<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------- ----------------------
33-93970
(Commission File number)
INTERNATIONAL WIRE GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
43-1705942
(I.R.S. Employer Identification No.)
101 SOUTH HANLEY ROAD
ST. LOUIS, MO 63105
(314) 719-1000
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Outstanding at
Class July 31, 1997
------------------------------- -----------------------
<S> <C>
International Wire Group, Inc.
Common Stock 1,000
</TABLE>
<PAGE> 2
INTERNATIONAL WIRE GROUP, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
International Wire Group, Inc.
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 . . . . . . . . . . 1
Consolidated Statements of Operations for the three and six months ended June 30, 1997
and the three and six months ended June 30, 1996 . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statements of Cash Flows for the six months ended June 30, 1997 and six
months ended June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 4
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 3
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
June 30, December 31,
--------------- ---------------
1997 1996
--------------- ---------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Accounts receivable, less allowance of $1,418
and $1,363, respectively . . . . . . . . . . . . . . . . . . $100,307 $71,181
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 65,066 60,362
Prepaid expenses and other . . . . . . . . . . . . . . . . . 11,119 5,060
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 4,741 4,741
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . 181,233 141,344
Property, plant and equipment, net . . . . . . . . . . . . . 156,513 118,551
Deferred financing costs, net . . . . . . . . . . . . . . . . 24,890 21,222
Intangible assets, net . . . . . . . . . . . . . . . . . . . 244,931 244,655
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 7,229 5,248
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . $614,796 $531,020
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations . . . . . . . . . $4,463 $20,948
Accounts payable . . . . . . . . . . . . . . . . . . . . . . 42,065 45,832
Accrued and other liabilities . . . . . . . . . . . . . . . . 53,706 41,183
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 2,716 4,648
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . 102,950 112,611
Long-term obligations, less current maturities . . . . . . . 521,296 426,719
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 14,719 14,719
Other long-term liabilities . . . . . . . . . . . . . . . . . 19,746 12,162
Total liabilities . . . . . . . . . . . . . . . . . . . . . 658,711 566,211
Stockholder's equity (deficit):
Common stock, $.01 par value, 1,000 shares
authorized, issued and outstanding . . . . . . . . . . . . . 0 0
Series A Senior Cumulative Exchangeable
Redeemable Preferred Stock, $.01 par value,
$25 liquidation value, 0 and 400,000 shares authorized,
issued and outstanding as of June 30, 1997 and December
31, 1996, respectively . . . . . . . . . . . . . . . . . -- 4
Contributed capital . . . . . . . . . . . . . . . . . . . . . 114,193 125,340
Carryover of predecessor basis . . . . . . . . . . . . . . . (67,762) (67,762)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (90,346) (92,773)
-------- --------
Total stockholder's equity (deficit) . . . . . . . . . . . . (43,915) (35,191)
-------- --------
Total liabilities and stockholder's equity (deficit) . . . $614,796 $531,020
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
1
<PAGE> 4
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
----------------------------------------------
1997 1996 1997 1996
----------------------------------------------
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . $189,398 $147,309 $365,551 $266,116
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . 146,465 114,493 284,378 207,968
Selling, general and administrative . . . . . 14,411 10,857 27,719 20,578
Depreciation and amortization . . . . . . . . 8,656 6,902 16,167 12,946
Inventory valuation adjustment . . . . . . . -- 6,500 -- 8,500
Expenses related to plant closings . . . . . -- -- 500 4,000
------- -------- -------- --------
Operating income . . . . . . . . . . . . . . . 19,866 8,557 36,787 12,124
Other income (expense):
Interest expense . . . . . . . . . . . . . . (13,369) (11,011) (25,380) (20,583)
Amortization of deferred financing costs . . (1,062) (1,091) (2,057) (1,814)
Other, net . . . . . . . . . . . . . . . . . -- 43 11 132
------- -------- -------- --------
Income (loss) before income taxes and
extraordinary item . . . . . . . . . . . . . 5,435 (3,502) 9,361 (10,141)
