<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 28, 1999
GENERAL CABLE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-12983 06-1398235
- ----------------------- ----------------------- -----------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification Number)
organization)
4 Tesseneer Drive
Highland Heights, KY 41076
----------------------------------------------------------
(Address of principal executive offices, including zip code)
(606) 572-8000
-------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE> 2
General Cable Corporation (the "Company") is amending Item 2, Item 7(a)
and Item 7(b) of its Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 14, 1999 to update the information supplied under
Item 2 and to file the financial statements and pro forma financial information
required to be filed with respect to the businesses acquired described in Item 2
of the filed report.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 28, 1999, General Cable Corporation (the "Company") completed the
first phase of its acquisition of the worldwide energy cable systems businesses
of BICC plc and its subsidiaries with a payment to BICC plc of 211.4 million
pounds sterling ($339.3 million). Phase I included the acquisition of
substantially all of the assets of BICC Cables Corporation, Pyrotenax USA Inc.,
and BICC Cables Canada Inc., the acquisition of the assets used in the energy
cable and cable systems operations in the United Kingdom of BICC plc, BICC
Cables Limited and BICC Components Limited and the acquisition of 100% of
the issued and outstanding capital shares of BICC General Cable SA, BICC Ceat
Cavi Srl, BICC Cables New Zealand Limited, Trans Power Cables Pte Ltd, and BICC
Supertension Cables (1980) Limited. These entities have operations in the
United States, Canada, the United Kingdom, Spain, Italy and New Zealand.
Phase II of the transaction was completed July 2, 1999, and included the
acquisition of BICC's Middle Eastern, Asia/Pacific and African cable businesses,
including ownership interests in businesses in Fiji, Portugal, Zimbabwe,
Mozambique, Angola, Indonesia, Malaysia, and Singapore for a cash payment of $26
million. The Company expects to complete the third and final phase of the
acquisition, which includes joint venture businesses in Germany and the Middle
East, by December 31, 1999.
The consideration paid in Phase I, Phase II and the estimated
consideration to be paid in Phase III of the acquisition are subject to
adjustment under the terms of the asset purchase agreements entered into among
the parties to this transaction.
The acquisition adds to the Company's existing products low-voltage,
medium-voltage and high-voltage power distribution and transmission cable
products, and control, signaling electronic and data communications products
and accessories, to serve industrial, utility, OEM, military/government and
electrical and communications distributor customers worldwide. The businesses
acquired, including those to be acquired upon completion of Phase III, are
conducted in 41 manufacturing locations in 16 countries, with representation in
an additional 20 countries through regional sales offices.
Financing of the purchase price for the acquisition was provided by a
syndicate of lenders led by The Chase Manhattan Bank under the terms of a credit
agreement which provides credit facilities to the Company for borrowings of up
to $1.05 billion to use for the acquisition, refinancing of existing debt and
general corporate purposes.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements, pro forma financial information and
exhibits are being filed as part of this report:
(a) The following financial statements with respect to the businesses
acquired ("BICC Energy Cables"), attached hereto as Appendix I.
- Profit and loss account for the three years ended December 31,
1998.
- Statement of total recognized gains and losses for the three
years ended December 31, 1998.
- Balance sheet as of December 31, 1997 and December 31, 1998.
- Cash flow statement for the three years ended December 31, 1998.
- Notes to the accounts for the three years ended December 31, 1998.
(b) The following pro forma financial information with respect to the
businesses acquired, attached hereto as Appendix II.
- Pro Forma Combined Statement of Operations for the year ended
December 31, 1998 and the three-month period ended March 31, 1999.
- Pro Forma Combined Balance Sheet as of March 31, 1999.
(c) Exhibits
Number Title
- ------ -----
2.1 Assets Sale and Purchase Agreement, made as of April
6, 1999, among BICC Cables Corporation, Pyrotenax USA
Inc., BICC Cables Canada Inc., BICC plc, GK
Technologies, Incorporated and General Cable
Corporation, together with the Schedules to such
Agreement.*
2.2 Amendment No. 1 to and Assignment of Assets Sale and
Purchase Agreement, dated as of May 27, 1999, by and
among BICC Cables Corporation, Pyrotenax USA Inc.,
BICC Cables Canada Inc., BICC plc, GK Technologies,
Incorporated, General Cable Corporation, BICC General
Pyrotenax Cables Ltd, BICC General Cable (USA) LLC
and BICC General Cable Company.*
2.3 Sale and Purchase Agreement, made on April 6, 1999,
between BICC plc, GK Technologies, Incorporated and
General Cable Corporation, together with the
Schedules to such Agreement.*
2.4 Letter Agreement amending the Sale and Purchase
Agreement, dated May, 1999, among GK Technologies,
Incorporated, General Cable Corporation and BICC
plc.*
- ------------------------------
* Incorporated by reference to such exhibit previously filed with the
Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 14, 1999.
3
<PAGE> 4
APPENDIX I
BICC Energy Cables Group
Report and accounts
for the three years ended 31 December 1998
<PAGE> 5
CONTENTS
Page
Statement of directors' responsibilities in relation to the accounts 1
Auditors' report 2
Combined profit and loss account 3
Statement of total recognised gains and losses 4
Combined balance sheet 5
Combined cash flow statement 6
Notes to the accounts 7-21
<PAGE> 6
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE ACCOUNTS
The following statement, which should be read in conjunction with the auditors'
report which follows, is made with a view to distinguishing the respective
responsibilities of the directors of General Cable Corporation and of the
auditors in relation to these accounts. The accounts have been drawn up in
accordance with the Basis of Preparation set out on pages 7 and 8.
The directors are required to prepare accounts for each financial year which
give a true and fair view of the state of affairs of the Group and of the profit
or loss of the Group for that period. In preparing those accounts, the directors
are required to:
- - select suitable accounting policies and then apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
accounts; and
- - prepare the accounts on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy at any time the financial position of the
Group. The directors have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group to prevent and
detect fraud and other irregularities.
1
<PAGE> 7
AUDITORS' REPORT
TO THE DIRECTORS OF GENERAL CABLE CORPORATION:
We have audited the accounts on pages 3 to 21, which have been prepared on the
bases set out on pages 7 and 8, under the historical cost convention as modified
by the revaluation of certain fixed assets and in accordance with the accounting
policies set out on pages 9 and 10. As explained in note 1a, the accounts have
not been prepared for the purposes of section 226 of the UK Companies Act 1985
and are therefore not statutory accounts.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITORS
As described on page 1, the Group's directors are responsible for the
preparation of the accounts. It is our responsibility to form an independent
opinion, based on our audit, on those accounts and to report our opinion to the
directors.
