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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ___________
COMMISSION FILE NUMBER 33-93970
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INTERNATIONAL WIRE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 43-1705942
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
101 SOUTH HANLEY ROAD, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 719-1000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
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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 the
filing requirements for at least the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant.
NO ESTABLISHED PUBLISHED PUBLIC TRADING MARKET EXISTS FOR THE COMMON STOCK,
PAR VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP, INC. ALL OF THE
OUTSTANDING SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF INTERNATIONAL
WIRE GROUP, INC. ARE HELD BY INTERNATIONAL WIRE HOLDING COMPANY.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
OUTSTANDING AT
CLASS FEBRUARY 29, 2000
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<S> <C>
Common Stock 1,000
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE NONE
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CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this Annual Report on Form 10-K regarding expected
or possible future events, including statements of the plans and objectives of
management for future growth, operations, products and services and statements
related to future economic performance, is forward-looking and subject to risks
and uncertainties. For those statements, International Wire Group, Inc. (the
"Company") claims the protection of the safe harbor for forward-looking
statements provided for by Section 21E of the Securities Exchange Act of 1934,
as amended. Factors that could affect the future results of the Company and
could cause those results to differ materially from those expressed in the
forward-looking statements are discussed at greater length herein.
Forward-looking statements can be identified by, among other things, the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "seeks," "pro forma," "anticipates" or "intends" or the negative of
any thereof or other variations thereof or comparable terminology, or by
discussions of strategy or intentions. See Item 7, "Management's Discussion and
Analysis of Results of Operations and Financial Condition."
PART I
ITEM 1. BUSINESS
GENERAL
The Company, through its subsidiaries, is a leading designer, manufacturer
and marketer of (i) wire products, including bare and tin-plated copper wire and
insulated copper wire, and (ii) wire harnesses. The Company's products include a
broad spectrum of copper wire configurations and gauges with a variety of
electrical and conductive characteristics and are utilized by a wide variety of
customers primarily in the appliance, automotive, computer and data
communications, and industrial equipment industries. The Company manufactures
and distributes its products at 35 facilities located in the United States,
Mexico, Italy, the Philippines and France.
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.
Wire Products (70% of 1999 net sales)
- Bare Wire Products. Bare copper wire products (or conductors) are used
to transmit digital, video and audio signals or conduct electricity and
are sold to a diverse customer base of approximately 2,000 insulated wire
manufacturers and various industrial original equipment manufacturers
("OEMs") for use in computer and data communications products, industrial
equipment, appliances, automobiles and other applications.
- Insulated Wire Products. Insulated wire products (copper conductors
insulated with plastic, rubber or other polymeric compounds) are
incorporated in wire harnesses that control and distribute electrical
current in automobiles, trucks and appliances. The Company's external
sales of insulated wire are primarily to independent wire harness
fabricators. These independent wire harness fabricators then sell wire
harnesses to automotive and appliance OEMs. The Company divides its
customers who manufacture wire harnesses into three broad groups: (a)
Tier 1 suppliers to Ford Motor Company and Chrysler Corporation (General
Motors Corporation ("GM") continues to purchase the majority of its wire
and wire harness products from Delphi Packard, formerly a division of GM
that has in-house wire and wire harness manufacturing capability); (b)
suppliers to the North American facilities of Japanese automakers, that
utilize "thin-wall" insulated wire which complies with Japanese
Industrial Standards ("JIS"); and (c) suppliers to appliance OEMs
(including the Company's appliance wire harness business).
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Wire Harness Products (30% of 1999 net sales)
- Wire harnesses are assemblies of wires that are terminated with
connectors, switches or other electrical devices. The Company primarily
sells wire harnesses to the major U.S. manufacturers of household
appliances such as Amana, Frigidaire, General Electric Company ("GE"),
Maytag and Whirlpool. These manufacturers utilize the Company's wire
harnesses in the manufacture of refrigerators, washers, dryers, ranges
and dishwashers.
The principal executive offices of the Company are located at 101 South
Hanley Road, Suite 400, St. Louis, Missouri 63105, and the Company's telephone
number at such address is (314) 719-1000.
BACKGROUND
In December 1992, an investor group led by Hicks, Muse, Tate and Furst
Incorporated ("Hicks Muse") and Mills & Partners, Inc. ("Mills & Partners")
acquired (the "Original Wirekraft Acquisition") Kirtland Indiana, Limited
Partnership ("KILP"), which was subsequently renamed Wirekraft Industries, Inc.
("Wirekraft"). KILP was engaged in the manufacturing of insulated wire and
fabrication of wire harnesses. In 1993, Wirekraft purchased the wire
manufacturing business of Ristance Corporation, a manufacturer of high
temperature insulated copper wire. This acquisition increased Wirekraft's
capacity as well as its product offering in the automotive, appliance and motor
leadwire markets. In 1994, Wirekraft completed a major expansion of its wire
mill in El Paso, Texas. The El Paso expansion significantly increased the copper
wire fabricating capacity of Wirekraft with a valuable presence in the
Southwestern U.S.
In December 1994, Wirekraft acquired (the "ECM Acquisition") Electro
Componentes de Mexico, S.A. de C.V. ("ECM") and certain related assets from GE.
ECM functioned as the captive appliance wire harness operation for GE's domestic
appliance business. ECM's Mexican presence provided Wirekraft with significant
competitive advantages, as well as providing the Company with a low cost
manufacturing capability in Mexico. As part of the acquisition, Wirekraft
entered into a supply agreement, which expires in 2006, to supply substantially
all of GE's domestic wire harness requirements for major kitchen and laundry
appliances.
In March 1995, an investor group led by Hicks Muse and Mills & Partners
acquired Omega Wire, Inc. ("Omega"). The acquisition of Omega (the "Original
Omega Acquisition") broadened the Company's product offering through the
addition of a broad and diverse bare wire product offering and vertically
integrated the Company by substantially reducing the Company's need to purchase
outside bare wire.
In June 1995, through a series of acquisitions and mergers, the Company was
organized to combine the operations of Wirekraft and Omega (the "Wirekraft/Omega
Combination").
In March 1996, the Company acquired (the "DWT Acquisition") the business of
Hoosier Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and
Silicones, Inc., a group of affiliated companies together under the trade name
Dekko Wire Technology Group ("Dekko"). Dekko was engaged in the design,
manufacture and marketing of insulated and bare copper wire. The DWT Acquisition
increased the Company's insulated and bare wire manufacturing capabilities, as
well as increased the Company's capacity to better serve its client base and
expand into new markets by adding specialty products to the Company's product
offering.
In February 1997, the Company acquired (the "Camden Acquisition") all of
the issued and outstanding common stock of Camden Wire Co., Inc. ("Camden"), a
designer, manufacturer and marketer of bare and tin-plated copper wire. The
Camden Acquisition allowed the Company to expand its geographic manufacturing
base and to realize efficiencies through consolidation of operations and process
improvements.
In 1998, the Company made two strategic acquisitions, the acquisition of
the assets of Spargo Wire Company, Inc. ("Spargo Wire"), which expanded the
Company's offering of bare wire, and the acquisition of Italtrecce S.r.l.
("Italtrecce"), which expanded the Company's offering of specialty braid
products and allowed the Company to expand its geographic manufacturing base to
Italy. In addition, in July 1998, the Company completed its construction of a
facility in Cebu, Philippines and began operations. The Cebu facility
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allows the Company to supply global customers of the Company and to build
relationships with new customers in the Asia Pacific markets.
In December 1999, the Company acquired a group of French wire manufacturers
(collectively, "Forissier Group"). Two of the companies manufacture specialty
braids, rope and cable products and the third company manufactures insulated
wire products. This acquisition will compliment the Company's existing business
in Italy as well as expand sales opportunities throughout Europe.
On February 11, 2000, the Company entered into a letter of intent to sell
its Wire Harness Segment to Viasystems Group, Inc. ("Viasystems") for $210
million in cash. The sale is contingent upon Viasystems' initial public
offering. The Company and Viasystems are commonly controlled by affiliates of
Hicks Muse. As such, the Company will account for any gain or loss on the
transaction through stockholder's equity. The purchase price was determined by
senior management of both companies. In addition, each of the boards of
directors have received opinions from nationally recognized financial advisors
that the purchase price is fair, from a financial point of view, to each of the
respective parties. In connection with the sale, the Company will enter into a
supply agreement to supply substantially all of the Wire Harness Segment's
insulated wire requirements through 2003. See Note 13 to the Company's
Consolidated Financial Statements.
PRODUCTS AND MARKETS
The Company's products are used by a variety of end users, primarily in the
appliance, automotive, computer and data communications and industrial equipment
industries. See Note 12 to the Company's Consolidated Financial Statements for
business segment information.
The following is a description of the Company's primary products and
markets served:
WIRE SEGMENT
Bare Wire Products
The Company's bare copper wire products are primarily used to (i) transmit
digital, video and audio signals that generally control motor functions in
appliances, automobiles, industrial equipment, heating, ventilating and air
conditioning ("HVAC") systems, safety control systems and switching equipment
and (ii) conduct electricity. The Company's external sales of bare wire products
are primarily to wire insulators, who apply various insulating materials to the
conductors through an extrusion process. These wire insulators, in turn, sell
the insulated wire to a variety of customers, many of which are in the computer
and data communications industries. Within these industries, the Company's bare
wire is generally used in wire and cable products that (i) connect circuit
boards inside personal computers ("PCs"), (ii) join PCs to peripheral equipment
and (iii) link PCs in local area and wide area networks.
The Company manufactures a broad array of bare copper conductors including
the following:
- Single End Wire. Single end wire is an individual wire drawn to the
customer's size requirements ranging from .08 to .002 inches in diameter.
Single end wire is used to transmit digital, video and audio signals or
low voltage current in a variety of wire products used in motor controls,
local area networks, security systems, television or telephone
connections inside homes and buildings and water sprinkler systems.
Single end wire is capable of transmitting signals or electrical current
only between two distinct end points (terminals) such as between an
on-off switch and the starter to a motor. Single end wire is generally
the least expensive form of wire to produce due to its simple
configuration.
- Stranded Wire. Stranded wire is comprised of a number of single end
wires, twisted together in a specific geometric pattern, where each
individual wire's relative position is preserved throughout the length of
the strand. Like single end wire, stranded wire transmits digital, video
and audio signals or low voltage current but is capable of connecting
multiple terminals. Stranded wire is typically used in wire and cable
products that (i) connect peripherals such as printers to a computer,
(ii) connect the internal components of a PC, and (iii) control HVAC,
security and other functions inside buildings.
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- Bunched Wire. Bunched wire is comprised of a number of single end wires
that are twisted in a random pattern rather than a specific geometric
pattern. This type of wire is the primary wire used in appliance and
automotive wire harnesses. In addition, bunched wire is commonly used for
transmission of electrical current in lighting fixture cords, extension
cords and power cords for portable power hand tools. This type of wire
provides improved flexibility (versus single end wire) while maintaining
its ability to carry electrical currents.
- Shielding Wire. Shielding wire is comprised of varying numbers of single
end wire which are wound together in parallel construction around a
bobbin. Shielding wire does not transmit signals or voltage but rather
shields the signal traveling through the core conductor from outside
interference. This type of wire is primarily used in data communication
applications.
- Cabled Wire and Braided Wire. Cabled wire and braided wire are
combinations of single, bunched or stranded wire twisted together in
various patterns and thickness. These wires transmit electrical current
and are typically used in mining, mass transportation, automotive and
other industrial applications.
Insulated Wire Products
The Company's external sales of insulated wire products are primarily to
companies that assemble wire harnesses for installation in automobiles or
appliances. The Company manufactures a diverse array of insulated wire products
including the following:
- PVC Lead Wire and Cable. PVC lead wire and cable is copper wire that has
been insulated with polyvinyl chloride ("PVC"). This product is used
primarily in automotive wire harnesses located behind the instrument
panel or in the vehicle body that control certain functions including
turn signals and air bags.
- JIS Wire. JIS wire is copper wire insulated with PVC that is produced
according to Japanese Industrial Standards. The primary difference
between domestic PVC wire and JIS wire is that JIS wire is manufactured
to metric dimensions and generally has thinner insulation than products
manufactured according to U.S. Society of Automotive Engineers Standards.
JIS wire is used primarily in automotive wire harnesses located behind
the instrument panel or in the vehicle body.
- XLPE Insulated Wire. Cross-linked polyethylene ("XLPE") wire is copper
wire insulated with polyethylene that is subjected to heat and steam
pressure ("cross-linking") to make the wire resistant to high
temperatures. This product's primary application includes use in high
temperature environments such as the engine compartment of vehicles and
in electric ranges.
- PVC Insulated Cord. PVC insulated cord is insulated wire that is
surrounded with fillers and then jacketed with PVC insulation. This
product is used primarily for wall-plug applications (cord sets) in the
appliance and power tool industries.
- Appliance Wire. Appliance wire is copper wire primarily insulated with
PVC and used in producing harnesses for a variety of appliances. The
Company also manufactures high temperature wire, insulated with silicone,
used primarily in electric ranges and niche applications such as
resistance heaters, motor leads and lighting products.
WIRE HARNESS SEGMENT
A wire harness is comprised of an assembly of wires with connectors and
terminals attached to their ends that transmit electricity between two or more
end points. For example, a wire harness used in a washing machine will link the
washing machine's control panel with its other electrical components, such as
the motor. The Company supplies wire harnesses to most of the leading domestic
appliance manufacturers, including Amana, Frigidaire, GE, Maytag and Whirlpool.
The Company also participates in several niche businesses oriented around its
expertise and marketing presence in the appliance industry, including resistance
and appliance heaters. In addition, the Company produces truck trailer cable
assemblies that transmit electrical current from the tractor to the trailer.
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MARKETING
The Company sells its products through a combination of direct
(Company-employed) sales people, manufacturer's representatives and
distributors. The Company's sales organization is supported by an internal
marketing staff and customer service groups. Collectively, these departments act
as a bridge between the Company's customers and its production and engineering
staff. The Company's engineers work directly with customers in designing the
wire or wire harness products to the customer's exact specifications. In
addition, engineers work closely with the Company's production managers, quality
supervisors and customer service representatives to ensure the timely delivery
of quality products.
KEY CUSTOMERS
The Company sells its products primarily to major appliance manufacturers,
automotive wire harness manufacturers and copper wire insulators who then sell
to a diverse array of end users. A large percentage of the Company's total sales
are to GE. Sales to GE accounted for approximately 15%, 15% and 14% of the
Company's total sales in 1999, 1998 and 1997, respectively. In connection with
the ECM Acquisition, the Company entered into a supply agreement with GE, which
expires December 31, 2006, pursuant to which the Company supplies substantially
all of GE's domestic wire harness requirements for major kitchen and laundry
appliances.
INTERNATIONAL OPERATIONS
The Company has operations in Mexico, the Philippines, Italy and France.
For the years ended December 31, 1999, 1998 and 1997, approximately 12%, 6% and
5% of the Company's sales originated from these foreign subsidiaries. The
majority of these sales were to original equipment manufacturers in the
appliance industry located in the United States or to Tier 1 automotive
suppliers whose products were sold back into the United States. The Company has
three operating facilities located in Mexico. In Asia, the Company has a
manufacturing facility in Cebu, Philippines, and a joint venture in The People's
Republic of China. In Europe, the Company has a manufacturing facility in
Vinovo, Italy and three facilities near Lyon, France. See Note 12 to the
Company's Consolidated Financial Statements for information regarding the
Company's international operations.
The Company is subject to risks generally associated with international
operations, including price and exchange controls and other restrictive actions.
In addition, fluctuations in currency exchange rates may affect the Company's
results of operations.
RAW MATERIALS
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. 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.
Other major raw materials consumed by the Company include PVC compound,
plasticizer, XLPE compound, color concentrate and a wide variety of
electro-mechanical components. The Company enters into long term supply
agreements on a wide variety of materials consumed. Supplies on all critical
materials are currently adequate to meet the Company's needs.
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The Company orders material based on purchase orders received and accepted
and seeks to minimize the inventory of material not identified for specific
orders. The Company works with its suppliers to develop just-in-time supply
systems which reduce inventory carrying costs.
MANUFACTURING AND DISTRIBUTION
The Company is committed to the highest quality standards for its products,
a standard maintained in part by continuous improvements to its production
processes and upgrades and investments to its manufacturing equipment. The
Company's equipment can be adapted to satisfy the changing needs of its
customers. The Company maintains advanced quality assurance and testing
equipment to ensure the products it manufactures will consistently meet customer
quality requirements. The following is a description of the Company's
manufacturing and distribution facilities and processes for its major product
lines.
BARE WIRE PRODUCTS
As of December 31, 1999, the Company had fourteen facilities dedicated to
the production and distribution of bare wire. Six of these facilities are
located in New York, two are located in Arkansas, two are located in France, one
facility is located in Indiana, one facility is located in Texas, one facility
is located in Italy and one distribution facility is located in California. The
manufacturing of bare wire consists of one or more of the following four
processes: wire drawing; plating; bunching and stranding; and cabling.
- Wire Drawing Process. Wire drawing involves a multi-step process in
which 5/16 inch copper rod is drawn through a series of dies of
decreasing diameters.
- Plating Process. After being drawn, the Company's wire products may be
plated through an electroplating process. The Company has the capability
to plate copper wire with tin and other metals. Approximately 25% of the
Company's bare wire products are plated with tin. The plating process
prevents the bare copper from oxidizing and also allows the wire to be
soldered, which is an important quality in many electrical applications.
- Bunching and Stranding Process. Bunching and stranding is the process of
twisting together single strand wires to form a construction ranging from
seven to over 200 strands. If the wire is bunched, the individual strands
of wire are twisted together in a random pattern. Bunched wire is
typically used in power cords for lights and appliances. Stranded wire is
composed of a number of single end wires twisted together in a specific
geometric pattern where each strand's relative position is maintained
throughout the length of the wire. Stranded wire is typically used in
security, audio and intercom systems.
- Cabling Process. Cabling is the process of twisting bunched wire to form
a construction ranging from 49 to 47,000 strands. Cabling is used in
various industrial applications such as transportation and mining.
INSULATED WIRE PRODUCTS
As of December 31, 1999, the Company had fifteen manufacturing and
distribution facilities used to produce and distribute insulated wire. Five of
the manufacturing facilities are located in Indiana, four are located in Texas,
three are located in Alabama, one is located in the Philippines and one is
located in France. The Company has one distribution facility in Texas. The
production of insulated wire starts with bare wire (primarily manufactured
internally) and involves insulating the wire products with various polymeric
insulating compounds through an extrusion process. Extrusion involves the
feeding, melting and pumping of insulating compounds through a die to shape it
into its final form on the wire. In order to enhance the insulation properties
of some products, certain polymeric compounds can be chemically cross-linked
after the extrusion process. The Company has extensive chemical cross-linking
capabilities.
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WIRE HARNESSES PRODUCTS
As of December 31, 1999, the Company had five manufacturing facilities and
one distribution facility dedicated to wire harness products. Three of the
manufacturing facilities are located in Mexico, one facility is located in Ohio
and one facility is located in Indiana. The Company has one distribution
facility is located in Texas dedicated to wire harness products. The
manufacturing of wire harnesses involves the following four-step process:
- Cutting and Stripping. Insulated copper wire, obtained primarily from
internal sources, is fed through cutting machines that are programmed to
cut wire to a certain length, strip the end of the wire and attach
terminals or connectors.
- Splicing and Connecting. In the second process, the lengths of wire are
spliced or joined together and additional connectors and/or terminals are
attached. Splicing, like cutting and stripping, lends itself to
automation.
- Harness Assembly. Once these two preparatory stages have been completed,
the cut and spliced wires are brought to the assembly area. Assembly
boards are used to guide each employee on the assembly line in the
placement of designated wires.
- Quality Control. Every assembly board is equipped with 100% continuity
testers that are designed into the assembly board. These testers are
designed to pinpoint any defective circuits for repair or rework. After
assembly, each harness is again tested for continuity and analyzed by a
trained inspector.
COMPETITION
As a result of the diversity of the Company's segments and product lines,
the Company believes that no single competitor competes with the Company across
the entire spectrum of the Company's product lines. However, in each of the
Company's business segments, the Company experiences competition from at least
one major competitor. The Company competes primarily on the basis of quality,
reliability, price, reputation, customer service and delivery time. The Company
believes it maintains a leading market share position in the non-captive U.S.
market for each of its business segments. Several OEMs in the end markets the
Company serves have in-house or "captive" wire and wire harness production
facilities. However, these captive facilities do not compete with the Company
for sales to other customers. The Company also sells its products to OEMs with
captive production to meet needs in excess of their internal production
capacity.
BACKLOG
Due to the manner in which it processes its orders, the Company has no
significant order backlog. The Company follows the industry practice of
producing its products on an ongoing basis to meet customer demand without
significant delay. Management believes the ability to supply orders in a timely
fashion is a competitive factor in its market, and therefore, attempts to
minimize order backlog to the extent practicable.
PATENTS AND TRADEMARKS
The Company has six patents, three patents pending, eleven registered
trademarks and two trademark applications pending. The Company does not believe
that its competitive position is dependent on patent protection or that its
operations are dependent on any individual patent or trademark or group of
related patents or trademarks.
EMPLOYEES
As of December 31, 1999, the Company employed approximately 8,100 full time
employees, of which approximately 5,100 were located in Mexico. The Company
believes that it has a good relationship with its employees.
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SEASONALITY
The Company does not believe that its business segments are subject to
significant seasonal fluctuations.
ENVIRONMENTAL MATTERS
The Company is subject to a number of federal, state, local and foreign
environmental laws and regulations relating to the storage, handling, use,
emission, discharge, release or disposal of materials into the environment and
the investigation and remediation of contamination associated with such
materials. These laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Water
Pollution Control Act, the Clean Air Act and the Resource Conservation and
Recovery Act, the regulations promulgated thereunder, and any state analogs. The
Company's operations also are governed by laws and regulations relating to
employee health and safety. The Company believes that it is in material
compliance with such applicable laws and regulations and that its existing
environmental controls are adequate. Further, the Company has no current plans
for substantial capital expenditures in this area.
As is the case with most manufacturers, the Company could incur costs
relating to environmental compliance, including remediation costs related to
historical hazardous materials handling and disposal practices at certain
facilities, although it does not believe that such costs would materially and
adversely affect the Company. In the past the Company has undertaken remedial
activities to address on-site soil contamination caused by historic operations.
None of these activities have resulted in any material liability. Currently, the
Company is involved with environmental monitoring activities at its Camden, New
York and Jordan, New York facilities.
The Company currently does not anticipate that compliance with
environmental laws or regulations or the costs to remediate the sites discussed
above will have a material adverse effect on the Company. As mentioned above,
however, the risk of environmental liability and remediation costs is inherent
in the nature of the Company's business and, therefore, there can be no
assurances that material environmental costs, including remediation costs, will
not arise in the future. In addition, it is possible that future developments
(e.g., new regulations or stricter regulatory requirements) could result in the
Company incurring material costs to comply with applicable environmental laws
and regulations.
ITEM 2. PROPERTIES
The Company uses owned or leased properties as manufacturing and
distribution facilities, warehouses and offices throughout the United States,
Mexico, Italy, the Philippines and France. The Company's principal executive
offices are located in St. Louis, Missouri. All of the Company's domestic owned
properties are pledged to secure the Company's indebtedness under the Company's
Amended and Restated Credit Agreement dated as of February 12, 1997, with the
Chase Manhattan Bank, Bankers Trust Company and the other lenders party thereto,
as amended (the "Senior Bank Facility").
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Listed below are the principal manufacturing and distribution facilities
operated by the Company as of December 31, 1999:
<TABLE>
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LOCATION SQUARE FEET OWNED/LEASED PRIMARY PRODUCTS/END USE
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<S> <C> <C> <C>
BARE WIRE
Camden, New York................. 450,000 Owned Single end, bunched, stranded,
cabled and electroplated wire
Williamstown, New York........... 210,000 Owned Single end, bunched, stranded and
cabled wire
Bremen, Indiana.................. 175,000 Owned Bunched wire
Camden, New York................. 150,000 Leased (1) Single end, bunched, stranded and
cabled wire
Pine Bluff, Arkansas............. 130,000 Owned Single end, bunched, stranded and
cabled wire
Jordan, New York................. 120,000 Leased (1) Single end, bunched, stranded,
shielding and cabled wire
Rome, New York................... 112,000 Owned Bunched, stranded, cabled and
electroplated wire
Cazenovia, New York.............. 60,000 Owned Braided wire
Saint-Chamond, France............ 60,000 Owned Specialty braids, rope and cable
products
El Paso, Texas................... 57,000 Owned Bunched wire
Pine Bluff, Arkansas............. 40,000 Owned Shielding and braided wire
Saint-Chamond, France............ 30,000 Owned Specialty braids, rope and cable
products
Vinovo, Italy.................... 25,000 Owned Braided wire
Cerritos, California............. 19,000 Leased (5) Distribution
INSULATED WIRE
Cebu, Philippines................ 135,000 Owned Automotive
Avilla, Indiana.................. 119,000 Owned Appliance and automotive
El Paso, Texas................... 101,000 Leased (4) Appliance and automotive
Beynost, France.................. 82,000 Owned Automotive
Corunna, Indiana................. 72,000 Owned Appliance
El Paso, Texas................... 70,000 Owned Automotive
Elkmont, Alabama................. 65,000 Owned Appliance and automotive
Kendallville, Indiana............ 61,000 Leased (4) Appliance and automotive
Kendallville, Indiana............ 60,000 Owned Appliance and automotive
El Paso, Texas................... 60,000 Owned Automotive
Albion, Indiana.................. 53,000 Owned Appliance and automotive
Elkmont, Alabama................. 52,000 Owned Automotive
El Paso, Texas................... 50,000 Leased (3) Distribution
Ardmore, Alabama................. 45,000 Owned Automotive
El Paso, Texas................... 28,000 Leased (4) Automotive
WIRE HARNESSES
Juarez, Mexico................... 120,000 Leased (4) Appliance
Chihuahua, Mexico................ 100,000 Owned Appliance
Chihuahua, Mexico................ 91,000 Leased (2) Appliance
Bucyrus, Ohio.................... 47,000 Leased (5) Truck Trailers, farm machinery
and appliance
El Paso, Texas................... 38,000 Leased (3) Distribution
Mishawaka, Indiana............... 29,000 Owned Appliance, HVAC and lawn and
garden
</TABLE>
9
<PAGE> 11
- ---------------
(1) The leases on the Company's Camden, New York and Jordan, New York facilities
have remaining terms of approximately 12 years. During 1997, the Company
purchased the notes that were collateralized by the Camden and Jordan
properties from an unrelated creditor. The Company negotiated a payment
schedule with the lessor which allows the lessor to retain title to the
property until the termination of the lease, at which time the Company will
have the option to purchase the properties for a nominal purchase price.
(2) The lease has a remaining term of approximately eight years.
(3) The lease has a remaining term of approximately three years.
(4) The lease has a remaining term of approximately two years.
(5) The lease has a remaining term of approximately one year.
The Company believes its plants and equipment include state-of-the-art
technology and are well maintained. Additionally, the Company believes its
facilities are suitable for their present and intended purposes and adequate for
the Company's current level of operations and expected demand for the Company's
products.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. The Company was served with notice of an action
styled Whirlpool Corporation v. Wirekraft Industries, Inc. (Case No.
97-2039-CK-T), initiated in the Second Judicial Circuit of the State of
Michigan, Berrien County Trial Court, Civil Division, on August 8, 1997. This
action, a product liability claim, relates to certain wire harness products
supplied to Whirlpool by one of the Company's predecessors during 1991 and 1992.
Such wire harness products were required by Whirlpool to include a specified
AMP, Inc. ("AMP") connector. The Company has joined AMP as a third-party
defendant. The complaint filed with respect to such lawsuit does not specify an
amount of damages. The Company filed a motion for summary disposition (judgment)
and in the fall of 1998, the trial court ruled in favor of the Company with
respect to most of Whirlpool's claims. Whirlpool is attempting to appeal the
trial court's action. The Company believes that its insurance coverage is
applicable to any of the remaining claims and the cost of defense of such claims
is being borne by the Company's insurance carriers. In the opinion of the
Company's management, all such proceedings and actions should not, individually
or in the aggregate, have a material adverse effect on the Company's results of
operations, financial condition or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders in the fourth
quarter of 1999.
10
<PAGE> 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
All of the Company's outstanding common stock is held by International Wire
Holding Company ("Holding"), and there is no established public trading market
for such. The Company has paid no dividends to common stockholders since
inception and does not have any present intention to commence payment of any
cash dividends. The Company intends to retain earnings to provide funds for
operation and expansion of the Company's business and to repay outstanding
indebtedness. The Company's ability to pay such dividends is limited by the
terms of its Senior Bank Facility and the Indentures relating to its 11 3/4%
Senior Subordinated Notes due 2005, its 14% Senior Subordinated Notes due 2005
and its 11 3/4% Series B Senior Subordinated Notes due 2005 (collectively, the
"Senior Subordinated Notes").
11
<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
THE COMPANY
The selected financial data set forth below presents financial information
for the Company for the years ended December 31, 1999, 1998, 1997 and 1996, and
for the seven months ended December 31, 1995, as derived from the audited
consolidated financial statements of the Company. The selected financial data
should be read in conjunction with the Company's Consolidated Financial
Statements and notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," each included elsewhere herein.
