the proceeds as follows:
(i) repayment of intercompany indebtedness of $195.8 million; (ii)
repayment of $25.2 million of outstanding bank debt; (iii) payment of $42.6
million as the Selling Stockholder Dividend; (iv) payment of $2.0 million
for the purchase of the Related Companies; (v) repayment of $1.7 million of
intercompany advances owed by the Related Companies to Wassall; and (vi)
payment of $0.4 million of estimated expenses of the Refinancing.
(11) Adjusted to reflect (i) the Selling Stockholder Dividend of $42.6 million
and (ii) the Restricted Stock Issuance.
15
<PAGE>
<PAGE>
UNAUDITED PRO FORMA FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
The unaudited pro forma statement of operations data set forth below give
effect to the Refinancing as if it had occurred on January 1, 1996. The
unaudited pro forma balance sheet data give pro forma effect to the Refinancing
and the Restricted Stock Issuance as if they had occurred on March 31, 1997. The
pro forma financial adjustments are based upon available information and certain
assumptions that the Company believes are reasonable. The pro forma financial
data are for informational purposes only and may not necessarily be indicative
of the results of operations or financial position of the Company had the
Refinancing and the Restricted Stock Issuance actually occurred on such dates.
The following pro forma financial data should be read in conjunction with
'Capitalization,' 'Management's Discussion and Analysis of Financial Condition
and Results of Operations' and the audited combined financial statements of the
Company and related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, 1996 MARCH 31, 1997
-------------------------------------- --------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.......................................... $1,043.6 $1,043.6 $251.0 $ 251.0
Cost of sales...................................... 855.3 855.3 202.2 202.2
---------- --------- --------- ---------
Gross profit....................................... 188.3 188.3 48.8 48.8
Selling, general and administrative expenses....... 109.8 -- (1) 109.8 29.6 -- (1) 29.6
---------- ----------- --------- -------------------- ---------
Operating income................................... 78.5 -- 78.5 19.2 -- 19.2
Interest expense to related parties................ (19.6) $ 19.6(2) -- (4.8) $ 4.8(2) --
Other interest expense............................. (1.1) (13.7)(2) (14.8 ) (.3) (3.3)(2) (3.6)
Interest income.................................... 1.1 (.4)(2) .7 .2 .2
---------- ----------- --------- -------------------- ---------
Earnings before income taxes....................... 58.9 5.5 64.4 14.3 1.5 15.8
Income tax provision............................... (19.7) (2.2)(3) (21.9 ) (5.7) (.6)(3) (6.3)
---------- ----------- --------- -------------------- ---------
Net income......................................... $ 39.2 $ 3.3 $ 42.5 $ 8.6 $ .9 $ 9.5
---------- ----------- --------- -------------------- ---------
---------- ----------- --------- -------------------- ---------
Earnings per share(4).............................. $ 1.62 $ .13 $ 1.75 $ .35 $ .04 $ .39
Weighted average number of shares outstanding(4)... 24.3 24.3 24.3 24.3 24.3 24.3
BALANCE SHEET DATA (AT MARCH 31):
Working capital.................................... $214.9 $ 214.9
Total assets....................................... 540.3 $ .4(5) 540.7
Long-term debt..................................... 204.9 46.7(6) 251.6
Shareholders' equity............................... 115.8 (37.0)(7) 78.8
</TABLE>
- ------------
(1) Prior to the Offerings, selling, general and administrative expenses
included fees of $1.6 million for 1996 and $0.6 million for the three months
ended March 31, 1997 for financial, management and other services provided
by a U.S. affiliate of the Selling Stockholder. Following the Offerings,
these fees will be eliminated and selling, general and administrative
expenses will include certain legal, insurance and other corporate expenses,
which the Company believes will approximate these fees.
(2) Adjustments to reflect a net decrease in interest expense resulting from
consummation of the Refinancing. The adjustments include: (i) elimination of
interest expense to related parties of $19.6 million for 1996 and $4.8
million for the three months ended March 31, 1997 resulting from the
expected repayment of $195.8 million of intercompany long-term debt with a
weighted average interest rate of 9.9% per annum; (ii) interest expense on
the New Credit Facility of $13.7 million for 1996 and $3.3 million for the
three months ended March 31, 1997 reflecting an interest rate of 5.75% per
annum (representing a 37.5 basis point spread over the one month London
interbank offered rate ('LIBOR')) and $242.1 million of average borrowings
assumed to be outstanding during 1996 and $245.1 million of average
borrowings assumed to be outstanding during the three months ended March 31,
1997 (based upon an initial borrowing of $242.4 million as of January 1,
1996) and General Cable's actual borrowing and repayment experience in 1996
and the three months ended March 31, 1997; and (iii) amortization of
deferred financing costs. Historical interest income in 1996 included $0.4
million of earnings on excess cash, which were assumed to have been
eliminated as a result of the Refinancing.
(3) Represents the income tax effect of the adjustments described in (1) and (2)
above at a 40% effective tax rate.
(4) Earnings per share was computed based on the weighted average common shares
outstanding for each period, adjusted for a 121,250-for-1 stock split.
(5) Represents capitalization of estimated deferred financing costs related to
the Refinancing.
(6) Represents adjustments to reflect an initial borrowing under the New Credit
Facility of $267.7 million at March 31, 1997 and the use of the proceeds as
follows: (i) repayment of intercompany indebtedness of $195.8 million; (ii)
repayment of $25.2 million of outstanding bank debt; (iii) payment of $42.6
million as the Selling Stockholder Dividend; (iv) payment of $2.0 million
for the purchase of the Related Companies; (v) repayment of $1.7 million of
intercompany advances to the Related Companies; and (vi) payment of $0.4
million of estimated expenses of the Refinancing.
(7) Represents adjustments to reflect (i) the Selling Stockholder Dividend of
$42.6 million and (ii) the Restricted Stock Issuance.
16
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion of General Cable's historical results of
operations and financial condition should be read in conjunction with the
combined financial statements of General Cable, the consolidated financial
statements of the Predecessor and the respective notes thereto included
elsewhere in this Prospectus. General Cable acquired the Predecessor in a
transaction accounted for as a purchase effective June 9, 1994. Solely for
purposes of comparing results of operations in 1995 and 1994, the Predecessor's
operating results for the 1994 pre-Acquisition period have been combined with
the Company's operating results for the 1994 post-Acquisition period. The
combined results of operations for 1994 may not be indicative of the results
that would have been achieved if the Acquisition had not occurred, primarily due
to the difference in accounting basis resulting from the Acquisition.
The combined financial statements include the results of operations and
assets and liabilities of the Related Companies, which were transferred from the
Company to Wassall subsequent to the Acquisition. Wassall will sell the Related
Companies to General Cable following completion of the Offerings for $2.0
million. See 'Certain Relationships and Related Transactions.'
Since the Acquisition, General Cable has taken a number of initiatives
designed to improve its profitability and productivity, including investment in
new production equipment and information systems; rationalization of
manufacturing facilities and product lines; consolidation of distribution
locations; product redesign; improved materials procurement and usage; and the
establishment of business teams and other organizational changes.
General Cable's reported net sales are directly influenced by the price of
copper. The cost of copper has been subject to considerable volatility over the
past several years, with the daily copper cathode selling price on the COMEX
averaging $1.07 per pound in 1994, $1.35 per pound in 1995, $1.06 per pound in
1996 and $1.11 per pound in the first quarter of 1997. However, as a result of a
number of practices intended to match copper purchases with sales, the Company's
profitability has generally not been significantly affected by changes in copper
prices. For certain of the Company's products (primarily building wire and
portable cord), which are priced on a daily basis, the Company purchases copper
at prices based on the average of the daily closing selling prices of copper on
the COMEX for the month in which the purchase occurs, plus a negotiated premium
(principally representing transportation costs and processing charges). For a
portion of its other sales, the Company purchases copper cathode from its
existing vendor base at a firm price for future delivery against orders or, with
respect to a contract that is fixed as to price but not as to volume, for a
portion of the estimated volume. Finally, the Company's arrangements with
certain customers provide for the pass-through of changes in copper costs
through price revisions. As a result of these practices, the Company generally
passes changes in copper prices along to its customers, although there are
timing delays of varying lengths depending upon the type of product, competitive
conditions and particular customer arrangements. Generally, the Company does not
engage in speculative metals trading or other speculative activities, nor does
it engage in activities to hedge the underlying value of its copper inventory.
In addition, the New Credit Facility will contain a provision restricting
General Cable from engaging in hedging activities other than in the ordinary
course of business. See 'Risk Factors -- Impact of Copper Prices' and
'Business -- Raw Materials.'
General Cable generally experiences certain seasonal trends in sales and
cash flow. Relatively significant amounts of cash are generally required during
the first and second quarters of the year to build inventories in anticipation
of higher demand during the spring and summer months, when construction activity
increases. In general, receivables related to higher sales activity during the
spring and summer months are collected during the third and fourth quarters of
the year.
17
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<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, statement of
operations data in millions of dollars and as a percentage of net sales.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------- ----------------------------------
1994(1) 1995(2) 1996(2) 1996(2) 1997(2)
--------------- ----------------- ----------------- --------------- ---------------
$ % $ % $ % $ % $ %
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales................ $898.3 100.0% $1,061.3 100.0% $1,043.6 100.0% $258.0 100.0% $251.0 100.0%
Cost of sales............ 780.7 86.9 922.6 86.9 855.3 82.0 222.0 86.0 202.2 80.6
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Gross profit............. 127.6 13.1 138.7 13.1 188.3 18.0 36.0 14.0 48.8 19.4
Selling, general and
administrative
expenses............... 96.2 10.7 94.2 8.9 109.8 10.5 27.1 10.5 29.6 11.8
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Operating income......... 21.4 2.4 44.5 4.2 78.5 7.5 8.9 3.4 19.2 7.6
Interest expense, net.... (23.1) (2.6) (20.7) (2.0) (19.6) (1.9) (5.2) (2.0) (4.9) (2.0)
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Earnings (loss) before
taxes.................. (1.7) (.2) 23.8 2.2 58.9 5.6 3.7 1.4 14.3 5.7
Income tax (expense)
benefit................ (6.4) (.7) 1.5 .1 (19.7) (1.9) (1.2) (.5) (5.7) (2.3)
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Net income (loss)........ $ (8.1) (.9)% $ 25.3 2.4% $ 39.2 3.8% $ 2.5 1.0% $ 8.6 3.4%
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
</TABLE>
- ------------
(1) As discussed under 'General' above, the dollar amounts and percentages for
1994 combine the operating results of the Predecessor for the
pre-Acquisition period with those of the Company for the post-Acquisition
period.
(2) Percentages do not add due to rounding.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Net sales for the three months ended March 31, 1997 decreased $7.0 million,
or 2.7%, to $251.0 million from net sales of $258.0 million for the same period
in 1996. The decrease reflects a decrease of $8.4 million, or 9.7%, in the net
sales of the Communications Group and an increase of $1.4 million, or 0.9%, in
the net sales of the Electrical Group. Such amounts reflect a $0.07 decrease in
the weighted average monthly COMEX price per pound of copper in the first three
months of 1997 and other factors as discussed in the following paragraph.
After adjusting the net sales for the first three months of 1996 to reflect
the $0.07 lower weighted average monthly COMEX price per pound of copper sold by
the Company in the first three months of 1997, net sales were $0.9 million, or
0.4%, lower than the first three months of 1996. The decrease in copper-adjusted
net sales reflected an 8.2% decrease in the copper-adjusted net sales of the
Communications Group and a 3.7% increase in the copper-adjusted net sales of the
Electrical Group. The decrease in Communications Group net sales primarily
reflected a decline in the volume of sales of PIC to U S WEST due to an expected
decline in U S WEST's requirements for PIC in 1997 and a delay in the timing of
expected orders. This decline, along with a decrease in pricing for certain
datacom products, was partially offset by increased sales of PIC to other
customers and increased datacom unit volume. The growth in Electrical Group net
sales was primarily due to more favorable building wire pricing and increased
copper-adjusted net sales of OEM assemblies, portable cord and automotive
products in the first three months of 1997 compared to the same period in 1996.
Gross profit increased $12.8 million, or 35.6% to $48.8 million in the
first three months of 1997 from $36.0 million in the first three months of 1996.
General Cable's gross margin increased to 19.4% in the first three months of
1997 from 14.0% in the first three months of 1996. The improvement in the 1997
period was primarily attributable to manufacturing cost reductions and improved
building wire pricing, partially offset by a decrease in pricing for certain
datacom products. On a copper-adjusted basis (to the first three months of
1997), the Company's gross margin was 14.3% in the first three months of 1996.
The reduction in manufacturing costs in the first three months of 1997
compared to the same period in 1996 reflected (i) the effects of continued
rationalization of production facilities; (ii) improvement of capacity
utilization, including the conversion of certain facilities from five day to
seven day per week continuous
18
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<PAGE>
production schedules; (iii) product redesigns to lower material costs; and (iv)
capital investment and other improvements in manufacturing processes to improve
materials usage and reduce waste.
Selling, general and administrative expenses increased $2.5 million, or
9.2%, to $29.6 million in the first three months of 1997 from $27.1 million in
the first three months of 1996. Selling, general and administrative expenses as
a percentage of sales were 11.8% in the first three months of 1997, compared to
10.8% of copper-adjusted (to 1997) sales in the first three months of 1996. The
increase primarily reflected higher transportation costs, higher advertising and
marketing expenses and increased incentive compensation expense.
The Company incurred net interest expense of $4.9 million in the first
three months of 1997 compared to $5.2 million in the first three months of 1996.
The reduction in 1997 reflects the repayment of an $8.0 million related party
note during 1996.
The effective income tax rate for the three months ended March 31, 1997 was
39.9% compared to approximately 32.4% for the three months ended March 31, 1996.
The lower 1996 effective tax rate reflected the impact of certain tax return
reconciliation adjustments.
YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995
Net sales for 1996 decreased $17.7 million, or 1.7%, to $1,043.6 million in
1996 from 1995 net sales of $1,061.3 million. The decrease reflects a decrease
of $36.1 million, or 5.1%, in the net sales of the Electrical Group, partially
offset by an increase of $18.4 million, or 5.2%, in the net sales of the
Communications Group. Such amounts reflect a $0.29 decrease in the weighted
average monthly COMEX price per pound of copper in 1996, partially offset by
increased volume and other factors as discussed in the following paragraph.
After adjusting 1995 net sales to reflect the $0.29 lower weighted average
monthly COMEX price per pound of copper sold by the Company in 1996, net sales
for 1996 represented an $80.6 million, or 8.4%, increase over 1995. The increase
in copper-adjusted net sales reflected a 13.1% increase in copper-adjusted net
sales of the Communications Group and a 5.8% increase in copper-adjusted net
sales of the Electrical Group. The growth in Communication Group sales was
primarily due to increased volume of sales of PIC to RBOCs and increased demand
for high-bandwidth twisted pair data cables. The growth in Electrical Group
sales reflected a 5.0% increase in copper-adjusted net sales of building wire
primarily due to more favorable pricing as market conditions improved in the
second half of 1996, and a 9.7% increase in copper-adjusted net sales of
portable cord principally due to increased volume.
Gross profit increased $49.6 million, or 35.8%, to $188.3 million in 1996
from $138.7 million in 1995. General Cable's gross margin increased to 18.0% in
1996 from 13.1% in 1995. On a copper-adjusted basis (to 1996), the Company's
gross margin was 14.4% in 1995. The improvement in 1996 was primarily
attributable to manufacturing cost reductions and the increases in selling
prices and sales volumes discussed above.
The reduction in manufacturing costs in 1996 reflected (i) continued
rationalization of production facilities through the closing of two plants; (ii)
improvement of capacity utilization at remaining facilities, including the
conversion of four facilities from five day to seven day per week continuous
production schedules; (iii) improved production efficiencies resulting from
higher production levels; (iv) raw material cost reductions reflecting decreased
prices for resins and other non-copper raw materials and product redesigns to
lower material costs; and (v) capital investment and other improvements in
manufacturing processes to improve materials usage and reduce waste.
Selling, general and administrative expenses increased $15.6 million, or
16.6%, to $109.8 million in 1996 from $94.2 million in 1995. Selling, general
and administrative expenses as a percentage of sales were 10.5% in 1996,
compared to 9.8% of copper-adjusted (to 1996) sales in 1995. The increase
primarily reflected higher sales volume-related expenses such as transportation
and higher salary and related expenses attributable to increases in staff to
support expansion of the Company's direct sales force and marketing function,
the restructuring of its distribution processes and new product development
efforts. In addition, expenses in 1996 included increases in incentive
compensation and advertising expenses.
The Company incurred net interest expense of $19.6 million in 1996 compared
to $20.7 million in 1995. The reduction in 1996 expense reflects the repayment
of an $8.0 million related party note.
19
<PAGE>
<PAGE>
The provision for income taxes was $19.7 million in 1996 compared to a
benefit of $1.5 million in 1995. Prior to 1995, General Cable recorded a full
valuation allowance against its net deferred tax asset because of uncertainties
as to the amount of taxable income that would be generated in future years. In
1995, the Company determined that it was more likely than not that future
taxable income would be sufficient to enable General Cable to realize all of its
deferred tax assets. In accordance with the provisions of SFAS No. 109,
'Accounting for Income Taxes', the reversal of the valuation allowance resulted
in a $63.0 million reduction of goodwill and a deferred tax benefit of $1.7
million in 1995.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994
Net sales for 1995 increased $163.0 million, or 18.1%, to $1,061.3 million
in 1995 from $898.3 million in 1994. The increase reflects an increase of $88.8
million, or 33.1%, in the net sales of the Communications Group and an increase
of $74.2 million, or 11.8%, in the net sales of the Electrical Group. Such
amounts reflect a $0.28 increase in the weighted average monthly COMEX price per
pound of copper in 1995, increased volume and other factors discussed in the
following paragraph.
After adjusting 1994 net sales to reflect the $0.28 higher weighted average
monthly COMEX price per pound of copper sold by the Company in 1995, net sales
for 1995 represented a $74.4 million, or 7.5%, increase over 1994. The increase
in copper-adjusted net sales primarily reflected a 24.1% increase in
copper-adjusted net sales of the Communications Group, primarily due to the full
year impact of a long-term supply contract with U S WEST entered into in
November 1994.
Gross profit increased $21.1 million, or 17.9%, to $138.7 million from
$117.6 million in 1994. The increase reflected reductions in product cost and
increased sales volume. Results for 1994 benefitted from a $10.3 million
reduction (compared to a $0.2 million reduction in 1995) in cost of sales
resulting from the liquidation of inventory quantities accounted for on a
last-in-first-out basis. The Company's gross margin was 13.1% in both 1995 and
1994. On a copper-adjusted basis (to 1995), the Company's gross margin was 11.9%
in 1994.
Reductions in manufacturing costs in 1995 resulted from (i) rationalization
of production facilities through the closing of three plants; (ii) improvement
of capacity utilization at other facilities; (iii) improved production
efficiencies resulting from higher production levels; and (iv) capital
investment and other improvements in manufacturing processes to improve
materials usage and reduce waste. These improvements were partially offset by
higher raw material prices and the additional cost of purchasing finished goods
from outside vendors to meet an increase in customer demand for PIC while the
Company was adding capacity.
Selling, general and administrative expenses decreased $2.0 million, or
2.1%, to $94.2 million in 1995 from $96.2 million in 1994 primarily due to the
restructuring of the Company's sales, marketing and administrative functions
following the Acquisition. Selling, general and administrative expenses as a
percentage of sales were 8.9% in 1995 compared to 9.7% of copper-adjusted (to
1995) sales in 1994.
The Company incurred net interest expense of $20.7 million in 1995 compared
to $23.1 million in 1994, principally due to lower average outstanding
borrowings.
Income taxes in 1995 reflected a benefit of $1.5 million compared to a
provision of $6.4 million in 1994. The Company's income tax provision in 1994
principally reflected alternative minimum tax for which no deferred tax benefit
was realized for the related tax credit due to a full valuation allowance on the
Company's deferred tax assets at December 31, 1994.
LIQUIDITY AND CAPITAL RESOURCES
In general, the Company requires cash for working capital, capital
expenditures, debt repayment, interest and taxes. The Company's working capital
requirements increase when it experiences strong incremental demand for products
and/or significant copper price increases. Since the Acquisition, the Company
has satisfied its cash requirements through a combination of funds generated
from operations, related party borrowings and external borrowings. At March 31,
1997, the Company had outstanding long-term borrowings due Wassall and its
subsidiaries of $195.8 million, intercompany advances due Wassall and its
subsidiaries of $1.7 million and borrowings of $25.2 million under existing bank
lines of credit, all of which will be repaid in the Refinancing. After
completion of the Offerings, the Company will be required to meet all its cash
requirements through funds generated from operations and external borrowings,
without any support from Wassall. Based upon historical experience and the
expected availability of funds under the New Credit Facility, the Company
expects that its sources of liquidity will
20
<PAGE>
<PAGE>
be sufficient to enable it to meet its cash requirements for working capital,
capital expenditures, debt repayment, interest and taxes through 1998.
Cash flow used by operating activities in the first three months of 1997
was $18.2 million. This principally reflected net income before depreciation and
deferred taxes of $12.6 million, offset by a $20.7 million increase in accounts
receivable, a $4.6 million increase in inventories and a $4.2 million reduction
in accounts payable, accrued liabilities and other long-term liabilities.
Accounts receivable increased due to an increase in selling prices resulting
from a $0.12 per pound increase in copper prices in the first quarter of 1997
and higher sales volume in the first quarter of 1997 compared to the fourth
quarter of 1996. Inventories increased during the first quarter of 1997 to
support anticipated seasonal product demand during the second and third
quarters. The reduction in accounts payable, accrued and other long-term
liabilities principally reflected a decrease in accounts payable.
Cash flow provided by operating activities in 1996 was $80.8 million. This
principally reflected net income before depreciation and deferred taxes of $60.6
million, a $17.6 million reduction in inventory levels and a $12.1 million
reduction in accounts receivable partially offset by an $11.6 million reduction
in accounts payable, accrued liabilities and other long-term liabilities.
Inventory was reduced as General Cable consolidated several inventory stocking
locations into regional distribution centers and instituted new processes for
forecasting, scheduling and inventory management. Accounts receivable decreased
due to a decline in selling prices resulting from a $0.33 per pound decrease in
copper prices in the fourth quarter of 1996, partially offset by higher sales
volume in that quarter. The reduction in accounts payable, accrued liabilities
and other long-term liabilities primarily reflected expenditures related to the
closure of two manufacturing facilities.
Cash flow used in investing activities was $35.5 million in 1996 and $3.8
million in the first three months of 1997, principally reflecting, in both
periods, capital expenditures. The 1996 amount also reflected a $6.4 million
investment in the Company's fiber optic cable joint venture with SpecTran
Corporation ('SpecTran').
General Cable expended $15.3 million, $26.2 million and $30.0 million for
capital projects during 1994, 1995 and 1996, respectively, and $4.0 million in
the first three months of 1997. Capital expenditures in 1996 consisted of
projects to reduce product costs, increase capacity and modernize machinery and
equipment. Although it has no material commitments for capital expenditures in
1997, General Cable expects to spend approximately $38.0 million for capital
projects in 1997 in order to further increase manufacturing productivity and to
selectively add production capacity.
Cash flow provided by financing activities in the first three months of
1997 was $23.0 million, reflecting the proceeds of borrowings under the
Company's revolving credit line. Cash flow used in financing activities in 1996
was $57.1 million, consisting primarily of dividends totaling $55.1 million.
ENVIRONMENTAL AND ASBESTOS-RELATED LITIGATION MATTERS
General Cable's expenditures for environmental compliance and remediation
amounted to approximately $0.3 million, $2.0 million and $1.0 million in 1994,
1995 and 1996, respectively, and $0.1 million for the first three months of
1997, and the Company expects to spend approximately an additional $0.9 million
for these purposes in the remainder of 1997. In addition, subsidiaries of the
Company have been named as PRPs in certain proceedings that involve
environmental remediation. General Cable had accrued $7.2 million at March 31,
1997 for all environmental liabilities. In connection with the Acquisition,
American Premier has agreed to indemnify General Cable against certain
environmental liabilities arising out of General Cable's or its predecessor's
ownership or operation of properties and assets. While it is difficult to
estimate future environmental liabilities, General Cable does not currently
anticipate any material adverse effect on its results of operations, cash flows
or financial position as a result of compliance with federal, state, local or
foreign environmental laws or regulations or remediation costs. See
'Business -- Environmental Matters.'
General Cable's expenditures for asbestos litigation amounted to
approximately $0.5 million, $0.5 million and $0.6 million in 1994, 1995 and
1996, respectively, and $0.1 million for the first three months of 1997 (before
reimbursement of a substantial portion thereof under the settlement agreement
described below), all of which were for defense costs. General Cable had accrued
approximately $2.2 million for this litigation at March 31, 1997. General Cable
has entered into a settlement agreement with certain principal primary insurers
concerning liability for the costs of defense, judgments and settlements, if
any, in the asbestos litigation. Subject to the terms and conditions of the
settlement
21
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<PAGE>
agreement, the insurers are responsible for a substantial portion of the costs
and expenses incurred in the defense or resolution of such litigation. The
Company does not believe that the outcome of the litigation will have a material
adverse effect on its results of operations, cash flows or financial position.
See 'Business -- Legal Proceedings.'
THE NEW CREDIT FACILITY
Prior to consummation of the Offerings, General Cable intends to enter into
the New Credit Facility with The Chase Manhattan Bank, as administrative agent
(the 'Agent'), and a syndicate of banks. The following summary of the principal
terms of the New Credit Facility does not purport to be complete and is subject
to the detailed provisions of the agreement governing the New Credit Facility, a
copy of which will be filed as an exhibit to the Registration Statement (as
defined herein) of which this Prospectus is a part. The Company and the Agent
have entered into a commitment letter pursuant to which the Agent has committed
to provide the full amount of the facility.
The New Credit Facility will consist of a five-year senior unsecured
revolving credit and competitive advance facility in an aggregate principal
amount of $350.0 million. Borrowings will be guaranteed by General Cable's
principal operating subsidiaries. General Cable intends to make an initial
borrowing of approximately $271.8 million under the New Credit Facility
concurrently with consummation of the Offerings and to use the proceeds thereof
to (i) repay all of its outstanding revolving bank debt (which is anticipated to
be approximately $26.1 million on the date of the consummation of the
Offerings), (ii) repay all intercompany debt and advances owed to Wassall and
its subsidiaries (which, together with accrued interest, are anticipated to
amount to approximately $200.7 million on the date of the consummation of the
Offerings), (iii) pay $42.6 million as the Selling Stockholder Dividend; (iv)
pay $2.0 million for the purchase of the Related Companies from Wassall and (v)
pay estimated expenses of the Refinancing of $0.4 million. Future borrowings
will be available for general corporate purposes, including acquisitions.
Revolving Credit loans will bear interest, at General Cable's option, at
(i) a spread over LIBOR or (ii) the 'Alternate Base Rate', which will be defined
as the higher of (a) the Agent's Prime Rate, (b) the secondary market rate for
certificates of deposit (adjusted for reserve requirements) plus 1% and (c) the
Federal Funds Effective Rate (i.e., for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers). The spread over LIBOR will
range between 17.0 and 42.5 basis points per annum, depending upon the Company's
Leverage Ratio (as defined below), and will initially be 25.0 basis points per
annum until the date by which the Company is required to furnish financial
statements with respect to the fiscal year ending December 31, 1997.
A facility fee will accrue on the full amount of the New Credit Facility,
regardless of usage. The facility fee will range between 8.0 and 20.0 basis
points per annum, depending upon the Company's Leverage Ratio, and will
initially be 12.5 basis points per annum until the date by which the Company is
required to furnish financial statements with respect to the fiscal year ending
December 31, 1997.
The New Credit Facility will require General Cable to maintain an Interest
Coverage Ratio (defined as the ratio of earnings before interest, taxes,
depreciation and amortization ('EBITDA') to Cash Interest Expense (as defined in
the New Credit Facility)) for any period of four consecutive fiscal quarters of
not less than 2.50 to 1.00 with step-ups to be agreed upon and a Leverage Ratio
(defined as the ratio of Indebtedness (as defined in the New Credit Facility) to
EBITDA) at any date and for the period of the four most recently ended
consecutive fiscal quarters of not more than 3.75 to 1.00. The New Credit
Facility will also contain limitations on (i) mergers, consolidations and
certain asset sales and dispositions; (ii) subsidiary indebtedness and
guarantees; (iii) liens and sale-leaseback transactions; (iv) transactions with
affiliates; (v) dividends on, and redemptions and repurchases of, capital stock;
(vi) covenants restricting dividends and advances by subsidiaries; (vii) loans
and investments; (viii) issuance of capital stock by subsidiaries; (ix) hedging
activities other than in the ordinary course of business; and (x) changes in
business.
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BUSINESS
General Cable is a leader in the development, design, manufacture,
marketing and distribution of copper wire and cable products for the
communications and electrical markets. Communications wire and cable transmits
low voltage signals for voice, data, video and control applications. Electrical
wire and cable conducts electrical current for power and control applications.
General Cable believes that its principal competitive strengths include its
breadth of product line; brand recognition; distribution strength; customer
selection, sales and service; and improved operating efficiency.
The principal markets, products, distribution channels and end-users of
each of General Cable's seven principal product categories are summarized below:
<TABLE>
<CAPTION>
PRINCIPAL
PRINCIPAL DISTRIBUTION PRINCIPAL
PRODUCT CATEGORY MARKETS PRINCIPAL PRODUCTS CHANNELS END-USERS
<S> <C> <C> <C> <C>
COMMUNICATIONS GROUP:
Outside Voice and Telecom Local Loop PIC; Outside Service Direct; Telecommunications
Data Wire Distributors System Operators
Datacom Computer Networking Multi- Distributors; Contractors;
and Multimedia Conductor/Multi-pair; Direct Original Equipment
Applications Fiber Optic Cable Manufacturers
('OEMs');
Systems Integrators
Industrial Building Management; Multi-Conductor; Distributors; Contractors;
Instrumentation and Entertainment; Coaxial Cable Retailers; Consumers;
Control Equipment Control Direct Industrial
ELECTRICAL GROUP:
Building Wire Non-Residential and THHN; Romex'r' Products Distributors; Contractors;
Residential Retailers Consumers
Construction
Portable Cord Industrial Power and Rubber and Plastic- Distributors; Industrial;
Control Jacketed Wire and Cable Retailers; Consumers;
Direct Contractors;
OEMs
Cordsets & OEM Consumer; Consumer Cordsets; Retailers; Consumers;
Assemblies Industrial Power OEM Cordsets; Direct; Contractors;
Assemblies Distributors OEMs
Automotive Parts Aftermarket Ignition Wire Sets; Retailers; Consumers
Booster Cables Distributors
</TABLE>
INDUSTRY OVERVIEW
Total shipments of insulated wire and cable (which excludes magnet wire and
fiber optic products) in the U.S. during 1995 (the last year for which data are
presently available) were estimated by the U.S. Department of Commerce to be
approximately $11 billion. The Company estimates that shipments of such products
outside of the U.S. during 1995 exceeded $40 billion. U.S. Department of
Commerce statistics indicate that during the period from 1992 through 1995, the
value of insulated wire and cable shipments increased an average of
approximately 9% per annum. The Company believes that factors contributing to
this growth include the development of an increasingly complex data and
communication infrastructure, industrial expansion and increased construction
outlays.