BASIS OF OPINION
We conducted our audit in accordance with United Kingdom Auditing Standards
issued by the Auditing Practices Board, which are substantially consistent with
generally accepted auditing standards in the United States. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the accounts. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation of the
accounts and of whether the accounting policies are appropriate to the
circumstances of the Group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the accounts are free from
material misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the accounts.
OPINION
In our opinion, the accounts give a true and fair view of the state of affairs
of the Group as at 31 December 1997 and 31 December 1998 and of the Group's
result and cash flows for each of the three years ended 31 December 1998 in
accordance with the bases of preparation set out on pages 7 and 8 and generally
accepted accounting principles in the United Kingdom.
RECONCILIATION TO US GAAP
Accounting practices used by the Group in preparing the accompanying accounts
conform with generally accepted accounting principles in the United Kingdom, but
do not conform with generally accepted accounting principles in the United
States. A description of these differences and a reconciliation of net
(loss)/profit and net equity to generally accepted accounting principles in the
United States is set out in note 18.
Arthur Andersen
Chartered Accountants
1 Surrey Street
London
WC2R 2PS
11 August 1999
2
<PAGE> 8
COMBINED PROFIT AND LOSS ACCOUNT
For the three years ended 31 December 1998
<TABLE>
<CAPTION>
NOTES BEFORE EXCEPTIONAL BEFORE EXCEPTIONAL BEFORE EXCEPTIONAL
EXCEPTIONAL ITEMS EXCEPTIONAL ITEMS EXCEPTIONAL ITEMS
ITEMS (NOTE 4) TOTAL ITEMS (NOTE 4) TOTAL ITEMS (NOTE 4) TOTAL
1998 1998 1998 1997 1997 1997 1996 1996 1996
GBP M GBP M GBP M GBP M GBP M GBP M GBP M GBP M GBP M
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Turnover including share of
joint ventures and associates 3 1,076 - 1,076 1,219 - 1,219 1,350 - 1,350
Share of turnover of joint ventures (51) - (51) (100) - (100) (112) - (112)
Share of turnover of associates (24) - (24) (33) - (33) (45) - (45)
----- ----- ----- ----- ----- ----- ----- ----- -----
Group turnover 1,001 - 1,001 1,086 - 1,086 1,193 - 1,193
Cost of Sales (854) (137) (991) (934) (2) (936) (1,003) - (1,003)
----- ----- ----- ----- ----- ----- ----- ----- -----
Gross Profit 147 (137) 10 152 (2) 150 190 - 190
Net operating expenses (133) - (133) (125) - (125) (137) - (137)
----- ----- ----- ----- ----- ----- ----- ----- -----
Group operating profit/(loss) 14 (137) (123) 27 (2) 25 53 - 53
(2) - (2) (12) - (12) (14) (25) (39)
Share of operating loss of
joint ventures
3 - 3 6 - 6 9 - 9
Share of operating profit of
associates
----- ----- ----- ----- ----- ----- ----- ----- -----
Operating profit/(loss) 15 (137) (122) 21 (2) 19 48 (25) 23
Fundamental restructuring costs:
Group - - - - (38) (38) - - -
Share of joint ventures - - - - (46) (46) - - -
----- ----- ----- ----- ----- ----- ----- ----- -----
Profit/(loss) on ordinary 5 15 (137) (122) 21 (86) (65) 48 (25) 23
activities before taxation
Taxation 6 (8) (12) (21)
----- -----
(Loss)/profit after taxation (130) (77) 2
Minority interests (1) (1) -
----- ----- -----
(Loss)/profit for the financial year (131) (78) 2
===== ===== =====
</TABLE>
The (loss)/profit for the financial year in each of the three years ended 31
December 1998 calculated on a historical cost basis is not significantly
different from the amounts included above.
The accompanying notes are an integral part of this combined profit and loss
account.
3
<PAGE> 9
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
for the three years ended 31 December 1998
<TABLE>
<CAPTION>
Note 1998 1997 1996
GBP M GBP M GBP M
<S> <C> <C> <C> <C>
(Loss)/profit for the financial year (131) (78) 2
Exchange adjustments (1) (10) (36)
Reduction in fixed asset revaluation surplus 7 (27) (1) (1)
---------- ---------- ----------
TOTAL RECOGNISED GAINS AND LOSSES RELATING TO THE YEAR (159) (89) (35)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this statement of total
recognised gains and losses.
4
<PAGE> 10
COMBINED BALANCE SHEET
As at 31 December 1997 and 31 December 1998
<TABLE>
<CAPTION>
Notes 1998 1997
GBP M GBP M
FIXED ASSETS
<S> <C> <C> <C>
Tangible assets 7 123 251
Investments in joint ventures
- - share of gross assets 25 19
- - share of gross liabilities (15) (12)
Investments in associates 16 17
---------- ----------
149 275
CURRENT ASSETS
Stocks 8 140 150
Debtors
- - due within one year 9 194 181
- - due after one year 9 5 4
---------- ----------
339 335
CREDITORS: amounts falling due within one year 10 (202) (190)
---------- ----------
NET CURRENT ASSETS 137 145
---------- ----------
TOTAL ASSETS LESS CURRENT LIABILITIES 286 420
CREDITORS: amounts falling due after more than one year 11 - (2)
PROVISIONS FOR LIABILITIES AND CHARGES 12 (25) (39)
---------- ----------
OPERATING CAPITAL 261 379
========== ==========
NET EQUITY
Parent's equity in the Group 1a,1b 256 375
Minority interests 5 4
---------- ----------
13 261 379
========== ==========
</TABLE>
The accounts on pages 3 to 21 were approved by the board of directors on 11
August 1999.
The accompanying notes are an integral part of this combined balance sheet.
