Coleman Cable, Inc. Announces Fourth-Quarter and Full-Year 2008 Financial Results


WAUKEGAN, Ill., March 12, 2009 (GLOBE NEWSWIRE) -- Coleman Cable, Inc. (Nasdaq:CCIX) (the "Company," "Coleman," "we," "us," or "our"), a leading manufacturer and innovator of electrical and electronic wire and cable products, announced fourth-quarter and full-year 2008 financial results.

Fourth-Quarter Results



 * Revenue of $182.2 million
 * Adjusted EBITDA of ($3.0) million
 * Adjusted EPS of ($0.69) per share
 * Total debt (net of cash and cash equivalents) reduced $71.3 million
   on a sequential basis

Full-Year Results



 * Revenue of $973.0 million
 * Adjusted EBITDA of $57.4 million
 * Adjusted EPS of ($0.04) per share
 * Total debt (net of cash and cash equivalents) reduced $102.5
   million on an annual basis

Management Comments

Commenting on the Company's results, Gary Yetman, president and CEO, said, "As we reported in early March, our business was impacted in the quarter by the combined effect of a rapid decline in copper prices, which declined by 49.3 percent on a sequential quarter basis, and significant contraction in demand across most of our channels. Volumes declined throughout the quarter, with the rate of decline accelerating toward the end of the fourth quarter reflecting a very challenging and deteriorating economic environment. In response to these challenges, we have and will continue to adjust our capacity and reduce our costs where possible to match the reduced demand levels. In this regard, at the end of February 2009 we further scaled back our workforce, reducing total headcount and further reducing work schedules within our plants. Including the most-recent reductions, we have lowered our headcount by over 600 employees, or nearly 40 percent, during the past 13 months."

Mr. Yetman added, "Significantly impacting our GAAP results in the quarter was a non-cash asset impairment charge of $29.3 million, which relates to the rationalization initiatives and the resulting downsizing of our OEM segment, and $4.7 million in restructuring charges primarily related to the integration of our 2007 acquisitions. Additionally, as a result of the rapid decline in copper, our results in the quarter included the unfavorable impact of a $4.8 million charge recorded during the fourth quarter to reduce the cost of certain of our inventory to market value. While we are disappointed with our operating results, we generated $74.0 million of cash flow during the quarter, an improvement of 154 percent over last year. Our strong cash generation, coupled with our focus on working capital, allowed us to reduce our total debt level on a sequential basis by $71.3 million during the quarter which demonstrates our commitment to proactively managing our business to mitigate the effects of current market conditions. In addition, at the end of February 2009 we had approximately $100 million in combined credit availability under our revolver and cash on hand, and we have no required long-term debt repayments until 2012."

Mr. Yetman concluded, "Taking into consideration the current economic climate, for the first quarter of 2009 we expect revenues will be in a range of $105 million to $115 million, Adjusted EBITDA in a range of $9 million to $11 million, and Adjusted earnings per share in a range of ($0.14) to ($0.09). Furthermore, if demand stabilizes we believe as the year progresses our results will show improvement over the first quarter, due to several factors including the recent capacity rationalization, overhead cost adjustments and the seasonality of a number of our businesses."

Fourth-Quarter Financial Results Summary

For the quarter we generated a net loss of $34.1 million, or $2.03 per diluted share in 2008, as compared to net income of $4.0 million, or $0.24 per diluted share for the fourth quarter of 2007. Our results for 2008 reflect the impact of our 2007 acquisitions, and therefore are not comparable to the results for 2007, which do not include the entire impact of the 2007 acquisitions. In addition, net income for the fourth quarter of 2008 was impacted by certain significant items. The magnitude of such items may vary significantly from period to period and, thereby, have an effect on the comparability of earnings reported for any given period. Accordingly, we consider the aggregate impact of these items, along with reported results, in evaluating our financial performance.

Our fourth quarter 2008 results reflect the deteriorating economic environment, and our previously announced customer rationalization initiatives which have led to significant downsizing of our OEM segment. As a result, in the fourth quarter of 2008 we recorded a non-cash asset impairment charge of $29.3 million ($1.15 per diluted share), which primarily related to our OEM segment and reflected the significant and rapid deterioration in the economic environment that occurred during the 2008 fourth quarter, which we believe will continue in 2009, as well as capacity reductions within the OEM segment as a result of significantly lowered sales demand forecasts for future periods.

Additionally, our results for the fourth quarter of 2008 included $4.7 million ($0.19 per diluted share) in restructuring charges incurred in connection with the integration of our 2007 acquisitions, and our estimated remaining exposure for leasehold obligations associated with a number of locations that closed during 2008. Restructuring costs were $0.3 million for the same period of 2007 attributable to the 2006 closure of Coleman's facility in Siler City, N.C.

