HIGHLAND HEIGHTS, Ky., Feb 07, 2006 (BUSINESS WIRE) -- General Cable Corporation (NYSE:BGC) reported today
that net income for the fourth quarter and full year ended December
31, 2005 was $14.2 million and $39.2 million, respectively, compared
to $27.2 million and $37.9 million for the corresponding periods of
2004. Earnings per share applicable to shareholders of the Company's
common stock on a diluted per share basis for the fourth quarter ended
December 31, 2005 was a loss of $(0.08). Excluding the impact of the
fourth quarter preferred stock conversion and a gain related to plant
rationalizations, earnings per share applicable to shareholders of the
Company's common stock on a diluted per share basis for the fourth
quarter ended December 31, 2005 was $0.29. In the fourth quarter of
2005, the Company recorded a charge of $16.3 million related to the
preferred share conversion, including conversion transaction costs and
the conversion premium, and a pre-tax gain of $0.5 million related to
the facility closures undertaken during 2005. Included in the results
for the 2004 fourth quarter were pre-tax charges of $5.0 million
associated with the rationalization of certain of the Company's
manufacturing facilities and the unwinding of the Company's former
fiber optics joint venture. Also during the fourth quarter of 2004,
the Company recognized a $0.4 million after-tax gain related to
discontinued operations and a $23.9 million income tax benefit due to
the elimination of certain prior year income tax exposures. These
items increased reported net income by $20.9 million in the fourth
quarter of 2004. On a comparable basis without the effect of these
items in both periods, earnings per share were $0.29 in the fourth
quarter of 2005 compared to $0.12 in the fourth quarter of 2004, an
increase of 142%.
Revenues for the fourth quarter and full year ended December 31,
2005 were $617.5 million and $2,380.8 million, respectively, compared
to $485.3 million and $1,970.7 million in the corresponding periods of
2004. On a metal-adjusted basis, revenues increased $64.5 million or
12% in the fourth quarter of 2005 compared to the fourth quarter of
2004, and $213.7 million or 10% for the full year of 2005 compared to
the full year of 2004. The 2004 net sales have been increased in this
comparison to put them on a consistent metal-adjusted basis with 2005
net sales.
Fourth Quarter Highlights
-- Achieved 11th consecutive quarter of positive year-over-year
metal-adjusted revenue growth.
-- Increased year over year fourth quarter gross margins over 150
basis points, on a metal-adjusted basis excluding unusual
items.
-- Completed two strategic acquisitions, increasing expected
annual revenues by more than $250 million and significantly
expanded the Company's capabilities to serve the global Energy
market.
-- Completed preferred share conversion with 94% participation,
increasing float of common stock by nearly 10 million shares
and reducing future annual dividend payments approximately
$5.6 million.
-- Completed amendment and extension of Senior Secured Revolving
Credit Facility, adding flexibility to terms and lowering
borrowing costs.
-- Completed $150 million notional cross-currency and interest
rate swap reducing borrowing costs by approximately $6 million
over two years.
Fourth Quarter Results
Net sales for the fourth quarter of 2005 were $617.5 million, an
increase of 12% versus metal-adjusted net sales in the fourth quarter
of 2004, despite a stronger dollar against foreign currencies which
reduced revenue growth by two percentage points. The average price per
pound of copper and aluminum increased $0.62 and $0.09, respectively,
from the fourth quarter 2004 to the fourth quarter of 2005, and were
up $0.33 and $0.12 from the third quarter of 2005, respectively.
Overall net sales for the quarter were positively affected by less
than 1% as a result of the acquisition of the Helix electronics and
datacom business in March of 2005.
