<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
-------------------------------------------------
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 October 31, 1999
-------------------------- ----------------
<S> <C>
Common Stock 1,000
</TABLE>
<PAGE> 2
INTERNATIONAL WIRE GROUP, INC.
<TABLE>
<CAPTION>
INDEX
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
International Wire Group, Inc.
Condensed Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998..................
Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended
September 30, 1999 and 1998...................................................................... 4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1999 and
1998............................................................................................. 5
Notes to Condensed Consolidated Financial Statements.................................................. 6
Management's Discussion and Analysis of Financial Condition and Results of Operations.................
16
Quantitative and Qualitative Disclosure About Market Risk............................................. 20
PART II - OTHER INFORMATION................................................................................. 22
SIGNATURES.................................................................................................. 23
</TABLE>
2
<PAGE> 3
INTERNATIONAL WIRE GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1999 1998
------------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................ $ 7,705 $ --
Accounts receivable, less allowance of $2,305
and $2,633, respectively ............................... 97,448 81,369
Inventories .............................................. 72,523 82,968
Other current assets ..................................... 26,574 28,617
--------- ---------
Total current assets ................................... 204,250 192,954
Property, plant and equipment, net ......................... 178,643 178,647
Intangibles and other assets ............................... 260,220 267,513
--------- ---------
Total assets ........................................... $ 643,113 $ 639,114
========= =========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations .............. $ 7,195 $ 6,222
Accounts payable ......................................... 41,248 34,461
Accrued and other liabilities ............................ 52,508 60,922
Accrued interest ......................................... 13,603 3,674
--------- ---------
Total current liabilities .............................. 114,554 105,279
Long-term obligations, less current maturities ............. 505,670 520,983
Other long-term liabilities ................................ 44,246 44,412
--------- ---------
Total liabilities ...................................... 664,470 670,674
Stockholder's equity (deficit):
Common stock, $.01 par value, 1,000 shares
authorized, issued and outstanding ..................... 0 0
Contributed capital ...................................... 114,328 114,172
Carryover of predecessor basis ........................... (67,762) (67,762)
Accumulated deficit ...................................... (67,923) (77,970)
--------- ---------
Total stockholder's equity (deficit) ................... (21,357) (31,560)
--------- ---------
Total liabilities and stockholder's equity (deficit).... $ 643,113 $ 639,114
========= =========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE> 4
INTERNATIONAL WIRE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales .............................. $ 156,371 $ 156,177 $ 485,606 $ 493,917
Operating expenses:
Cost of goods sold ................... 111,048 111,817 343,816 356,986
Selling, general and
administrative expenses ............. 15,171 14,987 47,976 45,915
Depreciation and
amortization ........................ 11,386 10,583 32,082 29,764
--------- --------- --------- ---------
Operating income ....................... 18,766 18,790 61,732 61,252
Other income (expense):
Interest expense ..................... (12,503) (12,553) (37,500) (38,137)
Amortization of deferred
financing costs ..................... (968) (951) (2,910) (2,855)
Other, net ........................... -- 35 -- 52
--------- --------- --------- ---------
Income before income tax
provision and cumulative effect
of change in accounting principle .... 5,295 5,321 21,322 20,312
Income tax provision ................... 2,224 2,274 8,956 8,405
--------- --------- --------- ---------
Income before cumulative effect
of change in accounting
principle ............................ 3,071 3,047 12,366 11,907
Cumulative effect of change in
accounting for start-up costs,
net of tax benefit of $1,679 ......... -- -- (2,319) --
--------- --------- --------- ---------
Net income ............................. $ 3,071 $ 3,047 $ 10,047 $ 11,907
========= ========= ========= =========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE> 5
INTERNATIONAL WIRE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income .................................................... $ 10,047 $ 11,907
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization ............................... 34,992 32,619
Cumulative effect of change in accounting
for start-up costs ......................................... 3,998 --
Change in assets and liabilities, net of
acquisitions:
Accounts receivable ....................................... (16,079) (299)
Inventories ............................................... 10,445 10,970
Other assets .............................................. (6,858) 4,156
Accounts payable .......................................... 6,787 (8,894)
Accrued and other liabilities ............................. (8,414) (799)
Accrued interest .......................................... 9,929 9,141
Other long-term liabilities ............................... (166) (3,001)
-------- --------
Net cash provided by operating
activities .................................................... 44,681 55,800
-------- --------
Cash flows used in investing activities:
Acquisitions, net of cash ..................................... -- (7,738)
Capital expenditures .......................................... (22,450) (20,913)
-------- --------
Net cash used in investing activities ........................... (22,450) (28,651)
-------- --------
Cash flows provided by (used in) financing
activities:
Equity proceeds ............................................... 42 --
Repurchase of stock of Holding ................................ (228) --
Repayment of long-term obligations ............................ (5,340) (4,408)
Repayment on revolver (net) ................................... (9,000) (825)
Financing fees and other ...................................... -- (582)
-------- --------
Net cash used in financing activities ........................... (14,526) (5,815)
-------- --------
Net change in cash and cash equivalents ......................... 7,705 21,334
Cash at beginning of the period ................................. -- --
-------- --------
Cash at end of the period ....................................... $ 7,705 $ 21,334
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
5
<PAGE> 6
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
1. Basis of Presentation
Unaudited Interim Condensed Consolidated Financial Statements
The unaudited interim condensed 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 the financial position and results of operations
of the Company. The results for the three and nine months ended
September 30, 1999 are not necessarily indicative of the results that
may be expected for a full fiscal year. These financial statements
should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 1998.