General Cable believes that there are approximately 350 participants in the
U.S. insulated wire and cable market. In recent years, there has been
significant consolidation of U.S. wire and cable manufacturers. General Cable
believes that the ten largest manufacturers currently account for approximately
50% of the U.S. insulated wire and cable market. The industry is serviced
primarily by U.S. production facilities due to high transportation costs.
Insulated wire and cable is used in a wide array of products. Its principal
applications can be divided among four general end-user markets: communications,
construction, durable goods and electrical power transmission. The largest
product category within the insulated wire and cable industry
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is building wire, which accounted for approximately 26% of the total U.S. wire
and cable market in 1995 according to the U.S. Department of Commerce. Other
principal product categories and their share of the total U.S. wire and cable
market include power cable (15%), electronic and data wire (13%), telephone and
telegraph wire (17%), coaxial and antennae cable (12%) and other, including
cord, cordsets and appliance wire (17%). General Cable competes in segments of
each of these product categories, except for power cable, and estimates that its
served market in the U.S. exceeds $7.0 billion.
GROWTH STRATEGY
The following are the principal elements of General Cable's growth
strategy:
'One Company' approach. General Cable seeks to enhance its market share and
operating performance by offering its diversified product line to customers who
previously purchased wire and cable from multiple vendors but prefer to deal
with a smaller number of broader-based suppliers. The Company also seeks to
develop supply relationships with preferred customers who have a favorable
combination of volume, product mix, business strategy and industry position. The
Company believes its 'One Company' strategy will become increasingly important
as the electrical, data communications, industrial and electronic distribution
industries continue to consolidate into a smaller number of larger regional and
national participants with broader product lines. The Company also expects that
successful execution of its 'One Company Strategy' will provide more efficient
purchasing, manufacturing, marketing and distribution for its products. As part
of this strategy, the Company has established cross-functional business teams
with profit and loss responsibility for its seven product categories. These
teams seek opportunities to increase sales to existing customers and to new
customers inside and outside of traditional market channels.
Participation in growth markets. General Cable expects the markets for
certain wire and cable products to increase significantly, and believes it is
well positioned to participate in such growth. According to industry studies,
demand for high-performance datacom and electronic wire is expected to increase.
The Company believes that this increase will be driven by the development of
computer networks, more powerful workstations, and imaging and multimedia
applications. To increase its penetration of these markets, the Company has
recently established a joint venture to design, develop, manufacture and market
fiber optic premise cable for computer networking and multimedia applications in
commercial and industrial markets. The Company believes that demand for copper
wire and cable for outside voice and data applications in certain
telecommunications markets will increase as a result of greater demand from
residential customers for multiple access lines for fax machines and computer
modems, and from business customers for greater bandwidth for data distribution
and networking applications. Finally, the Company expects that demand for
portable cord, cordsets and assemblies will grow as a result of increased demand
for home office and communications equipment, expansion and maintenance of
industrial equipment and the development of higher specification products for
more environmentally demanding industrial applications.
Further improvements in productivity. Since the Acquisition, General Cable
has invested over $65 million in capital projects primarily to increase capacity
and productivity; closed five manufacturing facilities representing 20% of total
manufacturing floor space; consolidated its distribution operations through the
closing of 60 inventory stocking locations and the establishment of three
regional distribution centers; reduced salaried headcount by approximately 20%;
and upgraded its information systems. The Company believes that these actions
have generated significant productivity improvements. For example, on a constant
copper-adjusted basis, sales per employee (based on average monthly employment)
increased approximately 34% from 1994 to 1996. The Company plans to continue
similar programs in the future, including the planned capital investment of
$38.0 million in 1997 and the consolidation of several additional inventory
stocking locations into the Company's regional distribution centers.
The Company will also seek to achieve additional efficiencies in materials
procurement and usage by working with suppliers to jointly develop programs to
improve productivity. Currently, suppliers accounting for approximately 80% of
the Company's purchased raw materials participate in such continuous
productivity programs.
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New products. General Cable continues to develop new and enhanced products
to meet changing customer needs and to improve operating results. Examples of
newly introduced products include DreamLan'tm', an enhanced Category 5 data and
video cable for office use; multimedia aerial service wire which provides voice,
data and video in a single wire that can be easily installed through existing
hardware; FrogHide'tm', a 'contractor-duty' extension cord; the Plug-It'tm'
family of portable lighting and accessories; VuTron'r' III super-flexible
premium portable cord; and the MinuteMan'tm' family of armored cable. In
addition, the Company has introduced new packaging and merchandising for both
the retail and wholesale markets.
Joint ventures, strategic alliances and acquisitions. General Cable intends
to seek joint venture partners and strategic alliances both domestically and
internationally to enhance its manufacturing, distribution and sales
capabilities. Current arrangements include: (i) a joint venture with SpecTran
for the design, development, manufacture and marketing of communications-grade
fiber optic cable for the customer premises market in the United States, Canada
and Mexico; (ii) a strategic sourcing agreement with ALFLEX, a leading
manufacturer of armored cable; and (iii) a strategic sourcing agreement for
large rubber cord with Elektrim, a leading Polish power and electrical equipment
manufacturer. In addition, the Company believes that complementary acquisition
opportunities exist that would allow the Company to capitalize on its strong
brand names, broad customer base, cost-efficient manufacturing capabilities and
superior distribution processes.
International expansion. General Cable currently derives less than 5% of
its net sales outside of the U.S. The Company believes that opportunities exist
for increased export and international sales, especially as its customers
establish international operations and seek global capabilities from their
suppliers. The Predecessor had manufacturing facilities in South America and
Europe, most of which were divested in the 1980s. However, the Company believes
that its brands have retained name-recognition that will assist the Company if
it determines to re-enter these markets. Currently, the Company has sales and
distribution activities in Canada and Europe and manufacturing facilities in
Mexico and the United Kingdom.
PRODUCTS AND MARKETS
COMMUNICATIONS GROUP
The Communications Group manufactures and sells wire and cable products for
voice, data and video transmission applications ('Outside Voice and Data
Products'), multi-conductor/multi-pair cables used for computer and telephone
interconnections in telephone company central offices and customer premises
('Datacom Products') and specialty products for use in machinery and instrument
interconnection, audio, computer, security and other applications ('Industrial
Instrumentation and Control Products'). In 1996, the Communications Group
contributed approximately 35% of the Company's net sales and approximately 65%
of its operating income; in the first three months of 1997, it contributed
approximately 30% of the Company's net sales and approximately 50% of the
Company's operating income.
Outside Voice and Data Products
General Cable's principal Outside Voice and Data Products are PIC and
outside service wire. PIC is short haul trunk, feeder or distribution cable from
a telephone company central office to the subscriber premises. It consists of
multiple paired conductors (ranging from six pairs to 4,200 pairs) and various
types of sheathing, water-proofing, foil wraps and metal jacketing. Outside
service wire is used to connect telephone subscriber premises to curbside
distribution cable.
Copper wire and cable is the most widely used medium for transmission in
the local loop portion of the telecommunications infrastructure. The local loop
is the segment of the telecommunications network that connects the customer's
premises to the nearest telephone company central office. The Company believes
that copper will continue to be the transmission medium of choice in the local
loop due to factors such as the investment of over $200 billion in the local
exchange copper telecommunications infrastructure that must be maintained; the
lower installation costs of copper compared to optical fiber and other media;
and technological advancements that expand the bandwidth
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of the installed local loop copper network, which allow the continued use of
copper as the transmission medium for the new voice, data, video and multi-media
uses demanded by customers. In addition, the Company expects that demand for
Outside Voice and Data Products will increase as a result of greater demand from
residential customers for multiple access lines for fax machines and computer
modems, and the demand for new services that can be supported by a copper-based
local loop.
Technological advances supporting continued copper dominance in the local
loop include the Integrated Services Digital Network ('ISDN') and digital
subscriber line ('xDSL') variations. ISDN is a digital service that enables
voice, data and video to be carried over a single connection. ISDN applications
include remote office connectivity, internet connections, high speed computing
and videoconferencing. xDSL technologies, including HDSL (High-speed Digital
Subscriber Line), ADSL (Asymmetric Digital Subscriber Line), SDSL (Symmetric
Digital Subscriber Line) and VDSL (Very-high Data Rate Digital Subscriber Line),
employ advanced digital signal processing and advanced data compression
techniques to allow ordinary copper wires to transmit large amounts of
high-speed digital information with greatly enhanced performance. A significant
feature of xDSL technology is that both 'plain old telephone service' and
digital data can be carried on existing wires. This allows xDSL systems to be
compatible with current analog phones and upgradeable for digital systems.
Individual customers can also be added without a significant technology
investment to upgrade an entire network.
General Cable sells its Outside Voice and Data Products primarily to
telecommunications system operators through its direct sales force under supply
contracts of varying lengths, and also to telecommunications distributors. In
1995 and 1996, approximately 8.9% and 10.4%, respectively, of the Company's net
sales were generated by sales of Outside Voice and Data products to its largest
customer, U S WEST, pursuant to a ten-year supply agreement that took effect on
November 1, 1994. The agreement does not guarantee a minimum level of sales.
Product prices are subject to periodic adjustment based upon changes in the cost
of copper and other factors. The agreement is terminable by U S WEST prior to
its scheduled expiration date if the Company does not meet certain performance
criteria.
Outside Voice and Data Products face competition from other PIC
manufacturers and potentially from alternative products such as fiber optic
cable. Based on U.S. Department of Commerce reports, the Company believes that
its share of the U.S. outside voice and data market increased from approximately
13% in 1994 to approximately 21% in 1995.
Datacom Products
The Company's Datacom Products are high-bandwidth twisted pair copper and
fiber optic cable for the customer premises, central office and OEM
telecommunications equipment markets. Customer premises products are used for
wiring at subscriber premises, and include computer, riser and plenum wire and
cable. Riser cable runs between floors and plenum cable runs in air spaces,
primarily above ceilings in non-residential structures. Central office products
interconnect components within central office switching systems and public
branch exchanges.
Rapid technological advances in computers and software, including the
increased use of more powerful computers and distributed data processing, have
created the need for sophisticated local area network ('LAN') and wide area
network ('WAN') technologies. Such technologies demand advanced data
transmission cable that enables increased volumes of data to be transmitted at
faster speeds without diminishing data integrity. Because of continuing
technological advances and new network applications, the Company expects that
demand for such high-performance data cable will continue to increase. The
Company is a leading supplier of a broad family of cables for LAN and WAN
applications, which are often specified for large, complex installations with
demanding data processing applications such as a new Motorola Inc. plant in
Boynton Beach, Florida and the Mirage Resorts, Inc. Bellagio Hotel and Casino
currently under construction in Las Vegas, Nevada.
The Company's strategy has been to focus its marketing, engineering and
development efforts on introducing new products in response to the growing
demand for higher-performance data transmission cable. For example, in 1996 the
Company introduced DreamLan'tm', an enhanced performance Category 5 video and
data cable for office use, as well as high pair-count Category 3 and Category 5
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plenum products and indoor/outdoor rated Category 3 products. The Company will
continue to invest in manufacturing technology and to focus on new product
development and product improvements to serve this market.
The growth and evolution of LAN and WAN networks have also resulted in new
and distinct processes for specifying, selecting, installing and guaranteeing
the performance of data transmission cable required to support such networks.
General Cable engineers coordinate with end users and installers to determine
the specifications of the cable required for a particular network. The Company's
product development, manufacturing and product testing and verification
capabilities, as well as its established relationships and reputation in the
industry, have enabled it to become an integral participant in this process. For
example, the Company works with a number of connector manufacturers to further
sales in this market by offering joint warranty programs to assure system
performance.
In December 1996, subsidiaries of the Company and SpecTran formed General
Photonics LLC ('General Photonics'), an equally-owned joint venture, for the
design, development, manufacture and marketing of communications-grade fiber
optic cable for the customer premises market in the United States, Canada and
Mexico. SpecTran is a developer, manufacturer and marketer of glass optical
fiber and specialty value-added fiber optic components and assemblies. Based on
the most recent U.S. Department of Commerce data, the premise fiber optic market
grew at an annual rate of approximately 23% over the five-year period ended in
1995. Under the joint venture arrangement, fiber optic cable and other products
manufactured by General Photonics will be marketed primarily through General
Cable's sales force with some direct sales and customer support provided by
General Photonics personnel. General Cable believes that the addition of premise
fiber optic cable to the Company's product line will enable it to better serve
its major communications customers, nearly all of whom currently purchase fiber
optic cables. In connection with the joint venture, General Photonics entered
into a contract with SpecTran's fiber optic manufacturing subsidiary. The
contract, which is co-terminous with the joint venture, provides the joint
venture with an available supply of optical fiber. GCC and SpecTran also have
entered into a non-compete arrangement as part of the joint venture.
General Cable sells Datacom Products primarily through distributors and
agents under the General Cable'r' brand name. The Company believes, based on
U.S. Department of Commerce reports, that it has approximately a 12% share of
the U.S. market for copper datacom products based on 1995 sales.
Industrial Instrumentation and Control Products
The Company's Industrial Instrumentation and Control Products include
multi-conductor, multi-pair, coaxial, hook-up, audio and microphone cables,
speaker and television lead wire, high temperature and shielded electronic wire,
and harness assemblies. Primary uses for these products are various applications
within the commercial, industrial instrumentation and control, and residential
markets.
These markets require a broad range of multi-conductor products for
applications involving programmable controllers, robotics, process control and
computer integrated manufacturing, sensors and test equipment, as well as cable
for fire alarm, smoke detection, sprinkler control, entertainment and security
systems. Many industrial and commercial environments require cables with
exterior armor and/or jacketing materials that can endure exposure to chemicals,
extreme temperatures and outside elements. The Company offers products that are
specially designed for these applications.
Harness assemblies are used in communications switching systems and
industrial control applications. These assemblies are used in such products as
data processing equipment, telecommunications network switches, office machines
and industrial machinery.
The Company's Industrial Instrumentation and Control Products are sold
primarily through distributors and agents under the Carol'r' brand name. The
Company believes, based on U.S. Department of Commerce reports, that it has
approximately a 7% share of the U.S. market for industrial instrumentation and
control products (excluding harness assemblies and coaxial products for cable
television and other applications) based on 1995 sales.
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ELECTRICAL GROUP
The Electrical Group manufactures and sells wire and cable products
(typically for applications at 600 volts or less) for use in non-residential and
residential structures and in a wide variety of capital goods and consumer uses.
General Cable has four principal Electrical product categories: building wire,
portable cord, cordsets and OEM assemblies, and automotive products. In 1996,
the Electrical Group contributed approximately 65% of the Company's net sales
and approximately 35% of its operating income; in the first three months of
1997, it contributed approximately 70% of the Company's net sales and
approximately 50% of the Company's operating income. The Company intends to seek
continued improvements in productivity, new product developments and customer
relationships to increase the profits derived from these product lines.
Building Wire
General Cable manufactures and sells a broad line of thermosetting,
thermoplastic and elastomeric insulated wire and cable products for the
distribution of electrical power to and within non-residential and residential
structures. The Company's principal building wire products are THHN, a copper
conductor used in non-residential construction and industrial applications,
Romex'r' brand residential circuit, intermediate and feeder sized cables, and
value-added specialty cables for industrial applications. According to the most
recent brand preference survey by Electrical Construction & Maintenance, General
Cable has the highest-ranked brand of building wire in the U.S. among electrical
contractors and operators of plants and facilities.
Based on data compiled by the Copper Development Association, from 1980
through 1995 new non-residential and residential construction square footage has
been generally flat, while copper cable usage has almost doubled. The Company
believes that demand for building wire has increased as a result of greater
wiring density required in new construction and renovation projects to provide
for the electrical needs of such appliances as trash compactors, microwave
ovens, air conditioners, entertainment centers, lighting and climate controls,
specialty and task lighting, electric garages and outdoor lighting systems.
An increasing portion of the Company's building wire sales consists of
sales of high value-added niche products that meet more demanding service
requirements or reduce installation costs. These products include tray cable,
armored cable, aluminum utility service cable and control cable used in the
operation and interconnection of protective and signalling devices in electrical
distribution systems.
General Cable has entered into a strategic sourcing agreement with ALFLEX,
a subsidiary of Commonwealth Industries, to expand the Company's position in the
armored cable market. Armored cable is armor sheathed electrical cable that
features excellent mechanical protection and has become a cost effective
alternative to traditional conduit and wire installations.
General Cable sells its building wire products primarily to electrical
distributors for resale to electrical contractors, industrial customers and
OEMs. Sales are also made through hardware and home center retail chains and
other retail stores. The Company believes, based on U.S. Department of Commerce
reports, that it has approximately a 17% share of the U.S. building wire and
cable market based on 1995 sales. In addition, based on published industry
information, the Company believes that it is one of the three largest
competitors in the U.S. building wire market.
Portable Cord
The Company manufactures and sells a wide variety of rubber and plastic
insulated portable cord products for power and control applications serving
industrial, mining, entertainment, OEM, farming and other markets. Portable cord
products have electrical characteristics similar to building wire, but are
designed and constructed to be used in more dynamic and severe environmental
conditions where a flexible but durable power supply is required. Portable cord
products include both standard commercial cord and cord products designed to
customer specifications. Portable rubber-jacketed power cord, the Company's
largest selling cord product line, is typically manufactured without a
connection device at either end and is sold in standard and customer-specified
lengths. Portable cord is also sold to OEMs for use as power cords on their
products and in other applications, in which case the cord is made to the
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OEMs' specifications. The Company also manufactures portable cord for use with
moveable heavy equipment and machinery. According to the most recent brand
preference survey by Electrical Construction & Maintenance, General Cable has
the highest-ranked brand of portable cord in the U.S. among electrical
contractors, operators of plants and facilities and engineering firms.
General Cable's portable cords are used in the installation of new
industrial equipment and the maintenance of existing equipment, and to supply
electrical power at temporary venues such as festivals, sporting events,
concerts and construction sites. For example, General Cable supplied portable
cord for the 1996 Summer Olympics. The Company expects demand for portable cord
to grow in response to general economic activity and the development of higher
specification products for more environmentally demanding industrial
applications.
General Cable's portable cord products are sold under the Carol'r' brand
name, primarily through electrical distributors and electrical retailers to
industrial customers, OEMs, contractors and consumers. The Company believes,
based on U.S. Department of Commerce reports, that it has approximately a 16%
share of the U.S. portable cord market based on 1995 sales.
Cordsets and OEM Assemblies
General Cable focuses primarily on high-performance, value-added cordsets,
including extension cords and multiple outlet power centers, appliance cords for
ranges and dryers, portable lights, and cordsets with surge protection and
ground fault interruption devices for use by consumers, contractors and OEMs.
Cordsets are manufactured with connection devices at one or both ends, with
standard indoor and outdoor, single or multiple outlet extension cords being the
most common example. Jackets for cordset products are typically thermoplastic.
The Company has developed many high-performance plastic and premium rubber
cordsets for use in a wide variety of demanding applications, such as outdoor
locations or rugged job sites.
OEM assemblies are used in a variety of demanding applications such as
power delivery to office modules and for such products as power hand tools,
floor care products and other appliances. The Company targets customers who
require premium cordsets or assemblies that require innovative engineering and
for whom the Company's vertical integration in high-performance wire and cable
provides a competitive cost advantage.
The Company sells its cordsets and cable harness assemblies primarily to
OEMs and to hardware and home center retail chains, hardware distributors and
mass merchants for resale to consumers and contractors. In addition, an
increasing portion of the Company's cordset sales are to electrical distributors
for resale to retail outlets, electrical contractors, industrial companies and
OEMs.
The Company faces competition for these products from both U.S. and foreign
(particularly, Mexican and Asian) cordset manufacturers and suppliers. The
Company believes that it is a leading domestic supplier of cordsets.
Automotive Products
General Cable's principal automotive products are ignition wire sets and
booster cables for sale to the automotive aftermarket. The Company believes that
it offers one of the broadest ranges of ignition wire sets for the U.S.
automotive aftermarket. Many of the Company's automotive products are built to
OEM specifications, and the Company utilizes the expertise of its automotive and
materials engineers in the design and manufacture of these products.
Booster cable sales are affected by the severity of weather conditions and
related promotional activity by retailers. As a result, a majority of booster
cable sales occur between September and December.
General Cable sells its automotive wire and cable primarily to automotive
parts retailers and distributors, mass merchants, hardware and home center
retail chains and hardware distributors. The Company's automotive products are
also sold on a private label basis to retailers and other automotive parts
manufacturers. The Company believes that it is one of the leading suppliers of
ignition wire to the U.S. automotive aftermarket.
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Other Operations
Genca, a subsidiary of the Company, designs, manufactures and sells
extruders, extrusion tooling and equipment and synthetic and carbide wire
drawing dies for sale to third parties and for use by General Cable. Genca's
product line of extrusion tooling and equipment includes generic and specialty
crossheads, extrusion and mixing screws, small tools and complete extrusion
equipment systems, including components and related technical services. These
products are used principally for the manufacture of insulated wire and cable,
and the fabrication of plastic tubing and various hoses and pipes. General Cable
has been focusing on expanding the applications for these products outside of
the traditional wire and cable markets. Among the growing technologies utilizing
the Company's extrusion equipment and tooling are the medical tubing and
automotive fuel line industries. Genca's products are primarily sold through
Genca's agents and direct sales force to end users. Although these products
represent a relatively small portion of the Company's sales, the Company
believes that its other operations benefit from the technology and equipment
provided by this business.
MARKETING, DISTRIBUTION AND CUSTOMER SERVICE
General Cable sells its products primarily through electrical, data
communications and electronic distribution companies, and automotive, hardware
and home center retail chains, and directly to end users in the industrial,
entertainment and communications markets. General Cable has developed supply
relationships with preferred customers who have a favorable combination of
volume, product mix, business strategy and industry position, and has
implemented a number of initiatives designed to enable the Company to better
serve these customers.
Since the Acquisition, General Cable has been implementing a comprehensive
restructuring of its marketing and distribution processes, which has contributed
to the Company's improved profitability and customer service. As a principal
part of this initiative, the Company has focused on creating an organizational
structure and putting in place the facilities and processes necessary to enable
the Company to execute its 'One Company' strategy. In this regard, the Company
has restructured both its direct sales force and its commissioned agents and has
redesigned its sales force, agent and customer incentives.
The Company is currently implementing several operational and service
enhancements, including electronic locator systems for materials and finished
products, bar coding, Advance Shipping Notifications, EDI and Vendor Managed
Inventory ('VMI'). Company-wide electronic product locator systems for raw and
in-process materials and finished products and comprehensive bar coding at the
point of manufacture are being put in place in all of the Company's plants and
regional distribution centers to allow the Company to better monitor, control
and make effective use of its inventories. Advance Shipping Notifications are
being introduced company-wide so that in-transit product is identifiable and can
be allocated against orders while moving toward a regional distribution center
or to a customer. EDI has enabled the Company to reduce transaction costs and
improve communications with its customers. VMI allows the Company to monitor and
replenish customer inventory, thereby reducing customer purchasing and inventory
costs and improving the Company's production and inventory planning and customer
service. The Company believes that these services enable its customers to
improve service to their own customers.
General Cable has also implemented a number of initiatives designed to
reduce operating costs and improve the Company's inventory management
capabilities to support increased sales and improved order fill rates. Since
1994, the Company has closed approximately 60 inventory stocking locations and
established three new regional distribution centers. The Company's distribution
centers enable General Cable to ship all of its products to a customer on one
order with one set of shipping documents and to bill on one invoice. As a result
of these increased efficiencies, the Company has been able to achieve
significant inventory reductions, decreased operating costs and improved
delivery times and fill rates. The Company intends to open two new regional
distribution centers in 1997, and to consolidate several additional inventory
stocking locations into its regional distribution centers.
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COMPETITION
The markets for all of General Cable's products are highly competitive, and
the Company experiences competition from at least one major competitor within
each market. Due to the diversity of its product lines, however, the Company
believes that no single competitor competes with the Company across the entire
spectrum of the Company's product lines. General Cable believes that it has
developed strong customer relations as a result of its ability to supply
customer needs across a broad range of products, its commitment to quality
control and continuous improvement, its continuing investment in information
technology, its emphasis on customer service, and its substantial production and
distribution resources.
Although the primary competitive factors for General Cable's products vary
somewhat across the different product categories, the principal factors
influencing competition are generally breadth of product line, inventory
availability and delivery time, price, quality and customer service. Price is a
highly significant factor for certain lines within the Company's Electrical
product categories. Many of the Company's products are made to industry
specifications, and are therefore essentially functionally interchangeable with
those of competitors. See 'Risk Factors -- Price and Other Competitive Factors.'
However, the Company believes that significant opportunities exist to
differentiate all of its products on the basis of quality, consistent
availability, conformance to customer specifications and customer service.
Within the communications market, conformance to manufacturer's specifications
and technological superiority are also important competitive factors. Brand
recognition is also a primary differentiating factor in the portable cord market
and, to a lesser extent, in the Company's other product groups.
MANUFACTURING AND TECHNOLOGY
General Cable's manufacturing strategy is primarily focused on product
quality and production efficiency. The Company seeks to optimize its cost
structure through vertical integration, where appropriate, to lower its
production costs while maintaining high quality standards in the finished
products. For example, General Cable internally produces a substantial portion
of its copper rod requirements. General Cable also develops and produces certain
proprietary thermoplastic, thermosetting and elastomeric compounds, which are
used as insulation and jacketing for many of its products.
General Cable has invested and expects to continue to invest in new
equipment and production processes, process controls, automation, material
handling and packaging to further improve its production efficiency. Since the
Acquisition, General Cable has spent an aggregate of $65.3 million for capital
projects, and expects to spend $38.0 million in 1997. In addition, since the
Acquisition, General Cable has closed five manufacturing facilities, reducing
overall manufacturing floor space by 20% without reducing production output.
General Cable's manufacturing operations involve a broad variety of
manufacturing processes which reflect the breadth of the Company's product
lines. All of the Company's copper wire and cable products require that copper
rod be drawn and insulated. The Company draws most of its wire requirements at
its manufacturing facilities, and purchases the rest of its needs from third
parties. Wire drawing is the process of reducing the conductor diameter by
pulling it through a converging set of dies until the specified product size is
attained. For certain of the Company's products, the drawn wire is then bundled.
Most wire products, including the bundled wire, are insulated with
thermoplastic, thermosetting, elastomeric or fluoropolymer compounds through an
extrusion process. Extrusion involves the melting, feeding and pumping of a
polymeric compound through a die to shape it into its final form on the wire.
The Company has the capability to manufacture thermoplastic, thermosetting and
elastomeric compounds in a wide variety of proprietary formulations and colors
which are then extruded onto wire. General Cable also supplies its competitors
with certain of these proprietary compounds. The insulated wires are then
combined, or cabled, in a number of configurations to achieve the desired
performance characteristics. A final extrusion process applies an overall
covering, or 'jacket,' to the cable.
General Cable maintains advanced manufacturing, quality assurance and
testing equipment geared to the specific products which it manufactures, and
which enable the Company to achieve the critical tolerances in insulating,
cabling, jacketing, pairing and other processes required for many of the
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Company's high-performance products. The Company believes that meeting industry
standards and codes is critical to its success, and its products are designed to
satisfy the safety and performance standards set by various industrial groups
and testing laboratories. UL, a nonprofit, independent organization, operates a
listing service for electrical and electronic materials and equipment. UL
listing is required by national and most local electrical codes in the United
States. UL conformity assessment includes testing, evaluation, certification and
periodic inspections by UL of the Company's manufacturing facilities.
In addition to standards organizations, the Company's electrical products
are designed to comply with electrical code requirements, particularly the
National Electric Code, federal specifications and various local and municipal
codes. As part of the Company's focus on meeting and exceeding customer
expectations and industry standards, 11 of the Company's 17 U.S. manufacturing
facilities are ISO 9002 certified, and the Company is working to certify all of
its manufacturing and distribution facilities. ISO 9002 is an internationally
recognized verification system for quality management. The Company believes that
such registration is an important factor in its ability to maintain and expand
its participation in international markets.
RAW MATERIALS
The principal raw material used by General Cable in the manufacture of its
wire and cable products is copper. General Cable purchases copper in either
cathode, rod or wire form from a number of major domestic and foreign producers,
generally through annual supply contracts. In 1996, the Company produced
approximately 37% of the copper rod used in its manufacturing operations at its
cast copper rod mill, which uses both cathode and recycled copper. Copper is
available from many sources, and General Cable believes that it is not dependent
on any single supplier of copper. In 1996, the Company's largest supplier of
copper accounted for approximately 30% of the Company's copper purchases.
General Cable has centralized its copper purchasing to capitalize on
economies of scale and to facilitate the negotiation of favorable purchase terms
from suppliers. The cost of copper has been subject to considerable volatility
over the past several years. However, as a result of a number of practices
intended to match copper purchases with sales, the Company's profitability has
generally not been significantly affected by changes in copper prices. For
certain of the Company's products (primarily building wire and portable cord),
which are priced on a daily basis, the Company purchases copper at prices based
on the average of the daily closing selling prices of copper on the COMEX for
the month in which the purchase occurs, plus a negotiated premium (principally
representing transportation costs and processing charges). For a portion of its
other sales, the Company purchases copper cathode from its existing vendor base
at a firm price for future delivery against orders or, with respect to a
contract that is fixed as to price but not as to volume, for a portion of the
estimated volume. Finally, the Company's arrangements with certain customers
provide for the pass-through of changes in copper costs through price revisions.
As a result of these practices, the Company generally passes changes in copper
prices along to its customers, although there are timing delays of varying
lengths depending upon the type of product, competitive conditions and
particular customer arrangements. Generally, the Company does not engage in
speculative metals trading or other speculative activities, nor does it engage
in activities to hedge the underlying value of its copper inventory. In
addition, the New Credit Facility is expected to contain a provision restricting
General Cable from engaging in hedging activities other than in the ordinary
course of business. See 'Risk Factors -- Impact of Copper Prices' and
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
Other raw materials utilized by the Company include nylon, PVC resin and
compounds, polyethylene and plasticizers, fluoropolymer compounds, a variety of
filling, binding and sheathing materials, and aluminum wire. The Company
believes that all of these materials are available in sufficient quantities
through purchases in the open market.