Net sales were up in all reported business segments in the fourth
quarter of 2005 compared to metal-adjusted net sales in the fourth
quarter of 2004. The energy cable segment metal-adjusted revenues were
up 13% including double-digit revenue growth in Europe and high single
digit growth in the US led by gains in demand for bare aluminum
transmission cable and medium voltage distribution cable as well as
increased pricing which helped mitigate raw material inflation. The
leverage of the additional volume and pricing actions taken over the
last 12 months have helped propel energy segment operating margins up
320 basis points compared to a difficult fourth quarter of 2004.
Industrial & Specialty cables metal-adjusted revenue was up 15% due to
strong demand, particularly in North America driven by marine, mining,
oil and gas exploration and production products as well as portable
power cords. Revenue in the Communication cables segment increased 5%,
led by a 40% increase in enterprise networking cable sales in North
America, well in excess of estimated market growth, as the Company's
new go-to-market strategy implemented late in 2004 began to gain
traction. Partially offsetting these increases were continued lower
demand for outside plant telecommunications cables. Demand from the
traditional regional bell operating companies (RBOC's) has fallen at
an annualized rate of approximately 7% per year over the last four
years, and was down 10% in the fourth quarter of 2005 compared to the
fourth quarter of 2004. As a result of this declining sales trend the
Company closed one of its three telephone cable manufacturing
facilities during the third quarter. The Company has recorded net
charges of $18.6 million in 2005 for rationalization actions and the
relocation of fiber optic capacity into another facility. The Company
now operates the telecommunications business at a higher utilization
rate providing a source of earnings growth going into 2006.
Commenting on the status of the Company's plant rationalization
efforts, Gregory B. Kenny, President and Chief Executive Officer of
General Cable said, "We have completed the closure of our Bonham,
Texas and Dayville, Connecticut telecommunications facilities, ahead
of schedule and below budget. We also completed the sale of the
Bonham, Texas real estate in January 2006. The benefit of these
actions, which was partially realized during the fourth quarter, will
be fully realized in our earnings in 2006. I expect that this business
will add meaningfully to our earnings growth picture going forward."
Fourth quarter 2005 operating income was $28.5 million without the
$0.5 million gain related to finalizing the facility closure charges,
compared to fourth quarter 2004 operating income of $18.0 million
(without the effect of $5.0 million in rationalization and charges
related to unwinding our former fiber optic joint venture), an
increase of $10.5 million or 58%. Adjusted operating earnings as a
percent of metal-adjusted net revenues were 4.6% and 3.3% in the
fourth quarter of 2005 and 2004, an increase of more than 130 basis
points.
During the interim periods of 2005, revenue related to certain
turn-key energy system projects in the Company's Spanish operations
was deferred until completion of those projects. In the fourth quarter
of 2005, the Company determined that the revenues and related profits
for a portion of the projects should have been recognized as energy
cables were delivered to the customers. Results for the fourth quarter
of 2005 included approximately $1.5 million of after-tax earnings that
would have been recognized in earlier interim quarters of 2005 if the
deferral had not occurred. The amount of after-tax earnings related to
this issue was not material in any of the three previously reported
interim periods of 2005. This benefit was partially offset by $1.3
million in LIFO expense charged against operating earnings during the
fourth quarter of 2005 as the Company added over three million pounds
of copper to inventory compared to the end of the third quarter of
2005. The inventory increase was principally the result of the
Company's decision to build its inventory position to support stronger
than expected sales growth.
Selling, general and administrative expenses were 7.0% and 7.6% of
metal-adjusted net sales in the fourth quarter of 2005 and 2004,
respectively. Included in SG&A in the fourth quarter of 2004 was $4.7
million related primarily to the unwinding of our fiber optic joint
venture. Without this expense, SG&A as a percentage of metal-adjusted
net sales for the fourth quarter of 2004 would have been 6.8%.
The Company's effective tax rate for the fourth quarter of 2005
was 30.4% as a result of adjusting the full year 2005 tax provision to
an effective rate of 35.7%. This annual effective rate is below our
statutory rate principally due to the effect of recognizing
international tax credits during the fourth quarter of 2005 and the
resolution of tax exposures which reduced our 2005 effective tax rate
by approximately two points. In the fourth quarter of 2004, the
Company recorded a net tax benefit of $22.7 million related primarily
to prior period tax exposures that were eliminated as a result of a
tax notification that a prior period tax audit had been settled.