Excluding the above-noted items, our earnings for the fourth quarter of 2008, as compared to the same period last year, largely reflects decreased operating income within both our Distribution and OEM segments as a result of weakened demand and uncertain, difficult economic conditions, which have caused our customers to lower their inventory levels. Somewhat offsetting our reduced results in the fourth quarter of 2008 was a decrease in interest expense given lower average interest rates and a reduction in our outstanding debt levels.

We reported net sales for the 2008 fourth quarter of $182.2 million compared to net sales of $254.3 million in the same period last year, which represents a decrease of 28.4 percent and reflects the significant contraction in demand across our business in the face of recessionary conditions. Volume (total pounds shipped) decreased 21.3 percent in the fourth quarter of 2008 compared to the prior-year period. The Company's distribution segment experienced a 7.5 percent decrease in volume, which was somewhat mitigated by the impact of the 2007 acquisitions, as the fourth quarter of 2008 included the full benefit of the Woods acquisition, whereas the fourth quarter of 2007 included only one month of Woods sales. Within the Company's OEM segment, we experienced a volume decline of 43.5 percent which was partially a result of the pricing and rationalizing efforts that we initiated over the second half of 2008 to mitigate the impact of inflationary cost pressures on our profitability.

Our gross profit margin for the fourth quarter of 2008 was 3.6 percent compared to 12.0 percent for the same period of 2007, and reflects poor gross profit performance in both the OEM and Distribution segments due to a severe decline in sales demand. In response to these conditions, during the fourth quarter of 2008 we reduced our workforce and plant production and closed our production facilities for an extended period of time. While these actions lowered our variable and overhead costs, they were not enough to offset the impact that the sharp decline in sales demand and resulting lower production levels had on our profitability by way of increasing our unfavorable overhead variances. In addition, our 2008 gross profit included the unfavorable impact of a $4.8 million charge recorded during the fourth quarter to reflect a loss in value of our on-hand inventory as of December 31, 2008. This charge is a result of the severe copper price decline experienced in the fourth quarter, coupled with reduced sales demand, which created downward price pressure in the market for certain of our inventory below its first in, first out (FIFO) carrying value requiring an adjustment to reflect inventory at its estimated net realizable value.

Selling, engineering, general and administrative (SEG&A) expense for the 2008 fourth quarter decreased to $11.8 million, or 9.7 percent, from $13.0 million in the 2007 fourth quarter. The decreased SEG&A expenses in the current quarter reflects significantly reduced headcount in the fourth quarter of 2008, a result of the integration efforts, as well as a sharp decline in sales demand, resulting in reduced third-party commissions in the 2008 fourth quarter.

Intangible amortization expense for the 2008 fourth quarter was $3.1 million, as compared to $2.6 million for the 2007 fourth quarter with the expense in both periods arising from the amortization of intangible assets recorded in connection with the 2007 acquisitions.

Asset impairment charges were $29.3 million in the 2008 fourth quarter, while there were no asset impairment charges in the 2007 fourth quarter. As described above, these charges relate to customer rationalization initiatives that have led to a significant downsizing of our OEM segment. Further asset impairments may be recognized in future periods to the extent of changes in a number of factors or circumstances, including but not limited to further deterioration in the macro-economic environment or in the equity markets, including the market value of our common shares, or in the performance of, or projections for the future performance of one or more of our businesses.

Restructuring charges for the fourth quarter of 2008 were $4.7 million, a result of the integration of the Copperfield facilities, including our estimated remaining exposure for leasehold obligations associated with a number of locations that closed during 2008, compared to restructuring charges of $0.3 million for the same period of 2007 attributable to the 2006 closure of Coleman's facility in Siler City, N.C.

Interest expense for the fourth quarter of 2008 was $7.1 million compared to $8.1 million for the same period of 2007, due primarily to lower borrowings and interest rates.

We recorded an income tax benefit of $17.4 million in the 2008 fourth quarter compared to income tax expense of $2.6 million for 2007 fourth quarter, with the decline reflecting the decline in pre-tax earnings.

Full-Year Financial Results Summary

For the full year of 2008, we generated a net loss of $28.3 million, or $1.68 per diluted share in 2008, as compared to net income of $14.9 million, or $0.88 per diluted share for 2007.

