<PAGE>
<PAGE>
4,350,000 SHARES
[LOGO]
COMMON STOCK
All of the 4,350,000 shares of common stock, par value $.01 per share (the
'Common Stock'), of General Cable Corporation ('General Cable' or the 'Company')
offered hereby (the 'Offering') are being sold by Wassall Netherlands Cable
B.V., a Netherlands corporation (the 'Selling Stockholder'). The Company will
not receive any of the proceeds from the sale of the shares offered hereby.
Following consummation of the Offering, the Selling Stockholder will own
approximately 1.9% of the outstanding Common Stock (none, if the Underwriters'
over-allotment option is exercised in full).
The Common Stock commenced trading on the New York Stock Exchange (the
'NYSE') on May 16, 1997 under the symbol 'GCN.' On August 19, 1997, the reported
last sale price of the Common Stock on the NYSE Composite Tape was $31 1/4 per
share. See 'Price Range of Common Stock and Dividends.'
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE SHARES OF COMMON
STOCK OFFERED HEREBY, SEE 'RISK FACTORS' ON PAGES 8 - 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....................................... $31.00 $1.35 $29.65
Total`DD'....................................... $ 134,850,000 $ 5,872,500 $ 128,977,500
</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 Offering estimated to be $350,000, all of
which are payable by the Company.
`DD' The Selling Stockholder has granted the U.S. Underwriters a 30-day option
to purchase up to 465,000 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 $149,265,000, the
total underwriting discounts and commissions will be $6,500,250 and the
total proceeds to the Selling Stockholder will be $142,764,750. 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
August 22, 1997, against payment therefor. The Underwriters include:
DILLON, READ & CO. INC.
LAZARD FRERES & CO. LLC
MERRILL LYNCH & CO.
The date of this Prospectus is August 19, 1997.
<PAGE>
<PAGE>
[ARTWORK TO BE INSERTED]
------------------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERING 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 (ii) all information in this
Prospectus assumes that the Underwriters' over-allotment option is not
exercised.
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
3
<PAGE>
<PAGE>
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 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 IPO AND THE REFINANCING
In May 1997, the initial public offering of 19,435,000 shares of Common
Stock owned by the Selling Stockholder (the 'IPO') was consummated and the
Common Stock commenced trading on the NYSE. Concurrently with consummation of
the IPO, General Cable made an initial borrowing of $268.0 million under a new
$350.0 million credit facility entered into with a syndicate of banks (the
'Credit Facility'). The Company used the proceeds of such borrowing to (i) repay
all of its revolving bank debt (approximately $19.6 million); (ii) repay all
intercompany debt and advances owed to Wassall and its subsidiaries (which,
together with accrued interest, amounted to approximately $201.3 million); (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 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 OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Selling
Stockholder................................... 4,350,000 shares
Common Stock to be outstanding after the
Offering...................................... 24,518,597 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 issuance of 268,597 shares of restricted stock (the 'Restricted
Stock Issuance') to the Company's executive officers and key employees
following consummation of the IPO pursuant to the Company's 1997 Stock
Incentive Plan (the 'Stock Incentive Plan'). Excludes an aggregate of
1,103,750 shares of Common Stock reserved for issuance upon the exercise of
options granted at an exercise price of $21 per share to the Company's
executive officers and key employees following consummation of the IPO
pursuant to the Stock Incentive Plan. See 'Executive Compensation -- Stock
Incentive Plan.'
4
<PAGE>
<PAGE>
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 8-11, prior to making an investment
decision.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical fact, included in this
Prospectus, including without limitation the statements under 'Risk Factors',
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Business -- Growth Strategy,' are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the 'Securities Act') and Section 21E of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'). Important factors that
could cause actual results to differ materially from those discussed in such
forward-looking statements ('Cautionary Statements') include: price competition,
particularly in certain segments of the building wire and cordset markets, and
other competitive pressures; general economic conditions, particularly those
affecting the non-residential construction industry; the Company's ability to
retain key customers and distributors; the Company's ability to increase
manufacturing capacity; the cost of raw materials, including copper; the level
of growth in demand for products serving various segments of the communications
markets; the Company's ability to introduce successfully new or enhanced
products; the impact of technological changes; the Company's ability to achieve
productivity improvements; and the impact of changes in industry standards and
the regulatory environment. Some of these Cautionary Statements are discussed in
more detail under 'Risk Factors.' All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on
behalf of the Company are expressly qualified in their entirety by such
Cautionary Statements.
5
<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 consolidated financial statements of the Company and 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 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 of the
Company had the Refinancing actually occurred on such date.
The following summary financial data should be read in conjunction with
'Selected Financial Data,' 'Management's Discussion and Analysis of Financial
Condition and Results of Operations,' the consolidated 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>
THE COMPANY
PREDECESSOR ------------------------------------------------------------------
------------ YEAR ENDED SIX MONTHS ENDED
JANUARY 1 TO JUNE 9 TO DECEMBER 31, JUNE 30,
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 $528.7 $543.2
Gross profit................... 44.2 73.4 138.7 188.3 83.6 103.8
Operating income............... 1.1 20.3 44.5 78.5 29.1 43.8
Interest expense, net.......... (12.1) (11.0) (20.7) (19.6) (10.4) (9.5)
Earnings (loss) before income
taxes........................ (11.0) 9.3 23.8 58.9 18.7 34.3
Income tax benefit
(provision).................. .1 (6.5) 1.5(1) (19.7) (6.2) (13.7)
Net income (loss).............. (10.9) 2.8 25.3 39.2 12.5 20.6
Earnings per share(2).......... $ .12 $ 1.04 $ 1.62 $ .51 $ .85
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 $ 43.8
Interest expense, net(3)....... (14.1) (7.4)
Net income..................... 42.5 21.9
Earnings per share(2).......... $ 1.75 $ .90
OTHER DATA:
Average daily New York
Commodity Exchange ('COMEX')
price per pound of copper
cathode...................... $ 0.91 $ 1.20(4) $ 1.35 $ 1.06 $ 1.17 $ 1.13
Capital expenditures........... $ 6.2 $ 9.1 $ 26.2 $ 30.0 $ 11.5 $ 12.3
Depreciation and amortization
of fixed assets.............. 7.5 6.7 11.7 12.1 5.8 6.7
Number of employees (end of
period)...................... 4,200 4,100 3,900 3,900 3,800
<CAPTION>
DECEMBER 31, JUNE 30,
----------------------------------------
1994 1995 1996 1997
------------ -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................ $224.8 $ 234.4 $ 205.6 $247.1
Total assets................... 518.7 535.6 513.6 569.8
Long-term debt................. 206.5 205.9 205.1 272.0
Shareholders' equity........... 97.6 122.9 107.4(5) 90.8(6)
</TABLE>
- ------------
(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 consolidated 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 $9.2
million for the six months ended June 30, 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 Credit
Facility
(footnotes continued on next page)
6
<PAGE>
<PAGE>
(footnotes continued from previous page)
of $13.7 million for 1996 and $7.1 million for the six months ended June 30,
1997 reflecting an interest rate of 5.88% per annum (representing a 37.5
basis point spread over the London interbank offered rate ('LIBOR')) and
$242.1 million of average borrowings assumed to be outstanding during 1996
and $250.8 million of average borrowings assumed to be outstanding during
the six months ended June 30, 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 six months ended
June 30, 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) After the payment of the $42.6 million Selling Stockholder Dividend.