"The earnings improvement achieved in the fourth quarter is a
result of a number of actions we have been taking to drive improvement
across our entire business. These actions include an increased
investment in material science and technology resources, leveraging
increased energy cable and industrial cable demand, accelerating
pricing actions to recover raw material cost increases, and
improvement in underperforming businesses through Lean initiatives,
and marketing strategies. We have also taken several actions to reduce
our borrowing costs and increase our operating and financing
flexibility going forward," commented Kenny. "These actions along with
the geographic and product expansion initiatives we have made through
the purchases of Silec in France, and Beru in Mexico, set the stage
for ongoing growth in revenues and earnings in 2006 and beyond."
Full Year Results
Net income for the full year ended December 31, 2005 was $39.2
million compared to $37.9 million for the full year of 2004. Included
in the results for 2005 were net pre-tax charges of $18.6 million
associated with the previously announced closure of certain of the
Company's manufacturing facilities. Also in the fourth quarter of
2005, the Company recorded a charge of $16.3 million related to the
preferred share conversion, including the conversion transaction costs
and the conversion premium. Included in the 2004 results were pre-tax
charges of $7.1 million relating to the rationalization of certain
manufacturing facilities, $1.5 million for remediation costs, $4.3
million related to the unwinding of the former fiber optics joint
venture, a $0.9 million pre-tax loss resulting from unfavorable
foreign currency transactions, a $0.4 million after-tax gain from
discontinued operations, and a $23.9 million reduction in its tax
provision. On a comparable basis without the effect of these items in
both periods, earnings per share were $1.01 in 2005, compared to $0.43
in 2004, an increase of 135%.
Preferred Stock Dividend
In accordance with the terms of the Company's 5.75% Series A
Convertible Redeemable Preferred Stock, the Board of Directors has
declared a preferred stock dividend of approximately $0.72 per share
for the three-month period ending February 24, 2006. The dividend is
payable on February 24, 2006 to preferred stockholders of record as of
the close of business on January 31, 2006. After giving effect to the
conversion of preferred shares into the Company's common shares, which
occurred during the fourth quarter, the Company expects this payment
to be approximately $0.1 million per quarter on a go-forward basis.
First Quarter 2006 Outlook
Commenting on the first quarter of 2006, Kenny said, "We continue
to experience an upward trend in demand for non-residential
industrial, oil, gas, and petrochemical (OGP), energy, and enterprise
networking products from our customers in North America and Europe,
and accelerating demand for our products from the developing nations.
Our early read on the Silec acquisition has been positive. Our teams
are working through the integration plan with particular focus on
leveraging technology, market reach, and manufacturing best practices.
Booking activity continues to be robust throughout all of our product
lines and geographies. For the first quarter of 2006 we expect
revenues to be between $680 million and $700 million, including
approximately $60 million from acquisitions completed at the end of
2005. This assumes copper continues to trade in a range of $2.20 to
$2.30 per pound during the first quarter. On a diluted per share
basis, earnings should approximate $0.23 to $0.29, compared to first
quarter 2005 diluted earnings per share of $0.18. We continue to
introduce new price increases to recover raw material inflation as
copper and aluminum accelerate to new highs," Kenny concluded.
General Cable will discuss fourth quarter results on a conference
call and webcast at 8:30 a.m. ET tomorrow, February 8. For more
information please see our website at www.generalcable.com.
With over $2.5 billion of annualized revenues and 7,000 employees,
General Cable (NYSE:BGC) is a global leader in the development,
design, manufacture, marketing and distribution of copper, aluminum
and fiber optic wire and cable products for the energy, industrial,
specialty and communications markets. Visit our website at
www.generalcable.com.