Our net sales for 2008 were $973.0 million compared to $864.1 million for 2007, an increase of $108.9 million, or 12.6 percent. Our total sales volume (measured in total pounds shipped) increased 12.7 percent for 2008 compared to 2007. These full-year increases were primarily a result of the expansion of our customer base as a result of our 2007 acquisitions that occurred during the first three quarters of the year and are not indicative of more recent trends, as described in our fourth quarter discussion above.

Gross profit margin for 2008 was 9.6 percent compared to 12.1 percent for 2007. The decline in gross profit margin for 2008 reflected poor gross profit performance within the OEM segment throughout most of 2008, as well as a significant decline in fourth quarter gross profit across both the OEM and Distribution segments, as described in our fourth quarter discussion above.

SEG&A expense was $52.2 million in 2008 compared to $44.3 million for 2007, an increase of $7.9 million. As a percentage of net sales, SEG&A expense was 5.4 percent in 2008, as compared to 5.1 percent in 2007. SEG&A expense for 2008 included a non-cash charge of $1.6 million for an allowance established during 2008 for an insurance claim we filed for thefts which occurred in 2005 at our manufacturing facility in Miami Lakes, Florida, which we have since closed. During the third quarter of 2008, as a result of failing to secure satisfactory settlement of the matter with our insurers, we commenced legal action in regard to this matter and recorded an allowance for the related insurance receivable. Excluding the impact of this non-cash charge, SEG&A expense for 2008 was $50.6 million, or 5.2 percent of total net sales for 2008. The remaining increase in SEG&A expense for 2008 as compared to 2007 includes increased expenses related to the impact of headcount increases occurring during the first half of 2008 offset by a reduction in our headcount in the second half of 2008, in part due to the integration of the acquisitions, as well as in response to the sharp decline in sales demand experienced late in 2008, as described above. Additionally, we experienced increased SEG&A expense in the 2008 period as a result of higher expenses across a number of general expense categories, most notably professional fees and information technology expenses associated primarily with our integration efforts.

Intangible amortization expense for 2008 was $12.0 million as compared to 7.6 million for 2007. The increase in the 2008 period relates to intangible assets recognized as part of our 2007 acquisitions, primarily Copperfield which was acquired in April 2007.

Asset impairment charges were $29.3 million in 2008, while there were no asset impairment charges in 2007. As described above, these charges relate to customer rationalization initiatives that have led to a significant downsizing of our OEM segment.

Restructuring charges for 2008 were $10.2 million as compared to $0.9 million in 2007. For 2008, increased expenses were primarily incurred in connection with the integration of our 2007 acquisitions, including our estimated remaining exposure for leasehold obligations associated with a number of locations that closed during 2008. For 2007, these expenses were incurred in connection with the closure of our Miami Lakes and Siler City facilities in 2006 ($0.6 million), as well as with our integration of our 2007 acquisitions ($0.3 million).

Interest expense was $29.7 million in 2008, compared to $27.5 million in 2007, an increase of $2.2 million. The increase was due primarily to additional expense related to the 9.875 percent senior notes issued in 2007 and increased borrowings under our revolving credit facility during 2008. As noted above, we have significantly lowered our debt at December 31, 2008 as compared to December 31, 2007.

Income tax benefit was $13.7 million in 2008 compared to income tax expense of $9.4 million for 2007, with the decline reflecting the decrease in pre-tax earnings.

The Company continues to strengthen its balance sheet. Net working capital was approximately 15.4 percent of net sales for the quarter, and improved sequentially by 4.7 percentage points as compared to the third quarter of 2008. Additionally, our net debt (net of cash) declined by $102.5 million from $359.0 million at December 31, 2007, to $256.5 million at December 31, 2008.

Non-GAAP Fourth-Quarter and Full-Year 2008 Results

In an effort to better assist investors in understanding our financial results, we have provided in this release Adjusted Net Income, Adjusted Earnings Per Share (EPS), and Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), which are all measures not defined under accounting principles generally accepted in the United States (GAAP). Management believes these numbers are useful to investors in understanding the results of operations because they illustrate the impact that interest, taxes, depreciation, amortization, and other non-recurring and/or non-cash charges had on results. We use these terms in this release as they are calculated in the financial information set forth below.

Webcast

Coleman Cable has scheduled its conference call for Friday, March 13, 2009, at 10:00 a.m. Central time. Hosting the call will be Gary Yetman, president and CEO, and Richard Burger, executive vice president and CFO. A live broadcast of Coleman Cable's conference call, along with accompanying visuals, will be available through the Company's website at http://investors.colemancable.com/events.cfm. The webcast will be archived for 90 days.

About Coleman Cable, Inc.

