BGC- 2014.9.26
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________ 
FORM 10-Q 
_____________________________________________ 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 26, 2014
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             .
Commission file number: 1-12983
_____________________________________________ 
GENERAL CABLE CORPORATION
(Exact name of registrant as specified in its charter)
_____________________________________________ 
Delaware
06-1398235
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
4 Tesseneer Drive
Highland Heights, KY
41076-9753
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (859) 572-8000
_____________________________________________  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
Large accelerated filer
x
  
Accelerated filer
¨
Non-accelerated filer
¨
  
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class
Outstanding at October 27, 2014
Common Stock, $0.01 par value
48,670,829

Table of Contents

GENERAL CABLE CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
 
 
 
PAGE
PART I
Financial Statements
 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II
Other Information
 
Item 1.
Item 1A.
Item 2.
Item 6.


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Table of Contents

PART I. FINANCIAL STATEMENTS
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
GENERAL CABLE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
(in millions, except per share data) (unaudited)
 
Three Fiscal Months Ended
 
Nine Fiscal Months Ended
 
September 26,
2014
 
September 27,
2013
 
September 26,
2014
 
September 27,
2013
Net sales
$
1,471.7

 
$
1,557.1

 
$
4,433.1

 
$
4,759.9

Cost of sales
1,445.1

 
1,396.9

 
4,142.6

 
4,250.0

Gross profit
26.6

 
160.2

 
290.5

 
509.9

Selling, general and administrative expenses
101.9

 
117.3

 
338.2

 
363.4

Goodwill impairment charge
—

 
—

 
155.1

 
—

Intangible asset impairment charges
3.3

 
—

 
98.8

 
—

Operating income (loss)
(78.6
)
 
42.9

 
(301.6
)
 
146.5

Other income (expense)
(17.3
)
 
9.5

 
(111.4
)
 
(58.8
)
Interest income (expense):
 
 
 
 
 
 
 
Interest expense
(28.5
)
 
(30.6
)
 
(85.6
)
 
(90.7
)
Interest income
0.8

 
1.7

 
3.0

 
4.7

 
(27.7
)
 
(28.9
)
 
(82.6
)
 
(86.0
)
Income (loss) before income taxes
(123.6
)
 
23.5

 
(495.6
)
 
1.7

Income tax (provision) benefit
4.5

 
(16.2
)
 
13.8

 
(29.9
)
Equity in net earnings of unconsolidated affiliated companies
0.3

 
0.9

 
0.9

 
1.5

Net income (loss) including non-controlling interest
(118.8
)
 
8.2

 
(480.9
)
 
(26.7
)
Less: preferred stock dividends
—

 
0.1

 
—

 
0.3

Less: net income (loss) attributable to non-controlling interest
5.4

 
2.4

 
(16.5
)
 
4.9

Net income (loss) attributable to Company common shareholders
$
(124.2
)
 
$
5.7

 
$
(464.4
)
 
$
(31.9
)
Earnings (loss) per share
 
 
 
 
 
 
 
Earnings (loss) per common share-basic
$
(2.55
)
 
$
0.11

 
$
(9.52
)
 
$
(0.64
)
Weighted average common shares-basic
48.7

 
49.2

 
48.8

 
49.5

Earnings (loss) per common share-assuming dilution
$
(2.55
)
 
$
0.11

 
$
(9.52
)
 
$
(0.64
)
Weighted average common shares-assuming dilution
48.7

 
50.7

 
48.8

 
49.5

Dividends per common share
$
0.18

 
$
0.18

 
$
0.54

 
$
0.36

Comprehensive income (loss):
 
 
 
 


 


   Net income (loss)
$
(118.8
)
 
$
8.2

 
$
(480.9
)
 
$
(26.7
)
   Currency translation gain (loss)
(56.1
)
 
14.5

 
(57.9
)
 
(28.8
)
Defined benefit plan adjustments, net of tax of $0.7 million and $3.3 million in the three and nine months ended September 26, 2014 and $0.8 million and $2.8 million in the three and nine months ended September 27, 2013
1.0

 
1.8

 
6.1

 
5.2

Change in fair value of derivatives, net of tax of $0.2 million and $0.6 million in the three and nine months ended September 27, 2013
—

 
(0.2
)
 
—

 
—

Comprehensive income (loss), net of tax
(173.9
)
 
24.3

 
(532.7
)
 
(50.3
)
Comprehensive income (loss) attributable to non-controlling interest, net of tax
3.9

 
5.5

 
(20.3
)
 
1.0

Comprehensive income (loss) attributable to Company common shareholders, net of tax
$
(177.8
)
 
$
18.8

 
$
(512.4
)
 
$
(51.3
)
See accompanying Notes to Condensed Consolidated Financial Statements.