<TABLE>
<CAPTION>
SEVEN MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales......................................... $ 643,690 $ 645,921 $ 695,148 $ 546,981 $ 245,583
Cost of goods sold................................ 456,333 464,552 530,310 420,823 195,221
Selling, general and administrative
expenses(1)..................................... 61,194 65,442 60,713 47,572 17,129
Depreciation and amortization..................... 44,794 42,758 36,826 31,976 11,312
Impairment, unusual and plant closing
charges(2)...................................... 3,000 -- 2,000 84,250 1,750
Inventory valuation adjustment(3)................. -- -- 8,500 8,500 --
--------- --------- --------- --------- ---------
Operating income (loss)........................... 78,369 73,169 56,799 (46,140) 20,171
Interest expense.................................. (49,839) (50,627) (50,939) (43,013) (19,931)
Amortization of deferred financing costs.......... (3,050) (2,980) (3,132) (3,066) (1,176)
Other (expense) income............................ -- 95 (103) 312 (158)
--------- --------- --------- --------- ---------
Income (loss) before income tax provision,
cumulative effect of change in accounting
principle and extraordinary item................ 25,480 19,657 2,625 (91,907) (1,094)
Income tax provision.............................. 10,055 10,002 2,654 1,262 2,197
--------- --------- --------- --------- ---------
Income (loss) before cumulative effect of change
in accounting principle and extraordinary
item............................................ 15,425 9,655 (29) (93,169) (3,291)
Cumulative effect of change in accounting for
start-up costs, net of tax benefit of $1,679.... (2,319)(4) -- -- -- --
--------- --------- --------- --------- ---------
Income (loss) before extraordinary item........... 13,106 9,655 (29) (93,169) (3,291)
Extraordinary item................................ -- -- (2,991)(5) -- --
--------- --------- --------- --------- ---------
Net income (loss)........................... $ 13,106 $ 9,655 $ (3,020) $ (93,169) $ (3,291)
========= ========= ========= ========= =========
OTHER DATA:
EBITDA, as adjusted(6)............................ $ 124,621 $ 120,085 $ 108,135 $ 82,273 $ 33,233
Capital expenditures.............................. 30,506 34,299 27,760 15,849 5,751
Total assets...................................... 678,107 639,114 628,048 531,020 427,920
Long-term obligations (including current
maturities)..................................... 535,944 527,205 523,795 447,667 338,677
CASH FLOW DATA:
Net cash from (used in) operating activities...... $ 51,475 $ 40,646 $ 33,998 $ 31,980 $ 13,334
Net cash from (used in) investing activities...... (50,506) (42,120) (86,756) (176,108) (346,797)
Net cash from (used in) financing activities...... 6,456 1,474 52,758 144,128 333,463
</TABLE>
- ---------------
(1) Includes non-cash compensation expense (income) related to the stock
appreciation of Holding Class A Common Stock (as defined herein) in the
amount of ($1,542), $4,158, $4,010, $3,687 and $0 for the years ended
December 31, 1999, 1998, 1997 and 1996 and the seven months ended December
31, 1995, respectively. See Note 15 to the Company's Consolidated Financial
Statements and Item 12, "Securities Ownership."
(2) Consists of charges relating to product liability claims in the amount of
$3,000 in 1999, charges relating to plant closings in the amounts of $2,000,
$6,000 and $1,750 in the years ended December 31, 1997 and 1996, and the
seven months ended December 31, 1995, respectively, and charges related to
the write-off of goodwill principally related to the Original Wirekraft
Acquisition in the amount of $78,250 in the year
12
<PAGE> 14
ended December 31, 1996. See Note 9 to the Company's Consolidated Financial
Statements included herein.
(3) Represents a pre-tax inventory valuation charge to reduce the last in, first
out ("LIFO") valuation of copper in inventory as a result of the decline in
the average price of copper during 1997 and 1996. See Note 3 to the
Company's Consolidated Financial Statements included herein.
(4) The cumulative effect of change in accounting principle for the ended
December 31, 1999 represents a $2,319 loss related to the adoption of
Financial Accounting Standards Board ("FASB") Statement of Position (SOP)
98-5, "Reporting on the Costs of Start-Up Activities," (net of income tax
benefit of $1,679). See Note 2 to the Company's Consolidated Financial
Statements included herein.
(5) The extraordinary item in the year ended December 31, 1997 represents a
$2,991 loss on the early extinguishment of debt (net of income taxes of
$1,995).
(6) "EBITDA, as adjusted" is defined as operating income (loss) plus
depreciation, amortization of intangible assets, impairment, unusual and
plant closing charges and non-cash compensation expense (income). EBITDA, as
adjusted, is presented because (i) it is a widely accepted indicator of a
company's ability to incur and service debt and (ii) it is the basis on
which the Company's compliance with certain financial covenants contained in
the Indentures relating to its Senior Subordinated Notes and the Senior Bank
Facility is principally determined. However, EBITDA, as adjusted, does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flow, is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. Also, the measure
of EBITDA, as adjusted, may not be comparable to similar measures reported
by other companies. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
13
<PAGE> 15
WIREKRAFT (A PREDECESSOR COMPANY)
The selected financial data set forth below presents financial information
for Wirekraft for the six months ended May 31, 1995. The data is derived from
the audited consolidated financial statements of Wirekraft.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED MAY 31,
1995
--------------
(IN THOUSANDS)
<S> <C>
RESULTS OF OPERATIONS:
Net sales................................................. $168,053
Cost of goods sold........................................ 138,851
Selling, general and administrative expenses.............. 13,301
Depreciation and amortization............................. 6,474
Compensation expense...................................... 895(1)
Expenses related to sale.................................. 501(2)
Expenses related to plant closings........................ 2,000(3)
--------
Operating income.......................................... 6,031
Interest expense.......................................... (8,020)
Amortization of deferred financing costs.................. (1,657)
--------
Income (loss) before income taxes and extraordinary
item................................................... (3,646)
Income tax provision (benefit)............................ (2,114)
--------
Income (loss) before extraordinary item................... (1,532)
Extraordinary item........................................ (7,835)(4)
--------
Net income (loss)................................. $ (9,367)
========
OTHER DATA:
EBITDA, as adjusted(5).................................... $ 15,901
Capital expenditures...................................... 2,914
Total assets.............................................. 241,277
Long-term obligations (including current maturities)...... 148,386
CASH FLOW DATA:
Net cash from (used in) operating activities.............. $ (3,921)
Net cash from (used in) investing activities.............. (47,887)
Net cash from (used in) financing activities.............. 51,663
</TABLE>
- ---------------
(1) Represents payments to senior management of Wirekraft for the redemption of
employee stock options in connection with the Wirekraft/Omega Combination.
(2) Represents non-recurring expenses of Wirekraft associated with the
Wirekraft/Omega Combination, which included, among other things, brokerage
and legal fees.
(3) Represents expenses related to the closing of certain domestic wire harness
facilities.
(4) The extraordinary item in the six months ended May 31, 1995 represents a
$7,835 loss on early extinguishment of debt (net of income tax of $4,930).
(5) "EBITDA, as adjusted" is defined as operating income (loss) plus
depreciation, amortization of intangible assets, impairment, unusual and
plant closing charges and non-cash compensation expense (income). EBITDA, as
adjusted, is presented because (i) it is a widely accepted indicator of a
company's ability to incur and service debt and (ii) it is the basis on
which the Company's compliance with certain financial covenants contained in
the Indentures relating to its Senior Subordinated Notes and the Senior Bank
Facility is principally determined. However, EBITDA, as adjusted, does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flow, is not a measure of
financial performance under GAAP and should not be considered in isolation
or as a substitute for measures of performance prepared in accordance with
GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to
similar measures reported by other companies.
14
<PAGE> 16
OMEGA (A PREDECESSOR COMPANY)
The selected financial data set forth below presents the financial
information of Omega and its predecessor, THL-Omega Holding Corporation
("THL-Omega"), for the periods indicated. The data for the two months ended May
31, 1995, are derived from the audited consolidated financial statements of
Omega. The data for the three months ended March 31, 1995 are derived from the
audited consolidated financial statements of THL-Omega.
<TABLE>
<CAPTION>
THL-
OMEGA OMEGA
--------- ---------
TWO THREE
MONTHS MONTHS
ENDED ENDED
MAY 31, MARCH 31,
1995(1) 1995
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
RESULTS OF OPERATIONS:
Net sales................................................. $ 23,295 $38,736
Cost of goods sold........................................ 17,512 29,401
Selling, general and administrative expenses.............. 1,639 2,651
Depreciation and amortization............................. 1,233 1,459
Compensation expense...................................... -- 9,715(2)
Expenses related to sale.................................. -- 1,689(3)
--------- -------
Operating income (loss)................................... 2,911 (6,179)
Interest expense.......................................... (1,797) (1,478)
Amortization of deferred financing costs.................. (238) (50)
Other income.............................................. -- 32
--------- -------
Income (loss) before income taxes and extraordinary
item................................................... 876 (7,675)
Income tax provision...................................... 171 484
--------- -------
Income (loss) before extraordinary item................... 705 (8,159)
Extraordinary item........................................ (4,044)(4) (1,148)(5)
--------- -------
Net income (loss)................................. $ (3,339) $(9,307)
========= =======
OTHER DATA:
EBITDA, as adjusted(6).................................... $ 4,144 $ 6,684
Capital expenditures...................................... 581 1,597
Total assets.............................................. 176,659 97,657
Long-term obligations (including current maturities)...... 128,116 54,615
CASH FLOW DATA:
Net cash from (used in) operating activities.............. $ 4,987 $ 3,604
Net cash from (used in) investing activities.............. (159,661) (1,597)
Net cash from (used in) financing activities.............. 154,674 (1,536)
</TABLE>
- ---------------
(1) On March 31, 1995, Omega, through the Original Omega Acquisition, acquired
all of the issued and outstanding common stock of THL-Omega.
(2) Represents payments to senior management for the redemption of stock options
and stock that was issued immediately prior to the Original Omega
Acquisition for consideration less than the fair value.
(3) Represents expenses of the sellers associated with the Original Omega
Acquisition.
(4) The extraordinary item in the two months ended May 31, 1995 represents a
$4,044 loss on early extinguishment of debt (net of income taxes of $2,082).
(5) The extraordinary item in the three months ended March 31, 1995 represents a
$1,148 loss on early extinguishment of debt (net of income taxes of $765).
(6) "EBITDA, as adjusted" is defined as operating income (loss) plus
depreciation, amortization of intangible assets, impairment, unusual and
plant closing charges and non-cash compensation expense
15
<PAGE> 17
(income). EBITDA, as adjusted, is presented because (i) it is a widely
accepted indicator of a company's ability to incur and service debt and (ii)
it is the basis on which the Company's compliance with certain financial
covenants contained in the Indentures relating to its Senior Subordinated
Notes and the Senior Bank Facility is principally determined. However,
EBITDA, as adjusted, does not purport to represent cash provided by
operating activities as reflected in the Company's consolidated statements
of cash flow, is not a measure of financial performance under GAAP and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. Also, the measure of EBITDA,
as adjusted, may not be comparable to similar measures reported by other
companies.
16
<PAGE> 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 table below sets forth the major components of the
results of operations for the years ended December 31, 1999, 1998 and 1997, and
should be used in reviewing the discussion and analysis of results of operations
and liquidity and capital resources. See Note 12 to the Company's Consolidated
Financial Statements for business segment information.
Included in the year ended December 31, 1998, are the results of operations
of Spargo Wire from April 1, 1998, the date Spargo Wire was acquired by the
Company, and the results of operations of Italtrecce from July 1, 1998, the date
Italtrecce was acquired by the Company. Included in the year ended December 31,
1997, are the results of operations of Camden from February 12, 1997, the date
of the Camden Acquisition.
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
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Wire sales................................................ $452,644 $475,528 $529,718
Wire harness sales........................................ 191,046 170,393 165,430
-------- -------- --------
Net sales......................................... 643,690 645,921 695,148
Cost of goods sold........................................ 456,333 464,552 530,310
Selling, general and administrative expenses.............. 61,194 65,442 60,713
Depreciation and amortization............................. 44,794 42,758 36,826
Unusual and plant closing charges......................... 3,000 -- 2,000
Inventory valuation adjustment............................ -- -- 8,500
-------- -------- --------
Operating income.................................. $ 78,369 $ 73,169 $ 56,799
======== ======== ========
</TABLE>
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998
Net sales for the year ended December 31, 1999 were $643.7 million,
representing a $2.2 million, or 0.3%, decrease compared to the year ended
December 31, 1998. An increase in unit volume was more than offset by the impact
of a decrease in the average cost and selling price of copper. The average price
of copper based upon the New York Mercantile Exchange, Inc. ("COMEX") decreased
to $.72 per pound during the year ended December 31, 1999 from $0.75 per pound
during the year ended December 31, 1998.
Wire Segment sales were $452.6 million, representing a $22.9 million, or
4.8%, decrease for the year ended December 31, 1999, as compared to the year
ended December 31, 1998. Increased sales of bare wire products into the
industrial market was more than offset by the decrease in the average price of
copper and lower insulated wire sales to the automotive industry in the first
half of 1999. This decrease in sales to the automotive industry was due
primarily to a decision by some of the Company's customers, who are suppliers to
17
<PAGE> 19
U.S. facilities of Japanese automakers, to shift some of their wire production
in-house to better utilize their available capacity caused in part by the 1998
Asian financial crisis. Within the Wire Harness Segment, net sales for the year
ended December 31, 1999 were $191.0 million, representing a $20.7 million, or
12.1%, increase compared to the year ended December 31, 1998. This increase in
volume was due to an increase in consumer demand and production within the
appliance industry and additional volume with new and existing customers.
Cost of goods sold as a percentage of sales improved to 70.9% for the year
ended December 31, 1999, from 71.9% for the same period in 1998. This
improvement was the result of cost reductions from material savings, operating
efficiencies, equipment upgrades, previous plant consolidations, increased
volume at lower cost facilities in Mexico and the Philippines and the impact of
lower copper prices. Because the Company's products are typically priced at a
spread over the cost of copper, a lower copper price leads to a higher gross
margin percentage but generally has no impact on gross margin dollars.
Selling, general and administrative expenses were $61.2 million for the
year ended December 31, 1999, compared to $65.4 million for the year ended
December 31, 1998. This decrease was due to non-cash compensation income
recognized in the current year of $1.5 million compared to a similar non-cash
compensation expense recognized during 1998 of $4.2 million. This decrease was
partially offset by the effect of increased costs related to the additional
volume within the Wire Harness Segment and the impact of incremental costs for a
full year associated with the acquisitions of Spargo Wire and Italtrecce in
1998. Selling, general and administrative expenses as a percent of net sales
improved from 10.1% for the year ended December 31, 1998 to 9.5% for the year
ended December 31, 1999. This decrease was primarily due to the effect of the
non-cash compensation income and expense and was partially offset by the effect
of lower copper prices on net sales.
Depreciation and amortization was $44.8 million for the year ended December
31, 1999, as compared to $42.8 million for the same period in 1998. The increase
of $2.0 million was the result of a full year of depreciation and amortization
of goodwill related to the acquisitions of Spargo Wire and Italtrecce and
increased capital expenditures.
The Company recorded a pre-tax charge to operations of $3.0 million in the
year ended December 31, 1999 for anticipated losses related to product liability
claims associated with a predecessor of the Company. These claims are for a
non-wire product in the appliance industry that the Company has not manufactured
since 1992. In 1999, the Company reviewed the occurrence rate associated with
these claims and determined that the liability originally established in the
year ended December 31, 1996 needed to be increased. The Company did not have a
similar charge during the year ended December 31, 1998.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
Net sales for the year ended December 31, 1998 were $645.9 million,
representing a $49.2 million, or 7.1%, decrease compared to the year ended
December 31, 1997. Increases in unit volume in both segments were more than
offset by the impact of a decrease in the average cost and selling price of
copper, a higher mix of tolled copper and the discontinuation of a non-core
product line in September 1997. The average price of copper based upon the COMEX
decreased to $.75 per pound during the year ended December 31, 1998 from $1.03
per pound during the year ended December 31, 1997.
Wire Segment sales were $475.5 million, representing a $54.2 million, or
10.2%, decrease for the year ended December 31, 1998, as compared to the year
ended December 31, 1997. This decrease was the result of the decrease in the
average price of copper offset by an increase in unit growth in sales of bare
wire and cable to industrial and electronics/data communications customers. Wire
Segment sales also benefited from the full year of sales related to the Camden
Acquisition (acquired in February 1997) and the incremental sales related to the
acquisitions of Spargo Wire and Italtrecce in 1998. Within the Wire Harness
Segment, net sales for the year ended December 31, 1998 were $170.4 million,
representing a $5.0 million, or 3.0%, increase compared to the year ended
December 31, 1997. This increase in volume was due primarily to a general
increase in domestic appliance production and sales and expanded relationships
with certain customers. Volume increases were partially offset by the loss of
sales from a non-core product line discontinued in September 1997.
18
<PAGE> 20
Cost of goods sold as a percentage of sales improved to 71.9% for the year
ended December 31, 1998 from 76.3% for the same period in 1997. This improvement
reflected synergies related to the Camden Acquisition, savings realized from
previous plant consolidations, lower current period costs achieved through the
transition of certain wire harness segment business to lower-cost Mexican
facilities, and the impact of lower copper prices. Because the Company's
products are typically priced at a spread over the cost of copper, a lower
copper price leads to a higher gross margin percentage but generally has no
impact on gross margin dollars.
Selling, general and administrative expenses were $65.4 million for the
year ended December 31, 1998, compared to $60.7 million for the year ended
December 31, 1997. This $4.7 million increase primarily reflected the addition
of Camden for a full first quarter, the effect of the acquisitions of Spargo
Wire and Italtrecce in 1998 and increased unit volume. Selling, general and
administrative expenses as a percent of net sales increased from 8.7% for the
year ended December 31, 1997 to 10.1% for the year ended December 31, 1998. This
increase was primarily due to the effect of lower copper prices on net sales.
Depreciation and amortization was $42.8 million for the year ended December
31, 1998, as compared to $36.8 million for the same period in 1997. The increase
of $6.0 million was the result of a full year of depreciation and amortization
of goodwill related to the Camden Acquisition, increased capital expenditures
and additional depreciation and amortization of goodwill related to the
acquisitions of Spargo Wire and Italtrecce in 1998.
The Company recorded a pre-tax charge to operations of $2.0 million in the
year ended December 31, 1997 related to the shut down and consolidation of
certain wire segment facilities. Additionally, the Company recorded a pre-tax
inventory valuation charge of $8.5 million during the year ended December 31,
1997. This charge was the result of an adjustment to the LIFO valuation of
copper in inventory reflecting the decrease in the copper cost per pound during
fiscal 1997. The Company did not have similar charges during the year ended
December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Inflation has not been a material factor affecting the Company's business.
As a result of the copper price pass-through arrangements that the Company has
with its customers, fluctuations in the price of copper have not, nor are
expected to have, a material impact on the Company's profitability. The
Company's general operating expenses, such as salaries, employee benefits and
facilities costs are subject to normal inflationary pressures.
Working Capital and Cash Flows
For the year ended December 31, 1999, the Company generated $51.5 million
in cash from operations, received $25.0 million from the issuance of long-term
debt obligations, made net repayments of $16.3 million to repay indebtedness
under the Senior Bank Facility, spent $30.5 million on capital projects, used
$20.0 million on the acquisition of the Forissier Group, used $2.1 million on
financing fees and used $0.2 million on other financing activities.
For the year ended December 31, 1998, the Company generated $40.6 million
in cash from operations, made net borrowings of $2.8 million under debt
obligations, spent $34.3 million on capital projects, used $7.8 million on the
acquisitions of Spargo Wire and Italtrecce and used $1.4 million on other
financing activities.
For the year ended December 31, 1997, the Company generated $34.0 million
in cash from operations and $6.0 million of net proceeds from the issuance of
long-term debt obligations related to the Camden Acquisition. During 1997, the
Company made net borrowings of $1.1 million under debt obligations, spent $27.8
million on capital projects, used $11.3 million related to financing fees and
used $2.1 million on other financing activities.
In June 1997, the Company generated $157.4 million in proceeds from the
issuance of 11.75% Series B Senior Subordinated Notes due June 2005, net of
financing costs of $5.8 million. The Company applied all net proceeds from this
issuance to repay a portion of the Senior Bank Facility.
19
<PAGE> 21
Financing Arrangements
In connection with the acquisition of the Forissier Group, the Company
amended its Senior Bank Facility to obtain an additional $25.0 million in
borrowing under a Tranche A1 Loan. As amended, the Senior Bank Facility provides
senior secured financing of up to $275.5 million, consisting of a $17.5 million
Tranche A Loan, a $25.0 million Tranche A1 Loan and a $158.0 million Tranche B
Loan (collectively, the "Term Facility") and a $75.0 million revolving credit
facility (the "Revolver"). The Company is obligated to make principal payments
in respect of the Term Facility of $8.0 million in 2000, $9.3 million in 2001,
$48.4 million in 2002 and $134.8 million in 2003. In addition, the Senior Bank
Facility may require a prepayment on the term loans based on an excess cash flow
calculation as defined in the Senior Bank Facility agreement. The Revolver is
available for working capital purposes including letters of credit. The
commitments terminate and all amounts under the Revolver then outstanding mature
in 2002. As of December 31, 1999, there was $200.5 million outstanding under the
Term Facility and $52.9 million of unused borrowing capacity under the Revolver.
The Company's obligations under the Senior Bank Facility bear interest at
floating rates and require interest payments on varying dates depending on the
interest rate option selected by the Company. At December 31, 1999, the weighted
average interest rate on outstanding borrowings under the Senior Bank Facility
was 8.11%.
The Company has outstanding $150.0 million principal amount of 11.75%
Senior Subordinated Notes due 2005 under an Indenture dated June 12, 1995 and
$150 million of 11.75% Series B Senior Subordinated Notes due June 2005 under an
Indenture dated June 17, 1997, priced at 108.75% for an effective interest rate
of 10.15% (collectively, the "Senior Notes"). The Senior Notes bear interest at
the rate of 11.75% per annum, requiring semi-annual interest payments of $17.6
million on each June 1 and December 1. The Company also has outstanding $5.0
million of 14% Senior Subordinated Notes due June 1, 2005 (the "14% Notes"). The
14% Notes bear interest at the rate of 14% per annum, requiring a semi-annual
interest payment of $0.4 million on each June 1 and December 1. Neither the
Senior Notes nor the 14% Notes are subject to any sinking fund requirements.
In connection with the Camden Acquisition, the Company assumed debt related
to two Industrial Revenue Bonds (the "IRBs") totaling $15.5 million. The IRBs
are due in August 2005 and March 2016 in the amounts of $9.0 million and $6.5
million, respectively. The IRBs 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. The IRBs are collateralized by letters of credit totaling $15.5
million. As of December 31, 1999, the weighted average interest rate on the IRBs
was 4.29%.
Liquidity
The principal raw material used in the Company's products is copper. The
market price of copper is subject to significant fluctuations. Working capital
needs change whenever the Company experiences a significant change in copper
prices. A $0.10 per pound change in the price of copper changes the Company's
working capital by approximately $5.1 million. The Company enters into
contractual relationships with most of its customers to adjust its prices based
upon the prevailing market prices on the COMEX. This approach is patterned after
the Company's arrangement with its copper suppliers and is designed to remove
the risk associated with fluctuating copper prices.
As part of an impairment charge in 1996, the Company accrued $4.2 million
for anticipated losses related to product liability claims associated with the
Original Wirekraft Acquisition. These claims are for a non-wire product utilized
in the appliance industry that the Company has not manufactured since 1992. The
Company's policy is to record the probable and reasonably estimable loss related
to product liability claims. In 1996, the claims significantly increased as a
result of the receipt of claims accumulated by insurance companies related to
prior periods. Accordingly, the Company revised its estimated liability
outstanding on actual claims reported and its estimate of claims incurred but
not reported at December 31, 1999.
20
<PAGE> 22
The Company continues to review the status of the claims and adjust the
liability accordingly. In developing its estimated liability outstanding on
actual claims reported, the Company considered historic settlement rates. In
determining its estimate of claims incurred but not reported, the Company
considered historical claim levels, amounts relative to total product shipped
and historical settlement rates.
The Company expected the frequency and per incident dollar value of the
claims to decrease substantially in 1999 as the products are now beyond their
useful life. Actual claims in 1999 did not decrease at the rate expected by the
Company as several insurance carriers continued to submit claims for products
beyond their expected useful life. The Company has not reached agreement on
settlement for the claims on these products. Based on these recent developments,
the Company reserved an additional amount of $3.0 million related to these
claims. The reserve for product liability claims was $3.8 million and $2.4
million at December 31, 1999 and 1998, respectively.
Due to the uncertainties associated with these product claims, the future
cost of final settlement of these claims may differ from the liability currently
accrued. However, in the Company's opinion, the impact of final settlement of
these claims should not, individually or in the aggregate, have a material
adverse effect on the Company's results of operations, financial condition or
cash flows.
The Company's primary sources of liquidity are cash flows from operations
and borrowings under the Revolver, which are subject to a borrowing base
calculation. The major uses of cash in 2000 are expected to be for debt service
requirements and capital expenditures. In 2000, debt service requirements are
estimated at approximately $64.3 million while capital expenditures are
estimated at approximately $31.0 million. Management believes that cash from
operating activities, together with available borrowings under the Revolver, if
necessary, should be sufficient to permit the Company to meet these financial
obligations.
In the event that the sale of the Wire Harness Segment is completed, the
Company anticipates that all of the proceeds from the sale will be used to pay
down the outstanding Senior Bank Facility.
IMPACT OF YEAR 2000 ISSUE
During 1999, the Company completed the implementation of a new computer
system at several of its facilities in order to become Year 2000 compliant. As
of January 31, 2000, the Company is not aware of any known internal failures
with the computer systems or machinery and equipment related to the Year 2000
issue nor is the Company aware of any business interruptions from external Year
2000 failures. Due to the general uncertainty inherent in the Year 2000 issue,
the Company cannot be certain that there will not be system failures or business
interruptions in the future related to the Year 2000 issue, and if such failures
were to occur, what impact they might have on the Company's results of
operations, liquidity or financial condition.
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.
SUBSEQUENT EVENT
On February 11, 2000, the Company entered into a letter of intent to sell
its Wire Harness Segment to Viasystems Group, Inc. ("Viasystems") for $210
million in cash. The sale is contingent upon Viasystems'
21
<PAGE> 23
initial public offering. The Company and Viasystems are commonly controlled by
affiliates of Hicks Muse. As such, the Company will account for any gain or loss
on the transaction through stockholder's equity. The purchase price was
determined by senior management of both companies. In addition, each of the
boards of directors have received opinions from nationally recognized financial
advisors that the purchase price is fair, from a financial point of view, to
each of the respective parties. In connection with the sale, the Company will
enter into a supply agreement to supply substantially all of the Wire Harness
Segment's insulated wire requirements through 2003. See Note 13 to the Company's
Consolidated Financial Statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES 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 December 31, 1999, approximately $216 million of the Company's long-term
debt, specifically, borrowings outstanding under the Senior Bank Facility and
IRBs, 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 1999 interest expense would have increased by
approximately $4.3 million, resulting in a decrease to the Company's net income
and after tax cash flow of approximately $2.5 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 operations in Mexico, the Philippines, Italy and France.
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 evaluates from time-to-time various currency hedging
programs that could reduce the risk.
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. 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.