Income tax provision . . . . . . . . . . . . . 2,313 320 3,943 575
------- -------- -------- --------
Income (loss) before extraordinary item . . . . 3,122 (3,822) 5,418 (10,716)
Extraordinary item - loss related to early
extinguishment of debt, net of taxes of
$1,995 . . . . . . . . . . . . . . . . . . (2,991) -- (2,991) --
------- -------- -------- --------
Net income (loss) . . . . . . . . . . . . . . . $ 131 $ (3,822) $ 2,427 $(10,716)
------- -------- -------- --------
</TABLE>
See accompanying notes to the consolidated financial statements
2
<PAGE> 5
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
------------- ------------------
1997 1996
------------- ------------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ 2,427 $ (10,716)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . 16,167 12,946
Amortization of deferred financing costs . . . . . . . . . 2,057 1,814
Extraordinary loss on early extinguishment of debt . . . . 4,986 --
Inventory valuation adjustment . . . . . . . . . . . . . . -- 8,500
Change in assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . (13,654) (11,380)
Inventories . . . . . . . . . . . . . . . . . . . . . . . 20,482 5,541
Prepaid expenses and other . . . . . . . . . . . . . . . (4,220) (2,751)
Accounts payable . . . . . . . . . . . . . . . . . . . . (17,522) (8,546)
Accrued and other liabilities . . . . . . . . . . . . . . (2,284) 3,111
Accrued interest . . . . . . . . . . . . . . . . . . . . (1,932) 1,161
Income taxes payable/refundable . . . . . . . . . . . . . -- 4,001
Other long-term liabilities . . . . . . . . . . . . . . . 1,824 (203)
--------- -----------
Net cash provided by operating activities . . . . . . . . . . . 8,331 3,478
--------- -----------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash . . . . . . . . . . . . . . . . . . (58,996) (160,259)
Capital expenditures. . . . . . . . . . . . . . . . . . . . . (7,679) (5,486)
--------- -----------
Net cash from investing activities . . . . . . . . . . . . . . (66,675) (165,745)
--------- -----------
Cash flows provided by (used in) financing activities:
Equity proceeds . . . . . . . . . . . . . . . . . . . . . . . -- 45,039
Proceeds from issuance of long-term obligations . . . . . . . 228,125 128,200
Borrowing (repayment) of long-term obligations . . . . . . . (162,992) (336)
Cash dividends paid on preferred stock . . . . . . . . . . . (1,378) --
Financing fees and other . . . . . . . . . . . . . . . . . . (5,411) (7,800)
--------- -----------
Net cash from financing activities . . . . . . . . . . . . . . 58,344 165,103
--------- -----------
Net change in cash . . . . . . . . . . . . . . . . . . . . . . -- 2,836
Cash at beginning of the period . . . . . . . . . . . . . . . . -- --
--------- -----------
Cash at end of the period . . . . . . . . . . . . . . . . . . . $ -- $ 2,836
========= ===========
</TABLE>
See accompanying notes to the consolidated financial statements
3
<PAGE> 6
INTERNATIONAL WIRE GROUP, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
1. THE COMPANY
International Wire Group, Inc. ("Group" or the "Company"), a Delaware
corporation, was formed to participate in the transactions
contemplated by the IW Acquisition (as described below). On June 12,
1995, Wirekraft Holdings Corp. ("Wirekraft"), Omega Wire Corp.
("Omega"), International Wire Holding Company ("Holding", the parent
company of Group), Group, Wirekraft Acquisition Company and certain
shareholders of Wirekraft and Omega entered into a series of
acquisitions and mergers (the "IW Acquisition") pursuant to which
Group acquired all of the common equity securities (and all securities
convertible into such securities) of Wirekraft and all of the common
equity securities of Omega. On March 5, 1996, Wire Technologies, Inc.
("Wire Technologies"), a wholly-owned subsidiary of the Company,
acquired the businesses of Hoosier Wire, Inc., Dekko Automotive Wire,
Inc., Albion Wire, Inc. and Silicones, Inc., a group of affiliated
companies operating together under the tradename Dekko Wire Technology
Group (the "DWT Acquisition"). On February 12, 1997, the Company
acquired all of the issued and outstanding common stock of Camden Wire
Co., Inc. ("Camden Wire") a wholly-owned subsidiary of Oneida LTD.
(the "Camden Acquisition"). See Note 3.
The Company through its two segments, the wire segment and the harness
segment, is engaged in the design, manufacture and marketing of
non-insulated and insulated copper wire and wire harnesses. The
Company's products are used by a wide variety of customers primarily
in the automotive, appliance, computer and data communications and
industrial equipment industries.