3
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GENERAL CABLE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in millions, except share data)
(unaudited)
 
September 26,
2014
 
December 31,
2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
272.4

 
$
418.8

Receivables, net of allowances of $36.5 million at September 26, 2014 and $39.2 million at December 31, 2013
1,187.5

 
1,171.7

Inventories
1,278.2

 
1,239.6

Deferred income taxes
44.8

 
50.2

Prepaid expenses and other
129.0

 
126.2

Total current assets
2,911.9

 
3,006.5

Property, plant and equipment, net
887.9

 
1,092.0

Deferred income taxes
17.8

 
15.8

Goodwill
27.0

 
184.6

Intangible assets, net
70.4

 
182.9

Unconsolidated affiliated companies
19.3

 
19.0

Other non-current assets
88.0

 
78.1

Total assets
$
4,022.3

 
$
4,578.9

Liabilities and Total Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
855.6

 
$
870.6

Accrued liabilities
403.2

 
434.9

Current portion of long-term debt
407.4

 
250.3

Total current liabilities
1,666.2

 
1,555.8

Long-term debt
1,116.4

 
1,136.6

Deferred income taxes
215.5

 
233.8

Other liabilities
213.6

 
255.9

Total liabilities
3,211.7

 
3,182.1

Commitments and contingencies

 

Redeemable non-controlling interest
16.3

 
17.0

Total equity:
 
 
 
Common stock, $0.01 par value, issued and outstanding shares:
 
 
 
September 26, 2014 – 48,670,009 (net of 10,139,959 treasury shares)
 
 
 
         December 31, 2013 – 49,598,653 (net of 9,211,857 treasury shares)
0.6

 
0.6

Additional paid-in capital
707.5

 
699.6

Treasury stock
(185.4
)
 
(155.3
)
Retained earnings
356.4

 
847.4

Accumulated other comprehensive income (loss)
(160.1
)
 
(112.1
)
Total Company shareholders’ equity
719.0

 
1,280.2

Non-controlling interest
75.3

 
99.6

Total equity
794.3

 
1,379.8

Total liabilities, redeemable non-controlling interest and equity
$
4,022.3

 
$
4,578.9

See accompanying Notes to Condensed Consolidated Financial Statements.


4
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GENERAL CABLE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in millions) (unaudited)
 
Nine Fiscal Months Ended
 
September 26,
2014
 
September 27,
2013
Cash flows of operating activities:
 
 
 
Net income (loss) including non-controlling interest
$
(480.9
)
 
$
(26.7
)
Adjustments to reconcile net income (loss) to net cash flows of operating activities:
 
 
 
Depreciation and amortization
96.7

 
100.0

Amortization of restricted stock awards
0.9

 
0.6

Foreign currency exchange (gain) loss
106.1

 
55.2

Deferred income taxes
(13.2
)
 
4.0

Excess tax (benefits) deficiencies from stock-based compensation
0.6

 
(0.1
)
Goodwill impairment charge
155.1

 
—

Intangible asset impairment charges
98.8

 
—

Non-cash asset-related charges
124.5

 
14.0

Convertible debt instruments non-cash interest charges
1.3

 
17.4

(Gain) loss on disposal of property
2.7

 
2.8

Changes in operating assets and liabilities:
 
 
 
(Increase) decrease in receivables
(104.0
)
 
(91.0
)
(Increase) decrease in inventories
(81.7
)
 
(64.0
)
(Increase) decrease in other assets
3.5

 
(8.2
)
Increase (decrease) in accounts payable, accrued and other liabilities
11.5

 
(27.1
)
Net cash flows of operating activities
(78.1
)
 