22
<PAGE> 24
ITEM 8. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTERNATIONAL WIRE GROUP, INC
Report of Independent Accountants......................... 24
Consolidated Balance Sheets as of December 31, 1999 and
December 31, 1998...................................... 25
Consolidated Statements of Operations for the years ended
December 31,
1999, December 31, 1998 and December 31, 1997.......... 26
Consolidated Statements of Stockholder's Equity (Deficit)
for the years
ended December 31, 1999, December 31, 1998 and December
31, 1997.............................................. 27
Consolidated Statements of Cash Flows for the years ended
December 31,
1999, December 31, 1998 and December 31, 1997.......... 28
Notes to Consolidated Financial Statements................ 29
Consolidated Financial Statement Schedule for the years
ended
December 31, 1999, December 31, 1998 and December 31,
1997:
Schedule II -- Valuation and Qualifying Accounts.......... 50
</TABLE>
23
<PAGE> 25
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and shareholder of
International Wire Group, Inc.:
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of International Wire Group, Inc. and its subsidiaries at December 31,
1999 and 1998, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. In addition, in
our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements and the financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As discussed in Note 15 to the consolidated financial statements, the
accompanying consolidated financial statements have been restated. As discussed
in Note 2 to the consolidated financial statements, the Company changed its
method of reporting start-up activities.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 17, 2000
24
<PAGE> 26
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
AS OF DECEMBER 31,
ASSETS
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 7,425 --
Accounts receivable, less allowance of $2,879 and
$2,633................................................. 101,310 81,369
Inventories............................................... 92,142 82,968
Prepaid expenses and other................................ 12,223 16,510
Deferred income taxes..................................... 15,436 12,107
-------- --------
Total current assets.............................. 228,536 192,954
Property, plant and equipment, net........................ 184,660 178,647
Deferred financing costs, net............................. 14,011 14,966
Intangible assets, net.................................... 243,627 246,529
Other assets.............................................. 7,273 6,018
-------- --------
Total assets...................................... $678,107 $639,114
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations............... $ 9,606 $ 6,222
Accounts payable.......................................... 48,655 34,461
Accrued and other liabilities............................. 22,654 25,094
Accrued payroll and payroll related items................. 12,858 13,240
Customers' deposits....................................... 20,987 22,588
Accrued interest.......................................... 4,041 3,674
-------- --------
Total current liabilities......................... 118,801 105,279
Long-term obligations, less current maturities............ 526,338 520,983
Deferred income taxes..................................... 21,772 13,184
Other long-term liabilities............................... 30,926 31,228
-------- --------
Total liabilities................................. 697,837 670,674
Stockholder's equity (deficit):
Common stock, $.01 par value, 1,000 shares authorized,
issued and outstanding................................. 0 0
Contributed capital....................................... 124,751 126,027
Carryover of predecessor basis............................ (67,762) (67,762)
Accumulated deficit....................................... (76,719) (89,825)
-------- --------
Total stockholder's equity (deficit).............. (19,730) (31,560)
-------- --------
Total liabilities and stockholder's equity
(deficit)........................................ $678,107 $639,114
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
25
<PAGE> 27
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net sales................................................... $643,690 $645,921 $695,148
Operating expenses:
Cost of goods sold........................................ 456,333 464,552 530,310
Selling, general and administrative expenses including
non-cash compensation expense (income) of ($1,542),
$4,158 and 4,010, respectively......................... 61,194 65,442 60,713
Depreciation and amortization............................. 44,794 42,758 36,826
Unusual and plant closing charges......................... 3,000 -- 2,000
Inventory valuation adjustment............................ -- -- 8,500
-------- -------- --------
Operating income............................................ 78,369 73,169 56,799
Other income (expense):
Interest expense.......................................... (49,839) (50,627) (50,939)
Amortization of deferred financing costs.................. (3,050) (2,980) (3,132)
Other, net................................................ -- 95 (103)
-------- -------- --------
Income before income tax provision, cumulative effect of
change in accounting principle and extraordinary item..... 25,480 19,657 2,625
Income tax provision...................................... 10,055 10,002 2,654
-------- -------- --------
Income (loss) before cumulative effect of change in
accounting principle and extraordinary item............... 15,425 9,655 (29)
Cumulative effect of change in accounting for start-up
costs, net of tax benefit of $1,679....................... (2,319) -- --
-------- -------- --------
Income (loss) before extraordinary item..................... 13,106 9,655 (29)
Extraordinary item -- loss related to early extinguishment
of debt, net of taxes of $1,995........................... -- -- (2,991)
-------- -------- --------
Net income (loss)................................. $ 13,106 $ 9,655 $ (3,020)
======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
26
<PAGE> 28
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
CARRYOVER OF
COMMON PREFERRED CONTRIBUTED PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
------ --------- ----------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996, as
reported........................ $ 0 $ 4 $125,340 $(67,762) $(92,773) $(35,191)
Adjustment........................ -- -- 3,687 -- (3,687) --
--- --- -------- -------- -------- --------
Balance December 31, 1996, as
restated........................ 0 4 129,027 (67,762) (96,460) (35,191)
Capital contributed............... -- -- 451 -- -- 451
Repurchase of stock of Holding.... -- -- (700) -- -- (700)
Conversion of preferred stock to
debt............................ -- (4) (9,996) -- -- (10,000)
Preferred stock dividend.......... -- -- (1,378) -- -- (1,378)
Non-cash compensation expense..... -- -- 4,010 -- -- 4,010
Net loss.......................... -- -- -- -- (3,020) (3,020)
--- --- -------- -------- -------- --------
Balance December 31, 1997......... 0 -- 121,414 (67,762) (99,480) (45,828)
Capital contributed............... -- -- 455 -- -- 455
Non-cash compensation expense..... -- -- 4,158 -- -- 4,158
Net income........................ -- -- -- -- 9,655 9,655
--- --- -------- -------- -------- --------
Balance December 31, 1998......... 0 -- 126,027 (67,762) (89,825) (31,560)
Capital contributed............... -- -- 496 -- -- 496
Repurchase of stock of Holding.... -- -- (230) -- -- (230)
Non-cash compensation income...... -- -- (1,542) -- -- (1,542)
Net income........................ -- -- -- -- 13,106 13,106
--- --- -------- -------- -------- --------
Balance December 31, 1999......... $ 0 $-- $124,751 $(67,762) $(76,719) $(19,730)
=== === ======== ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
27
<PAGE> 29
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- ---------
<S> <C> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss)......................................... $ 13,106 $ 9,655 $ (3,020)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation........................................... 30,962 27,461 24,465
Amortization of intangibles............................ 13,832 15,297 12,361
Amortization of deferred financing costs............... 3,050 2,980 3,132
Cumulative effect of change in accounting for start-up
costs................................................ 3,998 -- --
Extraordinary loss on early extinguishment of debt..... -- -- 4,986
Unusual and plant closing charges...................... 3,000 -- 2,000
Inventory valuation adjustment......................... -- -- 8,500
Non-cash compensation expense (income)................. (1,542) 4,158 4,010
Deferred income taxes.................................. 5,259 5,629 901
Change in assets and liabilities, net of acquisitions:
Accounts receivable.................................. (9,823) 9,998 (456)
Inventories.......................................... (4,218) (7,995) (1,835)
Prepaid expenses and other........................... (5,158) (11,474) (6,273)
Accounts payable..................................... 9,090 (17,686) (9,171)
Accrued and other liabilities........................ (7,962) (3,824) (4,313)
Customers' deposits.................................. (1,601) 1,483 4,591
Accrued interest..................................... 367 (1,160) 186
Income taxes payable/refundable...................... 3,723 (1,113) (2,976)
Other long-term liabilities.......................... (4,608) 7,237 (3,090)
-------- -------- ---------
Net cash from operating activities................ 51,475 40,646 33,998
-------- -------- ---------
Cash flows used in investing activities:
Acquisitions, net of cash................................. (20,000) (7,821) (58,996)
Capital expenditures...................................... (30,506) (34,299) (27,760)
-------- -------- ---------
Net cash used in investing activities............. (50,506) (42,120) (86,756)
-------- -------- ---------
Cash flows provided by (used in) financing activities:
Equity proceeds........................................... 42 -- --
Proceeds from issuance of long-term obligations........... 25,000 -- 228,125
Repayment of long-term obligations........................ (7,261) (5,339) (143,836)
Borrowing (repayment) on revolver......................... (9,000) 8,175 (18,165)
Repurchase of stock of Holding............................ (230) -- (700)
Cash dividends paid on preferred stock.................... -- -- (1,378)
Financing fees and other.................................. (2,095) (1,362) (11,288)
-------- -------- ---------
Net cash from financing activities................ 6,456 1,474 52,758
-------- -------- ---------
Net change in cash and cash equivalents........... 7,425 -- --
Cash and cash equivalents at beginning of the period........ -- -- --
-------- -------- ---------
Cash and cash equivalents at end of the period.............. $ 7,425 $ -- $ --
======== ======== =========
</TABLE>
See accompanying notes to the consolidated financial statements
28
<PAGE> 30
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
1. COMPANY BACKGROUND AND ACQUISITIONS
International Wire Group, Inc. ("Group" or the "Company"), a Delaware
corporation, through its two segments, the Wire Segment and the Wire Harness
Segment, is engaged in the design, manufacture and marketing of bare and
insulated copper wire and wire harnesses. The Company's products are used by a
wide variety of customers primarily in the appliance, automotive, computer and
data communications and industrial equipment industries.
The Company was formed to participate in the transactions contemplated by
the Acquisitions (as described below). On June 12, 1995, Wirekraft Holdings
Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire Holding
Company ("Holding"), the sole common stockholder of Group, Wirekraft Acquisition
Company and certain shareholders of Wirekraft and Omega entered into a series of
acquisitions and mergers (the "Acquisitions") 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. In
accordance with EITF 88-16, "Basis in Leveraged Buy Out Transactions," the
Acquisitions have been accounted for at "predecessor basis."
On March 5, 1996, the Company acquired the businesses of Hoosier Wire,
Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc.
(collectively "Dekko"), a group of affiliated companies operating together under
the trade name Dekko Wire Technology Group (the "DWT Acquisition"). Dekko was
engaged in the design, manufacture and marketing of insulated and bare copper
wire. The DWT Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been allocated to the
consolidated assets and liabilities based upon their estimated respective fair
values.
On February 12, 1997, the Company acquired all of the issued and
outstanding common stock of Camden Wire Co., Inc. ("Camden"), a wholly-owned
subsidiary of Oneida LTD (the "Camden Acquisition"). Camden was engaged in the
design, manufacture and marketing of non-insulated bare and tin-plated copper
wire. The Camden Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been allocated to the
consolidated assets and liabilities based upon their estimated respective fair
values.
In 1998, the Company made two strategic acquisitions, the acquisition of
the assets of Spargo Wire Company, Inc. (the "Spargo Acquisition") and the
acquisition of Italtrecce S.r.l. (the "Italtrecce Acquisition"). The
acquisitions were accounted for using the purchase method of accounting. The
total consideration paid in connection with these acquisitions, including fees
and expenses, was $7,821.
On December 29, 1999, the Company acquired the business of a group of three
French wire and cable manufacturers (collectively, "Forissier Group"). Two of
the companies manufacture and market specialty braids, rope and cable products
and the third company manufactures and markets insulated wire products. The
total consideration paid in connection with these acquisitions, including fees
and expenses, was approximately $20,000. This acquisition was accounted for
using the purchase method of accounting whereby the total acquisition cost has
been allocated to the consolidated assets and liabilities based upon their
estimated respective fair values.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Group and its
wholly owned subsidiaries. All intercompany balances and transactions have been
eliminated in consolidation.
29
<PAGE> 31
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Revenue Recognition
Sales and related cost of goods sold are included in income when goods are
shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: building -- 25 to 40 years; building
improvements -- 15 years; machinery and equipment -- 3 to 11 years; and
furniture and fixtures -- 5 years. Leasehold improvements are amortized over the
shorter of the term of the respective lease or the life of the respective
improvement. The cost and related accumulated depreciation of assets sold,
retired or otherwise disposed of are removed from the respective accounts, and
any resulting gains or losses are included in the statement of operations.
Intangible Assets
Intangible assets consist principally of goodwill arising from the excess
of cost over the value of net assets acquired which is amortized using the
straight-line method over a range of twenty to forty years. Accumulated
amortization aggregated $44,305 and $36,257 at December 31, 1999 and 1998,
respectively.
Impairment of Long-lived Assets
The Company periodically assesses the recoverability of long-lived assets
(including intangible assets) based on its current and anticipated future
undiscounted cash flows. In addition, the Company's policy for the recognition
and measurement of any impairment of long-lived assets is to assess the current
and anticipated future cash flows associated with the impaired asset. An
impairment occurs when the cash flows (excluding interest) do not exceed the
carrying amount of the asset. The amount of the impairment loss is the
difference between the carrying amount of the asset and its estimated fair
value.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses associated
with debt financing are amortized over the term of the related debt using the
straight-line method, which approximates the effective interest method.
Accumulated amortization aggregated $13,404 and $10,354 at December 31, 1999 and
1998, respectively.
Deferred Income Taxes
The Company accounts for certain items of income and expense in different
periods for financial reporting and income tax purposes. Provisions for deferred
income taxes are made in recognition of such temporary differences, where
applicable. A valuation allowance is established against deferred tax assets
unless the Company believes it is more likely than not that the benefit will be
realized.
Non-cash Compensation Expense (Income)
The Company records non-cash compensation which reflects the difference
between the cost of Holding's Class A common stock, which can be converted into
shares of Holding common stock at a variable rate, and the value of the common
shares at the time of the valuation. Contributed capital is increased for
non-cash compensation expense and decreased for non-cash compensation income.
30
<PAGE> 32
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Foreign Currency
The Company has operations in Mexico, the Philippines, Italy and France.
The U.S. dollar is the functional currency for the majority of the Company's
foreign transactions. All gains and losses from remeasurement and transactions
are determined using a combination of current and historical rates and are
included in net income.
Interest Rate Hedging Arrangement
As of December 31, 1998, the Company had one interest rate protection
agreement for the purpose of hedging against rising interest rates. The fees the
Company paid for these arrangements are included in deferred financing fees and
amortized on a straight-line basis over the life of the arrangements. This
agreement provided the Company with a ceiling on the three month London
Interbank Offered Rate ("LIBOR") of 8.0% on $32,500 of indebtedness through
March 1999. The Company estimates that the fair value approximated the carrying
value of the interest rate hedging arrangement. There was no such arrangement at
December 31, 1999.
Fair Value of Financial Instruments
The Company's financial instruments, excluding the Senior Notes (as
hereinafter defined) are carried at fair value or amounts that approximate fair
value. The Company has estimated the fair market value of the Senior Notes using
current market data. The fair market value of the Senior Notes was approximately
$308,625 and $318,750 at December 31, 1999 and 1998, respectively.
Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the years ended
December 31, 1999, 1998 and 1997, was $49,480, $51,787 and $50,753,
respectively. Net taxes paid (refunded) for the years ended December 31, 1999,
1998 and 1997 were ($6), $5,644 and $2,817, respectively.
During the year ended December 31, 1997, the Company entered into certain
non-cash investing and financing activities. In 1997, the Company exchanged
$10,000 of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock
for debt.
In fiscal 1999, 1998 and 1997, the Company recorded capital lease
obligations of $320, $1,044 and $0, respectively, for property, plant and
equipment.
Significant Customer
A significant portion of the Company's sales were to a major customer
within the Wire Harness Segment. Sales to this customer represented 15%, 15% and
14% of net sales for the years ended December 31, 1999, 1998 and 1997,
respectively.
31
<PAGE> 33
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Reclassification of Financial Information
Certain items in the prior years' financial statements have been
reclassified to conform with the current period presentation.
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.
3. INVENTORIES
The composition of inventories is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
Raw materials............................................... $30,723 $41,777
Work-in process............................................. 19,168 13,047
Finished goods.............................................. 42,251 28,144
------- -------
Total inventories................................. $92,142 $82,968
======= =======
</TABLE>
The current cost of inventories at December 31, 1999 and 1998 approximated
the carrying cost.
In connection with the decline in the average price of copper, the Company
recorded a pre-tax inventory valuation charge of $8,500 for the year ended
December 31, 1997 to reduce the LIFO valuation of copper in inventory.
32
<PAGE> 34
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
--------- ---------
<S> <C> <C>
Land........................................................ $ 3,759 $ 3,836
Buildings and improvements.................................. 51,367 53,262
Machinery and equipment..................................... 270,892 232,614
Construction in progress.................................... 2,824 7,004
--------- ---------
328,842 296,716
Less: accumulated depreciation.............................. (144,182) (118,069)
--------- ---------
$ 184,660 $ 178,647
========= =========
</TABLE>
5. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In December 1999, the Company amended the Amended and Restated Credit
Agreement in connection with the acquisition of Forissier Group. Accordingly,
the Company recorded deferred financing costs of $2,095.
In June 1997, the Company refinanced debt under the Amended and Restated
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 debt and recorded an
extraordinary loss of $390, net of income tax, related to a prepayment premium.
In connection with the Acquisitions and the related financing, the Company
entered into a Monitoring and Oversight Agreement ("Agreement") with Hicks, Muse
& Co. Partners, L.P. ("Hicks Muse Partners"), an affiliate of the Company. The
Agreement provides that the Company shall pay Hicks Muse Partners an annual fee
of $500, for ten years for monitoring and oversight services adjusted annually
at the end of each fiscal year to an amount equal to 0.1% of the consolidated
net sales of the Company, but in no event less than $500 annually.
6. LONG-TERM OBLIGATIONS
The composition of long-term obligations at December 31, 1999 and 1998 is
as follows:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Amended and Restated Credit Agreement:
Revolving credit facility................................. $ -- $ 9,000
Term facility............................................. 200,500 180,250
Senior Subordinated Notes................................... 150,000 150,000
Series B Senior Subordinated Notes.......................... 150,000 150,000
Series B Senior Subordinated Notes Premium.................. 9,979 11,295
Industrial revenue bonds.................................... 15,500 15,500
Other....................................................... 9,965 11,160
-------- --------
535,944 527,205
Less, current maturities.................................... 9,606 6,222
-------- --------
$526,338 $520,983
======== ========
</TABLE>
33
<PAGE> 35
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The schedule of principal payments (excluding unamortized premium) for
long-term obligations at December 31, 1999 is as follows:
<TABLE>
<S> <C>
2000........................................................ $ 9,606
2001........................................................ 10,730
2002........................................................ 48,623
2003........................................................ 134,989
2004........................................................ 125
Thereafter.................................................. 321,892
--------
Total............................................. $525,965
========
</TABLE>
Amended and Restated Credit Agreement
In connection with the acquisition of Forissier Group, the Company amended
the Amended and Restated Credit Agreement dated June 17, 1997 to obtain an
additional $25,000 Term A1 Loan. The terms of the amendment require mandatory
principle payments in quarterly installments. The final installment of the Term
A1 Loan is due March 31, 2003. As amended, the Amended and Restated Credit
Agreement provides senior secured financing of up to $275,500, consisting of a
$17,500 Term A Loan, a $25,000 Term A1 Loan and a $158,000 Term B Loan
(collectively, 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 of the Term A
loan is due September 30, 2002, at which time the Revolver is also due. The
final installment of the Term A1 Loan is due March 31, 2003 and the final
installment of 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 and Restated Credit Agreement) plus 0.25% or (b) the Eurodollar
Rate (as defined in the Amended and Restated Credit Agreement) plus 1.25%.
Borrowings under the Term B Loan and Term A1 Loan bear interest, at the option
of Group, at a rate per annum equal to (a) the Alternate Base Rate plus 1.0% or
(b) the Eurodollar Rate 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. The weighted
average interest rate on outstanding borrowings under the Amended and Restated
Credit Agreement was 8.11% and 7.53% at December 31, 1999 and 1998,
respectively.
Senior Subordinated Notes and Series B Senior Subordinated Notes
The Senior Subordinated Notes issued in connection with the Acquisitions
and the Series B Notes issued in connection with the refinancing of the Term
Facility (collectively, 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 Indentures) 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., Wirekraft Industries de Mexico, S.A. de
C.V., IWG-Philippines, Inc., IWG International, Inc., Italtrecce-Societa
Italiana Trecce & Affini S.r.l., International Wire SAS, JYM Finance, S.A.,
Tresse Metalique J. Forissier, S.A., Cablerie E.
34
<PAGE> 36
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Charbonnet, S.A., Forissier Connectique, S.A., Hermitec, S.A. and Fressynet,
S.A. (the "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries and
Non-Guarantor Subsidiaries is wholly owned by the Company.
The Senior Notes mature on June 1, 2005. Interest on the Senior Notes is
payable semi-annually on each June 1 and December 1. The Senior Notes bear
interest at the rate of 11.75% per annum. The Senior Notes may not be redeemed
prior to June 1, 2000, except in the event of a Change of Control (as defined)
and at such applicable premium (as defined). The Senior 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.
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 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.
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 which resulted in an effective rate of 4.29% and
3.42% at December 31, 1999 and 1998, respectively. Rates change weekly and
interest is paid monthly. The IRB's are collateralized by letters of credit
totaling $15,500.
7. PREFERRED STOCK
In connection with the DWT Acquisition, the Company issued 400,000 shares
of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock, par value
$.01 (the "Preferred Stock"). In accordance with the Certificate of Designation
of the Preferred Stock, cumulative dividends were payable quarterly at the rate
of 14% per annum. The Preferred Stock had a liquidation preference of $25.00 per
share and a par value of $.01 per share. In 1997, the Company exchanged all
shares of Preferred Stock for debt and paid all dividends in arrears related to
the Preferred Stock.
35
<PAGE> 37
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109. The provision for income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Current:
Federal............................................... $ 2,096 $ 2,535 $ 169
State................................................. 358 736 776
Foreign............................................... 2,342 1,102 808
------- ------- -------
4,796 4,373 1,753
Deferred:
Federal............................................... 4,066 4,586 1,020
State................................................. 593 1,043 (119)
Foreign............................................... 600 -- --
------- ------- -------
5,259 5,629 901
------- ------- -------
10,055 10,002 2,654
Tax benefit on change in accounting principle........... (1,679) -- --
Tax benefit on extraordinary item....................... -- -- (1,995)
------- ------- -------
Total provision............................... $ 8,376 $10,002 $ 659
======= ======= =======
</TABLE>
The components of income before income taxes, cumulative effect of change
in accounting principle and extraordinary item were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Domestic................................................ $13,462 $24,324 $(2,371)
Foreign................................................. 12,018 (4,667) 4,996
------- ------- -------
Income (loss) before income taxes, cumulative effect of
change in accounting principle and extraordinary
item.................................................. $25,480 $19,657 $ 2,625
======= ======= =======
</TABLE>
Reconciliation between the statutory income tax rate and effective tax rate
is summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------- ------- ------
<S> <C> <C> <C>
U.S. Federal statutory rate at 35%....................... $ 8,918 $ 6,880 $ 919
State taxes, net of federal effect....................... 618 1,156 427
Foreign taxes............................................ (1,265) 736 (875)
Nondeductible expenses................................... 313 (870) (163)
Nondeductible amortization of intangibles................ 1,464 1,380 1,307
Nondeductible compensation expense (income).............. (540) 1,455 1,405
Other.................................................... 547 (735) (366)
------- ------- ------
$10,055 $10,002 $2,654
======= ======= ======
</TABLE>
36
<PAGE> 38
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effects of significant temporary differences representing deferred
tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Deferred tax assets:
Accounts receivable reserves.......................... $ 1,110 $ 1,106 $ 720
Accrued liabilities not yet deductible................ 194 1,393 2,672
Inventories........................................... 5,872 8,808 8,608
Net operating loss carryforward....................... 6,402 799 5,077
AMT credit carryforward............................... 1,858 2,259 --
Postretirement benefits............................... 2,690 2,912 3,158
Other................................................. 215 341 315
------- ------- -------
18,341 17,618 20,550
Deferred tax liabilities:
Depreciation and amortization......................... 24,677 18,695 15,998
------- ------- -------
Net deferred tax asset (liability)............ $(6,336) $(1,077) $ 4,552
======= ======= =======
</TABLE>
The Company's net operating loss expires in periods ranging from the year
2010 through the year 2011. The Company has no present intention of remitting
undistributed earnings of its foreign subsidiaries and, accordingly, no deferred
tax liability has been established relative to these earnings.
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. The
Company received 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.
9. UNUSUAL AND PLANT CLOSING CHARGES
During the development of a new business strategy in 1996, the Company
formulated a plan to realign the plant capacity through plant closings and
consolidations of Wire Segment facilities. To that end, the Company established
a reserve for plant closings. As future costs of the 1996 plan became reasonably
estimable, the Company charged an additional $2,000 to the reserve in 1997
relating to the closure of plants in the Wire Segment. The plant closing reserve
includes provisions for shut-down costs from the period of the plant closure to
the date of disposal, commitment costs for leased property and key personnel and
severance related costs. The Company anticipates that the remaining reserve is
adequate for the future expenditures related to plant closings and that all
remaining costs will be incurred with in the next year. During 1999, 1998 and
1997, plant closing actions resulted in the reduction of approximately 0, 90,
300 employees, respectively. There have been ten Wire Harness Segment facilities
and six Wire Segment facilities closed to date.
37
<PAGE> 39
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes the activity in the plant closing reserve
for the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Balance, beginning of period............................... $1,079 $1,445 $2,462
Charges to operations:
Facility shut-down costs................................. -- -- 1,875
Lease commitments........................................ -- -- --
Key personnel and severance costs........................ -- -- 125
------ ------ ------
-- -- 2,000
Costs incurred:
Facility shut-down costs................................. (549) (69) (1,979)
Lease commitments........................................ (90) (236) (230)
Key personnel and severance costs........................ (364) (61) (808)
------ ------ ------
(1,003) (366) (3,017)
------ ------ ------
Balance, end of period..................................... $ 76 $1,079 $1,445
====== ====== ======
</TABLE>
The Company periodically evaluates the adequacy of the reserve balances and
estimated future expenditures, including assumptions used and the period over
which such costs are expected to be incurred.
As part of an impairment charge in 1996, the Company accrued $4,200 for
anticipated losses related to product liability claims associated with the
Original Wirekraft Acquisition. These claims are for a non-wire product utilized
in the appliance industry that the Company has not manufactured since 1992. The
Company's policy is to record the probable and reasonably estimable loss related
to product liability claims. In 1996, the claims significantly increased as a
result of the receipt of claims accumulated by insurance companies related to
prior periods. Accordingly, the Company revised its estimated liability
outstanding on actual claims reported and its estimate of claims incurred but
not reported at December 31, 1999.
The Company continues to review the status of the claims and adjust the
liability accordingly. In developing its estimated liability outstanding on
actual claims reported, the Company considered historic settlement rates. In
determining its estimate of claims incurred but not reported, the Company
considered historical claim levels, amounts relative to total product shipped
and historical settlement rates.
The Company expected the frequency and per incident dollar value of the
claims to decrease substantially in 1999 as the products have exceeded their
useful life. Actual claims in 1999 did not decrease at the rate expected by the
Company as several insurance carriers continued to submit claims for products
beyond their expected useful life. The Company has not reached agreement on
settlement for the claims on these products. Based on these recent developments,
the Company reserved an additional amount of $3,000 related to these claims.
The Company has estimated its liability outstanding on actual claims
reported at December 31, 1999 and 1998 to be $2,739 and $1,574, respectively.
Additionally, the Company considered historical settlement rates to develop its
estimate for incurred but not reported claims at December 31, 1999 and 1998 of
$968 and $818, respectively. Due to the uncertainties associated with these
product claims, the future cost of final settlement of these claims may differ
from the liability currently accrued. However, in the Company's opinion, the
impact of final settlement of these claims on future operations, financial
position and cash flows will not be material.
38
<PAGE> 40
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. RETIREMENT BENEFITS AND STOCK OPTION PLANS
The Company sponsors a number of defined contribution retirement plans
which provide retirement benefits for eligible employees. Company contribution
expense related to these retirement plans for the years ended December 31, 1999,
1998 and 1997 amounted to approximately $3,828, $3,837 and $3,442, respectively.
Holding's Qualified and Non-Qualified Stock Option Plan (the "Option Plan")
provides for the granting of up to 4,795,322 shares of common stock to officers
and key employees of Holding and the Company. Under the Option Plan, options
granted approximate market value of the common stock at the date of grant. Such
options vest ratably over a five year period commencing on the first anniversary
date after the date of grant, and vested options are exercisable at the
discretion of the committee appointed to administer the Option Plan. Generally,
an option may be exercised only if the holder is an officer or employee of
Holding or the Company at the time of exercise. Options granted under the Option
Plan are not transferable, except by will and the laws of descent and
distribution.
Holding and the Company also granted Performance Options (the "Performance
Options") to certain key executives in 1996 and 1995. The Performance Options
are exercisable only on the occurrence of certain events. The exercise price for
the Performance Options is initially equal to $1.00 per share and, effective
each anniversary of the grant date, the per share exercise price for the
Performance Options is equal to the per share exercise price for the prior year
multiplied by 1.09. The Performance Options terminate on the tenth anniversary
date of the date of grant.
In accordance with SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for the Option Plan.
Accordingly, no compensation cost has been recognized for the Option Plan and
the Performance Options. There may be compensation expense in future periods to
the extent that the fair value of the stock exceeds the exercise price of the
Performance Options. Had compensation cost for the Option Plan and the
Performance Options been determined based upon the fair value at the grant date
for awards under these plans consistent with the methodology prescribed under
SFAS No. 123, the Company's net income would approximate the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1999 1998 1997
------- ------ -------
<S> <C> <C> <C>
As reported.............................................. $13,106 $9,655 $(3,020)
Pro forma................................................ $12,918 $9,345 $(3,210)
</TABLE>
The minimum value of each option grant is estimated on the date of grant
with the following assumptions in 1999, 1998 and 1997, respectively: (i)
risk-free interest rates of 6.0% in 1999, 6.0% in 1998 and a range of 6.4% to
6.6% in 1997 and (ii) expected life of 10 years.
The effects of applying SFAS No. 123 in this pro forma disclosure are not
indicative of future amounts. Additional awards in future years are anticipated.
39
<PAGE> 41
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Changes in the status of the Option Plan are summarized below:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE OPTIONS OPTIONS
PER SHARE GRANTED VESTED
---------------- --------- ---------
<S> <C> <C> <C>
December 31, 1996.............................. $1.01 4,015,249 195,249
Granted...................................... $1.40 1,350,000 --
Vested....................................... $1.03 -- 915,000
Forfeitures.................................. $1.00 (888,805) (28,805)
--------- ---------
December 31, 1997.............................. $1.12 4,476,444 1,081,444
Granted...................................... $1.81 225,000 --
Vested....................................... $1.12 -- 885,000
Forfeitures.................................. $1.41 (304,992) (44,992)
--------- ---------
December 31, 1998.............................. $1.14 4,396,452 1,921,452
Granted...................................... $2.24 400,000 --
Vested....................................... $1.11 -- 755,000
Exercised.................................... $1.40 (30,000) (30,000)
Forfeitures.................................. $1.33 (570,000) (140,000)
--------- ---------
December 31, 1999.............................. $1.22 4,196,452 2,506,452
========= =========
</TABLE>
Changes in the status of the Performance Options are summarized below:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICE OPTIONS OPTIONS
PER SHARE GRANTED VESTED
---------------- --------- ---------
<S> <C> <C> <C>
December 31, 1996.............................. $1.06 4,202,744 --
Granted...................................... $ -- -- --
--------- ---------
December 31, 1997.............................. $1.16 4,202,744 --
Granted...................................... $ -- -- --
Forfeitures.................................. $1.26 (350,228) --
--------- ---------
December 31, 1998.............................. $1.26 3,852,516 --
Reissued..................................... $1.26 350,228 --
--------- ---------
December 31, 1999.............................. $1.38 4,202,744 --
========= =========
</TABLE>
The weighted average grant-date fair value of options granted during 1999,
1998 and 1997 was $1.26, $1.04 and $0.75 per share, respectively. Of the
4,196,452 options outstanding under the Option Plan at December 31, 1999,
2,925,000 have an exercise price at $1.00 per share, 625,000 at $1.40 per share,
41,452 at $1.63 per share, 205,000 at $1.81 per share and 400,000 at $2.24 per
share and have weighted average remaining contractual lives of between 6 and 10
years. The weighted average exercise price of options vested at December 31,
1999 is $1.11 per share.
Of the Performance Options outstanding at December 31, 1999, 2,966,178 and
1,236,566 have exercise prices of $1.41 and $1.30 respectively, and have
weighted average remaining contractual lives of between 6 and 7 years. The
performance options that were forfeited in 1998 were reissued to certain
officers of the Company in 1999.
In addition to the options granted to officers and key employees through
the Option Plan, the Company also granted options to purchase 300,000 shares of
Holding Common Stock at $1.00 per share to directors of the Company. These
options were issued and vested in 1995.
40
<PAGE> 42
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Holding Class A common stock may be converted in shares of Holding common
stock (i) at the option of any holder thereof at any time, (ii) at the option of
Holding upon the occurrence of a Triggering Event (as defined), and (iii)
mandatorily at March 31, 2005. Each share of Holding's Class A common stock is
convertible into a fraction of a share of Holding common stock based on a
formula set forth in the Company's Certificate of Incorporation. During the
years ended December 31, 1999, 1998 and 1997, the Company recorded non-cash
compensation expense (income) of ($1,542), $4,158 and $4,010, respectively,
which reflects the difference between the cost of the Class A common stock and
the value of the defined conversion feature at those dates.
11. COMMITMENTS AND CONTINGENCIES
The Company leases certain property, transportation vehicles and other
equipment. Total rental expense under operating leases was $6,772, $6,511 and
$5,862 for the years ended December 31, 1999, 1998 and 1997, respectively.
Future minimum lease payments under capital and operating leases for the years
ended December 31 are:
<TABLE>
<CAPTION>
CAPITAL OPERATING
------- ---------
<S> <C> <C>
2000........................................................ $ 1,875 $ 4,115
2001........................................................ 1,567 3,536
2002........................................................ 578 2,482
2003........................................................ 433 1,794
2004........................................................ 432 1,200
Thereafter.................................................. 2,043 1,554
------- -------
Total minimum lease payments.............................. 6,928 $14,681
=======
Less amount representing interest......................... (2,374)
-------
Present value of net minimum lease payments............... $ 4,554
=======
</TABLE>
The Company is subject to legal proceedings and claims that arise in the
normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
12. BUSINESS SEGMENT INFORMATION
The Company conducts its operations through two business segments, a Wire
Segment and a Wire Harness Segment. The Wire Segment is comprised of two
operating divisions. The accounting policies of the segments are the same as
those described in Note 2 to the consolidated financial statements, "Significant
Accounting Policies." 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.