Statement of Cash Flows
Interest paid for the nine months ended September 30, 1999 and 1998,
was approximately $27,600 and $29,000, respectively. Total income taxes
paid for the nine months ended September 30, 1999 and 1998, was
approximately $700 and $2,900, respectively.
Change in Accounting Principle
In April 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities," which requires costs of start-up activities and
organization costs to be expensed as incurred. SOP 98-5 is effective
for financial statements for fiscal years beginning after December 15,
1998. The Company adopted SOP 98-5 effective January 1, 1999. The
Company had $3,998 in net capitalized start-up costs remaining at
December 31, 1998, which the Company expensed in accordance with SOP
98-5 at January 1, 1999.
Recently Issued Accounting Standards
In June 1998, the FASB adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards requiring that every derivative instrument (including certain
derivative instruments embedded in other contracts) be recorded in the
balance sheet as either an asset or liability measured at its fair
value and that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are
met. Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in the
income statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive
hedge accounting. SFAS No. 133 is effective for fiscal years beginning
after June 15, 2000. The Company believes that the future adoption of
this statement will not have a significant impact on the results of
operations or financial position of the Company.
6
<PAGE> 7
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
2. Inventories
The composition of inventories at September 30, 1999 is as follows:
<TABLE>
<S> <C>
Raw materials............................................. $ 19,940
Work-in-process .......................................... 13,735
Finished goods ........................................... 38,848
----------
Total .................................................... $ 72,523
==========
</TABLE>
The carrying value of inventories on a last-in, first-out basis, at
September 30, 1999, approximates its current cost.
3. Long-Term Obligations
The composition of long-term obligations at September 30, 1999 is as
follows:
<TABLE>
<S> <C>
Amended and Restated Credit Agreement:
Revolving credit facility................................. $ --
Term facility ............................................ 176,688
Senior Subordinated Notes................................... 150,000
Series B Senior Subordinated Notes.......................... 150,000
Series B Senior Subordinated Notes premium.................. 10,320
Industrial revenue bonds.................................... 15,500
Other ...................................................... 10,357
----------
512,865
Less, current maturities.................................... 7,195
----------
$ 505,670
==========
</TABLE>
The Company's Amended and Restated Credit Agreement relating to its
senior credit facility contains several financial covenants which,
among other things, require the Company to maintain certain financial
ratios and restrict the Company's ability to incur indebtedness, make
capital expenditures and pay dividends.
The Company's 11 3/4% Senior Subordinated Notes, 11 3/4% Series B
Senior Subordinated Notes, and 14% Senior Subordinated Notes
(collectively, the "Senior Notes") restrict, among other things, the
incurrence of additional indebtedness by the Company, the payment of
dividends and other distributions in respect of the Company's capital
stock, the imposition of restrictions on the payment of dividends and
other distributions by the Company's subsidiaries, the creation of
liens on the properties and the assets of the Company to secure certain
subordinated debt and certain mergers, sales of assets and transactions
with affiliates.
7
<PAGE> 8
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
4. Plant Closing Expense
A summary of activity related to plant closings is as follows:
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
-----------------------
1999 1998
------- -------
<S> <C> <C>
Balance, beginning of period ........... $ 1,079 $ 1,445
Charges to operations:
Facility shut-down costs ............. -- --
Lease commitments .................... -- --
Key personnel and severance costs .... -- --
------- -------
-- --
------- -------
Costs incurred:
Facility shut-down costs ............. (960) (57)
Lease commitments .................... -- (236)
Key personnel and severance costs .... -- (61)
------- -------
(960) (354)
------- -------
Balance, end of period ................. $ 119 $ 1,091
======= =======
</TABLE>
5. Income Taxes
The Internal Revenue Service ("IRS") has examined the U.S. income tax
return of Kirtland Indiana, Limited Partnership ("KILP"), a predecessor
of one of the Company's subsidiaries, for the tax period ended December
21, 1992. During the third quarter of 1999, the Company received from
the IRS a proposed adjustment to increase taxable income for the period
under review. The Company believes that final resolution of this matter
will not have a material adverse effect on the Company and that
adequate amounts of taxes have been provided.