2. BASIS OF PRESENTATION
Unaudited Interim Consolidated Financial Statements
The unaudited interim consolidated financial statements reflect all
adjustments consisting only of normal recurring adjustments which are,
in the opinion of management, necessary for a fair presentation of
financial position and results of operations. The results for the six
months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for a full fiscal year.
Statement of Cash Flows
Interest and taxes paid for the six months ended June 30, 1997 were
$27,312 and $1,721, respectively.
Recently Issued Accounting Standards
Statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income, is effective for years beginning after December
15, 1997. This statement requires that an enterprise classify items
of other comprehensive income by their nature in the financial
statements and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in
capital in the equity section of the statement of position.
4
<PAGE> 7
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information, is effective for
years beginning after December 15, 1997. This statement requires that
a public business report financial and descriptive information about
its reportable business segments.
The Company believes that the future adoption of these statements will
not have a significant impact on the results of operations of
financial position but will have disclosure requirement.
3. CAMDEN ACQUISITION
On February 12,1997, the Company completed the Camden Acquisition. The
total consideration of $65,000 paid in connection with the Camden
Acquisition, including fees and expenses, consisted of (i) cash and
(ii) the assumption of debt related to Industrial Revenue Bonds. The
cash portion of the consideration paid and the transaction fees and
expenses incurred in connection with the Camden Acquisition were
funded with $65,000 of senior debt under the Amended and Restated
Credit Agreement.
The Camden Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been preliminarily
allocated to the consolidated assets and liabilities based upon their
estimated respective fair values. The purchase price allocations are
still in process. It is not expected that the final allocation of the
purchase cost will result in a materially different allocation than is
presented herein. The total acquisition cost is preliminarily
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . $ 48,033
Property, plant & equipment . . . . . . . . . . . . 42,041
Goodwill . . . . . . . . . . . . . . . . . . . . . 3,802
Other, non-current . . . . . . . . . . . . . . . . 1,696
Fees and costs . . . . . . . . . . . . . . . . . . 3,250
Current liabilities . . . . . . . . . . . . . . . . (28,062)
Other liabilities . . . . . . . . . . . . . . . . . (5,760)
--------
$ 65,000
========
</TABLE>
Unaudited pro forma results of operations of the Company for the six
months ended June 30, 1997 and June 30, 1996 are included below. Such
pro forma presentation has been prepared assuming that the Camden
Acquisition and related financing had occurred as of January 1, 1997
and January 1, 1996, respectively, and that the DWT Acquisition and
related financing had occurred as of January 1, 1996.
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1997 1996
------------------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . $384,542 $363,134
Income (loss) before extraordinary
item. . . . . . . . . . . . . . . . . $ 4,327 $ (6,551)
Net income (loss) . . . . . . . . . . . $ 1,366 $ (6,551)
</TABLE>
4. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out ("LIFO") method.
5
<PAGE> 8
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The composition of inventories at June 30, 1997 is as follows:
<TABLE>
<S> <C>
Raw materials . . . . . . . . . . . . . . . $ 26,033
Work-in-process . . . . . . . . . . . . . . 18,305
Finished goods . . . . . . . . . . . . . . 20,728
-------------
Total . . . . . . . . . . . . . . . . . $ 65,066
=============
</TABLE>
5. LONG-TERM OBLIGATIONS
The composition of long-term obligations at June 30,1997 is as
follows:
<TABLE>
<S> <C>
Credit Agreement:
Revolving credit facility . . . . . . . . . $ --
Term facility . . . . . . . . . . . . . . . 185,500
Senior Subordinated Notes . . . . . . . . . . 150,000
Series B Senior Subordinated Notes . . . . . 150,000
Series B Senior Subordinated Notes Premium . 13,036
Exchange notes . . . . . . . . . . . . . . . 5,000
Industrial revenue bonds . . . . . . . . . . 15,500
Other . . . . . . . . . . . . . . . . . . . . 6,723
-------------
525,759
Less, current maturities . . . . . . . . . . 4,463
-------------
$ 521,296
=============
</TABLE>
The schedule of principal payments for long-term obligations at June
30, 1997 is as follows:
<TABLE>
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . $ 2,251
1998 . . . . . . . . . . . . . . . . . . . 4,424
1999 . . . . . . . . . . . . . . . . . . . 5,674
2000 . . . . . . . . . . . . . . . . . . . 6,924
2001 . . . . . . . . . . . . . . . . . . . 8,174
Thereafter . . . . . . . . . . . . . . . . 485,276
-------------
Total . . . . . . . . . . . . . . . . . $ 512,723
=============
</TABLE>
During the second quarter of 1997 the Company issued $150,000 of
11.75% Series B Senior Subordinated Notes due June 2005, priced at
108.75% The proceeds of this issuance were used to pay down the term
facility of the Credit Agreement.