41
<PAGE> 43
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The table below presents information about reported segments for the years
ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
WIRE
WIRE HARNESS CONSOLIDATED
-------- -------- ------------
<S> <C> <C> <C>
December 31, 1999
Sales............................................. $484,978 $191,046 $676,024
Intersegment sales................................ (32,334) -- (32,334)
-------- -------- --------
Sales to customers................................ 452,644 191,046 643,690
Depreciation and amortization..................... 35,728 9,066 44,794
Unusual charges................................... -- 3,000 3,000
Operating income.................................. 61,144 17,225 78,369
Total assets...................................... $572,721 $105,386 $678,107
December 31, 1998
Sales............................................. $502,013 $170,393 $672,406
Intersegment sales................................ (26,485) -- (26,485)
-------- -------- --------
Sales to customers................................ 475,528 170,393 645,921
Depreciation and amortization..................... 35,169 7,589 42,758
Operating income.................................. 51,757 21,412 73,169
Total assets...................................... $539,527 $ 99,587 $639,114
December 31, 1997
Sales............................................. $553,925 $165,430 $719,355
Intersegment sales................................ (24,207) -- (24,207)
-------- -------- --------
Sales to customers................................ 529,718 165,430 695,148
Depreciation and amortization..................... 29,389 7,437 36,826
Plant closing charges............................. 2,000 -- 2,000
Inventory valuation adjustment.................... 8,500 -- 8,500
Operating income.................................. 36,451 20,348 56,799
Total assets...................................... $536,782 $ 91,266 $628,048
</TABLE>
A reconciliation of total operating income for reportable segments to
consolidated income (loss) before income tax provision, change in accounting
principle and extraordinary item for the years ended December 31, 1998, 1997 and
1996 is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Total operating income (loss) for reportable
Segments........................................... $ 78,369 $ 73,169 $ 56,799
Other income (expense):
Interest expense................................... (49,839) (50,627) (50,939)
Amortization of deferred financing costs........... (3,050) (2,980) (3,132)
Other, net......................................... -- 95 (103)
-------- -------- --------
Consolidated income before income tax provision,
change in accounting principle and extraordinary
item............................................... $ 25,480 $ 19,657 $ 2,625
======== ======== ========
</TABLE>
42
<PAGE> 44
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is sales and long-lived asset information by geographic area
as of and for the years ended December 31:
<TABLE>
<CAPTION>
SALES LONG-LIVED ASSETS
------------------------------ -------------------
1999 1998 1997 1999 1998
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
United States................... $622,929 $635,253 $695,148 $400,201 $416,190
Foreign......................... 77,434 40,915 35,885 49,370 29,970
Eliminations.................... (56,673) (30,247) (35,885) -- --
-------- -------- -------- -------- --------
$643,690 $645,921 $695,148 $449,571 $446,160
======== ======== ======== ======== ========
</TABLE>
Foreign sales are based on the country in which the legal subsidiary is
domiciled. Sales from no single foreign country were material to the
consolidated sales of the Company.
13. SUBSEQUENT EVENT
On February 11, 2000, the Company entered into a letter of intent to sell
its Wire Harness Segment to Viasystems Group, Inc. ("Viasystems") for $210,000
in cash. The sale is contingent upon Viasystems' initial public offering. The
Company and Viasystems are commonly controlled by affiliates of Hicks Muse. As
such, the Company will account for any gain or loss on the transaction through
stockholder's equity. The purchase price was determined by senior management of
both companies. In addition, each of the boards of directors have received
opinions from nationally recognized financial advisors that the purchase price
is fair, from a financial point of view, to each of the respective parties. In
connection with the sale, the Company will enter into a supply agreement to
supply substantially all of the Wire Harness Segment's insulated wire
requirements through 2003.
14. 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 other than 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.
43
<PAGE> 45
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1999
ASSETS
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
-------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash...................................... $ -- $ 7,131 $ 294 $ -- $ 7,425
Accounts receivable....................... -- 84,278 17,284 (252) 101,310
Inventories............................... -- 83,593 8,549 -- 92,142
Other current assets...................... -- 24,456 3,203 -- 27,659
-------- --------- ------- --------- --------
Total current assets............ -- 199,458 29,330 (252) 228,536
Property, plant and equipment, net........ -- 149,212 35,448 -- 184,660
Intangible assets, net.................... 18,484 229,358 9,796 -- 257,638
Investment in subsidiaries................ 736,090 -- -- (736,090) --
Other assets.............................. -- 3,147 4,126 -- 7,273
-------- --------- ------- --------- --------
Total assets.................... $754,574 $ 581,175 $78,700 $(736,342) $678,107
======== ========= ======= ========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities....................... $ 11,674 $ 92,255 $15,124 $ (252) $118,801
Long term obligations, less current
maturities.............................. 507,479 18,859 -- -- 526,338
Other long-term liabilities............... -- 51,849 849 -- 52,698
Intercompany (receivable) payable......... 187,389 (231,846) 44,457 -- --
-------- --------- ------- --------- --------
Total liabilities............... 706,542 (68,883) 60,430 (252) 697,837
Stockholder's equity (deficit):
Common stock............................ 0 0 0 0 0
Contributed capital..................... 124,751 572,012 10,867 (582,879) 124,751
Carryover of predecessor basis.......... -- (67,762) -- -- (67,762)
Retained earnings (accumulated
deficit)............................. (76,719) 145,808 7,403 (153,211) (76,719)
-------- --------- ------- --------- --------
Total stockholder's equity
(deficit)..................... 48,032 650,058 18,270 (736,090) (19,730)
-------- --------- ------- --------- --------
Total liabilities and
stockholder's equity
(deficit)..................... $754,574 $ 581,175 $78,700 $(736,342) $678,107
======== ========= ======= ========= ========
</TABLE>
44
<PAGE> 46
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
-------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............................... $ -- $622,929 $77,434 $(56,673) $643,690
Operating expenses:
Cost of goods sold.................... -- 462,909 50,097 (56,673) 456,333
Selling, general and administrative
expenses, including non-cash
compensation income of $1,542...... (1,542) 52,550 10,186 -- 61,194
Depreciation and amortization......... 826 34,862 9,106 -- 44,794
Unusual charges....................... -- 3,000 -- -- 3,000
-------- -------- ------- -------- --------
Operating income (loss)................. 716 69,608 8,045 -- 78,369
Other income (expense):
Interest expense...................... (48,839) (975) (25) -- (49,839)
Amortization of deferred financing
costs.............................. (3,050) -- -- -- (3,050)
Equity in net income of
subsidiaries....................... 64,279 -- -- (64,279) --
-------- -------- ------- -------- --------
Income before income tax provision and
cumulative effect of change in
accounting principle.................. 13,106 68,633 8,020 (64,279) 25,480
Income tax provision.................... -- 8,620 1,435 -- 10,055
-------- -------- ------- -------- --------
Income before cumulative effect of
change in accounting principle........ 13,106 60,013 6,585 (64,279) 15,425
Cumulative effect of change in
accounting for start-up costs, net of
tax benefit of $1,679................. -- (2,319) -- -- (2,319)
-------- -------- ------- -------- --------
Net income.............................. $ 13,106 $ 57,694 $ 6,585 $(64,279) $ 13,106
======== ======== ======= ======== ========
</TABLE>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
-------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash from operating activities.... $ (7,772) $ 50,195 $ 4,303 $ 4,749 $ 51,475
-------- -------- ------- ------- --------
Cash flows used in investing
activities:
Acquisitions, net of cash........... -- (20,000) -- -- (20,000)
Capital expenditures................ -- (22,096) (8,410) -- (30,506)
-------- -------- ------- ------- --------
Net cash used in investing
activities.......................... -- (42,096) (8,410) -- (50,506)
-------- -------- ------- ------- --------
Cash flows provided by (used in)
financing activities:
Equity proceeds..................... 42 -- 4,749 (4,749) 42
Repurchase of stock of Holding...... (230) -- -- -- (230)
Proceeds from issuance of long-term
obligations...................... 25,000 -- -- -- 25,000
Borrowing (repayment) of long-term
obligations and revolver......... (14,945) (968) (348) -- (16,261)
Financing fees and other............ (2,095) -- -- -- (2,095)
-------- -------- ------- ------- --------
Net cash from (used in) financing
activities.......................... 7,772 (968) (348) -- 6,456
-------- -------- ------- ------- --------
Net change in cash.................... $ -- $ 7,131 $ 294 $ -- $ 7,425
======== ======== ======= ======= ========
</TABLE>
45
<PAGE> 47
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1998
ASSETS
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
-------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash...................................... $ -- $ -- $ -- $ -- $ --
Accounts receivable....................... -- 79,444 2,969 (1,044) 81,369
Inventories............................... -- 80,803 2,165 -- 82,968
Other current 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
Intangible assets, net.................... 20,265 236,725 4,505 -- 261,495
Investment in subsidiaries................ 666,004 -- -- (666,004) --
Other assets.............................. -- 5,613 405 -- 6,018
-------- -------- ------- --------- --------
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
Contributed capital..................... 126,027 572,012 6,118 (578,130) 126,027
Carryover of predecessor basis.......... -- (67,762) -- -- (67,762)
Retained earnings (accumulated
deficit)............................. (89,825) 88,114 (240) (87,874) (89,825)
-------- -------- ------- --------- --------
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>
46
<PAGE> 48
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
-------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............................. $ -- $635,253 $ 40,915 $(30,247) $645,921
Operating expenses:
Cost of goods sold.................. -- 468,918 25,881 (30,247) 464,552
Selling, general and administrative
expenses including non-cash
compensation expense of $4,158... 4,158 47,782 13,502 -- 65,442
Depreciation and amortization....... 826 35,754 6,178 -- 42,758
-------- -------- -------- -------- --------
Operating income (loss)............... (4,984) 82,799 (4,646) -- 73,169
Other income (expense):
Interest expense.................... (49,762) (844) (21) -- (50,627)
Amortization of deferred financing
costs............................ (2,980) -- -- -- (2,980)
Equity in net income of
subsidiaries..................... 67,381 -- -- (67,381) --
Other, net.......................... -- 95 -- -- 95
-------- -------- -------- -------- --------
Income (loss) before income tax
provision........................... 9,655 82,050 (4,667) (67,381) 19,657
Income tax provision.................. -- 8,900 1,102 -- 10,002
-------- -------- -------- -------- --------
Net income............................ $ 9,655 $ 73,150 $ (5,769) $(67,381) $ 9,655
======== ======== ======== ======== ========
</TABLE>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash from operating activities..... $(4,031) $ 32,561 $ 6,036 $ 6,080 $ 40,646
------- -------- -------- ------- --------
Cash flows used in investing
activities:
Acquisitions, net of cash............ -- (7,821) -- -- (7,821)
Capital expenditures................. -- (22,283) (12,016) -- (34,299)
------- -------- -------- ------- --------
Net cash used in investing
activities........................... -- (30,104) (12,016) -- (42,120)
------- -------- -------- ------- --------
Cash flows provided by (used in)
financing activities:
Equity proceeds...................... -- 100 5,980 (6,080) --
Borrowing (repayment) of long-term
obligations and revolver.......... 4,031 (969) (226) -- 2,836
Financing fees and other............. -- (1,362) -- -- (1,362)
------- -------- -------- ------- --------
Net cash from (used in) financing
activities........................... 4,031 (2,231) 5,754 (6,080) 1,474
------- -------- -------- ------- --------
Net change in cash..................... $ -- $ 226 $ (226) $ -- $ --
======= ======== ======== ======= ========
</TABLE>
47
<PAGE> 49
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
-------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales.............................. $ -- $695,148 $35,885 $(35,885) $695,148
Operating expenses:
Cost of goods sold................... -- 551,311 14,884 (35,885) 530,310
Selling, general and administrative
expenses including non-cash
compensation expense of $4,010.... 4,010 44,190 12,513 -- 60,713
Depreciation and amortization........ 800 33,347 2,679 -- 36,826
Plant closing charges................ -- 2,000 -- -- 2,000
Inventory valuation adjustment....... -- 8,500 -- -- 8,500
-------- -------- ------- -------- --------
Operating income (loss)................ (4,810) 55,800 5,809 -- 56,799
Other income (expense):
Interest expense..................... (49,753) (1,186) -- -- (50,939)
Amortization of deferred financing
costs............................. (3,132) -- -- -- (3,132)
Equity in net income of
subsidiaries...................... 57,666 -- -- (57,666) --
Other, net........................... -- (98) (5) -- (103)
-------- -------- ------- -------- --------
Income before income tax provision and
extraordinary item................... (29) 54,516 5,804 (57,666) 2,625
Income tax provision................... -- 1,846 808 -- 2,654
-------- -------- ------- -------- --------
Income before extraordinary item....... (29) 52,670 4,996 (57,666) (29)
Extraordinary item..................... (2,991) -- -- -- (2,991)
-------- -------- ------- -------- --------
Net income................... $ (3,020) $ 52,670 $ 4,996 $(57,666) $ (3,020)
======== ======== ======= ======== ========
</TABLE>
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TOTAL
TOTAL NON-
COMPANY GUARANTOR GUARANTOR ELIMINATIONS CONSOLIDATED
--------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net cash from operating activities.... $ (53,585) $ 78,917 $ 8,666 $ -- $ 33,998
--------- -------- ------- -------- ---------
Cash flows used in investing
activities:
Acquisitions, net of cash........... -- (58,996) -- -- (58,996)
Capital expenditures................ -- (19,062) (8,698) -- (27,760)
--------- -------- ------- -------- ---------
Net cash used in investing
activities.......................... -- (78,058) (8,698) -- (86,756)
--------- -------- ------- -------- ---------
Cash flows provided by (used in)
financing activities:
Equity proceeds..................... 331 (451) 120 -- --
Proceeds from issuance of long-term
obligations...................... 228,125 -- -- -- 228,125
Repayment of long-term obligations
and revolver..................... (161,505) (496) -- -- (162,001)
Repurchase of stock of Holding...... (700) -- -- -- (700)
Cash dividends paid on preferred
stock............................ (1,378) -- -- -- (1,378)
Financing fees and other............ (11,288) -- -- -- (11,288)
--------- -------- ------- -------- ---------
Net cash from financing activities.... 53,585 (947) 120 -- 52,758
--------- -------- ------- -------- ---------
Net change in cash.................... $ -- $ (88) $ 88 $ -- $ --
========= ======== ======= ======== =========
</TABLE>
48
<PAGE> 50
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. RESTATEMENT OF FINANCIAL INFORMATION
The Company has restated its previously issued financial statements for the
years ended December 31, 1998, 1997 and 1996. These restatements were made to
reflect non-cash compensation expense (income) related to Holding's Class A
common stock, which is convertible into Holding common stock (see Note 2 and
Note 10). The Company also made reclassifications to accumulated deficit and
contributed capital to reflect the impact of the non-cash compensation expense
(income). There were no net adjustments to Stockholder's equity (deficit) for
the years reported.
The impact of these adjustments on the Company's financial results as
originally reported is summarized below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1998 1997 1996
------------------------- ------------------------- -------------------------
AS REPORTED AS RESTATED AS REPORTED AS RESTATED AS REPORTED AS RESTATED
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Income before income tax
provision, cumulative
effect of change in
accounting principle and
extraordinary item......... $23,815 $19,657 $6,635 $ 2,625 $(88,220) $(91,907)
Net income (loss)............ $13,813 $ 9,655 $ 990 $(3,020) $(89,482) $(93,169)
</TABLE>
These adjustments are reflected in the Company's accompanying Consolidated
Statements of Operations.
49
<PAGE> 51
INTERNATIONAL WIRE GROUP, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ALLOWANCE FOR DOUBTFUL COLLECTION OF
ACCOUNTS -- DEDUCTED FROM BALANCE AT PREVIOUSLY BALANCE AT
ACCOUNTS RECEIVABLES IN THE BEGINNING WRITTEN OFF END OF
BALANCE SHEET OF PERIOD PROVISION WRITE-OFFS ACCOUNTS ACQUISITIONS PERIOD
- ----------------------------- ---------- --------- ---------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31,
1997....................... $1,363 $888 $(388) $12 $203 $2,078
Year ended December 31,
1998....................... $2,078 $787 $(250) $18 $ -- $2,633
Year ended December 31,
1999....................... $2,633 $679 $(608) $-- $175 $2,879
</TABLE>
50
<PAGE> 52
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL
DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the names and positions of the directors and executive
officers of Holding and the Company. All directors hold office until the next
annual meeting of stockholders of Holding and the Company, and until their
successors are duly elected and qualified. All officers serve at the pleasure of
the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<S> <C> <C>
James N. Mills.............. 62 Chairman of the Board and Chief Executive Officer of Holding
and the Company
Charles W. Tate............. 55 Director of Holding and the Company
Jack D. Furst............... 42 Director of Holding and the Company
John A. Gavin............... 68 Director of Holding and the Company
Thomas P. Danis............. 53 Director of Holding and the Company
Richard W. Vieser........... 72 Director of Holding and the Company
Joseph M. Fiamingo.......... 50 Director, President and Chief Operating Officer of Holding
and the Company
Rodney D. Kent.............. 52 Director of Holding and the Company, President and Chief
Executive Officer of Omega
David M. Sindelar........... 42 Senior Vice President and Chief Financial Officer of
Holding, Senior Vice President of the Company
Glenn J. Holler............. 52 Vice President-- Finance of the Company
</TABLE>
James N. Mills is Chairman of the Board and Chief Executive Officer of the
Company and of Holding and has held such position since April 1995. Mr. Mills
serves as Chairman of the Board and Chief Executive Officer of Mills & Partners,
Viasystems Group, Inc. and LLS Corp. Mr. Mills was Chairman of the Board and
Chief Executive Officer of Berg Electronics Corp. and Chairman of the Board and
sole director of Berg Electronics Group, Inc. from November 1992 through October
1998 and was Chairman of the Board and Chief Executive Officer of Crain Holding
Corp. and Crain Industries, Inc. from August 1995 through December 1997 and of
Jackson Holding Company and Jackson Products, Inc. from February 1993 through
August 1995.
Charles W. Tate is a director of the Company and has held such position
since April 1995. Mr. Tate is President of Hicks Muse. Before joining Hicks Muse
as a Managing Director and Principal in 1991, Mr. Tate had over 19 years of
experience in investment and merchant banking with Morgan Stanley & Co.
Incorporated, including ten years in the mergers and acquisitions department and
the last two and one-half years as a Managing Director in Morgan Stanley & Co.
Incorporated's merchant banking group. Mr. Tate also serves as a director of
International Home Foods, Inc., International Outdoor Advertising Holding
Company, International Seed Holdings ApS, Venezuela Cable Service Holding Ltd.,
CEI Citicorp Holding Sociedad Anonima, Stoneville Pedigreed Seed Company,
Mahendra Hybrid Seeds Limited and five companies in Mexico (Seguros Comercial
America, S.A. de C.V., Vidrio Formas, S.A. de C.V., Grupo Minsa, S.A. de C.V.,
Almacenadora Mercader S.A., and Fomento e Ingenieria en Comercializacion, S.A.
de C.V.).
Jack D. Furst is a Director of the Company and has held such position since
April 1995. Mr. Furst is a Partner of Hicks Muse and has held such position
since 1989. Mr. Furst has approximately 20 years of experience in leveraged
acquisitions and private investments. Mr. Furst is involved in all aspects of
Hicks Muse's business and has been actively involved in originating, structuring
and monitoring its investments.
51
<PAGE> 53
Mr. Furst is primarily responsible for managing the relationship with Mills &
Partners. Prior to joining Hicks Muse, Mr. Furst was a Vice President and
subsequently a Partner of Hicks & Haas Incorporated, a Dallas based private
investment firm from 1987 to May 1989. From 1984 to 1986, Mr. Furst was a merger
and acquisition/corporate finance specialist for The First Boston Corporation in
New York. Before joining First Boston, Mr. Furst was a financial consultant at
Price Waterhouse. Mr. Furst serves on the board of directors of American Tower
Corporation, Triton Energy Limited, Home Interiors & Gifts, Inc., Hedstrom
Holdings, Inc., Cooperative Computing, Inc., Globix Corporation, Viasystems
Group, Inc. and LLS Corp.
John A. Gavin is a director of the Company and has held such position since
June 1995. Mr. Gavin is the founder and Chairman of the Board of Gamma Holdings,
an international capital and consulting firm established in 1968, and is a
Partner and Managing Director of Hicks, Muse, Tate & Furst (Latin America),
Incorporated and has held such position since 1996. From 1987 to 1990, Mr. Gavin
was President of Univisa Satellite Communications, a part of a Spanish-speaking
broadcast network. Prior thereto, Mr. Gavin served as a Vice President of
Atlantic Richfield Company from 1986. From 1981 to 1986, Mr. Gavin served as the
United States Ambassador to Mexico. Mr. Gavin also serves as a director of
Atlantic Richfield Company, Apex Mortgage Capital, Krause's and the Hotchkis and
Wiley Funds.
Thomas P. Danis is a director of the Company and has held such position
since June 1995. Mr. Danis has been Chairman of the Board of Aon Risk Services
of Missouri, Inc., a company engaged in the insurance brokerage business, since
1993. In 1979, Mr. Danis co-founded an insurance brokerage firm, a joint venture
with Corroon & Black, which was ultimately purchased by Corroon & Black in 1984.
Mr. Danis also serves as a director of Commerce Bank, N.A.
Richard W. Vieser is a director of the Company and has held such position
since September 1995. Mr. Vieser is the retired Chairman of the Board, Chief
Executive Officer and President of Lear Siegler, Inc. (a diversified
manufacturing company), the former Chairman of the Board and Chief Executive
Officer of FL Industries, Inc. and FL Aerospace (also diversified manufacturing
companies) and the former President and Chief Operating Officer of McGraw-Edison
Co. He is the Chairman of the Board of Varian Associates, Inc. and is also a
director of Ceridian Corporation (formerly Control Data Corporation), Dresser
Industries, Inc., Harvard Industries, INDRESCO Inc., Viasystems Group, Inc. and
Sybron International Corporation.
Joseph M. Fiamingo is a director of the Company and has held such position
since October 1996. Mr. Fiamingo also serves as President and Chief Operating
Officer of the Company and has held such positions since September 1996.
Previously, Mr. Fiamingo held the position of Vice President of Operations and
Technology of the Company from June 1996 and President and Chief Operating
Officer of Wirekraft from October 1995. Prior thereto, Mr. Fiamingo was employed
by General Cable Corporation from 1972 to 1995 where he held various senior
management level positions including President and Vice President and General
Manager of several divisions of General Cable and most recently, Executive Vice
President of Operations.
Rodney D. Kent is a director of the Company and has held such position
since April 1995. Mr. Kent also serves as President and Chief Executive Officer
of Omega and has held such positions since 1983. Mr. Kent served as Assistant to
the President of Omega from 1974 to 1983. Prior to joining Omega, Mr. Kent was
employed with Flexo Wire from 1973 to 1974 and Camden Wire Company from 1970 to
1973. Mr. Kent also serves as a director of Oneida Savings Bank.
David M. Sindelar is Senior Vice President and Chief Financial Officer of
the Company and of Holding and has held such positions since April 1995. Mr.
Sindelar is also President and Chief Operating Officer of Mills & Partners. Mr.
Sindelar also serves as Senior Vice President and Chief Financial Officer of
Viasystems, Inc., Viasystems Group, Inc. and LLS Corp. Mr. Sindelar was Senior
Vice President and Chief Financial Officer of Berg Electronics Corp. from March
1993 through October 1998 and of Crain Industries, Inc. and Crain Holdings Corp.
from August 1995 through December 1997 and of Jackson Holding Company from
February 1993 through August 1995. Mr. Sindelar is a director of LLS Corp.
Glenn J. Holler is Vice President -- Finance of the Company and has held
such position since August 1996. Prior to joining the Company, Mr. Holler was
employed by Vigoro Industries, Inc. as Vice President,
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<PAGE> 54
Finance from 1994 to 1996. From 1983 to 1994, Mr. Holler held several positions
at Moog Automotive, Inc. including Vice President -- Finance and Senior Vice
President -- Finance.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation earned by
the Chief Executive Officer and the four other most highly compensated executive
officers of Holding and the Company (the "Named Executive Officers"). Such
compensation was paid by or on behalf of the Company during the years ended
December 31, 1999, 1998 and 1997. The bonuses included in annual compensation
were paid subsequent to year end. As of the date hereof, the Company has not
granted any stock appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
---- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
James N. Mills...................... 1999 685,000 685,000 175,228 --
Chairman of the Board and 1998 502,944 500,000 -- --
Chief Executive Officer of Holding 1997 395,000 548,000 -- --
Joseph M. Fiamingo.................. 1999 379,850 227,500 -- --
President and Chief Operating 1998 350,350 227,500 -- --
Officer of Holding and the Company 1997 316,502 195,000 -- --
Rodney D. Kent...................... 1999 349,700 227,305 -- 165,038(2)
President and Chief Executive 1998 325,000 177,631 -- 119,671(2)
Officer of Omega 1997 316,960 207,564 -- 153,196(2)
David M. Sindelar................... 1999 300,000 300,000 175,000 --
Senior Vice President and 1998 223,486 177,600 -- --
Chief Financial Officer of Holding 1997 169,000 150,000 -- --
Senior Vice President of the
Company
Glenn J. Holler..................... 1999 245,284 117,354 -- --
Vice President -- Finance of 1998 231,030 110,225 -- --
the Company 1997 217,579 103,144 -- --
</TABLE>
- ---------------
(1) Holding and the Company provide to certain executive officers, a car
allowance, reimbursement for club memberships, insurance policies and
certain other benefits. The aggregate incremental cost of these benefits to
Holding and the Company for each officer do not exceed the lesser of $50,000
or 10% of the total annual salary and bonus reported for each officer.
(2) Represents (i) $34,904, $0 and $45,792 in premiums paid on life insurance
policies for the benefit of Mr. Kent in 1999, 1998 and 1997, respectively
and (ii) $52,455, $51,562 and $47,888 in annual deferred compensation and
$77,679, $68,109 and $59,516 in annual interest accruals thereon earned by
Mr. Kent in 1999, 1998 and 1997, respectively, pursuant to his employment
agreement.
53
<PAGE> 55
OPTION GRANTS IN LAST FISCAL YEAR
Upon cancellation of 350,228 Performance Options (as hereinafter defined)
granted to a previous member of the Company's management, the Company reissued
those Performance Options to certain Named Executive Officers under the same
terms and conditions of the cancelled options. There were no other options
granted to Named Executive Officers in the current fiscal year. The following
table summarizes options reissued during fiscal 1999 to Named Executive
Officers:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED/ PRICE APPRECIATION FOR
OPTIONS REISSUED TO EXERCISE OPTION TERM(1)
REISSUED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------- ------------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
James N. Mills(2).............. 81,668 11% 1.41(3) 03/31/05 0(4) 0(4)
James N. Mills(2).............. 42,003 6% 1.41(3) 06/12/05 0(4) 0(4)
James N. Mills(2).............. 51,557 7% 1.30(3) 03/05/06 0(4) 0(4)
David M. Sindelar(2)........... 81,562 11% 1.41(3) 03/31/05 0(4) 0(4)
David M. Sindelar(2)........... 41,948 6% 1.41(3) 06/12/05 0(4) 0(4)
David M. Sindelar(2)........... 51,490 7% 1.30(3) 03/05/06 0(4) 0(4)
</TABLE>
- ---------------
(1) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the option immediately
prior to the expiration of its term, assuming the specified compound rates
of appreciation of Holding Common Stock over the term of the options. These
amounts represent certain assumed rates of appreciation only. Actual gains
on the exercise of options are dependent on the future performance of
Holding Common Stock.
(2) Reflects Performance Options (as hereinafter defined) reissued in fiscal
1999 by Holding. For a description of the material terms of such options,
see "-- Benefit Plans -- Performance Options"
(3) The exercise price for the Performance Options is initially equal to $1.00
per share and, effective each anniversary date of the initial grant date,
the per share exercise price for the Performance Options is equal to the per
share exercise price for the prior year multiplied by 1.09. The Performance
Options were reissued in fiscal 1999 under the same terms and conditions of
the original grant.
(4) The Performance Options are exercisable only in the event that Hicks, Muse,
Tate & Furst Equity Fund II, L.P. ("HM Fund II") realizes a 35% overall rate
of return, compounded annually, on its equity funds invested in Holding.
Accordingly, there is no potential realizable value to the Performance
Options at compound appreciation rates of 5% and 10%.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
No options were exercised by the Named Executive Officers during fiscal
1999. The following table summarizes the value of unexercised options as of
December 31, 1999. The per share fair market value of the Holding Common Stock
used to make the calculations in the following table is $2.24, which is the fair
market value attributed to the Holding Common Stock by the Board of Directors on
November 9, 1999.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James N. Mills............ 0 0 0 1,576,027 0 1,355,481
Joseph M. Fiamingo........ 0 0 680,000 320,000 843,200 396,800
Rodney D. Kent............ 0 0 320,000 80,000 396,800 99,200
David M. Sindelar......... 0 0 0 1,225,804 0 1,054,093
Glenn J. Holler........... 0 0 150,000 100,000 186,000 124,000
</TABLE>
54
<PAGE> 56
EMPLOYMENT AGREEMENTS
James N. Mills Employment Agreement. Mr. James N. Mills entered into an
employment agreement with Holding and the Company on June 12, 1995. Pursuant to
such employment agreement, Mr. Mills will serve as the Chairman of the Board and
Chief Executive Officer of Holding and the Company through June 11, 2000. Mr.
Mills is required to devote such business time and attention to the transaction
of the Company's business as is reasonably necessary to discharge his duties
under the employment agreement. Subject to the foregoing limitation on his
activities, Mr. Mills is free to participate in other business endeavors.
The compensation provided to Mr. Mills under his employment agreement
includes an annual base salary of not less than $300,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and the Company for as
long as the employment agreement is in force. In addition, Mr. Mills is entitled
to an annual bonus in an amount to be determined at the sole discretion of the
Board of Directors of Holding.
Mr. Mills' employment agreement also provides that if Mr. Mills' employment
is terminated without cause, Mr. Mills will continue to receive his then current
salary for the longer of the remainder of the employment period or 18 months
following such termination. In addition, Mr. Mills' employment agreement
provides that if Mr. Mills is terminated due to death or disability, Mr. Mills'
estate, heirs, or beneficiaries, as applicable, will receive, in addition to any
other benefits provided under any benefit plan, his then current salary for a
period of 18 months from the date of termination.
Joseph M. Fiamingo Employment Agreement. Mr. Joseph M. Fiamingo entered
into an employment agreement with Holding and the Company on November 13, 1999.
Pursuant to such employment agreement, Mr. Fiamingo will serve as President and
Chief Operating Officer of Holding and the Company through November 12, 2002.
The compensation provided to Mr. Fiamingo under his employment agreement
includes an annual base salary of not less than $350,000, subject to adjustment
at the sole direction of the Chief Executive Officer of Holding, and such
benefits as are customarily accorded the executives of Holding and the Company
for as long as the employment agreement is in force. In addition, Mr. Fiamingo
is entitled to an annual bonus in an amount to be determined by the Chief
Executive Officer of Holding of up to sixty-five percent of his base
compensation.