6. Business Segment Information
The Company conducts its operations through two business segments, a
Wire Segment and a Wire Harness Segment. Segment data includes
intersegment revenues, as well as charges allocating corporate
administrative costs to each of its operating segments. The Company
evaluates the performance of its segments and allocates resources to
them based on operating income.
The table below presents information about reported segments for the
three and nine months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Wire
Wire Harness Consolidated
--------- --------- ------------
<S> <C> <C> <C>
THREE MONTHS ENDED SEPTEMBER 30,
1999
Sales ......................... $ 117,331 $ 46,300 $ 163,631
Intersegment sales ............ (7,260) -- (7,260)
--------- --------- ---------
Sales to customers ............ 110,071 46,300 156,371
Operating income .............. $ 14,453 $ 4,313 $ 18,766
1998
Sales ......................... $ 121,368 $ 41,984 $ 163,352
Intersegment sales ............ (7,175) -- (7,175)
--------- --------- ---------
Sales to customers ............ 114,193 41,984 156,177
Operating income .............. $ 12,915 $ 5,875 $ 18,790
</TABLE>
8
<PAGE> 9
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
<TABLE>
<CAPTION>
Wire
Wire Harness Consolidated
--------- --------- ------------
<S> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30,
1999
Sales .................................. $ 361,633 $ 148,440 $ 510,073
Intersegment sales ..................... (24,467) -- (24,467)
--------- --------- ---------
Sales to customers ..................... 337,166 148,440 485,606
Operating income ....................... $ 45,611 $ 16,121 $ 61,732
1998
Sales .................................. $ 383,507 $ 129,684 $ 513,191
Intersegment sales ..................... (19,274) -- (19,274)
--------- --------- ---------
Sales to customers ..................... 364,233 129,684 493,917
Operating income ....................... $ 43,958 $ 17,294 $ 61,252
</TABLE>
A reconciliation of total operating income for reportable segments to
consolidated income before income tax provision and cumulative effect
of change in accounting principle for the three and nine months ended
September 30, 1999 and 1998 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
Total operating income for
reportable segments ............. $ 18,766 $ 18,790
Other income (expense):
Interest expense ................ (12,503) (12,553)
Amortization of deferred
financing costs ............... (968) (951)
Other, net ...................... -- 35
-------- --------
Consolidated income before
income tax provision and
cumulative effect of change
in accounting principle ......... $ 5,295 $ 5,321
======== ========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------
1999 1998
-------- --------
<S> <C> <C>
Total operating income for
reportable segments ............. $ 61,732 $ 61,252
Other income (expense):
Interest expense ................ (37,500) (38,137)
Amortization of deferred
financing costs ............... (2,910) (2,855)
Other, net ...................... -- 52
-------- --------
Consolidated income before
income tax provision and
cumulative effect of change
in accounting principle ......... $ 21,322 $ 20,312
======== ========
</TABLE>
9
<PAGE> 10
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
7. Guarantor Subsidiaries
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., Wirekraft Industries
de Mexico, S.A. de C.V., IWG-Philippines, Inc., IWG International, Inc.
and Italtrecce-Societa Italiana Trecce & Affini S.r.l. ("Italtrecce")
(collectively, 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.
10
<PAGE> 11
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
--------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
AS OF SEPTEMBER 30, 1999
ASSETS
Cash and cash equivalents ............... $ -- $ 7,075 $ 630 $ -- $ 7,705
Accounts receivable ..................... -- 92,032 7,343 (1,927) 97,448
Inventories ............................. -- 71,681 842 -- 72,523
Other assets ............................ -- 25,037 1,537 -- 26,574
--------- --------- --------- --------- ---------
Total current assets ................. -- 195,825 10,352 (1,927) 204,250
Property, plant and equipment,
net ................................... -- 150,795 27,848 -- 178,643
Investment in subsidiaries .............. 648,419 -- -- (648,419) --
Intangibles and other assets ............ 17,355 234,359 8,506 -- 260,220
--------- --------- --------- --------- ---------
Total assets ......................... $ 665,774 $ 580,979 $ 46,706 $(650,346) $ 643,113
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDER'S
EQUITY (DEFICIT)
Current liabilities ..................... $ 19,417 $ 89,891 $ 7,173 $ (1,927) $ 114,554
Long-term obligations, less
current maturities .................... 486,194 19,194 282 -- 505,670
Other long-term liabilities ............. -- 44,246 -- -- 44,246
Intercompany (receivable) payable ....... 113,872 (137,190) 23,318 -- --
--------- --------- --------- --------- ---------
Total liabilities .................... 619,483 16,141 30,773 (1,927) 664,470
Stockholder's equity
(deficit):
Common stock ........................... 0 0 0 0 0
Contributed capital .................... 114,214 572,242 6,118 (578,246) 114,328
Carryover of predecessor basis ......... -- (67,762) -- -- (67,762)
Retained earnings
(accumulated deficit) .................. (67,923) 60,358 9,815 (70,173) (67,923)