In connection with the Company's joint venture with SpecTran, General
Photonics has entered into a contract with a wholly-owned subsidiary of SpecTran
for the purchase of optical fiber. See ' -- Products and Markets --
Communications Group -- Datacom Products.'
32
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<PAGE>
PATENTS AND TRADEMARKS
General Cable believes that the success of its business depends more on the
technical competence, creativity and marketing abilities of its employees than
on any individual patent, trademark or copyright. Nevertheless, General Cable
has a policy of seeking patents when appropriate on inventions concerning new
products and product improvements as part of its ongoing research, development
and manufacturing activities. The Company owns 35 U.S. patents, which expire in
1999 through 2017, and has four patent applications pending in the U.S. In
addition, the Company owns 25 foreign patents, which expire in 1998 through
2015. The Company also owns 73 registered trademarks and 29 trademarks for which
application for registration is pending.
Although in the aggregate these patents and trademarks are of considerable
importance to the manufacturing and marketing of many of the Company's products,
the Company does not consider any single patent or trademark or group of patents
or trademarks to be material to its business as a whole. While General Cable
occasionally obtains patent licenses from third parties, none are deemed to be
significant. Trademarks which are deemed to be important are Carol'r', Genca'r',
General Cable'r', Romex'r', Vutron'r' and DreamLan'tm', and the General Cable
triangle symbol. General Cable believes that the Company's products bearing
these trademarks have achieved significant brand recognition within the
industry.
General Cable also relies on trade secret protection for its confidential
and proprietary information. The Company routinely enters into confidentiality
agreements with its employees. There can be no assurance, however, that others
will not independently obtain similar information and techniques or otherwise
gain access to the Company's trade secrets or that the Company will be able to
effectively protect its trade secrets.
ENGINEERING AND DEVELOPMENT
General Cable actively engages in a continuing engineering and development
program and employs over 75 engineers and technicians. The Company maintains a
central research, development and product testing laboratory in Highland
Heights, Kentucky. In addition, each of the Company's manufacturing locations
has process and manufacturing engineering facilities and, in certain cases,
product engineering facilities. The engineering and development activities
conducted by the Company at these facilities include new product development,
testing and analysis, process and equipment development and testing, and
compound materials development and testing.
The Company's products are designed to satisfy the safety and performance
standards set by various industrial groups and testing laboratories, and care is
exercised throughout the manufacturing process to ensure that the products
conform to industry, government and customer specifications. The characteristics
of insulating compounds are designed to satisfy safety and other technical
requirements.
General Cable's personnel take an active role in the establishment of
industry standards, codes and specifications. The Company has representatives on
committees of the National Electrical Manufacturers Association, the Institute
of Electrical & Electronics Engineers, the Electronic Industries Association and
other organizations.
EMPLOYEES
At March 31, 1997, approximately 3,800 persons were employed by General
Cable, and collective bargaining agreements covered approximately 2,200
employees at 14 locations. During the last five years, the Company has
experienced two strikes affecting a total of three facilities; both preceded the
Acquisition and were settled on satisfactory terms. Union contracts will expire
at three facilities in 1997, six facilities in 1998 and two facilities in 1999.
The Company believes that its relationships with employees are good.
PROPERTIES
General Cable operates 17 manufacturing facilities in the U.S., of which
14, totaling approximately 3.5 million square feet, are owned. The remaining
three facilities, totaling approximately 216,000 square
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<PAGE>
feet, are leased under agreements with expiration dates ranging from 1997 to
2000. In addition, General Cable operates two manufacturing facilities outside
the U.S., totaling approximately 27,500 square feet. The Company also leases
three regional distribution centers, totaling approximately 717,240 square feet,
located in Anaheim, Dallas and Atlanta, and a 64,000 square foot warehouse in
Des Plaines, Illinois. These leases expire in 2001 and 2002. Company agents
manage two additional regional distribution centers in Chicago and Bridgeton,
New Jersey.
The Company's principal properties are listed below. The Company believes
that its properties are generally well maintained and are adequate for the
Company's current level of operations.
<TABLE>
<CAPTION>
SQUARE USE/PRODUCT OWNED
LOCATION FEET LINE(S) OR LEASED
- ------------------------------ ------- --------------------------------------- ---------
<S> <C> <C> <C>
MANUFACTURING FACILITIES:
Manchester, NH................ 533,000 Electronic and Datacom Products Owned
Plano, TX..................... 404,000 Electrical Products and Rod Mill Owned
Lincoln, RI................... 398,000 Electrical Products and Automotive Owned
Bonham, TX.................... 330,000 Outside Voice and Data Products Owned
Mountoursville, PA............ 318,000 Cordsets and Electrical Products Owned
Monticello, IL................ 250,000 Outside Voice and Data Products Owned
Kingman, AZ................... 243,000 Electrical Products Owned
Watkinsville, GA.............. 224,000 Electrical Products Owned
Altoona, PA................... 195,000 Automotive Products Owned
Lawrenceburg, KY.............. 190,000 Outside Voice and Data Products and Owned
Datacom Products
Williamstown, MA.............. 167,000 Electrical Products and Cordsets Owned
Taunton, MA................... 138,000 Wire Fabricating Leased
Sanger, CA.................... 105,000 Datacom Products Owned
Cass City, MI................. 100,000 Datacom Products Owned
Clearwater, FL................ 72,300 Extrusion Systems and Tooling Owned
Kenly, NC..................... 50,000 Electrical OEM Products Leased
Ft. Wayne, IN................. 28,000 Wire Drawing Dies Leased
Piedras Negras, Mexico........ 16,540 Communications Assemblies Leased
Wellingborough, UK............ 11,000 Automotive and Electrical OEM Products Leased
DISTRIBUTION AND OTHER FACILITIES:
Atlanta, GA................... 328,260 Distribution Center Leased
Dallas, TX.................... 200,000 Distribution Center Leased
Anaheim, CA................... 188,980 Distribution Center Leased
Highland Heights, KY.......... 166,000 Corporate Headquarters and Laboratory Owned
Des Plaines, IL............... 64,000 Warehouse Leased
Toronto, Ontario Canada....... 24,000 Sales Office and Warehouse Leased
</TABLE>
ENVIRONMENTAL MATTERS
The Company is subject to numerous federal, state, local and foreign laws
and regulations relating to the storage, handling, emission and discharge of
materials into the environment, including CERCLA, the Clean Water Act, the Clean
Air Act (including the 1990 amendments) and the Resource Conservation and
Recovery Act.
Subsidiaries of the Company have been identified as PRPs with respect to
several sites designated for cleanup under CERCLA or similar state laws, which
impose liability for cleanup of certain waste sites and for related natural
resource damages without regard to fault or the legality of waste generation or
disposal. Persons liable for such costs and damages generally include the site
owner or operator and persons that disposed or arranged for the disposal of
hazardous substances found at those sites. Although CERCLA imposes joint and
several liability on all PRPs, in application, the PRPs typically allocate the
investigation and cleanup costs based, among other things, upon the volume of
waste contributed by each PRP. Settlements can often be achieved through
negotiations with the appropriate environmental agency or the other PRPs. PRPs
that contributed small amounts of waste (typically less
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<PAGE>
than 1% of the waste) are often given the opportunity to settle as 'de minimis'
parties, resolving their liability for a particular site. The Company does not
own or operate any of the waste sites with respect to which it has been named as
a PRP by the government. Based on its review and other factors, the Company
believes that costs to the Company relating to environmental clean-up at these
sites will not have a material adverse effect on its results of operations, cash
flows or financial position.
American Premier, in connection with the Acquisition, agreed to indemnify
General Cable against liabilities (including all environmental liabilities)
arising out of General Cable's or its predecessors' ownership or operation of
the Indiana Steel & Wire Company and Marathon Manufacturing Holdings, Inc.
businesses (which were divested by the Predecessor prior to the Acquisition),
without limitation as to time or amount. American Premier also agreed to
indemnify General Cable against 66 2/3% of all other environmental liabilities
arising out of General Cable's or its predecessors' ownership or operation of
other properties and assets in excess of $10 million but not in excess of $33
million which are identified during the seven year period ending June 2001.
General Cable also has claims against third parties with respect to some of
these liabilities. While it is difficult to estimate future environmental
liabilities accurately, the Company does not currently anticipate any material
adverse effect on its results of operations, financial condition or cash flows
as a result of compliance with federal, state, local or foreign environmental
laws or regulations or cleanup costs of the sites discussed above.
At March 31, 1997, the Company had accrued approximately $7.2 million
(exclusive of an additional accrual of approximately $2.2 million for the
asbestos-related litigation described below under ' -- Legal Proceedings') for
various environmental related liabilities of which the Company is aware. The
Company cannot predict whether future developments in laws and regulations
concerning environmental protection or unanticipated enforcement or other legal
actions, particularly with respect to environmental standards, will require
material capital expenditures or otherwise affect its financial condition,
results of operation or cash flow in a materially adverse manner or whether it
will be successful in meeting future demands of regulatory agencies in a manner
which will not have a material adverse effect on the Company's results of
operations, cash flows or financial position. See 'Risk Factors -- Environmental
Matters.'
LEGAL PROCEEDINGS
There are approximately 4,900 pending non-maritime asbestos cases involving
subsidiaries of the Company. The overwhelming majority of these cases involve
employees in shipyards alleging exposure to asbestos-contaminated shipboard
cable manufactured by General Cable's predecessors. In addition to the Company's
subsidiaries, numerous other wire and cable manufacturers have been named as
defendants. Most cases previously filed have been dismissed with prejudice and
without imposition of liability against the Company. In some instances,
individual cases have been settled on a de minimis basis. In addition,
subsidiaries of the Company have been named, together with numerous other wire
and cable manufacturers, as defendants in approximately 14,000 suits brought by
plaintiffs alleging asbestos-related injury from the maritime industry ('MARDOC'
cases), under the supervision of the U.S. District Court for the District of
Eastern Pennsylvania (the 'District Court'). On May 1, 1996 the District Court
ordered that 9,373 of such MARDOC cases be dismissed without prejudice for
failure to plead sufficient facts. Pursuant to that order of dismissal,
plaintiffs' attorney was permitted to bring future MARDOC cases only if the
cases were brought in admiralty under the Merchant Marine Act of 1920 (commonly
known as the Jones Act) and if counsel paid a filing fee for each new complaint
and pleaded sufficient facts showing an asbestos-related injury as well as
product identification specific as to each defendant. Subsequently, plaintiffs'
counsel filed additional cases, and defendants filed a motion seeking dismissal
of all MARDOC cases and an injunction against any new suits on essentially the
same grounds as the prior motion that was granted in May 1996. On March 17,
1997, the District Court ordered that all MARDOC cases, including any cases not
covered by the May 1, 1996 order, all actions filed after May 1, 1996 and all
future cases, be administratively dismissed and placed on an inactive docket.
These cases were dismissed without prejudice, but can be refiled only if the
cases are brought in admiralty under the Jones Act and plaintiff's counsel pays
a filing fee for each such complaint and pleads sufficient facts showing both an
asbestos-related injury and product identification specific as to
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<PAGE>
<PAGE>
each defendant. Based upon its experience to date, the Company does not believe
that the outcome of the pending non-maritime and MARDOC asbestos cases will have
a material adverse effect on its results of operations, cash flows or financial
position.
In January 1994, General Cable entered into a settlement agreement with
certain principal primary insurers concerning liability for the costs of
defense, judgments and settlements, if any, in all of the asbestos litigation
described above. Subject to the terms and conditions of the settlement
agreement, the insurers are responsible for a substantial portion of the costs
and expenses incurred in the defense or resolution of such litigation.
Accordingly, based on (i) the terms of the insurance settlement agreement; (ii)
the relative costs and expenses incurred in the disposition of past asbestos
cases; (iii) reserves established on the books of the Company which are believed
to be reasonable; and (iv) defenses available to the Company in the litigation,
the Company believes that the resolution of the present asbestos litigation will
not have a material adverse effect on its results of operations, cash flows or
financial position. Liabilities incurred in connection with asbestos litigation
are not covered by the American Premier indemnification referred to under
' -- Environmental Liabilities' above.
General Cable is a party to various other legal proceedings and
administrative actions in addition to those discussed above and under
' -- Environmental Matters,' all of which are of an ordinary or routine nature
incidental to the operations of the Company. In the opinion of the Company's
management, such proceedings and actions should not, individually or in the
aggregate, have a material adverse effect on its results of operations, cash
flows or financial position.
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MANAGEMENT
EXECUTIVE OFFICERS
Upon consummation of the Offerings, the executive officers of General Cable
will be as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) WITH THE COMPANY
- -------------------------------- --- ---------------------------------------------------------------
<S> <C> <C>
Stephen Rabinowitz.............. 54 Chairman, President, Chief Executive Officer
and Director
Gregory B. Kenny................ 44 Executive Vice President, Chief Operating Officer
and Director
Christopher F. Virgulak......... 42 Executive Vice President, Chief
Financial Officer and Treasurer
Robert J. Siverd................ 48 Executive Vice President,
General Counsel and Secretary
</TABLE>
Mr. Rabinowitz has served as President and Chief Executive Officer of GCC
since joining it in September 1994 and became Chairman, President and Chief
Executive Officer of the Company in March 1997. From March 1992 until August
1994, Mr. Rabinowitz served as President and Group Executive for AlliedSignal
Friction Materials and as President of AlliedSignal Braking Systems Business.
For the ten years prior thereto, he held various executive positions at General
Electric Company, including President and Chief Executive Officer of GE
Electrical Distribution and Control and Vice President and General Manager of GE
Lighting Technology Division. Mr. Rabinowitz is a director of JLG Industries,
Inc.
Mr. Kenny has served as Executive Vice President of GCC since June 1994. He
also became Chief Operating Officer of GCC in February 1997 and Executive Vice
President, Chief Operating Officer and a director of the Company in March 1997.
Mr. Kenny was Senior Vice President of GCC from April 1992 until June 1994. He
joined PCC in 1982 and served in various executive positions with PCC and GCC
thereafter.
Mr. Virgulak has served as Executive Vice President, Chief Financial
Officer and Treasurer of GCC since October 1994 and became Executive Vice
President, Chief Financial Officer and Treasurer of the Company in March 1997.
From January 1993 to October 1994, Mr. Virgulak was Chief Financial Officer of
Wassall USA, Inc., an affiliate of Wassall. From November 1990 to September
1992, he served as Chief Financial Officer of Carol Cable Company, Inc., then a
subsidiary of PCC.
Mr. Siverd has served as Executive Vice President, General Counsel and
Secretary of GCC since August 1994 and became Executive Vice President, General
Counsel and Secretary of the Company in March 1997. He was Senior Vice
President, General Counsel and Secretary of GCC from April 1992 until July 1994
and Vice President and Associate General Counsel of PCC from September 1987
through June 1992.
OTHER KEY EMPLOYEES
General Cable's other key management employees are as follows:
<TABLE>
<CAPTION>
YEARS OF
NAME AGE POSITION(S) SERVICE
- --------------------------------- --- ------------------------------------------------- ------------
<S> <C> <C> <C>
Harold C. Bevis.................. 37 Senior Vice President and General Manager for 2
Building Wire Products
Richard D. Foster................ 57 Senior Vice President, Human Resources 1
Joseph Ewing-Chow................ 51 Vice President, Information Systems 16
R. David Corey................... 48 Vice President and General Manager for Outside 26
Voice and Data Products
Kenneth A. McAllister............ 52 Vice President and General Manager for 11
Datacom/Electronic Products
Elizabeth W. Taliaferro.......... 41 Vice President, Sales Systems 15
Bryan Kelln...................... 31 Vice President, Supply Chain Management 2
Larry L. Davis................... 55 Vice President, Operations 34
</TABLE>
37
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<PAGE>
BOARD OF DIRECTORS
General
The Board of Directors of the Company currently consists of the Company's
Chief Executive and Chief Operating Officers, Stephen Rabinowitz and Gregory B.
Kenny, who were elected as directors in March 1997 and two designees of Wassall,
Kevin J. Doyle and David A. Roper, who have served as directors since the
Acquisition. Mr. Doyle, 41, has been Chief Executive Officer of Wassall USA,
Inc., an affiliate of Wassall, since 1991 and has been a director of Wassall
since January 1993. He served as President of the Company and Chairman of GCC
from the Acquisition until March 1997. Mr. Roper, 46, has been an executive
director of Wassall since September 1988 and Deputy Chief Executive of Wassall
since March 1994.
The directors are divided into three classes of directors serving staggered
three-year terms. The initial term of office of the first class of directors
(the 'Class I Directors') will expire at the 1998 annual meeting of
stockholders, the initial term of office of the second class of directors (the
'Class II Directors') will expire at the 1999 annual meeting of stockholders,
and the initial term of office of the third class of directors (the 'Class III
Directors') will expire at the 2000 annual meeting of stockholders. The Class I
Directors will initially consist of Mr. Roper, the Class II Directors will
initially consist of Mr. Kenny, and the Class III Directors will initially
consist of Messrs. Doyle and Rabinowitz. Commencing with the 1998 annual meeting
of stockholders, directors elected to succeed those directors whose terms have
thereupon expired will be elected to a term of office to expire at the third
succeeding annual meeting of stockholders after their election. See 'Description
of Capital Stock -- Certain Anti-Takeover Effects -- Certain Charter and By-Law
Provisions.'
The Company anticipates that the Board of Directors will be expanded to add
four directors (to be divided among the three classes) who are not employees of
either the Company or Wassall as soon as practicable after consummation of the
Offerings, and that at least one non-employee director will be added no later
than 90 days after completion of the Offerings. It is anticipated that Mr. Roper
will resign from the Board of Directors upon the appointment of one or more of
such additional directors.
Committees
Upon appointment of the additional directors, the Company's Board of
Directors will establish an Audit Committee and a Compensation Committee, each
consisting entirely of directors who are not employees of the Company. The
functions of these standing committees will be as follows:
Audit Committee. The Audit Committee will be responsible for matters
relating to accounting policies and practices, financial reporting, and internal
controls. It will recommend to the Board of Directors the appointment of a firm
of independent accountants to audit the Company's financial statements and
review with representatives of the independent accountants the scope of the
audit of the Company's financial statements, results of audits, audit costs and
recommendations with respect to internal controls and financial matters. It will
also review non-audit services rendered by the Company's independent accountants
and periodically meet with or receive reports from the Company's principal
financial and accounting officers.
Compensation Committee. The Compensation Committee will set the
compensation of all executive officers and administer the Stock Incentive Plan
and Company's other executive compensation plans and programs (including setting
performance targets and making awards under such plans). It will also review the
competitiveness of the Company's management and director compensation and
benefit programs and review principal employee relations policies and
procedures. It is intended that all members of the Compensation Committee will
be 'Non-Employee Directors' within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the 'Exchange Act'), and 'outside
directors' within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the 'Code').
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Compensation of Directors
It is anticipated that, following consummation of the Offerings, the
Company will establish a compensation program for directors who are not
employees of the Company, including annual retainer and meeting fees. It is
anticipated that a portion of such fees may be payable in awards under the Stock
Incentive Plan and the balance will be paid in cash.
Compensation Committee Interlocks and Insider Participation
During 1996, neither the Company's nor GCC's Board of Directors had a
compensation committee or other committee performing similar functions. The
directors of the Company (Messrs. Doyle and Roper) and the directors of GCC
(Messrs. Doyle, Roper and Rabinowitz) participated in deliberations concerning
executive compensation.
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
awarded or paid to or earned by the chief executive officer and the four other
most highly compensated executive officers of the Company for services rendered
in all capacities to the Company (including its subsidiaries) for 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------------------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) COMPENSATION(2)
- ---------------------------------------------- ---- --------- -------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Stephen Rabinowitz ........................... 1996 $ 354,423 $830,921 $ 12,387 $ 42,433
Chairman, President and Chief Executive
Officer
Gregory B. Kenny ............................. 1996 235,000 250,000 9,293 27,557
Executive Vice President and Chief Operating
Officer
Robert J. Siverd ............................. 1996 215,045 207,000 3,461 21,732
Executive Vice President, General Counsel
and Secretary
Christopher F. Virgulak ...................... 1996 191,539 200,000 5,463 20,701
Executive Vice President, Chief Financial
Officer and Treasurer
Harold C. Bevis .............................. 1996 155,481 180,000 4,167 10,153
Senior Vice President
</TABLE>
- ------------
(1) Represents the amount reimbursed during the fiscal year for payment of
insurance premiums and related taxes thereon.
(2) Includes (a) imputed income from life insurance in the amounts of $3,168 for
Mr. Rabinowitz, $857 for Mr. Kenny, $1,329 for Mr. Siverd, $683 for Mr.
Virgulak and $345 for Mr. Bevis and (b) employer matching and additional
contributions pursuant to the Company's retirement and excess benefit plans
in the amounts of $39,265 for Mr. Rabinowitz, $26,700 for Mr. Kenny, $20,403
for Mr. Siverd, $20,018 for Mr. Virgulak and $9,808 for Mr. Bevis.
1997 ANNUAL INCENTIVE BONUS PLAN
The following is a description of the 1997 Annual Incentive Bonus Plan of
the Company (the '1997 Plan'), which will be adopted by the Selling Stockholder
prior to consummation of the Offerings. This description is intended only as a
summary and is qualified in its entirety by reference to the 1997 Plan, which
will be filed as an exhibit to the Registration Statement of which this
Prospectus forms a part.
The 1997 Plan is designed to attract, retain and motivate key employees of
the Company and the Company's subsidiaries by providing a cash incentive award
for 1997 to approximately 110 employees of the Company and the Company's
subsidiaries who have been selected to participate by the Board of
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<PAGE>
Directors, subject to consummation of the Offerings. Upon attainment by the
Company of specified performance goals based on the Company's operating results
(the 'Performance Goal'), the Company shall pay participants their respective
bonus payout based on the participants' base salaries multiplied by the
applicable multiplier factor under the Performance Goal. The maximum bonus
payout attainable under the 1997 Plan by each of the individuals named in the
Summary Compensation Table (as a percentage of their respective base salaries)
is 120% for Mr. Rabinowitz, 120% for Mr. Kenny, 90% for Mr. Siverd and 90% for
Mr. Virgulak.
It is expected that compensation paid under the 1997 Plan to participants
who are 'covered employees' as defined in Section 162(m) of the Code and the
applicable regulations thereunder will be deductible by the Company for federal
income tax purposes based upon a special transition rule contained in the
Treasury regulations for private corporations that complete an initial public
offering.
STOCK INCENTIVE PLAN
The following is a description of the Stock Incentive Plan, which will be
adopted by the Selling Stockholder prior to consummation of the Offerings. This
description is intended only as a summary and is qualified in its entirety by
reference to the Stock Incentive Plan, which will be filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
The Stock Incentive Plan is designed to attract, retain and motivate key
employees of the Company and the Company's subsidiaries and to align the
interests of the Company's key employees with those of its stockholders by
providing opportunities to receive Common Stock or monetary payments based on
the value of the Common Stock. Awards under the Stock Incentive Plan may be
granted in any one or a combination of (a) stock options, which may be
'incentive stock options,' within the meaning of Section 422 of the Code, or
stock options which do not constitute incentive stock options, (b) stock
appreciation rights ('SARs'), (c) restricted stock awards, (d) performance
awards and (e) stock units. A maximum of 2,450,000 shares of Common Stock may be
issued or used for reference purposes pursuant to the Stock Incentive Plan. The
maximum number of shares of Common Stock with respect to which Awards may be
granted or measured to any individual participant under the Stock Incentive Plan
during the term of the Stock Incentive Plan will not exceed 1,000,000 shares and
the maximum number of shares with respect to which stock options and SARs may be
granted to any individual participant under the Stock Incentive Plan during the
term of the Stock Incentive Plan shall not exceed 750,000 shares. The Stock
Incentive Plan shall terminate on the tenth anniversary of the date of adoption
(unless sooner terminated by the Board).
The Stock Incentive Plan will be administered by the Company's Board of
Directors, and by the Compensation Committee once it is established. The
composition of the Compensation Committee is intended to satisfy the requirement
contained in Rule 16b-3 under the Exchange Act that the Stock Incentive Plan be
administered by 'Non-Employee Directors' (as defined in Rule 16b-3) so that
awards granted under the Stock Incentive Plan are exempt from Section 16(b) of
the Exchange Act. The Compensation Committee will have the authority, subject to
the terms of the Stock Incentive Plan, to determine when and to whom to make
grants or awards under the plan, the number of shares to be covered by the
grants or awards, the types and terms of performance awards, stock options,
SARs, restricted stock grants and stock units, and the exercise price of stock
options and SARs, and to prescribe, amend and rescind rules and regulations
relating to the Stock Incentive Plan. The Compensation Committee's
determinations under the Stock Incentive Plan need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
grants and awards under the Stock Incentive Plan.
Participants will consist of such key employees of the Company and the
Company's subsidiaries as the Compensation Committee in its sole discretion
determines to be significantly responsible for the success and future growth and
profitability of the Company and whom the Compensation Committee may designate
from time to time to receive awards under the Stock Incentive Plan. The terms of
any grants under the Stock Incentive Plan will be governed by the award
agreements issued in connection with awards under the Stock Incentive Plan.
Approximately 110 employees currently are eligible to participate in the Stock
Incentive Plan.
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The Company's Board of Directors may amend, suspend or terminate the Stock
Incentive Plan at any time except that, unless approved by stockholders of the
Company, no such amendment may (i) increase the total number of shares which may
be issued under the Stock Incentive Plan or the maximum number of shares with
respect to which Awards may be granted to any individual participant under the
Stock Incentive Plan, except for adjustments to reflect stock dividends or other
recapitalizations affecting the number or kind of outstanding shares, or (ii)
modify the requirements as to eligibility for awards under the Stock Incentive
Plan. In addition, no amendment to the Plan may be made without approval of the
stockholders if the amendment would disqualify any incentive stock options
granted under the Stock Incentive Plan. By mutual agreement between the Company
and a participant, awards may be made under the Stock Incentive Plan in
substitution and cancellation of awards previously granted to the participant
under the Stock Incentive Plan or under any other plan of the Company. Awards
granted under the Stock Incentive Plan are subject to adjustment in the event of
certain changes affecting the Common Stock.
The Compensation Committee may grant 'incentive stock options' within the
meaning of Section 422 of the Code, 'non-qualified stock options' or SARs in
respect of shares of Common Stock to participating employees alone or in tandem
with other awards under the Stock Incentive Plan. The exercise price of a stock
option or base price of an SAR may not be less than the fair market value of the
underlying shares of the Common Stock on the date of grant. The exercise period
for stock options and SARs will be determined by the Compensation Committee and
may not exceed ten years from the date of grant. Stock options and SARs will be
exercisable at such times, in such amounts, in accordance with such terms and
conditions, and subject to such restrictions, as are set forth in the agreement
evidencing the grant of such options or SARs. In the event of a change of
control (as defined in the Stock Incentive Plan) of the Company, outstanding
stock options and SARs may become exercisable immediately and, in the discretion
of the Compensation Committee, the excess of the fair market value of the Common
Stock subject to such stock options or SARs over the exercise price or base
price thereof will be paid out in cash.
Stock options and SARs may be transferred by an optionee only by will or by
the laws of descent and distribution, and may be exercised only by the optionee
or grantee during his lifetime. If a participant dies and the applicable award
agreement so provides, all outstanding options and SARs will become immediately
vested and may be exercised by the person or persons to whom the optionee's or
grantee's rights pass within one year after the optionee's or grantee's death.
In no case (other than in the event of the participant's death) may options or
SARs be exercised later than the expiration date of the stock options or SARs
specified in the grant.
Upon exercise of an SAR, a holder generally is entitled, without payment to
the Company, to receive cash, shares of Common Stock or any combination thereof,
as determined by the Compensation Committee, in an amount equal to the excess of
the fair market value of one share of Common Stock on the exercise date over the
base price, multiplied by the number of shares in respect of which the SAR is
exercised.
The Compensation Committee may grant performance awards, in the form of
shares or units, to participating employees alone or in tandem with other awards
under the Stock Incentive Plan. In the event that the Compensation Committee
grants such awards, it will establish performance goals which, depending on the
extent to which they are met, will determine the number and/or value of
performance awards that will be paid out. Payouts may be in shares of Common
Stock (with or without restrictions) and/or cash. Performance goals may be based
upon Company-wide, divisional and/or individual performance.
The Compensation Committee may grant stock awards, in such amounts and
subject to such terms and conditions as the Compensation Committee will
determine. The vesting of a stock award granted under the Stock Incentive Plan
may be conditioned upon the completion of a specified period of service, upon
the attainment of specified performance goals and/or upon such other criteria,
if any, as the Compensation Committee may determine. In addition, the right to
vote and receive dividends on the shares of Common Stock subject to the stock
award will be determined by the Compensation Committee.
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The Compensation Committee also may grant stock units, each of which is a
notional account representing one share of Common Stock. Stock units granted
under the Stock Incentive Plan are payable in shares of Common Stock at such
time as is set forth in an award agreement and are accompanied by such
restrictions on vesting, if any, as may be determined by the Compensation
Committee. While stock units do not confer voting rights on the participant, the
Compensation Committee may provide that a stock unit be accompanied by dividend
equivalent rights payable in cash or in the form of additional stock units.
All stock options and SARs, and certain stock awards, performance awards
and stock units, granted under the Stock Incentive Plan, and the compensation
attributable to such awards, are intended to (i) qualify as 'performance-based
compensation' (as such term is used in Section 162(m) of the Code) and thus be
exempt from the deduction limitation imposed by Section 162(m) of the Code or
(ii) be otherwise exempt from the deduction limitation imposed by Section 162(m)
of the Code. Certain awards granted under the Stock Incentive Plan may be
granted in a manner such that the awards qualify as 'performance-based
compensation' if either the granting or vesting of such award is subject to the
achievement of a performance target or targets based on one or more of the
following performance measures: net sales; pretax income before allocation of
corporate overhead and bonus; budget; earnings per share; net income; division,
group or corporate financial goals; return on stockholders' equity; return on
assets; attainment of strategic and operational initiatives; appreciation in
and/or maintenance of the price of the Common Stock or any other publicly-traded
securities of the Company; market share; gross profits; earnings before interest
and taxes; earnings before interest, taxes, depreciation and amortization;
economic value-added models; comparisons with various stock market indices;
and/or reductions in costs.
Following consummation of the Offerings, the Board of Directors is expected
to award Restricted Stock having a potential maximum undiscounted aggregate fair
market value on the date of grant (based upon the initial public offering price)
of approximately $5,600,000 to approximately 100 executive officers and other
key employees. The individuals named in the Summary Compensation Table are
expected to receive awards of restricted stock having the following potential
maximum undiscounted fair market values: Mr. Rabinowitz -- $2,000,000; Mr.
Kenny -- $500,000; Mr. Siverd -- $140,000; Mr. Virgulak -- $125,000; and Mr.