Coleman Cable, Inc. is a leading manufacturer and innovator of electrical and electronic wire and cable products for the security, sound, telecommunications, electrical, commercial, industrial, and automotive industries. With extensive design and production capabilities and a long-standing dedication to customer service, Coleman Cable, Inc. is the preferred choice of cable and wire users throughout the United States.

Various statements included in this release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact constitute forward-looking statements. These statements may be identified by the use of forward-looking terminology such as "believes," "plans," "anticipates," "expects," "estimates," "continues," "could," "may," "might," "potential," "predict," "should," or the negative thereof or other variations thereon or comparable terminology. In particular, statements about Coleman Cable's expectations, beliefs, plans, objectives, assumptions or future events, financial results or performance contained in this release are forward-looking statements. Coleman Cable has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While Coleman Cable believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in Coleman Cable's most recent Annual Report on Form 10-K (available at www.sec.gov), may cause its actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. Some of the key factors that could cause actual results to differ from Coleman Cable's expectations include:



      * fluctuations in the supply or price of copper and other raw
        materials;
      * increased competition from other wire and cable manufacturers,
        including foreign manufacturers;
      * pricing pressures causing margins to decrease;
      * further adverse changes in general economic and capital market
        conditions;
      * general economic conditions and changes in the demand for
        Coleman Cable's products by key customers;
      * failure to identify, finance or integrate acquisitions;
      * failure to accomplish integration activities on a timely basis;
      * failure to achieve expected efficiencies in Coleman Cable's
        manufacturing and integration activities;
      * changes in the cost of labor or raw materials, including PVC
        and fuel costs;
      * failure of customers to make expected purchases, including
        customers of acquired companies;
      * unforeseen developments or expenses with respect to Coleman
        Cable's business acquisition, integration and consolidation
        efforts; and
      * other risks and uncertainties, including those described under
        "Item 1A. Risk Factors" in Coleman Cable's most recent Annual
        Report on Form 10-K.

In addition, any forward-looking statements represent Coleman's views only as of today and should not be relied upon as representing its views as of any subsequent date. While Coleman may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if its estimates change and, therefore, you should not rely on these forward-looking statements as representing Coleman's views as of any date subsequent to today.

CCIX-G



                 COLEMAN CABLE, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENT OF INCOME
                  (Thousands, except per share date)

                                Three months ended  Twelve months ended
                                   December 31,        December 31,
 Statement of Income              2008      2007      2008      2007
                                --------  --------  --------  --------
                                    as Reported         as Reported
                                ------------------  ------------------
 Net sales                      $182,193  $254,277  $972,968  $864,144
 Cost of goods sold              175,631   223,714   879,367   759,551
                                --------  --------  --------  --------
 Gross profit                      6,562    30,563    93,601   104,593
 % of net sales                      3.6%     12.0%      9.6%     12.1%
 Selling, engineering, general
  & administrative expenses       11,755    13,020    52,227    44,258
 Intangible amortization expense   3,117     2,551    12,006     7,636
 Asset impairments                29,276        --    29,276        --
 Restructuring charges             4,710       294    10,225       874
                                --------  --------  --------  --------
 Operating profit                (42,296)   14,698   (10,133)   51,825
 Interest expense-net              7,111     8,108    29,656    27,519
 Other (income) expense            2,113        12     2,181        41
                                --------  --------  --------  --------
 Income before income taxes      (51,520)    6,578   (41,970)   24,265
 Income tax expense              (17,425)    2,623   (13,709)    9,375
                                --------  --------  --------  --------
 Net income (loss)              $(34,095) $  3,955  $(28,261) $ 14,890
                                ========  ========  ========  ========
 % of net sales                    -18.7%      1.6%     -2.9%      1.7%
 Earnings per share data
 Net income (loss) per common
  share
 Basic                          $  (2.03) $   0.24  $  (1.68) $   0.89
 Diluted                        $  (2.03) $   0.23  $  (1.68) $   0.88
 Weighted average common shares
  outstanding
 Basic                            16,787    16,786    16,787    16,786
 Diluted                          16,787    16,826    16,787    16,826


                 COLEMAN CABLE, INC. AND SUBSIDIARIES
                           Non-GAAP Results
                             (Thousands)