Mr. Fiamingo's employment agreement also provides that if Mr. Fiamingo's
employment is terminated without cause, Mr. Fiamingo will continue to receive
his then current salary for the remainder of such employment agreement. In
addition, Mr. Fiamingo's employment agreement provides that if Mr. Fiamingo is
terminated due to death or disability, Mr. Fiamingo's estate, heirs, or
beneficiaries, as applicable, will receive, in addition to any other benefits
provided under any benefit plan, his then current salary for a period of 12
months from the date of termination.
Rodney D. Kent Employment Agreement. Mr. Kent entered into an employment
agreement with Omega on March 14, 1995. Pursuant to such employment agreement,
Mr. Kent will serve as President and Chief Executive Officer of Omega through
March 28, 2000. Mr. Kent is required to devote substantially all of his business
time and attention to the performance of his duties under the employment
agreement.
The compensation provided to Mr. Kent under his employment agreement
includes an annual base salary of not less than $349,700, subject to increase at
the sole discretion of the Board of Directors of Omega, and certain other
benefits for as long as the employment agreement is in force. In addition,
during each year of employment, an additional 15% of the annual base salary is
credited to a deferred compensation account for the benefit of Mr. Kent, which
deferred compensation account is annually credited with an interest accrual of
8% on the balance of the account for the prior year. Further, Mr. Kent is
entitled to an annual bonus in an amount to be determined at the sole discretion
of the Chairman of the Board of Holding of up to sixty-five percent of his
annual base salary.
Mr. Kent's employment agreement also provides that if Mr. Kent's employment
is terminated by Omega without cause or due to disability or death, Mr. Kent or
his estate, heirs or beneficiaries, as applicable, will
55
<PAGE> 57
receive, in addition to any other benefits provided him or them under any
benefit plan, Mr. Kent's then current salary for a period of 24 months from Mr.
Kent's termination without cause or his disability or death. In the event that
Mr. Kent terminates his employment and receives a bona fide offer of employment
from a competitor of the Company, Mr. Kent will receive, in addition to any
other benefits provided under any benefit plan, Mr. Kent's then current salary
for a period of 24 months from such termination, but only in the event that
Omega elects to enforce certain non-competition provisions of the employment
agreement.
David M. Sindelar Employment Agreement. Mr. David M. Sindelar entered into
an employment agreement with Holding and the Company on June 12, 1995. Pursuant
to such employment agreement, Mr. Sindelar will serve as the Senior Vice
President and Chief Financial Officer of Holding and Senior Vice President of
the Company through June 11, 2000. Mr. Sindelar is required to devote such
business time and attention to the transaction of the Company's business as is
reasonably necessary to discharge his duties under the employment agreement.
Subject to the foregoing limitation on his activities, Mr. Sindelar is free to
participate in other business endeavors.
The compensation provided to Mr. Sindelar under his employment agreement
includes an annual base salary of not less than $150,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and Senior Vice President
of the Company for as long as the employment agreement is in force. In addition,
Mr. Sindelar is entitled to an annual bonus in an amount to be determined at the
sole discretion of the Board of Directors of Holding.
Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's
employment is terminated without cause, Mr. Sindelar will continue to receive
his then current salary for the longer of the remainder of the employment period
or 18 months following such termination. In addition, Mr. Sindelar's employment
agreement provides that if Mr. Sindelar is terminated due to death or
disability, Mr. Sindelar's estate, heirs, or beneficiaries, as applicable, will
receive, in addition to any other benefits provided under any benefit plan, his
then current salary for a period of 18 months from the date of termination.
Glenn J. Holler Employment Agreement. Mr. Glenn J. Holler entered into an
employment agreement with the Company on November 13, 1999. Pursuant to such
employment agreement, Mr. Holler will serve as Vice President -- Finance of the
Company through November 12, 2000.
The compensation provided to Mr. Holler under his employment agreement
includes an annual base salary of not less than $244,000, subject to adjustment
at the sole direction of the Chief Executive Officer of Holding, and such
benefits as are customarily accorded the executives of the Company for as long
as the employment agreement is in force. In addition, Mr. Holler is entitled to
an annual bonus in an amount to be determined by the Chief Executive Officer of
Holding of up to fifty percent of his base compensation.
Mr. Holler's employment agreement also provides that if Mr. Holler's
employment is terminated without cause, Mr. Holler will continue to receive his
then current salary for one year. In addition, Mr. Holler's employment agreement
provides that if Mr. Holler is terminated due to death or disability, Mr.
Holler's estate, heirs, or beneficiaries, as applicable, will receive, in
addition to any other benefits provided under any benefit plan, his then current
salary for a period of six months from the date of termination.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions are made by the Board of Directors. Messrs. James N.
Mills, Joseph M. Fiamingo and Rodney D. Kent served as both executive officers
and directors during 1999, and are expected to serve in such capacities in 2000.
COMPENSATION OF DIRECTORS
Directors who are officers, employees or otherwise an affiliate of Holding
or the Company receive no compensation for their services as directors. Each
director of Holding and the Company who is not also an officer, employee or an
affiliate of Holding or the Company (an "Outside Director") will receive an
annual retainer of $12,000 and a fee of $1,000 for each meeting of the board of
directors at which the director is present. Directors of Holding and the Company
are entitled to reimbursement of their reasonable out-of-
56
<PAGE> 58
pocket expenses in connection with their travel to and attendance at meetings of
the board of directors or committees thereof.
BENEFIT PLANS
Stock Option Plan
Holding's qualified and non-qualified stock option plan (the "Option Plan")
provides for the granting of up to 4,795,322 shares of Holding Common Stock to
officers and key employees of Holding and the Company. Under the Option Plan, as
of January 31, 2000, Holding has granted options to purchase 4,196,452 shares of
Holding common stock, 2,925,000 at $1.00 per share, 625,000 at $1.40 per share,
41,452 at $1.625 per share, 205,000 at $1.81 per share and 400,000 at $2.24 per
share, the fair market value of Holding Common Stock at the date of grant as
determined by the Board of Directors of Holding. Such options vest ratably over
a five year period commencing on the first anniversary date after the date of
grant, subject to acceleration in the discretion of the committee appointed to
administer the Option Plan in the event of a Change of Control (as defined in
the Option Plan). Generally, an option may be exercised only if the holder is an
officer or employee of Holding or the Company at the time of exercise. Options
granted under the Option Plan are not transferable, except by will and the laws
of descent and distribution. Except as expressly provided otherwise in any
optionee's agreement relating to the grant of options under the Option Plan, in
the event an optionee's employment with Holding, the Company or a related entity
terminates at any time, Holding or its designees shall have the right to
repurchase from the optionee (or optionee's representatives) (i) the number of
shares of Holding Common Stock acquired upon exercise of an option and (ii) the
optionee's right to acquire that number of shares of Holding Common Stock which
an optionee can acquire upon exercise immediately prior to such repurchase. The
purchase price to be paid is calculated on the basis of the fair market value
(as defined in the Option Plan) of Holding Common Stock multiplied by the number
of shares of Holding Common Stock to be acquired (less the aggregate exercise
price in the event such repurchase option is exercised by Holding with respect
to the optionee's right to acquire Holding Common Stock).
Performance Options
On March 31, 1995, Omega granted options (the "Performance Options") to
purchase 1,958,762 shares of common stock of Omega ("Omega Common Stock"). Mr.
Mills was granted Performance Options to purchase 652,921 shares of Omega Common
Stock, Mr. Sindelar was granted Performance Options to purchase 489,691 shares
of Omega Common Stock and Performance Options to purchase the remaining 816,150
shares of Omega Common Stock were granted to certain officers of Omega who are
also affiliated with Mills & Partners. In connection with the Wirekraft/Omega
Combination and pursuant to the terms of the option agreements (the "Performance
Option Agreements") related to the Performance Options, the Performance Options
became options to purchase an identical number of shares of Holding Common
Stock. During the year ended December 31, 1998, a member of the Company's
management forfeited 163,230 Performance Options. In 1999, the Company reissued
these Performance Options with the same terms and conditions to Mr. Mills and
Mr. Sindelar. Mr. Mills was granted Performance Options to purchase 81,668
shares of Holding Common Stock and Mr. Sindelar was granted Performance Options
to purchase 81,562 shares of Holding Common Stock.
On June 12, 1995, the Company granted Performance Options to purchase
1,007,416 shares of Holding Common Stock. Mr. Mills was granted Performance
Options to purchase 335,804 shares of Holding Common Stock, Mr. Sindelar was
granted Performance Options to purchase 251,856 shares of Holding Common Stock
and Performance Options to purchase the remaining 419,756 shares of Holding
Common Stock were granted to certain officers of the Company who are also
affiliated with Mills & Partners. During the year ended December 31, 1998, a
member of the Company's management forfeited Performance Options to purchase
83,951 shares of Holding Common Stock. In 1999, the Company reissued these
Performance Options with the same terms and conditions to Mr. Mills and Mr.
Sindelar. Mr. Mills was granted Performance Options to purchase 42,003 shares of
Holding Common Stock and Mr. Sindelar was granted Performance Options to
purchase 41,948 shares of Holding Common Stock.
57
<PAGE> 59
On March 5, 1996, the Company granted Performance Options to purchase
1,236,566 shares of Holding Common Stock. Mr. Mills was granted Performance
Options to purchase 412,188 shares of Holding Common Stock, Mr. Sindelar was
granted Performance Options to purchase 309,143 shares of Holding Common Stock
and Performance Options to purchase the remaining 515,235 shares of Holding
Common Stock were granted to certain officers of the Company who are also
affiliated with Mills & Partners. During the year ended December 31, 1998, a
member of the Company's management forfeited Performance Options to purchase
103,047 shares of Holding Common Stock. In 1999, the Company reissued these
Performance Options with the same terms and conditions to Mr. Mills and Mr.
Sindelar. Mr. Mills was granted Performance Options to purchase 51,557 shares of
Holding Common Stock and Mr. Sindelar was granted Performance Options to
purchase 51,490 shares of Holding Common Stock.
The Performance Options are exercisable only in the event that Hicks, Muse,
Tate and Furst Equity Fund II, L.P. ("HM Fund II") has realized an overall rate
of return of at least 35% per annum, compounded annually, on all equity funds
invested by it in Holding. Subject to the foregoing, the Performance Options are
exercisable (i) immediately prior to a Liquidity Event (as hereinafter defined),
(ii) concurrently with the consummation of a Qualified IPO (as hereinafter
defined), or (iii) on December 31, 2004 (with respect to the Performance Options
granted on March 31, 1995 and June 12, 1995) or on December 31, 2005 (with
respect to the Performance Options granted on March 5, 1996). A "Liquidity
Event" generally means (i) one or more sales or other dispositions of Holding
Common Stock if, thereafter, the amount of Holding Common Stock owned by HM Fund
II is reduced by 50%, (ii) any merger, consolidation or other business
combination of Holding pursuant to which any person or group acquires a majority
of the common stock of the resulting entity, or (iii) any sale of all or
substantially all of the assets of Holding. A "Qualified IPO" means a firm
commitment underwritten public offering of Holding Common Stock for gross
proceeds of at least $25.0 million.
The exercise price for the Performance Options is initially equal to $1.00
per share and, effective each anniversary of the grant date, the per share
exercise price for the Performance Options is equal to the per share exercise
price for the prior year multiplied by 1.09. The exercise price of the
Performance Options and the number of shares of Holding Common Stock for which
the Performance Options are exercisable is subject to adjustment in the event of
certain fundamental changes in the capital structure of Holding. The Performance
Options terminate on the tenth anniversary of the date of grant.
58
<PAGE> 60
ITEM 12. SECURITIES OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the issued and outstanding shares of common stock of the Company are
held by Holding. The following table sets forth as of December 31, 1999 certain
information regarding the beneficial ownership of the voting securities of
Holding by each person who beneficially owns more than 5% of any class of
Holding voting securities and by the directors and certain executive officers of
Holding, individually, and by the directors and executive officers of Holding as
a group. The Class A Common Stock, par value $0.01 per share, of Holding
("Holding Class A Common Stock") votes together with the Holding Common Stock as
a single class and is entitled to one vote for each share.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
---------------------------------------------------------------
HOLDING CLASS A
HOLDING COMMON STOCK COMMON STOCK
------------------------ -----------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS SHARES CLASS TOTAL
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS:
HM Parties(2)...................... 118,766,452 100.0% -- -- 90.1%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Rodney D. Kent(3).................... 6,020,000 5.1% -- -- 4.6%
c/o Omega Wire, Inc.
12 Masonic Avenue
Camden, New York 13316
OFFICERS AND DIRECTORS:
James N. Mills(4).................... 1,702,034 1.4% 13,000,000 100.0% 11.2%
Thomas P. Danis(5)................... 200,000 * -- -- *
Jack D. Furst(2)..................... 118,766,452 100.0% -- -- 90.1%
John A. Gavin(6)..................... 235,957 * -- -- *
Charles W. Tate(2)................... 118,766,452 100.0% -- -- 90.1%
Rodney D. Kent(3).................... 6,020,000 5.1% -- -- 4.6%
Richard W. Vieser(7)................. 235,957 * -- -- *
Joseph M. Fiamingo(8)................ 680,000 * -- -- *
David M. Sindelar(9)................. -- -- 3,648,482 28.1% 2.8%
Glenn J. Holler(10).................. 150,000 * -- -- *
All executive officers and directors
as a group (10 persons)(11)........ 118,766,452 100.0% 13,000,000 100.0% 100.0%
</TABLE>
- ---------------
* Less than one percent.
(1) Holding Class A Common Stock is convertible into Holding Common Stock (i)
at the option of any holder thereof at any time, (ii) at the option of
Holding upon the occurrence of a Triggering Event (as defined below), and
(iii) mandatorily at March 31, 2005. A "Triggering Event" means any sale of
substantially all of the assets of Holding or any merger, consolidation or
other business combination of Holding in which Hicks Muse and its
affiliates cease to own at least 50% of the resulting entity. Each share of
Holding Class A Common Stock is convertible into a fraction of a share of
Holding Common Stock equal to the quotient of (i) the fair market value of
a share of Holding Common Stock at the time of conversion less the sum of
$0.99 plus imputed interest thereon at a rate of 9% per annum, compounded
annually, at the time of conversion, divided by (ii) the fair market value
of a share of Holding Common Stock at the time of conversion. Because the
fraction of a share of Holding Common Stock into which Holding Class A
Common Stock is convertible is determinable only at the time of a
conversion, shares of Class A Holding Common Stock are not included in the
shares of Holding Common Stock beneficially owned in the foregoing table.
59
<PAGE> 61
(2) Includes (i) shares owned of record by HM Fund II, a limited partnership of
which the sole general partner is HM2/GP Partners, L.P., a limited
partnership of which the sole general partner is Hicks, Muse GP Partners,
L.P., a limited partnership of which the sole general partner is Hicks,
Muse, Tate & Furst Fund II Incorporated, a corporation affiliated with
Hicks Muse; (ii) shares owned of record by HM2/Wire/Hunt Partners, L.P.,
HM2/Wire/Sunwestern Partners, L.P. and HM2/Wire/Hubbard Partners, L.P.,
limited partnerships of which the sole general partner is HM2/GP Partners,
L.P.; (iii) shares owned of record by certain individuals that Hicks Muse
has the power to direct the voting of with respect to the election of
directors; and (iv) shares owned of record by certain individuals subject
to an irrevocable proxy in favor of Hicks Muse. Thomas O. Hicks is a
controlling stockholder of Hicks Muse and serves as Chairman of the Board,
Chief Executive Officer and Partner of Hicks Muse. Accordingly, Mr. Hicks
may be deemed to be the beneficial owner of Holding Common Stock held by HM
Fund II. John R. Muse, Charles W. Tate, Jack D. Furst, Lawrence D. Stuart,
Michael J. Levitt, David B. Deniger and Dan H. Blanks are officers,
directors and minority stockholders of Hicks Muse and as such may be deemed
to share with Mr. Hicks the power to vote or dispose of Holding Common
Stock held by HM Fund II. Each of Messrs. Hicks, Muse, Tate, Furst, Stuart,
Levitt, Deniger and Blanks disclaims the existence of a group and disclaims
beneficial ownership of Holding Common Stock not respectively owned of
record by him.
(3) Includes 320,000 shares of Holding Common Stock issuable to Mr. Kent upon
exercise of options granted under the Option Plan that are currently
exercisable. Does not include 80,000 shares of Holding Common Stock
issuable to Mr. Kent upon exercise of options granted under the Option Plan
that are not currently exercisable. See "Executive Compensation -- Benefit
Plans -- Stock Option Plan."
(4) Includes shares of Holding Class A Common Stock held by James N. Mills and
shares of Holding Class A Common Stock that Mr. Mills has the power to vote
by proxy. Does not include 1,576,141 shares of Holding Common stock
issuable to Mr. Mills upon the exercise of Performance Options that are not
currently exercisable. See "Executive Compensation -- Benefit
Plans -- Performance Options."
(5) Includes 100,000 shares of Holding Common Stock issuable to Mr. Danis upon
exercise of options granted in 1995 that are currently exercisable.
(6) Includes 100,000 shares of Holding Common Stock issuable to Mr. Gavin upon
exercise of options granted in 1995 that are currently exercisable.
(7) Includes 100,000 shares of Holding Common Stock issuable to Mr. Vieser upon
exercise of options granted in 1995 that are currently exercisable.
(8) Consists of 680,000 shares of Holding Common Stock issuable to Mr. Fiamingo
upon exercise of options granted under the Option Plan that are currently
exercisable. Does not include 320,000 shares of Holding Common Stock
issuable to Mr. Fiamingo upon exercise of options granted under the option
plan that are not currently exercisable. See "Executive Compensation
-- Benefit Plans -- Stock Option Plan."
(9) Does not include 1,225,690 shares of Holding Common Stock issuable to Mr.
Sindelar upon exercise of Performance Options that are not currently
exercisable. See "Executive Compensation -- Benefit Plans -- Performance
Options."
(10) Consists of 150,000 shares of Holding Common Stock issuable to Mr. Holler
upon exercise of options granted under the Option Plan that are currently
exercisable. Does not include 100,000 shares of Holding Common Stock
issuable to Mr. Holler upon exercise of options granted under the Option
Plan that are not currently exercisable. See "Executive
Compensation -- Benefit Plans -- Stock Option Plan."
(11) Includes (i) shares of Holding Class A Common Stock held by executive
officers and directors and shares of Holding Class A Common Stock as to
which Hicks Muse has the power to direct the voting of with respect to the
election of directors and to which Mr. Mills has the power to vote by proxy
and (ii) 2,806,452 shares of Holding Common Stock issuable upon exercise of
options that are currently exercisable. Does not include 4,202,744 shares
of Holding Common Stock issuable to executive officers of Holding upon the
exercise of Performance Options and options under the Option Plan that are
not currently exercisable. See "Executive Compensation -- Benefit
Plans -- Stock Option Plan" and "-- Performance Options."
60
<PAGE> 62
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIPS WITH HICKS MUSE
Monitoring and Oversight Agreement
On June 12, 1995, Holding and the Company entered into a ten-year agreement
(the "Monitoring and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P.
("Hicks Muse Partners"), a limited partnership of which the sole general partner
is HM Partners Inc., a corporation affiliated with Hicks Muse, pursuant to which
they pay an annual fee of $500,000 for oversight and monitoring services to
Holding and the Company. The annual fee is adjustable at the end of each fiscal
year to an amount equal to 0.1% of the consolidated net sales of the Company,
but in no event less than $500,000. Hicks Muse Partners also will be entitled to
receive a fee equal to 1.5% of the transaction value (as defined) for each
add-on transaction (as defined) in which the Company is involved. The term
"transaction value" means the total value of any add-on transaction, including,
without limitation, the aggregate amount of the funds required to complete the
add-on transaction (excluding any fees payable pursuant to the Monitoring and
Oversight Agreement and any fees, if any, paid to any other person or entity for
financial advisory, investment banking, brokerage, or any other similar services
rendered in connection with such add-on transaction) including the amount of any
indebtedness, preferred stock or similar items assumed (or remaining
outstanding). The term "add-on transaction" means any future proposal for a
tender offer, acquisition, sale, merger, exchange offer, recapitalization,
restructuring, or other similar transaction directly or indirectly involving
Holding, the Company, or any of their respective subsidiaries and any other
person or entity. In January 2000, the Company paid Hicks Muse Partners cash
financial advisory fees of approximately $161,000 as compensation for its
services as financial advisor in connection with the 1999 acquisition of the
Forissier Group.
Messrs. Tate and Furst, directors of Holding and the Company, are each
principals of Hicks Muse Partners. In addition, Holding and the Company have
agreed to indemnify Hicks Muse Partners, its affiliates and shareholders, and
their respective directors, officers, agents, employees and affiliates from and
against all claims, actions, proceedings, demands, liabilities, damages,
judgments, assessments, losses and costs, including fees and expenses, arising
out of or in connection with the services rendered by Hicks Muse Partners in
connection with the Monitoring and Oversight Agreement.
The Monitoring and Oversight Agreement makes available the resources of
Hicks Muse Partners concerning a variety of financial and operational matters.
The services that have been and will continue to be provided by Hicks Muse
Partners could not otherwise be obtained by Holding and the Company without the
addition of personnel or the engagement of outside professional advisors. In
management's opinion, the fees provided for under this agreement reasonably
reflect the benefits received and to be received by Holding and the Company.
Stockholders Agreement
Each investor in any class of common stock of Holding has entered into a
stockholders agreement (the "Stockholders Agreement"). The Stockholders
Agreement, among other things, grants preemptive rights and certain registration
rights to the parties thereto and contains provisions requiring the parties
thereto to sell their shares of common stock in connection with certain sales of
Holding's common stock by Hicks Muse ("drag-along right") and granting the
parties thereto the right to include a portion of their shares of common stock
in certain sales in which Hicks Muse does not exercise its drag-along rights
("tag-along rights"). In addition, the Stockholders agreement contains an
irrevocable proxy pursuant to which all parties to the Stockholders Agreement
grant to Hicks Muse the power to vote all shares of Holding Common Stock held by
such parties. The Stockholders Agreement terminates on its tenth anniversary
date, although the preemptive rights, drag-along rights and tag-along rights
contained therein terminate earlier upon the consummation of a firm commitment
underwritten public offering of Holding Common Stock.
61
<PAGE> 63
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
See Index to Financial Statements and Financial Schedules on page 23 of
this report.
Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of June 2, 1995,
among Omega Wire Corp., Wirekraft Holdings Corp.,
International Wire Holding Company, International Wire
Group, Inc. and Wirekraft Acquisition Company(1)
2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996,
among Hoosier Wire, Inc., International Wire Group, Inc.,
and Wire Technologies, Inc.(2)
2.3 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Dekko Automotive Wire, Inc., International Wire
Holding Company, International Wire Group, Inc., and Wire
Technologies, Inc.(2)
2.4 -- Asset Purchase Agreement, dated as of March 5, 1996,
among International Wire Holding Company, International
Wire Group, Inc., and Wire Technologies, Inc.(2)
2.5 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Silicones, International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc.(2)
3.1 -- Restated Certificate of Incorporation of International
Wire Group, Inc.(4)
3.2 -- By-Laws of International Wire Group, Inc.(1)
4.1 -- Indenture, dated as of June 12, 1995, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank & Trust
Company, as Trustee.(1)
4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1,
Exhibit A)
4.3 -- Exchange and Registration Rights Agreement, dated as of
June 12, 1995, among International Wire Group, Inc., the
Subsidiary Guarantors (as therein defined), Chemical
Securities Inc. and BT Securities Corporation.(1)
4.4 -- First Supplemental Indenture, dated as of March 5, 1996,
by and among International Wire Group, Inc., Wire
Technologies, Inc., the subsidiary guarantors party
thereto, and IBJ Schroder Bank & Trust Company, as
Trustee.(2)
4.5 -- Certificate of Designation of Series A Senior Cumulative
Exchangeable Redeemable Preferred Stock of International
Wire Group, Inc.(2)
4.6 -- Second Supplemental Indenture, dated as of December 20,
1996, by International Wire Group, Inc. the subsidiary
guarantors party thereto, and IBJ Schroder Bank and Trust
Company, as Trustee.(4)
4.7 -- Indenture, dated as of February 12, 1997, among
International Wire Group, Inc., as Issuer, the Subsidiary
Guarantors (as therein defined) and IBJ Schroder Bank and
Trust Company, as Trustee.(5)
4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A).
4.9 -- Preferred Stock and Warrant Purchase Agreement dated as
of March 5, 1996,
by and among International Wire Holding Company,
International Wire Group, Inc., Chemical Equity
Associates and Hicks, Muse, Tate & Furst Equity Fund II,
L.P.(5)
</TABLE>
62
<PAGE> 64
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.10 -- Third Supplemental Indenture, dated as of February 12,
1997, by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank and Trust Company, as Trustee.(5)
4.11 -- First Supplemental Indenture, dated as of June 10, 1997,
by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank and Trust Company, as Trustee.(5)
4.12 -- Indenture, dated as of June 17, 1997, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank and Trust
Company, as Trustee.(5)
4.13 -- Form of 11 3/4% Series B Note (included in Exhibit 4.12,
Exhibit (A))
10.1 -- Parts Sourcing Contract, dated as of December 2, 1994,
among Wirekraft Industries, Inc. and General Electric
Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(1)
10.2 -- Schedule of Substantially Identical Domestic Subsidiary
Security Agreements.(1)
10.3 -- Agreement of Sublease, dated as of December 31, 1991,
between Oneida County Industrial Development Agency and
OWI Corporation.(1)
10.4 -- Agreement of Sublease, dated as of December 31, 1991,
between Onondaga County Industrial Development Agency and
OWI Corporation.(1)
10.5 -- Sublease Agreement, dated as of March 31, 1994, between
Productos de Control, S.A. de C.V. and Wirekraft
Industries, Inc.(1)
10.6 -- Lease Contract, dated as of August 1, 1994, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(1)
10.7 -- Lease Contract, dated as of March 15, 1998, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(6)
10.8+ -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and James N.
Mills.(3)
10.9+ -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and David M.
Sindelar.(3)
10.10+ -- Employment Agreement, dated as of March 14, 1995, between
Omega Wire, Inc. and Rodney D. Kent.(1)
10.11+ -- Option Agreement, dated as of March 31, 1995, between
Omega Wire Corp. and James N. Mills.(1)
10.12+ -- Option Agreement, dated as of March 31, 1995, between
Omega Wire Corp. and David M. Sindelar.(1)
10.13+ -- Option Agreement dated as of June 12, 1995, between Omega
Wire Corp. and David M. Sindelar.(1)
10.14+ -- Option Agreement dated as of June 12, 1995, between
International Wire Group, Inc. and David M. Sindelar.(1)
10.15 -- Stockholders Agreement dated as of June 12, 1995, among
International Wire Holding Company and the Stockholders
signatories thereto.(1)
10.16 -- Monitoring and Oversight Agreement dated as of June 12,
1995, among International Wire Holding Company,
International Wire Group, Inc. and Hicks, Muse & Co.
Partners, L.P.(1)
10.17+ -- 1995 Stock Option Plan of International Wire Holding
Company.(3)
</TABLE>
63
<PAGE> 65
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.18+ -- Form of Option Agreement of International Wire Holding
Company under 1995 Stock Option Plan.(3)
10.19 -- Agreement dated as of December 29, 1995 among Wirekraft
Industries, Inc. and General Electric Company
(Confidential treatment has been granted with respect to
certain portions of this exhibit).(3)
10.20 -- Amended and Restated Credit Agreement, dated as of
February 12, 1997, among International Wire Group, Inc.,
International Wire Holding Company, the several lenders
from time to time parties thereto, Chase Manhattan Bank,
as Administrative Agent, and Bankers Trust Company, as
Documentation Agent.(4)
10.21+ -- Employment Agreement, dated as of September 25, 1996,
among International Wire Holding Company and
International Wire Group, Inc. and Joseph M. Fiamingo.(4)
10.22+ -- Option Agreement, dated as of November 5, 1995, between
International Wire Holding Company and Joseph M.
Fiamingo.(4)
10.23+ -- Option Agreement, dated as of November 6, 1996, between
International Wire Holding Company and Joseph M.
Fiamingo.(4)
10.24 -- First Amendment to Amended and Restated Credit Agreement,
dated as of June 17, 1997, among International Wire
Group, Inc., International Wire Holding Company, the
Several Lenders from time to time parties thereto, the
Chase Manhattan Bank, as Administrative Agent, and
Bankers Trust Company, as Documentation Agent.(5)
10.25 -- Second Amendment and Waiver to Amended and Restated
Credit Agreement, dated as of September 29, 1997, among
International Wire Group, Inc., International Wire
Holding Company, the Several Lenders from time to time
parties thereto, the Chase Manhattan Bank, as
Administrative Agent, and Bankers Trust Company, as
Documentation Agent.(6)
10.26+ -- Option Agreement, dated as of August 6, 1996, between
International Wire Holding Company and Glenn J.
Holler.(6)
10.27 -- Fourth Amendment to Amended and Restated Credit
Agreement, dated as of December 29, 1999, among
International Wire Group, Inc., International Wire
Holding Company, Camden Wire Co., Inc., the Several
Lenders from time to time parties thereto, the Chase
Manhattan Bank, as Administrative Agent, and Bankers
Trust Company, as Documentation Agent.*
10.28+ -- Employment Agreement, dated as of November 13, 1999,
among International Wire Holding Company and
International Wire Group, Inc. and Glenn J. Holler. *
10.29+ -- Employment Agreement, dated as of November 13, 1999,
among International Wire Holding Company and
International Wire Group, Inc. and Joseph M. Fiamingo. *
21.1 -- Subsidiaries of International Wire Group, Inc.*
27.0 -- Financial Data Schedule.*
</TABLE>
- ---------------
(1) Incorporated by reference to the Registration Statement on Form S-1
(33-93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.
(2) Incorporated by reference to the Current Report on Form 8-K of International
Wire Group, Inc. as filed with the Securities Exchange Commission on March
20, 1996.
(3) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1995.
64
<PAGE> 66
(4) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1996.
(5) Incorporated by reference to the Registration Statement on Form S-1
(333-26925) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on November 12, 1997.
(6) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1997.
* Filed herewith.
+ Indicates compensatory plan or arrangement.
(b) Reports on Form 8-K
The Company did not file any report on Form 8-K with the Securities and
Exchange Commission during the quarter ended December 31, 1999.
65
<PAGE> 67
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL WIRE GROUP, INC.