7
<PAGE>
<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.
In connection with the forward-looking statements which appear in this
Prospectus, prospective purchasers of the Common Stock should carefully review
the factors discussed, or to which reference is made, below and the Cautionary
Statements referred to in 'Summary -- Disclosure Regarding Forward-Looking
Statements.'
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 six months 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.
Sales to U S WEST were made pursuant to a ten-year supply agreement that
took effect on November 1, 1994. This agreement does not guarantee a minimum
level of sales, and is terminable by U S WEST prior to its scheduled expiration
date if the Company does not meet certain performance criteria. The Company
experienced a decline in the volume of sales to U S WEST in the first six months
of 1997 compared to the comparable period in 1996 due to an expected decline in
U S WEST's requirements for the year 1997 compared to 1996.
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
8
<PAGE>
<PAGE>
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.
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.
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 six
months 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 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
$1.22 per pound in the first six months 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.
9
<PAGE>
<PAGE>
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 standards that may be adopted
in the future, could have on the Company's results of operations, cash flows or
financial position.
ENVIRONMENTAL, LEGAL AND OTHER 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. On May 13, 1997, the Company
notified the Consumer Products Safety Commission (the 'CPSC') that it had
initiated a product recall of certain outdoor power center units manufactured at
one of its facilities during a one-month period. See 'Business -- Environmental
Matters' and 'Business -- Legal and Other Matters.' 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 or from product liability matters, 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.
LIMITED TRADING HISTORY; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the consummation of the IPO in May 1997, there was no public
market for the Common Stock. Accordingly, the Common Stock has a limited trading
history. 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.
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
10
<PAGE>
<PAGE>
Compensation.' In addition, a change of control constitutes an event of default
under the Credit Facility.
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.
In May 1997, the Company consummated the IPO and the Common Stock commenced
trading on the NYSE.
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>
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock commenced trading on the NYSE under the symbol GCN on May
16, 1997. The table below sets forth, for the calendar quarters indicated, the
reported high and low sale prices of the Common Stock as reported on the NYSE
Composite Tape:
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
1997:
Second Quarter (commencing May 16)...................................... $26 3/8 $20 3/8
Third Quarter (through August 19)....................................... 33 25
</TABLE>
The reported last sale price of the Common Stock on the NYSE Composite Tape
on August 19, 1997 was $31 1/4 per share. On August 1, 1997, there were
approximately 125 holders of record of the Common Stock.
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 Credit Facility contains certain provisions that 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 IPO, it paid the Selling Stockholder
Dividend. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources.'
12
<PAGE>
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1997. This table should be read in conjunction with 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and the
consolidated financial statements of the Company and related notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
JUNE 30, 1997
-------------
(DOLLARS IN
MILLIONS)
<S> <C>
Long-term debt:
Credit Facility..................................................................... $ 263.0
Other............................................................................... 9.0
-------------
Total long-term debt........................................................... 272.0
-------------
Shareholders' equity:
Common Stock, par value $.01, 75,000,000 shares authorized, 24,518,597 shares issued
and outstanding.................................................................... 0.2
Additional paid-in capital.......................................................... 83.6
Retained earnings................................................................... 7.0
-------------
Total shareholders' equity..................................................... 90.8
-------------
Total capitalization................................................. $ 362.8
-------------
-------------
</TABLE>
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 consolidated financial statements of the Company and the
Predecessor. The data presented for the six months ended June 30, 1996 and 1997
and at June 30, 1997 are derived from the unaudited 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 June 30, 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 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 of the
Company had the Refinancing actually occurred on such date.
The following selected financial data should be read in conjunction with
'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' the consolidated 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
---------------------------------
YEAR ENDED
DECEMBER 31, JANUARY 1 TO
------------------ JUNE 8,
1992 1993 1994
------ ------ ------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................. $834.4 $794.2 $355.0
Gross profit.............. 81.7 97.7 44.2
Operating income (loss)... (44.4)(1) 2.3 1.1
Interest expense, net..... (14.4) (29.0) (12.1)
Earnings (loss) before
income taxes............ (69.2) (26.3) (11.0)
Loss from discontinued
operations(2)........... (2.7) (31.3) --
Cumulative effect of
accounting change(3).... 7.5 -- --
Income tax benefit
(provision)............. -- -- .1
Net income (loss)......... (64.4) (57.6) (10.9)
Earnings per share(5).....
Weighted average number of
shares outstanding(5)...
PRO FORMA STATEMENT OF OPERATIONS
DATA:
Operating income..........
Interest expense,
net(6)..................
Net income................
Earnings per share(5).....
OTHER DATA:
Average daily COMEX price
per pound of copper
cathode................. $ 1.03 $ 0.85 $ 0.91
Capital expenditures...... $ 15.5 $ 11.7 $ 6.2
Depreciation and
amortization of fixed
assets.................. 19.8 17.4 7.5
Number of employees (at
end of period).......... 4,400 4,500
<CAPTION>
DECEMBER 31,
---------------------
1992 1993
------ ------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........... $206.8 $227.7
Net assets of discontinued
operations(2)........... 82.8 48.4
Total assets.............. 710.7 620.4
Long-term debt............ 262.2 293.4
Other long-term
liabilities............. 70.8 76.7
Shareholders' equity...... 218.7 139.9
<CAPTION>
THE COMPANY
--------------------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED
JUNE 9 TO DECEMBER 31, JUNE 30,
DECEMBER 31, ----------------------- ---------------------
1994 1995 1996 1996 1997
------------ -------- --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................. $ 543.3 $1,061.3 $ 1,043.6 $528.7 $543.2
Gross profit.............. 73.4 138.7 188.3 83.6 103.8
Operating income (loss)... 20.3 44.5 78.5 29.1 43.8
Interest expense, net..... (11.0) (20.7) (19.6) (10.4) (9.5)
Earnings (loss) before
income taxes............ 9.3 23.8 58.9 18.7 34.3
Loss from discontinued
operations(2)........... -- -- -- -- --
Cumulative effect of
accounting change(3).... -- -- -- -- --
Income tax benefit
(provision)............. (6.5) 1.5(4) (19.7) (6.2) (13.7)
Net income (loss)......... 2.8 25.3 39.2 12.5 20.6
Earnings per share(5)..... $ .12 $ 1.04 $ 1.62 $ .51 $ .85
Weighted average number of
shares outstanding(5)... 24.3 24.3 24.3 24.3 24.3
PRO FORMA STATEMENT OF OPERATI
DATA:
Operating income.......... $ 78.5 $ 43.8
Interest expense,
net(6).................. (14.1) (7.4)
Net income................ 42.5 21.9
Earnings per share(5)..... $ 1.75 $ .90
OTHER DATA:
Average daily COMEX price
per pound of copper
cathode................. $ 1.20(7) $ 1.35 $ 1.06 $ 1.17 $ 1.13
Capital expenditures...... $ 9.1 $ 26.2 $ 30.0 $ 11.5 $ 12.3
Depreciation and
amortization of fixed
assets.................. 6.7 11.7 12.1 5.8 6.7
Number of employees (at
end of period).......... 4,200 4,100 3,900 3,900 3,800
<CAPTION>
DECEMBER 31,
------------------------------------- JUNE 30,
1994 1995 1996 1997
------------ -------- --------- ------------------------------------
<S> <<C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........... $ 224.8 $ 234.4 $ 205.6 $247.1
Net assets of discontinued
operations(2)........... -- -- -- --
Total assets.............. 518.7 535.6 513.6 569.8
Long-term debt............ 206.5 205.9 205.1 272.0
Other long-term
liabilities............. 94.1 71.9 71.0 65.6
Shareholders' equity...... 97.6 122.9 107.4(8) 90.8(9)
</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 consolidated 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) 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 $9.2
million for the six months ended June 30, 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 Credit
Facility of $13.7 million for 1996 and $7.1 million for the six months ended
June 30, 1997 reflecting an interest rate of 5.88% per annum (representing a
37.5 basis point spread over the LIBOR) and $242.1 million of average
borrowings assumed to be outstanding during 1996 and $250.8 million of
average borrowings assumed to be outstanding during the six months ended
June 30, 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 six months ended June 30, 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.