Certain statements in this press release, including without
limitation, statements regarding future financial results and
performance, plans and objectives, capital expenditures and the
Company's or management's beliefs, expectations or opinions, are
forward-looking statements. Actual results may differ materially from
those statements as a result of factors, risks and uncertainties over
which the Company has no control. Such factors include economic and
political consequences resulting from the September 2001 terrorist
attack and the war with Iraq, economic consequences arising from
natural disasters and other similar catastrophes, such as floods,
earthquakes, hurricanes and tsunamis; domestic and local country price
competition, particularly in certain segments of the power cable
market and other competitive pressures; general economic conditions,
particularly in construction; changes in customer or distributor
purchasing patterns in our business segments; the Company's ability to
increase manufacturing capacity and productivity; the financial impact
of any future plant closures; the Company's ability to successfully
complete and integrate acquisitions and divestitures; the Company's
ability to negotiate extensions of labor agreements on acceptable
terms; the Company's ability to service debt requirements and maintain
adequate domestic and international credit facilities and credit
lines; the Company's ability to pay dividends on its preferred stock;
the impact of unexpected future judgments or settlements of claims and
litigation; the Company's ability to achieve target returns on
investments in its defined benefit plans; the Company's ability to
avoid limitations on utilization of net losses for income tax
purposes; the cost and availability of raw materials, including
copper, aluminum and petrochemicals, generally and as a consequence of
hurricanes Katrina and Rita; the Company's ability to increase its
selling prices during periods of increasing raw material costs; the
impact of foreign currency fluctuations; the impact of technological
changes; and other factors which are discussed in the Company's Report
on Form 10-K filed with the Securities and Exchange Commission on
March 30, 2005, as well as periodic reports filed with the Commission.
TABLES TO FOLLOW
General Cable Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)
----------------- -------------------
Three Fiscal Twelve Fiscal
Months Ended Months Ended
December 31 December 31
----------------- -------------------
2005 2004 2005 2004
-------- -------- --------- ---------
Net sales $617.5 $485.3 $2,380.8 $1,970.7
Cost of sales 545.4 430.0 2,110.1 1,756.0
-------- -------- --------- ---------
Gross profit 72.1 55.3 270.7 214.7
Selling, general and
administrative expenses 43.1 42.3 172.2 158.2
-------- -------- --------- ---------
Operating income 29.0 13.0 98.5 56.5
Other expense (0.5) (0.3) (0.5) (1.2)
Net interest expense (8.1) (8.6) (37.0) (35.9)
-------- -------- --------- ---------
Income before income taxes 20.4 4.1 61.0 19.4
Income tax (provision) benefit (6.2) 22.7 (21.8) 18.1
-------- -------- --------- ---------
Income from continuing operations 14.2 26.8 39.2 37.5
Discontinued Operations
---------------------------------
Gain on disposal of discontinued
operations (net of tax) - 0.4 - 0.4
-------- -------- --------- ---------
Net income 14.2 27.2 39.2 37.9
Less: preferred stock dividends (17.5) (1.5) (22.0) (6.0)
-------- -------- --------- ---------
Net income (loss) applicable to
common shareholders $(3.3) $25.7 $17.2 $31.9
-------- -------- --------- ---------
-------- -------- --------- ---------
EPS of Continuing Operations
---------------------------------
Earnings (loss) per common share $(0.08) $0.65 $0.42 $0.81