(23.1
)
Cash flows of investing activities:
 
 
 
Capital expenditures
(68.2
)
 
(65.4
)
Proceeds from properties sold
5.4

 
0.4

Acquisitions, net of cash acquired
—

 
(6.9
)
Other
—

 
0.2

Net cash flows of investing activities
(62.8
)
 
(71.7
)
Cash flows of financing activities:
 
 
 
Dividends paid to shareholders
(26.6
)
 
(18.1
)
Excess tax benefits (deficiencies) from stock-based compensation
(0.6
)
 
0.1

Proceeds from debt
1,764.6

 
850.9

Repayments of debt
(1,598.2
)
 
(779.5
)
Purchase of non-controlling interest
(0.3
)
 
(4.0
)
Dividends paid to non-controlling interest
(5.2
)
 
(3.2
)
Repurchase of common shares
(30.7
)
 
(19.5
)
Proceeds from exercise of stock options
0.2

 
0.6

Net cash flows of financing activities
103.2

 
27.3

Effect of exchange rate changes on cash and cash equivalents
(108.7
)
 
(21.7
)
Increase (decrease) in cash and cash equivalents
(146.4
)
 
(89.2
)
Cash and cash equivalents – beginning of period
418.8

 
622.3

Cash and cash equivalents – end of period
$
272.4

 
$
533.1

Supplemental Information
 
 
 
Cash paid during the period for:
 
 
 
Income tax payments, net of refunds
$
17.6

 
$
34.4

Interest paid
$
67.6

 
$
62.0

Non-cash investing and financing activities:
 
 
 
Capital expenditures included in accounts payable
$
17.0

 
$
13.9

See accompanying Notes to Condensed Consolidated Financial Statements.

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GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
1.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited Condensed Consolidated Financial Statements of General Cable Corporation and Subsidiaries (“General Cable” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the nine fiscal months ended September 26, 2014 are not necessarily indicative of results that may be expected for the full year. The December 31, 2013 Condensed Consolidated Balance Sheet amounts are derived from the audited financial statements. These financial statements should be read in conjunction with the audited financial statements and notes thereto in General Cable’s 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 3, 2014. The Company’s fiscal quarters consist of 13-week periods ending on the Friday nearest to the end of the calendar months of March, June and September.

The Condensed Consolidated Financial Statements include the accounts of General Cable Corporation and its wholly-owned subsidiaries. Investments in 50% or less owned joint ventures in which the Company has the ability to exercise significant influence are accounted for under the equity method of accounting. All intercompany transactions and balances among the consolidated companies have been eliminated.
2.
Accounting Standards
The Company’s significant accounting policies are described in Note 2 to the audited annual consolidated financial statements in the 2013 Annual Report on Form 10-K. In the nine months ended September 26, 2014, there have been no significant changes to these policies. In the nine months ended September 26, 2014, the following accounting pronouncements have been issued with respect to the Company:
In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity", which raises the threshold for determining which disposals are required to be presented as discontinued operations and modifies related disclosure requirements. The standard is applied prospectively and is effective in 2015 with early adoption permitted. The Company is currently assessing the potential impact that the adoption of this guidance will have on its Consolidated Financial Statements.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This guidance outlines a single, comprehensive model for accounting for revenue from contracts with customers. The Company will adopt the standard on January 1, 2017. The Company is evaluating the impact that the standard will have on its Consolidated Financial Statements.
In June 2014, the FASB issued ASU 2014-12, "Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period." This standard provides more explicit guidance for treating share-based payment awards that require a specific performance target that affects vesting and that could be achieved after the requisite service period as a performance condition. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2015. The Company does not expect the adoption of this guidance to have a material impact on its Consolidated Financial Statements.
3.    Restructuring
July 2014 restructuring program

In July 2014, the Company announced a comprehensive restructuring program. The restructuring program, which builds on the Company's previously launched productivity and asset optimization plans, is focused on the closure of certain underperforming assets as well as the consolidation and realignment of other facilities. The Company is also implementing initiatives to reduce selling, general and administrative ("SG&A") expenses globally.