--------- --------- --------- --------- ---------
Total stockholder's equity
(deficit) ........................ 46,291 564,838 15,933 (648,419) (21,357)
--------- --------- --------- --------- ---------
Total liabilities and
Stockholder's equity
(deficit) ........................ $ 665,774 $ 580,979 $ 46,706 $(650,346) $ 643,113
========= ========= ========= ========= =========
</TABLE>
11
<PAGE> 12
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
--------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET
AS OF DECEMBER 31, 1998
ASSETS
Cash and cash equivalents ............... $ -- $ -- $ -- $ -- $ --
Accounts receivable ..................... -- 79,444 2,969 (1,044) 81,369
Inventories ............................. -- 80,803 2,165 -- 82,968
Other assets ............................ -- 23,414 5,203 -- 28,617
--------- --------- --------- --------- ---------
Total current assets ................. -- 183,661 10,337 (1,044) 192,954
Property, plant and equipment,
net ................................... -- 153,587 25,060 -- 178,647
Investment in subsidiaries .............. 666,004 -- -- (666,004) --
Intangibles and other assets ............ 20,265 242,338 4,910 -- 267,513
--------- --------- --------- --------- ---------
Total assets ......................... $ 686,269 $ 579,586 $ 40,307 $(667,048) $ 639,114
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDER'S
EQUITY (DEFICIT)
Current liabilities ..................... $ 8,424 $ 90,215 $ 7,684 $ (1,044) $ 105,279
Long-term obligations, less
current maturities .................... 500,795 19,840 348 -- 520,983
Other long-term liabilities ............. -- 44,412 -- -- 44,412
Intercompany (receivable) payable ....... 140,848 (167,245) 26,397 -- --
--------- --------- --------- --------- ---------
Total liabilities .................... 650,067 (12,778) 34,429 (1,044) 670,674
Stockholder's equity (deficit)
Common stock ........................... 0 0 0 -- 0
Contributed capital .................... 114,172 572,012 6,118 (578,130) 114,172
Carryover of predecessor basis ......... -- (67,762) -- -- (67,762)
Retained earnings
(accumulated deficit) ................. (77,970) 88,114 (240) (87,874) (77,970)
--------- --------- --------- --------- ---------
Total stockholder's equity
(deficit) .......................... 36,202 592,364 5,878 (666,004) (31,560)
--------- --------- --------- --------- ---------
Total liabilities and
Stockholder's equity
(deficit) ........................ $ 686,269 $ 579,586 $ 40,307 $(667,048) $ 639,114
========= ========= ========= ========= =========
</TABLE>
12
<PAGE> 13
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED 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 THREE MONTHS ENDED
SEPTEMBER 30, 1999
Net sales .............................. $ -- $ 151,283 $ 20,756 $ (15,668) $ 156,371
Operating expenses:
Cost of goods sold ................. -- 115,286 11,430 (15,668) 111,048
Selling, general and
administrative expenses .......... -- 11,558 3,613 -- 15,171
Depreciation and amortization ...... -- 9,280 2,106 -- 11,386
--------- --------- --------- --------- ---------
Operating income ....................... -- 15,159 3,607 -- 18,766
Other income (expense):
Interest expense ................... (12,278) (216) (9) -- (12,503)
Amortization of deferred
financing costs .................. (968) -- -- -- (968)
Equity in net income
(loss) of subsidiaries ............. 16,317 -- -- (16,317) --
--------- --------- --------- --------- ---------
Income before income tax
provision ............................ 3,071 14,943 3,598 (16,317) 5,295
Income tax provision ................... -- 1,850 374 -- 2,224
--------- --------- --------- --------- ---------
Net income (loss) ...................... $ 3,071 $ 13,093 $ 3,224 $ (16,317) $ 3,071
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
--------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
Net sales .............................. $ -- $ 156,177 $ 10,754 $ (10,754) $ 156,177
Operating expenses
Cost of goods sold ................... -- 116,822 5,749 (10,754) 111,817
Selling, general and
administrative expenses ............ -- 11,569 3,418 -- 14,987
Depreciation and amortization ........ -- 9,028 1,555 -- 10,583
--------- --------- --------- --------- ---------
Operating income (loss) ................ -- 18,758 32 -- 18,790
Other income (expense):
Interest expense ..................... (11,916) (623) (14) -- (12,553)
Amortization of deferred financing
costs .............................. (951) -- -- -- (951)
Equity in net income (loss) of
Subsidiaries ....................... 15,914 -- -- (15,914) --
Other ................................ -- 35 -- -- 35
--------- --------- --------- --------- ---------
Income (loss) before income tax
provision ............................ 3,047 18,170 18 (15,914) 5,321
Income tax provision ................... -- 1,947 327 -- 2,274
--------- --------- --------- --------- ---------
Net income (loss) ...................... $ 3,047 $ 16,223 $ (309) $ (15,914) $ 3,047
========= ========= ========= ========= =========
</TABLE>
13
<PAGE> 14
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED 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 NINE MONTHS ENDED
SEPTEMBER 30, 1999
Net sales ............................... $ -- $ 471,557 $ 64,048 $ (49,999) $ 485,606
Operating expenses:
Cost of goods sold .................. -- 361,057 32,758 (49,999) 343,816
