International Wire Group, Inc. Reports Results for the Third Quarter and First Nine Months of 2002
ST. LOUIS--Nov. 14, 2002--International Wire Group, Inc. today reported its financial results for the third quarter and first nine months ended September 30, 2002. During the third quarter, earnings before interest, taxes, depreciation and amortization and other unusual charges ("EBITDA") was $12.1 million, a decrease of $0.5 million, or 4.0% from the third quarter of 2001. EBITDA for the first nine months of $38.5 million was $10.0 million, or 20.6%, below comparable 2001 levels. These decreases were primarily from the effects of competitive price pressures and reduced customer demand in markets impacted by lower levels of business capital spending in the United States.David M. Sindelar, Chief Executive Officer, said, "International Wire's third quarter 2002 results were solid given the difficult manufacturing environment and general business conditions in the United States. Demand for our products, dependent upon higher U.S. business capital, remained weak. However, consumer driven automotive and appliance sales were strong resulting in a year-over-year sales increase."
Net sales for the third quarter were $99.6 million, an increase of $2.8 million, or 2.9%, compared to the third quarter of 2001 from increased demand in the automotive and appliance markets and slightly higher copper prices. This increase in sales was partially offset by reduced demand from customers supplying the industrial/energy market. In general, the Company prices its wire products based on a spread over the cost of copper. The average price of copper based on the New York Mercantile Exchange, Inc. ("COMEX") increased to $0.69 per pound during the quarter ended September 30, 2002 from $0.67 per pound in the quarter ended September 30, 2001.
The Company's loss before income tax benefit and change in accounting principle was $4.7 million for the third quarter of 2002 and $10.5 million for the 2001 period. The 2001 results include unusual, one-time charges of $4.8 million, before tax benefit, related to the realignment of production, including certain plant closings. There were no such charges in the third quarter of 2002.
The net loss for the third quarter of 2002 was $1.7 million compared to a net loss of $6.0 million during the third quarter of 2001.
Net sales for the nine months ended September 30, 2002, were $307.7 million, a decrease of $29.6 million, or 8.8%, compared to the nine months ended September 30, 2001. The decrease was primarily the result of reduced demand from customers supplying the electronics/data communication and industrial/energy markets and lower copper prices, which were partially offset by higher sales to the appliance industry. The average price of copper based on COMEX decreased from $0.75 per pound during the nine months September 30, 2001 to $0.72 per pound during the nine months ended September 30, 2002.
EBITDA as a percentage of sales decreased to 12.5% during the first nine months of 2002 from 14.4% for the comparable 2001 period. The main contributing factors included product mix, competitive pricing pressures and operating inefficiencies associated with lower production levels partially offset by favorable effects of the 2001 plant consolidations 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 November 14, 2002.
The Company's loss before income tax benefit and change in accounting principle was $11.3 million and $16.3 million for the first nine months ended September 30, 2002 and 2001, respectively. Included in the 2001 results were unusual, one-time charges of $10.5 million, before tax benefit, related to the realignment of production including plant closings. There were no such charges in the 2002 period.
The net loss for the nine months of 2002 was $59.3 million compared to a net loss of $9.3 million during the comparable period of 2001. The 2002 period net loss included a first quarter $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 24 facilities strategically located in the United States, Mexico, Italy, France and the Philippines.
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
------- -------- -------- --------
(in millions) (in millions)
EBITDA $12.1 $12.6 $38.5 $48.5
Depreciation and
amortization (7.1) (9.0) (21.0) (27.1)
Impairment, unusual
and plant closing
charges -- (4.8) -- (10.5)
Interest expense (9.2) (9.0) (27.2) (26.2)
Amortization of
deferred financing
fees (0.5) (0.3) (1.6) (1.0)
Income tax benefit 3.0 4.5 6.5 7.0
Change in accounting
for goodwill,
net of tax benefit -- -- (54.5) --
-------- -------- -------- --------
Net loss per GAAP ($1.7) ($6.0) ($59.3) ($9.3)
======== ======== ======== ========