Date: March 20, 2000 By: /s/ GLENN J. HOLLER
----------------------------------
Glenn J. Holler,
Vice President -- Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JAMES N. MILLS Chairman of the Board of March 20, 2000
- ----------------------------------------------------- Directors and Chief Executive
(James N. Mills) Officer (Principal Executive
Officer)
/s/ DAVID M. SINDELAR Senior Vice President and Chief March 20, 2000
- ----------------------------------------------------- Financial Officer (Principal
(David M. Sindelar) Financial Officer)
/s/ GLENN J. HOLLER Vice President -- Finance March 20, 2000
- ----------------------------------------------------- (Principal Accounting Officer)
(Glenn J. Holler)
/s/ THOMAS P. DANIS Director March 20, 2000
- -----------------------------------------------------
(Thomas P. Danis)
/s/ JACK D. FURST Director March 20, 2000
- -----------------------------------------------------
(Jack D. Furst)
/s/ JOHN A. GAVIN Director March 20, 2000
- -----------------------------------------------------
(John A. Gavin)
/s/ CHARLES W. TATE Director March 20, 2000
- -----------------------------------------------------
(Charles W. Tate)
/s/ RICHARD W. VIESER Director March 20, 2000
- -----------------------------------------------------
(Richard W. Vieser)
/s/ RODNEY D. KENT Director March 20, 2000
- -----------------------------------------------------
(Rodney D. Kent)
/s/ JOSEPH M. FIAMINGO Director, President and Chief March 20, 2000
- ----------------------------------------------------- Operating Officer
(Joseph M. Fiamingo)
</TABLE>
66
<PAGE> 68
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT
The registrant has not sent to its security holders any annual report to
security holders covering the registrant's last fiscal year or sent any proxy
statement, form of proxy or other proxy soliciting material with respect to any
annual or special meeting of security holders to more than ten of the
registrant's security holders.
67
<PAGE> 69
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of June 2, 1995,
among Omega Wire Corp., Wirekraft Holdings Corp.,
International Wire Holding Company, International Wire
Group, Inc. and Wirekraft Acquisition Company(1)
2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996,
among Hoosier Wire, Inc., International Wire Group, Inc.,
and Wire Technologies, Inc.(2)
2.3 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Dekko Automotive Wire, Inc., International Wire
Holding Company, International Wire Group, Inc., and Wire
Technologies, Inc.(2)
2.4 -- Asset Purchase Agreement, dated as of March 5, 1996,
among International Wire Holding Company, International
Wire Group, Inc., and Wire Technologies, Inc.(2)
2.5 -- Asset Purchase Agreement, dated as of March 5, 1996,
among Silicones, International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc.(2)
3.1 -- Restated Certificate of Incorporation of International
Wire Group, Inc.(4)
3.2 -- By-Laws of International Wire Group, Inc.(1)
4.1 -- Indenture, dated as of June 12, 1995, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank & Trust
Company, as Trustee.(1)
4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1,
Exhibit A)
4.3 -- Exchange and Registration Rights Agreement, dated as of
June 12, 1995, among International Wire Group, Inc., the
Subsidiary Guarantors (as therein defined), Chemical
Securities Inc. and BT Securities Corporation.(1)
4.4 -- First Supplemental Indenture, dated as of March 5, 1996,
by and among International Wire Group, Inc., Wire
Technologies, Inc., the subsidiary guarantors party
thereto, and IBJ Schroder Bank & Trust Company, as
Trustee.(2)
4.5 -- Certificate of Designation of Series A Senior Cumulative
Exchangeable Redeemable Preferred Stock of International
Wire Group, Inc.(2)
4.6 -- Second Supplemental Indenture, dated as of December 20,
1996, by International Wire Group, Inc. the subsidiary
guarantors party thereto, and IBJ Schroder Bank and Trust
Company, as Trustee.(4)
4.7 -- Indenture, dated as of February 12, 1997, among
International Wire Group, Inc., as Issuer, the Subsidiary
Guarantors (as therein defined) and IBJ Schroder Bank and
Trust Company, as Trustee.(5)
4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A).
4.9 -- Preferred Stock and Warrant Purchase Agreement dated as
of March 5, 1996,
by and among International Wire Holding Company,
International Wire Group, Inc., Chemical Equity
Associates and Hicks, Muse, Tate & Furst Equity Fund II,
L.P.(5)
4.10 -- Third Supplemental Indenture, dated as of February 12,
1997, by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank and Trust Company, as Trustee.(5)
4.11 -- First Supplemental Indenture, dated as of June 10, 1997,
by and among International Wire Group, Inc., the
subsidiary guarantors party thereto, and IBJ Schroder
Bank and Trust Company, as Trustee.(5)
</TABLE>
<PAGE> 70
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
4.12 -- Indenture, dated as of June 17, 1997, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors
(as therein defined) and IBJ Schroder Bank and Trust
Company, as Trustee.(5)
4.13 -- Form of 11 3/4% Series B Note (included in Exhibit 4.12,
Exhibit (A))
10.1 -- Parts Sourcing Contract, dated as of December 2, 1994,
among Wirekraft Industries, Inc. and General Electric
Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(1)
10.2 -- Schedule of Substantially Identical Domestic Subsidiary
Security Agreements.(1)
10.3 -- Agreement of Sublease, dated as of December 31, 1991,
between Oneida County Industrial Development Agency and
OWI Corporation.(1)
10.4 -- Agreement of Sublease, dated as of December 31, 1991,
between Onondaga County Industrial Development Agency and
OWI Corporation.(1)
10.5 -- Sublease Agreement, dated as of March 31, 1994, between
Productos de Control, S.A. de C.V. and Wirekraft
Industries, Inc.(1)
10.6 -- Lease Contract, dated as of August 1, 1994, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(1)
10.7 -- Lease Contract, dated as of March 15, 1998, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(6)
10.8+ -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and James N.
Mills.(3)
10.9+ -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and David M.
Sindelar.(3)
10.10+ -- Employment Agreement, dated as of March 14, 1995, between
Omega Wire, Inc. and Rodney D. Kent.(1)
10.11+ -- Option Agreement, dated as of March 31, 1995, between
Omega Wire Corp. and James N. Mills.(1)
10.12+ -- Option Agreement, dated as of March 31, 1995, between
Omega Wire Corp. and David M. Sindelar.(1)
10.13+ -- Option Agreement dated as of June 12, 1995, between Omega
Wire Corp. and David M. Sindelar.(1)
10.14+ -- Option Agreement dated as of June 12, 1995, between
International Wire Group, Inc. and David M. Sindelar.(1)
10.15 -- Stockholders Agreement dated as of June 12, 1995, among
International Wire Holding Company and the Stockholders
signatories thereto.(1)
10.16 -- Monitoring and Oversight Agreement dated as of June 12,
1995, among International Wire Holding Company,
International Wire Group, Inc. and Hicks, Muse & Co.
Partners, L.P.(1)
10.17+ -- 1995 Stock Option Plan of International Wire Holding
Company.(3)
10.18+ -- Form of Option Agreement of International Wire Holding
Company under 1995 Stock Option Plan.(3)
10.19 -- Agreement dated as of December 29, 1995 among Wirekraft
Industries, Inc. and General Electric Company
(Confidential treatment has been granted with respect to
certain portions of this exhibit).(3)
</TABLE>
<PAGE> 71
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.20 -- Amended and Restated Credit Agreement, dated as of
February 12, 1997, among International Wire Group, Inc.,
International Wire Holding Company, the several lenders
from time to time parties thereto, Chase Manhattan Bank,
as Administrative Agent, and Bankers Trust Company, as
Documentation Agent.(4)
10.21+ -- Employment Agreement, dated as of September 25, 1996,
among International Wire Holding Company and
International Wire Group, Inc. and Joseph M. Fiamingo.(4)
10.22+ -- Option Agreement, dated as of November 5, 1995, between
International Wire Holding Company and Joseph M.
Fiamingo.(4)
10.23+ -- Option Agreement, dated as of November 6, 1996, between
International Wire Holding Company and Joseph M.
Fiamingo.(4)
10.24 -- First Amendment to Amended and Restated Credit Agreement,
dated as of June 17, 1997, among International Wire
Group, Inc., International Wire Holding Company, the
Several Lenders from time to time parties thereto, the
Chase Manhattan Bank, as Administrative Agent, and
Bankers Trust Company, as Documentation Agent.(5)
10.25 -- Second Amendment and Waiver to Amended and Restated
Credit Agreement, dated as of September 29, 1997, among
International Wire Group, Inc., International Wire
Holding Company, the Several Lenders from time to time
parties thereto, the Chase Manhattan Bank, as
Administrative Agent, and Bankers Trust Company, as
Documentation Agent.(6)
10.26+ -- Option Agreement, dated as of August 6, 1996, between
International Wire Holding Company and Glenn J.
Holler.(6)
10.27 -- Fourth Amendment to Amended and Restated Credit
Agreement, dated as of December 29, 1999, among
International Wire Group, Inc., International Wire
Holding Company, Camden Wire Co., Inc., the Several
Lenders from time to time parties thereto, the Chase
Manhattan Bank, as Administrative Agent, and Bankers
Trust Company, as Documentation Agent.*
10.28+ -- Employment Agreement, dated as of November 13, 1999,
among International Wire Holding Company and
International Wire Group, Inc. and Glenn J. Holler. *
10.29+ -- Employment Agreement, dated as of November 13, 1999,
among International Wire Holding Company and
International Wire Group, Inc. and Joseph M. Fiamingo. *
21.1 -- Subsidiaries of International Wire Group, Inc.*
27.0 -- Financial Data Schedule.*
</TABLE>
- ---------------
(1) Incorporated by reference to the Registration Statement on Form S-1
(33-93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.
(2) Incorporated by reference to the Current Report on Form 8-K of International
Wire Group, Inc. as filed with the Securities Exchange Commission on March
20, 1996.
(3) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1995.
(4) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1996.
(5) Incorporated by reference to the Registration Statement on Form S-1
(333-26925) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on November 12, 1997.
<PAGE> 72
(6) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1997.
* Filed herewith.
+ Indicates compensatory plan or arrangement.
<PAGE> 1
EXHIBIT 10.27
===============================================================================
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
among
INTERNATIONAL WIRE GROUP, INC.,
as Borrower,
INTERNATIONAL WIRE HOLDING COMPANY,
as Guarantor,
CAMDEN WIRE CO., INC.,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
THE CHASE MANHATTAN BANK,
as Administrative Agent,
and
BANKERS TRUST COMPANY,
as Documentation Agent
-------------------------------------
CHASE SECURITIES INC.
as Arranger
-------------------------------------
DATED AS OF DECEMBER 29, 1999
===============================================================================
<PAGE> 2
FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
FOURTH AMENDMENT, dated as of December 29, 1999 (this "Amendment"), to the
Amended and Restated Credit Agreement, dated as of February 12, 1997 (as
amended, supplemented or otherwise modified prior to the date hereof, the
"Credit Agreement"), among INTERNATIONAL WIRE GROUP, INC., a Delaware
corporation (the "Borrower"), INTERNATIONAL WIRE HOLDING COMPANY, a Delaware
corporation ("Holdings"), CAMDEN WIRE CO., INC., a New York corporation
("Camden"), the several banks and other financial institutions from time to time
parties thereto (the "Lenders"), THE CHASE MANHATTAN BANK, a New York banking
corporation, as administrative agent for the Lenders thereunder (in such
capacity, the "Administrative Agent"), and BANKERS TRUST COMPANY, as
documentation agent for the Lenders thereunder (in such capacity, the
"Documentation Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, Holdings, the Lenders, the Administrative Agent and
the Documentation Agent are parties to the Credit Agreement;
WHEREAS, the Borrower intends to acquire (the "Forissier Acquisition") all
of the capital stock of JYM Finance, s.a., a French corporation ("JYM Finance"),
and TM J. Forissier, s.a. a French corporation ("Forissier") pursuant to the
stock purchase agreement, dated as of December 29, 1999 (the "Forissier Stock
Purchase Agreement"), among International Wire SAS and the Sellers (as defined
in the Forissier Stock Purchase Agreement).
WHEREAS, the Borrower intends to make other Permitted Acquisitions;
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement to permit the Forissier Acquisition and other Permitted Acquisitions
and to make other changes to the Credit Agreement as set forth herein;
NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:
1. Definitions. Terms defined in the Credit Agreement are used herein
with the respective meanings given to them therein.
2. Amendments to Section 1.1 of the Credit Agreement. (a) Section 1.1
of the Credit Agreement is hereby amended by inserting the following new
definitions in the proper alphabetical order:
<PAGE> 3
Page 2
""Approved Fund": with respect to any Lender that is a fund that
invests in commercial loans, any other fund that invests in commercial
loans and is managed or advised by the same investment advisor as such
lender or by an affiliate of such investment advisor.
"Fourth Amendment": that certain Fourth Amendment to the Agreement
dated as of December 29, 1999 by and among the Borrower, Holdings, Camden,
the Lenders, the Administrative Agent and the Documentation Agent.
"Fourth Amendment Effective Date": as defined in the Fourth Amendment.
"Tranche A1 Term Loan Commitment": as to any Tranche A1 Term Loan
Lender, its obligation to make a Tranche A1 Term Loan to the Borrower
pursuant to subsection 2.6 in an aggregate amount not to exceed the amount
set forth opposite such Tranche A1 Term Loan Lender's name in Schedule 1.1
under the heading "Total Tranche A1 Term Loan Commitment."
"Tranche A1 Term Loan Commitment Percentage": as to any Tranche A1
Term Loan Lender, the percentage of the aggregate Tranche A1 Term Loan
Commitments constituted by its Tranche A1 Term Loan Commitment.
"Tranche A1 Term Loan Lender": any Lender having a Tranche A1 Term
Loan Commitment hereunder or that holds outstanding Tranche A1 Term Loans.
"Tranche A1 Term Loans": as defined in subsection 2.6.
"Tranche A1 Term Note": as defined in subsection 2.7(a).
(b) Subsection 1.1 of the Credit Agreement is hereby amended by (a)
deleting the definitions of "Acquisition", "Acquisition Documentation",
"Applicable Margin", "Consolidated EBITDA", "ECF Percentage", "Excess Cash
Flow", "Term Loan Commitments", "Term Loan Lender", "Term Note" and "Total
Credit Percentages"; appearing therein in their entirety and substituting in
lieu thereof the following new definitions:
""Acquisition": the collective reference to the Silicones Acquisition,
the DAW Acquisition, the Albion
Acquisition, the Hoosier Merger and the Forissier Acquisition.
"Acquisition Documents": the collective reference to the DAW Asset
Purchase Agreement, Albion Asset Purchase Agreement, Hoosier Merger
Agreement, Silicones Asset Purchase Agreement, Dekko Escrow Agreement, the
Forissier Stock Purchase Agreement and all other agreements, instruments or
certificates executed in connection with any Acquisition, as the same may
be amended, supplemented or otherwise modified from time to time in
accordance with subsection 8.16.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
<PAGE> 4
Page 3
<TABLE>
<CAPTION>
Alternate Base Rate Loans
-------------------------
Type Applicable Margin
---- -----------------
<S> <C>
Tranche A Term Loans 1/2%
Tranche A1 Term Loans 1%
Tranche B Term Loans 1%
Revolving Credit Loans 1/2%
(including Swing Line Loans)
</TABLE>
<TABLE>
<CAPTION>
Eurodollar Rate Loans
---------------------
Type Applicable Margin
---- -----------------
<S> <C>
Tranche A Term Loans 1-1/2%
Tranche A1 Term Loans 2%
Tranche B Term Loans 2%
Revolving Credit Loans 1-1/2%
</TABLE>
; provided that in the event that the ratio of Consolidated Senior Debt of the
Borrower as of the most recent fiscal quarter to Consolidated EBITDA (calculated
in accordance with subsection 8.1(c)) of the Borrower, is as set forth in the
relevant column heading below for any quarterly period, any such Applicable
Margin with respect to Tranche A Term Loans, Tranche B Term Loans and Revolving
Credit Loans (including in the case of Alternate Base Rate Loans, Swing Line
Loans) shall be as provided in the relevant column heading below:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Applicable Applicable
Margin For Margin for
Revolving Credit Revolving Credit
Relevant Ratio of Consolidated and Tranche A and Tranche A
Senior Debt to Consolidated Eurodollar Alternate Base
EBITDA Loans Rate Loans
- ------------------------------------------------------------------------
<S> <C> <C>
1.75x and above 1-1/2% 1/2%
- ------------------------------------------------------------------------
1.50x to but excluding 1.75x 1-1/4% 1/4%
- ------------------------------------------------------------------------
Below 1.50x 1% 0%
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Applicable
Applicable Margin for
Relevant Ratio of Margin For Tranche B
Consolidated Senior Debt to Tranche B Alternate Base
Consolidated EBITDA Eurodollar Loans Rate Loans
- ------------------------------------------------------------------------
<S> <C> <C>
Above 2.00x 2-1/4% 1-1/4%
- ------------------------------------------------------------------------
2.00x and below 2% 1%
- ------------------------------------------------------------------------
</TABLE>
<PAGE> 5
Page 4
If the financial statements required to be delivered pursuant to subsection
7.1(a) or 7.1(b), as applicable, and the related compliance certificate
required to be delivered pursuant to subsection 7.2(b), are delivered on or
prior to the date when due (or, in the case of the fourth quarterly period
of each fiscal year of the Borrower, if financial statements which satisfy
the requirements of, and are delivered within the time period specified in,
subsection 7.l(b) and a related compliance certificate which satisfies the
requirements of, and is delivered within the time period specified in,
subsection 7.2(b), with respect to any such quarterly period are so
delivered within such time periods), then the Applicable Margin in respect
of the Revolving Credit Loans, the Tranche A Term Loans and the Tranche B
Term Loans from the date upon which such financial statements were
delivered shall be the Applicable Margin as set forth in the relevant
column heading above; provided, however, that in the event that the
financial statements delivered pursuant to subsection 7.1(a) or 7.1(b), as
applicable, and the related compliance certificate required to be delivered
pursuant to subsection 7.2(b), are not delivered when due, then:
(a) if such financial statements and certificate are delivered
after the date such financial statements and certificate were required
to be delivered (without giving effect to any applicable cure period)
and the Applicable Margin increases from that previously in effect as
a result of the delivery of such financial statements and certificate,
then the Applicable Margin in respect of Revolving Credit Loans
(including in the case of Alternate Base Rate Loans, Swing Line
Loans), Tranche A Term Loans and Tranche B Term Loans during the
period from the date upon which such financial statements and
certificate were required to be delivered (without giving effect to
any applicable cure period) until the date upon which they actually
are delivered shall, except as otherwise provided in clause (c) below,
be the Applicable Margin as so increased;
(b) if such financial statements and certificate are delivered
after the date such financial statements and certificate were required
to be delivered (without giving effect to any applicable cure period)
and the Applicable Margin decreases from that previously in effect as
a result of the delivery of such financial statements and certificate,
then such decrease in the Applicable Margin shall not become
applicable until the date upon which such financial statements and
certificate actually are delivered; and
(c) if such financial statements and certificate are not
delivered prior to the expiration of the applicable cure period, then,
effective upon such expiration, for the period from the date upon
which such financial statements and certificate were required to be
delivered (after the expiration of the applicable cure period) until
two Business Days following the date upon which they actually are
delivered, the Applicable Margin in respect of Revolving Credit Loans
(including in the case of Alternate Base Rate Loans, Swing Line Loans)
and Tranche A Term Loans shall be 1-1/2%, in the case of Eurodollar
Loans, and 1/2%, in the case of Alternate Base Rate Loans and the
Applicable Margin in respect of Tranche B Term Loans shall be 2-1/4%,
in the case of Eurodollar Loans, and 1-1/4% in the
<PAGE> 6
Page 5
case of Alternate Base Rate Loans (it being understood that the
foregoing shall not limit the rights of the Administrative Agent and
the Lenders set forth in Section 9).
"Consolidated EBITDA": for any period, with respect to any Person,
Consolidated Net Income of such Person for such period (A) plus, without
duplication and to the extent reflected as a charge in the statement of
such Consolidated Net Income for such period, the sum of (i) total income
and franchise tax expense, (ii) interest expense, amortization or writeoff
of debt discount and debt issuance costs and commissions and discounts and
other fees and charges associated with Indebtedness, (iii) depreciation and
amortization expense, (iv) amortization of intangibles (including, but not
limited to, goodwill and organization costs (including, with respect to the
Borrower, costs associated with the Camden Acquisition, the Acquisition,
the Omega Acquisition, the Mergers and the Wirekraft Acquisition)), (v)
other noncash charges (including non-cash currency exchange losses), (vi)
any extraordinary and unusual losses (including losses on sales of assets
other than inventory sold in the ordinary course of business) other than
any loss from any discontinued operation and (vii) restructuring costs
expensed in fiscal years 1996 and 1997 as contemplated in connection with
the Acquisition in an aggregate amount not exceeding $8,000,000, which
shall include, but not be limited to costs associated with plant shutdowns,
severance and relocations, and (B) minus, without duplication and to the
extent reflected as a credit or gain in the statement of such Consolidated
Net Income for such period, the sum of (i) any extraordinary and unusual
gains (including gains on the sales of assets, other than inventory sold in
the ordinary course of business) other than any income from discontinued
operations and (ii) other noncash credits or gains (including non-cash
currency exchange gains). For purposes of calculating the financial
covenants set forth in Section 8, if an acquisition or disposition has
occurred during the relevant period, Consolidated EBITDA will be determined
giving pro forma effect thereto (without giving effect to synergies and
cost savings) as if such acquisition or disposition and any related
incurrence of Indebtedness or issuance of preferred stock had occurred at
the beginning of the relevant period.
"ECF Percentage": 50%; provided that the percentage will be reduced to
zero if the ratio of Consolidated Total Debt of the Borrower and its
Subsidiaries to Consolidated EBITDA of the Borrower and its Subsidiaries,
for the most recently completed fiscal year (determined in accordance with
subsection 8.1(c)) is < 3.75:1.0.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess of
(a) the sum, without duplication, of (i) Consolidated EBITDA for such
fiscal year (calculated for purposes of this definition without giving
effect to clause (vii) of the definition of Consolidated EBITDA), (ii) the
amount of returned surplus assets of any Plan during such fiscal year to
the extent not included in Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year, (iii) decreases in Consolidated
Working Capital of the Borrower and its Subsidiaries for such fiscal year,
(iv) the amount of any refund received by the Borrower and its Subsidiaries
on taxes paid by the Borrower and its Subsidiaries (other than the Sellers
Tax Escrow Amount), (v) cash dividends, cash
<PAGE> 7
Page 6
interest and other similar cash payments received by the Borrower in
respect of investments to the extent not included in Consolidated Net
Income to determine Consolidated EBITDA for such fiscal year and (vi)
extraordinary cash gains to the extent subtracted or otherwise not included
in Consolidated Net Income to determine Consolidated EBITDA for such fiscal
year over (b) the sum, without duplication, of (i) the aggregate amount of
cash Capital Expenditures made by the Borrower and its Subsidiaries during
such fiscal year and permitted hereunder (other than Capital Expenditures
permitted under subsection 8.8(b)), (ii) the aggregate amount of all
reductions of the Revolving Credit Commitments (to the extent such
reductions are accompanied by prepayment of Revolving Credit Loans, Swing
Line Loans and/or L/C Obligations) or payments or prepayments of the Term
Loans during such fiscal year other than pursuant to subsection 2.12(a),
(b) or (c), (iii) the aggregate amount of payments of principal in respect
of any Indebtedness (other than revolving credit Indebtedness to the extent
the related commitment is not permanently reduced) permitted hereunder
during such fiscal year (other than under this Agreement), (iv) increases
in Consolidated Working Capital of the Borrower and its Subsidiaries for
such fiscal year, (v) cash interest expense of the Borrower and its
Subsidiaries for such fiscal year, (vi) taxes actually paid in such fiscal
year or to be paid in the subsequent fiscal year on account of such fiscal
year to the extent added to Consolidated Net Income to determine
Consolidated EBITDA for such fiscal year, (vii) extraordinary cash losses
to the extent added to Consolidated Net Income to determine Consolidated
EBITDA for such fiscal year, (viii) the amount of all Investments made in
such fiscal year as permitted by clauses (d), (h) and (j) of subsection 8.9
and (ix) dividends or other direct payments paid by the Borrower to or for
the benefit of Holdings to the extent permitted by subsection 8.7(a) to the
extent not subtracted in the determination of Consolidated Net Income of
the Borrower for such fiscal year and (x) the aggregate principal amount of
any optional prepayments of the Revolving Credit Loans for such fiscal year
(to the extent accompanied by a corresponding permanent reduction of the
Revolving Credit Commitments) and any optional prepayments of the Term
Loans for such fiscal year. For purposes of determining changes in
Consolidated Working Capital, the working capital acquired in connection
with the Acquisition and the Camden Acquisition will be excluded.
"Term Loan Commitments": the collective reference to the Tranche A
Term Loan Commitments, the Tranche A1 Term Loan Commitments and the Tranche
B Term Loan Commitments; collectively, as to all the Term Loan Lenders, the
"Term Commitments."
"Term Loan Lender": the collective reference to the Tranche A Term
Loan Lenders, the Tranche A1 Term Loan Lenders and the Tranche B Term Loan
Lenders.
"Term Note" and "Term Notes": as defined in subsection 2.9(a).
"Total Credit Percentage": as to any Lender at any time, the
percentage of the aggregate Revolving Credit Commitments, outstanding
Tranche A Term Loans, outstanding Tranche A1 Term Loans and outstanding
Tranche B Term Loans then constituted by its Revolving Credit Commitment,
outstanding Tranche A Term Loans, outstanding Tranche A1 Term Loans and
outstanding Tranche B Term Loans, respectively (or, if the Revolving Credit
Commitments have terminated or expired, the percentage of the aggregate
outstanding Revolving Credit Loans, outstanding Tranche A Term Loans and,
<PAGE> 8
Page 7
outstanding Tranche A1 Term Loans and outstanding Tranche B Term Loans and
risk interests in the Letter of Credit Outstandings and Swing Line Loans
then constituted by its outstanding Revolving Credit Loans, outstanding
Tranche A Term Loans, outstanding Tranche A1 Term Loans and outstanding
Tranche B Term Loans and risk interest in Letter of Credit Outstandings and
Swing Line Loans)."
3. Amendment to Subsection 2.6 of the Credit Agreement. Subsection 2.6
of the Credit Agreement is hereby amended by deleting such subsection in its
entirety and inserting in lieu thereof the following:
"2.6 Term Loans. (a) Each Tranche A Term Loan Lender
identified on Schedule 1.1 hereto has made a term loan (a "Tranche A
Term Loan") to the Borrower the outstanding principal balance of which
is set forth opposite such Lender's name in Schedule 1.1 under the
heading "Tranche A Term Loan" (collectively, the "Tranche A Term
Loans").
(b) Each Tranche B Term Loan Lender identified on Schedule 1.1 hereto
has made a Tranche B term loan (a "Tranche B Term Loan") to the
Borrower the outstanding principal balance of which is set forth
opposite such Lender's name in Schedule 1.1 under the heading "Tranche
B Term Loan" (collectively, the "Tranche B Term Loans").
(c) Subject to the terms and conditions hereof, each Tranche A1 Term
Loan Lender identified on Schedule 1.1 as having a "Tranche A1 Term
Loan Commitment" severally agrees to make a term loan (a "Tranche A1
Term Loan", together with the Tranche A Term Loans and the Tranche B
Term Loans, the "Term Loans") on the Fourth Amendment Effective Date in
an aggregate principal amount set forth opposite such Lender's name in
Schedule 1.1 under the heading "Tranche A1 Term Loan Commitment."
(d) The Term Loans may from time to time be (i) Eurodollar Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof, as determined
by the Borrower and notified to the Administrative Agent in accordance
with subsection 2.10."
4. Amendment to Subsection 2.8 of the Credit Agreement. Subsection 2.8
of the Credit Agreement is hereby amended by deleting the words "Tranche A Term
Notes, and Tranche B Term Notes when hereafter referred to collectively shall be
referred to as "Term Notes"" beginning on the fifth line of such subsection.
5. Amendment of Subsection 2.9 of the Credit Agreement. Subsection 2.9
of the Credit Agreement is hereby amended by deleting such subsection in its
entirety and inserting in lieu thereof the following:
<PAGE> 9
Page 8
"2.9 Tranche A1 Term Notes. (a) The Borrower agrees that, upon
the request to the Administrative Agent by any Tranche A1 Term Loan
Lender, in order to evidence such Lender's Tranche A1 Term Loan the
Borrower will execute and deliver to such Lender a promissory note
substantially in the form of Exhibit A-3 (each, as amended,
supplemented, replaced or otherwise modified from time to time, a
"Tranche A1 Term Note"; Tranche A Term Notes, Tranche A1 Term Notes and
Tranche B Term Notes when hereinafter referred to collectively shall be
referred to as "Term Notes"), with appropriate insertions therein as to
payee, date and principal amount, payable to the order of such Tranche
A1 Term Loan Lender and in a principal amount equal to the amount set
forth opposite such Tranche A1 Term Loan Lender's name on Schedule 1.1
under the heading "Tranche A1 Term Loan Commitment". Each Tranche A1
Term Loan Lender is hereby authorized to record the date, Type and
amount of its Tranche A1 Term Loan, each continuation thereof, each
conversion of all or a portion thereof to another Type, the date and
amount of each payment or prepayment of principal of its Tranche A1
Term Loan and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto, on the schedules annexed to and
constituting a part of its Tranche A1 Term Note, and any such
recordation shall, in the absence of manifest error, constitute prima
facie evidence of the accuracy of the information so recorded, provided
that the failure by any Tranche A1 Term Loan Lender to make any such
recordation shall not affect any of the obligations of the Borrower
under such Tranche A1 Term Note or this Agreement. Any Tranche A1 Term
Note shall (i) be dated the Fourth Amendment Effective Date, (ii) be
payable as provided in subsection 2.7(b) and (iii) provide for the
payment of interest in accordance with subsection 4.1.
(b) The aggregate Tranche A1 Term Loans of all the Tranche A1
Term Loan Lenders shall be payable in four consecutive installments on
the dates and in a principal amount equal to the amount set forth below
(together with all accrued interest thereon) opposite the applicable
installment date (or, if less, the aggregate amount of the Tranche A1
Term Loans then outstanding):
<TABLE>
<CAPTION>
Installment Amount
----------- -------
<S> <C>
December 31, 2000 $2,000,000.00
December 31, 2001 $2,000,000.00
December 31, 2002 $2,000,000.00
March 31, 2003 $19,000,000.00"
</TABLE>
6. Amendment to Subsection 2.10 of the Credit Agreement. Subsection
2.10 (a) is hereby amended by inserting the following:
"(a) The Borrower shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior
to 10:00 A.M., New York City time, one Business Day prior to the Fourth
Amendment Effective Date)
<PAGE> 10
Page 9
requesting that the Tranche A1 Term Loan Lenders make the Tranche A1
Term Loans on the Fourth Amendment Effective Date and specifying the
amount to be borrowed. Upon receipt of such notice the Administrative
Agent shall promptly notify each Tranche A1 Term Loan Lender thereof.