Selling, general and ................ 12,980
administrative expenses ........... -- 34,996 -- 47,976
Depreciation and amortization ....... -- 24,886 7,196 -- 32,082
--------- --------- --------- --------- ---------
Operating income ........................ -- 50,618 11,114 -- 61,732
Other income (expense):
Interest expense .................... (36,723) (768) (9) -- (37,500)
Amortization of deferred
financing costs ................... (2,910) -- -- (2,910)
Equity in net income
(loss) of subsidiaries .............. 49,680 -- -- (49,680) --
--------- --------- --------- --------- ---------
Income before income tax
provision and cumulative
effect of change in
accounting principle .................. 10,047 49,850 11,105 (49,680) 21,322
Income tax provision .................... -- 7,906 1,050 -- 8,956
--------- --------- --------- --------- ---------
Income before cumulative effect
of change in accounting
principle ........................... 10,047 41,944 10,055 (49,680) 12,366
Cumulative effect of change in
accounting for start-up costs,
net of tax benefit of $1,679 .......... -- (2,319) -- -- (2,319)
--------- --------- --------- --------- ---------
Net income (loss) ....................... $ 10,047 $ 39,625 $ 10,055 $ (49,680) $ 10,047
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
--------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
Net sales .............................. $ -- $ 493,917 $ 25,879 $ (25,879) $ 493,917
Operating expenses
Cost of goods sold ................... -- 368,521 14,344 (25,879) 356,986
Selling, general and
administrative expenses .......... -- 35,860 10,055 -- 45,915
Depreciation and amortization ........ -- 26,123 3,641 -- 29,764
--------- --------- --------- --------- ---------
Operating income (loss) ................ -- 63,413 (2,161) -- 61,252
Other income (expense):
Interest expense ..................... (37,430) (693) (14) -- (38,137)
Amortization of deferred
financing costs .................... (2,855) -- -- -- (2,855)
Equity in net income (loss) of
subsidiaries ....................... 52,192 -- -- (52,192) --
Other ................................ -- 51 1 -- 52
--------- --------- --------- --------- ---------
Income (loss) before income tax
provision ............................ 11,907 62,771 (2,174) (52,192) 20,312
Income tax provision ................... -- 7,745 660 -- 8,405
--------- --------- --------- --------- ---------
Net income (loss) ...................... $ 11,907 $ 55,026 $ (2,834) $ (52,192) $ 11,907
========= ========= ========= ========= =========
</TABLE>
14
<PAGE> 15
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (continued)
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
-------- --------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999
Net cash from operating activities .......... $ 13,723 $ 24,083 $ 6,875 $ -- $ 44,681
-------- -------- -------- ----------- --------
Cash flows used in investing
activities for capital
expenditures .............................. -- (16,271) (6,179) -- (22,450)
-------- -------- -------- ----------- --------
Cash flows provided by (used in)
financing activities:
Equity proceeds ......................... 42 -- -- -- 42
Repurchase of stock ..................... (228) (228)
Repayment on revolver ................... (9,000) -- -- -- (9,000)
Repayment of long-term
obligations ........................... (4,537) (737) (66) -- (5,340)
-------- -------- -------- ----------- --------
Net cash used in financing
activities ................................ (13,723) (737) (66) -- (14,526)
-------- -------- -------- ----------- --------
Net change in cash and cash equivalents ..... $ -- $ 7,075 $ 630 $ -- $ 7,705
======== ======== ======== =========== ========
</TABLE>
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS TOTAL
-------- ---------- --------- ------------ --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
Net cash from operating
activities ................................ $ 3,783 $ 39,472 $ 8,675 $ 3,870 $ 55,800
Cash flows used in investing
activities:
Acquisition, net of cash .................. -- (7,738) -- -- (7,738)
Capital expenditures ...................... -- (9,036) (11,877) -- (20,913)
-------- -------- -------- -------- --------
Net cash used in investing
activities ................................ -- (16,774) (11,877) -- (28,651)
-------- -------- -------- -------- --------
Cash flows provided by (used in)
financing activities:
Equity proceeds ........................... -- 100 3,770 (3,870) --
Repayment of long-term
obligations .............................. (3,783) (876) (574) -- (5,233)
Financing fees and other .................. -- (582) -- -- (582)
-------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities ...................... (3,783) (1,358) 3,196 (3,870) (5,815)
-------- -------- -------- -------- --------
Net change in cash and cash equivalents...... $ -- $ 21,340 $ (6) $ -- $ 21,334
======== ======== ======== ======== ========
</TABLE>
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company conducts its operations through two segments: (i) wire products,
which includes both bare wire and insulated wire products, and (ii) wire harness
products. The following discussion and analysis includes the results of
operations for the three and nine months ended September 30, 1999 compared to
the three and nine months ended September 30, 1998.