5
<PAGE> 11
Combined cash flow statement
For the three years ended 31 December 1998
<TABLE>
<CAPTION>
Notes 1998 1997 1996
GBP M GBP M GBP M
<S> <C> <C> <C>
GROUP OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS 14 27 53
Depreciation 28 22 29
Profit on disposal of fixed assets (1) - (1)
Exceptional items - cash expenditure (13) (5) (6)
Working capital decrease/(increase):
Stocks 10 (1) 28
Debtors (14) 28 6
Other creditors and provisions 6 (24) (24)
---------- ---------- ----------
NET CASH INFLOW FROM OPERATING ACTIVITIES 30 47 85
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Capital expenditure (68) (51) (35)
Disposal of tangible fixed assets 12 5 4
Investment in joint ventures and associates 1b (7) (9) (22)
---------- ---------- ----------
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT (63) (55) (53)
---------- ---------- ----------
NET OPERATING CASHFLOW (33) (8) 32
Net non-operating cashflow 1b 33 8 (32)
---------- ---------- ----------
NET CASHFLOW IN THE PERIOD - - -
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of this combined cash flow
statement.
"Net non-operating cashflow" is a balancing number representing the cashflow
impact of non-operating capital items. Non-operating capital includes cash,
third-party indebtedness and intra-group indebtedness, current taxation
liabilities and dividends payable.
6
<PAGE> 12
NOTES TO ACCOUNTS
For the three years ended 31 December 1998
1 BASIS OF PREPARATION
a) Structure of accounts
The accounts combine the financial position and financial results of the
businesses included in the BICC Energy Cables transaction, as defined in the
North America and Rest of World Sale & Purchase Agreements (both dated 6 April
1999), and set out in note 17, drawn up to 31 December each year.
The accounts are not statutory accounts within the meaning of section 226 of the
UK Companies Act 1985 ("the Act"). They have been prepared specifically for the
sale of the BICC Energy Cables Group and consequently do not contain certain
reports, disclosures or other matters that would be required under the Act.
The Group is a combination of businesses subject to either share or asset sale
and consequently is not a legally structured and legally consolidated group. The
accounts do not contain any information in respect of a holding company.
b) Basis of aggregation
The accounts reflect the assets and liabilities attributable to each element of
the BICC Energy Cables Group and the results of such operations for the periods
shown. Appropriate elimination entries have been included to present the Group
on a stand-alone basis, so as to result in the accounts reflecting adjustments
which would be applicable if such accounts had been prepared on a consolidated
basis.
The combined balance sheets at 31 December 1997 and 31 December 1998 reflect the
operating capital of the Group, but exclude non-operating capital. Non-operating
capital includes cash, third-party indebtedness and intra-group indebtedness,
current taxation liabilities and dividends payable. This presentation has been
adopted because the Group has never been managed, financed or structured on a
stand-alone basis, but rather as an integral part of the BICC Group.
Accordingly, the non-operating capital of the Group (as recorded in the Group's
underlying books of account) reflects the manner in which BICC plc managed,
financed and structured its worldwide interests and may not reflect the position
that might have arisen if the Group had been managed, financed and structured on
a stand-alone basis.
The combined balance sheets do not present capital and reserves for the business
included in the BICC Energy Cables Group, consistent with the fact that the
Group is not legally structured or legally consolidated. Accordingly, the net
total of operating capital is presented with a balancing (equal and opposite)
net equity figure representing the parent's equity in the Group and minority
interests. In order to facilitate the reconciliation of net equity (note 13), a
balancing number defined as "other movement on non-operating capital" has been
calculated.
Consistent with the combined balance sheet presentation, the combined profit and
loss accounts do not include interest charges or interest income arising on the
Group's (or the Group's share of joint ventures and associates) cash and
indebtedness, or proposed dividends.
7
<PAGE> 13
NOTES TO ACCOUNTS (CONTINUED)
1 BASIS OF PREPARATION (CONTINUED)
b) Basis of aggregation (continued)
The Group's taxation charge (as recorded in the Group's underlying books of
account) reflects the manner in which the BICC Group organised its tax affairs.
Accordingly, for the purpose of these accounts, the taxation charge has been
recalculated on a separate return basis; withholding taxes and incremental UK
taxes have been calculated on the basis that the distributable profits of
overseas business units are repatriated in full each year.
Consistent with the combined balance sheet presentation, the combined cash flow
statement reflects operating capital movements only, balanced by an equal and
opposite net non-operating capital movement.
As far as practicable, the accounts present a consistent historical record of
the businesses included in the Sale & Purchase transaction. In New Zealand and
Germany, achieving this consistent record is complicated by BICC's corporate
restructuring, as explained below:
i) New Zealand - The operations currently held in BICC Cables New Zealand Ltd
were transferred into that company during 1998, following the BICC Group's
reorganisation of its interest in Metal Manufactures (the Australian
majority-owned subsidiary of BICC which owned the New Zealand business). The
profit and loss accounts included in these accounts for 1996, 1997 and the first
half of 1998 are thus technically not those of BICC Cables New Zealand Ltd, but
reflect the results of the existing operations carried out in these periods. The
operating assets and liabilities are reflective of the same business.
ii) Germany - KWO Kabel GmbH ("KWO"), BICC's former German cable business, was
amalgamated with effect from August 1997 with the German cable businesses of NKF
Holdings NV into joint ventures, thereby enabling substantial rationalisation
and factory closures. The BICC Energy Cables Group's 50 per cent share of the
results of these joint ventures from the effective date is included in these
accounts.
As a result of the rationalisation and the lack of publicly available
information on the German cable businesses contributed by NKF Holdings NV, it is
not possible to provide financial information for earlier periods on a basis
totally consistent with the business currently carried on. However, the reported
results of KWO for 1996 and 1997 are included in these accounts and have been
presented within the Group's share of joint ventures to facilitate comparability
with the results of the joint venture arrangements with NKF Holdings NV.
The results of KWO for 1996 and 1997 (which are reproduced below) include the
operations of BICC's German optical fibre business (which was sold to Corning
Incorporated in 1999) and the operations of an energy cable business based in
Schonow which was closed in 1996.
<TABLE>
<CAPTION>
1997 1996
GBP M GBP M
<S> <C> <C>
Turnover 78 112
---------- ----------
Operating loss (after GBP 25m of exceptional cost of sales in 1996; 1997: GBP nil) (8) (39)
Fundamental restructuring costs (27) -
---------- ----------
Loss on ordinary activities before taxation (35) (39)
========== ==========
</TABLE>
8
<PAGE> 14
NOTES TO ACCOUNTS (CONTINUED)
2 STATEMENT OF ACCOUNTING POLICIES
A summary of the principal accounting policies, all of which have been applied
consistently throughout the three years ended 31 December 1998 is set out below.
a) Basis of accounting
The accounts have been prepared under the historical cost convention, modified
to include the revaluation of certain land and buildings, and in accordance with
applicable accounting standards.