Bevis -- $100,000. The restrictions on the initial grants of the restricted
stock shall lapse (subject to acceleration under certain circumstances) 36
months after consummation of the Offerings in the case of Messrs. Rabinowitz and
Kenny and December 31, 1998 in the case of all other recipients. The awards of
Restricted Stock will be made in settlement of all obligations of the Company
under existing long-term incentive arrangements with employees of the Company
other than with respect to Mr. Rabinowitz, who will be paid, in addition to the
restricted stock to be granted to him under the Stock Incentive Plan, a separate
cash payment of $1,788,000 in settlement of all obligations of the Company under
Mr. Rabinowitz's existing long-term incentive arrangements. These arrangements,
which provide for cash payments upon the Company's achievement of certain
performance targets, will be terminated upon consummation of the Offerings.
Upon consummation of the Offerings, the Board of Directors is also expected
to grant options to purchase a total of approximately 1,103,750 shares of Common
Stock to approximately 110 employees. The individuals named in the Summary
Compensation Table are expected to receive options to purchase the following
number of shares of Common Stock: Mr. Rabinowitz -- 286,000 shares; Mr.
Kenny -- 86,000 shares; Mr. Siverd -- 33,000 shares; Mr. Virgulak -- 33,000
shares; and Mr. Bevis -- 28,000 shares. The exercise price of these options,
which are not intended to be incentive stock options, shall be equal to the
initial public offering price and the options shall become exercisable on the
third anniversary of the date of grant (subject to acceleration under certain
circumstances) for a period of seven years thereafter.
It is expected that awards granted from 1997 through 2000 under the Stock
Incentive Plan to participants who are 'covered employees' (as defined in
Section 162(m) of the Code and the applicable regulations thereunder) will be
deductible by the Company for federal income tax purposes based upon a special
transition rule contained in the Treasury regulations for private corporations
that complete an initial public offering.
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EMPLOYMENT AGREEMENTS
The following descriptions of the employment agreements between the Company
and each of Messrs. Rabinowitz, Kenny, Virgulak and Siverd (each an 'Employment
Agreement') are intended only as a summary and are qualified in their entirety
by reference to the respective Employment Agreements, which will be filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
Each of the Employment Agreements will become effective upon the consummation of
the Offerings.
Mr. Rabinowitz will serve as Chief Executive Officer and President of the
Company pursuant to a three-year employment agreement (subject to automatic
one-year extensions unless the Company or Mr. Rabinowitz elects not to so
extend). Under his Employment Agreement, Mr. Rabinowitz will receive an annual
base salary of $600,000, retroactive to January 1, 1997. Mr. Rabinowitz will
also have an opportunity to earn a bonus under the 1997 Plan of up to 120% of
his base salary upon the attainment of specified performance goals and will not
be precluded from being awarded an additional bonus outside the 1997 Plan in
respect of 1997 in the discretion of the Compensation Committee. In addition, he
will have an opportunity (not less favorable than that under the 1997 Plan) to
earn a bonus under a performance-based annual bonus program for senior
executives to be established by the Compensation Committee for years after 1997
(the 'Future Bonus Plan'). Mr. Rabinowitz's Employment Agreement also provides
that the Company will recommend to the Board of Directors that, upon
consummation of the Offerings, Mr. Rabinowitz receive the awards of restricted
stock and options described above under 'Stock Incentive Plan'. Upon termination
of his employment, Mr. Rabinowitz's Employment Agreement provides for the
payment of accrued and unpaid base salary and benefits under then existing plans
(other than severance benefits). In addition, in the event of a termination due
to death or Disability, by the Company other than for Cause or by Mr. Rabinowitz
for Good Reason (all as defined in his Employment Agreement), his Employment
Agreement provides for immediate vesting of and lapsing of restrictions on all
unvested restricted stock and options held by Mr. Rabinowitz. In the event of a
termination by the Company other than for Cause or by Mr. Rabinowitz for Good
Reason, his Employment Agreement also provides for a payment equal to a multiple
(the 'Multiplier') of the sum of his base salary and the target bonus under the
1997 Plan or Future Bonus Plan for the year in which termination occurs, as well
as his continuation as a participant in the Company's executive health and
welfare benefit plans for the number of years represented by the Multiplier. The
Multiplier for Mr. Rabinowitz will be two.
The terms and conditions of the Employment Agreements between the Company
and each of Messrs. Kenny, Virgulak and Siverd are substantially the same as
those contained in Mr. Rabinowitz's Employment Agreement, except that the
Employment Agreements of each of the foregoing will not provide for the
opportunity to be awarded an additional bonus outside of the 1997 Plan, and
except as follows: Mr. Kenny will serve as Executive Vice President and Chief
Operating Officer of the Company, receive an annual base salary of $300,000,
have an opportunity to earn a bonus of up to 120% of his base salary under the
1997 Plan and the Future Bonus Plan, and have a Multiplier of 1.5. Mr. Siverd
will serve as Executive Vice President, General Counsel and Secretary pursuant
to a two-year employment agreement, receive an annual base salary of $225,000,
and have a Multiplier of one. Mr. Virgulak will serve as Executive Vice
President and Chief Financial Officer pursuant to a two-year employment
agreement, receive an annual base salary of $204,000, and have a Multiplier of
one. In addition, Mr. Virgulak and Mr. Siverd's agreements will provide that
they will be entitled to participate in the 1997 Plan and the Future Bonus Plan
on such terms as may be determined by the Compensation Committee. In addition,
each of their Employment Agreements will provide that the Company will recommend
to the Board of Directors that, upon consummation of the Offerings, they receive
the respective awards of restricted stock and options described under 'Stock
Incentive Plan.'
CHANGE IN CONTROL AGREEMENTS
Prior to consummation of the Offerings, the Company will enter into
agreements with each of Messrs. Rabinowitz, Kenny, Siverd and Virgulak (the
'Change-in-Control Agreements') providing for certain benefits if the
executive's employment is terminated by the Company or the Company's
subsidiaries or by the Company's successor without Cause (as defined in the
Change-in-Control
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Agreements), or the executive terminates his employment with the Company or the
Company's subsidiaries or with the Company's successor for Good Reason (as
defined below) and such termination occurs within six months preceding, or
within two years following, a Change-in-Control (as defined below). In such
event, the executive shall receive a payment equal to a specified multiple of
the sum of (x) the executive's annual base salary at the time of the termination
of the executive's employment (or, in the case of a termination of employment
for Good Reason based on a reduction of his annual base salary, the annual base
salary in effect immediately prior to such reduction) plus (y) the executive's
target annual incentive bonus in effect for the year in which his employment is
terminated or the year in which the Change-in-Control occurs, whichever is
greater. In addition, the Company or its successor shall continue the
executive's participation in the Company-sponsored executive health and welfare
benefit plans until the earlier of the same specified multiple of 12 months
following the date of the executive's termination of employment or the date the
executive receives equivalent coverage and benefits under the plans of a
subsequent employer. The multiples shall be as follows: Mr. Rabinowitz -- three
times; Mr. Kenny -- two and a half times; Mr. Siverd -- one and a half times;
and Mr. Virgulak -- one and a half times. Upon a Change-in-Control, the
restrictions on any restricted stock will lapse and any unexercisable stock
options held will become fully vested and immediately exercisable in accordance
with the terms of the Stock Incentive Plan and the award agreements issued
thereunder.
Provided that Mr. Rabinowitz has not deferred compensation otherwise
includible in income for any year commencing with 1997, if the payments received
by Mr. Rabinowitz (pursuant to the Change-in-Control Agreement or otherwise)
exceed a certain threshold amount and result from a 'change in ownership' as
defined in Section 280G of the Code, the Company will pay him an additional
amount (a 'Gross-Up Payment') to reimburse him for the federal excise tax (and
any interest, penalties or additions to tax) with respect thereto on a
'grossed-up' basis. However, if Mr. Rabinowitz has deferred compensation, he
will not be entitled to a Gross-Up Payment, and further, if the net payments he
would retain in connection with a 'change in ownership' (after deducting any
excise tax and applicable income tax) would be less than the amount he would
have netted, after applicable income taxes, had the present value of such
payments equalled $1 less than three times his threshold amount (the 'Maximum
Payments'), then his total payments will not exceed the Maximum Payments. Any
payments to Messrs. Kenny, Siverd and Virgulak pursuant to the Change-in-Control
Agreements shall be subject to the limitations of Section 280G(b)(2) of the
Code.
For purposes of the Change-in-Control Agreements, 'Change-in-Control' means
that any of the following has occurred: (a) any person or other entity (other
than any of the Company's subsidiaries or any employee benefit plan sponsored by
the Company or any of its subsidiaries) including any person as defined in
Section 13(d)(3) of the Exchange Act, becomes the beneficial owner, as defined
in Rule 13d-3 under the Exchange Act, directly or indirectly, of more than fifty
percent (50%) of the total combined voting power of all classes of capital stock
of the Company normally entitled to vote for the election of directors of the
Company (the 'Voting Stock'); (b) the stockholders of the Company approve the
sale of all or substantially all of the property or assets of the Company and
such sale occurs; (c) the stockholders of the Company approve a consolidation or
merger of the Company with another corporation (other than with any of the
Company's subsidiaries), the consummation of which would result in the
shareholders of the Company immediately before the occurrence of the
consolidation or merger owning, in the aggregate, less than 60% of the Voting
Stock of the surviving entity, and such consolidation or merger occurs; or (d) a
change in the Company's Board of Directors occurs with the result that the
members of the Board on the effective date of the Registration Statement of
which this Prospectus is a part (the 'Incumbent Directors') no longer constitute
a majority of such Board of Directors, provided that any person becoming a
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest or the settlement
thereof, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose election or nomination for election
was supported by two-thirds (2/3) of the then Incumbent Directors shall be
considered an Incumbent Director for these purposes. A Change-in-Control shall
not include the Offerings.
For purposes of the Change-in-Control Agreements, 'Good Reason' means the
occurrence of any of the following without the prior written consent of the
Executive: (i) removal from any of the positions held by the executive with
respect to the Company or any of its significant subsidiaries (as
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defined in Regulation S-X under the Exchange Act) on the 181st day prior to the
Change-in-Control or any senior position that the executive subsequently
achieves; (ii) the assignment of duties or responsibilities materially
inconsistent with those customarily associated with the position held by the
executive on the 181st day prior to the Change-in-Control or any senior position
that the executive subsequently achieves, or any other action by the Company or
a successor that results in a diminution of the executive's position, authority,
duties or responsibilities other than an isolated action that is not taken in
bad faith and is remedied by the Company or a successor promptly after receipt
of written notice thereof from the executive; (iii) a reduction in the
executive's annual base salary or executive's annual bonus opportunity set forth
in the Employment Agreement from that in effect on the 181st day prior to the
Change-in-Control (or any greater salary or bonus that the executive is
subsequently entitled to) or a material reduction in any other material benefit
provided the executive by the Company; (iv) notice by the Company not to extend
the Employment Agreement; (v) the relocation of the executive's principal place
of employment to a location more than fifty (50) miles from the executive's
principal place of employment (unless such relocation does not increase the
executive's commute by more than twenty (20) miles) on the 181st day prior to
the Change-in-Control, except for required travel on the Company's business to
an extent substantially consistent with the executive's business travel
obligations as of such day; or (vi) the failure by the Company to obtain an
agreement from any successor to assume and agree to perform the
Change-in-Control Agreement.
SELLING STOCKHOLDER
As of the date hereof, the Selling Stockholder owns all of the outstanding
shares of the Company's Common Stock. Upon consummation of the Offerings, the
Selling Stockholder will own 7,350,000 shares of Common Stock, or approximately
30% of the outstanding Common Stock. If the U.S. Underwriters' over-allotment
option is exercised in full, after consummation of Offerings the Selling
Stockholder will own 4,815,000 shares of Common Stock, or approximately 20% of
the outstanding Common Stock.
The address of the Selling Stockholder is P.O. Box 21153, 3001 AD
Rotterdam, The Netherlands.
In connection with the Offerings, the Selling Stockholder and Wassall are
entering into agreements with the Company providing certain rights in favor of
the Selling Stockholder and Wassall and certain obligations and restrictions on
the Company after consummation of the Offerings. See 'Certain Relationships and
Related Transactions.'
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an agreement (the 'Management Agreement'), the Company paid
management fees to an affiliate of the Selling Stockholder aggregating
approximately $1.1 million, $1.4 million and $1.6 million for the period June 9,
1994 to December 31, 1994 and the years ended December 31, 1995 and 1996,
respectively. From January 1, 1997 through the consummation of the Offerings,
the Company will pay management fees to such affiliate of the Selling
Stockholder aggregating approximately $1.0 million. Upon consummation of the
Offerings, the Management Agreement will be terminated.
Wassall has from time to time arranged for letters of credit on behalf of
General Cable under its credit facility. At December 31, 1995 and 1996, letters
of credit aggregating $12.6 million and $11.9 million, respectively, were issued
under Wassall's credit facility on behalf of the Company. At December 31, 1994,
no such letters of credit were issued. Pursuant to the Intercompany Agreement
(as defined below), the Company will agree to use its best efforts to obtain
letters of credit to replace all outstanding Wassall letters of credit, and to
indemnify Wassall against all expenses incurred by it with respect to such
Wassall letters of credit.
Concurrently with consummation of the Offerings, General Cable intends to
make an initial borrowing of approximately $271.8 million under the New Credit
Facility and use a portion of the proceeds thereof to (i) repay all intercompany
debt and advances owed to Wassall and its subsidiaries (which, together with
accrued interest, are anticipated to amount to approximately $200.7 on the date
of the consummation of the Offerings), (ii) pay $42.6 million as the Selling
Stockholder Dividend and (iii) pay $2.0 million for the purchase of the Related
Companies from Wassall.
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Following consummation of the Offerings, the Selling Stockholder will own
approximately 30% of the outstanding shares of Common Stock (or approximately
20% of the outstanding shares of Common Stock if the U.S. Underwriters'
over-allotment option is exercised in full). At least one director designated by
the Selling Stockholder initially will serve as a director of General Cable. In
addition, the Selling Stockholder will have the right to (i) approve the
directors to be appointed to the Company's Board of Directors prior to the first
annual meeting of stockholders following consummation of the Offerings and (ii)
designate one individual (or, if the Board of Directors of the Company shall
consist of more than eight members, two individuals) for nomination to the
Company's Board of Directors for so long as the Selling Stockholder and its
affiliates continue to own at least 10% of the outstanding capital stock of the
Company. As a result, the Selling Stockholder may be in a position to exercise
influence over General Cable after the consummation of the Offerings.
Concurrently with consummation of the Offerings, the Company and the
Selling Stockholder intend to enter into an agreement (the 'Registration Rights
Agreement') pursuant to which the Selling Stockholder will be granted the right
to require the Company, subject to certain limitations, to register for public
offering and sale all or a portion of the Common Stock held by the Selling
Stockholder following consummation of the Offerings (each, a 'demand
registration'). The Selling Stockholder will be entitled to three demand
registrations, one of which may, at the request of the Selling Stockholder, be a
shelf registration which the Company shall maintain effective for a period of up
to three years. In addition, the Selling Stockholder will have the right to have
its shares of Common Stock included in future registration statements of the
Company. The Selling Stockholder has agreed not to offer, sell, contract to
sell, pledge, grant any option to purchase, transfer or otherwise dispose of,
directly or indirectly, any shares of Common Stock or securities convertible
into or exercisable or exchangeable for Common Stock or warrants or other rights
to purchase or acquire shares of Common Stock for a period of 180 days following
the date of this Prospectus, without prior written consent of Dillon, Read & Co.
Inc. See 'Underwriting.' The Company will be obligated to pay all registration
expenses (other than underwriting discounts and commissions) incurred in
connection with such registrations, and will indemnify the Selling Stockholder
and its officers and directors against certain liabilities, including
liabilities under the federal securities laws, in connection therewith. All such
registration rights are subject to customary terms and conditions.
In addition, concurrently with consummation of the Offerings, the Company,
Wassall and the Selling Stockholder intend to enter an agreement (the
'Intercompany Agreement') pursuant to which, among other things, (i) the
Company, on the one hand, and Wassall and its subsidiaries (other than the
Company and its subsidiaries), on the other hand, will (A) agree not to solicit
employees of the other for a period of two years following the Offerings and (B)
indemnify each other with respect to certain insurance expenses; (ii) the
Company will, subject to certain exceptions, indemnify Wassall and its
subsidiaries against (A) all liabilities relating to the Company and its
subsidiaries and their businesses and assets (and the businesses and assets of
their predecessors) and (B) liabilities under the federal securities laws in
connection with the Offerings; and (iii) the Selling Stockholder will be granted
the rights, referred to above, to approve the Company's additional directors
appointed following consummation of the Offerings and to designate one
individual (or, in the circumstances described above, two individuals) for
nomination to the Company's Board of Directors.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 75,000,000 shares
of Common Stock, par value $0.01 per share, and 25,000,000 shares of preferred
stock, par value $0.01 per share (the 'Preferred Stock').
The following statements relating to the capital stock of the Company are
summaries and do not purport to be complete. Reference is made to the more
detailed provisions of, and such statements are qualified in their entirety by
reference to, the Amended and Restated Certificate of Incorporation (the
'Certificate of Incorporation') and the Amended and Restated By-Laws (the
'By-Laws') of the Company, copies of which have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.
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COMMON STOCK
Holders of Common Stock are entitled to one vote for each share on all
matters voted on by stockholders. Holders of Common Stock do not have cumulative
voting rights in the election of directors. The first annual meeting of
shareholders is expected to be held during the second quarter of 1998.
Holders of Common Stock do not have subscription, redemption or conversion
privileges. Subject to the preferences or other rights of any Preferred Stock
that may be issued from time to time, holders of Common Stock are entitled to
participate ratably in dividends on the Common Stock as declared by the
Company's Board of Directors. Holders of Common Stock are entitled to share
ratably in all assets available for distribution to stockholders in the event of
the liquidation or dissolution of the Company, subject to distribution of the
preferential amount, if any, to be distributed to holders of Preferred Stock.
PREFERRED STOCK
The Certificate of Incorporation authorizes the Company's Board of
Directors, without any vote or action by the holders of Common Stock, to issue
up to 25,000,000 shares of Preferred Stock from time to time in one or more
series. The Company's Board of Directors is authorized to determine the number
of shares and designation of any series of Preferred Stock and the dividend
rights, dividend rate, conversion rights and terms, voting rights (full or
limited, if any), redemption rights and terms, liquidation preferences and
sinking fund terms of any series of Preferred Stock. Issuances of Preferred
Stock would be subject to the applicable rules of the NYSE or other
organizations whose systems the stock of the Company may then be quoted or
listed. Depending upon the terms of Preferred Stock established by the Company's
Board of Directors, any or all series of Preferred Stock could have preferences
over the Common Stock with respect to dividends and other distributions and upon
liquidation of the Company. Issuance of any such shares with voting powers, or
issuance of additional shares of Common Stock, would dilute the voting power of
the outstanding Common Stock. The Company has no present plans to issue any
Preferred Stock.
TRANSFER AGENT AND REGISTRAR
ChaseMellon Shareholder Services L.L.C. will be the transfer agent and
registrar for the Common Stock.
CERTAIN ANTI-TAKEOVER MATTERS
CERTAIN CHARTER AND BY-LAW PROVISIONS
The provisions of the Certificate of Incorporation and the Company's
By-Laws described in this section may delay or make more difficult acquisitions
or changes of control of the Company not approved by the Company's Board of
Directors. Such provisions could have the effect of discouraging third parties
from making proposals involving an acquisition or change of control of the
Company, although such proposals, if made, might be considered desirable by a
majority of the Company's stockholders. Such provisions may also have the effect
of making it more difficult for third parties to cause the replacement of the
current management of the Company without the concurrence of the Company's Board
of Directors.
Copies of the Certificate of Incorporation and the By-Laws have been filed
with the Commission as exhibits to the Registration Statement. The following
description of certain provisions of the Certificate of Incorporation and the
By-Laws does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Certificate of Incorporation and the By-Laws.
Classified Board of Directors
The Certificate of Incorporation divides the Company's Board of Directors
into three classes of directors serving staggered three-year terms. As a result,
approximately one-third of the Company's Board of Directors will be elected each
year. See 'Management -- Board of Directors.'
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The Company believes that a classified board will help to assure the
continuity and stability of the Company's Board of Directors, and its business
strategies and policies as determined by the Company's Board of Directors,
because a majority of the directors at any given time will have prior experience
as directors of the Company. This provision should also help to ensure that the
Company's Board of Directors, if confronted with an unsolicited proposal from a
third party that has acquired a block of the Company's Common Stock, will have
sufficient time to review the proposal, to consider appropriate alternatives and
to seek the best available result for all stockholders.
This provision could prevent a party who acquires control of a majority of
the outstanding Common Stock from obtaining control of the Company's Board of
Directors until the second annual stockholders' meeting following the date the
acquiror obtains the controlling stock interest, could have the effect of
discouraging a potential acquiror from making a tender offer or otherwise
attempting to obtain control of the Company and could thus increase the
likelihood that incumbent directors will retain their positions.
Number of Directors; Removal; Vacancies
The Certificate of Incorporation and the By-Laws provide that the number of
directors shall not be less than three nor more than nine and shall be
determined from time to time exclusively by a vote of a majority of the
Company's Board of Directors then in office. The Certificate of Incorporation
also provides that the Company's Board of Directors shall have the exclusive
right to fill vacancies, including vacancies created by expansion of the
Company's Board of Directors. Furthermore, except as may be provided in a
resolution or resolutions of the Company's Board of Directors providing for any
class or series of Preferred Stock with respect to any directors elected by the
holders of such class or series, directors may be removed by shareholders only
for cause and only by the affirmative vote of at least 66 2/3% of the voting
power of all of the shares of the Company's capital stock then entitled to vote
generally in the election of directors, voting together as a single class. These
provisions, in conjunction with the provision of the Certificate of
Incorporation authorizing the Company's Board of Directors to fill vacant
directorships, could prevent stockholders from removing incumbent directors
without cause and filling the resulting vacancies with their own nominees.
No Stockholder Action by Written Consent; Special Meetings
The Certificate of Incorporation provides that, except as may be provided
in a resolution or resolutions of the Company's Board of Directors providing for
any class or series of Preferred Stock, stockholder action can be taken only at
an annual or special meeting of stockholders and cannot be taken by written
consent in lieu of a meeting. The Certificate of Incorporation also provides
that special meetings of the stockholders can only be called pursuant to a
resolution approved by a majority of the Company's Board of Directors then in
office. Stockholders are not permitted to call a special meeting of
stockholders.
Advance Notice for Raising Business or Making Nominations at Meetings
The By-Laws establish an advance notice procedure for stockholder proposals
to be brought before a meeting of stockholders of the Company and for
nominations by stockholders of candidates for election as directors at an annual
meeting or a special meeting at which directors are to be elected. Subject to
any other applicable requirements, including, without limitation, Rule 14a-8
under the Exchange Act, only such business may be conducted at a meeting of
stockholders as has been brought before the meeting by, or at the direction of,
the Company's Board of Directors, or by a stockholder who has given to the
Secretary of the Company timely written notice, in proper form, of the
stockholder's intention to bring that business before the meeting. The presiding
officer at such meeting has the authority to make such determinations. Only
persons who are nominated by, or at the direction of, the Company's Board of
Directors, or who are nominated by a stockholder who has given timely written
notice, in proper form, to the Secretary prior to a meeting at which directors
are to be elected will be eligible for election as directors of the Company.
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To be timely, notice of nominations or other business to be brought before
an annual meeting must be received by the Secretary of the Company at the
principal executive office of the Company no later than 60 days prior to the
date of such annual meeting. Similarly, notice of nominations or other business
to be brought before a special meeting must be delivered to the Secretary at the
principal executive office of the Company no later than the close of business on
the 15th day following the day on which notice of the date of a special meeting
of stockholders was given.
The notice of any nomination for election as a director must set forth the
name, date of birth, business and residence address of the person or persons to
be nominated; the business experience during the past five years of such person
or persons; whether such person or persons are or have ever been at any time
directors, officers or owners of 5% or more of any class of capital stock,
partnership interest or other equity interest of any corporation, partnership or
other entity; any directorships held by such person or persons in any company
with a class of securities registered pursuant to Section 12 of the Exchange Act
or subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of 1940, as
amended; and whether, in the last five years, such person or persons are or have
been convicted in a criminal proceeding or have been subject to a judgment,
order, finding or decree of any federal, state or other governmental entity,
concerning any violation of federal, state or other law, or any proceeding in
bankruptcy, which conviction, order, finding, decree or proceeding may be
material to an evaluation of the ability or integrity of the nominee; and, the
consent of each such person to serve as a director if elected. The person
submitting the notice of nomination, and any person acting in concert with such
person, must provide their names and business addresses, the name and address
under which they appear on the Company's books (if they so appear), and the
class and number of shares of the Company's capital stock that are beneficially
owned by them.
Amendments to By-Laws
The Certificate of Incorporation provides that the Company's Board of
Directors or the holders of at least 66 2/3% of the voting power of all shares
of the Company's capital stock then entitled to vote generally in the election
of directors, voting together as a single class, have the power to amend or
repeal the Company's By-Laws.
Amendment of the Certificate of Incorporation
Any proposal to amend, alter, change or repeal any provision of the
Certificate of Incorporation, except as may be provided in a resolution or
resolutions of the Company's Board of Directors providing for any class or
series of Preferred Stock and which relate to such class or series of Preferred
Stock, requires approval by the affirmative vote of both a majority of the
members of the Company's Board of Directors then in office and a majority vote
of the voting power of all of the shares of the Company's capital stock entitled
to vote generally in the election of directors, voting together as a single
class. Notwithstanding the foregoing, any proposal to amend, alter, change or
repeal the provisions of the Certificate of Incorporation relating to (i) the
classification of the Company's Board of Directors, (ii) removal of Directors,
(iii) the prohibition of stockholder action by written consent or stockholder
calls for special meetings, (iv) amendment of By-Laws, or (v) amendment of the
Certificate of Incorporation requires approval by the affirmative vote of
66 2/3% of the voting power of all of the shares of the Company's capital stock
entitled to vote generally in the election of directors, voting together as a
single class.
Preferred Stock and Additional Common Stock
Under the Certificate of Incorporation, the Company's Board of Directors
will have the authority to provide by Board resolution for the issuance of
shares of one or more series of Preferred Stock. The Company's Board of
Directors is authorized to fix by resolution the terms and conditions of each
such other series. See 'Description of Capital Stock -- Preferred Stock.'
The Company believes that the availability of the Company's Preferred
Stock, in each case issuable in series, and additional shares of Common Stock
could facilitate certain financings and acquisitions and
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provide a means for meeting other corporate needs which might arise. The
authorized shares of the Company's Preferred Stock, as well as authorized but
unissued shares of Common Stock will be available for issuance without further
action by the Company's stockholders, unless stockholder action is required by
applicable law or the rules of any stock exchange on which any series of the
Company's capital stock may then be listed.
These provisions give the Company's Board of Directors the power to approve
the issuance of a series of Preferred Stock, or an additional series of Common
Stock, of the Company that could, depending on its terms, either impede or
facilitate the completion of a merger, tender offer or other takeover attempt.
For example, the issuance of new shares of Preferred Stock might impede a
business combination if the terms of those shares include voting rights which
would enable a holder to block business combinations; the issuance of new shares
might facilitate a business combination if those shares have general voting
rights sufficient to cause an applicable percentage vote requirement to be
satisfied.
DELAWARE BUSINESS COMBINATION STATUTE
Section 203 of the DGCL ('Section 203') provides that, subject to certain
exceptions specified therein, an 'interested stockholder' of a Delaware
corporation shall not engage in any business combination with the corporation
for a three-year period following the date that such stockholder becomes an
'interested stockholder' unless (i) prior to such date, the board of directors
of the corporation approved either the business combination or the transaction
which resulted in the stockholder becoming an 'interested stockholder,' (ii)
upon consummation of the transaction which resulted in the stockholder becoming
an 'interested stockholder,' the interested stockholder owned at least 85% of
the voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares) or (iii) on or subsequent to such date, the
business combination is approved by the board of directors of the corporation
and authorized at an annual or special meeting of stockholders by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the 'interested stockholder.' Except as otherwise specified in
Section 203, an 'interested stockholder' is defined to include (x) any person
that is the owner of 15% or more of the outstanding voting stock of the
corporation, or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within three years immediately prior to the relevant date and (y) the
affiliates and associates of any such person.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an 'interested stockholder' to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The Certificate of Incorporation does not exclude the Company from
the restrictions imposed under Section 203. The provisions of Section 203 may
encourage companies interested in acquiring the Company to negotiate in advance
with the Company's Board of Directors, since the stockholder approval
requirement would be avoided if a majority of the directors then in office
approve either the business combination or the transaction which results in the
stockholder becoming an 'interested stockholder.' Such provisions also may have
the effect of preventing changes in the management of the Company. It is
possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.
SHARES ELIGIBLE FOR FUTURE SALE
The Company will have 24,500,000 shares of Common Stock outstanding upon
consummation of the Offerings. Of those shares, the 16,900,000 shares of Common
Stock offered hereby will be available for immediate sale as of the date of this
Prospectus in the public market without restriction by persons other than
'affiliates' of the Company, as that term is defined in the regulations
promulgated under the Securities Act.
Upon consummation of the Offerings, the Selling Stockholder will
beneficially own approximately 30% of the outstanding shares of Common Stock (or
approximately 20% if the over-allotment option is exercised in full). The
Company and the Selling Stockholder have agreed, subject to certain limited
exceptions, not to offer, sell, contract to sell, pledge, grant any option to
purchase, transfer or otherwise
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dispose of, directly or indirectly, any shares of Common Stock or warrants or
other rights to purchase or acquire shares of Common Stock or any securities
convertible into or exchangeable or exercisable for shares of Common Stock for a
period of 180 days following the date of this Prospectus without the prior
written consent of Dillon, Read & Co. Inc. After expiration of such 180-day
period, such shares may be sold (i) in accordance with Rule 144 promulgated
under the Securities Act, (ii) in private offerings or (iii) upon registration
under the Securities Act without regard to the volume limitations of Rule 144.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned 'restricted securities'
(defined generally in Rule 144 as securities issued in transactions not
involving a public offering) for at least one year, including persons who may be
deemed to be affiliates of the Company, is entitled to sell within any
three-month period a number of shares that does not exceed the greater of 1% of
the then outstanding shares of Common Stock (which number, immediately following
the Offerings, will be 245,000 shares) and the average weekly trading volume in
the Common Stock during the four calendar weeks preceding the filing of a Form
144 with respect to such sale, provided that the Company has been subject to and
complied with certain reporting requirements under the Exchange Act, and the
sale is made in a 'broker's transaction' or in a transaction directly with a
'market-maker,' as those terms are used in Rule 144, without the solicitation of
buy orders by the broker or such person and without such person making any
payment to any person other than the broker who executes the order to sell the
shares of Common Stock. A person (or persons whose shares are aggregated) who is
not deemed to have been an affiliate of the Company at any time during the 90
days preceding a sale of restricted securities by such person, and who has
beneficially owned the restricted securities for at least two years (including
the holding period of any prior owner except an affiliate), is entitled to sell
such shares under Rule 144 without regard to the volume limitations and public
information and manner of sale requirements described above. Restricted
securities properly sold in reliance upon Rule 144 are thereafter freely
tradeable without restrictions or registration under the Securities Act, unless
thereafter held by an affiliate of the Company.