Credit Agreement
In connection with the Series B Senior Subordinated Note issuance, the
Company amended the Amended and Restated Credit Agreement dated June
17, 1997, with certain financial institutions. This amendment to the
Amended and Restated Credit Agreement provides senior secured
financing of up to $260,500, consisting of a $25,000 Term A loan and a
$160,500
6
<PAGE> 9
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
Term B loan (collectively called the "Term Facility") and a $75,000
revolving loan and letter of credit facility (the "Revolver").
Mandatory principal payments of the Term Facility are due in quarterly
installments. The final installment on the Term A loan is due
September 30, 2002 at which time the Revolver is also due. The final
installment on the Term B Loan is due September 30, 2003.
Borrowings under the Term A Loan and Revolver bear interest, at the
option of Group, at a rate per annum equal to (a) the Alternate Base
Rate (as defined in the Amended Credit Agreement) plus .5 % or (b) the
Eurodollar Rate (as defined in the Amended Credit Agreement) plus
1.5%. Borrowings under the Term B Loan bear interest, at the option of
Group, at a rate per annum equal to (a) the Alternate Base Rate (as
defined in the Amended Credit Agreement) plus 1.0% or (b) the
Eurodollar Rate (as defined in the Amended Credit Agreement) plus
2.0%. The Alternate Base Rate and Eurodollar Rate margins are
established quarterly based on a formula as defined in the Amended and
Restated Credit Agreement. Interest payment dates vary depending on
the interest rate option to which the Term Facility and the Revolver
are tied, but generally interest is payable quarterly. The Amended and
Restated Credit Agreement contains several financial covenants which,
among other things, require Group to maintain certain financial ratios
and restrict Group's ability to incur indebtedness, make capital
expenditures and pay dividends.
Senior Subordinated Notes
The Senior Subordinated Notes issued in connection with the
Acquisitions and the Series B Senior Subordinated Notes issued in
connection with refinancing of the Term Facility (collectively called
the "Senior Notes") were issued under similar indentures (the
"Indentures") dated June 12, 1995 and June 17, 1997 respectively. The
Senior Notes represent unsecured general obligations of Group and are
subordinated to all Senior Debt (as defined in the Indenture) of
Group.
The Senior Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by
each subsidiary of the Company (the "Guarantor Subsidiaries") other
than Electro Componentes de Mexico, S.A. de C.V. and Wirekraft
Industries de Mexico, S.A. de C.V. (the "Non-Guarantor Subsidiaries").
Each of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is
wholly owned by the Company.
Exchange Notes
In February 1997, the Company exchanged $10,000 of Series A Senior
Cumulative Exchangeable Redeemable Preferred Stock (the "Preferred
Stock") for 14.0% Senior Subordinated Notes due June 1, 2005 (the
"Exchange Notes") and paid all dividends in arrears related to the
Preferred Stock. The Exchange Notes were issued under an indenture
dated February 12, 1997 (the "Exchange Indenture"). The Exchange
Notes represent unsecured general obligations of Group, are
subordinated to all Senior Indebtedness (as defined in the Exchange
Indenture) of Group and rank on equal terms with the Senior Notes.
In June 1997, the Company offered to repurchase its Exchange Notes for
a cash price of 113% of the principal amount, plus accrued interest.
As a result of this offer, the Company acquired $5,000 principal
amount of these notes.
The Exchange Notes are fully and unconditionally (as well as jointly
and severally) guaranteed on an unsecured, senior subordinated basis
by each Guarantor Subsidiary other than the NonGuarantor Subsidiaries.
Each of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is
wholly owned by the Company.