(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) After the payment of the $42.6 million Selling Stockholder Dividend.
15
<PAGE>
<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
consolidated 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 consolidated 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 sold the Related
Companies to General Cable following consummation of the IPO 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 $1.13 per pound in the first six months 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 Credit Facility contains 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.
16
<PAGE>
<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, SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------- ----------------------------------
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% $528.7 100.0% $543.2 100.0%
Cost of sales............ 780.7 86.9 922.6 86.9 855.3 82.0 445.1 84.2 439.4 80.9
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Gross profit............. 127.6 13.1 138.7 13.1 188.3 18.0 83.6 15.8 103.8 19.1
Selling, general and
administrative
expenses............... 96.2 10.7 94.2 8.9 109.8 10.5 54.5 10.3 60.0 11.0
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Operating income......... 21.4 2.4 44.5 4.2 78.5 7.5 29.1 5.5 43.8 8.1
Interest expense, net.... (23.1) (2.6) (20.7) (2.0) (19.6) (1.9) (10.4) (2.0) (9.5) (1.7)
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Earnings (loss) before
taxes.................. (1.7) (.2) 23.8 2.2 58.9 5.6 18.7 3.5 34.3 6.3
Income tax (expense)
benefit................ (6.4) (.7) 1.5 .1 (19.7) (1.9) (6.2) (1.2) (13.7) (2.5)
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
Net income (loss)........ $ (8.1) (.9)% $ 25.3 2.4% $ 39.2 3.8% $ 12.5 2.4% $ 20.6 3.8%
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
------ ----- -------- ----- -------- ----- ------ ----- ------ -----
</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.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1996
Net sales for the six months ended June 30, 1997 increased $14.5 million,
or 3%, to $543.2 million from net sales of $528.7 million for the same period in
1996. The increase reflects an increase of $15.6 million, or 5%, in the net
sales of the Electrical Group and a decrease of $1.1 million, or 1%, in the net
sales of the Communications Group. Such amounts reflect a $0.04 decrease in the
weighted average monthly COMEX price per pound of copper in the first six months
of 1997 compared to the first six months of 1996 and other factors as discussed
in the following paragraph.
After adjusting the net sales for the first six months of 1996 to reflect
the $0.04 lower weighted average monthly COMEX price per pound of copper sold in
the first six months of 1997, net sales were $21.5 million, or 4%, higher than
the first six months of 1996. The increase in copper-adjusted net sales
reflected a 6% increase in the copper-adjusted net sales of the Electrical Group
and a 1% increase in the copper-adjusted net sales of the Communications Group.
The growth in Electrical Group net sales was primarily due to more favorable
building wire pricing and increased copper-adjusted net sales of OEM cordsets
and portable cord products in the first six months of 1997 compared to the same
period in 1996. The increase in Communications Group net sales reflected an
increase in datacom product sales volume, partially offset by a decline in the
volume of sales of PIC to U S WEST and a decrease in pricing for high speed data
cables.
Gross profit increased $20.2 million, or 24%, to $103.8 million in the
first six months of 1997 from $83.6 million in the first six months of 1996.
General Cable's gross margin increased to 19.1% in the first six months of 1997
from 15.8% in the first six months of 1996. The improvement in the 1997 period
was primarily attributable to improved building wire pricing and manufacturing
cost reductions, partially offset by a decrease in pricing for high speed data
cables. On a copper-adjusted basis (to the first six months of 1997), General
Cable's gross margin was 16.0% in the first six months of 1996.
The reduction in manufacturing costs in the first six months of 1997
compared to the same period in 1996 reflected (i) the continuing effects of
prior rationalizations of production facilities; (ii) improvement in capacity
utilization, including the conversion of certain facilities from five day to
seven day per week continuous production schedules; (iii) product redesigns to
lower material costs; and (iv)
17
<PAGE>
<PAGE>
capital investment and other improvements in manufacturing processes to improve
materials usage and reduce waste.
Selling, general and administrative expenses increased $5.5 million, or
10%, to $60.0 million in the first six months of 1997 from $54.5 million in the
first six months of 1996. Selling, general and administrative expenses as a
percentage of sales were 11.0% in the first six months of 1997, compared to
10.5% of copper-adjusted (to the first six months of 1997) sales in the first
six months of 1996. The increase primarily reflected higher transportation
costs, higher advertising and increased salaries for additional staffing to
support sales growth.
Net interest expense was $9.5 million in the first six months of 1997
compared to $10.4 million in the first six months of 1996. The reduction
reflects the repayment of an $8.0 million related party note during 1996 and the
impact of refinancing the remaining related party debt in May 1997 with
borrowings under the Credit Facility at a lower effective interest rate.
The effective income tax rate for the six months ended June 30, 1997 was
40% compared to 33% for the six months ended June 30, 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.
18
<PAGE>
<PAGE>
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.
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. Upon
consummation of the IPO, the Company
19
<PAGE>
<PAGE>
repaid all outstanding related party indebtedness to Wassall. At June 30, 1997,
the Company had outstanding long-term borrowings under the Credit Facility of
$263.0 million. Based upon historical experience and the expected availability
of funds under the Credit Facility, the Company expects that its sources of
liquidity will 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 six months of 1997 was
$4.0 million. This principally reflected net income before depreciation and
deferred taxes of $28.7 million and a $14.9 million increase in accounts
payable, accrued liabilities and other long-term liabilities, offset by a $39.8
million increase in accounts receivable and an $8.8 million increase in
inventories.
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 $9.6
million in the first six 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'). Also included in the first six months of 1997 are cash
proceeds of $4.6 million from the sale of excess real property.
General Cable expended $15.3 million, $26.2 million and $30.0 million for
capital projects during 1994, 1995 and 1996, respectively, and $12.3 million in
the first six months of 1997. Capital expenditures in 1996 consisted of projects
to reduce product costs, increase capacity and modernize machinery and
equipment. 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 six months of 1997
was $22.2 million, primarily reflecting the proceeds of borrowings under the
Company's revolving credit line in excess of the repayment of intercompany and
other debt and the payment of the Selling Stockholder Dividend. 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 $0.4 million for the first six months of 1997,
and the Company expects to spend approximately an additional $0.6 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 $6.9 million at June 30,
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 $0.3 million for the first six 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
20
<PAGE>
<PAGE>
this litigation at June 30, 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 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 and
Other Matters.'