                                  For the three       For the twelve
                                   months ended        months ended
                                   December 31,        December 31,
                                  2008      2007      2008      2007
                                --------  --------  --------  --------
                                 Adjusted Results    Adjusted Results
                                ------------------  ------------------
 Income before income taxes, as
  reported                       (51,520)    6,578   (41,970)   24,265
 Asset impairments                29,276        --    29,276        --
 Restructuring charges             4,710       294    10,225       874
 Inventory theft insurance
  receivable allowance                --        --     1,588        --
                                --------  --------  --------  --------
 Income before income taxes,
  adjusted                       (17,534)    6,872      (881)   25,139
 Income tax expense, adjusted     (5,930)    2,740      (288)    9,713
                                --------  --------  --------  --------
 Adjusted net income (loss)      (11,604)    4,132      (593)   15,426
                                --------  --------  --------  --------
 % of net sales                     -6.4%      1.6%     -0.1%      1.8%
 Adjusted earnings per share
  data
 Adjusted net income (loss) per
  common share
 Adjusted-Basic                 $  (0.69)  $  0.25  $  (0.04) $   0.92
 Adjusted-Diluted               $  (0.69)  $  0.25  $  (0.04) $   0.92
 Weighted average common shares
  outstanding
 Basic                            16,787    16,786    16,787    16,786
 Diluted                          16,787    16,826    16,787    16,826

                                      EBITDA              EBITDA
                                ------------------  ------------------
 Net income (loss)               (34,095)    3,955   (28,261)   14,890
 Interest expense-net              7,111     8,108    29,656    27,519
 Income tax expense              (17,425)    2,623   (13,709)    9,375
 Depreciation & amortization       7,410     6,531    28,594    20,476
                                --------  --------  --------  --------
 EBITDA                         $(36,999) $ 21,217  $ 16,280  $ 72,260
                                ========  ========  ========  ========
 % of net sales                    -20.3%      8.3%      1.7%      8.4%

                                 Adjusted EBITDA     Adjusted EBITDA
                                ------------------  ------------------
 Asset impairments                29,276        --    29,276        --
 Restructuring charges             4,710       294    10,225       874
 Inventory theft insurance
  receivable allowance                --        --     1,588        --
                                --------  --------  --------  --------
 Adjusted EBITDA                $ (3,013) $ 21,511  $ 57,369  $ 73,134
                                ========  ========  ========  ========
 % of net sales                     -1.7%      8.5%      5.9%      8.5%


                 COLEMAN CABLE, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Thousands)

                                                       December 31,
                                                    ------------------
                                                      2008      2007
                                                    --------  --------
                                                    (Thousands except
                                                      per share data)
                      ASSETS
 CURRENT ASSETS:
  Cash and cash equivalents                         $ 16,328  $  8,877
  Accounts receivable, net of allowances of $3,020
   and $4,601, respectively                           97,038   159,133
  Inventories                                         73,368   138,359
  Deferred income taxes                                4,202     3,776
  Assets held for sale                                 3,535       661
  Prepaid expenses and other current assets           10,688     8,647
                                                    --------  --------
   Total current assets                              205,159   319,453
                                                    --------  --------
 PROPERTY, PLANT AND EQUIPMENT:
  Land                                                 1,675     2,772
  Buildings and leasehold improvements                14,915    14,780
  Machinery, fixtures and equipment                   93,675   101,701
                                                    --------  --------
                                                     110,265   119,253
  Less accumulated depreciation and amortization     (50,098)  (42,918)
  Construction in progress                             1,276     3,628
                                                    --------  --------
   Property, plant and equipment, net                 61,443    79,963
 GOODWILL                                             98,354   108,461
 INTANGIBLE ASSETS, NET                               39,385    58,181
 OTHER ASSETS, NET                                     7,625     9,594
                                                    --------  --------
 TOTAL ASSETS                                       $411,966  $575,652
                                                    ========  ========
        LIABILITIES AND SHAREHOLDERS' EQUITY
 CURRENT LIABILITIES:
  Current portion of long-term debt                 $ 30,445  $    936
  Accounts payable                                    27,408    49,519
  Accrued liabilities                                 31,191    38,473
                                                    --------  --------
   Total current liabilities                          89,044    88,928
                                                    --------  --------
 LONG-TERM DEBT                                      242,369   366,905
 LONG-TERM LIABILITIES                                 4,046       281
 DEFERRED INCOME TAXES                                 7,088    23,567
 COMMITMENTS AND CONTINGENCIES
 SHAREHOLDERS' EQUITY:
  Common stock, par value $0.001; 75,000 shares
   authorized and 16,787 shares issued and
   outstanding                                            17        17
  Additional paid-in capital                          86,135    83,709
  Retained earnings (accumulated deficit)            (15,968)   12,293
  Accumulated other comprehensive loss                  (765)      (48)
                                                    --------  --------
   Total shareholders' equity                         69,419    95,971
                                                    --------  --------
   TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $411,966  $575,652
                                                    ========  ========


            

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