7
<PAGE> 10
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
The Exchange Notes mature on June 1, 2005. Interest on the Exchange
Notes is payable semiannually on each June 1 and December 1. The
Exchange Notes bear interest at the rate of 14.0% per annum. The
Exchange Notes may not be redeemed prior to June 1, 2000, except mi
the event of a Change of Control (as defined) and at such applicable
premium (as defined). The Exchange Notes are redeemable, at the
Company's option, at the redemption prices of 105.875% at June 1,
2000, and at decreasing prices to 100% at June 1, 2003, and
thereafter, with accrued interest.
Industrial Revenue Bonds
In connection with the Camden Acquisition the Company assumed debt
related to two Industrial Revenue Bonds (the "IRB's") totaling
$15,500. The IRB's are due in August, 2005 and March, 2016 in the
amounts of $9,000 and $6,500 respectively. The IRB's bear interest at
a rate per annum which is tied to the Tax Exempt Money Market Index.
Rates change weekly and interest is paid monthly.
6. PLANT CLOSING EXPENSE
In March, 1997, the Company recorded a pretax charge to operations of
$500 to provide for plant closing costs. The plant closing costs
relate to consolidating a wire segment facility and include provisions
for certain shut-down and severance related costs. A summary of
activity related to plant closing is as follows:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, June 30,
-----------------------------
1997 1996
-----------------------------
<S> <C> <C>
Balance, beginning of period . . . . . . . . . . . $ 2,462 $ 700
Charges to operations:
Facility shut-down costs . . . . . . . . . . . 375 2,500
Lease commitments . . . . . . . . . . . . . . . -- 570
Key personnel and severance costs . . . . . . . 125 930
-------- -------
500 4,000
Costs incurred:
Facility shut-down costs . . . . . . . . . . . (1,128) (202)
Lease commitments . . . . . . . . . . . . . . . (114) --
Key personnel and severance costs . . . . . . . (202) --
-------- -------
(1,444) (202)
-------- -------
Balance, end of period . . . . . . . . . . . . . $ 1,518 $ 4,498
======== =======
</TABLE>
7. INCOME TAXES
Wirekraft's U.S. income tax returns for the years 1993-1995 are being
reviewed by the Internal Revenue Service. The proposed settlement is
being reviewed by the Joint Tax Committee. The Company believes that
final settlement will not have a material adverse effect and that
adequate amounts of taxes and related interest, if any, have been
provided.
8
<PAGE> 11
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
8. EXTRAORDINARY ITEMS-LOSS RELATED TO EARLY RETIREMENT OF DEBT
In June 1997, the Company refinanced debt under the Credit Agreement.
Accordingly, the Company recorded an extraordinary loss of $2,601, net
of income tax related to the write-off of deferred financing fees. In
addition, the Company repurchased $5,000 of the Exchange Notes. An
extraordinary loss of $390, net of income tax, was recognized related
to a prepayment premium.
9. GUARANTOR SUBSIDIARIES
The Senior Notes and Exchange Notes are fully and unconditionally (as
well as jointly and severally) guaranteed on an unsecured, senior
subordinated basis by each subsidiary of the Company (the "Guarantor
Subsidiaries") other than Electro Componentes de Mexico, S.A. de C.V.
and Wirekraft Industries de Mexico, S.A. de C.V. (the "Non-Guarantor
Subsidiaries"). Each of the Guarantor Subsidiaries and Non-Guarantor
Subsidiaries is wholly owned by the Company.
The following condensed, consolidating financial statements of the
Company include the accounts of the Company, the combined accounts of
the Guarantor Subsidiaries and the combined accounts of the
Non-Guarantor Subsidiaries. Given the size of the Non-Guarantor
Subsidiaries relative to the Company on a consolidated basis, separate
financial statements of the respective Guarantor Subsidiaries are not
presented because management has determined that such information is
not material in assessing the Guarantor Subsidiaries.