The UK accounting standard FRS12 ("Provisions, Contingent Liabilities and
Contingent Assets") is effective for accounting periods ending on or after 23
March 1999 and accordingly has not been adopted in these accounts.
b) Acquisitions
The results of businesses acquired are included from the date on which control
passed. Acquisitions are accounted for under the acquisition method. In
accordance with UK accounting standard FRS10 ("Goodwill and Intangible Assets"),
with effect from 1 January 1998, goodwill arising on the acquisition of
subsidiaries, joint ventures and associates is capitalised and amortised through
the profit and loss account over 20 years. Goodwill arising before 1 January
1998 is eliminated against net equity.
c) Foreign currencies
The results of overseas subsidiaries, joint ventures and associates are
translated at average rates of exchange for the year. Assets and liabilities are
translated at year end rates. All other exchange differences are dealt with in
the profit and loss account.
d) Turnover
Turnover represents amounts invoiced to outside customers, except in respect of
contracting activities where turnover represents the value of work carried out
during the year including amounts not invoiced. Turnover excludes value added
and similar sales-based taxes.
e) Profit recognition on contracting activities
Profit on individual contracts is taken only when their outcome can be foreseen
with reasonable certainty, based on the lower of the percentage margin earned to
date and that prudently forecast at completion, taking account of agreed claims.
Full provision is made for all known or expected losses on individual contracts,
taking a prudent view of future claims income, immediately when such losses are
foreseen. Profit for the year includes the benefit of claims settled on
contracts completed in prior years.
f) Research and development
Research and development expenditure is written off in the year in which it is
incurred.
g) Tangible fixed assets
Tangible fixed assets are stated at cost or valuation, net of depreciation and
any provision for impairment in accordance with UK accounting standard FRS11
("Impairment of Fixed Assets and Goodwill").
9
<PAGE> 15
NOTES TO ACCOUNTS (CONTINUED)
2 STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
g) Tangible fixed assets (continued)
Except for land, the cost or valuation of tangible fixed assets is depreciated
over their expected useful lives, on a straight line basis at rates of 2.5% for
buildings, or the life of the lease if less than 40 years, and 4% to 33% for
plant and equipment.
Assets held under finance leases are treated as tangible fixed assets;
depreciation is provided accordingly, and the deemed capital element of future
rentals is included within non-operating capital. Deemed interest, calculated on
a reducing balance basis, is charged as interest payable over the period of the
lease. The rental costs arising from operating leases are charged against profit
before interest as they arise.
h) Investments
Joint ventures and associates are included in the accounts at the Group's share
of net tangible asset values, plus net loans due from such undertakings and
attributable goodwill arising since 1 January 1998, less amounts written off.
Other Group investments are stated at cost plus loans, less amounts written off.
i) Stocks
Stocks and unbilled contract work in progress are valued at the lower of cost
and net realisable value. Cost where appropriate includes a proportion of
manufacturing overheads. Applications for progress payments are deducted from
cost, with any excess included in other creditors as advance progress
applications.
j) Deferred taxation
Deferred taxation is provided using the liability method. Deferred tax assets
are recognised to the extent that the directors believe they are recoverable in
the foreseeable future.
k) Pensions
BICC provided retirement benefits to eligible employees of the BICC Energy
Cables Group. Pension contributions (determined in accordance with independent
actuarial advice) were charged to the profit and loss account so as to spread
the cost of providing pensions over employees' working lives with the BICC
Energy Cables Group. During the three years ended 31 December 1998 the principal
UK pension scheme had a surplus of assets as compared to the benefits accrued to
members, resulting in a GBP nil charge in the BICC Group profit and loss
account in each year. The Sale & Purchase agreements dictate that pension assets
are transferred only to the extent of the actuarially determined liabilities in
relation to eligible employees. As a consequence, a "normal" UK accounting
standard SSAP 24 ("Accounting for Pension Costs") charge has been recorded in
these accounts in each year.
l) Management charges
BICC furnished the services of financial, administrative, treasury, legal and
certain other corporate staff personnel to the BICC Energy Cables Group. The
costs of such services were allocated to the BICC Energy Cables Group. The
management charge included in the results of the BICC Energy Cables Group was
approximately GBP 6m in 1998, GBP 6m in 1997 and GBP 5m in 1996. The directors
believe that the charges for such services and benefits have been calculated
on a reasonable basis.
10
<PAGE> 16
NOTES TO ACCOUNTS (CONTINUED)
3 SEGMENT ANALYSIS
a) Performance by activity
All activities relate to cable manufacturing, related systems and services.
b) Performance by geographic origin
<TABLE>
<CAPTION>
Operating profit
Turnover before exceptional items Operating capital
----------------------------- ------------------------------ --------------------
1998 1997 1996 1998 1997 1996 1998 1997
GBP M GBP M GBP M GBP M GBP M GBP M GBP M GBP M
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UK 345 387 396 2 4 9 91 126
Rest of Europe 267 337 430 (5) (16) 8 53 70
North America 371 382 361 9 20 14 100 144
Australasia, Asia Pacific
and Other 93 113 163 9 13 17 17 39
------ ------ ------ ------ ------ ------ ------ ------
1,076 1,219 1,350 15 21 48 261 379
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
Turnover, operating profit before exceptional items and operating capital
include the Group's share of joint ventures and associates.
4 EXCEPTIONAL ITEMS
<TABLE>
<CAPTION>
1998 1997 1996
GBP M GBP M GBP M
<S> <C> <C> <C>
a) Charged against operating profit
Rationalisation of cables businesses
Redundancy and other restructuring costs - 2 -
---------- ---------- ----------
- 2 -
Tangible fixed asset write-downs 132 - -
Write-down in value of associates and joint ventures 5 - 25
---------- ---------- ----------
137 2 25
b) Fundamental restructuring costs
Redundancy and other restructuring costs - 23 -
Tangible fixed asset write-downs - 15 -
Write-down in value of associates and joint ventures - 46 -
---------- ---------- ----------
137 86 25
========== ========== ==========
</TABLE>
Exceptional items charged against operating profit in 1998, 1997 and 1996 arose
in Europe GBP 84m (1997: GBP nil; 1996: GBP 25m), North America GBP 32m
(1997: GBP 2m; 1996: GBP nil), and Australasia GBP 21 m (1997: GBP nil;
1996: GBP nil). IN AccordancE WITH UK accounting standard FRS 11 ("Impairment
of Fixed Assets and Goodwill"), a write-down of GBP 137 m has been charged
against operating profit as an exceptional item in 1998.