Included in the three and nine months ended September 30, 1999, are the results
of operations of Spargo Wire Company, Inc. ("Spargo Wire"), which was acquired
on April 1, 1998, and Italtrecce, which was acquired on July 1, 1998.
A portion of the Company's revenues is derived from processing customer-owned
("tolled") copper. The value of tolled copper is excluded from both sales and
costs of sales of the Company, as title to these materials and the related risks
of ownership do not pass to the Company.
The cost of copper has historically been subject to fluctuations. While
fluctuations in the price of copper may directly affect the per unit prices of
the Company's products, these fluctuations have not had, nor are expected to
have, a material impact on the Company's profitability due to copper price
pass-through arrangements that the Company has with its customers. These sales
arrangements are based on similar variations of monthly copper price formulas.
Use of these copper price formulas minimizes the differences between raw
material copper costs charged to the cost of sales and the pass-through pricing
charged to customers.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 Compared to Three Months Ended September
30, 1998
Net sales for the third quarter of 1999 were $156.4 million, a $0.2 million
increase compared to the third quarter of 1998. An increase in Wire Harness
Segment sales for the quarter was offset by a decrease in Wire Segment sales.
The net effect of the change in the average cost and selling price of copper
combined with the shift in company-owned versus tolled copper sales had a
minimal impact on sales for the quarter compared to the prior year period. The
average price of copper based on the New York Mercantile Exchange, Inc.
("COMEX") increased to $0.78 per pound during the three months ended September
30, 1999 from $0.75 per pound during the comparable period in 1998. In general,
the Company prices its wire products based on a spread over the cost of copper,
which results in an increased dollar value of sales when copper costs increase.
Wire Segment sales were $110.1 million, a decrease of $4.1 million, or 3.6%, in
the quarter compared to the three months ended September 30, 1998. The decrease
was a result of lower sales volume due primarily to certain customers initiating
inventory reduction programs and softness in certain of the end user markets
that the Company supplies. Within the Wire Harness Segment, net sales for the
quarter were $46.3 million, a $4.3 million, or 10.3%, increase compared to the
third quarter of 1998. The increase in sales resulted from growth in consumer
demand and production within the appliance industry along with additional sales
volume from new and existing customers.
Cost of goods sold as a percentage of sales improved to 71.0% for the three
months ended September 30, 1999, from 71.6% for the three months ended September
16
<PAGE> 17
30, 1998. This improvement was primarily the result of cost reductions achieved
from material savings, improved operating efficiencies and equipment upgrades.
Selling, general and administrative expenses increased by $0.2 million, or 1.3%,
to $15.2 million for the three months ended September 30, 1999 compared to $15.0
million for the same period in 1998 primarily resulting from additional costs
associated with the increased sales volume in the Wire Harness Segment.
Depreciation and amortization was $11.4 million for the three months ended
September 30, 1999, compared to $10.6 million for the same period in 1998. The
increase of $0.8 million was primarily the result of depreciation of property,
plant and equipment additions.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998
Net sales for the first nine months ended September 30, 1999 were $485.6
million, a $8.3 million, or 1.7%, decrease compared to the first nine months of
1998. Increases in unit volume in the Wire Harness Segment were offset by the
impact of a decrease in the average cost and selling price of copper and a
reduction in sales volume in the Wire Segment. The average price for copper
based on COMEX decreased to $0.70 per pound during the nine months ended
September 30, 1999 from $0.77 per pound for the nine months ended September 30,
1998.
Wire Segment sales were $337.2 million, a decrease of $27.1 million, or 7.4%, in
the nine months ended September 30, 1999 as compared to the nine months ended
September 30, 1998. This decrease was the result of lower costs and selling
prices of copper and softness in certain of the end user markets that the
Company supplies in the third quarter of 1999. Within the Wire Harness Segment,
net sales for the nine months ended September 30, 1999 were $148.4 million,
representing a $18.8 million, or 14.5%, increase compared to the comparable
period in 1998. This increase is the result of high consumer demand and
production levels within the appliance industry and additional sales volume from
new and existing customers.
Cost of goods sold as a percentage of sales improved to 70.8% for the nine
months ended September 30, 1999, from 72.3% for the nine months ended September
30, 1998. This improvement reflected cost reductions achieved from material
savings, improved operating efficiencies, equipment upgrades and the impact of
lower copper prices.
Selling, general and administrative expenses were $48.0 million for the nine
months ended September 30, 1999, compared to $45.9 million for the same period
in 1998. This $2.1 million increase primarily reflected the addition of
Italtrecce and Spargo Wire and the increased sales volume in the Wire Harness
Segment.
Depreciation and amortization was $32.1 million for the nine months ended
September 30, 1999, compared to $29.8 million for the same period in 1998. The
increase of $2.3 million was primarily the result of depreciation of property,
plant and equipment additions.