The Company expects to incur approximately $200 million in before-tax restructuring charges. The expected costs are $13 million in the North America segment, $118 million in the Europe and Mediterranean segment, and $69 million in the Rest of World ("ROW") segment. As of September 26, 2014, aggregate costs incurred are $3.6 million in the North America segment, $105.7 million in the Europe and Mediterranean segment, and $37.0 million in the ROW segment. For the three and nine months ended September 26, 2014, the Company incurred charges of $119.6 million and $146.3 million, respectively. In the three and nine

6
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months ended September 26, 2014, costs incurred were $0.4 million and $3.6 million in the North America segment, $105.7 million and $105.7 million in the Europe and Mediterranean segment, and $13.5 million and $37.0 million in the ROW segment, respectively. For the three and nine months ended September 26, 2014, approximately $109.9 million and $136.6 million of these charges were recorded in the Cost of sales caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), respectively. For the three and nine months ended September 26, 2014, approximately $9.7 million of these charges were recorded as SG&A expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). Restructuring costs incurred consist primarily of employee separation costs and asset-related costs to exit or realign facilities. The Company is also incurring other costs as outlined below. Changes in the restructuring reserve and activity for the nine months ended September 26, 2014 are below (in millions):

 
Employee Separation Costs
Asset-Related Costs
Other Costs
Total
Total expected restructuring charges
$
40.0

$
130.0

$
30.0

$
200.0

Balance, December 31, 2013
$
—

$
—

$
—

$
—

Net provisions
29.0

109.2

8.1

146.3

Net benefits charged against the assets
—

(109.2
)
(7.7
)
(116.9
)
Payments
(0.4
)
—

(0.1
)
(0.5
)
Foreign currency translation
—

—

—

—

Balance, September 26, 2014
$
28.6

$
—

$
0.3

$
28.9

Remaining expected restructuring charges
$
11.0

$
20.8

$
21.9

$
53.7

Employee Separation Costs
The Company recorded employee separation costs of $29.0 million in the three and nine months ended September 26, 2014. The employee separation charges were $0.4 million in North America, $27.7 million in Europe and $0.9 million in ROW in the three and nine months ended September 26, 2014, respectively.
Employee separation costs include severance, retention bonuses and pension costs. As of September 26, 2014, employee separation costs included severance charges for approximately 550 employees; approximately 430 of these employees were classified as manufacturing employees and approximately120 of these employees were classified as non-manufacturing employees. The charges relate to involuntary separations and the amounts are based on current salary levels and past service periods and are either considered one-time employee termination benefits in accordance with ASC 420 - Exit or Disposal Cost Obligations or as charges for contractual termination benefits under ASC 712 - Compensation - Nonretirement Postemployment Benefits.
Asset-Related Costs
The Company recorded asset-related costs of $85.8 million and $109.2 million, respectively, in the three and nine months ended September 26, 2014. The long-lived asset impairment charges were $0.0 million and $3.2 million in North America, $77.6 million and $77.6 million in Europe and $8.2 million and $28.4 million in ROW in the three and nine months ended September 26, 2014, respectively.
Asset-related costs consist of both asset write-downs and accelerated depreciation. Asset write-downs relate to the establishment of a new fair value basis for assets to be classified as held-for-sale or to be disposed of, as well as asset impairment charges for asset groups to be held-and-used in locations which are being restructured and it has been determined the undiscounted cash flows expected to result from the use and eventual disposition of the assets exceed their carrying value. Charges for accelerated depreciation relate to long-lived assets that will be taken out of service prior to the end of their normal service period. Management will continue to evaluate the recoverability of the carrying amount of its long-lived assets as the global restructuring program is executed.
To determine the fair value, a current appraisal of each impaired asset groups' machinery and equipment and real property, as applicable, was performed utilizing standard valuation approaches, which incorporate Level 3 inputs. The Company assesses impairment at the asset group level which represents the lowest level for which identifiable cash flows can be determined independent of other groups of assets and liabilities. The asset groups at the Company are primarily each manufacturing unit, unless the cash flows of the manufacturing unit are not independent due to shared production, distribution and sale of the finished product. The Company considered the expected net cash flows to be generated by the use of each asset group, as well as the expected cash proceeds from the disposition of the assets, if any, to determine fair value. The impairment charges were recorded in the Cost of sales caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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The Company notes the plan to abandon a long-lived asset before the end of its previously estimated useful life is a change in accounting estimate per ASC 250 - Accounting Changes and Error Corrections. The annual depreciation impact from the asset write-downs and changes in estimated useful lives is immaterial.
Other Costs
The Company recorded other restructuring-type charges of $4.8 million and $8.1 million, respectively, in the three and nine months ended September 26, 2014. The other restructuring-type charges were $0.0 million and $0.0 million in North America, $0.4 million and $0.4 million in Europe and $4.4 million and $7.7 million in ROW in the three and nine months ended September 26, 2014, respectively.
Other restructuring-type charges are incurred as a direct result of the restructuring program. Such charges primarily include working capital write-downs not associated with normal operations, equipment relocation, termination of contracts and other immaterial costs.
February 2014 restructuring program
In February 2014, as part of the Company's productivity and asset optimization plans, the Company announced the permanent closure of two manufacturing facilities in the electric utility business in North America. The Company expected to incur $10.0 million to $12.0 million, half of which was expected to be non-cash, in pre-tax costs in 2014 related to the closure of these two manufacturing facilities. In the nine months ended September 26, 2014, the Company incurred charges of $8.4 million related to these closures and other cost reductions. The total employee separation costs were $5.5 million, asset related costs were $1.6 million and other costs were $1.3 million in the nine months ended September 26, 2014. The accrual balances related to these activities are immaterial at September 26, 2014.