THE CREDIT FACILITY
Concurrently with the consummation of the IPO, General Cable entered into
the 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 Credit Facility does not purport to be complete and is subject to the
detailed provisions of the agreement governing the Credit Facility, a copy of
which has been filed as an exhibit to the Registration Statement (as defined
herein) of which this Prospectus is a part.
The Credit Facility consists of a five-year senior unsecured revolving
credit and competitive advance facility in an aggregate principal amount of
$350.0 million. Borrowings are guaranteed by General Cable's principal operating
subsidiaries. General Cable made an initial borrowing of $268.0 million under
the Credit Facility concurrently with consummation of the IPO and used the
proceeds thereof to (i) repay all of its outstanding revolving bank debt
(approximately $19.6 million), (ii) repay all intercompany debt and advances
owed to Wassall and its subsidiaries (which, together with accrued interest,
amounted to approximately $201.3 million), (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 expenses of the Refinancing of $0.4
million. Future borrowings will be available for general corporate purposes,
including acquisitions.
Revolving Credit loans bear interest, at General Cable's option, at (i) a
spread over LIBOR or (ii) the 'Alternate Base Rate', which is 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 ranges
between 17.0 and 42.5 basis points per annum, depending upon the Company's
Leverage Ratio (as defined below), and is initially 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 accrues on the full amount of the Credit Facility,
regardless of usage. The facility fee ranges between 8.0 and 20.0 basis points
per annum, depending upon the Company's Leverage Ratio, and is initially 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 Credit Facility requires 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 Credit
Facility)) for any period of four consecutive fiscal quarters of not less than
2.50 to 1.00 through June 30, 1998, 3.00 to 1.00 for any period ending on or
prior to June 30, 1999, and 3.50 to 1.00 thereafter and a Leverage Ratio
(defined as the ratio of Total Debt (as defined in the 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 Credit Facility
also contains 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.
21
<PAGE>
<PAGE>
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
22
<PAGE>
<PAGE>
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. From the Acquisition through December
31, 1996, General Cable 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 (of which
$12.3 million has been spent in the first six months of 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.
23
<PAGE>
<PAGE>
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 1994, 1995 and 1996, the
Communications Group contributed approximately 30%, 34% and 35%, respectively,
of the Company's net sales and approximately 7%, 62% and 65%, respectively, of
its operating income; in the first six months of 1997, it contributed
approximately 35% of the Company's net sales and approximately 52% 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
24
<PAGE>
<PAGE>
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 and (to a lesser extent)
Datacom 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. The Company is currently
negotiating a multi-year supply agreement for telephone cables with GTE
Corporation. If a definitive agreement is entered into (as to which there can be
no assurance), it is not expected to have a significant effect on the Company's
operating results in 1997.
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. In 1994, 1995, 1996 and the first six
months of 1997, sales of Outside Voice and Data Products accounted for
approximately 16%, 21%, 24% and 21%, respectively, of the Company's net sales.
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.
25
<PAGE>
<PAGE>
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
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. In 1994, 1995,
1996 and the first six months of 1997, sales of Datacom Products accounted for
approximately 10%, 9%, 10% and 14%, respectively, of the Company's net 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.
26
<PAGE>
<PAGE>
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.
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 1994,
1995 and 1996, the Electrical Group contributed approximately 70%, 66% and 65%,
respectively, of the Company's net sales and approximately 93%, 38% and 35%,
respectively, of its operating income; in the first six months of 1997, it
contributed approximately 65% of the Company's net sales and approximately 48%
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. In 1994, 1995, 1996 and the first
six months of 1997, sales of Building Wire accounted for approximately 42%, 43%,
40% and 43%, respectively, of the Company's net sales.
27
<PAGE>
<PAGE>
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 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
28
<PAGE>
<PAGE>
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.
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.
29
<PAGE>
<PAGE>
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 one new regional
distribution center in 1997 and one new regional distribution center in 1998,
and to consolidate several additional inventory stocking locations into its
regional distribution centers.
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. From the
Acquisition through December 31, 1996, General Cable spent an aggregate of $65.3
million for capital projects, and expects to spend $38.0 million in 1997 (of
which $12.3 million has been spent in the first six months of 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
30
<PAGE>
<PAGE>
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
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
31
<PAGE>
<PAGE>
Credit Facility contains 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 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.'
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 37 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.
32
<PAGE>
<PAGE>
EMPLOYEES
At June 30, 1997, approximately 3,800 persons were employed by General
Cable, and collective bargaining agreements covered approximately 2,250
employees at 15 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. The Company is in the
process of negotiating an extension of a union contract for its Taunton,
Massachusetts facility, which expires on August 8, 1997. Union contracts will
expire at an additional two 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 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 40,255 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........ 29,295 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>
33
<PAGE>
<PAGE>
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 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 June 30, 1997, the Company had accrued approximately $6.9 million
(exclusive of an additional accrual of approximately $2.2 million for the
asbestos-related litigation described below under ' -- Legal and Other Matters')
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, Legal and Other Matters.'
LEGAL AND OTHER MATTERS
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 16,100 suits brought by
plaintiffs alleging asbestos-related injury from the maritime industry ('MARDOC'
cases), under the supervision of the
34
<PAGE>
<PAGE>
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 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 Matters' above.
On May 13, 1997, the Company notified the CPSC pursuant to Section 15(b) of
the Consumer Product Safety Act that it had initiated a product recall of
certain outdoor power center units manufactured at one of its facilities between
April 7, 1997 and May 5, 1997 because of potential problems with the electrical
insulation for such units. As of the date hereof, the Company has recovered or
located the substantial majority of the units and is not aware of any claim or
incident of personal injury or property damage involving the units. However,
there can be no assurance that there will be no such claims or incidents.
General Cable is involved in various legal proceedings and administrative
actions in addition to the matters discussed above and under ' -- Environmental
Matters.' 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.
35
<PAGE>
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The executive officers of General Cable are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS 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................ 49 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
Kenneth A. McAllister............ 52 Vice President and General Manager for Industrial 11
Instrumentation and Control 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>
36
<PAGE>
<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 consist of Mr. Roper, the Class II Directors consist of Mr. Kenny, and
the Class III Directors 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, and that one non-employee
director will be added shortly after consummation of the Offering. It is
anticipated that upon such appointment Messrs. Doyle and Roper will resign from
the Board of Directors and that, assuming that the Selling Stockholder no longer
owns any shares of Common Stock, the Selling Stockholder will thereafter refrain
from exercising its rights under the Intercompany Agreement to approve new
directors appointed to the Company's Board of Directors prior to the Company's
first annual meeting of stockholders. See 'Certain Relationships and Related
Transactions.'
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 Exchange
Act, and 'outside directors' within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the 'Code') and, in any event, will
not include any Wassall designee.
