General Cable Corporation Provides Update on Fourth Quarter 2012



General Cable Corporation  expects to report that its North America and Rest of World (ROW) businesses finished the year with a positive operating performance in the fourth quarter, excluding the  impact of certain items. The acquisitions of Alcan Cable North America, Prestolite and Procables (Colombia) are also expected to contribute meaningfully to the fourth quarter results.



However, the Company now  expects adjusted operating income for the fourth quarter in the range of $45 to $47 million, which includes the absorption of $12 million of expenses related to the revised estimated profitability of certain submarine turnkey projects. The Company expects reported operating income in the range of $2 to $4 million for the fourth quarter. The Company expects the following items will negatively affect its reported fourth quarter results: 


    An equipment failure at the Company's submarine power cable manufacturing facility in Germany as well as submarine turnkey project delays and deferrals are expected to result in one-time charges in the range of $16 million   

    Other items consisting of year-end adjustments in ROW including financial restatement and forensic investigation costs, one-off restructuring-related tax charges, acquisition costs and  severance-related charges in Spain, which are collectively expected to result in charges in the range of $37 million   




Submarine Turnkey Projects - The Company is in the process offinalizing the impact of the equipment failure and continued project delays/deferrals and has initiated steps to potentially recover certain of these costs through legal action and insurance coverage. 



Other Items - During the fourth quarter, the Company expects to record several year-end adjustments in ROW particularly as it relates to the collectability of certain customer accounts receivable, a portion of which are in dispute, as well as the net realizable value of certain other assets. The Company also restructured its legal entities to integrate the Alcan Cable Canada business, which will result in a more tax efficient structure going forward. The Company does not expect to       experience this level of adjustments in ROW going forward nor does the Company expect to incur restructuring-related tax charges or financial       restatement and forensic investigation costs on a regular basis as these items relate to specific events and transactions experienced in 2012. 



Initial View of 2013 Business Trends - "Despite the impact of these items in the fourth quarter of 2012, we believe demand growth drivers in important markets in North America and ROW are fundamentally unchanged. We are also encouraged by the performance of recent acquisitions including Alcan Cable, Prestolite and Procables as well as the potential of our long-term growth investments in Brazil, India, Mexico, Peru, and South Africa. For 2013, the Company is expecting to generate operating income in the range of $300 - $340 million as we focus on the integration of recent acquisitions and continuous  improvement at our manufacturing facilities around the world. Unit volume for 2013 is expected to be in the range of 1.4 to 1.5 billion metal pounds, including approximately 350 to 400 million metal pounds from acquisitions completed in 2012. For 2013, we expect our recent  acquisitions along with our base business in the Americas, Africa, and Asia Pacific to continue to show improvement. Our Europe and Mediterranean segment is expected to contribute in the range of 3-6% of overall operating income in 2013 driven by our businesses throughout the region as our Iberian and submarine turnkey project businesses are expected to operate around breakeven. While the Spanish end market is  expected to remain difficult in 2013, our actions taken in Spain over the last four years to reduce our ongoing cost base and deliver growth in our exports from Spain should help offset continuing weakness in the domestic market," said Gregory B. Kenny, President and Chief Executive Officer of General Cable.