4.
Other Income (Expense)
Other income (expense) includes foreign currency transaction gains or losses, which result from changes in exchange rates between the designated functional currency and the currency in which a transaction is denominated as well as gains and losses on derivative instruments that are not designated as cash flow hedges. During the three months ended September 26, 2014 and September 27, 2013, the Company recorded other expense of $17.3 million and other income of $9.5 million, respectively. During the nine months ended September 26, 2014 and September 27, 2013, the Company recorded other expense of $111.4 million and $58.8 million, respectively. For the three months ended September 26, 2014, other expense was primarily attributable to $19.8 million related to foreign currency transaction losses, of which $14.1 million was related to the remeasurement of the local balance sheet in Venezuela as the SICAD I rate depreciated during the third quarter, partially offset by $6.0 million related to gains on derivative instruments that were not designated as cash flow hedges. For the three months ended September 27, 2013, other income was primarily attributable to $2.9 million related to gains on derivative instruments that were not designated as cash flow hedges and other income of $6.6 million related to foreign currency transactions which included $4.3 million in foreign exchange gains related to copper imports in Venezuela that were approved at the 4.30 BsF per U.S. dollar rate prior to the currency devaluation on February 13, 2013 (described in Note 22 - Venezuelan Operations) and settled in the second quarter of 2013. For the nine months ended September 26, 2014, other expense was primarily attributable to $83.1 million related to the Venezuela currency devaluation in the first quarter, $4.7 million related to losses on derivative instruments that were not designated as cash flow hedges and other expense of $20.1 million related to foreign currency transaction losses, of which $11.6 million was related to the remeasurement of the local balance sheet in Venezuela as the SICAD I rate depreciated from the first quarter of 2014. For the nine months ended September 27, 2013, other expense was primarily attributable to $40.9 million related to the Venezuela currency devaluation, $17.5 million related to losses on derivative instruments that were not designated as cash flow hedges and other expense of $1.4 million related to foreign currency transaction losses which included $16.0 million in foreign exchange gains related to copper imports in Venezuela that were approved at the 4.30 BsF per U.S. dollar rate prior to the currency devaluation on February 13, 2013.
Refer to Note 22 - Venezuelan Operations for more information related to recent developments regarding the Company's Venezuelan operations.
5.    Inventories
Approximately 86% of the Company’s inventories are valued using the average cost method and all remaining inventories are valued using the first-in, first-out (FIFO) method. During the nine months ended September 26, 2014, the Venezuelan entity recorded $8.8 million of lower of cost or market charges that were recognized within the Cost of sales caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). These charges are due to translation of local sales results at the SICAD 1 rate, approximately 10 BsF to 12 BsF per U.S. Dollar, and sales price caps under the new price controls law while the Company's cost for the copper component of its inventory is based on copper purchases at the official rate of 6.30