37
<PAGE>
<PAGE>
Compensation of Directors
It is anticipated that, following consummation of the Offering, 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 PLAN
The following is a description of the 1997 Annual Incentive Plan of the
Company (the '1997 Plan'). This description is intended only as a summary and is
qualified in its entirety by reference to the 1997 Plan, which has been 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
38
<PAGE>
<PAGE>
Directors (or the compensation committee, once it is established). Upon
attainment by the Company of specified performance goals (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 any participant (other than the Company's chief executive officer
and chief operating officer) shall not exceed 90% of such participant's annual
base salary. 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, 90% for Mr. Virgulak and 90% for Mr. Bevis.
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. This
description is intended only as a summary and is qualified in its entirety by
reference to the Stock Incentive Plan, which has been 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 and non-employee directors of the Company and the Company's
subsidiaries and to align the interests of the Company's key employees and
non-employee directors with those of its stockholders by providing opportunities
to receive Common Stock or monetary payments. 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) 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 is administered by the Company's Board of
Directors, and will be administered by the Compensation Committee once it is
established (the Board of Directors or such committee being referred to herein
as the 'Plan Administrator'). 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 and 'outside directors' within
the meaning of Section 162(m) of the Code. The Plan Administrator 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, 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 Plan Administrator'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 consist of such key employees and non-employee directors of
the Company and the Company's subsidiaries as the Plan Administrator in its sole
discretion determines to be significantly responsible for the success and future
growth and profitability of the Company and whom the Plan Administrator may
designate from time to time to receive awards under the Stock Incentive Plan.
The terms of any grants under the Stock Incentive Plan are governed by the award
agreements issued in
39
<PAGE>
<PAGE>
connection with awards under the Stock Incentive Plan. Approximately 110
employees currently participate in the Stock Incentive Plan.
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 Plan Administrator 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 Plan Administrator 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 Plan Administrator, 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 Plan Administrator, 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 Plan Administrator 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 Plan Administrator 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 Plan Administrator may grant stock awards, in such amounts and subject
to such terms and conditions as the Plan Administrator 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 Plan Administrator 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 Plan Administrator.
40
<PAGE>
<PAGE>
The Plan Administrator 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 Plan Administrator.
While stock units do not confer voting rights on the participant, the Plan
Administrator 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 IPO, the Board of Directors awarded 268,597
shares of Restricted Stock having an undiscounted aggregate fair market value on
the date of grant of approximately $5.6 million to approximately 100 executive
officers and other key employees. The individuals named in the Summary
Compensation Table received awards of restricted stock in the following amounts
and having the following undiscounted fair market values at the date of grant:
Mr. Rabinowitz -- 95,238 shares ($2,000,000); Mr. Kenny -- 23,809 shares
($500,000); Mr. Siverd -- 6,910 shares ($145,108); Mr. Virgulak -- 6,129 shares
($128,713); and Mr. Bevis -- 4,933 shares ($103,598). The restrictions on the
initial grants of the restricted stock lapse (subject to acceleration under
certain circumstances) 36 months after consummation of the IPO in the case of
Messrs. Rabinowitz and Kenny and December 31, 1998 in the case of all other
recipients. The awards of Restricted Stock were 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 was
paid, in addition to the restricted stock 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 provided for cash payments upon the
Company's achievement of certain performance targets, were terminated upon
consummation of the IPO.
Following consummation of the IPO, the Board of Directors granted options
to purchase a total of 1,140,850 shares of Common Stock to approximately 170
employees. The individuals named in the Summary Compensation Table received
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, is $21 (the IPO price) and the options 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.
41
<PAGE>
<PAGE>
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 have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
Each of the Employment Agreements became effective upon the consummation of the
IPO.
Mr. Rabinowitz serves 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 is entitled to receive
an annual base salary of $600,000, retroactive to January 1, 1997. Mr.
Rabinowitz also has 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
is not 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
has 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'). 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
is 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 do not provide for the
opportunity to be awarded an additional bonus outside of the 1997 Plan, and
except as follows: Mr. Kenny serves as Executive Vice President and Chief
Operating Officer of the Company, is entitled to an annual base salary of
$300,000, has an opportunity to earn a bonus of up to 120% of his base salary
under the 1997 Plan and the Future Bonus Plan, and has a Multiplier of 1.5. Mr.
Siverd serves as Executive Vice President, General Counsel and Secretary
pursuant to a two-year employment agreement (subject to automatic one-year
extensions unless the Company or Mr. Siverd elects not to so extend), is
entitled to an annual base salary of $225,000, and has a Multiplier of one. Mr.
Virgulak serves as Executive Vice President, Treasurer and Chief Financial
Officer pursuant to a two-year employment agreement (subject to automatic
one-year extensions unless the Company or Mr. Virgulak elects not to so extend),
is entitled to an annual base salary of $204,000, and has a Multiplier of one.
In addition, Mr. Virgulak and Mr. Siverd's agreements 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.
CHANGE IN CONTROL AGREEMENTS
The following descriptions of the change-in-control agreements between the
Company and each of Messrs. Rabinowitz, Kenny, Siverd and Virgulak (the
'Change-in-Control Agreements') are intended only as a summary and are qualified
in their entirety by reference to the respective Change-in-Control Agreements,
which have been filed as exhibits to the Registration Statement of which this
Prospectus forms a part. Each of the Change-in-Control Agreements became
effective upon the consummation of the IPO.
The Change-in-Control Agreements provide 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
42
<PAGE>
<PAGE>
Cause (as defined in the Change-in-Control 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 are 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 IPO.
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
43
<PAGE>
<PAGE>
positions held by the executive with respect to the Company or any of its
significant subsidiaries (as 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 4,815,000 shares of the
Company's Common Stock. Upon consummation of the Offering, the Selling
Stockholder will own 465,000 shares of Common Stock, or approximately 1.9% of
the outstanding Common Stock. If the Underwriters' over-allotment option is
exercised in full, after consummation of the Offering the Selling Stockholder
will not own any shares of Common Stock.
The address of the Selling Stockholder is P.O. Box 21153, 3001 AD
Rotterdam, The Netherlands.
In connection with the IPO, the Selling Stockholder and Wassall entered
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 IPO. 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 IPO, the
Company paid management fees to such affiliate of the Selling Stockholder
aggregating approximately $1.0 million. Upon consummation of the IPO, the
Management Agreement was terminated.
Prior to the consummation of the IPO, Wassall 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
agreed 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 IPO, General Cable made an initial
borrowing of approximately $268.0 million under the Credit Facility and used 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,
amounted to approximately $201.3 million), (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.
44
<PAGE>
<PAGE>
Concurrently with consummation of the IPO, the Company and the Selling
Stockholder entered into an agreement (the 'Registration Rights Agreement')
pursuant to which the Selling Stockholder was 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 IPO (each, a 'demand registration'). The
Registration Rights Agreement entitles the Selling Stockholder 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, as well as the right to have its shares of Common Stock included
in future registration statements of the Company. All such registration rights
are subject to customary terms and conditions. The Selling Stockholder has
exercised a demand registration right with respect to the shares of Common Stock
being offered hereby. The Company is 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.