Shares held by the Selling Stockholder may be freely sold if registered
under the Securities Act. The Company has agreed to use its best efforts, upon
request by the Selling Stockholder, to register under the Securities Act any or
all shares of Common Stock held by the Selling Stockholder and, under certain
conditions, when shares of Common Stock are registered by the Company. See
'Certain Relationships and Related Transactions.'
The Company may file a registration statement on Form S-8 under the
Securities Act to register all of the shares of Common Stock issued or reserved
for future issuance under the Stock Incentive Plan. After the effective date of
that registration statement, shares purchased upon exercise of options granted
pursuant to the plan generally would be available for resale in the public
market.
Prior to the Offerings, there has been no public market for the Common
Stock of the Company. No predictions can be made of the effect, if any, that the
sale or availability for sale of shares of additional Common Stock will have on
the market price of the Common Stock. Nevertheless, sales of a substantial
amount of such shares by the Selling Stockholder or by stockholders purchasing
in the Offerings or the perception that sales could occur could adversely affect
prevailing market prices for the Common Stock.
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CERTAIN U.S. FEDERAL TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF COMMMON STOCK
GENERAL
The following general discussion summarizes certain of the material U.S.
federal income and estate tax consequences of the ownership and disposition of
Common Stock by a Non-U.S. Holder (as defined below). This discussion does not
address all aspects of U.S. federal income tax that may be relevant to the
ownership or disposition of the Common Stock by a prospective investor in light
of such investor's personal circumstances and does not address any state, local
or foreign tax consequences. This discussion also does not address the U.S.
federal income tax consequences of ownership of Common Stock not held as a
capital asset within the meaning of Section 1221 of the Code, or the U.S.
federal income tax consequences to investors subject to special treatment under
the U.S. federal income tax laws, such as dealers in securities or foreign
currency, tax-exempt entities, banks, thrifts, insurance companies or other
financial institutions, persons that hold the Common Stock as part of a
'straddle', a 'hedge' against currency risk or a 'conversion transaction',
persons that have a 'functional currency' other than the U.S. dollar, and
investors in pass-through entities.
This discussion is based upon the Code, existing and proposed regulations
thereunder, and current administrative rulings and court decisions. All of the
foregoing is subject to change, possibly on a retroactive basis, and any such
change could affect the continuing validity of this discussion.
For purposes of the following discussion, a Non-U.S. Holder of Common Stock
is a holder who is not (i) an individual who is a citizen or resident of the
United States, (ii) a corporation organized under the laws of the United States
or any political subdivision thereof or therein or (iii) an estate or trust the
income of which is subject to U.S. federal income tax regardless of its source.
For taxable years after December 31, 1996, a trust holding Common Stock is a
U.S. Holder if a court within the U.S. is able to exercise primary jurisdiction
over the trust and one or more U.S. fiduciaries have the authority to control
all substantial decisions of the trust. For purposes of withholding tax on
dividends discussed below, a non-resident alien or non-resident fiduciary of an
estate or trust will be considered a Non-U.S. Holder.
Dividends and gain on the sale, exchange or other disposition of Common
Stock will be considered to be 'U.S. trade or business income' if such income or
gain is (i) effectively connected with the conduct of a U.S. trade or business
or (ii) in the case of a treaty country resident, attributable to a permanent
establishment (or, in the case of an individual, a fixed base) in the United
States.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate, unless such
rate is reduced by an applicable income tax treaty. Dividends which represent
U.S. trade or business income are generally subject to U.S. federal income tax
at regular rates, but are not generally subject to the 30% withholding tax if
the Non-U.S. Holder files the appropriate form with the payor. Any U.S. trade or
business income received by a Non-U.S. Holder that is a corporation may also,
under certain circumstances, be subject to an additional 'branch profits tax' at
a 30% rate or such lower rate as may be applicable under an income tax treaty.
Dividends paid to an address in a foreign country generally are presumed (absent
actual knowledge to the contrary) to be paid to a resident of such country for
purposes of the withholding tax discussed above and for purposes of determining
the applicability of a tax treaty rate. Under proposed U.S. Treasury
regulations, not currently in effect, however, a Non-U.S. Holder of Common Stock
who wishes to claim the benefit of an applicable treaty rate would be required
to satisfy applicable certification and other requirements, which would include
the requirement that the Non-U.S. Holder file a form which contains the holder's
name and address or provides certain documentary evidence issued by foreign
governmental authorities to prove residence in the foreign country.
A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an income treaty may obtain a refund of any
excess amounts currently withheld by filing an appropriate claim for a refund
with the Service.
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SALE, EXCHANGE OR REDEMPTION OF COMMON STOCK
Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange or
redemption of Common Stock generally will not be subject to U.S. federal income
tax, unless (i) such gain is U.S. trade or business income, (ii) subject to
certain exceptions, the Non-U.S. Holder is an individual who holds the Common
Stock as a capital asset and is present in the United States for 183 days or
more in the taxable year of the disposition, (iii) the Non-U.S. Holder is
subject to tax pursuant to the provisions of U.S. tax law applicable to certain
U.S. expatriates (including certain former citizens or residents of the United
States) or (iv) the Company is a U.S. real property holding company (which the
Company is not, has not been and does not believe it is likely to become).
FEDERAL ESTATE TAX
Common Stock owned or treated as owned by an individual who is not a
citizen or resident of the United States (for federal estate tax purposes) will
be included in such individual's estate for U.S. federal income tax purposes
unless an applicable estate tax treaty otherwise applies.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the Service and to each Non-U.S. Holder
any dividend that is subject to withholding. Copies of these information returns
may also be made available under the provisions of a specific treaty or
agreement to the tax authorities of the country in which the Non-U.S. Holder
resides.
The payment of the proceeds from the disposition of Common Stock to or
through the United States office of any broker, U.S. or foreign, will be subject
to information reporting and possible backup withholding unless the owner
certifies as to its non-U.S. status under penalty of perjury or otherwise
establishes an exemption, provided that the broker does not have actual
knowledge that the Holder is a U.S. person or that the conditions of any other
exemption are not, in fact, satisfied. The payment of the proceeds from the
disposition of Common Stock to or through a non-U.S. office of a non-U.S. broker
that is not a U.S. related person will not be subject to information reporting
or backup withholding. For this purpose, a 'U.S. related person' is (i) a
'controlled foreign corporation' for U.S. federal income tax purposes or (ii) a
foreign person 50% or more of whose gross income from all sources for the three-
year period ending with the close of its taxable year preceding the payment (or
for such part of the period that the broker has been in existence) is derived
from activities that are effectively connected with the conduct of a United
States trade or business.
In the case of the payment of proceeds from the disposition of Common Stock
to or through a non-U.S. office of a broker that is either a U.S. person or a
U.S. related person, the regulations require information reporting on the
payment unless the broker has documentary evidence in its files that the owner
is a Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is not a U.S. person or a U.S. related person (absent actual knowledge that
the payee is a U.S. person).
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISER AS TO PARTICULAR TAX
CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE COMMON STOCK OF
THE COMPANY, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR
FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES IN APPLICABLE LAWS.
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UNDERWRITING
The names of the U.S. Underwriters for the United States Offering and the
aggregate number of shares of Common Stock that each has severally agreed to
purchase from the Selling Stockholder, subject to the terms and conditions
specified in the U.S. Underwriting Agreement, are as follows:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------ ----------
<S> <C>
Dillon, Read & Co. Inc....................................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................................
----------
Total................................................................................ 13,520,000
----------
----------
</TABLE>
The U.S. Managing Underwriters are Dillon, Read & Co. Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated.
The names of the International Underwriters for the International Offering
and the aggregate number of shares of Common Stock which each has severally
agreed to purchase from the Selling Stockholder, subject to the terms and
conditions specified in the International Underwriting Agreement, are as
follows:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------- ---------
<S> <C>
Dillon, Read & Co. Inc.....................................................................
Merrill Lynch International................................................................
Swiss Bank Corporation, acting through its division, SBC Warburg...........................
---------
Total................................................................................. 3,380,000
---------
---------
</TABLE>
The International Managing Underwriters are Dillon, Read & Co. Inc.,
Merrill Lynch International and Swiss Bank Corporation, acting through its
division, SBC Warburg.
The U.S. Underwriters and the International Underwriters are collectively
referred to as the 'Underwriters,' and the U.S. Underwriting Agreement and the
International Underwriting Agreement are collectively referred to as the
'Underwriting Agreements.' The per share price to the public and the per share
underwriting discounts and commissions for the Offerings will be identical. The
closing of the United States Offering is a condition to the closing of the
International Offering, and vice versa.
If any shares of Common Stock offered are purchased by the Underwriters,
all such shares will be so purchased. The Underwriting Agreements contain
certain provisions whereby if any U.S. Underwriter or International Underwriter
defaults in its obligation to purchase the shares to be purchased by it and if
the aggregate obligations of the U.S. Underwriters or International Underwriters
so defaulting do not exceed 10% of the shares offered in the United States
Offering or the International Offering, respectively, the remaining U.S.
Underwriters, or some of them, or the remaining International Underwriters, or
some of them, as the case may be, must assume such obligations.
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The shares of Common Stock offered hereby are being initially offered
severally by the Underwriters for sale at the price set forth on the cover page
hereof, or at such price less a concession not to exceed $ per share on
sales to certain dealers. The Underwriters may allow, and such dealers may
reallow, a concession not to exceed $ per share to other Underwriters or
certain other dealers. The offering of the shares of Common Stock is made for
delivery when, as and if accepted by the Underwriters and subject to prior sale
and to withdrawal, cancellation or modification of the offer without notice. The
Underwriters reserve the right to reject any order for the purchase of the
shares of Common Stock offered hereby. After the initial public offering of the
Common Stock, the price to the public, the concession and the reallowance may be
changed by the U.S. Managing Underwriters or the International Managing
Underwriters.
Pursuant to the Agreement Between the U.S. Underwriters and International
Underwriters (the 'Agreement Between Underwriters'), each U.S. Underwriter has
represented and agreed that, with certain exceptions, (i) it is not purchasing
any U.S. Shares (as defined below) for the account of anyone other than a United
States or Canadian Person (as defined below) and (ii) it has not offered or
sold, and will not offer or sell, direct or indirectly, any U.S. Shares or
distribute any prospectus relating to the U.S. Shares outside the United States
or Canada or to anyone other than a United States or Canadian Person. Pursuant
to the Agreement Between Underwriters, each International Underwriter has
represented and agreed that, with certain exceptions, (i) it is not purchasing
any International Shares (as defined below) for the account of any United States
or Canadian Person and (ii) it has not offered or sold, and will not offer or
sell, directly or indirectly, any International Shares or distribute any
prospectus relating to the International Shares within the United States or
Canada or to any United States or Canadian Person. The foregoing limitations do
not apply to stabilization transactions or to certain other transactions
specified in the Agreement Between Underwriters. As used herein 'United States
or Canadian Person' means any national or resident of the United States or
Canada, or any corporation, pension, profit-sharing or other trust or other
entity organized under the laws of the United States or Canada or of any
political subdivision thereof (other than a branch located outside the United
States and Canada of any United States or Canadian Person) and includes any
United States or Canadian branch of a person who is otherwise not a United
States or Canadian Person. All shares of Common Stock to be purchased by the
U.S. Underwriters and the International Underwriters are referred to herein as
the 'U.S. Shares' and the 'International Shares,' respectively.
Pursuant to the Agreement Between Underwriters, sales may be made between
the U.S. Underwriters and the International Underwriters of such number of
shares of Common Stock as may be mutually agreed. As a result, shares of Common
Stock originally purchased pursuant to the U.S. Underwriting Agreement may be
sold outside the United States and Canada, and shares of Common Stock originally
purchased pursuant to the International Underwriting Agreement may be sold in
the United States or Canada. The price of any shares so sold will, unless
otherwise agreed, be the price to the public, less an amount not greater than
the selling concession.
Pursuant to the Agreement Between Underwriters, each U.S. Underwriter has
represented that it has not offered or sold, and has agreed not to offer or
sell, any shares of Common Stock, directly or indirectly, in Canada in
contravention of the securities laws of Canada or any province or territory
thereof and has represented that any offer of Common Stock in Canada will be
made only pursuant to an exemption from the requirement to file a prospectus in
the province or territory of Canada in which such offer is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
shares of Common Stock a notice stating in substance that, by purchasing such
Common Stock, such dealer represents and agrees that it has not offered or sold,
and will not offer or sell, directly or indirectly, any of such Common Stock in
Canada or to, or for the benefit of, any resident of Canada in contravention of
the securities laws of Canada or any province or territory thereof and that any
offer of Common Stock in Canada will be made only pursuant to an exemption from
the requirement to file a prospectus in the province of Canada in which such
offer is made, and that such dealer will deliver to any other dealer to whom it
sells any of such Common Stock a notice to the foregoing effect.
Pursuant to the Agreement Between Underwriters, each International
Underwriter has represented and agreed that: (i) it has not offered or sold and
during the period of six months from the date hereof will not offer or sell any
shares of Common Stock to persons in the United Kingdom except to
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persons whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes of their
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations of 1995 (the 'Regulations'); (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Regulations with respect to anything done by it in
relation to the Common Stock in, from or otherwise involving the United Kingdom;
and (iii) it has only issued or passed on and will only issue or pass on to any
person in the United Kingdom any document received by it in connection with the
offer of the Common Stock if that person is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.
Pursuant to the Agreement Between Underwriters, each International
Underwriter has represented and agreed that it has not, directly or indirectly,
offered, sold or transferred and will not, directly or indirectly, offer, sell
or transfer any of the shares of Common Stock in The Netherlands to any person
other than to individuals or legal entities who trade or invest in securities in
the conduct of a business or profession (which include banks, investment
institutions, securities brokers, pension funds, insurance companies, central
governments, large international and supranational organizations, finance
companies and large enterprises with a separate treasury department).
In any jurisdiction this Prospectus is for distribution only to persons to
whom it may lawfully be issued and only in accordance with the laws and
regulations of such jurisdiction. The distribution of this Prospectus and the
offer and the sale of the Common Stock offered hereby may be restricted by law
in certain jurisdictions. Persons who receive this Prospectus must inform
themselves about and observe such restrictions.
In Belgium, this Prospectus is being distributed only to banks, subscribers
and other persons, distribution to whom will not contravene any relevant laws or
restrictions regarding the public offering of securities.
Neither this Prospectus, which has not been approved by, nor registered nor
filed with the Commission des Operations de Bourse, nor any other offering
material relating to the Common Stock may be used in connection with any offer
for subscription or sale of the Common Stock to the public in France or be
distributed to the public in France other than to a limited number of
institutional investors (excluding investment trusts or funds) acting for their
own account. Persons into whose possession this material comes must inform
themselves about and observe any such restrictions. This material does not
constitute and may not be used for or in connection with either an offer to any
person to whom it is unlawful to make such an offer or a solicitation by anyone
not authorized so to act.
The Selling Stockholder has granted to the U.S. Underwriters an option to
purchase an aggregate of up to an aggregate of 2,535,000 additional shares of
Common Stock on the same terms per share. If the U.S. Underwriters exercise this
option, each of the U.S. Underwriters will have a firm commitment, subject to
certain conditions, to purchase approximately the same proportion of the
aggregate shares so purchased as the number of shares to be purchased by it
shown in the above tables bears to 13,520,000. The U.S. Underwriters may
exercise such option on or before the thirtieth day from the date of the U.S.
Underwriting Agreement and only to cover over-allotments, if any, in connection
with the United States Offering.
The Company and the Selling Stockholder have agreed, subject to certain
limited exceptions, not to offer, sell, contract to sell, pledge, grant any
option to purchase, transfer, or otherwise dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or warrants or other rights to purchase or acquire
shares of Common Stock or permit the registration of shares of Common Stock for
a period of 180 days after the date of this Prospectus without the prior written
consent of Dillon, Read & Co. Inc.
The Company and the Selling Stockholder have agreed in the Underwriting
Agreements to indemnify the Underwriters against certain civil liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the Underwriters may be required to make in respect thereof.
56
<PAGE>
<PAGE>
Dillon, Read & Co. Inc. has rendered certain financial advisory and
investment banking services to Wassall and its affiliates for which it has
received customary fees. SBC Warburg is stockbroker to Wassall and has from time
to time performed certain investment banking services for Wassall, for which it
has received customary fees.
The U.S. Managing Underwriters and the International Managing Underwriters
have advised the Company and the Selling Stockholder that they do not expect
sales to discretionary accounts by the Underwriters to exceed 5% of the total
number of shares in the Offerings.
In connection with the Offerings, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock, including over-allotment, stabilization, syndicate covering
transactions and imposition of penalty bids. In an over-allotment, the
Underwriters would allot more shares of Common Stock to their customers in the
aggregate than are available for purchase by the Underwriters under the
Underwriting Agreements. Stabilizing means the placing of any bid, or the
effecting of any purchase, for the purpose of pegging, fixing or maintaining the
price of a security. In a syndicate covering transaction, the Underwriters would
place a bid or effect a purchase to reduce a short position created in
connection with the Offerings. Pursuant to a penalty bid, Dillon, Read & Co.
Inc., on behalf of the Underwriters, would be able to reclaim a selling
concession from an Underwriter if shares of Common Stock originally sold by such
Underwriter are purchased in syndicate covering transactions. These transactions
may result in the price of the Common Stock being higher than the price that
might otherwise prevail in the open market. These transactions may be effected
on the NYSE, in the over-the-counter market or otherwise, and, if commenced, may
be discontinued at any time.
Prior to the Offerings, there will be no public market for the Common
Stock. Consequently, the offering price will be determined by negotiations among
the Selling Stockholder, the U.S. Managing Underwriters and the International
Managing Underwriters. Among the principal factors to be considered in such
negotiations are the prevailing market and general economic conditions, the
price-to-earnings ratios of other publicly traded companies, the revenues and
earnings of the Company in recent periods, the current financial position of the
Company, estimates of the business potential of the Company and the present
state of the Company's development. Additionally, consideration will be given to
the general state of the securities market, the market conditions for new issues
of securities and the demand for securities of comparable companies at the time
the Offerings are made.
The Common Stock has been approved for listing on the NYSE, subject to
official notice of issuance.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Weil, Gotshal & Manges LLP, New York, New York. Certain
legal matters will be passed on for the Underwriters by Cahill Gordon & Reindel
(a partnership including a professional corporation), New York, New York.
EXPERTS
The combined financial statements of General Cable and related companies as
of December 31, 1995 and 1996 and for the period June 9, 1994 to December 31,
1994 and the years ended December 31, 1995 and 1996 and the consolidated
financial statements of General Cable Corporation and subsidiaries for the
period January 1, 1994 to June 8, 1994 included in this Prospectus and the
related financial statement schedule included elsewhere in the Registration
Statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein and elsewhere in the Registration
Statement, and are included in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
57
<PAGE>
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments, exhibits, schedules and supplements thereto,
the 'Registration Statement') under the Securities Act, with respect to the
Common Stock offered hereby. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information about the
Company and the Common Stock, reference is hereby made to the Registration
Statement and to the schedules and exhibits filed therewith. Statements
contained in this Prospectus concerning the provisions of any document filed as
an exhibit to the Registration Statement are not necessarily complete, and in
each instance, reference is made to the copy of such document so filed. Each
such statement is qualified in its entirety by such reference. The Registration
Statement can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also will be available for inspection and
copying at the following regional offices of the Commission: New York Regional
Office, 7 World Trade Center, New York, New York 10048, and Chicago Regional
Office, Suite 1400, Northwest Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511 and at the Commission website located at
(http://www.sec.gov). Copies of such material also can be obtained from the
Commission at prescribed rates through its Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549.
The Company is not currently subject to the informational requirements of
the Exchange Act. Upon consummation of the Offerings, the Company will be
subject to the informational requirements of the Exchange Act and, in accordance
therewith, will file periodic reports and other information with the Commission.
Such reports and other information will be available for inspection and copying
at the public reference section and regional Commission offices, at the
addresses set forth above.
58
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL CABLE CORPORATION AND RELATED COMPANIES:
Independent Auditors' Report............................................................................... F-2
Combined Statements of Income for the period June 9, 1994 to December 31, 1994 and the years ended December
31, 1995 and 1996 and the three months ended March 31, 1996 and 1997 (unaudited)......................... F-3
Combined Balance Sheets at December 31, 1995 and 1996 and at March 31, 1997 (unaudited).................... F-4
Combined Statements of Cash Flows for the period June 9, 1994 to December 31, 1994 and the years ended
December 31, 1995 and 1996 and the three months ended March 31, 1996 and 1997 (unaudited)................ F-5
Notes to Combined Financial Statements..................................................................... F-6
GENERAL CABLE CORPORATION AND SUBSIDIARIES ('PREDECESSOR'):
Independent Auditors' Report............................................................................... F-16
Consolidated Statement of Operations for the period January 1, 1994 to June 8, 1994........................ F-17
Consolidated Statement of Cash Flows for the period January 1, 1994 to June 8, 1994........................ F-18
Consolidated Statement of Stockholders' Equity for the period January 1, 1994 to June 8, 1994.............. F-19
Notes to Consolidated Financial Statements................................................................. F-20
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
GENERAL CABLE CORPORATION:
We have audited the accompanying combined balance sheets of General Cable
Corporation and related companies as of December 31, 1996 and 1995, and the
related combined statements of income and cash flows for the years ended
December 31, 1996 and 1995 and the period June 9, 1994 (acquisition date) to
December 31, 1994. The combined financial statements include the accounts of
General Cable Corporation and two related companies, Carol Cable Europe Ltd and
Carol Cable, Ltd. These companies are under common ownership and common
management. These combined financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such combined financial statements present fairly, in all
material respects, the combined financial position of General Cable Corporation
and related companies as of December 31, 1996 and 1995, and the combined results
of their operations and their cash flows for the years ended December 31, 1996
and 1995 and the period from June 9, 1994 (acquisition date) to December 31,
1994 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
February 7, 1997, except for
note 19, for which the
date is April 18, 1997.
F-2
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
COMBINED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JUNE 9, 1994 THREE MONTHS ENDED
(ACQUISITION DATE) YEAR ENDED DECEMBER 31, MARCH 31,
TO DECEMBER 31, --------------------------- --------------------
1994 1995 1996 1996 1997
------------------ ------------ ----------- --------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.............................. $543.3 $1,061.3 $ 1,043.6 $258.0 $251.0
Cost of sales.......................... 469.9 922.6 855.3 222.0 202.2
------- ------------ ----------- ------- -------
Gross profit................. 73.4 138.7 188.3 36.0 48.8
Selling, general and administrative
expenses............................. 53.1 94.2 109.8 27.1 29.6
------- ------------ ----------- ------- -------
Operating income............. 20.3 44.5 78.5 8.9 19.2
------- ------------ ----------- ------- -------
Interest income (expense):
Interest expense to related
parties......................... (10.9) (20.1) (19.6) (5.0) (4.8)
Other interest expense............ (.5) (1.3) (1.1) (.4) (.3)
Interest income................... .4 .7 1.1 .2 .2
------- ------------ ----------- ------- -------
(11.0) (20.7) (19.6) (5.2) (4.9)
------- ------------ ----------- ------- -------
Earnings before income
taxes...................... 9.3 23.8 58.9 3.7 14.3
Income tax benefit (provision)......... (6.5) 1.5 (19.7) (1.2) (5.7)
------- ------------ ----------- ------- -------
Net income................... $ 2.8 $ 25.3 $ 39.2 $ 2.5 $ 8.6
------- ------------ ----------- ------- -------
------- ------------ ----------- ------- -------
Earnings per common share.............. $ .12 $ 1.04 $ 1.62 $ .10 $ .35
------- ------------ ----------- ------- -------
------- ------------ ----------- ------- -------
Weighted average common shares......... 24.3 24.3 24.3 24.3 24.3
------- ------------ ----------- ------- -------
------- ------------ ----------- ------- -------
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-3
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
COMBINED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ MARCH 31,
1995 1996 1997
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.................................................................. $ 13.7 $ 1.9 $ 2.9
Receivables, net...................................................... 147.6 135.5 156.2
Inventories........................................................... 178.6 161.0 165.6
Deferred income taxes................................................. 23.0 23.7 23.4
Prepaid expenses and other............................................ 6.4 13.6 14.3
------ ------ -----------
Total current assets............................................. 369.3 335.7 362.4
Property, plant and equipment, net......................................... 116.4 128.8 128.5
Deferred income taxes...................................................... 41.7 31.8 31.3
Other non-current assets................................................... 8.2 17.3 18.1
------ ------ -----------
Total assets..................................................... $535.6 $513.6 $ 540.3
------ ------ -----------
------ ------ -----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable...................................................... $ 66.5 $ 69.3 $ 60.8
Accrued liabilities................................................... 60.4 58.8 61.5
Short-term debt....................................................... -- 2.0 25.2
Note payable to related party......................................... 8.0 -- --
------ ------ -----------
Total current liabilities........................................ 134.9 130.1 147.5
Long-term Debt:
Notes payable to related parties...................................... 195.8 195.8 195.8
Other................................................................. 10.1 9.3 9.1
------ ------ -----------
Total long-term debt............................................. 205.9 205.1 204.9
------ ------ -----------
Other long-term liabilities................................................ 71.9 71.0 72.1
------ ------ -----------
Total liabilities................................................ 412.7 406.2 424.5
------ ------ -----------
Shareholder's Equity:
Common stock, $0.01 par value, 75,000,000 shares authorized,
24,250,000 shares issued and outstanding............................ .2 .2 .2
Additional paid-in capital............................................ 94.7 94.7 94.7
Retained earnings..................................................... 28.0 12.5 20.9
------ ------ -----------
Total shareholder's equity....................................... 122.9 107.4 115.8
------ ------ -----------
Total liabilities and shareholder's equity....................... $535.6 $513.6 $ 540.3
------ ------ -----------
------ ------ -----------
Pro Forma (unaudited):
Historical shareholder's equity.................................. $ 115.8
Dividend to shareholder.......................................... 42.6
-----------
Shareholder's equity............................................. $ 73.2
-----------
-----------
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-4
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
JUNE 9, 1994
(ACQUISITION DATE) YEAR ENDED DECEMBER 31,
TO DECEMBER 31, ----------------------------
1994 1995 1996
------------------ ---------------------- ----------------------
<S> <C> <C> <C>
Cash flows of operating activities:
Net income................................. $ 2.8 $ 25.3 $ 39.2
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization......... 7.7 12.9 12.1
Deferred income taxes................. -- (1.7) 9.3
Changes in operating assets and
liabilities:
(Increase) decrease in
receivables..................... (10.1) (4.9) 12.1
(Increase) decrease in
inventories..................... 32.7 9.1 17.6
(Increase) decrease in other
assets.......................... 1.3 (3.4) 2.1
Decrease in accounts payable,
accrued and other long-term
liabilities..................... (14.0) (16.1) (11.6)
------- ------- -------
Net cash flows of operating
activities................. 20.4 21.2 80.8
------- ------- -------
Cash flows of investing activities:
Capital expenditures....................... (9.1) (26.2) (30.0)
Investment in joint venture................ -- -- (6.4)
Other, net................................. 1.6 (.5) .9
------- ------- -------
Net cash flows of investing
activities................. (7.5) (26.7) (35.5)
------- ------- -------
Cash flows of financing activities:
Dividends paid............................. -- -- (55.1)
Proceeds from related party advance........ 26.0 8.0 4.8
Proceeds from issuance of other debt....... 4.5 -- 2.0
Repayment of related party advance......... -- -- (8.0)
Repayment of other long-term debt.......... (35.9) (.7) (.8)
------- ------- -------
Net cash flows of financing
activities................. (5.4) 7.3 (57.1)
------- ------- -------
Increase (decrease) in cash.................... 7.5 1.8 (11.8)
Cash -- beginning of period.................... 4.4 11.9 13.7
------- ------- -------
Cash -- end of period.......................... $ 11.9 $ 13.7 $ 1.9
------- ------- -------
------- ------- -------
SUPPLEMENTAL INFORMATION
Income taxes paid (refunded)............... $ 4.5 $ 4.2 $ (1.1)
------- ------- -------
------- ------- -------
Interest paid.............................. $ 11.3 $ 21.3 $ 20.1
------- ------- -------
------- ------- -------
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------------------
1996 1997
------------------ ------------------
<S> <C> <C>
Cash flows of operating activities:
Net income................................. $ 2.5 $ 8.6
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization......... 3.0 3.3
Deferred income taxes................. .6 .7
Changes in operating assets and
liabilities:
(Increase) decrease in
receivables..................... (14.0) (20.7)
(Increase) decrease in
inventories..................... (4.2) (4.6)
(Increase) decrease in other
assets.......................... -- (1.3)
Decrease in accounts payable,
accrued and other long-term
liabilities..................... (10.6) (4.2)
------ ------
Net cash flows of operating
activities................. (22.7) (18.2)
------ ------
Cash flows of investing activities:
Capital expenditures....................... (5.6) (4.0)
Investment in joint venture................ -- --
Other, net................................. (.2) .2
------ ------
Net cash flows of investing
activities................. (5.8) (3.8)
------ ------
Cash flows of financing activities:
Dividends paid............................. -- --
Proceeds from related party advance........ -- --
Proceeds from issuance of other debt....... 22.0 23.2
Repayment of related party advance......... -- --
Repayment of other long-term debt.......... (.1) (.2)
------ ------
Net cash flows of financing
activities................. 21.9 23.0
------ ------
Increase (decrease) in cash.................... (6.6) 1.0
Cash -- beginning of period.................... 13.7 1.9
------ ------
Cash -- end of period.......................... $ 7.1 $ 2.9
------ ------
------ ------
SUPPLEMENTAL INFORMATION
Income taxes paid (refunded)............... -$- $ 1.9
------ ------
------ ------
Interest paid.............................. $ 4.3 $ .1
------ ------
------ ------
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-5
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. GENERAL AND ACQUISITION
General. General Cable Corporation (formerly General Cable Acquisition
Holdings Corporation, see note 19) and related companies ('General Cable') are
engaged in the development, design, manufacture, marketing and distribution of
copper wire and cable products for the communications and electrical markets. As
of December 31, 1996, General Cable operated seventeen manufacturing facilities
within the United States in addition to the corporate headquarters in Highland
Heights, Kentucky.
