International Wire Group, Inc. Reports Results for the First Quarter of 2002
ST. LOUIS--May 14, 2002--International Wire Group, Inc. today reported its financial results for the first quarter ended March 31, 2002. During the quarter, earnings before interest, taxes, depreciation and amortization and other unusual charges ("EBITDA") was $12.2 million, an increase of $3.0 million, or 32.1%, from the fourth quarter of 2001 as the result of increased sales demand and lower operating costs. EBITDA decreased by $5.0 million, or 29.3%, from the first quarter of 2001 primarily from the effects of reduced customer demand in markets impacted by lower levels of business capital spending in the United States.David M. Sindelar, Chief Executive Officer, said, "Demand for our products serving the automotive and appliance industries continues to improve as the U.S. general economy begins to recover from weak 2001 conditions. However, sales of our products that are driven by business capital spending remain weak. The impacts of our 2001 plant consolidations and other cost reduction actions continue to be positive year-over-year. Production at our new plant in Mexico is still targeted for mid-2002 which will further contribute to our low cost structure."
Net sales for the quarter were $100.4 million, an increase of 12.6 million, or 14.3%, compared to the fourth quarter of 2001 due to increased demand in all of our major markets served and higher copper prices. The largest increases were in the automotive and appliance markets. Net sales decreased by $24.3 million, or 19.5%, compared to the three months ended March 31, 2001. This decrease in sales was primarily the result of reduced demand from customers supplying the electronics / data communications and industrial / energy markets and lower copper prices. In general, the Company prices its wire products based on a spread over the cost of copper, which results in a decreased dollar value of sales when copper costs decrease. The average price of copper based on the New York Mercantile Exchange, Inc. ("COMEX") decreased to $0.72 per pound during the quarter ended March 31, 2002 from $0.82 per pound in the quarter ended March 31, 2001.
EBITDA as a percentage of sales decreased to 12.1% during the quarter from 13.8% for the 2001 first quarter. This change was due primarily to product mix, competitive pricing pressures and operating inefficiencies associated with lower production levels partially offset by favorable effects of the 2001 plant consolidation and realignment actions and lower selling, general and administrative expenses.
The discussion above reports EBITDA. Please refer to the attached schedule that reconciles EBITDA to General Accepted Accounting Principles ("GAAP") net loss and to our Form 10-Q, filed May 14, 2002.
The Company's loss before income tax benefit and change in accounting principle was $4.2 million and $3.6 million for the first quarters of 2002 and 2001, respectively. Included in the 2001 results was an unusual one-time charge of $3.1 million, before tax benefit, related to the closing of certain plants in Alabama and Indiana. There was no such charge in the first quarter 2002.
The net loss for the first quarter of 2002 was $55.8 million compared to a net loss of $2.1 million during the first quarter of 2001. The 2002 first quarter net loss included a $54.5 million non-cash impairment charge, net of $19.4 million tax benefit, related to a change in accounting principle from the adoption of Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets."
This press release contains forward-looking statements as defined by the federal securities laws and such statements are based on International Wire Group, Inc.'s current expectations and assumptions, which are inherently subject to various risks and uncertainties that could cause actual results to differ from those anticipated, projected or implied. Certain factors that could cause actual results to differ are indicated in International Wire Group, Inc.'s filings with the Securities and Exchange Commission.
International Wire Group, Inc., headquartered in St. Louis, Missouri, is a leading manufacturer and marketer of wire products, including bare and tin-plated copper wire and insulated copper wire. The Company's products include a broad spectrum of copper wire configurations and gauges with a variety of electrical and conductive characteristics that are utilized by a wide variety of customers primarily in the appliance, automotive, electronics / data communications and general industrial / energy industries. The Company manufactures and distributes its products in 23 facilities strategically located in the United States, Italy, France and the Philippines. The Company will begin operations in a new facility in Mexico during 2002.
Reconciliation of EBITDA to Net Loss per GAAP
Three Months Ended
March 31,
2002 2001
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(in millions)
EBITDA $ 12.2 $ 17.2
Depreciation and amortization (6.9) (9.0)
Impairment, unusual and plant closing charges -- (3.1)
Interest expense (9.0) (8.4)
Amortization of deferred financing fees (0.5) (0.3)
Income tax benefit 2.9 1.5
Change in accounting for goodwill,
net of tax benefit (54.5) --
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Net loss per GAAP ($ 55.8) ($ 2.1)
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