The fundamental restructuring costs in 1997 arose in Europe (GBP 82m) and
North America (GBP 2m).
Exceptional items had no impact on either the Group's 1998 tax charge (1997:
GBP nil; 1996: GBP nil) or 1998 minority interests (1997: GBP nil; 1996:
GBP nil).
11
<PAGE> 17
NOTES TO ACCOUNTS (CONTINUED)
5 PROFIT/(LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION
Profit/(loss) on ordinary activities before taxation is stated after charging:
<TABLE>
<CAPTION>
1998 1997 1996
GBP M GBP M GBP M
Depreciation 28 22 29
<S> <C> <C> <C>
Research and development 9 15 13
Operating lease rentals
- - plant and machinery 1 1 1
- - other 5 5 6
---------- ---------- ----------
6 TAX ON PROFIT ON ORDINARY ACTIVITIES
The tax charge comprises:
1998 1997 1996
GBP M GBP M GBP M
UK corporation tax at 31% (1997: 31.5%; 1996: 33%) - 1 2
Overseas taxation 8 11 19
---------- ---------- ----------
8 12 21
========== ========== ==========
</TABLE>
There is no deferred tax liability (1997: pound nil; 1996: pound nil).
The tax charge in each year has suffered from unrelieved losses in a number of
territories (see note 4 to the accounts for the impact of exceptional items on
the Group's tax charge).
12
<PAGE> 18
NOTES TO ACCOUNTS (CONTINUED)
7 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
ASSETS IN
LAND AND PLANT AND COURSE OF
BUILDINGS EQUIPMENT CONSTRUCTION TOTAL
GBP M GBP M GBP M GBP M
<S> <C> <C> <C> <C>
COST OR VALUATION
At 1 January 1998 121 454 19 594
Exchange adjustments 6 3 - 9
Additions 1 31 36 68
Disposals (1) (29) - (30)
Transfers 1 9 (11) (1)
---------- ---------- ---------- ----------
At 31 December 1998 128 468 44 640
---------- ---------- ---------- ----------
DEPRECIATION
At 1 January 1998 (30) (313) - (343)
Exchange adjustments (5) (3) - (8)
Charge for the year (4) (24) - (28)
Disposals - 21 - 21
Asset write-downs (44) (115) - (159)
---------- ---------- ---------- ----------
At 31 December 1998 (83) (434) - (517)
---------- ---------- ---------- ----------
NET BOOK VALUE
At 31 December 1998 45 34 44 123
========== ========== ========== ==========
At 31 December 1997 91 141 19 251
========== ========== ========== ==========
</TABLE>
The land and buildings asset write-down of GBP 44m includes GBP 27m which
was charged against net equity in the year ended 31 December 1998.
The net book value of assets held under finance leases was GBP 6m (1997:
GBP 6m) with related depreciation provided in the year of GBP 1m (1997:
GBP 1m).
8 STOCKS
<TABLE>
<CAPTION>
1998 1997
GBP M GBP M
<S> <C> <C>
RAW MATERIALS AND CONSUMABLES 26 32
WORK-IN-PROGRESS 45 45
FINISHED GOODS AND GOODS FOR RESALE 69 73
---------- ----------
140 150
========== ==========
</TABLE>
13
<PAGE> 19
NOTES TO ACCOUNTS (CONTINUED)
9 DEBTORS
<TABLE>
<CAPTION>
1998 1997
GBP M GBP M
AMOUNTS FALLING DUE WITHIN ONE YEAR:
<S> <C> <C>
Trade and other debtors 184 165
Due from joint ventures and associates 1 6
Contract retentions 1 1
Prepayments and accrued income 8 9
---------- ----------
194 181
---------- ----------
AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR:
Trade and other debtors 3 3
Contract retentions 2 1
---------- ----------
5 4
---------- ----------
199 185
========== ==========
10 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
1998 1997
GBP M GBP M
Trade and other creditors (170) (151)
VAT, payroll taxes and social security (10) (4)
Accruals and deferred income (22) (35)
---------- ----------
(202) (190)
========== ==========
11 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR:
1998 1997
GBP M GBP M
Trade and other creditors - (2)
---------- ----------
- (2)
========== ==========
</TABLE>
14
<PAGE> 20
NOTES TO ACCOUNTS (CONTINUED)
12 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
Reorganisation Other
Provisions provisions Total
GBP M GBP M GBP M
<S> <C> <C> <C>
At 1 January 1998 (21) (18) (39)
Charged in year (1) (2) (3)
Exchange adjustments - (2) (2)
Utilised 11 8 19
---------- ---------- ----------
At 31 December 1998 (11) (14) (25)
========== ========== ==========
</TABLE>
Other provisions principally comprise overseas pension and employment
obligations and contract provisions.
13 RECONCILIATION OF MOVEMENTS IN NET EQUITY
<TABLE>
<CAPTION>
1998 1997
GBP M GBP M
<S> <C> <C>
Loss for the financial year (131) (78)
Other recognised gains and losses relating to the year (net) (28) (11)
Other movement on non-operating capital 41 20
---------- ----------
Net reduction in net equity (118) (69)
Opening net equity 379 448
---------- ----------
Closing net equity 261 379
========== ==========
</TABLE>
"Other movements on non-operating capital" is a balancing number (see note 1b
to the accounts).
15
<PAGE> 21
NOTES TO ACCOUNTS (CONTINUED)
14 FINANCIAL COMMITMENTS
Capital expenditure authorised and contracted for which has not been
provided for in the accounts amounted to pound 6 m (1997: pound 17 m).
Annual operating lease commitments comprise:
<TABLE>
<CAPTION>
1998 1997
--------------------------- ---------------------------
LAND AND LAND AND
BUILDINGS OTHER BUILDINGS OTHER
GBP M GBP M GBP M GBP M
LEASES TERMINATING:
<S> <C> <C> <C> <C>
within one year 1 - 1 1
Between one and five years 1 3 - 2
In five years or more - - 1 -
---------- ---------- ---------- ----------
2 3 2 3
========== ========== ========== ==========
</TABLE>
15 PENSION ARRANGEMENTS
The BICC Group, through trustees, operates a number of pension schemes
throughout the world, the majority of which are of the defined benefit type and
are funded. In addition, the BICC Group contributes to a number of union
operated schemes.