In addition, concurrently with consummation of the IPO, the Company,
Wassall and the Selling Stockholder entered 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, (A) agreed not to solicit employees of the
other for a period of two years following the IPO and (B) will indemnify each
other with respect to certain insurance expenses; (ii) the Company will, subject
to certain exceptions, indemnify Wassall and its subsidiaries against (A)
liabilities relating to the business and assets of the Company, its subsidiaries
and the Related Companies and their respective predecessors and (B) liabilities
relating to the offering or sale of securities of the Company, including,
without limitation, liabilities under the federal securities laws in connection
with the IPO; (iii) the Selling Stockholder was granted certain rights to
approve the Company's additional directors appointed following consummation of
the IPO and, for so long as the Selling Stockholder and its affiliates continue
to own at least 10% of the outstanding Common Stock of the Company (excluding
any shares of Common Stock issued pursuant to the Stock Incentive Plan or any
other employee benefit plan of the Company), to designate one individual (or, if
the Board of Directors shall consist of more than eight members, two
individuals) for nomination to the Company's Board of Directors; and (iv) the
Company and Wassall will provide each other with certain information. Following
consummation of the Offering, the Selling Stockholder will own approximately
1.9% of the outstanding shares of Common Stock (none if the Underwriters'
over-allotment is exercised in full) and, accordingly, will cease to have the
right to designate any individuals for nomination to the Company's Board of
Directors. It is anticipated that Messrs. Doyle and Roper will resign from the
Board of Directors upon the appointment of an additional non-employee director,
which is expected to occur shortly after consummation of the Offering.
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.
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.
45
<PAGE>
<PAGE>
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. is 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.'
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
46
<PAGE>
<PAGE>
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.
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.
47
<PAGE>
<PAGE>
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 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,
48
<PAGE>
<PAGE>
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
Upon consummation of the Offering, the Selling Stockholder will
beneficially own approximately 1.9% of the outstanding shares of Common Stock
(none, 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 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 90 days following the date of this Prospectus without the
prior written consent of Dillon, Read & Co. Inc.
If the over-allotment option is not exercised in full, the Selling
Stockholder may dispose of any remaining shares of Common Stock pursuant to the
exercise of rights under the Registration Rights Agreement or pursuant to Rule
144 under the Securities Act. 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 Offering, will be 245,185 shares) and the average
weekly trading volume in the Common Stock during
49
<PAGE>
<PAGE>
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.
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.
50
<PAGE>
<PAGE>
CERTAIN U.S. FEDERAL TAX CONSEQUENCES TO
NON-U.S. HOLDERS OF COMMON 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.
51
<PAGE>
<PAGE>
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.
52
<PAGE>
<PAGE>
UNDERWRITING
The names of the Underwriters for the 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
Underwriting Agreement, are as follows:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
- ------------------------------------------------------------------------------------------- ---------
<S> <C>
Dillon, Read & Co. Inc..................................................................... 1,450,000
Lazard Freres & Co. LLC.................................................................... 1,450,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................................................. 1,450,000
---------
Total................................................................................. 4,350,000
---------
---------
</TABLE>
If any shares of Common Stock offered are purchased by the Underwriters,
all such shares will be so purchased.
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 $0.81 per share on
sales to certain dealers. The Underwriters may allow, and such dealers may
reallow, a concession not to exceed $0.10 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 public offering of the Common
Stock contemplated hereby, the price to the public, the concession and the
reallowance may be changed by the Underwriters.
The Selling Stockholder has granted to the Underwriters an option to
purchase an aggregate of up to an aggregate of 465,000 additional shares of
Common Stock on the same terms per share. If the Underwriters exercise this
option, each of the 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 4,350,000. The Underwriters may exercise such option on or
before the thirtieth day from the date of the Underwriting Agreement and only to
cover over-allotments, if any, in connection with the 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 90 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
Agreement 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. Wassall has
guaranteed the obligations of the Selling Stockholder under the Underwriting
Agreement.
Each of Dillon, Read & Co. Inc. and Lazard Freres & Co. LLC has rendered
certain financial advisory and investment banking services to Wassall and its
affiliates for which it has received customary fees.
In connection with the Offering, 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 Agreement. 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 Offering. Pursuant to a penalty bid, Dillon, Read & Co.
Inc., on behalf of the Underwriters, would be able to reclaim a selling
concession from an
53
<PAGE>
<PAGE>
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.
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the shares of Common Stock in Canada is being made on a
private placement basis. Accordingly, any resale of such shares must be made in
accordance with an exemption from the registration and prospectus requirements
of applicable securities laws. Purchasers of the shares of Common Stock are
advised to seek legal advice prior to any resale of the shares of Common Stock.
REPRESENTATION BY PURCHASERS
Confirmations of the acceptance of offers to purchase the shares of Common
Stock will be sent to purchasers in Canada who have not withdrawn their offers
to purchase prior to the issuance of such confirmations. Each purchaser who
receives a purchase confirmation will, by the purchaser's receipt thereof, be
deemed to represent to the Company, the Selling Stockholder and the dealer from
whom such purchase confirmation is received that such purchaser is entitled
under applicable provincial securities laws to purchase such shares of Common
Stock without the benefit of a prospectus qualified under such securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the Company's directors and officers, the Selling Stockholder as
well as the experts named herein may be located outside of Canada and, as a
result, it may not be possible for Canadian purchasers to effect service of
process within Canada upon the Company or such persons. All or a substantial
portion of the assets of the Company and such persons may be located outside of
Canada and, as a result, it may not be possible to satisfy a judgment against
the Company or such persons in Canada or to enforce a judgment obtained in
Canadian courts against the Company or such persons outside of Canada.
Ontario. The shares of Common Stock being offered are those of a foreign
issuer and Ontario purchasers will not receive the contractual right of action
prescribed by section 32 of the Regulation under the Securities Act (Ontario).
As a result, Ontario purchasers must rely on other remedies that may be
available, including common law rights of action for damages or rescission or
rights of action under the civil liability provisions of the U.S. federal
securities laws.
Saskatchewan. Saskatchewan purchasers to whom securities are sold in
reliance on sections 81(1)(c) or (d) of The Securities Act, 1988 (Saskatchewan)
(the 'Act') have certain statutory rights of action, including: (a) (i) a right
of action for damages or rescission against the Company and the Selling
Stockholder, (ii) a right of action for damages against every promoter and
director of the Company or the Selling Stockholder, as the case may be, who was
a promoter or director at the time this Prospectus or any amendment to it was
sent or delivered and (iii) a right of action for damages against the dealer
from whom the securities were purchased if this Prospectus or any amendment to
it contains a misrepresentation; (b) a right of action for damages against any
individual who makes a verbal misrepresentation to such Saskatchewan purchaser
prior to or contemporaneously with the purchase of the securities; (c) a right
to void the agreement to purchase the securities and recover the purchase price
if the securities are sold in contravention of the Act or the Regulation under
the Act and (d) a right of action or damages or rescission if a copy of this
Prospectus or any amendment to it was not delivered to such purchaser before the
securities were subscribed for.
An action for damages must be started by the earlier of (a) one year after
the investor first had knowledge of the facts giving rise to the action or (b)
six years after the date of the transaction that gave rise to the action. An
action for rescission must be commenced by 180 days after the date of the
transaction that gave rise to the action.
