International Wire Group, Inc. Reports Results For the Year Ended December 31, 2002
ST. LOUIS--March 31, 2003--International Wire Group, Inc. today reported its financial results for the fourth quarter and year ended December 31, 2002. During the fourth quarter, earnings before interest, taxes, depreciation, amortization and other unusual charges ("EBITDA") was $11.6 million, a $2.4 million increase, or 26.1%, from EBITDA of $9.2 million in the fourth quarter of 2001. The increase in fourth quarter EBITDA was the result of higher sales levels and lower operating costs. For the full year, EBITDA was $50.1 million, a decrease of $7.6 million, or 13.2%, from the year ended December 31, 2001 primarily from the effects of competitive 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, "In 2002, International Wire was impacted by the difficult general economic and manufacturing environment in the U.S. Sales in our major markets for the full year were mixed. Consumer-driven automotive and appliance markets were solid with 2002 sales exceeding 2001 levels. However, businesses were reluctant to invest capital in an uncertain economy, which negatively impacted our other two major markets, electronics/data communications and industrial/energy. Fortunately, the plant consolidation and production realignment plan, which started in 2001, was substantially completed for 2002. These actions, together with ongoing cost reduction actions, helped offset the impacts of the weak market and operating conditions."
Net sales for the fourth quarter of $95.0 million were 8.2% greater than 2001 fourth quarter sales of $87.8 million. This was primarily from the result of increased sales to automotive customers and the impact of an increase in the average cost and sales price of copper. The average price of copper, based upon the New York Mercantile Exchange, Inc. ("COMEX"), increased to $0.71 per pound during the fourth quarter of 2002 from $0.66 per pound in the 2001 period.
Net sales for the year ended December 31, 2002 were $402.1 million, representing a $22.4 million, or 5.3%, decrease compared to 2001. This decrease was primarily the result of lower volume from weak economic conditions in the United States, including reduced demand from customers supplying the electronics/data communications, and industrial/energy markets and the impact of a slight decrease in the average cost and selling price of copper. The average price of copper based upon COMEX decreased to $0.72 per pound during 2002 from $0.73 per pound during 2001. Partially offsetting these factors were higher sales to consumer-driven automotive and appliance markets.
EBITDA as a percentage of sales decreased to 12.5% for the year ended December 31, 2002, from 13.6% for the same period in 2001. This decrease was primarily the result of product mix, competitive price pressures and operating inefficiencies associated with reduced production levels. These impacts were partially offset by the 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 GAAP net income (loss) and to our Form 10-K, filed March 31, 2003.
The Company's loss from continuing operations before income taxes and cumulative change in accounting principle was $40.8 million for the year ended December 31, 2002 and $33.5 million for the full year 2001. Included in the 2002 results was a $24.4 million non-cash charge for goodwill impairment.
The net loss for the fourth quarter of 2002 was $74.0 million compared to a net loss of $8.2 million during the fourth quarter of 2001. Included in the fourth quarter 2002 net loss were non-cash charges of $24.4 million for goodwill impairment and a $58.9 million income tax valuation allowance. The net loss for the year ended December 31, 2002 was $133.3 million compared to a net loss of $17.5 million for 2001. For the year ended December 31, 2002, the net loss included non-cash charges of $54.5 million for the change in accounting for goodwill, a $24.4 million goodwill impairment charge and a $58.9 million income tax valuation allowance charge.
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, for other wire suppliers and original equipment manufacturers. 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, Mexico and the Philippines.
Reconciliation of EBITDA to net income (loss) per GAAP
Three Months Year
Ended Ended
December 31, December 31,
2002 2001 2002 2001
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(In Millions)
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EBITDA $11.6 $9.2 $50.1 $57.7
Unusual charges related to plant
consolidations -- (2.0) -- (5.8)
Non-cash compensation income
(expense) -- 10.4 -- 10.4
Depreciation and amortization (6.6) (9.3) (27.6) (36.4)
Goodwill impairment (24.4) (24.3)
Impairment, unusual and plant closing
charges -- (6.1) -- (12.9)
Inventory valuation adjustment -- (10.0) -- (10.0)
Gain/(loss) on sale of property,
plant and equipment 0.1 0.3 0.1 0.3
Interest expense (9.3) (9.0) (36.5) (35.2)
Amortization of deferred financing
costs (0.5) (0.3) (2.1) (1.3)
Other, net (0.4) (0.4) (0.5) (0.3)
Income tax (provision) benefit (40.5) 11.9 (34.0) 18.9
Loss from discontinued operations,
net of income taxes (4.0) (2.9) (4.0) (2.9)
Change in accounting for goodwill -- -- (54.5) --
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Net income (loss) per GAAP $(74.0) $(8.2) $(133.3) $(17.5)
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