BICC provided retirement benefits to eligible employees of the BICC Energy
Cables Group.
At the date of the latest valuations of the principal BICC UK defined benefit
schemes, the actuarial value of the scheme assets as determined by independent
actuaries (at 5 April 1996 using the projected unit method), exceeded the
benefits which had accrued to members, after allowing for expected future
increases in earnings. Accordingly, the BICC Group benefited from a
contributions holiday during each of the three years ended 31 December 1998 and
a GBP nil charge for accounting purposes. A "normal" UK pension charge, which
does not benefit from this surplus, has been recorded for the BICC Energy Cables
Group in each of the three years ended 31 December 1998 to reflect the basis of
the Sale & Purchase agreement, which dictates that the surplus is to be
retained by BICC Group. The "normal" charge of 14% of pensionable salaries is
based on actuarial estimates of the cost of pension benefits to the BICC
Energy Cables Group employees.
The total pension cost to the BICC Energy Cables Group was GBP 11m (1997:
GBP 11m, 1996: GBP 12m), of which GBP7m (1997: GBP 7m, 1996: GBP 7m)
related to overseas schemes.
16
<PAGE> 22
NOTES TO ACCOUNTS (CONTINUED)
16 SUBSEQUENT EVENTS
On 6 April 1999, BICC plc entered into an agreement to sell the BICC Energy
Cables Group to GK Technologies Inc. (a subsidiary of General Cable Corporation)
for total consideration of approximately GBP275m, which was subsequently reduced
to GBP261m after further negotiations of the parties under the contract. On 28
May 1999, the first phase of the transaction was completed for consideration of
GBP217m in cash, subject to adjustment for changes in certain balances. Phase
one comprised the operations in North America, Spain, Italy, United Kingdom and
New Zealand.
On 2 July 1999, the second phase of the transaction was completed including
ownership interests in businesses in Fiji, Portugal, Zimbabwe, Mozambique,
Angola, Indonesia, Malaysia and Singapore, for cash consideration of GBP11m
subject to adjustment. The third and final phase of the acquisition, which
includes joint venture businesses in Germany and the Middle East is anticipated
to be completed by 31 December 1999.
The consideration in respect of the Sale & Purchase of the BICC Energy Cables
Group was adjusted to exclude cash, third-party indebtedness and intra-group
indebtedness. Accordingly, the ability of the BICC Energy Cables Group to trade
on a short term basis is subject to the provision of appropriate banking and
other facilities by General Cable Corporation.
17 BUSINESSES INCLUDED IN THE BICC ENERGY CABLES GROUP ACCOUNTS
The operations and companies included in the BICC Energy Cables Group are as
follows:
ASSET SALES
<TABLE>
<CAPTION>
Country Operation
- ------- ---------
<S> <C>
UK Supertension and Subsea Cables (UK agency operation of BICC plc)
UK Distribution Cables Systems (UK agency operation of BICC plc)
UK Components (UK agency operation of BICC plc)
UK Energy Technology Centre (UK agency operation of BICC plc)
UK Energy HQ (UK agency operation of BICC plc)
UK UK Industrial and Special Cables business (UK agency operations of BICC plc)
UK UK Rod and Metals businesses (UK agency operation of BICC plc)
UK Pyrotenax Wiring and Thermoheat (UK agency operation of BICC plc)
US/Canada North American businesses of BICC Cables Corporation and Phillips Cables Inc.
</TABLE>
17
<PAGE> 23
NOTES TO ACCOUNTS (CONTINUED)
17 BUSINESSES INCLUDED IN THE BICC ENERGY CABLES GROUP ACCOUNTS (CONTINUED)
SHARE SALES
<TABLE>
<CAPTION>
COUNTRY COMPANY % INTEREST
- ------- ------- ----------
<S> <C> <C>
UK BICC Supertension Cables (1980) Ltd 100%
Spain BICC General Cable SA (and subsidiaries) 100%
Portugal BICC Portugal SGPS SA (and subsidiaries) 100%
Portugal BICC Portugal SGIDS SA (and subsidiaries) 50.7%
Italy BICC Ceat Cavi Srl 100%
Germany Kaiser KWO Kable Energie GmbH & Co. 50%
Germany Kaiser KWO Kable Telekom GmbH & Co. 50%
Jersey BICC-Ducab Investments Ltd (and subsidiaries) 65%
Dubai Dubai Cable Company Ltd 30%
Zimbabwe BICC CAFCA Ltd (and subsidiaries) 74%
Singapore Trans-Power Cables Pte Ltd 100%
Singapore BICC Cables Asia - Pacific Pte Ltd (and subsidiaries) 100%
Singapore BICC Cables Singapore Pte Ltd 100%
Fiji Dominion Wire & Cables Ltd 51%
New Zealand BICC Holdings New Zealand Ltd 100%
New Zealand BICC Cables New Zealand Ltd 100%
</TABLE>
18 SUMMARY OF RELEVANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The consolidated financial statements are prepared in conformity with accounting
principles generally accepted in the UK ("UK GAAP") which differs in certain
respects from those generally accepted in the United States ("US GAAP"). The
significant areas of difference affecting the Group's accounts are described
below:
18
<PAGE> 24
NOTES TO ACCOUNTS (CONTINUED)
18 SUMMARY OF RELEVANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED)
a) Reconciliations
The following is a summary of the significant adjustments to net profit and
net equity which would have been required if US GAAP had been applied instead
of UK GAAP.
<TABLE>
<CAPTION>
Note 1998 1997 1996
GBP M GBP M GBP M
<S> <C> <C> <C> <C>
NET (LOSS)/PROFIT IN ACCORDANCE WITH UK GAAP (131) (78) 2
Adjustments to conform with US GAAP:
Pension costs b) (1) (1) (1)
Impairment of goodwill c) (6) - -
Depreciation on revalued assets d) - 1 1
Restructuring costs e) (16) 16 (3)
Taxation on above adjustments - - 1
---------- ---------- ----------
NET (LOSS)/PROFIT IN ACCORDANCE WITH US GAAP (154) (62) -
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Note 1998 1997
GBP M GBP M
<S> <C> <C> <C>
NET EQUITY IN ACCORDANCE WITH UK GAAP 261 379
Adjustments to conform with US GAAP:
Goodwill c) - 6
Property revaluations d) - (27)
Restructuring provisions e) - 16
---------- ----------
NET EQUITY IN ACCORDANCE WITH US GAAP 261 374
========== ==========
</TABLE>
b) Pensions
Under UK GAAP, the costs of providing pension benefits may be calculated by the
use of any recognised actuarial method which is appropriate and whose
assumptions reflect the long term nature of the assets and liabilities involved.