9
<PAGE> 12
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
-------- --------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
As of June 30, 1997
ASSETS
Cash............................................. $ -- $ (79) $ 79 $ -- $ --
Accounts receivable.............................. -- 100,191 1,434 (1,318) 100,307
Inventory........................................ -- 65,066 -- -- 65,066
Other assets..................................... 4,741 11,119 -- -- 15,860
-------- -------- ------- --------- --------
Total current assets..................... 4,741 176,297 1,513 (1,318) 181,233
Property, plant and equipment, net................. -- 147,234 9,279 -- 156,513
Intangible assets, net............................. 24,890 244,931 -- -- 269,821
Investment in subsidiaries......................... 567,712 -- -- (567,712) --
Other assets....................................... -- 6,370 859 -- 7,229
-------- -------- ------- --------- --------
Total assets............................. $597,343 $574,832 $11,651 $(569,030) $614,796
======== ======== ======= ========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities.............................. $ 6,216 $ 95,290 $ 2,762 $ (1,318) $102,950
Long-term obligations, less current
maturities.................................... 500,036 21,260 -- -- 521,296
Other long-term liabilities...................... 14,719 19,746 -- -- 34,465
Intercompany (receivable) payable................ 52,525 (58,110) 5,585 -- --
-------- -------- ------- --------- --------
Total liabilities........................ 573,496 78,186 8,347 (1,318) 658,711
Stockholder's equity (deficit)
Common stock................................. -- -- -- -- --
Contributed capital........................... 114,193 572,012 18 (572,030) 114,193
Carryover of predecessor basis................ -- (67,762) -- -- (67,762)
Accumulated deficit........................... (90,346) (7,604) 3,286 4,318 (90,346)
-------- -------- ------- --------- --------
Total stockholder's equity (deficit)..... 23,847 496,646 3,304 (567,712) (43,915)
-------- -------- ------- --------- --------
Total liabilities and
stockholder's equity (deficit) ........ $597,343 $574,832 $11,651 $(569,030) $614,796
======== ======== ======= ========= ========
</TABLE>
10
<PAGE> 13
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
------- --------- ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
Statement of Operations
For the three months ended June 30, 1997
Net sales . . . . . . . . . . . . . . . . . . $ -- $ 189,398 $ 9,457 $ (9,457) $ 189,398
Operating expenses
Cost of goods sold . . . . . . . . . . . . -- 151,961 3,961 (9,457) 146,465
Selling, general and administrative . . . -- 11,083 3,328 -- 14,411
Depreciation and amortization . . . . . . -- 8,041 615 -- 8,656
-------- --------- --------- ---------- ---------
Operating income (loss) . . . . . . . . . . . -- 18,313 1,553 -- 19,866
Other income (expense)
Interest expense . . . . . . . . . . . . (13,369) -- -- -- (13,369)
Amortization of deferred financing costs . (1,062) -- -- -- (1,062)
Equity in net income (loss) of
subsidiaries . . . . . . . . . . . . . 17,553 -- -- (17,553) --
Other, net . . . . . . . . . . . . . . . . -- (4) 4 -- --
-------- --------- --------- ---------- ---------
Income (loss) before income tax
provision . . . . . . . . . . . . . . . 3,122 18,309 1,557 (17,553) 5,435
Income tax provision . . . . . . . . . . . . -- 2,179 134 -- 2,313
-------- --------- --------- ---------- ---------
Income (loss) before extraordinary item . . . 3,122 16,130 1,423 (17,553) 3,122
Extraordinary item, net of income taxes . . . (2,991) -- -- -- (2,991)
-------- --------- --------- ---------- ---------
Net income (loss) . . . . . . . . . . . . . . $ 131 $ 16,130 $ 1,423 $ (17,553) $ 131
======== ========= ========= ========== =========
</TABLE>
11
<PAGE> 14
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
--------- --------- ------------- ------------ --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
For the six months ended June
30, 1997
Net sales....................... $ -- $365,551 $18,023 $(18,023) $365,551
Operating expenses
Cost of goods sold............ -- 294,794 7,607 (18,023) 284,378
Selling, general and
administrative............. -- 21,369 6,350 -- 27,719
Depreciation and
amortization............... -- 15,118 1,049 -- 16,167
Expenses related to plant
closings................... -- 500 -- -- 500
--------- -------- ------- -------- --------