54
<PAGE>
<PAGE>
The rights available to Saskatchewan purchasers are in addition to and
without derogation from any other right or remedy which such purchasers may have
at law, are intended to correspond to the provisions of the Act and are subject
to the defences contained herein.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been 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 consolidated financial statements of General Cable and subsidiaries 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.
AVAILABLE INFORMATION
The Company is subject to the information reporting requirements of the
Exchange Act, and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the
'Commission'). Such reports, proxy statements and other information filed with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, Room 1024,
N.W., Washington, D.C. 20549 and at the Regional Offices of the Commission at
Seven World Trade Center, 13th Floor, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. The Commission maintains a Web site on the Internet that
contains reports, proxy and information statements and other information
(http://www.sec.gov). Such information may also be inspected at the offices of
the NYSE, 20 Broad Street, New York, New York 10005.
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 is available for inspection and copying as set forth above.
55
<PAGE>
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL CABLE CORPORATION AND SUBSIDIARIES:
Independent Auditors' Report............................................................................... F-2
Consolidated Statements of Income for the period June 9, 1994 to December 31, 1994 and the years ended
December 31, 1995 and 1996 and the six months ended June 30, 1996 and 1997 (unaudited)................... F-3
Consolidated Balance Sheets at December 31, 1995 and 1996 and at June 30, 1997 (unaudited)................. F-4
Consolidated 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 six months ended June 30, 1996 and 1997 (unaudited)................... F-5
Notes to Consolidated Financial Statements................................................................. F-6
GENERAL CABLE CORPORATION AND SUBSIDIARIES ('PREDECESSOR'):
Independent Auditors' Report............................................................................... F-17
Consolidated Statement of Operations for the period January 1, 1994 to June 8, 1994........................ F-18
Consolidated Statement of Cash Flows for the period January 1, 1994 to June 8, 1994........................ F-19
Consolidated Statement of Stockholders' Equity for the period January 1, 1994 to June 8, 1994.............. F-20
Notes to Consolidated Financial Statements................................................................. F-21
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
GENERAL CABLE CORPORATION:
We have audited the accompanying consolidated balance sheets of General
Cable Corporation and subsidiaries as of December 31, 1996 and 1995, and the
related consolidated 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. These consolidated financial statements are the
responsibility of the Companies' management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements present fairly, in
all material respects, the financial position of General Cable Corporation and
subsidiaries as of December 31, 1996 and 1995, and the 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 May 20, 1997
F-2
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
JUNE 9, 1994 SIX MONTHS ENDED
(ACQUISITION DATE) YEAR ENDED DECEMBER 31, JUNE 30,
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 $528.7 $543.2
Cost of sales................. 469.9 922.6 855.3 445.1 439.4
------- ------------ ----------- ------- -------
Gross profit........ 73.4 138.7 188.3 83.6 103.8
Selling, general and
administrative expenses..... 53.1 94.2 109.8 54.5 60.0
------- ------------ ----------- ------- -------
Operating income.... 20.3 44.5 78.5 29.1 43.8
------- ------------ ----------- ------- -------
Interest income (expense):
Interest expense to
related parties........ (10.9) (20.1) (19.6) (9.9) (7.5)
Other interest expense... (.5) (1.3) (1.1) (.8) (2.3)
Interest income.......... .4 .7 1.1 .3 .3
------- ------------ ----------- ------- -------
(11.0) (20.7) (19.6) (10.4) (9.5)
------- ------------ ----------- ------- -------
Earnings before
income taxes...... 9.3 23.8 58.9 18.7 34.3
Income tax benefit
(provision)................. (6.5) 1.5 (19.7) (6.2) (13.7)
------- ------------ ----------- ------- -------
Net income.......... $ 2.8 $ 25.3 $ 39.2 $ 12.5 $ 20.6
------- ------------ ----------- ------- -------
------- ------------ ----------- ------- -------
Earnings per common share..... $ .12 $ 1.04 $ 1.62 $ .51 $ .85
------- ------------ ----------- ------- -------
------- ------------ ----------- ------- -------
Weighted average common
shares...................... 24.3 24.3 24.3 24.3 24.3
------- ------------ ----------- ------- -------
------- ------------ ----------- ------- -------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash.................................................................. $ 13.7 $ 1.9 $ 10.5
Receivables, net...................................................... 147.6 135.5 175.3
Inventories........................................................... 178.6 161.0 169.8
Deferred income taxes................................................. 23.0 23.7 23.3
Prepaid expenses and other............................................ 6.4 13.6 9.6
------ ------ -----------
Total current assets............................................. 369.3 335.7 388.5
Property, plant and equipment, net......................................... 116.4 128.8 133.3
Deferred income taxes...................................................... 41.7 31.8 30.8
Other non-current assets................................................... 8.2 17.3 17.2
------ ------ -----------
Total assets..................................................... $535.6 $513.6 $569.8
------ ------ -----------
------ ------ -----------
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities:
Accounts payable...................................................... $ 66.5 $ 69.3 $ 80.7
Accrued liabilities................................................... 60.4 58.8 60.7
Short-term debt....................................................... -- 2.0 --
Note payable to related party......................................... 8.0 -- --
------ ------ -----------
Total current liabilities........................................ 134.9 130.1 141.4
Long-term Debt:
Notes payable to related parties...................................... 195.8 195.8 --
Other................................................................. 10.1 9.3 272.0
------ ------ -----------
Total long-term debt............................................. 205.9 205.1 272.0
------ ------ -----------
Other long-term liabilities................................................ 71.9 71.0 65.6
------ ------ -----------
Total liabilities................................................ 412.7 406.2 479.0
------ ------ -----------
Shareholder's Equity:
Common stock, $0.01 par value, 75,000,000 shares authorized,
24,250,000 shares issued and outstanding at December 31, 1995 and
1996, 24,518,597 shares issued and outstanding at June 30, 1997..... .2 .2 .2
Additional paid-in capital............................................ 94.7 94.7 83.6
Retained earnings..................................................... 28.0 12.5 7.0
------ ------ -----------
Total shareholder's equity....................................... 122.9 107.4 90.8
------ ------ -----------
Total liabilities and shareholder's equity....................... $535.6 $513.6 $569.8
------ ------ -----------
------ ------ -----------
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
JUNE 9, 1994 YEAR ENDED ENDED
(ACQUISITION DATE) DECEMBER 31, JUNE 30,
TO DECEMBER 31, -------------- --------------
1994 1995 1996 1996 1997
------------------ ----- ----- ----- -----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows of operating activities:
Net income.................................... $ 2.8 $25.3 $39.2 $12.5 $20.6
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization............ 7.7 12.9 12.1 5.8 6.7
Deferred income taxes.................... -- (1.7) 9.3 2.8 1.4
Changes in operating assets and
liabilities:
(Increase) decrease in receivables... (10.1) (4.9) 12.1 (15.5) (39.8)
(Increase) decrease in inventories... 32.7 9.1 17.6 16.7 (8.8)
(Increase) decrease in other
assets............................. 1.3 (3.4) 2.1 (2.0) 1.0
Increase (decrease) in accounts
payable, accrued and other
long-term liabilities.............. (14.0) (16.1) (11.6) (15.3) 14.9
------- ----- ----- ----- -----
Net cash flows of operating
activities.................... 20.4 21.2 80.8 5.0 (4.0)
------- ----- ----- ----- -----
Cash flows of investing activities:
Proceeds from property sold................... -- -- -- -- 4.6
Capital expenditures.......................... (9.1) (26.2) (30.0) (11.5) (12.3)
Investment in joint venture................... -- -- (6.4) -- --
Other, net.................................... 1.6 (.5) .9 .2 (1.9)
------- ----- ----- ----- -----