On the Fourth Amendment Effective Date each Tranche A1 Term Loan Lender
shall make available to the Administrative Agent at its office
specified in subsection 12.2 an amount in immediately available funds
equal to the Tranche A1 Term Loan to be made by such Tranche A1 Term
Loan Lender. The Administrative Agent shall on such date credit the
account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available
to the Administrative Agent by the Tranche A1 Term Loan Lenders."
and (b) Subsection 2.10(b) is hereby amended by deleting the word "and" at the
end of clause (iii) and inserting the following at the end of clause (iv):
"and (v) each Tranche A1 Term Loan Lender, such Tranche A1 Term Loan
Lender's Tranche A1 Term Loan Commitment Percentage of the amounts
specified in subsection 2.9(b) (or, if less, the aggregate amount of the
Tranche A1 Term Loans of such Tranche A1 Term Loan Lender then
outstanding), on the dates specified in subsection 2.9(b) (or such earlier
date on which the Tranche A Term Loans become due and payable pursuant to
Section 9)."
7. Amendment to Subsection 2.11 of the Credit Agreement. (a) Subsection
2.11(a) is hereby amended by inserting the words ", the Tranche A1 Term Loans"
after the words "Tranche A Term Loans" in the sixth, seventeenth, eighteenth and
twentieth lines of such subsection and by deleting the amounts $10,000,000
contained therein and inserting in lieu thereof the amount $15,000,000 and
(b) subsection 2.11(b) is hereby amended by inserting the words ", the
Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the third,
fifth, seventh and ninth lines of such subsection and by deleting the amounts
$10,000,000 contained therein and inserting in lieu thereof the amount
$15,000,000.
8. Amendment to Subsection 2.12 of the Credit Agreement. (a) Subsection
2.12(a) is hereby amended by inserting the words ", the Tranche A1 Term Loans"
after the words "Tranche A Term Loans" in the third line of such subsection,
(b) subsection 2.12(b) is hereby amended by inserting the words ", the
Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the first line
of such subsection,
(c) subsection 2.12(c) is hereby amended by inserting the words ", the
Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the first line
of such subsection and
(d) subsection 2.12(d) is hereby amended by inserting the words ", the
Tranche A1 Term Loans" after the words "Tranche A Term Loans" in the sixth and
ninth lines of the first paragraph of such subsection and the second, third,
fifth, seventh and ninth lines of the second
<PAGE> 11
Page 10
paragraph of such subsection and by adding the following at the end of such
subsection (d); "Notwithstanding the foregoing, the first $15,000,000 in the
aggregate of mandatory prepayments may be applied as the Borrower may elect in
accordance with subsection 2.11."
9. Amendment to Subsection 5.14 of the Credit Agreement. Subsection
5.14 of the Credit Agreement is hereby amended by deleting therefrom the phrase
"As of the date hereof," and substituting therefor the phrase "As of the Fourth
Amendment Date,".
10. Amendment to Subsection 5.15 of the Credit Agreement. Subsection
5.15 of the Credit Agreement is hereby amended by (a) deleting the first
sentence thereof and replacing it with the following sentence:
"The proceeds of the Term Loans (other than the Additional Term Loans, the
Second Additional Term Loans and the Tranche A1 Term Loans) shall be used
to finance a portion of the Mergers and the Wirekraft Acquisition and the
transaction costs associated therewith and to refinance the credit
facilities under the Omega Credit Agreement."
and
(b) adding the following sentence to the end of such subsection:
"The proceeds of the Tranche A1 Term Loans shall be used to finance a
portion of the Forissier Acquisition and other Permitted Acquisitions."
11. Amendment to Section 7.9 of the Credit Agreement. Subsection 7.9 of
the Credit Agreement is hereby amended by adding thereto, after the term
"thereafter" in the eighth line in the paragraph, the phrase "other than leased
real property not having a material value".
12. Amendment to Subsection 8.1 of the Credit Agreement. (a) Subsection
8.1(a) of the Credit Agreement is hereby amended by deleting the table set forth
therein in its entirety, and inserting in lieu thereof the following:
<TABLE>
<S> <C> <C>
"1999 4th 2.20 to 1.00
2000 1st 2.20 to 1.00
2nd 2.20 to 1.00
3rd 2.20 to 1.00
4th 2.30 to 1.00
2001 1st 2.30 to 1.00
2nd 2.30 to 1.00
3rd 2.30 to 1.00
4th 2.45 to 1.00
2002 1st 2.45 to 1.00
2nd 2.45 to 1.00
</TABLE>
<PAGE> 12
Page 11
<TABLE>
<S> <C> <C>
3rd 2.45 to 1.00
4th 2.60 to 1.00
2003 1st 2.60 to 1.00
2nd 2.60 to 1.00
3rd 2.60 to 1.00
4th 3.00 to 1.00"
</TABLE>
and
(b) Subsection 8.1(c) of the Credit Agreement is hereby amended by
deleting the table set forth therein in its entirety and inserting in lieu
thereof the following:
<TABLE>
<S> <C> <C>
"1999 4th 4.75 to 1.00
2000 1st 4.75 to 1.00
2nd 4.75 to 1.00
3rd 4.75 to 1.00
4th 4.50 to 1.00
2001 1st 4.50 to 1.00
2nd 4.50 to 1.00
3rd 4.50 to 1.00
4th 4.00 to 1.00
2002 1st 4.00 to 1.00
2nd 4.00 to 1.00
3rd 4.00 to 1.00
4th 3.75 to 1.00
2003 1st 3.75 to 1.00
2nd 3.75 to 1.00
3rd 3.75 to 1.00
4th 3.25 to 1.00"
</TABLE>
13. Amendment to Subsection 8.2 of the Credit Agreement. (a) Subsection
8.2(c) is hereby amended by deleting therefrom the phrase "Second Amendment
Closing Date" and substituting therefor the phrase "Fourth Amendment Effective
Date".
(b) Subsection 8.2(i) of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting in lieu thereof the following:
"(i) Indebtedness (i) of ECM to Wirekraft Industries evidenced by the
ECM Notes (provided that the ECM Notes are pledged by Wirekraft
Industries to the Administrative Agent for the ratable benefit of the
Lenders pursuant to the Wirekraft Note Pledge Agreement); (ii) of ECM
and any other Foreign Subsidiary
<PAGE> 13
Page 12
of the Borrower to the Borrower or any Domestic Subsidiary of the
Borrower (other than Indebtedness evidenced by the ECM Notes)
(provided that any such intercompany notes are pledged by the Borrower
or any such Domestic Subsidiary of the Borrower, as the case may be,
to the Administrative Agent for the ratable benefit of the Lenders
pursuant to a pledge agreement in form and substance reasonably
satisfactory to the Administrative Agent) (iii) of ECM and any other
Foreign Subsidiary of the Borrower consisting of unsecured overdraft
facilities provided by local financial institutions for working
capital purposes (other than the Philippines Project Indebtedness) the
aggregate commitments of which are not to exceed $10,000,000, (iv) of
any Foreign Subsidiary of the Borrower for financing under the
Philippines Project Indebtedness and (v) Indebtedness of any Foreign
Subsidiary to any other Foreign Subsidiary; provided that the
aggregate principal amount of Indebtedness described in clauses (i)
and (ii) above shall in no event exceed $40,000,000 at any one time
(other than Indebtedness incurred pursuant to subsection 8.9(j) of the
Credit Agreement) and provided further that the aggregate amount of
the Philippines Project Indebtedness described in subclause (iv) shall
in no event exceed $18,000,000 at any one time."
(c) Subsection 8.2(o) is hereby amended by deleting the word "and" at
the end of the second proviso.
(d) Subsection 8.2(p) is hereby amended by deleting the period at the
end of the proviso and inserting in lieu thereof a semi-colon followed by the
word "and".
(e) Section 8.2 of the Credit Agreement is hereby amended by adding the
following paragraph in the proper alphabetical order:
"(q) Indebtedness incurred in connection with any Investment made
pursuant to Section 8.9(j)."
14. Amendment to Subsection 8.3 of the Credit Agreement. (a) Subsection
8.3(g) is hereby amended by deleting therefrom the phrase "Second Amendment
Closing Date" and substituting therefor the phrase "Fourth Amendment Effective
Date".
(b) Subsection 8.3(p) is hereby amended by deleting the phrase
"subsections 8.2(i), (ii) and (iii)" and substituting therefor the phrase
"subsections 8.2(i), (ii), (iii) and (v)".
(c) Subsection 8.3(q) of the Credit Agreement is hereby amended by
deleting the amount $2,000,000 contained therein and inserting in lieu thereof
the amount $5,000,000.
15. Amendment to Subsection 8.4 of the Credit Agreement. (a) Subsection
8.4(b) is hereby amended by deleting therefrom the phrase "Second Amendment
Closing Date" and substituting therefor the phrase "Fourth Amendment Effective
Date".
<PAGE> 14
Page 13
(b) Subsection 8.4 of the Credit Agreement is hereby amended
by deleting the "and" at the end of 8.4(j), deleting the period at the end of
8.4(k) and inserting in lieu thereof the following:
"; and (l) Guarantee Obligations made in the ordinary course of
business that do not have a Material Adverse Effect."
16. Amendment to Subsection 8.5 of the Credit Agreement. Subsection 8.5
of the Credit Agreement is hereby deleted in its entirety and the following
substituted therefor:
"8.5 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign,
transfer or otherwise dispose of, all or substantially all of its property,
business or assets, or make any material change in its present method of
conducting business, except that the Borrower and/or any of its
Subsidiaries shall be able to enter into one or more transactions (i)
creating a new Subsidiary, (ii) changing the jurisdiction of the Borrower
or any Subsidiary from one state to another state or from one country to
another country, (iii) changing the form of the Borrower or any Subsidiary
from a corporation to any other Person or (iv) merging, consolidating or
dissolving the Borrower and/or any Subsidiary, provided that (X) notice of
such transaction is provided to the Administrative Agent and each Lender at
least 10 days prior to the effective date of such transaction and (Y) such
transaction does not, in the reasonable opinion of the Administrative
Agent, as evidenced by its written consent (such consent not to be
unreasonably withheld) materially and adversely affect the Administrative
Agent's or any Lender's remedies under this Agreement and the other Loan
Documents, or otherwise have a Material Adverse Effect or, in the case of a
change in the Borrower's jurisdiction, impair any Lender's ability to
legally make or participate in Loans."
17. Amendment to Subsection 8.8 of the Credit Agreement. (a) Subsection
8.8(a) of the Credit Agreement is hereby amended by deleting the table set
therein and inserting in lieu thereof the following table:
<TABLE>
<CAPTION>
"Fiscal Year Amount
------------ ------
<S> <C>
1999 and thereafter $35,000,000"
</TABLE>
and
(b) Subsection 8.8(c) of the Credit Agreement is hereby amended by deleting
the amount $27,000,000 contained therein and inserting in lieu thereof the
amount $35,000,000.
18. Amendment to Subsection 8.9 of the Credit Agreement. (a) Subsection
8.9(e) is hereby amended by deleting therefrom the phrase "Second Amendment
Closing Date" and substituting therefor the phrase "Fourth Amendment Effective
Date".
<PAGE> 15
Page 14
(b) Subsection 8.9(j) of the Credit Agreement is hereby amended by
deleting it in its entirety and inserting in lieu thereof the following:
"(j) In addition to the foregoing, Investments made after the Fourth
Amendment Effective Date (at cost, without regard to any write down or
write up thereof) in an aggregate amount not exceeding the sum of (a)
$50,000,000, (b) common stock issued by the Borrower in connection with
such Investments and (c) that portion of Excess Cash Flow retained, and
not otherwise utilized under any other exception to any negative
covenant, by the Borrower at any time outstanding;"
(c) Subsection 8.9(k) is hereby amended by deleting the word "and" at
the end of such subsection and
(d) Subsection 8.9(l) is amended by deleting the period at the end of
such subsection and inserting in lieu thereof:
"; and (m) Investments pursuant to the Forissier Acquisition."
19 Amendment to Section 9 of the Credit Agreement. (a) Subsection 9(e)
of the Credit Agreement is hereby amended by deleting the amount $2,000,000 set
forth therein and inserting in lieu thereof the amount $5,000,000 and (b)
subsection 9(h) is hereby amended by deleting the amount $2,000,000 set forth
therein and inserting in lieu thereof the amount $5,000,000.
20 Amendment to Section 12.6 of the Credit Agreement. Subsection
12.6(c) of the Credit Agreement is hereby amended by inserting at the end of the
first clause (x) of such subsection the following:
",or any other lesser amount, provided that the assignment of such
lesser amount is consented to by the Borrower and the Administrative
Agent"
21 Amendment to Schedules. Each Schedule to the Credit Agreement is
hereby amended as set forth in the corresponding schedule hereto.
22 Conditions to Effectiveness of this Amendment. This Amendment shall
become effective on and as of the date hereof upon the satisfaction of the
following conditions precedent (such date the "Fourth Amendment Effective
Date"):
(a) All documentation in connection with the Amendment and the
transactions contemplated hereby (including the Forissier Acquisition) shall
have been executed by each of Holdings, the Borrower and its Subsidiaries, as
applicable.
(b) The Borrower shall have consummated the Forissier Acquisition in
accordance with the Forissier Stock Purchase Agreement.
<PAGE> 16
Page 15
(c) The execution and delivery of the Amendment by (i) Holdings, (ii)
the Borrower, (iii) all of the Tranche A1 Term Loan Lenders, (iv) the Revolving
Credit Lenders and the Tranche A Term Loan Lenders the Total Credit Percentages
(calculated for this purpose without reference to outstanding Tranche B Term
Loans and Tranche A1 Term Loan Loans) of which aggregate at least a majority and
(v) the Tranche B Term Loan Lenders the Tranche B Term Loan Percentages of which
aggregate at least a majority.
(d) The Borrower shall have paid all fees and expenses in connection
with the Amendment.
(e) No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the transactions contemplated
herein.
(f) Each of the representations and warranties made by the Credit
Parties and their Subsidiaries in or pursuant to the Loan Documents shall be
true and correct in all material respects on and as of the date hereof as if
made on and as of the date hereof, except for any representation and warranty
which is expressly made as of an earlier date, which representation and warranty
shall have been true and correct in all material respects as of such earlier
date.
(g) The Administrative Agent shall have received, with a copy for each
Lender, the Acknowledgement and Consent to the Fourth Amendment attached hereto
as Exhibit A, executed by each of the Domestic Subsidiaries.
(h) The Administrative Agent shall have received, with a counterpart
for each Lender, the executed legal opinion of Weil, Gotshal & Manges LLP,
counsel to the Credit Parties, substantially in the form of Exhibit B hereto,
dated the Fourth Amendment Effective Date and covering such other matters
incident to the transactions contemplated by this Amendment as the
Administrative Agent may require.
23 Confirmation of Guarantees (a) Holdings hereby acknowledges and
confirms its obligations under Section 11 of the Credit Agreement, and agrees
that its guarantee shall continue at all times to support the Borrower's
obligations under all of the Loan Documents, including, without limitation, as
such documents have been heretofore amended or modified, and, to the extent
permitted by applicable law, as may be further amended or modified from time to
time.
(b) The Borrower hereby acknowledges and confirms its obligations under
the Borrower Guarantee and agrees that its guarantee shall continue at all times
to support Camden's obligations and liabilities under any Letters of Credit
issued for the account of Camden.
(c) Camden hereby acknowledges and confirms its obligations under the
Camden Guarantee, and agrees that its guarantee shall continue at all times to
support the Borrower's obligations under all of the Loan Documents, including,
without limitation, as such documents have been heretofore amended or modified,
and, to the extent permitted by applicable law, as may be further amended or
modified from time to time.
<PAGE> 17
Page 16
24 Miscellaneous. (a) Effect. Except as expressly amended hereby, all
of the representations, warranties, terms, covenants and conditions of the Loan
Documents shall remain unamended and not waived and shall continue to be in full
force in effect.
(b) Counterparts. This Amendment may be executed by one or more of the
parties to this Amendment on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Amendment signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
(c) Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(d) Integration. This Amendment and the other Loan Documents represent
the agreement of the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.
(E) GOVERNING LAW. THIS AMENDMENT, ANY NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT AND ANY NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
<PAGE> 18
Page 17
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
<TABLE>
<S> <C>
INTERNATIONAL WIRE GROUP, INC.,
as Borrower
By: /s/ DAVID J. WEBSTER
---------------------------------------
Name: David J. Webster
Title: Senior Vice President
INTERNATIONAL WIRE HOLDING
COMPANY, as Guarantor
By: /s/ DAVID J. WEBSTER
---------------------------------------
Name: David J. Webster
Title: Senior Vice President
CAMDEN WIRE CO., INC.
By: /s/ DAVID J. WEBSTER
---------------------------------------
Name: David J. Webster
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender,
as Swing Line Lender and as Issuing Lender
By: /s/ MARIAN N. SCHILLMAN
---------------------------------------
Name: Marian N. Schillman
Title: Vice President
ABN AMRO BANK
By: /s/ THOMAS COMFORT
--------------------------------------
Name: Thomas Comfort
Title: Group Vice President
By: /s/ BERNARD J. MCGUIGER
--------------------------------------
Name: Bernard J. McGuiger
Title: Group Vice President and
Director
</TABLE>
<PAGE> 19
Page 18
<TABLE>
<S> <C>
BANKERS TRUST COMPANY
By: /s/ GREGORY SHEFRIN
---------------------------------------
Name: Gregory Shefrin
Title: Principal
THE BANK OF NEW YORK
By: /s/ DAVID G. SHEDD
---------------------------------------
Name: David G. Shedd
Title: Vice President
BANK OF SCOTLAND
By: /s/ ANNIE GLYNN
---------------------------------------
Name: Annie Glynn
Title: Senior Vice President
PARIBAS CAPITAL FUNDING LLC
By: /s/ M.S. ALEXANDER
---------------------------------------
Name: M.S. Alexander
Title: Director
</TABLE>
<PAGE> 20
Page 19
<TABLE>
<S> <C>
CREDIT AGRICOLE INDOSUEZ
By: /s/ RAYMOND [ILLEGIBLE]
---------------------------------------
Name: Raymond [ILLEGIBLE]
Title: Vice President
Senior Relationship Manager
By: /s/ SUSAN KNIGHT
---------------------------------------
Name: Susan Knight
Title: Vice President
</TABLE>
<PAGE> 21
<TABLE>
Page 20
<S> <C>
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ GREGORY HONG
---------------------------------------
Name: Gregory Hong
Title: Duly Authorized Signatory
HELLER FINANCIAL, INC.
By: /s/ SCOTT ZAMBA
---------------------------------------
Name: Scott Zamba
Title: Assistant Vice President
THE INDUSTRIAL BANK OF JAPAN
LIMITED
By: /s/ TAKOYA [ILLEGIBLE]
---------------------------------------
Name: Takoya [ILLEGIBLE]
Title: Senior Vice President
KZH SHENKMAN
By:
---------------------------------------
Name:
Title:
KZH-CRESCENT LLC
By: /s/ PETER CHIN
---------------------------------------
Name: Peter Chin
Title: Authorized Agent
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:
---------------------------------------
Name:
Title:
</TABLE>
<PAGE> 22
Page 21
<TABLE>
<S> <C>
MEDICAL LIABILITY MUTUAL
INSURANCE CO.
By: INVESCO Senior Secured Management, Inc.
as Investment Manager
By: /s/ JOSEPH ROTONDO
--------------------------------------
Name: Joseph Rotondo
Title: Authorized Signatory
ML DEBT STRATEGIES FUND, INC.
By:
--------------------------------------
Name:
Title:
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management, L.P.
as Investment Advisor
By:
--------------------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:
--------------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By: /s/ BEATRICE E. KOSSODO
--------------------------------------
Name: Beatrice E. Kossodo
Title: Senior Vice President
</TABLE>
<PAGE> 23
Page 22
<TABLE>
<S> <C>
By:
--------------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ HIDEKAZU KOJIMA
---------------------------------------
Name: Hidekazu Kojima
Title: Vice President
NATEXIS BANQUE BFCE
By: /s/ JORDAN SADLER
---------------------------------------
Name: Jordan Sadler
Title: Associate
By: /s/ FRANK H. MADDEN, JR.
--------------------------------------
Name: Frank H. Madden, Jr.
Title: Vice President & Group Manager
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By:
--------------------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By: BOSTON MANAGEMENT & RESEARCH,
as Investment Advisor
By:
--------------------------------------
Name:
Title:
</TABLE>
<PAGE> 24
Page 23
<TABLE>
<S> <C>
VAN KAMPEN
PRIME RATE INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By: /s/ DARVIN D.PIERCE
--------------------------------------
Name: Darvin D. Pierce
Title: Vice President
</TABLE>
<PAGE> 25
Page 24
<TABLE>
<S> <C>
VAN KAMPEN
SENIOR INCOME TRUST
By: Van Kampen Investment Advisory Corp.
By: /s/ DARVIN D. PIERCE
--------------------------------------
Name: Darvin D. Pierce
Title: Vice President
VAN KAMPEN CLO I, LIMITED
BY: VAN KAMPEN
MANAGEMENT INC.,
as Collateral Manager
By: /s/ DARVIN D. PIERCE
--------------------------------------
Name: Darvin D. Pierce
Title: Vice President
DEEPROCK & COMPANY
By: Eaton Vance Management, as Investment Advisor
By:
--------------------------------------
Name:
Title:
CITY NATIONAL BANK
By: /s/ [ILLEGIBLE]
--------------------------------------
Name: [ILLEGIBLE]
Title: Vice President
KZH-SOLEIL CORPORATION (formerly known as
KZH Holding Corporation)
By:
--------------------------------------
Name:
Title:
EATON VANCE SENIOR INCOME TRUST
</TABLE>
<PAGE> 26
Page 25
<TABLE>
<S> <C>
PACIFICA PARTNERS
By:
--------------------------------------
Name:
Title:
IMPERIAL BANK
By: /s/ RAY VADSIMA
--------------------------------------
Name: Ray Vadsima
Title: Senior Managing Director
KZH CRESCENT-3 LLC
By:
--------------------------------------
Name:
Title:
SEQUILS I, LTD.
By: TCW Advisors, Inc. as its Collateral Manager
By: /s/ MARK L. GOLD
--------------------------------------
Name: Mark L. Gold
Title: Managing Director
By: /s/ JONATHAN I. BERG
--------------------------------------
Name: Jonathan I. Berg
Title: Assistant Vice President
</TABLE>
<PAGE> 27
Page 26
<TABLE>
<S> <C>
UNITED OF OMAHA LIFE INSURANCE
COMPANY
By: TCW Asset Management Company,
its Investment Advisor
By: /s/ MARK L. GOLD
--------------------------------------
Name: Mark L. Gold
Title: Managing Director
By: /s/ JONATHAN I. BERG
--------------------------------------
Name: Jonathan I. Berg
Title: Assistant Vice President
</TABLE>
<PAGE> 28
Page 27
<TABLE>
<S> <C>
UNITED OF OMAHA LIFE INSURANCE
COMPANY
By: TCW Asset Management Company, its
Investment Advisor
By:
--------------------------------------
Name:
Title:
By:
--------------------------------------
Name:
Title:
AVALON CAPITAL LTD.
By: INVESCO Senior Secured Management, Inc.
as Portfolio Advisor
By: /s/ JOSEPH [ILLEGIBLE]
--------------------------------------
Name:
Title:
</TABLE>
<PAGE> 29
Page 28
<TABLE>
<S> <C>
FIRST UNION NATIONAL BANK
By: /s/ THOMAS CAMEL
--------------------------------------
Name: Thomas Camel
Title: Vice President
By:
--------------------------------------
Name:
Title:
</TABLE>
<PAGE> 30
EXHIBIT A
ACKNOWLEDGEMENT AND CONSENT TO THE FOURTH
AMENDMENT TO AMENDED AND
RESTATED CREDIT AGREEMENT
December 29, 1999
To the Lenders Parties to the
Amended and Restated Credit Agreement
Reference is made to the following documents:
(1) AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
February 12, 1997 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Amended and Restated Credit
Agreement") among International Wire Group, Inc., a Delaware
corporation (the "Borrower"), International Wire Holding Company, a
Delaware corporation, Camden Wire Co., Inc., a New York corporation,
THE CHASE MANHATTAN BANK, as administrative agent (in such capacity,
the "Administrative Agent") for the lenders (the "Lenders") from time
to time parties to the Amended and Restated Credit Agreement and
Bankers Trust Company, as Documentation Agent.
(2) DOMESTIC SUBSIDIARIES' GUARANTEE, dated as of June 12,
1995 (the "Domestic Guarantee"), made by each of the parties that are
signatories thereto (the "Domestic Guarantors"), in favor of the
Administrative Agent for the ratable benefit of the Lenders.
(3) WIRE TECHNOLOGIES GUARANTEE, dated as of March 5, 1996
(the "Wire Technologies Guarantee", and together with the Domestic
Guarantee, each, a "Guarantee" and collectively, the "Guarantees"),
made by Wire Technologies, Inc. (and together with the Domestic
Guarantors, each, a "Guarantor" and collectively, the "Guarantors"), in
favor of the Administrative Agent for the ratable benefit of the
Lenders.
Terms not defined herein shall have the definitions ascribed thereto in the
Amended and Restated Credit Agreement or the Guarantee.
Each Guarantor hereby acknowledges and consents to the Fourth Amendment
to Amended and Restated Credit Agreement, including, but not limited to, the
amendment of the definition of "Obligations" contained therein, and the effect
of the Fourth Amendment on its obligations and the collateral security provided
by it under the Loan Documents. Each Guarantor hereby acknowledges and confirms
its obligations under the Guarantee to which it is a party, and agrees that the
Guarantee to which it is a party shall continue at all times to support the
Borrower's obligations under all of the Loan Documents, including, without
limitation, as such documents have been heretofore amended or modified, and, to
the extent permitted by applicable law, as may be further amended or modified
from time to time. Nothing herein or in any of the Loan Documents shall be
deemed to discharge, terminate or extinguish the Guarantee to which it
<PAGE> 31
is a party or the obligations and liabilities of such Guarantor under the
Guarantee to which it is a party, which shall remain in full force and effect.
This Acknowledgement and Consent is being delivered in, and shall be
governed by and construed and interpreted in accordance with the laws of, the
State of New York. The provisions of Section 3 of the Guarantee and Section 3 of
the Wire Technologies Guarantee are hereby incorporated herein by reference and
made applicable to this Acknowledgement and Consent.
<TABLE>
<S> <C>
Very truly yours,
OMEGA WIRE, INC.
OWI CORPORATION
WIREKRAFT INDUSTRIES, INC.
ECM HOLDING COMPANY
WIREKRAFT EMPLOYMENT COMPANY
WIRE TECHNOLOGIES, INC.
INTERNATIONAL WIRE ROME OPERATIONS., INC.
By: /s/ DAVID J. WEBSTER
-----------------------------------
Name: David J. Webster
Title: Senior Vice President
WIRE HARNESS INDUSTRIES, INC.
By: /s/ DAVID J. WEBSTER
------------------------------------
Name: David J. Webster
Title: Senior Vice President
</TABLE>
<PAGE> 32
Amendment to Schedule 1.1
to the Credit Agreement
ADDRESSES FOR NOTICES; TRANCHE A-1 TERM LOAN
COMMITMENTS
ABN -AMRO BANK
Address for Notice:
Attention:
Telecopy:
Tranche A-1 Term Loan Commitment: $2,500,000.00
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
Address for Notice:
1251 Avenue of the Americas
New York, NY 10020
Attention: Hidekazu Kojima
Telecopy: (212) 782-4981
Tranche A-1 Term Loan Commitment: $2,500,000.00
BANKERS TRUST COMPANY
Address for Notice:
130 Liberty Street
New York, NY 10006
Attention: Gina Thompson
Telecopy: (212) 250-7218
Tranche A-1 Term Loan Commitment: $2,500,000.00
<PAGE> 33
PARIBAS CAPITAL FUNDING LLC
Address for Notice:
2121 San Jacinto Street
Suite 930
Dallas, TX 75201
Attention: Deanna Walker
Telecopy:(214) 969-0260
Tranche A-1 Term Loan Commitment: $2,500,000.00
FIRST UNION NATIONAL BANK
Address for Notice:
Attention:
Telecopy:
Tranche A-1 Term Loan Commitment: $2,500,000.00
THE CHASE MANHATTAN BANK
Address for Notice:
c/o Chase Securities Inc.
10 South LaSalle Street
23rd Floor
Chicago, Illinois 60603
Attention: Jonathan Twichell
Telecopy:(312) 346-9310
Tranche A-1 Term Loan Commitment: $2,500,000.00(1)
- ------------------
1/ $10,000,000.00 on the Fourth Amendment Effective Date, $2,500,000 of which
is to be transferred via assignment to Captiva II Finance Ltd. on the day
following the Fourth Amendment Effective Date, $2,000,000 of which is to be
transferred via assignment to Senior Debt Portfolio on the Fourth Amendment
Effective Date, $500,000 of which is to be transferred via assignment to
Oxford Strategic Income Trust on the Fourth Amendment Effective Date, and
$2,500,000 of which is to be transferred to Mitsubishi Trust and Banking
Corporation on January 12, 2000.
<PAGE> 34
CAPTIVA II FINANCE LTD.
Address for Notice:
c/o Trust Company of the West
200 Park Avenue, Suite 2200
New York, New York 10166-0228
Attention: Mark Gould/ Justin Driscoll
Telecopy: (212) 771-4159
c/o Deutsche Bank (Cayman) Limited
P.O. Box 1984 GT, Elizabeth Square
Grand Cayman, Cayman Islands
Attn: Director
c/o State Street Bank & Trust Co.
2nd Avenue de Lafayette Place
Boston, MA 02111
Attention: Greg Monaghan
Telecopy:(617) 664-6367/5368
Tranche A-1 Term Loan Commitment: $2,500,000.00(2)
SENIOR DEBT PORTFOLIO
Address for Notice:
24 Federal Street, 6th floor
Boston, MA 02110
Attention: Gretchan Bergstresser
Telecopy:(617) 695-9594
Tranche A-1 Term Loan Commitment: $2,000,000.00(3)
- --------------
2/ Represents $2,500,000.00 to be transferred via assignment from The Chase
Manhattan Bank on the day following the Fourth Amendment Effective Date.