Under US GAAP, the costs of providing these benefits are calculated using the
projected unit credit method and a discount rate (being the rate of interest at
which pension liabilities could be effectively settled) which reflects current
market rates.
19
<PAGE> 25
NOTES TO ACCOUNTS (CONTINUED)
18 SUMMARY OF RELEVANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED)
c) Goodwill
Prior to 1998, under UK GAAP the Group wrote off acquisition goodwill against
reserves in the balance sheet in the year of acquisition. From 1998, under UK
GAAP acquired goodwill was capitalised and its subsequent measurement (via
annual impairment review or annual amortisation charge) is determined based on
the individual circumstances of each business acquired. Under US GAAP, goodwill
arising on consolidation is capitalised on the balance sheet and then amortised
over its useful life, which the Group has estimated to be 40 years.
Other than goodwill of GBP6m in respect of the New Zealand business, the
directors have concluded that goodwill arising on all other business units
(GBP306m) was fully impaired by 31 December 1995. The New Zealand goodwill
was fully impaired in the year ended 31 December 1998.
d) Revaluation of properties
Under UK GAAP, properties may be re-stated on the basis of appraised values in
financial statements prepared in all other respects in accordance with the
historical cost convention. Such revaluations are not permitted under US GAAP.
In 1997 the BICC Energy Cables Group carried properties at a valuation of
GBP27m above original historical cost. In 1998, these properties were
impaired to a value below historical cost to reflect their recoverable value.
This impairment was charged to the profit and loss account, after offset of
GBP27m against net equity.
e) Restructuring costs
Under US GAAP the requirements for establishing provisions for restructuring
costs differ from those under UK GAAP and there are also different criteria for
determining the timing of the recognition of restructuring costs.
In the year ended 31 December 1995, provisions for restructuring costs of
GBP 3m did not comply with the requirements of US GAAP and have been charged,
as incurred, in the year ended 31 December 1996.
In the year ended 31 December 1997, provision for restructuring costs of
GBP 16m did not comply with the requirements of US GAAP and have been
charged, as incurred, in the year ended 31 December 1998.
f) Statement of cash flows
The basis of presentation of the combined cash flow statement prepared in
accordance with UK GAAP is described in Note 1b. Under US GAAP, cash flows are
reported as operating activities, investing activities and financing activities.
Cash flow from taxation would be included as operating activities.
20
<PAGE> 26
NOTES TO ACCOUNTS (CONTINUED)
18 SUMMARY OF RELEVANT DIFFERENCES BETWEEN UK AND US GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (CONTINUED)
f) Statement of cash flows (continued)
Set out below is a summary combined statement of cash flows for the Group
under US GAAP.
<TABLE>
<CAPTION>
1998 1997
GBP M GBP M
<S> <C> <C>
Net cash provided by operating activities 22 35
Net cash used in investing activities (63) (55)
Net cash provided by financing activities 41 20
---------- ----------
NET CHANGE IN CASH UNDER US GAAP - -
</TABLE> ========== ==========
21
<PAGE> 27
APPENDIX II
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The Unaudited Pro Forma Combined Statement of Operations of the Company for the
fiscal year ended December 31, 1998 and the three-month period ended March 31,
1999 (the "Pro Forma Statements of Operations"), and the Unaudited Pro Forma
Combined Balance Sheet of the Company as of March 31, 1999 (the "Pro Forma
Balance Sheet" and, together with the Pro Forma Statements of Operations, the
"Pro Forma Financial Statements"), have been prepared to illustrate the
estimated effect of the acquisition. The Pro Forma Financial Statements do not
reflect any anticipated cost savings from the acquisition, or any synergies that
are anticipated to result from the acquisition, and there can be no assurance
that any such cost savings or synergies will occur. The Pro Forma Statements of
Operations give pro forma effect to the acquisition as if it had occurred on
January 1, 1998 for the year ended December 31, 1998 and January 1, 1999 for
the three months ended March 31, 1999. The Pro Forma Balance Sheet gives pro
forma effect to the acquisition as if it had occurred on March 31, 1999. The Pro
Forma Financial Statements do not purport to be indicative of the results of
operations or financial position of the Company that would have actually been
obtained had such transactions been completed as of the assumed dates and for
the period presented, or which may be obtained in the future. The pro forma
adjustments are described in the accompanying notes and are based upon available
information and certain assumptions that the Company believes are reasonable.
The Pro Forma Financial Statements should be read in conjunction with the
separate historical consolidated financial statements of the Company and the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
A preliminary allocation of the purchase price has been made to major categories
of assets and liabilities in the accompanying Pro Forma Financial Statements
based on available information. The actual allocation of purchase price and the
resulting effect on income from operations may differ significantly from the pro
forma amounts included herein. These pro forma adjustments represent the
Company's preliminary determination of purchase accounting adjustments and are
based upon available information and certain assumptions that the Company
believes to be reasonable. Consequently, the amounts reflected in the Pro Forma
Financial Statements are subject to change, and the final amounts may differ.