Effective January 1, 1999, the Company adopted Statement of Position (SOP) 98-5,
"Reporting on the Costs of Start-Up Activities," which requires costs of
start-up activities and organization costs to be expensed as incurred. On
January 1, 1999, the Company had a charge of $4.0 million related to the
cumulative effect of this change in accounting principle. There was no such
charge in the nine months ended September 30, 1998.
17
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities decreased to $44.7 million for the
nine months ended September 30, 1999, compared to $55.8 million for the nine
months ended September 30, 1998. An increase in income before non-cash charges
such as depreciation and amortization and the cumulative effect of a change in
accounting principle was more than offset by an increase in working capital
requirements.
Net cash used in investing activities was $22.5 million and $28.7 million for
the nine months ended September 30, 1999 and 1998, respectively. This decrease
was primarily due to $7.7 million used for acquisitions in 1998 with no such
expenditures in 1999. Capital expenditures have increased by $1.6 million
through the first nine months of the year of 1999 compared to the same period in
1998.
Net cash used in financing activities was $14.5 million and $5.8 million for the
nine months ended September 30, 1999 and 1998, respectively. This increase is
primarily due to higher debt repayments, including repayments of borrowings
under the Company's revolving credit facility.
The Company's ability to fund its liquidity and capital requirements and to pay
its indebtedness is limited to its ability to receive dividends and other
distributions from its subsidiaries. The Company's Amended and Restated Credit
Agreement and its Senior Notes prohibit the Company from imposing certain
restrictions on the ability of its subsidiaries to pay dividends or make other
distributions to the Company. As of September 30, 1999, the Company had $52.9
million of unused borrowing capacity under its revolving credit facility.
IMPACT OF YEAR 2000 ISSUE
The Year 2000 Issue is the result of computer programs written using two digits
rather than four to define the applicable year. Any of the Company's computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
During 1997, the Company established an internal team comprised of several key
members of the executive management group to address the Year 2000 Issue as it
relates to operating and administration of the Company. The objective of the
review team was to make an assessment of internal risks associated with the Year
2000 Issue including the status of the Company's internally used software,
computer hardware and use of computer applications in each of the Company's
business cycles and to develop a remediation plan, where necessary.
Based on the review team's assessment, the Company determined that it would be
required to replace approximately 60 percent of its existing financial and
operational software with Year 2000 compliant software so that its computer
systems will properly utilize dates beyond December 31, 1999. In 1998, the
Company purchased a software package that is Year 2000 compliant to replace the
existing systems deemed to be non-compliant and the appropriate computer
hardware and network equipment necessary to run the new software package. As of
September 30, 1999, the Company had successfully tested and implemented the new
software at all of the non-compliant facilities and installed the necessary
computer hardware and network equipment.
The Company utilized both internal and external resources to replace and test
the software for Year 2000 modifications. The total cost of the project is
estimated to be approximately $7.5 million. As of September 30, 1999,
18
<PAGE> 19
substantially all of the costs have been incurred. The majority of the
expenditures related to the purchase of new software, hardware and consulting
costs that have been capitalized and were funded through operating cash flows.
The Company has also reviewed the Year 2000 status of its machinery and
equipment utilized in the manufacturing process. The Company has identified
certain non-critical equipment that is not Year 2000 compliant and has
substantially completed the required corrective procedures. The Company does not
expect the costs associated with updating or replacing non Year 2000 compliant
equipment to be material.
The Company continues to evaluate the external risks associated with the Year
2000 Issue. All critical or significant suppliers have been identified and have
been surveyed regarding their Year 2000 readiness. Additionally, the Company is
in constant contact with significant customers regarding the status of both the
Company's and its customers' Year 2000 compliance. The Company is working with
its significant suppliers and customers to develop contingency plans in the case
of system failures. Management believes that the Company's risk with respect to
its suppliers not being Year 2000 compliant is somewhat mitigated by the fact
that the majority of the Company's raw materials are world traded commodities
with numerous domestic and international sources and by the fact that the
Company has multiple and flexible manufacturing facilities.
Due to the general uncertainty inherent in the Year 2000 Issue, resulting in
part from the uncertainty of the Year 2000 readiness of third-party suppliers
and customers, the Company is unable to determine at this time what impact the
Year 2000 issue will have on the Company's results of operations, liquidity or
financial condition. The Company presently believes, however, that with the
conversions to new software, the internal risks associated with the Year 2000
Issue have been mitigated. However, if the Company failed to identify critical
systems or equipment that are not Year 2000 compliant, the Year 2000 Issue could
have a materially adverse impact on the results of operations, liquidity or
financial condition.
19
<PAGE> 20
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company does not ordinarily hold market risk sensitive instruments for
trading purposes. The Company does, however, recognize market risk from interest
rate, foreign currency exchange and commodity price exposure.