3/ Represents $2,000,000.00 to be transferred via assignment from The Chase
Manhattan Bank on the Fourth Amendment Effective Date.
<PAGE> 35
OXFORD STRATEGIC INCOME TRUST
24 Federal Street, 6th floor
Boston, MA 02110
Attention: Gretchan Bergstresser
Telecopy:(617) 695-9594
Tranche A-1 Term Loan Commitment: $500,000.00(4)
THE MITSUBISHI TRUST AND BANKING CORPORATION
Address for Notice:
520 Madison Avenue
25th Floor
New York, NY 10022
Attention: Anthony James Rock
Telecopy: (212) 644-6825
Tranche A-1 Term Loan Commitment: $2,500,000.00(5)
NATEXIS BFCE
Address for Notice:
Attention:
Telecopy:
Tranche A-1 Term Loan Commitment: $2,500,000.00
- ---------------------
4/ Represents $500,000.00 to be transferred via assignment from The Chase
Manhattan Bank on the Fourth Amendment Effective - Date.
5/ Represents $2,500,000.00 to be transferred via assignment from The Chase
Manhattan Bank on January 12, 1999.
<PAGE> 1
EXHIBIT 10.28
EMPLOYMENT AGREEMENT
This agreement (the "Agreement") is made and entered into as of
November 13, 1999 by and between International Wire Group, Inc. ("Employer") and
Glenn J. Holler ("Employee").
W I T N E S S E T H :
WHEREAS, Employer is a direct wholly-owned subsidiary of International
Wire Holding Company ("International");
WHEREAS, Employer desires to continue to retain the services of
Employee upon the terms set forth herein; and
WHEREAS, Employee desires to continue to be employed by Employer, to
appropriately memorialize the terms and conditions of such employment.
NOW, THEREFORE, Employee and Employer, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
1. BASIC EMPLOYMENT PROVISIONS.
(a) Employment and Term. Employer hereby agrees to employ Employee
(hereinafter referred to as the "Employment") as Vice President - Finance of
Employer (the "Position") and Employee agrees to be employed by Employer in such
Position for a period of one (1) year ending on the 12th day of November, 2000
(the "Termination Date"), unless terminated earlier as provided herein (the
"Employment Period"). In the event that termination (as hereinafter provided)
has not occurred prior to the last day of the Employment Period, unless either
party shall have given written notice to the contrary at least thirty (30) days
prior to the end of the Employment Period or any extension thereof, the
Employment Period shall annually renew for a successive one (1) year period
until terminated.
(b) Duties. Employee in the Position shall be subject to the direction
and supervision of the President or his designee and shall have those duties and
responsibilities which are assigned to him during the Employment Period by the
President consistent with the Position, provided that the President shall not
assign any greater duties or responsibilities to the Employee than are necessary
for the Employee's faithful and adequate performance of the duties and
responsibilities assigned. The parties expressly acknowledge that the Employee
shall devote all of Employee's business time and attention to the transaction of
the Employer's businesses as is reasonably necessary to discharge Employee's
responsibilities hereunder. Employee agrees to perform faithfully the duties
assigned to the best of Employee's ability.
<PAGE> 2
2. COMPENSATION.
(a) Salary. During the employment period, Employer shall pay to
Employee a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such basic compensation shall be Two
Hundred Forty Four Thousand Dollars ($244,000) per year. Such salary shall be
reviewed from time to time by the Chief Executive Officer ("CEO") of the
Employer and may be increased in the CEO's sole discretion. Such salary shall
accrue and be payable in accordance with the payroll practices of Employer in
effect from time to time. All such payments shall be subject to deductions and
withholdings authorized or required by applicable law.
(b) Bonus. During the Employment Period, Employee shall be eligible to
receive an annual bonus (payable by the Employer) in an amount to be determined
by the CEO of Employer, in the CEO's sole discretion, of up to fifty percent
(50%) of Employee's annual basic compensation as set forth above.
(c) Benefits. During the Employment Period, Employee shall be entitled
to such other benefits as are determined by the CEO, including without
limitation, group life, health, executive medical supplement and other
insurance, paid vacations, annual executive physical, reimbursement for tax
preparation costs and executive lunches.
(d) Auto Allowance. Employer shall pay Employee an allowance to own and
maintain an automobile in an amount sufficient so that, after the effect of
federal and state income taxes, Employee shall net Five Hundred Dollars ($500)
per month.
(e) Country Club Membership. Employer shall reimburse Employee for the
initiation fee and monthly dues expense for Employee to belong to a country club
in St. Louis, Missouri area reasonably acceptable to Employer and for the
initiation fee and monthly dues expense for that Club, but not for any charges
made by Employee at the club, unless such qualify as reimbursable business
entertainment expenses.
3. TERMINATION.
(a) Death or Disability. This Agreement shall terminate automatically
upon the death or total disability of Employee. For the purpose of this
Agreement, "total disability" shall be deemed to have occurred if Employee shall
have been unable to perform the assigned duties due to mental or physical
incapacity for a period of three (3) consecutive months or for any sixty (60)
working days out of a six (6) month consecutive period.
(b) Cause. Employer may terminate the employment of Employee under this
Agreement for Cause. For the purpose of this Agreement, "Cause" shall be deemed
to be fraud, dishonesty, competition with Employer, unauthorized use of any of
Employer's trade secrets or confidential information, or failure to properly
perform the duties assigned to Employee, in the reasonable judgment of Employer.
(c) Without Cause. Employer may terminate the employment of Employee
under this Agreement without Cause, subject to the continuing rights of Employee
pursuant to Section 4(c) below.
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<PAGE> 3
4. COMPENSATION UPON TERMINATION.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall terminate
and no further compensation shall be payable to Employee, except that Employee
or Employee's estate, heirs or beneficiaries, as applicable, shall be entitled,
in addition to any other benefits specifically provided to them or Employee
under any benefit plan, to receive Employee's then current salary for a period
of six (6) months from the date the Employment Period terminates.
(b) Termination for Cause or Voluntary Termination by Employee. If the
employment of Employee under this Agreement is terminated for Cause pursuant to
the provisions of Section 3(b) above or if Employee voluntarily terminates
Employee's employment, no further compensation shall be paid to Employee after
the date of termination.
(c) Termination Without Cause. If the Employment of Employee under this
Agreement is terminated pursuant to Section 3(c) above, Employee shall be
entitled to continue to receive from Employer the then current basic
compensation hereunder [which shall not be less than the amount specified in
Section 2(a) above] until the longer of one (1) year or the Termination Date,
such amount to be paid in accordance with the payroll practices of Employer, and
shall further be entitled to continue to receive the benefits to which Employee
would otherwise be entitled pursuant to Section 2(c) above, but no other
benefits.
(d) In the event the Employment of Employee is terminated for any
reason other then death or disability or cause as provided herein above, within
one (1) year of a change of control of Employer or of International Wire Holding
Company (the parent of Employer), Employee shall be entitled to continue to
receive from Employer or its successor in interest the then current basis
compensation hereunder [but not less then the amount specified in Section 2(a)
above] for one (1) year from the date of such termination.
As used herein the term "change of control" shall mean be deemed to
have occurred if, subsequent to the November 13, 1999 (A) any "person" (as such
term is defined in Section 13(d) of the Exchange Act), other than Hicks, Muse,
Tate & Furst Equity Fund II, L. P. and/or Mills & Partners Inc., and/or their
respective affiliates, employees, officers, directors or successors (the "HMTF
Group"), is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing a majority of the combined voting power
of the Company's then outstanding voting securities, or (B) a majority of the
Board of Directors shall consist of persons who are not continuing Directors.
5. EXPENSE REIMBURSEMENT. Upon submission of properly documented
expense account reports, Employer shall reimburse Employee for all reasonable
travel and entertainment expenses incurred by Employee in the course of his
employment with Employer.
6. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns,
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<PAGE> 4
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto, except that this
Agreement and all of the provisions hereof may be assigned by Employer to any
successor to all or substantially all of its assets (by merger or otherwise) and
may otherwise be assigned upon the prior written consent of Employee.
7. CONFIDENTIAL INFORMATION.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of
employment, Employee will not directly or indirectly reveal, divulge, disclose
or communicate to any person or entity, other than authorized officers,
directors and employees of the Employer, in any manner whatsoever, any
Confidential Information (as hereinafter defined) of Employer without the prior
written consent of the CEO.
(b) Definition. As used herein, "Confidential Information" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employer or its respective
businesses, products and practices, which information is not generally known in
the business in which Employer is or may be engaged. However, Confidential
Information shall not include under any circumstances any information with
respect to the foregoing matters which is (i) available to the public from a
source other than Employee, (ii) released in writing by Employer to the public
or to persons who are not under a similar obligation of confidentiality to
Employer and who are not parties to this Agreement, (iii) obtained by Employee
from a third party not under a similar obligation of confidentiality to
Employer, (iv) required to be disclosed by any court process or any government
or agency or department of any government, or (v) the subject of a written
waiver executed by Employer for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment, Employee
will surrender to Employer all Confidential Information, including without
limitation, all lists, charts, schedules, reports, financial statements, books
and records of the Employer, and all copies thereof, and all other property
belonging to the Employer shall be accorded reasonable access to such
Confidential Information subsequent to the Employment Period for any proper
purpose as determined in the reasonable judgment of Employer.
8. AGREEMENT NOT TO COMPETE.
(a) Employee agrees:
(i) To give the President thirty (30) days' written advance
notice of voluntary termination of employment with Employer. Such
notice shall include Employee's future employment or self-employment
intentions, identification of the prospective employer and the general
nature of the prospective employment or self-employment, if known.
Employer shall continue to pay the then-current salary to Employee
until the end of such notice period.
(ii) To participate in an exit interview conducted by a member
of the personnel department of Employer and/or by a representative of
Employer, at the time of or prior to the termination of Employment with
Employer.
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<PAGE> 5
(iii) That for one (1) year following the termination of the
Employment, Employee shall promptly notify Employer of any change in
the identification of Employee's employer or the nature of such
employment or of self-employment.
(iv) Subject to the conditions hereinafter stated, Employee will
not, within one (1) year after leaving the employ of Employer, engage
or enter into employment by, or into self-employment or gainful
occupation as, a Competing Business or act directly or indirectly as an
advisor, consultant, sales agent or broker for a Competing Business. As
used herein, "Competing Business" means a business which is engaged in
the manufacture, sale or other disposition of a product or service or
has under development a product or service which is in direct
competition with a product or service, whether existing or under
development, of the Employer. Employee acknowledges that Employer does
not have an adequate remedy at law in the event Employee violates this
provision and, therefor, Employee agrees that, in such an event,
Employer shall be entitled to equitable relief, including but not
limited to, injunctive relieve and to withhold all payments due to
Employee hereunder pending a judicial determination of whether Employee
has violated this Agreement.
(v) The terms of 8(a)(i) - 8(a)(iv) shall apply whether the
termination is voluntary or involuntary for whatever reason.
(b) Employer agrees:
(i) That within fifteen (15) business days after receiving
identification of the prospective employer, the nature of the
employment or self-employment pursuant to Paragraph 8(a)(i) above, or
any change therein pursuant to Paragraph 8(a)(iii) above, Employer will
advise Employee as to whether such employment constitutes a Competing
Business as defined in Paragraph 8(a)(iv) above.
(ii) In the event Employer advises Employee that such employment
constitutes a Competing Business, to forward to Employee at the end of
each of the twelve (12) successive calendar months following the month
in which Employment by Employer terminates, a check in the amount equal
to one-half (1/2) of the monthly salary of Employee (exclusive of extra
compensation of any kind) as of the Termination Date. If notice is
received pursuant to Paragraph 8(b) and the Employer advises Employee
that such employment constitutes a Competing Business, the
aforementioned monthly checks shall be forwarded for the remaining
number of the aforesaid twelve (12) successive calendar months.
Provided, however, that all payments due under this Paragraph 8(b)(ii)
shall not be required during any periods that Employee is receiving
payments under either Paragraphs 4(a) or 4(c) or payment for service
from a Competing Business.
9. WAIVER OF AGREEMENT NOT TO COMPETE. The Employer, based on the facts
revealed to it by the Employee regarding the new employment and in its
discretion upon written notification to Employee, may at any time waive or elect
not to enforce the provisions of Paragraph 8(a)(iv), in which event the
obligations of Paragraph 8(b)(ii) above shall thereafter not apply and Employee
may
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<PAGE> 6
be engaged by or enter into the employment of the identified Competing
Business, but only such identified Competing Business.
10. AGREEMENT NOT TO SOLICIT EMPLOYEES. Employee agrees that, for a
period of one (1) year following the termination of the Employment Period,
Employee shall not, on behalf of any business, solicit or induce, or in any
manner attempt to solicit or induce, either directly or indirectly, any person
employed by, or any agent of, Employer to terminate such employment or agency,
as the case may be, with Employer. In the event of violation hereof, Employer
may terminate any payments due to Employee hereunder.
11. NO VIOLATION. Employee hereby represents and warrants to Employer
that the execution, delivery and performance of this Agreement or the passage of
time, or both, will not conflict with, result in a default, right to accelerate
or loss of rights under any provision of any agreement or understanding to which
the Employee or, to the best knowledge of Employee, any of Employee's affiliates
are a party or by which Employee, or to the best knowledge of Employee,
Employee's affiliates may be bound or affected.
12. CAPTIONS. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
13. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed delivered, whether or not actually
received, two days after being deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
Employer: International Wire Group, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Attn: Chief Executive Officer
Employee: Glenn J. Holler
226 Grimsley Station Bluff Drive
St. Louis, Missouri 63129
14. INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance of this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
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<PAGE> 7
15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof, including the Prior Agreement, which is fully replaced
hereby. This Agreement may be amended, in whole or in part only, by an
instrument in writing setting forth the particulars of such amendment and duly
executed by an officer of Employer expressly authorized by the CEO to do so and
by Employee.
16. WAIVER. No delay or omission by any party hereto to exercise any
right or power hereunder shall impair such right or power to be construed as a
waiver thereof. A waiver by any of the parties hereto of any of the covenants to
be performed by any other party or any breach thereof shall not be construed to
be a waiver of any succeeding breach thereof or of any other covenant herein
contained. Except as otherwise expressly set forth herein, all remedies provided
for in this Agreement shall be cumulative and in addition to and not in lieu of
any other remedies available to any party at law, in equity or otherwise.
17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced
according to the laws of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
<TABLE>
<CAPTION>
EMPLOYER: EMPLOYEE:
<S> <C>
INTERNATIONAL WIRE GROUP, INC.
By /s/ JAMES N. MILLS /s/ GLENN J. HOLLER
-------------------------- --------------------------
James N. Mills, Chairman Glenn J. Holler
</TABLE>
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<PAGE> 1
EXHIBIT 10.29
EMPLOYMENT AGREEMENT
This agreement (the "Agreement") is made and entered into as of
November 13, 1999 by and between International Wire Group, Inc. ("Employer") and
Joseph M. Fiamingo ("Employee") and fully replaces that certain Employment
Agreement (the "Prior Agreement") dated as of September 25, 1995 between
Wirekraft Industries, Inc. and Employee.
W I T N E S S E T H :
WHEREAS, Employer is a direct wholly-owned subsidiary of International
Wire Holding Company ("International");
WHEREAS, Employee has previously entered into the Prior Agreement,
which Prior Agreement expired by its term on September 24, 1999;
WHEREAS, Employer desires to retain the services of Employee upon the
terms set forth herein; and
WHEREAS, Employee desires to be employed by Employer, to appropriately
memorialize the terms and conditions of such employment.
NOW, THEREFORE, Employee and Employer, in consideration of the
agreements, covenants and conditions herein, hereby agree as follows:
1. BASIC EMPLOYMENT PROVISIONS.
(a) Employment and Term. Employer hereby agrees to employ Employee
(hereinafter referred to as the "Employment") as President and Chief Operating
Officer of Employer (the "Position") and Employee agrees to be employed by
Employer in such Position for a period of three (3) years ending on the 12th day
of November, 2002 (the "Termination Date"), unless terminated earlier as
provided herein (the "Employment Period"). In the event that termination (as
hereinafter provided) has not occurred prior to the last day of the Employment
Period, unless either party shall have given written notice to the contrary at
least thirty (30) days prior to the end of the Employment Period or any
extension thereof, the Employment Period shall annually renew for a successive
one (1) year period until terminated.
(b) Duties. Employee in the Position shall be subject to the direction
and supervision of the Chief Executive Officer of Employer (the "CEO") or his
designee and shall have those duties and responsibilities which are assigned to
him during the Employment Period by the CEO consistent with the Position,
provided that the CEO shall not assign any greater duties or responsibilities to
the Employee than are necessary for the Employee's faithful and adequate
performance of the duties and responsibilities assigned. The parties expressly
acknowledge that the Employee shall devote all of Employee's business time and
attention to the transaction of the Employer's businesses as is
<PAGE> 2
confidential reasonably necessary to discharge Employee's responsibilities
hereunder. Employee agrees to perform faithfully the duties assigned to the best
of Employee's ability.
2. COMPENSATION.
(a) Salary. During the employment period, Employer shall pay to
Employee a salary as basic compensation for the services to be rendered by
Employee hereunder. The initial amount of such basic compensation shall be Three
Hundred Fifty Thousand Dollars ($350,000) per year. Such salary shall be
reviewed from time to time by the CEO of the Employer and may be increased in
the CEO's sole discretion. Such salary shall accrue and be payable in accordance
with the payroll practices of Employer in effect from time to time. All such
payments shall be subject to deductions and withholdings authorized or required
by applicable law.
(b) Bonus. During the Employment Period, Employee shall be eligible to
receive an annual bonus (payable by the Employer) in an amount to be determined
by the CEO of Employer, in the CEO's sole discretion, of up to sixty-five
percent (65%) of Employee's annual basic compensation as set forth above.
(c) Benefits. During the Employment Period, Employee shall be entitled
to such other benefits as are determined by the CEO, including without
limitation, group life, hospitalization and other insurance, paid vacations,
executive medical supplement, annual executive physical, reimbursement for tax
preparation costs and executive lunches.
(d) Auto Allowance. Employer shall pay Employee an allowance to own and
maintain an automobile in an amount sufficient so that, after the effect of
federal and state income taxes, Employee shall net One Thousand Five Hundred
Dollars ($1,500) per month.
(e) Country Club & Dining Club Membership. Employer shall reimburse
Employee for the initiation fee and monthly dues expense for Employee to belong
to a country club in the St. Louis, Missouri area reasonably acceptable to
Employer and for the initiation fee and monthly dues expense for the Saint Louis
Club, but not for any charges made by Employee at either club, unless such
qualify as reimbursable business entertainment expenses.
3. TERMINATION.
(a) Death or Disability. This Agreement shall terminate automatically
upon the death or total disability of Employee. For the purpose of this
Agreement, "total disability" shall be deemed to have occurred if Employee shall
have been unable to perform the assigned duties due to mental or physical
incapacity for a period of three (3) consecutive months or for any sixty (60)
working days out of a six (6) month consecutive period.
(b) Cause. Employer may terminate the employment of Employee under this
Agreement for Cause. For the purpose of this Agreement, "Cause" shall be deemed
to be fraud, dishonesty, competition with Employer, unauthorized use of any of
Employer's trade secrets or confidential
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<PAGE> 3
information, or failure to properly perform the duties assigned to Employee, in
the reasonable judgment of Employer.
(c) Without Cause. Employer may terminate the employment of Employee
under this Agreement without Cause, subject to the continuing rights of Employee
pursuant to Section 4(c) below.
4. COMPENSATION UPON TERMINATION.
(a) Death or Disability. If the Employment Period is terminated
pursuant to the provisions of Section 3(a) above, this Agreement shall terminate
and no further compensation shall be payable to Employee, except that Employee
or Employee's estate, heirs or beneficiaries, as applicable, shall be entitled,
in addition to any other benefits specifically provided to them or Employee
under any benefit plan, to receive Employee's then current salary for a period
of twelve (12) months from the date the Employment Period terminates.
(b) Termination for Cause or Voluntary Termination by Employee. If the
employment of Employee under this Agreement is terminated for Cause pursuant to
the provisions of Section 3(b) above or if Employee voluntarily terminates
Employee's employment, no further compensation shall be paid to Employee after
the date of termination.
(c) Termination Without Cause. If the Employment of Employee under this
Agreement is terminated pursuant to Section 3(c) above, Employee shall be
entitled to continue to receive from Employer the then current basic
compensation hereunder [which shall not be less than the amount specified in
Section 2(a) above] until the Termination Date, such amount to be paid in
accordance with the payroll practices of Employer, and shall further be entitled
to continue to receive the benefits to which Employee would otherwise be
entitled pursuant to Section 2(c) above, but no other benefits.
5. EXPENSE REIMBURSEMENT. Upon submission of properly documented
expense account reports, Employer shall reimburse Employee for all reasonable
travel and entertainment expenses incurred by Employee in the course of his
employment with Employer.
6. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, except that this Agreement and all of the provisions hereof may
be assigned by Employer to any successor to all or substantially all of its
assets (by merger or otherwise) and may otherwise be assigned upon the prior
written consent of Employee.
7. CONFIDENTIAL INFORMATION.
(a) Non-Disclosure. During the Employment Period or at any time
thereafter, irrespective of the time, manner or cause of the termination of
employment, Employee will not directly or indirectly reveal, divulge, disclose
or communicate to any person or entity, other than authorized
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<PAGE> 4
officers, directors and employees of the Employer, in any manner whatsoever, any
Confidential Information (as hereinafter defined) of Employer without the prior
written consent of the CEO.
(b) Definition. As used herein, "Confidential Information" means
information disclosed to or known by Employee as a direct or indirect
consequence of or through the Employment about Employer or its respective
businesses, products and practices, which information is not generally known in
the business in which Employer is or may be engaged. However, Confidential
Information shall not include under any circumstances any information with
respect to the foregoing matters which is (i) available to the public from a
source other than Employee, (ii) released in writing by Employer to the public
or to persons who are not under a similar obligation of confidentiality to
Employer and who are not parties to this Agreement, (iii) obtained by Employee
from a third party not under a similar obligation of confidentiality to
Employer, (iv) required to be disclosed by any court process or any government
or agency or department of any government, or (v) the subject of a written
waiver executed by Employer for the benefit of Employee.
(c) Return of Property. Upon termination of the Employment, Employee
will surrender to Employer all Confidential Information, including without
limitation, all lists, charts, schedules, reports, financial statements, books
and records of the Employer, and all copies thereof, and all other property
belonging to the Employer shall be accorded reasonable access to such
Confidential Information subsequent to the Employment Period for any proper
purpose as determined in the reasonable judgment of Employer.
8. AGREEMENT NOT TO COMPETE.
(a) Employee agrees:
(i) To give the CEO thirty (30) days' written advance notice of
voluntary termination of employment with Employer. Such notice shall
include Employee's future employment or self-employment intentions,
identification of the prospective employer and the general nature of
the prospective employment or self-employment, if known. Employer shall
continue to pay the then-current salary to Employee until the end of
such notice period.
(ii) To participate in an exit interview conducted by a member
of the personnel department of Employer and/or by a representative of
Employer, at the time of or prior to the termination of Employment with
Employer.
(iii) That for two (2) years following the termination of the
Employment, Employee shall promptly notify Employer of any change in
the identification of Employee's employer or the nature of such
employment or of self-employment.
(iv) Subject to the conditions hereinafter stated, Employee will
not, within two (2) years after leaving the employ of Employer, engage
or enter into employment by, or into self-employment or gainful
occupation as, a Competing Business or act directly or indirectly as an
advisor, consultant, sales agent or broker for a Competing Business. As
used herein, "Competing Business" means a business which is engaged in
the manufacture, sale or other
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<PAGE> 5
disposition of a product or service or has under development a product
or service which is in direct competition with a product or service,
whether existing or under development, of the Employer. Employee
acknowledges that Employer does not have an adequate remedy at law in
the event Employee violates this provision and, therefor, Employee
agrees that, in such an event, Employer shall be entitled to equitable
relief, including but not limited to, injunctive relieve and to
withhold all payments due to Employee hereunder pending a judicial
determination of whether Employee has violated this Agreement.
(v) The terms of 8(a)(i) - 8(a)(iv) shall apply whether the
termination is voluntary or involuntary for whatever reason.
(b) Employer agrees:
(i) That within fifteen (15) business days after receiving
identification of the prospective employer, the nature of the
employment or self-employment pursuant to Paragraph 8(a)(i) above, or
any change therein pursuant to Paragraph 8(a)(iii) above, Employer will
advise Employee as to whether such employment constitutes a Competing
Business as defined in Paragraph 8(a)(iv) above.
(ii) In the event Employer advises Employee that such employment
constitutes a Competing Business, to forward to Employee at the end of
each of the twenty-four (24) successive calendar months following the
month in which Employment by Employer terminates, a check in the amount
equal to one-half (1/2) of the monthly salary of Employee (exclusive of
extra compensation of any kind) as of the Termination Date. If notice
is received pursuant to Paragraph 8(b) and the Employer advises
Employee that such employment constitutes a Competing Business, the
aforementioned monthly checks shall be forwarded for the remaining
number of the aforesaid twenty-four (24) successive calendar months.
Provided, however, that all payments due under this Paragraph 8(b)(ii)
shall not be required during any periods that Employee is receiving
payments under either Paragraphs 4(a) or 4(c) or payment for service
from a Competing Business.
9. WAIVER OF AGREEMENT NOT TO COMPETE. The Employer, based on the facts
revealed to it by the Employee regarding the new employment and in its
discretion upon written notification to Employee, may at any time waive or elect
not to enforce the provisions of Paragraph 8(a)(iv), in which event the
obligations of Paragraph 8(b)(ii) above shall thereafter not apply and Employee
may be engaged by or enter into the employment of the identified Competing
Business, but only such identified Competing Business..
10. AGREEMENT NOT TO SOLICIT EMPLOYEES. Employee agrees that, for a
period of two (2) years following the termination of the Employment Period,
Employee shall not, on behalf of any business, solicit or induce, or in any
manner attempt to solicit or induce, either directly or indirectly, any person
employed by, or any agent of, Employer to terminate such employment or agency,
as the case may be, with Employer. In the event of violation hereof, Employer
may terminate any payments due to Employee hereunder.
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<PAGE> 6
11. NO VIOLATION. Employee hereby represents and warrants to Employer
that the execution, delivery and performance of this Agreement or the passage of
time, or both, will not conflict with, result in a default, right to accelerate
or loss of rights under any provision of any agreement or understanding to which
the Employee or, to the best knowledge of Employee, any of Employee's affiliates
are a party or by which Employee, or to the best knowledge of Employee,
Employee's affiliates may be bound or affected.
12. CAPTIONS. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way affect, limit or
amplify the provisions hereof.
13. NOTICES. All notices required or permitted to be given hereunder
shall be in writing and shall be deemed delivered, whether or not actually
received, two days after being deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested, addressed to
the party to whom notice is being given at the specified address or at such
other address as such party may designate by notice:
Employer: International Wire Group, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Attn: Chief Executive Officer
Employee: Joseph M. Fiamingo
17724 Greystone Terrace
Chesterfield, Missouri 63005
14. INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws, such
provisions shall be fully severable, and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part of this Agreement; the remaining provisions of this Agreement
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance of this Agreement. In
lieu of each such illegal, invalid or unenforceable provision, there shall be
added automatically as part of this Agreement a provision as similar in terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof, including the Prior Agreement, which is fully replaced
hereby. This Agreement may be amended, in whole or in part only, by an
instrument in writing setting forth the particulars of such amendment and duly
executed by an officer of Employer expressly authorized by the CEO to do so and
by Employee.
16. WAIVER. No delay or omission by any party hereto to exercise any
right or power hereunder shall impair such right or power to be construed as a
waiver thereof. A waiver by any of the parties hereto of any of the covenants to
be performed by any other party or any breach thereof shall not be construed to
be a waiver of any succeeding breach thereof or of any other covenant
-6-
<PAGE> 7
herein contained. Except as otherwise expressly set forth herein, all remedies
provided for in this Agreement shall be cumulative and in addition to and not in
lieu of any other remedies available to any party at law, in equity or
otherwise.
17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, and all of which
together shall constitute one and the same agreement.
18. GOVERNING LAW. This Agreement shall be construed and enforced
according to the laws of the state of Missouri.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
EMPLOYER: EMPLOYEE:
INTERNATIONAL WIRE GROUP, INC.
By /s/ JAMES N. MILLS /s/ JOSEPH M. FIAMINGO
--------------------------- ---------------------------
James N. Mills, Chairman Joseph M. Fiamingo
-7-
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF
INTERNATIONAL WIRE GROUP, INC.
<TABLE>
<CAPTION>
JURISDICTION OF
INCORPORATION OR
SUSIDIARY ORGANIZATION
<S> <C>
Wirekraft Industries, Inc................................. Delaware
ECM Holding Company....................................... Delaware
Wirekraft Employment Company.............................. Delaware
Electro Componentes de Mexico, S.A. de C.V................ Mexico
Wirekraft Industries de Mexico, S.A. de C.V............... Mexico
Omega Wire, Inc........................................... Delaware
OWI Corporation........................................... New York
Wire Technologies, Inc.................................... Indiana
Wire Harness Industries, Inc.............................. Delaware
Camden Wire Company, Inc.................................. New York
IWG-Philippines, Inc...................................... Philippines
IWG International, Inc.................................... Barbados
International Wire Rome Operations, Inc................... Delaware
Italtrecce-Societa Italiana Trecce & Affini S.r.l......... Italy
International Wire Leasing, Inc........................... Delaware
IWG Resources, Inc........................................ Nevada
International Wire SAS.................................... France
JYM Finance............................................... France
T.M.J. Forissier.......................................... France
Cablerie E. Charbonnet.................................... France
Hermitek.................................................. France
Fressynet................................................. France
</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-K AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 7,425
<SECURITIES> 0
<RECEIVABLES> 104,189
<ALLOWANCES> 2,879
<INVENTORY> 101,310
<CURRENT-ASSETS> 228,536
<PP&E> 328,842
<DEPRECIATION> 144,182
<TOTAL-ASSETS> 678,107
<CURRENT-LIABILITIES> 118,801
<BONDS> 526,338
0
0
<COMMON> 0
<OTHER-SE> (19,730)
<TOTAL-LIABILITY-AND-EQUITY> 678,107
<SALES> 643,690
<TOTAL-REVENUES> 643,690
<CGS> 456,333
<TOTAL-COSTS> 456,333
<OTHER-EXPENSES> 47,794
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,889
<INCOME-PRETAX> 25,480
<INCOME-TAX> 10,055
<INCOME-CONTINUING> 15,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (2,319)
<NET-INCOME> 13,106
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