Operating income (loss)......... -- 33,770 3,017 -- 36,787
Other income (expense)
Interest expense.............. (25,380) -- -- -- (25,380)
Amortization of deferred
financing costs............ (2,057) -- -- -- (2,057)
Equity in net income (loss) of
subsidiaries............... 32,855 -- -- (32,855) --
Other......................... -- 10 1 -- 11
--------- -------- ------- -------- --------
Income (loss) before income tax
provision..................... 5,418 33,780 3,018 (32,855) 9,361
Income tax provision............ -- 3,678 265 -- 3,943
--------- -------- ------- -------- --------
Income (loss) before
extraordinary item............ 5,418 30,102 2,753 (32,855) 5,418
Extraordinary item, net of
income taxes.................. (2,991) -- -- -- (2,991)
--------- -------- ------- -------- --------
Net income (loss)............... $ 2,427 $ 30,102 $ 2,753 $(32,855) $ 2,427
========= ======== ======= ======== ========
</TABLE>
12
<PAGE> 15
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
--------- --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
For the six months ended June 30,
1997
Net cash from operating activities.... $ (42,084) $ 48,923 $ 1,492 $ -- $ 8,331
--------- -------- ------- ------- ---------
Cash flows provided by (used in)
investing activities:
Acquisition, net of cash............ -- (58,996) -- -- (58,996)
Capital expenditures................ -- (6,128) (1,551) -- (7,679)
--------- -------- ------- ------- ---------
Net cash from investing activities.... -- (65,124) (1,551) -- (66,675)
--------- -------- ------- ------- ---------
Cash flows provided by (used in)
financing activities:
Equity proceeds..................... -- -- -- -- --
Proceeds from issuance of long-term
obligations...................... 211,614 16,511 -- -- 228,125
Repayment of long-term
obligations...................... (162,741) (251) -- -- (162,992)
Cash dividends paid on preferred
stock............................ (1,378) -- -- -- (1,378)
Financing fees and other............ (5,411) -- -- -- (5,411)
--------- -------- ------- ------- ---------
Net cash from financing activities.... 42,084 16,260 -- -- 58,344
--------- -------- ------- ------- ---------
Net change in cash.................... $ -- $ 59 $ (59) $ -- $ --
========= ======== ======= ======= =========
</TABLE>
13
<PAGE> 16
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
--------- --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
As of December 31, 1996
ASSETS
Cash........................... $ -- $ (138) $ 138 $ -- $ --
Accounts receivable............ -- 70,010 1,902 (731) 71,181
Inventory...................... -- 59,648 714 -- 60,362
Other assets................... 5,375 4,314 112 -- 9,801
--------- --------- ------- --------- ---------
Total current assets... 5,375 133,834 2,866 (731) 141,344
Property plant and equipment,
net......................... -- 109,774 8,777 -- 118,551
Intangible assets, net......... 19,722 246,155 -- -- 265,877
Investment in subsidiaries..... 534,857 -- -- (534,857) --
Other assets................... -- 4,368 880 -- 5,248
--------- --------- ------- --------- ---------
Total assets........... $ 559,954 $ 494,131 $12,523 $(535,588) $ 531,020
========= ========= ======= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities............ $ 24,620 $ 85,866 $ 2,856 $ (731) $ 112,611
Long term obligations, less
current maturities.......... 420,422 6,297 -- -- 426,719
Other long-term liabilities.... 6,081 20,790 10 -- 26,881
Intercompany (receivable)
payable..................... 76,260 (85,366) 9,106 -- --
--------- --------- ------- --------- ---------
Total liabilities...... 527,383 27,587 11,972 (731) 566,211
Stockholders' equity (deficit)
Common stock................ -- -- -- -- --
Preferred stock............. 4 -- -- -- 4
Contributed capital......... 125,340 572,012 18 (572,030) 125,340
Predecessor carryover....... -- (67,762) -- -- (67,762)
Retained earnings........... (92,773) (37,706) 533 37,173 (92,773)
--------- --------- ------- --------- ---------
Total stockholders'
equity (deficit)..... 32,571 466,544 551 (534,857) (35,191)
--------- --------- ------- --------- ---------
Total liabilities and
stockholders' equity
(deficit)............ $ 559,954 $ 494,131 $12,523 $(535,588) $ 531,020
========= ========= ======= ========= =========
</TABLE>
14
<PAGE> 17
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
------- --------- ------------- ------------ -----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