Net cash flows of investing
activities.................... (7.5) (26.7) (35.5) (11.3) (9.6)
------- ----- ----- ----- -----
Cash flows of financing activities:
Dividends paid................................ -- -- (55.1) -- (42.6)
Proceeds from related party advance........... 26.0 8.0 4.8 -- --
Proceeds from issuance of other debt.......... 4.5 -- 2.0 -- 263.0
Repayment of related party advance............ -- -- (8.0) -- (195.8)
Repayment of other debt....................... (35.9) (.7) (.8) (.4) (2.4)
------- ----- ----- ----- -----
Net cash flows of financing
activities.................... (5.4) 7.3 (57.1) (.4) 22.2
------- ----- ----- ----- -----
Increase (decrease) in cash....................... 7.5 1.8 (11.8) (6.7) 8.6
Cash -- beginning of period....................... 4.4 11.9 13.7 13.7 1.9
------- ----- ----- ----- -----
Cash -- end of period............................. $ 11.9 $13.7 $1.9 $7.0 $10.5
------- ----- ----- ----- -----
------- ----- ----- ----- -----
SUPPLEMENTAL INFORMATION
Income taxes paid (refunded).................. $ 4.5 $4.2 $(1.1) $(2.6) $9.2
------- ----- ----- ----- -----
------- ----- ----- ----- -----
Interest paid................................. $ 11.3 $21.3 $20.1 $10.4 $8.3
------- ----- ----- ----- -----
------- ----- ----- ----- -----
Noncash activities
Issuance of Restricted Stock.................. -- -- -- -- $5.6
------- ----- ----- ----- -----
------- ----- ----- ----- -----
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL AND ACQUISITION
General. General Cable Corporation (formerly General Cable Acquisition
Holdings Corporation, see note 19) and subsidiaries ('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 Consolidation. The consolidated financial statements include
the accounts of General Cable and its wholly owned subsidiaries. All
transactions and balances among the consolidated 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 six
months ended June 30, 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.
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
F-6
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
New Standards. In June 1997, The Financial Accounting Standards Board
issued SFAS No. 130, 'Reporting Comprehensive Income' and SFAS No. 131,
'Disclosures About Segments of an Enterprise and Related Information'. General
Cable will be required to adopt these standards during 1998. Adoption of these
standards will not impact the reported results of operations or financial
position of General Cable but may require additional disclosure.
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 SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. INVENTORIES
Inventories consisted of the following (in millions):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- JUNE 30,
1995 1996 1997
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Raw materials................................................ $ 32.9 $ 20.8 $ 20.8
Work-in-progress............................................. 35.7 28.6 26.2
Finished goods............................................... 110.0 111.6 122.8
------ ------ -----------
Total................................................... $178.6 $161.0 $169.8
------ ------ -----------
------ ------ -----------
</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 consolidated balance sheet.
F-8
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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 (SEE NOTE 19)
General Cable had 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. As part of the initial public
offering and related debt refinancing, this facility was replaced by a new
credit facility. 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 SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. LONG-TERM DEBT (SEE NOTE 19)
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 was 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 limited
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 was payable
semi-annually. The holder of the note agreed that repayment would not be
demanded during 1997 unless other funding were 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 SUBSIDIARIES
NOTES TO CONSOLIDATED 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 SUBSIDIARIES
NOTES TO CONSOLIDATED 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 SUBSIDIARIES
NOTES TO CONSOLIDATED 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 YEAR ENDED
JUNE 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.
F-13
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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
Net income........................................... 20.6 20.6
Dividends............................................ (16.7) (25.9) (42.6)
Issuance of restricted stock......................... 5.6 5.6
Other................................................ (.2) (.2)
------ ----------- --------- ------
Balance, June 30, 1997 (unaudited)........................ $ .2 $ 83.6 $ 7.0 $ 90.8
------ ----------- --------- ------
------ ----------- --------- ------
</TABLE>
Following consummation of the initial public offering, General Cable
awarded 268,597 shares of restricted stock to executive officers and other key
employees. The awards of restricted stock were made in settlement of obligations
under existing long-term incentive arrangements.
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
F-14
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 $.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 included in selling, general and
administrative expenses in the accompanying consolidated 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, 1996 and the first two
quarters of 1997 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
1997
Net sales................................................. $251.0 $292.2
Gross profit.............................................. 48.8 55.0
Net income................................................ 8.6 12.0
Earnings per share........................................ .35 .49
</TABLE>
F-15
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
Concurrently with the consummation of the initial public offering on May
20, 1997, General Cable entered into a new credit facility with a syndicate of
banks. The facility consists 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
made an initial borrowing of $268.0 million under the new facility, and used the
proceeds of such borrowing, to (i) repay all outstanding revolving bank debt
(approximately $19.6 million), (ii) repay all intercompany debt and advances to
Wassall and its subsidiaries (approximately $201.3 million), (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 approximated the net book value
of such companies.
At June 30, 1997 (unaudited), $263 million of revolving credit loans were
outstanding, with a weighted average annual interest rate of 6.22%.
The acquisition of Carol Cable Ltd. and Carol Cable Europe Ltd. from
Wassall PLC has been accounted for as an acquisition of entities under common
control in a manner similar to a pooling-of-interests effective May 1997.
F-16
<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-17
<PAGE>
<PAGE>
GENERAL CABLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 1, 1994 TO JUNE 8, 1994
(IN MILLIONS)
<TABLE>
<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-18
<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-19
<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-20
<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-21
<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-22
<PAGE>
<PAGE>
[ARTWORK TO BE INSERTED]
<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............................... 8
The Company................................ 11
Use of Proceeds............................ 11
Price Range of Common Stock and Dividend
Policy................................... 12
Capitalization............................. 13
Selected Financial Data.................... 14
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 16
Business................................... 22
Management................................. 36
Executive Compensation..................... 38
Selling Stockholder........................ 44
Certain Relationships and Related
Transactions............................. 44
Description of Capital Stock............... 45
Shares Eligible for Future Sale............ 49
Certain U.S. Federal Tax
Consequences to Non-U.S. Holders of
Common Stock............................. 51
Underwriting............................... 53
Notice to Canadian Residents............... 54
Legal Matters.............................. 55
Experts.................................... 55
Available Information...................... 55
Index to Financial Statements.............. F-1
</TABLE>
[LOGO]
------------------------
4,350,000 SHARES
COMMON STOCK
PROSPECTUS
AUGUST 19, 1997
------------------------
DILLON, READ & CO. INC.
LAZARD FRERES & CO. LLC
MERRILL LYNCH & CO.
______________________________ ______________________________
STATEMENT OF DIFFERENCES
------------------------
The dagger symbol shall be expressed as ....`D'
The double dagger symbol shall be expressed as .... `DD'
The registered trademark symbol shall be expressed as .... 'r'
<PAGE>