8
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BsF per U.S. dollar. Therefore, management reduced Venezuela's inventory value to expected sales price (market value), which was lower than the recorded cost basis. In the three months ended September 26, 2014, the Venezuelan entity did not record a lower of cost or market charge. Refer to Note 22 - Venezuelan Operations for the recent developments at the Venezuelan entity.
At September 26, 2014, all inventories are stated at the lower of cost or market.
(in millions)
September 26, 2014
 
December 31, 2013
Raw materials
$
316.5

 
$
319.1

Work in process
202.1

 
190.1

Finished goods
759.6

 
730.4

Total
$
1,278.2

 
$
1,239.6

6.    Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Costs assigned to property, plant and equipment related to acquisitions are based on estimated fair values on the acquisition date. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets: buildings, from 15 to 50 years, and machinery, equipment and office furnishings, from 2 to 20 years. Leasehold improvements are depreciated over the shorter of the lease term or the useful life of the asset, unless acquired in a business combination, in which case the leasehold improvements are amortized over the shorter of the useful life of the asset or a term that includes the reasonably assured life of the lease.

Property, plant and equipment consisted of the following (in millions): 
 
September 26, 2014
 
December 31, 2013
Land
$
102.5

 
$
120.8

Buildings and leasehold improvements
316.2

 
372.6

Machinery, equipment and office furnishings
969.2

 
1,290.6

Construction in progress
60.2

 
46.3

Total gross book value
1,448.1

 
1,830.3

Less accumulated depreciation
(560.2
)
 
(738.3
)
Total net book value
$
887.9

 
$
1,092.0

Depreciation expense for the three and nine fiscal months ended September 26, 2014 was $27.5 million and $85.4 million, respectively. Depreciation expense for the three and nine fiscal months ended September 27, 2013 was $30.3 million and $89.6 million, respectively.

The Company periodically evaluates the recoverability of the carrying amount of long-lived assets (including property, plant and equipment and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company evaluates events or changes in circumstances based mostly on actual historical operating results, but business plans, forecasts, general and industry trends, and anticipated cash flows are also considered. Impairment is assessed when the undiscounted expected future cash flows derived from asset groups are less than its carrying amount. Impairment losses are measured as the amount by which the carrying value of asset groups exceeds its fair value and are recognized in earnings. The Company also continually evaluates the estimated useful lives of all long-lived assets and, when warranted, revises such estimates based on current events.

Third Quarter 2014 Brazil Rod Mill Asset Impairment

The Brazil rod mill results are reported within the ROW reportable segment. In the three months ended September 26, 2014, the Company announced its intent to shut down the Brazil rod mill due to changes in the supply market. The change in the supply market was deemed a significant adverse change in the manner in which the Brazil rod mill will operate resulting in a change in the defined asset group. The asset group was deemed impaired as it no longer provides future benefits to the Company. To determine the fair value, the Company considered the expected net cash flows to be generated by the assets through the closure date, as well as the expected cash proceeds from the disposition of the assets utilizing standard valuation approaches, which incorporate Level 3 inputs. Based on the results of the analysis, the Company recorded an impairment charge of $13.1 million in the three and nine

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months ended September 26, 2014.  The impairment charge was recorded in the Cost of sales caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Third Quarter 2013 Mexico Asset Impairment
In three months ended September 27, 2013, the Company’s executive management decided to no longer import building wire product into the United States manufactured in its Mexico unit ("Mexico"). This change is considered significant to the Mexican operation due to the associated revenue, profit and the influence on the overall results in Mexico from this United States business. This change coupled with pricing pressures in the Mexico market and a history of losses caused the Company to perform an asset impairment analysis of its Mexican business in accordance with ASC 360 “Property, Plant and Equipment”.

The Mexico results are reported within the ROW reporting segment. The Mexico operations and assets include machinery and equipment which manufactures power cables, building wire and telephone cables. These three product lines have a significant amount of shared costs including advertising, sales force, data processing, accounting, and general management. The Company manages its business at a total Mexico level and has similar distribution methods. Therefore, based on the reporting structure, the lowest level of which identifiable cash flows that can be determined is the Mexico unit.