Acquisition. In June 1994, a subsidiary of Wassall PLC acquired all of the
outstanding common stock of General Cable for $94.9 million including
acquisition related expenses. Wassall PLC also purchased a subordinated
promissory note payable to American Premier Underwriters, Inc. ('American
Premier') for $169.8 million. This transaction is referred to as the
'Acquisition'. The Acquisition was accounted for as a purchase and accordingly
the purchase price was allocated to the assets acquired and liabilities assumed
based upon their fair market values.
The fair values of assets acquired and liabilities assumed were as follows
(in millions):
<TABLE>
<S> <C>
Cash................................................................................ $ 4.4
Receivables......................................................................... 132.6
Inventories......................................................................... 220.3
Property, plant and equipment....................................................... 101.3
Goodwill............................................................................ 64.4
Other assets........................................................................ 12.7
-------
Total.......................................................................... 535.7
Accounts payable and accrued liabilities............................................ (141.8)
Long-term debt...................................................................... (211.8)
Other liabilities................................................................... (87.2)
-------
Total, net..................................................................... $ 94.9
-------
-------
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination. The combined financial statements include the
accounts of General Cable and its wholly owned subsidiaries and two related
companies, Carol Cable Ltd. and Carol Cable Europe Ltd. The companies, the
ownership of which was transferred to Wassall PLC subsequent to the Acquisition,
are under common ownership and common management. See Note 19. All transactions
and balances among the combined companies have been eliminated. Certain
reclassifications have been made to the prior years to conform to the current
year's presentation.
Basis of Presentation of Unaudited Interim Financial Information. The
interim financial information included herein is unaudited. In the opinion of
management, the interim financial information reflects all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
such unaudited interim financial information. Results of operations for the
three months ended March 31, 1997 are not necessarily indicative of results that
may be expected for the full year.
Revenue Recognition. Revenue is recognized when shipments are made to
customers.
Earnings Per Share. Earnings per share was computed based on the weighted
average shares outstanding for each period adjusted for a 121,250-for-1 stock
split effected April 18, 1997. See Note 19. General Cable is required to
implement SFAS No. 128, 'Earnings Per Share' ('SFAS No. 128'), which was issued
in February 1997, in the fourth quarter of 1997. The effect of implementing SFAS
No. 128 is not expected to be material.
Inventories. Inventories are stated at the lower of cost or market value.
General Cable values the copper component of its inventories using the
last-in/first-out ('LIFO') method and values all remaining inventories using the
first-in/first-out ('FIFO') method.
F-6
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Goodwill. Goodwill recorded in the Acquisition was amortized using the
straight line method over 40 years. In accordance with SFAS No. 109, 'Accounting
for Income Taxes' ('SFAS No. 109'), the recognition in 1995 of the tax benefits
of acquired deductible temporary differences and carryforwards served to reduce
goodwill to zero.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost. Costs assigned to property, plant and equipment relating to the
Acquisition were based on estimated fair values at that date. Depreciation is
provided using the straight-line method over the estimated useful lives of the
assets. General Cable implemented SFAS No. 121, 'Accounting for the Impairment
of Long-Lived Assets and Long-Lived Assets to Be Disposed Of,' on January 1,
1996. SFAS No. 121 requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
the asset in question may not be recoverable. Management believes that amounts
recorded as assets are recoverable through normal operations. The implementation
of SFAS No. 121 did not have a material effect on the combined financial
statements.
Fair Value of Financial Instruments. Financial instruments are defined as
cash or contracts relating to the receipt, delivery or exchange of financial
instruments. Except as otherwise noted, fair value approximates the carrying
value of such instruments.
Forward Pricing Agreements For Purchases of Copper. In the normal course of
business, General Cable enters into forward pricing agreements for purchases of
copper to match certain sales transactions. At December 31, 1995 and 1996,
General Cable had $21.3 million and $16.9 million, respectively, of future
copper purchases that were under forward pricing agreements and such amounts
approximated fair value.
Use of Estimates. The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk. General Cable sells a broad range of products
throughout the United States, Canada and Europe. Concentrations of credit risk
with respect to trade receivables are limited due to the large number of
customers, including members of buying groups, comprising General Cable's
customer base. Ongoing credit evaluations of customers' financial condition are
performed and, generally, no collateral is required. General Cable maintains
reserves for potential credit losses and such losses, in the aggregate, have not
exceeded management's estimates. General Cable has one customer that accounted
for 10.4% of its net sales in 1996. Sales to a single customer did not exceed
10% in 1995 or the period June 9, 1994 to December 31, 1994.
3. RECEIVABLES
Receivables were net of allowances of $8.1 million and $8.4 million at
December 31, 1995 and 1996, respectively.
F-7
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
4. INVENTORIES
Inventories consisted of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- MARCH 31,
1995 1996 1997
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................................................ $ 32.9 $ 20.8 $ 20.7
Work-in-progress............................................. 35.7 28.6 24.4
Finished goods............................................... 110.0 111.6 120.5
------ ------ -----------
Total................................................... $178.6 $161.0 $ 165.6
------ ------ -----------
------ ------ -----------
</TABLE>
At December 31, 1995 and 1996, $80.2 million and $67.8 million,
respectively, of inventories were valued using the LIFO method. Approximate
replacement cost of inventories valued using the LIFO method totaled $114.5
million at December 31, 1995 and $76.2 million at December 31, 1996. A reduction
in inventory quantities during 1994, 1995 and 1996 resulted in a liquidation of
LIFO inventory quantities carried at a lower cost as compared with the cost of
current purchases. The effect of this liquidation was to decrease cost of goods
sold by $10.3 million, $.2 million and $1.6 million for the period June 9, 1994
to December 31, 1994 and the years ended December 31, 1995 and 1996,
respectively.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1996
------ ------
<S> <C> <C>
Land....................................................................... $ 9.7 $ 6.9
Buildings and leasehold improvements....................................... 35.2 38.5
Machinery, equipment and office furnishings................................ 76.4 94.1
Construction in progress................................................... 12.3 18.1
------ ------
133.6 157.6
Less -- Accumulated depreciation and amortization.......................... (17.2) (28.8)
------ ------
Total................................................................. $116.4 $128.8
------ ------
------ ------
</TABLE>
Depreciation expense totaled $6.7 million, $11.7 million and $12.1 million
for the period June 9, 1994 to December 31, 1994 and the years ended December
31, 1995 and 1996, respectively.
6. INVESTMENT IN JOINT VENTURE
In December 1996, General Cable and SpecTran Corporation formed General
Photonics LLC, a joint venture fiber optic cable company. General Cable and
SpecTran each own 50% of General Photonics. General Cable accounts for its
investment in General Photonics under the equity method of accounting. At
December 31, 1996, the investment balance of $6.4 million is included in other
assets in the accompanying combined balance sheet.
F-8
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
7. ACCRUED LIABILITIES
Accrued liabilities consisted of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1995 1996
----- -----
<S> <C> <C>
Insurance claims and related expenses.............................. $10.3 $10.1
Payroll related accruals........................................... 8.0 9.4
Customer rebates................................................... 9.2 7.1
Accrued restructuring costs........................................ 15.0 6.4
Payable to related party........................................... -- 4.8
Other accrued liabilities.......................................... 17.9 21.0
----- -----
Total.................................................... $60.4 $58.8
----- -----
----- -----
</TABLE>
8. SHORT-TERM DEBT
General Cable has an unsecured Demand Revolving Credit Note ('Revolver')
for $30.0 million, of which no amounts were outstanding at December 31, 1995 and
$2.0 million was outstanding at December 31, 1996. The Revolver is due December
31, 1997. Interest on borrowings under the Revolver is paid on the last day of
the selected interest period and is based on either (i) the prime rate, (ii) the
LIBOR rate plus 30 basis points or (iii) a quoted rate, as such rate is selected
by General Cable. The approximate weighted average interest rate paid was 6.1%,
6.6% and 5.9% for the period June 9, 1994 to December 31, 1994 and the years
ended December 31, 1995 and 1996, respectively.
In March 1995, a subsidiary of General Cable issued an $8.0 million note
payable on demand to a Wassall PLC subsidiary. The note bore annual interest at
the one year LIBOR rate plus 1% and was payable semi-annually. The note was
repaid in July 1996.
9. RESTRUCTURING PLAN
In connection with the Acquisition, accruals of approximately $46.5 million
were established for restructuring activities related to the reduction of excess
manufacturing and warehouse capacity and the reduction of excess administrative
overhead costs. These costs principally represented employee separation costs
and costs related to facility closings, including lease payments for closed
facilities and other premise costs. Facilities closed include two manufacturing
plants during 1996 and three manufacturing plants and one warehouse in 1995. The
restructuring plan is expected to be completed during 1998. The total cost of
these actions is expected to approximate the original estimate.
Changes in accrued restructuring costs were as follows (in millions):
<TABLE>
<CAPTION>
FACILITY
SEPARATION CLOSING
COSTS COSTS TOTAL
---------- -------- -----
<S> <C> <C> <C>
Original balance................................................ $ 18.4 $ 28.1 $46.5
Utilization................................................ (2.8) -- (2.8)
---------- -------- -----
Balance, December 31, 1994...................................... 15.6 28.1 43.7
Utilization................................................ (7.9) (8.7) (16.6)
---------- -------- -----
Balance, December 31, 1995...................................... 7.7 19.4 27.1
Utilization................................................ (4.7) (9.1) (13.8)
---------- -------- -----
Balance, December 31, 1996...................................... $ 3.0 $ 10.3 $13.3
---------- -------- -----
---------- -------- -----
</TABLE>
F-9
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
10. LONG-TERM DEBT
Notes payable to related parties consisted of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1996
------ ------
<S> <C> <C>
Subordinated Note, 9.98%............................... $169.8 $169.8
Note payable, prime rate plus 3/4%..................... 26.0 26.0
------ ------
Total........................................ $195.8 $195.8
------ ------
------ ------
</TABLE>
On June 9, 1994, Wassall PLC purchased a $169.8 million 9.98% Subordinated
Note due 2005 from American Premier (the 'Subordinated Note'). The principal of
the Subordinated Note is scheduled to be repaid as follows: $12.75 million in
each of 1998 and 1999; $25.5 million in each of 2000 through 2004; and the
remaining unpaid balance in 2005. The terms of the Subordinated Note limit
General Cable's other indebtedness to $100 million in borrowings from banks or
other financial institutions.
In July 1994, a subsidiary of General Cable issued a $26.0 million note
payable on demand to a Wassall PLC subsidiary. Interest on the note is payable
semi-annually. The holder of the note has agreed that repayment will not be
demanded during 1997 unless other funding is obtained to refinance the note on a
long-term basis.
At December 31, 1996, the fair value of General Cable's notes to related
parties was $220.3 million compared to the carrying value of $195.8 million. The
fair value was estimated by discounting the future cash flows using an interest
rate currently available to General Cable.
At December 31, 1996, other long-term debt of $9.3 million, primarily
Industrial Development Revenue Bonds, had a weighted average annual interest
rate of 5.7%. Maturities of such notes are as follows: 1997 -- $0.7 million,
1998 -- $0.6 million, 1999 -- $2.8 million, 2000 -- $0.1 million, 2001 -- $0.1
million and thereafter -- $5.0 million.
11. INCOME TAXES
The provision (benefit) for income taxes consisted of the following (in
millions):
<TABLE>
<CAPTION>
PERIOD
JUNE 9 TO YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------
1994 1995 1996
------------ ---------- ------------
<S> <C> <C> <C>
Current:
Federal tax expense.......................... $6.3 $-- $ 6.8
State tax expense............................ .2 -- 2.9
Foreign tax expense.......................... -- .2 .7
Deferred:
Federal tax expense (benefit)................ -- (1.7) 8.4
State tax expense............................ -- -- .9
----- ---------- ------
$6.5 $ (1.5) $ 19.7
----- ---------- ------
----- ---------- ------
</TABLE>
F-10
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The reconciliation of reported income tax expense to the amount of income
tax expense that would result from applying domestic federal statutory tax rates
to pretax income is as follows (in millions):
<TABLE>
<CAPTION>
PERIOD
JUNE 9 TO YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------
1994 1995 1996
------------ ---------- ------------
<S> <C> <C> <C>
Statutory federal income tax...................... $3.3 $ 8.3 $ 20.6
State income tax-net of federal benefit........... .1 -- 1.7
Valuation allowance change........................ 2.0 (10.1) --
Other (net)....................................... 1.1 .3 (2.6)
----- ---------- ------
$6.5 $ (1.5) $ 19.7
----- ---------- ------
----- ---------- ------
</TABLE>
The components of deferred tax assets and liabilities were as follows (in
millions):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996
---------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward............................. $ 28.3 $ 27.4
Pension and retiree benefits accruals....................... 8.5 7.9
Asset and rationalization reserves.......................... 11.7 7.8
Inventory reserves.......................................... 5.3 5.1
Alternative minimum tax credit.............................. 7.5 4.7
Other liabilities and reserves.............................. 13.5 14.4
---------- ------
Total deferred tax assets................................... $ 74.8 $ 67.3
---------- ------
---------- ------
Deferred tax liabilities:
Depreciation and fixed assets............................... $ 10.1 $ 11.8
---------- ------
---------- ------
Net deferred tax assets.......................................... $ 64.7 $ 55.5
---------- ------
---------- ------
</TABLE>
SFAS No. 109 requires a valuation allowance to be recorded when it is more
likely than not that some or all of the deferred tax assets will not be
realized. At December 31, 1994, a valuation allowance for the full amount of the
net deferred tax asset was recorded because of pre-1994 losses and uncertainties
as to the amount of taxable income that would be generated in future years. Due
in large part to productivity improvements and cost reduction programs, General
Cable's operating profits have increased substantially. In 1995, management
determined that it was more likely than not that future taxable income would be
sufficient to enable General Cable to realize all of its deferred tax assets.
Accordingly, no valuation allowance has been recorded at December 31, 1995 and
1996. Goodwill recorded in the Acquisition was amortized using the straight line
method over 40 years. In accordance with SFAS No. 109, the recognition in 1995
of the tax benefits of acquired deductible temporary differences and
carryforwards served to reduce goodwill to zero.
In accordance with the provisions of Internal Revenue Code Section 382,
utilization of the Company's net operating loss carryforward is estimated to be
limited to approximately $5.4 million per year. The net operating loss
carryforward expires in varying amounts from 2007 through 2011. Because of the
Section 382 limitation, the portion of the Company's total net operating loss
carryforward that may be utilized through expiration is estimated to be
approximately $78.2 million. General Cable also has $4.7 million of alternative
minimum tax ('AMT') credit carryforwards that have no expiration date. The
utilization of the AMT credit carryforwards is also subject to Section 382
limitations.
12. PENSION PLANS
General Cable provides retirement benefits through contributory and
noncontributory pension plans for the majority of its regular full-time
employees.
F-11
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Pension expense under the defined contribution plans sponsored by General
Cable equaled four percent of each eligible employee's covered compensation. In
addition, General Cable sponsors employee savings plans under which General
Cable may match a specified portion of contributions made by eligible employees.
Benefits provided under defined benefit pension plans sponsored by General
Cable are generally based on years of service multiplied by a specific fixed
dollar amount. Contributions to these pension plans are based on generally
accepted actuarial methods which may differ from the methods used to determine
pension expense. The amounts funded for any plan year are neither less than the
minimum required under federal law nor more than the maximum amount deductible
for federal income tax purposes.
Net pension expense for plans included the following components (in
millions):
<TABLE>
<CAPTION>
PERIOD JUNE YEAR ENDED
9 TO DECEMBER 31,
DECEMBER 31, -----------------
1994 1995 1996
------------ ------ ------
<S> <C> <C> <C>
Service cost........................................................ $ .6 $ 1.1 $ 1.4
Interest cost....................................................... 2.9 6.1 6.0
Return on plan assets............................................... (1.1) (14.3) (10.5)
Net amortization and deferral....................................... (2.3) 7.7 3.2
------ ------ ------
Net defined benefit pension expense............................ .1 .6 .1
Net defined contribution pension expense....................... 1.4 2.3 2.1
------ ------ ------
Total pension expense..................................... $ 1.5 $ 2.9 $ 2.2
------ ------ ------
------ ------ ------
</TABLE>
The table below sets forth the funded status of General Cable's defined
benefit plans and the amounts recognized in General Cable's balance sheet at
December 31, 1995 and 1996 related to those plans (in millions):
<TABLE>
<CAPTION>
ASSETS EXCEED
ACCUMULATED
BENEFITS ACCUMULATED
----------------- BENEFITS
DECEMBER 31, EXCEED ASSETS
----------------- -------------
1995 1996 1995
------ ------ -------------
<S> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested benefit obligation..................................... $ (8.0) $(75.9) $ (69.7)
------ ------ -------------
------ ------ -------------
Accumulated benefit obligation................................ $ (9.0) $(82.7) $ (74.9)
------ ------ -------------
------ ------ -------------
Projected benefit obligation....................................... $(10.0) $(84.0) $ (74.9)
Plan assets at fair value.......................................... 12.8 87.8 68.7
------ ------ -------------
Excess assets (obligations)........................................ 2.8 3.8 (6.2)
Unrecognized net gain.............................................. (1.6) (9.1) (2.0)
Unrecognized prior service cost.................................... .4 2.8 1.0
------ ------ -------------
Accrued pension asset (liability)............................. $ 1.6 $ (2.5) $ (7.2)
------ ------ -------------
------ ------ -------------
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 8.5% for the period June
9, 1994 to December 31, 1994 and 7.5% for the years ended December 31, 1995 and
1996, respectively. The rate of compensation increase was 4.5% and the assumed
long-term rate of return on plan assets was 9.5% for each period presented.
Pension plan assets consist of equity securities and various fixed income
investments.
F-12
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
13. POST-RETIREMENT BENEFITS OTHER THAN PENSIONS
General Cable has post-retirement benefit plans that provide medical and
life insurance for certain retirees and eligible dependents. General Cable funds
the plans as claims or insurance premiums are incurred. Net post-retirement
benefit expense included the following components (in millions):
<TABLE>
<CAPTION>
PERIOD JUNE YEAR ENDED
9 TO DECEMBER 31,
DECEMBER 31, -------------
1994 1995 1996
------------ ---- ----
<S> <C> <C> <C>
Service cost........................................................... $ .1 $ .3 $ .4
Interest cost.......................................................... .5 1.1 1.1
--- ---- ----
Net post-retirement benefit expense............................... $ .6 $1.4 $1.5
--- ---- ----
--- ---- ----
</TABLE>
The funded status of the plans and amounts recognized in General Cable's
balance sheet was as follows (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1995 1996
------ ------
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees........................................................................ $ (5.9) $ (5.3)
Fully eligible active plan participants......................................... (3.0) (3.0)
Other active plan participants.................................................. (6.3) (7.2)
Unrecognized net loss........................................................... .4 --
------ ------
Accrued post-retirement benefit liability.................................. $(14.8) $(15.5)
------ ------
------ ------
</TABLE>
The discount rate used in determining the accumulated post-retirement
benefit obligation was 8.5% for the period June 9, 1994 to December 31, 1994 and
7.5% for the years ended December 31, 1995 and 1996, respectively. The assumed
health care cost trend rate used in measuring the accumulated post-retirement
benefit obligation was 11.9% decreasing gradually to 5.5% in year 2005 and
thereafter. Increasing the assumed health care cost trend rate by 1% would
result in an increase of the accumulated post-retirement benefit obligation of
$1.3 million for 1996. The effect of this change would increase net
post-retirement benefit expense by $.1 million.
14. SHAREHOLDER'S EQUITY
Changes in shareholder's equity were as follows (in millions):
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------ ----------- --------- ------
<S> <C> <C> <C> <C>
Balance, June 9, 1994..................................... $ .2 $94.7 $ -- $ 94.9
Net income........................................... -- -- 2.8 2.8
Other................................................ -- -- (.1) (.1)
------ ----------- --------- ------
Balance, December 31, 1994................................ .2 94.7 2.7 97.6
Net income........................................... -- -- 25.3 25.3
------ ----------- --------- ------
Balance, December 31, 1995................................ .2 94.7 28.0 122.9
Net income........................................... -- -- 39.2 39.2
Dividends............................................ -- -- (55.1) (55.1)
Other................................................ -- -- .4 .4
------ ----------- --------- ------
Balance, December 31, 1996................................ $ .2 $94.7 $ 12.5 $107.4
------ ----------- --------- ------
------ ----------- --------- ------
</TABLE>
F-13
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Pro forma shareholder's equity (unaudited) reflects a $42.6 million
dividend anticipated to be paid to a Wassall subsidiary in May 1997 in
connection with the refinancing and the initial public offering described in
Note 19.
15. CONTINGENCIES
Certain present and former operating sites, or portions thereof, currently
or previously owned and/or leased by current or former operating units of
General Cable are the subject of investigations, monitoring or remediation under
the Federal Comprehensive Environmental Response, Compensation and Liability Act
('CERCLA' or 'superfund'), the Federal Resource Conservation and Recovery Act or
comparable state statutes or agreements with third parties. These proceedings
are in various stages ranging from initial investigations to active settlement
negotiations to implementation of the clean-up or remediation of sites.
Certain present and former operating units of General Cable have been named
as Potentially Responsible Parties ('PRPs') at several off-site disposal sites
under CERCLA or comparable state statutes in federal court proceedings. In each
of these matters, the operating unit of General Cable is working with the
governmental agencies involved and other PRPs to address environmental claims in
a responsible and appropriate manner.
At December 31, 1996, General Cable had accrued approximately $7.3 million
for various environmental related liabilities of which General Cable is aware.
In connection with the Acquisition, American Premier agreed to indemnify General
Cable against all environmental liabilities arising out of General Cable's or
its predecessors' ownership or operation of the Indiana Steel & Wire Company and
Marathon Manufacturing Holdings, Inc. businesses (which were divested by General
Cable prior to the Acquisition), without limitation as to time or amount.
American Premier also agreed to indemnify General Cable against 66 2/3% of all
other environmental liabilities arising out of General Cable's or its
predecessors' ownership or operation of other properties and assets in excess of
$10 million but not in excess of $33 million which are identified during the
seven year period ending June 2001. While it is difficult to estimate future
environmental liabilities accurately, General Cable does not currently
anticipate any material adverse impact on its results of operations, financial
position or cash flows as a result of compliance with federal, state, local or
foreign environmental laws or regulations or cleanup costs of the sites
discussed above.
In addition, subsidiaries of the Company have been named as defendants in
lawsuits alleging exposure to asbestos in products manufactured by the Company.
At December 31, 1996, General Cable had accrued approximately $2.3 million for
these lawsuits. The Company does not believe that the outcome of the litigation
will have a material adverse effect on its results of operations, cash flows or
financial position.
16. COMMITMENTS
General Cable has entered into various operating lease agreements related
principally to certain administrative, manufacturing and distribution facilities
and transportation equipment. Future minimum rental payments required under
noncancelable lease agreements at December 31, 1996 were as follows:
1997 -- $5.8 million, 1998 -- $5.0 million, 1999 -- $4.7 million, 2000 -- $3.0
million, 2001 -- $2.1 million, and $0.5 million thereafter. Rental expense
recorded under operating leases was $2.1 million, $3.8 million and $4.2 million
for the period June 9, 1994 to December 31, 1994, and the years ended December
31, 1995, 1996, respectively.
17. RELATED PARTY TRANSACTIONS
A subsidiary of Wassall charged General Cable a fee for management services
of $1.1 million for the period June 9, 1994 to December 31, 1994, $1.4 million
for 1995 and $1.6 million for 1996 which are
F-14
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND RELATED COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
included in selling, general and administrative expenses in the accompanying
combined statements of income.
18. QUARTERLY OPERATING RESULTS (UNAUDITED)
The interim financial information is unaudited. In the opinion of
management, the interim financial information reflects all adjustments necessary
for a fair presentation of quarterly financial information. Quarterly results
have been influenced by seasonal factors inherent in General Cable's businesses.
Summarized historical quarterly financial data for 1995 and 1996 are set forth
below (in millions, except per share data):
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
1995
Net sales................................................. $249.3 $270.8 $273.6 $267.6 $1,061.3
Gross profit.............................................. 27.0 38.2 35.9 37.6 138.7
Net income(loss).......................................... (3.2) 8.2 9.1 11.2 25.3
Earnings (loss) per share................................. (.13) .34 .37 .46 1.04
1996
Net sales................................................. $258.0 $270.7 $272.2 $242.7 $1,043.6
Gross profit.............................................. 36.0 47.6 55.7 49.0 188.3
Net income................................................ 2.5 10.0 15.2 11.5 39.2
Earnings per share........................................ .10 .41 .63 .48 1.62
</TABLE>
19. SUBSEQUENT EVENTS
On March 5, 1997 the name of General Cable Acquisition Holdings Corporation
was changed to General Cable Corporation. In addition, on March 7, 1997 General
Cable's Board of Directors approved the filing of a Registration Statement under
the Securities Act of 1933 for an initial public offering of General Cable's
common stock.
In connection with the initial public offering, the Board of Directors of
General Cable approved an increase in the number of authorized shares of common
stock to 75,000,000, authorized 25,000,000 shares of preferred stock and
authorized a 121,250-for-1 common stock split effective April 18, 1997. All
references to common stock and per share data have been restated to give
retroactive effect to the stock split.
Prior to consummation of the initial public offering, General Cable intends
to enter into a new credit facility with a syndicate of banks. The facility will
consist of a five-year unsecured revolving credit and competitive advance
facility in an aggregate principal amount of $350.0 million. Concurrently with
the consummation of the initial public offering, General Cable intends to make
an initial borrowing under the new facility, and to use the proceeds of such
borrowing, to (i) repay all outstanding revolving bank debt, (ii) repay all
intercompany debt and advances to Wassall and its subsidiaries, (iii) pay a
$42.6 million dividend to Wassall and (iv) purchase Carol Cable Ltd. and Carol
Cable Europe Ltd. from Wassall for $2.0 million, which approximates the net book
value of such companies.
F-15
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
GENERAL CABLE CORPORATION:
We have audited the accompanying consolidated statement of operations, cash
flows, and shareholders' equity of the General Cable Corporation and
subsidiaries for the period January 1, 1994 to June 8, 1994. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statements of operations, cash flows, and
shareholders' equity. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the consolidated results of operations and cash flows of General Cable
Corporation and subsidiaries for the period from January 1, 1994 to June 8, 1994
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
February 3, 1997
F-16
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 1, 1994 TO JUNE 8, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
<S> <C>
Net sales....................................................................... $ 355.0
Cost of sales................................................................... 310.8
----------
Gross profit.......................................................... 44.2
Selling, general and administrative expenses.................................... 43.1
----------
Operating income...................................................... 1.1
Interest expense:
Interest expense related parties........................................... (11.5)
Other interest............................................................. (.6)
----------
Loss before income taxes.............................................. (11.0)
Income tax benefit.............................................................. .1
----------
Net loss.............................................................. $ (10.9)
----------
----------
</TABLE>
See Notes to Consolidated Financial Statements.
F-17
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 1994 TO JUNE 8, 1994
(IN MILLIONS)
<TABLE>
<S> <C>
Cash flows of operating activities:
Net loss............................................................................. $ (10.9)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization................................................... 7.8
Non-cash interest expense....................................................... 11.5
Changes in operating assets and liabilities:
Increase in receivables.................................................... (13.1)
Increase in inventories.................................................... (22.9)
Increase in other assets................................................... (3.0)
Decrease in accounts payable, accrued and other long-term liabilities...... (7.8)
-------------
Net cash flows of operating activities................................ (38.4)
-------------
Cash flows of investing activities:
Proceeds from sale of discontinued operations........................................ 10.4
Capital expenditures................................................................. (6.2)
-------------
Net cash flows of investing activities................................ 4.2
-------------
Cash flows of financing activities:
Net proceeds from Revolving Credit Facility.......................................... 35.9
Repayment of debt.................................................................... (11.3)
-------------
Net cash flows of financing activities................................ 24.6
-------------
Decrease in cash.......................................................................... (9.6)
Cash -- beginning of period............................................................... 14.0
-------------
Cash -- end of period..................................................................... $ 4.4
-------------
-------------
</TABLE>
Non-cash Items
General Cable issued an Interest Note to American Premier Underwriters Inc.
("American Premier") for $12.0 million on March 31, 1994.
General Cable transferred promissory notes received in connection with the
sale of assets and liabilities of MLTC Company (formerly Marathon LeTourneau
Company) to American Premier in payment of $37.7 million of subordinated debt.
See Notes to Consolidated Financial Statements
F-18
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD JANUARY 1, 1994 TO JUNE 8, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
COMMON CAPITAL ACCUMULATED
STOCK SURPLUS DEFICIT TOTAL
------ -------- ----------- ------
<S> <C> <C> <C> <C>
Balance, December 31, 1993........................................... $13.0 $245.1 $(118.2) $139.9
Net loss........................................................ -- -- (10.9) (10.9)
Common stock retired............................................ (.1 ) (.5) -- (.6)
Other........................................................... -- .2 .3 .5
------ -------- ----------- ------
Balance, June 8, 1994................................................ $12.9 $244.8 $(128.8) $128.9
------ -------- ----------- ------
------ -------- ----------- ------
</TABLE>
See Notes to Consolidated Financial Statements
F-19
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Business. General Cable Corporation ('General Cable') manufacturers a broad
array of wire and cable products for use in the telecommunications, electronic,
electrical, consumer and automotive markets. The Common Stock of General Cable
was distributed to the shareholders of American Premier, a subsidiary of
American Financial Corporation, on July 1, 1992. American Financial Corporation
and its subsidiaries owned approximately 45% of General Cable Common Stock at
December 31, 1993.
General Cable had $286.8 million in 9.98% Subordinated Notes payable to
American Premier at December 31, 1993. Interest expense relating to the
Subordinated Notes payable to American Premier was $11.5 million for the period
January 1, 1994 to June 8, 1994.
Basis of Presentation. The consolidated financial statements present the
results of operations and cash flows of General Cable and its subsidiaries for
the period from January 1, 1994 to June 8, 1994 prior to the acquisition of
General Cable by Wassall PLC on June 9, 1994 and do not include any adjustments
resulting from the acquisition.
Principles of Consolidation. All significant majority-owned subsidiaries
are consolidated. Intercompany transactions and balances are eliminated.
Inventories. Inventories are stated at the lower of cost or market value.
General Cable values the copper component of its inventories using the
last-in/first-out ('LIFO') method and values all remaining inventories using the
first-in/first-out ('FIFO') method.
Property, Plant and Equipment. Property, plant and equipment are stated at
cost. Depreciation is provided using the straight-line method over the expected
useful lives of the assets.
Goodwill. The excess of the acquisition cost over the net assets of
businesses acquired is being amortized using the straight-line method over 40
years.
Use of Estimates. The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Revenue Recognition. Product sales are recorded when such products are
shipped to customers.