-------- -------- --------- ---------
-------- -------- --------- ---------
Weighted average common shares 41.9 39.1 41.1 39.0
-------- -------- --------- ---------
-------- -------- --------- ---------
Earnings (loss) per common share-
assuming dilution $(0.08) $0.53 $0.41 $0.75
-------- -------- --------- ---------
-------- -------- --------- ---------
Weighted average common shares-
assuming dilution 42.9 50.6 41.9 50.3
-------- -------- --------- ---------
-------- -------- --------- ---------
EPS Including Discontinued
Operations
---------------------------------
Earnings (loss) per common share $(0.08) $0.66 $0.42 $0.82
-------- -------- --------- ---------
-------- -------- --------- ---------
Earnings (loss) per common share-
assuming dilution $(0.08) $0.54 $0.41 $0.75
-------- -------- --------- ---------
-------- -------- --------- ---------
General Cable Corporation and Subsidiaries
Condensed Consolidated Statements of Operations
Segment Information
(in millions)
(unaudited)
------------------- -------------------
Three Fiscal Twelve Fiscal
Months Ended Months Ended
December 31 December 31
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues (as reported)
-----------------------------
Energy Segment $227.4 $185.3 $849.6 $705.7
Industrial & Specialty
Segment 256.7 192.6 989.8 810.5
Communications Segment 133.4 107.4 541.4 454.5
--------- --------- --------- ---------
Total $617.5 $485.3 $2,380.8 $1,970.7
--------- --------- --------- ---------
--------- --------- --------- ---------
Revenues (metal adjusted)
-----------------------------
Energy Segment $227.4 $201.9 $849.6 $753.9
Industrial & Specialty
Segment 256.7 224.0 989.8 903.5
Communications Segment 133.4 127.1 541.4 509.7
--------- --------- --------- ---------
Total $617.5 $553.0 $2,380.8 $2,167.1
--------- --------- --------- ---------
--------- --------- --------- ---------
Metal Pounds Sold
-----------------------------
Energy Segment 68.4 67.2 286.5 275.6
Industrial & Specialty
Segment 61.3 49.7 245.5 235.1
Communications Segment 29.6 31.1 126.9 134.3
--------- --------- --------- ---------
Total 159.3 148.0 658.9 645.0
--------- --------- --------- ---------
--------- --------- --------- ---------
Operating Profit (Loss)
-----------------------------
Energy Segment $20.4 $11.6 $65.9 $39.8
Industrial & Specialty
Segment 8.4 5.8 37.4 27.6
Communications Segment (0.3) 0.6 13.8 2.0
--------- --------- --------- ---------
Subtotal 28.5 18.0 117.1 69.4
Corporate 0.5 (5.0) (18.6) (12.9)
--------- --------- --------- ---------
Total $29.0 $13.0 $98.5 $56.5
--------- --------- --------- ---------
--------- --------- --------- ---------
Return on Metal Adjusted
Sales
-----------------------------
Energy Segment 9.0% 5.7% 7.8% 5.3%
Industrial & Specialty
Segment 3.3% 2.6% 3.8% 3.1%
Communications Segment -0.2% 0.5% 2.5% 0.4%
Total Company 4.7% 2.4% 4.1% 2.6%
Capital Expenditures
-----------------------------
Energy Segment $7.9 $4.3 $19.0 $13.9
Industrial & Specialty
Segment 6.9 5.8 16.5 15.7
Communications Segment 2.1 2.8 7.1 7.4
--------- --------- --------- ---------
Total $16.9 $12.9 $42.6 $37.0
--------- --------- --------- ---------
--------- --------- --------- ---------
Depreciation & Amortization
-----------------------------
Energy Segment $4.0 $1.5 $11.9 $6.2
Industrial & Specialty
Segment 3.8 2.6 13.3 10.2
Communications Segment 3.2 4.0 14.7 16.3
--------- --------- --------- ---------
Subtotal 11.0 8.1 39.9 32.7
Corporate (1) (3.6) - 11.1 2.7
--------- --------- --------- ---------
Total $7.4 $8.1 $51.0 $35.4
--------- --------- --------- ---------
--------- --------- --------- ---------
(1) Relates to the rationalization of certain plant locations.
SOURCE: General Cable Corporation
General Cable Corporation
Michael P. Dickerson, 859-572-8684