-1-
<PAGE> 28
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 THREE MONTHS ENDED MARCH 31, 1999
------------------------------------------------ -----------------------------------------------
GCC BICC PRO GCC BICC PRO
HISTORICAL HISTORICAL ADJUSTMENTS FORMA HISTORICAL HISTORICAL ADJUSTMENTS FORMA
---------- ---------- ----------- ----- ---------- ---------- ----------- -----
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $1,150.5 $1,658.4 $2,808.9 $ 262.8 $ 386.9 $ 649.7
Cost of sales 900.7 1,641.8 $(262.2)(a) 2,280.3 216.0 314.5 $ (8.8)(a) 521.7
------- ------- ------- ------- ------- ------- ------- -------
Gross profit 249.8 16.6 262.2 528.6 46.8 72.4 8.8 128.0
Selling, general and
administrative expenses 120.2 256.8(b) (9.9)(b) 367.1 29.5 69.2(b) 98.7
------- -------- ------- -------- ------- ------- ------- -------
Operating income 129.6 (240.2) 272.1 161.5 17.3 3.2 8.8 29.3
Net interest (expense)/income (15.7) - (41.8)(c) (57.5) (4.4) - (11.2)(c) (15.6)
------- -------- ------- -------- ------- ------- ------- -------
Earnings before income taxes
and minority interests 113.9 (240.2) 230.3 104.0 12.9 3.2 (2.4) 13.7
Income tax provisions (42.7) (13.3) 17.0(d) (39.0) (4.8) (2.4) 2.0(d) (5.2)
Minority interests - (1.7) - (1.7) - - -
------- -------- ------- ------- ------- ------- ------- -------
Net income $ 71.2 $ (255.2) $ 247.3 $ 63.3 $ 8.1 $ 0.8 $ (0.4) $ 8.5
======= ======== ======= ======= ======= ======= ======= =======
Earnings per common share $ 1.93 n/a $ 6.72 $ 1.72 $ 0.22 n/a $ (0.01) $ 0.23
Weighted average common shares 36.8 n/a 36.8 36.8 36.9 n/a 36.9 36.9
Earnings per common share
assuming dilution $ 1.90 n/a $ 6.59 $ 1.69 $ 0.22 n/a $ (0.01) $ 0.23
Weighted average common
shares assuming dilution 37.5 n/a 37.5 37.5 37.2 n/a 37.2 37.2
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
<S> <C> <C> <C> <C>
Working capital $ 290.0 $ 169.3 $ 45.7 (e) $ 504.0
Total assets 682.0 875.6 (233.0)(a) 1,324.6
Long-term debt 301.6 21.2 462.9 (e) 785.7
Shareholders' equity 184.0 526.8 (526.8)(f) 184.0
</TABLE>
- -------------
(a) The estimated purchase price and preliminary adjustments to the historical
book value of BICC as a result of the acquisition are as follows (in millions):
<TABLE>
<CAPTION>
Purchase price:
<S> <C>
Cash $379.0
Book value of net assets acquired (625.5)
------
Net assets acquired in excess of purchase price $246.5
======
</TABLE>
The excess of net assets acquired over the purchase price has resulted in, among
other purchase accounting adjustments, a write-down of fixed assets. The related
depreciation savings is assumed to be amortized over seven years, the estimated
remaining useful lives of fixed assets acquired. The adjustment to 1998 cost of
sales in the table above also includes the elimination of a $227.0 million fixed
asset impairment included in the BICC historical column which would not have
been taken assuming the acquisition occurred on January 1, 1998. The adjustment
to total assets in the table above is net of the capitalization of estimated
deferred financing costs related to the $1.05 billion credit facility.
(b) Amount includes U.K. GAAP to U.S. GAAP adjustment of $38.1 million in 1998
and $0.7 million for the three months ended March 31, 1999. The principal
adjustments in 1998 relate to a $26.5 million restructuring charge recognized
under U.K. GAAP in 1997 but in 1998 for U.S. GAAP and a $9.9 million impairment
of goodwill. The $9.9 million impairment of goodwill is eliminated in the 1998
adjustments column due to the fact that the impairment would not have been
recognized assuming the acquisition occurred on January 1, 1998.
-2-
<PAGE> 29
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(c) Adjustments to reflect net increase in interest expense resulting from
acquisition funding. The adjustments include: (i) elimination of interest
expense on the Company's previous $350 million revolving credit facility of
$16.0 million for 1998 and $4.3 million for the three months ended March 31,
1999 resulting from the repayment of the outstanding balance of the facility of
$335.7 million with a weighted average interest rate of 5.7% per annum; (ii)
interest expense on the New Credit Facility of $53.4 million for 1998 and $14.4
million for the three months ended March 31, 1999 reflecting an interest rate of
8.0% per annum (representing a 275.0 basis point spread over an assumed one
month London interbank offered rate ("LIBOR")) and $667.5 million of average
borrowings assumed to be outstanding during 1998 and $719.2 million of average
borrowings assumed to be outstanding during the three months ended March 31,
1999 and General Cable's actual borrowing and repayment experience in 1998 and
in the three months ended March 31, 1999; (iii) interest expense on existing
debt of the businesses acquired of $1.7 million for 1998 and $0.4 million for
the three months ended March 31, 1999 reflecting an interest rate of 8% per
annum and $21.0 million of average borrowings assumed to be outstanding for both
periods; and (iv) amortization of deferred financing costs.
(d) Represents the income tax effect of the adjustments described in (a), (b)
and (c) above to provide a combined pro forma income tax provision of 37.5%,
the Company's estimated combined effective tax rate.
(e) Represents adjustments to reflect an initial borrowing under the $1.05
billion debt facility of $760.4 million at March 31, 1999 and the use of funds
as follows: (i) purchase price of $379.0; (ii) repayment of $335.7 million on
the $350 million revolving credit facility; and (iii) excess cash proceeds of
$45.7 million.
(f) Adjustment to eliminate the equity of the businesses acquired.
-3-
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
General Cable Corporation
Date: August 13, 1999 By: /s/ Christopher F. Virgulak
- ------------------------ ---------------------------------
Name: Christopher F. Virgulak
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
4
<PAGE> 31
EXHIBIT INDEX
Number Title
2.1 Assets Sale and Purchase Agreement, made as of April
6, 1999, among BICC Cables Corporation, Pyrotenax USA
Inc., BICC Cables Canada Inc., BICC plc, GK
Technologies, Incorporated and General Cable
Corporation, together with the Schedules to such
Agreement.*
2.2 Amendment No. 1 to and Assignment of Assets Sale and
Purchase Agreement, dated as of May 27, 1999, by and
among BICC Cables Corporation, Pyrotenax USA Inc.,
BICC Cables Canada Inc., BICC plc, GK Technologies,
Incorporated, General Cable Corporation, BICC General
Pyrotenax Cables Ltd, BICC General Cable (USA) LLC
and BICC General Cable Company.*
2.3 Sale and Purchase Agreement, made on April 6, 1999,
between BICC plc, GK Technologies, Incorporated and
General Cable Corporation, together with the
Schedules to such Agreement.*
2.4 Letter Agreement amending the Sale and Purchase
Agreement, dated May, 1999, among GK Technologies,
Incorporated, General Cable Corporation and BICC
plc.*
- ----------------------------
* Incorporated by reference to such exhibit previously filed with the
Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on June 14, 1999.
5