Postretirement Benefits Other than Pensions. General Cable implemented SFAS
No. 106, 'Employers Accounting for Postretirement Benefits Other than Pensions,'
on January 1, 1993 and elected prospective recognition of the transition
obligation. The expense related to health care and life insurance for retired
employees was not material for January 1, 1994 through June 8, 1994.
2. DIVESTITURES
In November 1993, General Cable entered into a definitive agreement with
Rowan Companies, Inc. for the sale of substantially all the assets and
assumption of certain liabilities of MLTC Company as of September 30, 1993. In
February 1994, General Cable completed the sale and subsequently transferred all
proceeds of the transaction, approximately $48.1 million, consisting of cash and
promissory notes, to American Premier in partial payment of subordinated debt
due to American Premier.
3. PENSION PLANS
General Cable provides retirement benefits through contributory and
noncontributory pension plans for the majority of its regular full-time
employees except those covered by certain labor contracts.
Pension expense under the defined contribution plans sponsored by General
Cable equaled four percent of each eligible employee's covered compensation. In
addition, General Cable sponsors
F-20
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
employee savings plans under which General Cable may match a specified portion
of contributions made by eligible employees.
Benefits provided under defined benefit plans sponsored by General Cable
are generally based on years of service multiplied by a specific fixed dollar
amount. Contributions to these pension plans are based on generally accepted
actuarial methods which may differ from the methods used to determine pension
expense. The amounts funded for any plan year are neither less than the minimum
required under federal law nor more than the maximum amount deductible for
federal income tax purposes.
Net pension expense for the period January 1, 1994 to June 8, 1994 was $1.3
million.
4. INCOME TAXES
In accordance with Statement of Financial Accounting Standards No. 109, the
benefit of future deductible temporary differences as well as tax loss and
credit carryforwards was offset by a full valuation allowance due to the
uncertainties with respect to the amount of taxable income which will be
generated in future years. No provision for federal income taxes and a $0.1
million benefit for state income taxes were recorded for the period January 1,
1994 to June 8, 1994 due to an operating loss.
5. COMMITMENTS
General Cable has entered into various operating lease agreements related
principally to certain administrative and manufacturing facilities and
transportation equipment. Rental expense charged to operations for all operating
leases amounted to $1.9 million for the period January 1, 1994 to June 8, 1994.
6. SUBSEQUENT EVENTS
Effective June 9, 1994, a subsidiary of Wassall PLC acquired 96% of the
outstanding common stock of General Cable. The subsidiary subsequently acquired
the remaining 4% of the common stock of General Cable.
F-21
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<PAGE>
<PAGE>
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<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
______________________________ ______________________________
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE SECURITIES OFFERED
BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SHARES OF COMMON STOCK IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 7
The Company................................ 11
Use of Proceeds............................ 11
Dividends.................................. 12
Dilution................................... 12
Capitalization............................. 13
Selected Financial Data.................... 14
Unaudited Pro Forma Financial Data......... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 17
Business................................... 23
Management................................. 37
Selling Stockholder........................ 45
Certain Relationships and Related
Transactions............................. 45
Description of Capital Stock............... 46
Shares Eligible for Future Sale............ 50
Certain U.S. Federal Tax Consequences
to Non-U.S. Holders of Common
Stock.................................... 52
Underwriting............................... 54
Legal Matters.............................. 57
Experts.................................... 57
Available Information...................... 58
Index to Financial Statements.............. F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
------------------------
16,900,000 SHARES
COMMON STOCK
PROSPECTUS
, 1997
------------------------
DILLON, READ & CO. INC.
MERRILL LYNCH & CO.
______________________________ ______________________________
<PAGE>
<PAGE>
[INTERNATIONAL PROSPECTUS -- ALTERNATE PAGE]
SUBJECT TO COMPLETION, DATED APRIL 22, 1997
16,900,000 SHARES
[LOGO]
COMMON STOCK
All of the 16,900,000 shares of common stock, par value $.01 per share (the
'Common Stock'), of General Cable Corporation ('General Cable' or the 'Company')
offered hereby are being sold by Wassall Netherlands Cable B.V., a Netherlands
corporation (the 'Selling Stockholder'), in concurrent offerings in the United
States and Canada and outside the United States and Canada (the 'Offerings'). Of
such shares, 3,380,000 are initially being offered outside the United States and
Canada by the International Underwriters (the 'International Offering') and
13,520,000 are initially being offered in the United States and Canada by the
U.S. Underwriters (the 'United States Offering'). The per share price to the
public and per share underwriting discounts and commissions for the Offerings
will be identical. See 'Underwriting.' The Company will not receive any of the
proceeds from the sale of the shares offered hereby.
Prior to the Offerings, the Company has been a wholly-owned subsidiary of
the Selling Stockholder. Following consummation of the Offerings, the Selling
Stockholder will own approximately 30% of the outstanding shares of Common Stock
(or approximately 20% of the outstanding shares of Common Stock if the U.S.
Underwriters' over-allotment option is exercised in full).
Prior to the Offerings, there has been no public market for the Common
Stock. It is currently estimated that the initial public offering price of the
Common Stock will be between $21.00 and $24.00. See 'Underwriting' for the
factors to be considered in determining the initial public offering price. The
Common Stock has been approved for listing on the New York Stock Exchange (the
'NYSE'), subject to official notice of issuance, under the symbol 'GCN'.
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE 'RISK FACTORS' ON PAGES 7 - 11.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------
<TABLE>
<CAPTION>
Underwriting Proceeds to
Price to Discounts and Selling
Public Commissions* Stockholder`D'
<S> <C> <C> <C>
Per Share....................................... $ $ $
Total`DD'....................................... $ $ $
</TABLE>
- ------------------------
* The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See 'Underwriting.'
`D' Before deducting expenses of the Offerings estimated to be $ , all of
which are payable by the Selling Stockholder.
`DD' The Selling Stockholder has granted the U.S. Underwriters a 30-day option
to purchase up to 2,535,000 additional shares of Common Stock on the same
terms per share solely to cover over-allotments, if any. If such option is
exercised in full, the total price to public will be $ , the total
underwriting discounts and commissions will be $ and the total
proceeds to the Selling Stockholder will be $ . See
'Underwriting.'
------------------------
The Common Stock is being offered by the Underwriters as set forth under
'Underwriting' herein. It is expected that delivery of the Common Stock offered
hereby will be made at the offices of Dillon, Read & Co. Inc., New York, New
York or through the facilities of The Depository Trust Company on or about
, 1997 against payment therefor. The International Underwriters
include:
DILLON, READ & CO. INC.
MERRILL LYNCH INTERNATIONAL
SBC WARBURG
A DIVISION OF SWISS BANK CORPORATION
The date of this Prospectus is , 1997.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION, OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
<PAGE>
[INTERNATIONAL PROSPECTUS -- ALTERNATE PAGE]
______________________________ ______________________________
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR
SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE SECURITIES OFFERED
BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY SHARES OF COMMON STOCK IN ANY JURISDICTION IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE ANY SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary......................... 3
Risk Factors............................... 7
The Company................................ 11
Use of Proceeds............................ 11
Dividends.................................. 12
Dilution................................... 12
Capitalization............................. 13
Selected Financial Data.................... 14
Unaudited Pro Forma Financial Data......... 16
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 17
Business................................... 23
Management................................. 37
Selling Stockholder........................ 45
Certain Relationships and Related
Transactions............................. 45
Description of Capital Stock............... 46
Shares Eligible for Future Sale............ 50
Certain U.S. Federal Tax Consequences to
Non-U.S. Holders of Common Stock......... 52
Underwriting............................... 54
Legal Matters.............................. 57
Experts.................................... 57
Available Information...................... 58
Index to Financial Statements.............. F-1
</TABLE>
------------------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
[LOGO]
------------------------
16,900,000 SHARES
COMMON STOCK
PROSPECTUS
, 1997
------------------------
DILLON, READ & CO. INC.
MERRILL LYNCH INTERNATIONAL
SBC WARBURG
A DIVISION OF SWISS BANK CORPORATION
______________________________ ______________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemization of the expenses to be borne by the Selling
Stockholder in connection with the distribution of the securities being
registered hereunder. All such expenses (other than the registration, NASD and
NYSE fees) are estimated.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................... $141,346
NASD fee.......................................................................... 30,500
NYSE listing fee.................................................................. 151,100
Legal fees and expenses........................................................... *
Accounting fees................................................................... *
Printing costs and expenses....................................................... *
Miscellaneous..................................................................... *
--------
Total........................................................................ $ *
--------
--------
</TABLE>
- ------------
* To be completed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Section 145 of the Delaware General Corporation Law (the 'DGCL')
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit, or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, or, with respect to any criminal action or
proceeding, that he had reasonable cause to believe that his conduct was
unlawful.
Section 145 of the DGCL also provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending, or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee, or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon adjudication that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
II-1
<PAGE>
<PAGE>
Any such indemnification (unless ordered by a court) shall be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth above. Such determination shall be made:
(1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding; or
(2) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel
in a written opinion; or
(3) by the stockholders.
Section 145 of the DGCL permits a Delaware business corporation to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against such person and incurred by him in any such capacity,
or arising out of his status as such, whether or not the corporation would have
the power to indemnify such person.
(b) Article IX of the Company's By-laws, as amended, provides that the
Company shall, to the fullest extent permitted under the DGCL or any other
applicable law, as may from time to time be in effect, indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a member of
the board of directors or an officer of the Company or controller of the
Company, or is or was serving at the request of the Company as a member of the
board of directors or an officer of another corporation, partnership, joint
venture, trust or other enterprise, against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding.
Article IX also provides that expenses incurred by an officer or director or
controller of the Company in defending a civil or criminal action, suit or
proceeding shall be paid by the Company in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by or on behalf
of such director, officer or controller to repay such amount if it shall be
ultimately determined that he or she is not entitled to be indemnified as
authorized by the DGCL. Persons who are not officers, directors or the
controller of the Company and who are or were employees or agents of the
Company, or are or were serving at the request of the Company as employees or
agents of another corporation, partnership, joint venture, trust or other
enterprise, may be indemnified to the extent authorized at any time or from time
to time by the board of directors. The right to indemnification provided by
Article IX of the Company's By-laws is not exclusive of any other rights to
which those indemnified may be entitled by law or otherwise, and shall continue
as to a person who has ceased to be a director, officer, controller, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such person.
(c) Section 8.2 of the Company's Certificate of Incorporation contains
provisions relating to indemnification similar to the provisions contained in
Article IX of the Company's By-laws which are described above.
(d) The Underwriting Agreements among the Underwriters, the Selling
Stockholder and the Company relating to the Common Stock contain provisions with
respect to indemnification of directors and certain officers of the Company by
the Underwriters under certain circumstances.
(e) The directors and officers of the Company are covered by Wassall's
global directors' and officers' insurance policy, which coverage will terminate
upon consummation of the Offerings. The Company intends to purchase a directors'
and officers' insurance policy which will provide coverage for certain
liabilities that directors and officers of the Company may incur in their
capacity as such.
II-2
<PAGE>
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------
<C> <S>
*1.1 Form of U.S. Underwriting Agreement.
*1.2 Form of International Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Amended and Restated By-Laws of the Registrant.
*4.1 Specimen Common Stock Certificate.
*5.1 Opinion of Weil, Gotshal & Manges LLP as to the legality of the Common Stock.
10.1 Stock and Note Purchase Agreement, dated as of May 5, 1994 (filed as Exhibit (c)(2) to the Schedule
14D-1 of Wassall PLC and the Registrant filed with the Commission on May 11, 1994 and incorporated
herein by reference).
*10.2 Form of Credit Agreement between the Registrant, Chase Manhattan Bank, as Administrative Agent, and the
lenders signatory thereto.
*10.3 General Cable Corporation 1997 Annual Incentive Bonus Plan.
*10.4 General Cable Corporation Long-Term Stock Incentive Plan.
*10.5 Employment Agreement, dated , 1997, between Stephen Rabinowitz and the Registrant.
*10.6 Employment Agreement, dated , 1997, between Gregory B. Kenny and the Registrant.
*10.7 Employment Agreement, dated , 1997, between Christopher F. Virgulak and the Registrant.
*10.8 Employment Agreement, dated , 1997, between Robert J. Siverd and the Registrant.
*10.9 Change-in-Control Agreement, dated , 1997, between Stephen Rabinowitz and the Registrant.
*10.10 Change-in-Control Agreement, dated , 1997, between Gregory B. Kenny and the Registrant.
*10.11 Change-in-Control Agreement, dated , 1997, between Christopher F. Virgulak and the
Registrant.
*10.12 Change-in-Control Agreement, dated , 1997, between Robert J. Siverd and the Registrant.
*10.13 Registration Rights Agreement, dated , 1997, between Wassall Netherlands Cable BV and the
Registrant.
*10.14 Intercompany Agreement, dated , 1997, among Wassall PLC, Wassall Netherlands Cable BV and
the Registrant.
*10.15 Stock Purchase Agreement, dated , 1997, between Wassall PLC and General Cable Industries,
Inc.
**21.1 List of subsidiaries of the Registrant.
23.1 Consent of Deloitte & Touche LLP.
*23.2 Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1).
**24.1 Powers of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- ------------
* To be filed by amendment.
** Previously filed
(b) Financial Statement Schedule
The following financial statement schedule of the Company is filed
herewith:
<TABLE>
<CAPTION>
SCHEDULE DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<S> <C>
II. Valuation and Qualifying Accounts
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that:
(1) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification
II-3
<PAGE>
<PAGE>
is against public policy as expressed in the Exchange Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Exchange Act and will be governed by the final
adjudication of such issue.
(2) For purposes of determining any liability under the Securities Act, the
information omitted from the Prospectus filed as part of this Registration
Statement in reliance upon Rule 430A and contained in the Prospectus filed by
the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed part of the Registration Statement as of the time it was
declared effective.
(3) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) The undersigned registrant hereby undertakes to provide to the
Underwriters at the closing specified in the underwriting agreements
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on April 22, 1997.
GENERAL CABLE CORPORATION
By: /s/ STEPHEN RABINOWITZ
...................................
STEPHEN RABINOWITZ
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by or on behalf of the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------------- ---------------------------------------------- -------------------
<C> <S> <C>
/S/ STEPHEN RABINOWITZ Chairman, President, Chief Executive Officer April 22, 1997
........................................ and Director (Principal Executive Officer)
(STEPHEN RABINOWITZ)
** Executive Vice President, Chief Operating April 22, 1997
........................................ Officer and Director
(GREGORY B. KENNY)
* Director April 22, 1997
........................................
(KEVIN J. DOYLE)
* Director April 22, 1997
........................................
(DAVID A. ROPER)
** Chief Financial Officer (Principal Financial April 22, 1997
........................................ and Accounting Officer)
(CHRISTOPHER F. VIRGULAK)
*By: /s/ MARSHALL D. GRINGAUZ
........................................
MARSHALL D. GRINGAUZ,
ATTORNEY-IN-FACT
**By: /s/ ROBERT J. SIVERD
........................................
ROBERT J. SIVERD
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
<PAGE>
SCHEDULE II
GENERAL CABLE CORPORATION AND RELATED COMPANIES
VALUATION AND QUALIFYING ACCOUNTS
ACCOUNTS RECEIVABLE ALLOWANCES
(IN MILLIONS)
<TABLE>
<CAPTION>
PREDECESSOR
--------------- FOR THE YEARS
FOR THE PERIOD FOR THE PERIOD ENDED DECEMBER 31,
JANUARY 1, 1994 JUNE 9, 1994 TO ----------------------------------------
TO JUNE 8, 1994 DECEMBER 31, 1994 1995 1996
--------------- ----------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Accounts Receivable Allowances:
Beginning balance..................... $10.2 $10.2 $ 10.7 $8.1
Provision........................ .6 .9 .7 1.3
Write-offs....................... (.6) (.4) (3.3) (1.0)
------ ------ ------ -----
Ending balance........................ $10.2 $10.7 $ 8.1 $8.4
------ ------ ------ -----
------ ------ ------ -----
</TABLE>
S-1<PAGE>
<PAGE> EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------
<C> <S>
*1.1 Form of U.S. Underwriting Agreement.
*1.2 Form of International Underwriting Agreement.
3.1 Amended and Restated Certificate of Incorporation of the Registrant.
3.2 Amended and Restated By-Laws of the Registrant.
*4.1 Specimen Common Stock Certificate.
*5.1 Opinion of Weil, Gotshal & Manges LLP as to the legality of the Common Stock.
10.1 Stock and Note Purchase Agreement, dated as of May 5, 1994 (filed as Exhibit (c)(2) to the Schedule
14D-1 of Wassall PLC and the Registrant filed with the Commission on May 11, 1994 and incorporated
herein by reference).
*10.2 Form of Credit Agreement between the Registrant, Chase Manhattan Bank, as Administrative Agent, and the
lenders signatory thereto.
*10.3 General Cable Corporation 1997 Annual Incentive Bonus Plan.
*10.4 General Cable Corporation Long-Term Stock Incentive Plan.
*10.5 Employment Agreement, dated , 1997, between Stephen Rabinowitz and the Registrant.
*10.6 Employment Agreement, dated , 1997, between Gregory B. Kenny and the Registrant.
*10.7 Employment Agreement, dated , 1997, between Christopher F. Virgulak and the Registrant.
*10.8 Employment Agreement, dated , 1997, between Robert J. Siverd and the Registrant.
*10.9 Change-in-Control Agreement, dated , 1997, between Stephen Rabinowitz and the Registrant.
*10.10 Change-in-Control Agreement, dated , 1997, between Gregory B. Kenny and the Registrant.
*10.11 Change-in-Control Agreement, dated , 1997, between Christopher F. Virgulak and the
Registrant.
*10.12 Change-in-Control Agreement, dated , 1997, between Robert J. Siverd and the Registrant.
*10.13 Registration Rights Agreement, dated , 1997, between Wassall Netherlands Cable BV and the
Registrant.
*10.14 Intercompany Agreement, dated , 1997, among Wassall PLC, Wassall Netherlands Cable BV and
the Registrant.
*10.15 Stock Purchase Agreement, dated , 1997, between Wassall PLC and General Cable Industries,
Inc.
**21.1 List of subsidiaries of the Registrant.
23.1 Consent of Deloitte & Touche LLP.
*23.2 Consent of Weil, Gotshal & Manges LLP (included in Exhibit 5.1).
**24.1 Powers of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- ------------
* To be filed by amendment.
** Previously filed
STATEMENT OF DIFFERENCES
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The trademark symbol shall be expressed as.............. 'tm'
The registered trademark symbol shall be expressed as... 'r'
The dagger symbol shall be expressed as................. `D'
The double dagger symbol shall be expressed as.......... `DD'
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AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
GENERAL CABLE CORPORATION
This document constitutes an amendment and restatement of the original
Certificate of Incorporation of General Cable Corporation (the "Corporation"),
which was filed with the Secretary of State of Delaware on April 22, 1994 under
the name "Coil Acquisition Holdings Corp." This Amended and Restated Certificate
of Incorporation was duly adopted in accordance with the provisions of Sections
245(c) and 242 of the Delaware General Corporation Law (the "DGCL").
ARTICLE I
NAME
The name of the Corporation is General Cable Corporation.
ARTICLE II
ADDRESS OF REGISTERED OFFICE;
NAME OF REGISTERED AGENT
The address of the registered office of the Corporation in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
that address in the State of Delaware is The Corporation Trust Company.
ARTICLE III
PURPOSE AND POWERS
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
DGCL. The Corporation shall have all powers that may now or hereafter be lawful
for a corporation to exercise under the DGCL.
ARTICLE IV
CAPITAL STOCK
SECTION 4.1. Total Number of Shares of Stock. The total number of
shares of capital stock of all classes that the Corporation shall have authority
to issue is one hundred million (100,000,000) shares. The authorized capital
stock is divided into twenty five million (25,000,000) shares of preferred
stock, of the par value of $.01 each (the "Preferred Stock"), and seventy-five
million (75,000,000) shares of common stock, of the par value of $.01 each (the
"Common Stock").
SECTION 4.2. Preferred Stock. (a) The shares of Preferred Stock of the
Corporation may be issued from time to time in one or more classes or series
thereof, the shares of each such class or series thereof to have such voting
powers, full or limited, or no voting powers, and such designations,
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preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated and expressed
herein or in the resolution or resolutions providing for the issue of such class
or series, adopted by the board of directors of the Corporation (the "Board of
Directors") as hereinafter provided.
(b) Authority is hereby expressly granted to the Board of Directors,
subject to the provisions of this Article IV and to the limitations prescribed
by the DGCL, to authorize the issue of one or more classes, or series thereof,
of Preferred Stock and with respect to each such class or series to fix by
resolution or resolutions providing for the issue of such class or series the
voting powers, full or limited, if any, of the shares of such class or series
and the designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof. The
authority of the Board of Directors with respect to each class or series thereof
shall include, but not be limited to, the determination or fixing of the
following:
(i) the maximum number of shares to constitute such class or
series, which may subsequently be increased or decreased by resolutions
of the Board of Directors unless otherwise provided in the resolution
providing for the issue of such class or series, the distinctive
designation thereof and the stated value thereof if different than the
par value thereof;
(ii) the dividend rate of such class or series, the conditions
and dates upon which such dividends shall be payable, the relation
which such dividends shall bear to the dividends payable on any other
class or classes of stock or any other series of any class of stock of
the Corporation, and whether such dividends shall be cumulative or
noncumulative;
(iii) whether the shares of such class or series shall be
subject to redemption, in whole or in part, and if made subject to such
redemption the times, prices and other terms and conditions of such
redemption, including whether or not such redemption may occur at the
option of the Corporation or at the option of the holder or holders
thereof or upon the happening of a specified event;
(iv) the terms and amount of any sinking fund established for
the purchase or redemption of the shares of such class or series;
(v) whether or not the shares of such class or series shall be
convertible into or exchangeable for shares of any other class or
classes of any stock or any other series of any class of stock of the
Corporation, and, if provision is made for conversion or exchange, the
times, prices, rates, adjustments, and other terms and conditions of
such conversion or exchange;
(vi) the extent, if any, to which the holders of shares of such
class or series shall be entitled to vote with respect to the election
or directors or otherwise;
(vii) the restrictions, if any, on the issue or reissue of any
additional Preferred Stock;
(viii) the rights of the holders of the shares of such class or
series upon the dissolution of, or upon the subsequent distribution of
assets of, the Corporation; and
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(ix) the manner in which any facts ascertainable outside the
resolution or resolutions providing for the issue of such class or
series shall operate upon the voting powers, designations, preferences,
rights, and qualifications, limitations or restrictions of such class
or series.
SECTION 4.3. Common Stock. The shares of Common Stock of the
Corporation shall be of one and the same class. The holders of Common Stock
shall have one vote per share of Common Stock on all matters on which holders of
Common Stock are entitled to vote.
ARTICLE V
BOARD OF DIRECTORS
SECTION 5.1. Powers of the Board of Directors. The business and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors. In furtherance, and not in limitation, of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly authorized
to:
(a) adopt, amend, alter, change or repeal the By-Laws of the
Corporation; provided, however, that no By-Laws hereafter adopted shall
invalidate any prior act of the directors that would have been valid if
such new By-Laws had not been adopted;
(b) determine the rights, powers, duties, rules and procedures
that affect the power of the Board of Directors to manage and direct
the business and affairs of the Corporation, including the power to
designate and empower committees of the Board of Directors, to elect,
appoint and empower the officers and other agents of the Corporation,
and to determine the time and place of, the notice requirements for,
Board meetings, as well as quorum and voting requirements for, and the
manner of taking, Board action; and
(c) exercise all such powers and do all such acts as may be
exercised or done by the Corporation, subject to the provisions of the
DGCL, this Certificate of Incorporation, and the By-Laws of the
Corporation.
SECTION 5.2. Number of Directors. The number of directors constituting
the entire Board of Directors shall be not less than three nor more than nine.
Subject to the foregoing limitation the number of directors constituting the
Board of Directors shall be determined from time to time exclusively by a vote
of a majority of the Board of Directors in office at the time of such vote.
SECTION 5.3. Classified Board of Directors. The directors shall be
divided into three classes, with each class to be as nearly equal in number as
reasonably possible, and with the initial term of office of the first class of
directors to expire at the 1998 annual meeting of stockholders, the initial term
of office of the second class of directors to expire at the 1999 annual meeting
of stockholders and the initial term of office of the third class of directors
to expire at the 2000 annual meeting of stockholders, in each case upon the
election and qualification of their successors. Commencing with the 1998 annual
meeting of stockholders, directors elected to succeed those directors whose
terms have thereupon expired shall be elected to a term of office to expire at
the third succeeding annual meeting of stockholders after their election, and
upon the election and qualification of their successors. If the number of
directors is changed, any increase or decrease shall be apportioned among the
classes so as to maintain or attain the
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number of directors in each class as nearly equal as reasonably possible, but in
no case will a decrease in the number of directors shorten the term of any
incumbent director.
SECTION 5.4. Vacancies. Any vacancies in the Board of Directors for any
reason and any newly created directorship resulting by reason of any increase in
the number of directors may be filled only by the Board of Directors, acting by
a majority of the remaining directors then in office, although less than a
quorum, or by a sole remaining director, and any directors so appointed shall
hold office until the next election of the class for which such directors have
been chosen and until their successors are elected and qualified.
SECTION 5.5. Removal of Directors. Except as may be provided in a
resolution or resolutions providing for any class or series of Preferred Stock
pursuant to Article IV hereof with respect to any directors elected by the
holders of such class or series, any director, or the entire Board of Directors,
may be removed from office at any time, but only for cause, and only by the
affirmative vote of the holders of at least 66-2/3% of the voting power of all
of the shares of capital stock of the Corporation then entitled to vote
generally in the election of directors, voting together as a single class.
ARTICLE VI
STOCKHOLDER ACTIONS AND MEETINGS OF STOCKHOLDERS
Except as may be provided in a resolution or resolutions providing for
any class or series of Preferred Stock pursuant to Article IV hereof, any action
required or permitted to be taken by the stockholders of the Corporation must be
effected at a duly called annual or special meeting of such holders and may not
be effected by any written consent in lieu of a meeting by such holders. Special
meetings of stockholders of the Corporation may be called only by the Board of
Directors pursuant to a resolution adopted by a majority of the members of the
Board of Directors then in office. Elections of directors need not be by written
ballot, unless otherwise provided in the By-Laws. For purposes of all meetings
of stockholders, a quorum shall consist of a majority of the shares entitled to
vote at such meeting of stockholders, unless otherwise required by law.
ARTICLE VII
LIMITATION ON LIABILITY OF DIRECTORS
No person shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
including, without limitation, directors serving on committees of the Board of
Directors; provided, however, that the foregoing shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL or (iv) for any transaction from which the
director derived an improper personal benefit. If the DGCL is amended hereafter
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the DGCL, as
so amended. Any amendment, repeal or modification of this Article VII shall not
adversely affect any right or protection of a director of the Corporation
existing hereunder with respect to any act or omission occurring prior to such
amendment, repeal or modification.
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ARTICLE VIII
AMENDMENT OF BY-LAWS
The Board of Directors shall have the power to adopt, amend, alter,
change or repeal any By-Laws of the Corporation. In addition, the stockholders
of the Corporation may adopt, amend, alter, change or repeal any By-Laws of the
Corporation by the affirmative vote of the holders of at least 66-2/3% of the
voting power of all of the shares of capital stock of the Corporation then
entitled to vote generally in the election of directors, voting together as a
single class (notwithstanding the fact that a lesser percentage may be specified
by DGCL).
ARTICLE IX
AMENDMENT OF CERTIFICATE OF INCORPORATION
The Corporation hereby reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in any
manner permitted by DGCL and all rights and powers conferred upon stockholders,
directors and officers herein are granted subject to this reservation. Except as
may be provided in a resolution or resolutions providing for any class or series
of Preferred Stock pursuant to Article IV hereof and which relate to such class
or series of Preferred Stock, any such amendment, alteration, change or repeal
shall require the affirmative vote of both (a) a majority of the members of the
Board of Directors then in office and (b) a majority of the voting power of all
of the shares of capital stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class; except that any
proposal to amend, alter, change or repeal the provisions of Section 5.3,
Section 5.5, Article VI, Article VIII and this Article IX shall require the
affirmative vote of 66-2/3% of the voting power of all of the shares of capital
stock entitled to vote generally in the election of directors, voting together
as a single class.
ARTICLE X
SEVERABILITY
In the event that any of the provisions of this Certificate of
Incorporation (including any provision within a single Section, paragraph or
sentence) are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions are severable and shall remain
enforceable to the fullest extent permitted by law.
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THE UNDERSIGNED, being the President of the Corporation, for the
purpose of amending and restating the Certificate of Incorporation of the
Corporation pursuant to the DGCL, does make this Certificate, hereby declaring
and certifying that this is the act and deed of the Corporation and that the
facts herein stated are true, and accordingly have hereunto set my hand as of
the 18th day of April, 1997.
/s/ Stephen Rabinowitz
----------------------------------------
Stephen Rabinowitz, Chairman, President
and Chief Executive Officer
ATTEST:
/s/ Robert J. Siverd
----------------------------------------
Robert J. Siverd, Executive Vice
President, General Counsel and
Secretary
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AMENDED AND RESTATED
BY-LAWS
OF
GENERAL CABLE CORPORATION
(a Delaware corporation)
ARTICLE I
Stockholders
SECTION 1. Annual Meetings. (a) All annual meetings of the
Stockholders for the election of directors shall be held at such place as shall
be designated from time to time by the Board of Directors and stated in the
notice of the meeting. Special meetings of Stockholders for any other purpose
may be held at such time and place as shall be stated in the notice of the
meeting or in a duly executed waiver of notice thereof.
(b) Annual meetings of Stockholders shall be held on such date
and at such time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, at which they shall elect, by
a plurality vote, a Board of Directors or, during such time as the certificate
of incorporation of the Corporation (the "Certificate of Incorporation")
provides for a classified Board of Directors, that class of directors the term
of which shall expire at the meeting, and transact such other business as may
properly be brought before the meeting.
(c) Written notice of the annual meeting stating the place,
date, and hour of the meeting shall be given to each Stockholder entitled to
vote at such meeting not less than ten days nor more than 60 days prior to the
date of the meeting. A written waiver of any such notice signed by the person
entitled thereto, whether before or after the time stated therein, shall be
deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
the meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened.
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(d) The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
Stockholders, a complete list of the Stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
Stockholder and the number of shares registered in the name of each Stockholder.
Such list shall be open to the examination of any Stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any Stockholder who is
present. The stock ledger shall be the only evidence as to the Stockholders
entitled to examine the stock ledger, the list required by this section or the
books of the Corporation, or to vote in person or by proxy at any meeting of
Stockholders.
SECTION 2. Special Meetings. (a) Special meetings of the
Stockholders, for any purpose or purposes, unless otherwise prescribed by
statute or by the Certificate of Incorporation, shall be called by the Chairman,
President or Secretary only at the request in writing of a majority of the Board
of Directors then in office. Such request shall state the purpose or purposes of
the proposed meeting.