INTEREST RATE RISK
At September 30, 1999, approximately $192.2 million of the Company's long-term
debt, specifically, borrowings outstanding under the Company's Amended and
Restated Credit Agreement and the Company's borrowings related to Industrial
Revenue Bonds, bears interest at variable rates. Accordingly, the Company's net
income and after tax cash flow are affected by changes in interest rates.
Assuming the current level of borrowings at variable rates and assuming a two
percentage point change in the average interest rate under these borrowings, it
is estimated that the Company's interest expense for the nine months ended
September 30, 1999 would have increased by approximately $2.9 million, resulting
in a decrease to the Company's net income of approximately $1.7 million and a
decrease to the Company's after tax cash flow of approximately $2.9 million. In
the event of an adverse change in interest rates, management would likely take
actions that would mitigate the Company's exposure; however, due to the
uncertainty of the actions that would be taken and their possible effects, this
analysis assumes no such actions. Further, this analysis does not consider the
effects of the change in the level of overall economic activity that could exist
in such an environment. Additionally, there can be no assurances that increases
in interest rates will not exceed the above projected interest rates.
FOREIGN CURRENCY RISK
The Company has foreign operations in Mexico, the Philippines and Italy. While
the majority of the Company's foreign transactions are denominated in the U.S.
dollar, some transactions are denominated in foreign currencies and are subject
to market risk with respect to fluctuations in the relative value of currencies.
The Company is most vulnerable to changes in the U.S. dollar/Mexican peso
exchange rate. In the normal course of business, the Company enters into forward
contracts to purchase Mexican pesos in future months to match certain operating
cash requirements denominated in the Mexican peso. The Company does not consider
the forward contracts or the unrealized gain or loss on these contracts to be
material.
The following example illustrates the potential impact of U.S. dollar/Mexican
peso exchange rate fluctuations on the operating results and cash flows of the
Company. Assuming the current level of Mexican peso requirements and assuming
the Mexican peso traded at a rate that was 10% stronger against the U.S. dollar
than the actual exchange rate during the nine months ended September 30, 1999,
throughout the nine months ended September 30, 1999, it is estimated that the
Company's operating expenses for the nine months ended September 30, 1999 would
have increased by approximately $3.6 million, resulting in a decrease to the
Company's net income and after tax cash flow of approximately $2.1 million. In
the event of an adverse change in the U.S. dollar/Mexican peso exchange rate,
management would likely take further actions that would mitigate the Company's
exposure; however, due to the uncertainty of the actions that would be taken and
their possible effects, this hypothetical analysis assumes no such actions.
Further, this hypothetical analysis does not consider the effects of the change
in the level of overall economic activity that could exist in such an
environment. Additionally, there can be no assurances that the U.S.
dollar/Mexican peso exchange rate will correspond to the above example.
COMMODITY PRICE RISK
The principal raw material used by the Company is copper, which is purchased in
the form of 5/16 inch rod from the major copper producers in North America.
20
<PAGE> 21
Copper rod prices are based on market prices, which are generally established by
reference to the New York Mercantile Exchange, Inc. ("COMEX") prices, plus a
premium charged to convert copper cathode to copper rod and deliver it to the
required location. As a world traded commodity, copper prices have historically
been subject to fluctuations. While fluctuations in the price of copper may
directly affect the per unit prices of the Company's products, these
fluctuations have not had, nor are expected to have, a material impact on the
Company's profitability due to copper price pass-through arrangements that the
Company has with its customers. These sales arrangements are based on similar
variations of monthly copper price formulas. Use of these copper price formulas
minimizes the differences between raw material copper costs charged to the cost
of sales and the pass-through pricing charged to customers.
21
<PAGE> 22
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the three months ended
September 30, 1999.
22
<PAGE> 23
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.
INTERNATIONAL WIRE GROUP, INC.
Dated: November 15, 1999 By : /s/ DAVID M. SINDELAR
-----------------------------------
Name : David M. Sindelar
Title: Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
By : /s/ GLENN J. HOLLER
-----------------------------------
Name : Glenn J. Holler
Title: Vice President - Finance
(Chief Accounting Officer)
23
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 7,705
<SECURITIES> 0
<RECEIVABLES> 99,753
<ALLOWANCES> 2,305
<INVENTORY> 72,523
<CURRENT-ASSETS> 204,250
<PP&E> 316,587
<DEPRECIATION> 137,944
<TOTAL-ASSETS> 643,113
<CURRENT-LIABILITIES> 114,554
<BONDS> 512,865
0
0
<COMMON> 0
<OTHER-SE> (21,357)
<TOTAL-LIABILITY-AND-EQUITY> 643,113
<SALES> 485,606
<TOTAL-REVENUES> 485,606
<CGS> 343,816
<TOTAL-COSTS> 343,816
<OTHER-EXPENSES> 32,082
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,500
<INCOME-PRETAX> 21,322
<INCOME-TAX> 8,956
<INCOME-CONTINUING> 12,366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 2,319
<NET-INCOME> 10,047
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