For the three months ended June 30, 1996
Net sales . . . . . . . . . . . . . . . . . . $ -- $147,309 $8,453 $(8,453) $ 147,309
Operating expenses
Cost of goods sold . . . . . . . . . . . . -- 118,176 4,770 (8,453) 114,493
Selling, general and administrative. . . . -- 8,258 2,599 -- 10,857
Depreciation and amortization . . . . . . -- 6,465 437 -- 6,902
Inventory valuation adjustment . . . . . . -- 4,500 -- -- 4,500
-------- -------- ------ ------- ---------
Operating income (loss) . . . . . . . . . . . -- 7,910 647 -- 8,557
Other income (expense)
Interest expense . . . . . . . . . . . . . (11,011) -- -- -- (11,011)
Amortization of deferred financing
costs . . . . . . . . . . . . . . . . . (1,091) -- -- -- (1,091)
Equity in net income (loss) of
subsidiaries . . . . . . . . . . . . . . 8,280 -- -- (8,280) --
Other. . . . . . . . . . . . . . . . . . . -- 43 -- -- 43
-------- -------- ------ ------- ---------
Income (loss) before income tax
provision . . . . . . . . . . . . . . . (3,822) 7,953 647 (8,280) (3,502)
Income tax provision . . . . . . . . . . . . -- 309 11 -- 320
-------- -------- ------ ------- ---------
Net income (loss) . . . . . . . . . . . . . . $ (3,822) $ 7,644 $ 636 $(8,280) $ (3,822)
======== ======== ====== ======= =========
</TABLE>
15
<PAGE> 18
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
-------- --------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
For the six months ended June 30,
1996
Net sales........................... $ -- $266,116 $16,096 $(16,096) $ 266,116
Operating expenses
Cost of goods sold................ -- 215,573 8,491 (16,096) 207,968
Selling, general and
administrative................. -- 15,491 5,087 -- 20,578
Depreciation and amortization..... -- 12,200 746 -- 12,946
Inventory valuation adjustment.... -- 8,500 -- -- 8,500
Expenses related to plant
closings....................... -- 4,000 -- -- 4,000
-------- -------- ------- -------- ---------
Operating income (loss)............. -- 10,352 1,772 -- 12,124
Other income (expense)
Interest expense.................. (20,583) -- -- -- (20,583)
Amortization of deferred financing
costs.......................... (1,814) -- -- -- (1,814)
Equity in net income (loss) of
subsidiaries................... 11,681 -- -- (11,681) --
Other............................. -- 132 -- -- 132
-------- -------- ------- -------- ---------
Income (loss) before income tax
provision......................... (10,716) 10,484 1,772 (11,681) (10,141)
Income tax provision................ -- 409 166 -- 575
-------- -------- ------- -------- ---------
Net income (loss)................... $(10,716) $ 10,075 $ 1,606 $(11,681) $ (10,716)
======== ======== ======= ======== =========
</TABLE>
16
<PAGE> 19
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
TOTAL TOTAL
COMPANY GUARANTOR NON-GUARANTOR ELIMINATIONS TOTAL
--------- --------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
For the six months ended June 30,
1996
Net cash from operating activities.... $ (5,069) $ 6,627 $ 1,920 $ -- $ 3,478
--------- ------- ------- ---- ---------
Cash flows provided by (used in)
investing activities:
Acquisition, net of cash............ (160,259) -- -- -- (160,259)
--------- ------- ------- ---- ---------
Capital expenditures................ -- (3,679) (1,807) -- (5,486)
--------- ------- ------- ---- ---------
Net cash used in investing
activities.......................... (160,259) (3,679) (1,807) -- (165,745)
--------- ------- ------- ---- ---------
Cash flows provided by (used in)
financing activities:
Equity proceeds..................... 45,039 -- -- -- 45,039
Proceeds from issuance of long-term
obligations...................... 128,200 -- -- -- 128,200
Repayment of long-term
obligations...................... (111) (225) -- -- (336)
Cash dividends paid on preferred
stock............................ -- -- -- -- --
Financing fees and other............ (7,800) -- -- -- (7,800)
--------- ------- ------- ---- ---------
Net cash from financing activities.... 165,328 (225) -- -- 165,103
--------- ------- ------- ---- ---------
Net change in cash.................... $ -- $ 2,723 $ 113 $ -- $ 2,836
========= ======= ======= ==== =========
</TABLE>
17
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTERNATIONAL WIRE GROUP, INC.
Dated: November 7, 1997
By: /s/ DAVID M. SINDELAR
------------------------------------
Name: David M. Sindelar
Title: Senior Vice President
18