(b) Written notice of a special meeting stating the place,
date, and hour of the meeting and, in general terms, the purpose or purposes for
which the meeting is called, shall be given not less than ten days nor more than
sixty days prior to the date of the meeting, to each Stockholder entitled to
vote at such meeting. Special meetings may be held at such place as shall be
designated by the Board of Directors. Whenever the directors shall fail to fix
such place, the meeting shall be held at the principal executive offices of the
Corporation.
(c) Business transacted at any special meeting of
Stockholders, other than procedural matters and matters relating to the conduct
of the meeting, shall be limited to the purpose or purposes stated in the
notice.
SECTION 3. Quorums. (a) The holders of a majority of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy,
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shall constitute a quorum at all meetings of the Stockholders for the
transaction of business except as otherwise provided by the Delaware General
Corporation Law (the "DGCL") or by the Certificate of Incorporation. Unless
these By-Laws otherwise require, when a meeting is adjourned to another time or
place, whether or not a quorum is present, notice need not be given of the
adjourned meeting if the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting, the Corporation may
transact any business which might have been transacted at the original meeting.
If the adjournment is for more than thirty days, or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Stockholder of record entitled to vote at the
meeting. When a quorum is once present it is not broken by the subsequent
withdrawal of any Stockholder.
(b) When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one on which, by express provision of the DGCL or of the
Certificate of Incorporation, a different vote is required, in which case such
express provision shall govern and control the decision of such question.
SECTION 4. Organization. Meetings of Stockholders shall be
presided over by the Chairman, if any, or if none or in the Chairman's absence,
the President, if any, or if none or in the President's absence, by a Chairman
to be chosen by the Stockholders entitled to vote who are present in person or
by proxy at the meeting. The Secretary of the Corporation, or in the Secretary's
absence an Assistant Secretary, shall act as Secretary of every meeting and keep
the minutes thereof, but if neither the Secretary nor an Assistant Secretary is
present, the presiding officer of the meeting shall appoint any person present
to act as secretary of the meeting. The order of business at all meetings of
stockholders shall be as determined by the Chairman of the meeting.
SECTION 5. Voting; Proxies; Required Vote. (a) At each meeting
of Stockholders, every Stockholder shall be entitled to vote in person or by
proxy appointed by an instrument in writing, subscribed by such Stockholder or
by such Stockholder's duly authorized attorney-in-fact (but no such proxy shall
be voted or acted upon after three years
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from its date, unless the proxy provides for a longer period) and, unless the
DGCL or the Certificate of Incorporation (including resolutions designating any
class or series of preferred stock pursuant to Article IV of the Certificate of
Incorporation) provides otherwise, shall have one vote for each share of stock
entitled to vote registered in the name of such Stockholder on the books of the
Corporation on the applicable record date fixed pursuant to these By-Laws. At
all elections of directors the voting may but need not be by ballot and a
plurality of the votes cast there shall elect directors. Except as otherwise
required by law or the Certificate of Incorporation, any other action shall be
authorized by a majority of the votes cast.
(b) Where the holders of a class or classes of shares of the
Corporation, present in person or represented by proxy, shall be entitled to
vote separately as a class on any matter, the affirmative vote of the majority
of shares of such class or classes present in person or represented by proxy at
the meeting shall be the act of such class, unless otherwise provided in the
Certificate of Incorporation.
SECTION 6. Inspector of Election. The Board of Directors, in
advance of any meeting, may, but need not, appoint one or more inspectors of
election to act at the meeting or any adjournment thereof. If an inspector or
inspectors are not so appointed, the person presiding at the meeting may, but
need not, appoint one or more inspectors. In case any person who may be
appointed as an inspector fails to appear or act, the vacancy may be filled by
appointment made by the directors in advance of the meeting or at the meeting by
the person presiding thereat. Each inspector, if any, before entering upon the
discharge of his or her duties, shall take and sign an oath faithfully to
execute the duties of inspector at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall determine
the number of shares of stock outstanding and the voting power of each, the
shares of stock represented at the meeting, the existence of a quorum, and the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all Stockholders. On request of the person presiding at the meeting,
the inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter
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determined by such inspector or inspectors and execute a certificate of any fact
found by such inspector or inspectors.
SECTION 7. Stockholder Proposals and Nominations. (a) No
proposal for a stockholder vote shall be submitted by a stockholder (a
"Stockholder Proposal") to the Corporation's stockholders unless the stockholder
submitting such proposal (the "Proponent") shall have filed a written notice
setting forth with particularity (i) the names and business addresses of the
Proponent and all persons or entities (collectively, the "Persons") acting in
concert with the Proponent; (ii) the name and address of the Proponent and the
Persons identified in clause (i), as they appear on the Corporation's books (if
they so appear); (iii) the class and number of shares of the Corporation
beneficially owned by the Proponent and the Persons identified in clause (i);
(iv) a description of the Stockholder Proposal containing all material
information relating thereto; and (v) such other information as the Board of
Directors reasonably determines is necessary or appropriate to enable the Board
of Directors and stockholders of the Corporation to consider the Stockholder
Proposal. The presiding officer at any stockholders' meeting may determine that
any Stockholder Proposal was not made in accordance with the procedures
prescribed in these By-Laws or is otherwise not in accordance with law, and if
it is so determined, such officer shall so declare at the meeting and the
Stockholder Proposal shall be disregarded.
(b) Only persons who are selected and recommended by the Board
of Directors or the committee of the Board of Directors designated to make
nominations (if any), or who are nominated by stockholders in accordance with
the procedures set forth in this Section 7, shall be eligible for election, or
qualified to serve, as directors. Nominations of individuals for election to the
Board of Directors of the Corporation at any annual meeting or any special
meeting of stockholders at which directors are to be elected may be made by any
stockholder of the Corporation entitled to vote for the election of directors at
that meeting by compliance with the procedures set forth in this Section 7.
Nominations by stockholders shall be made by written notice (a "Nomination
Notice"), which shall set forth (i) as to each individual nominated, (A) the
name, date of birth, business address and residence address of such individual;
(B) the business experience during the past five years of such nominee,
including his or her principal occupations and employment during such period,
the name and principal
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business of any corporation or other organization in which such occupations and
employment were carried on, and such other information as to the nature of his
or her responsibilities and level of professional competence as may be
sufficient to permit assessment of his or her prior business experience; (C)
whether the nominee is or has ever been at any time a director, officer or owner
of 5% or more of any class of capital stock, partnership interests or other
equity interest of any corporation, partnership or other entity; (D) any
directorships held by such nominee in any company with a class of securities
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, or subject to the requirements of Section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940, as amended; and (E) whether, in the last five years, such nominee has been
convicted in a criminal proceeding or has been subject to a judgment, order,
finding or decree of any federal, state or other governmental entity, concerning
any violation of federal, state or other law, or any proceeding in bankruptcy,
which conviction, order, finding, decree or proceeding may be material to an
evaluation of the ability or integrity of the nominee; and (ii) as to the Person
submitting the Nomination Notice and any Person acting in concert with such
Person, (x) the name and business address of such Person, (y) the name and
address of such Person as they appear on the Corporation's books (if they so
appear), and (z) the class and number of shares of the Corporation that are
beneficially owned by such Person. A written consent to being named in a proxy
statement as a nominee, and to serve as a director if elected, signed by the
nominee, shall be filed with any Nomination Notice. If the presiding officer at
any stockholders' meeting determines that a nomination was not made in
accordance with the procedures prescribed by these By-Laws, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(c) Stockholder Proposals and Nomination Notices shall be
delivered to the Secretary at the principal executive office of the Corporation
60 days or more before the date of the stockholders' meeting if such Stockholder
Proposal or Nomination Notice is to be submitted at an annual stockholders'
meeting. Stockholder Proposals and Nomination Notices shall be delivered to the
Secretary at the principal executive office of the Corporation no later than the
close of business on the 15th day following the day on which notice of the date
of a special meeting of stockholders was given if the Stockholder Proposal or
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Nomination Notice is to be submitted at a special stockholders' meeting.
ARTICLE II
Board of Directors
SECTION 1. General Powers. The business, property and affairs
of the Corporation shall be managed by, or under the direction of, the Board of
Directors, which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by law or by the Certificate of Incorporation
or by these By-laws directed or required to be exercised by the Stockholders.
SECTION 2. Qualification; Number; Term; Remuneration. (a) Each
director shall be at least 18 years of age. A director need not be a
Stockholder, a citizen of the United States, or a resident of the State of
Delaware. The number of directors constituting the entire Board shall be such
number as may be fixed from time to time by the Board of Directors, but shall be
not less than three nor more than nine. One of the directors may be selected by
the Board of Directors to be its Chairman, who shall preside at meetings of the
Stockholders and the Board of Directors and shall have such other duties, if
any, as may from time to time be assigned by the Board of Directors. In the
absence of formal selection, the President of the Corporation shall serve as
Chairman. The use of the phrase "entire Board" herein refers to the total number
of directors which the Corporation would have if there were no vacancies.
(b) Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing Committees may be allowed like compensation for attending
Committee meetings.
SECTION 3. Quorum and Manner of Voting. Except as otherwise
provided by law, a majority of the entire Board of Directors shall constitute a
quorum. A majority of the directors present, whether or not a quorum is present,
may adjourn a meeting from time to time to another time and place without
notice. The vote of the majority of the
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directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. When a meeting is adjourned to another time or place,
whether or not a quorum is present, notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting, the Board of Directors may
transact any business which might have been transacted at the original meeting.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting, from time to time, without
notice other than announcement at the meeting, until a quorum is present.
SECTION 4. Annual Meeting. At the next regular meeting
following the annual meeting of Stockholders, the newly elected Board of
Directors shall meet for the purpose of the election of officers and the
transaction of such other business as may properly come before the meeting.
SECTION 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such places and such times as the Board of Directors
shall from time to time by resolution determine. After the place and time of
regular meetings of the Board of Directors shall have been determined and notice
thereof shall have been once given to each member of the Board of Directors,
regular meetings may be held without further notice being given.
SECTION 6. Special Meetings. Notice of the date, time and
place of each special meeting shall be mailed by regular mail to each director
at his designated address at least six days before the meeting; or sent by
overnight courier to each director at his designated address at least two days
before the meeting (with delivery scheduled to occur no later than the day
before the meeting); or given orally by telephone or other means, or by
telegraph or telecopy, or by any other means comparable to any of the foregoing,
to each director at his designated address at least 24 hours before the meeting;
provided, however, that if less than five days' notice is provided and one third
of the members of the Board of Directors then in office object in writing prior
to or at the commencement of the meeting, such meeting shall be postponed until
five days after such notice was given pursuant to this sentence (or such shorter
period to which a majority of those who objected in writing agree), provided
that notice of such postponed meeting shall be given in accordance with this
Section 6. The notice of the special meeting shall state the general purpose of
the
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meeting, but other routine business may be conducted at the special meeting
without such matter being stated in the notice. Only meetings of the Board of
Directors which are duly called pursuant to this Section and Section 5 and
Section 6 of this Article shall constitute official meetings of the Board of
Directors and no other actions shall constitute meetings of the Board of
Directors for purposes of these By-Laws.
SECTION 7. Organization. At all meetings of the Board of
Directors, the Chairman or in the Chairman's absence or inability to act, the
President, or in the President's absence, a Chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as Secretary.
SECTION 8. Resignation. Any director may resign at any time
upon written notice to the Corporation and such resignation shall take effect
upon receipt thereof by the Chairman or Secretary, unless otherwise specified in
the resignation. Directors may be removed only in the manner provided in the
Certificate of Incorporation.
SECTION 9. Vacancies. Unless otherwise provided in these
By-Laws, vacancies on the Board of Directors, whether caused by resignation,
death, disqualification, removal, an increase in the authorized number of
directors or otherwise, may be filled by the affirmative vote of a majority of
the remaining directors, although less than a quorum, or by a sole remaining
director.
SECTION 10. Preferred Directors. Notwithstanding anything else
contained herein, whenever the holders of one or more classes or series of
Preferred Stock shall have the right, voting separately as a class or series, to
elect directors, the election, term of office, filling of vacancies, removal and
other features of such directorships shall be governed by the terms of the
resolutions applicable thereto adopted by the Board of Directors pursuant to the
Certificate of Incorporation, and such directors so elected shall not be subject
to the provisions of this Article II unless otherwise provided in such
resolutions.
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ARTICLE III
Committees
SECTION 1. Appointment. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
Committees, each Committee to consist of one or more of the directors of the
Corporation. The Board of Directors may designate one or more directors as
alternate members of any Committee, who may replace any absent or disqualified
member at any meeting of the Committee. Any such Committee, to the extent
provided in the resolution, shall, subject to the provisions of Article II,
Section 1 of these By-Laws, have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Such Committee or Committees shall have such name or names as may be
determined from time to time by resolution adopted by the Board of Directors.
SECTION 2. Procedures, Quorum and Manner of Acting. Each
Committee shall fix its own rules of procedure, and shall meet where and as
provided by such rules or by resolution of the Board of Directors. Except as
otherwise provided by law, the presence of a majority of the then appointed
members of a Committee shall constitute a quorum for the transaction of business
by that Committee, and in every case where a quorum is present the affirmative
vote of a majority of the members of the Committee present shall be the act of
the Committee. Each Committee shall keep minutes of its proceedings, and actions
taken by a Committee shall be reported to the Board of Directors.
SECTION 3. Termination. In the event any person shall cease to
be a director of the Corporation, such person shall simultaneously therewith
cease to be a member of any Committee appointed by the Board of Directors.
ARTICLE IV
Officers
SECTION 1. Election and Qualifications. The Board of Directors
at its first meeting held after each annual meeting of Stockholders shall elect
the officers of the Corporation, which shall include a President and a
Secretary, and may include, by election or appointment, a Chairman of the Board,
one or more Vice-Presidents (any one
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or more of whom may be given an additional designation of rank or function), a
Treasurer and such Assistant Secretaries, such Assistant Treasurers and such
other officers as the Board of Directors may from time to time deem proper. Each
officer shall have such powers and duties as may be prescribed by these By-Laws
and as may be assigned by the Board of Directors or the President. Any two or
more offices may be held by the same person.
SECTION 2. Term of Office and Remuneration. The term of office
of all officers shall be until their respective successors have been elected and
qualified or their earlier death, resignation or removal. The remuneration of
all officers of the Corporation may be fixed by the Board of Directors or in
such manner as the Board of Directors shall provide.
SECTION 3. Resignation; Removal. Any officer may resign at any
time upon written notice to the Corporation and such resignation shall take
effect upon receipt thereof by the President or Secretary, unless otherwise
specified in the resignation. Any officer shall be subject to removal, with or
without cause, at any time by the Board of Directors. Any vacancy in any office
shall be filled in such manner as the Board of Directors shall determine.
SECTION 4. Powers and Duties of Officers.
(a) The Chairman of the Board of Directors, if there be one,
shall be the chief executive officer of the Corporation and shall preside at all
meetings of the Stockholders and the Board of Directors and shall have general
management of and supervisory authority over the property, business and affairs
of the Corporation and its other officers. The Chairman of the Board may execute
and deliver in the name of the Corporation powers of attorney, contracts, bonds
and other obligations and instruments, and shall have such other authority and
perform such other duties as from time to time may be assigned by the Board of
Directors. The Chairman of the Board shall see that all orders and resolutions
of the Board of Directors are carried into effect and shall perform such
additional duties that usually pertain to the office of chief executive officer.
(b) If there be no Chairman of the Board, the President shall
be the chief executive officer and shall exercise the powers listed in (a)
above. Otherwise, the President may execute and deliver in the name of the
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Corporation powers of attorney, contracts, bonds and other obligations and
instruments, and shall have such other authority and perform such other duties
as from time to time may be assigned by the Board of Directors or the Chairman
of the Board.
(c) A Vice President may execute and deliver in the name of
the Corporation powers of attorney, contracts, bonds and other obligations and
instruments, and shall have such other authority and perform such other duties
as from time to time may be assigned by the Board of Directors, the Chairman of
the Board or the President.
(d) The Treasurer shall in general have all duties and
authority incident to the position of Treasurer and such other duties and
authority as may be assigned by the Board of Directors, the Chairman of the
Board or the President. The Treasurer shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by or at the direction
of the Board of Directors. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board of Directors, the Chairman of the
Board or the President, and shall render, upon request, an account of all such
transactions.
(e) The Secretary shall in general have all the duties and
authority incident to the position of Secretary and such other duties and
authority as may be assigned by the Board of Directors, the Chairman of the
Board or the President. The Secretary shall attend all meetings of the Board of
Directors and all meetings of Stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose. The Secretary shall
give, or cause to be given, notice of all meetings of the Stockholders and
special meetings of the Board of Directors. The Secretary shall have custody of
the seal of the Corporation and any officer of the Corporation shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by the signature of the Secretary or any other officer.
(f) Any assistant officer shall have the same duties and
authority as the officer whom such assistant officer assists and, in addition,
such other duties and
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authority as the Board of Directors, the Chairman of the Board or President
shall from time to time assign.
ARTICLE V
Contracts, Etc.
SECTION 1. Contracts. The Board of Directors may authorize any
person or persons, in the name and on behalf of the Corporation, to enter into
or execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
SECTION 2. Proxies; Powers of Attorney; Other Instruments. (a)
The Chairman, the President, any Vice President, the Treasurer or any other
person designated by any of them shall have the power and authority to execute
and deliver proxies, powers of attorney and other instruments on behalf of the
Corporation in connection with the execution of contracts, the purchase of real
or personal property, the rights and powers incident to the ownership of stock
by the Corporation and such other situations as the Chairman, the President,
such Vice President or the Treasurer shall approve, such approval to be
conclusively evidenced by the execution of such proxy, power of attorney or
other instrument on behalf of the Corporation.
(b) The Chairman, the President, any Vice President, the
Treasurer or any other person authorized by proxy or power of attorney executed
and delivered by any of them on behalf of the Corporation may attend and vote at
any meeting of stockholders of any company in which the Corporation may hold
stock, and may exercise on behalf of the Corporation any and all of the rights
and powers incident to the ownership of such stock at any such meeting, or
otherwise as specified in the proxy or power of attorney so authorizing any such
person. The Board of Directors, from time to time, may confer like powers upon
any other person.
ARTICLE VI
Books and Records
SECTION 1. Location. The books and records of the Corporation
may be kept at such place or places as the
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Board of Directors or the respective officers in charge thereof may from time to
time determine. The record books containing the names and addresses of all
Stockholders, the number and class of shares of stock held by each and the dates
when they respectively became the owners of record thereof shall be kept by the
Secretary as prescribed in the By-Laws or by such officer or agent as shall be
designated by the Board of Directors.
SECTION 2. Addresses of Stockholders. Notices of meetings and
all other corporate notices may be delivered personally or mailed to each
Stockholder at the Stockholder's address as it appears on the records of the
Corporation.
SECTION 3. Fixing Date for Determination of Stockholders of
Record. (a) In order that the Corporation may determine the Stockholders
entitled to notice of or to vote at any meeting of Stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors and which record date shall not be more
than 60 days nor less than 10 days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
Stockholders entitled to notice of or to vote at a meeting of Stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the day on which the meeting is held. A determination of Stockholders
of record entitled to notice of or to vote at a meeting of Stockholders shall
apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
Stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the Stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action not contemplated by paragraph (a) of this Section 3, the
Board of Directors may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted and which
record date shall be not more than 60 days prior to such action. If no record
date is fixed, the record date for determining Stockholders for any such
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purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
ARTICLE VII
Certificates Representing Stock
SECTION 1. Certificates; Signatures. The shares of the
Corporation shall be represented by certificates, provided that the Board of
Directors of the Corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate, signed by or
in the name of the Corporation by the Chairman or Vice-Chairman of the Board of
Directors, or the President or any Vice-President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, representing the number of shares registered in certificate form.
Any or all of the signatures on any such certificate may be a facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same
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effect as if such person were such officer, transfer agent or registrar at the
date of issue.
SECTION 2. Record Ownership. The name of the holder of record
of the shares represented thereby, with the number of such shares and the date
of issue thereof, shall be entered on the books of the Corporation. The
Corporation shall be entitled to treat the holder of record of any share of
stock as the holder in fact thereof, and accordingly shall not be bound to
recognize any equitable or other claim to or interest in any share on the part
of any other person, whether or not it shall have express or other notice
thereof, except as required by the DGCL. The Board of Directors shall have power
and authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates representing
shares of the Corporation.
SECTION 3. Transfer of Record Ownership. Transfer of stock
shall be made on the books of the Corporation only by direction of the person
named in the certificate or such person's attorney, lawfully constituted in
writing, and only upon the surrender of the certificate therefor and a written
assignment of the shares evidenced thereby, which certificate shall be canceled
before the new certificate is issued.
SECTION 4. Fractional Shares. The Corporation may, but shall
not be required to, issue certificates for fractions of a share where necessary
to effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a Stockholder except as therein
provided.
SECTION 5. Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new certificate in place of any certificate theretofore
issued by it, alleged to have been lost, stolen or destroyed, and the Board of
Directors may require the owner of any lost, stolen or destroyed certificate, or
his legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against it on account of the
alleged loss, theft or destruction of any
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such certificate or the issuance of any such new certificate.
SECTION 6. Transfer Agents; Registrants; Rules Respecting
Certificates. The Board of Directors may appoint, or authorize any officer or
officers to appoint, one or more transfer agents and one or more registrars. The
Board of Directors may make such further rules and regulations as it may deem
expedient concerning the issue, transfer and registration of stock certificates
of the Corporation.
ARTICLE VIII
Dividends
Subject to the provisions of Delaware Law and the Certificate
of Incorporation, the Board of Directors shall have full power to declare and
pay dividends on the capital stock of the Corporation. Before payment of any
dividend, there may be set aside out of any funds of the Corporation available
for dividends such sum or sums as the Board of Directors from time to time, in
its absolute discretion, may determine for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
ARTICLE IX
Ratification
Any transaction, questioned in any lawsuit on the ground of
lack of authority, defective or irregular execution, adverse interest of
director, officer or Stockholder, non-disclosure, miscomputation, or the
application of improper principles or practices of accounting, may be ratified
before or after judgment, by the Board of Directors or by the Stockholders, and
if so ratified shall have the same force and effect as if the questioned
transaction had been originally duly authorized. Such ratification shall be
binding upon the Corporation and its Stockholders and shall constitute a bar to
any claim or execution of any judgment in respect of such questioned
transaction.
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ARTICLE X
Corporate Seal
The corporate seal shall be in form of a circular inscription
which contains the words "Corporate Seal" and such additional information as the
officer inscribing such seal shall determine in such officer's sole discretion.
The corporate seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise displayed or it may be manually
inscribed.
ARTICLE XI
Fiscal Year
The fiscal year of the Corporation shall be fixed, and shall
be subject to change, by the Board of Directors. Unless otherwise fixed by the
Board of Directors, the fiscal year of the Corporation shall end on December 31.
ARTICLE XII
Waiver of Notice
Whenever notice is required to be given by these By-Laws or by
the Certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XIII
Amendments
By-Laws may be adopted, amended or repealed by either the
Board of Directors or the affirmative vote of the holders of at least 66 2/3% of
the voting power of all shares of the Corporation's capital stock then entitled
to vote generally in the election of directors.
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ARTICLE XIV
Indemnification
SECTION 1. Right to Indemnification. Each person who was or is
made a party or is threatened to be made a party to or is otherwise involved in
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact (a) that he or she is or was a director or officer of the Corporation, or
(b) that he or she, being at the time a director or officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer,
member, employee, fiduciary or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (collectively, "another enterprise" or "other
enterprise"), shall be indemnified and held harmless by the Corporation to the
fullest extent permitted by the DGCL as the same exists or may hereafter be
amended (but, in the case of any such amendment, with respect to alleged action
or inaction occurring prior to such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
permitted prior thereto), against all expense, liability and loss (including,
without limitation, attorneys' and other professionals' fees and expenses,
claims, judgments, fines, ERISA excise taxes or penalties and amounts paid in
settlement) actually and reasonably incurred or suffered by such person in
connection therewith ("Losses"). Without diminishing the scope of
indemnification provided by this Section 1, such persons shall also be entitled
to the further rights set forth below.
SECTION 2. Actions, Suits Or Proceedings Other Than Those By
Or In The Right Of The Corporation. Subject to the terms and conditions of this
Article, the Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any Proceeding (other than an action by or in
the right of the Corporation) by reason of the fact that such person is or was a
director, officer or employee of the Corporation, or, being at the time a
director, officer or employee of the Corporation, is or was serving at the
request of the Corporation as a director, officer, member, employee, fiduciary
or agent of another enterprise, against all Losses, actually and reasonably
incurred or suffered by such person in connection with such
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Proceeding if such person acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct was unlawful. The termination of any Proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that the conduct was unlawful.
SECTION 3. Actions, Suits Or Proceedings By Or In The Right Of
The Corporation. Subject to the terms and conditions of this Article, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any Proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or was
a director, officer or employee of the Corporation, or being at the time a
director, officer or employee of the Corporation, is or was serving at the
request of the Corporation as a director, officer, member, employee, fiduciary
or agent of another enterprise against all Losses actually and reasonably
incurred or suffered by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
SECTION 4. Authorization of Indemnification. Any
indemnification under this Article (unless ordered by a court) shall be made by
the Corporation only as authorized in the specific case upon a determination
that indemnifica- tion of a person is proper in the circumstances because such
person has met the applicable standard of conduct required by Section 1 or set
forth in Section 2 or 3 of this Article, as the case may be. Such determination
shall be made in a
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reasonably prompt manner (i) by the Board of Directors by a majority vote of
directors who were not parties to such action, suit or proceeding, whether or
not they constitute a quorum of the Board of Directors, (ii) if there are no
such directors, or if such directors so direct, by independent legal counsel in
a written opinion, (iii) by the stockholders or (iv) as the DGCL may otherwise
permit. To the extent, however, that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorneys' and other professionals' fees) actually and reasonably incurred by
such person in connection therewith, without the necessity of authorization in
the specific case.
SECTION 5. Good Faith Defined. For purposes of any
determination under Section 4 of this Article, a person shall be deemed to have
acted in good faith if the action is based on (a) the records or books of
account of the Corporation or another enterprise, or on information supplied to
such person by the officers of the Corporation or another enterprise in the
course of their duties, (b) the advice of legal counsel for the Corporation or
another enterprise, or (c) information or records given or reports made to the
Corporation or another enterprise by an independent certified public accountant,
independent financial adviser, appraiser or other expert selected with
reasonable care by the Corporation or the other enterprise. The provisions of
this Section 5 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct.
SECTION 6. Proceedings Initiated by Indemnified Persons.
Notwithstanding any provisions of this Article to the contrary, the Corporation
shall not indemnify any person or make advance payments in respect of Losses to
any person pursuant to this Article in connection with any Proceeding (or
portion thereof) initiated against the Corporation by such person unless such
Proceeding (or portion thereof) is authorized by the Board of Directors or its
designee; provided, however, that this prohibition shall not apply to a
counterclaim, cross-claim or third-party claim brought in any Proceeding or to
any claims provided for in Section 7 of this Article.
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SECTION 7. Indemnification By A Court. Notwithstanding any
contrary determination in the specific case under Section 4 of this Article, and
notwithstanding the absence of any determination thereunder, any director,
officer or employee may apply to any court of competent jurisdiction for
indemnification to the extent otherwise permissible under Section 1, 2 or 3 of
this Article. Notice of any application for indemnification pursuant to this
Section 7 shall be given to the Corporation promptly upon the filing of such
application.
SECTION 8. Losses Payable In Advance. Losses reasonably
incurred by an officer or director in defending any threatened or pending
Proceeding shall be paid by the Corporation in advance of the final disposition
of such Proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the Corporation as
authorized in this Article. Losses shall be reasonably documented by the officer
or director and required payments shall be made promptly by the Corporation.
Losses incurred by other employees may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
SECTION 9. Non-exclusivity and Survival of Indemnification.
The indemnification and advancement of expenses provided by or granted pursuant
to this Article shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under the
Certificate of Incorporation, any ByLaw, agreement, contract, vote of
Stockholders or of disinterested directors, or pursuant to the direction
(howsoever embodied) of any court of competent jurisdiction or otherwise. The
provisions of this Article shall not be deemed to preclude the indemnification
of any person who is not specified in Section 1, 2 or 3 of this Article but whom
the Corporation has the power or obligation to indemnify under the provisions of
the DGCL, or otherwise. The rights conferred by this Article shall continue as
to a person who has ceased to be a director, officer or employee and shall inure
to the benefit of such person and the heirs, executors, administrators and other
comparable legal representatives of such person. The rights conferred in this
Article shall be enforceable as contract rights, and shall continue to exist
after any rescission or restrictive modification hereof with respect to events
occurring prior thereto. No rights are conferred in this Article for the
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benefit of any person (including, without limitation, officers, directors and
employees of subsidiaries of the Corporation) in any capacity other than as
explicitly set forth herein.
SECTION 10. Meaning of certain terms in connection with
Employee Benefit Plans, etc. For purposes of this Article, references to "fines"
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; references to "serving at the request of the Corporation" shall
include any service as a director, officer or employee of the Corporation which
imposes duties on, or involves services by, such director, officer or employee,
with respect to an employee benefit plan, its participants or beneficiaries; and
a person who has acted in good faith and in a manner reasonably believed to be
in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the Corporation" as referred to in this Article.
SECTION 11. Insurance. The Corporation may, but shall not be
required to, purchase and maintain insurance on behalf of any person who is or
was a director, officer or employee of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, member, employee,
fiduciary or agent of another against any liability asserted against such person
and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power or
the obligation to indemnify such person against such liability under the
provisions of this Article.
Dated:
23
<PAGE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
GENERAL CABLE CORPORATION
We consent to the use in this Amendment No. 2 to Registration Statement No.
333-22961 of General Cable Corporation on Form S-1 of our report dated February
7, 1997 (except for Note 19 as to which the date is April 18, 1997) on the
combined financial statements of General Cable Corporation and related companies
appearing in the Prospectus, which is a part of this Registration Statement, and
to the reference to us under the heading 'Experts' in such Prospectus.
We also consent to the use in this Amendment No. 2 to Registration
Statement of General Cable Corporation on Form S-1 of our report dated February
3, 1997 on the consolidated financial statements of General Cable Corporation
and subsidiaries (Predecessor), appearing in the Prospectus, which is a part of
this Registration Statement.
Our audits of the financial statements referred to in our reports dated
February 7, 1997 (except for Note 19 as to which the date is April 18, 1997) and
February 3, 1997 also included the financial statement schedule of General Cable
Corporation, listed in Item 16. This financial statement schedule is the
responsibility of the Corporation's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Cincinnati, Ohio
April 22, 1997
<PAGE>
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<PERIOD-END> MAR-31-1996 MAR-31-1997
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