The Company developed its internal forward business plans and 2014 outlook under the guidance of new local and regional leadership to determine the undiscounted expected future cash flows derived from the Mexican long lived assets. Based on the internal projections developed by executive management, the Company determined that the undiscounted expected future cash flows were less than the carrying value of the assets. To determine the fair value, a current appraisal of the Mexico machinery and equipment and real property assets was performed utilizing standard valuation approaches.  Based on the results of the analysis, the Company recorded an impairment charge of $14.0 million in the three and nine months ended September 27, 2013.  The impairment charge was recorded in the Cost of sales caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
7.    Goodwill and Other Intangible Assets
Goodwill and intangible assets with indefinite useful lives are not amortized, but are reviewed at least annually for impairment. If the carrying amount of goodwill or an intangible asset with an indefinite life exceeds its fair value, an impairment loss would be recognized in the amount equal to the excess. In the first quarter of 2014, the Company determined that for goodwill and certain intangible assets related to the 2007 acquisition of Phelps Dodge International Corporation, the carrying value exceeded the fair value and an impairment charge was recorded which is described below.
The amounts of goodwill and indefinite-lived intangible assets were as follows (millions of dollars):
 
Goodwill
 
Indefinite-Lived Assets – Trade Names
 
North
America
 
Europe and
Mediterranean
 
ROW
 
Total
 
North
America
 
Europe and
Mediterranean
 
ROW
 
Total
Balance, December 31, 2013
$
17.6

 
$
2.0

 
$
165.0

 
$
184.6

 
$
2.4

 
$
0.5

 
$
127.9

 
$
130.8

Currency translation and other adjustments (1)
(0.5
)
 
(0.1
)
 
(2.5
)
 
(3.1
)
 
—

 
(0.1
)
 
(34.8
)
 
(34.9
)
Goodwill and indefinite-lived asset impairment(2)
—

 
—

 
(154.5
)
 
(154.5
)
 
(2.1
)
 
—

 
(93.1
)
 
(95.2
)
Balance, September 26, 2014
$
17.1

 
$
1.9

 
$
8.0

 
$
27.0

 
$
0.3

 
$
0.4

 
$
—

 
$
0.7

(1) $32.2 million of the currency translation and other adjustment related to the indefinite-lived assets in the ROW operating segment includes a reclassification of the PDIC trade name to a definite-lived asset with an estimated remaining life of 10 years.
(2) The difference in the goodwill and indefinite-lived asset impairment in the above table and the amounts reported in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss) is due to the difference in the average foreign currency exchange rates for the three months ended March 28, 2014 as compared to the spot rates at March 28, 2014 at the various entities within the reporting unit.
At September 26, 2014, the total accumulated goodwill impairment charge was $154.5 million prior to foreign currency translation adjustments, all within the ROW segment. At September 26, 2014, the total accumulated indefinite-lived asset trade name impairment loss was $93.1 million in the ROW segment, prior to foreign currency translation adjustments and $2.1 million was recorded within the North America segment.
The amounts of other intangible assets were as follows (millions of dollars):

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September 26, 2014
 
December 31, 2013
Amortized intangible assets:
 
 
 
Amortized intangible assets
$
168.4

 
$
139.5

Accumulated amortization
(96.3
)
 
(85.8
)
Foreign currency translation adjustment
(2.4
)
 
(1.6
)
Amortized intangible assets, net
$
69.7

 
$
52.1

Amortized intangible assets are stated at cost less accumulated amortization as of September 26, 2014 and December 31, 2013. Other intangible assets have been determined to have a useful life in the range of 7 to 12 years. The approximate weighted average useful life of the amortized intangible assets is 10 years. For customer relationships, the Company has accelerated the amortization expense to align with the historical customer attrition rates. The amortization of intangible assets for the nine months ended September 26, 2014 and September 27, 2013 was $10.5 million and $9.3 million, respectively. The estimated amortization expense during the twelve month periods beginning September 26, 2014 through September 27, 2019 and thereafter, based on exchange rates as of September 26, 2014, is $12.6 million, $11.5 million, $9.9 million, $7.1 million, $6.3 million and $22.3 million thereafter.
Goodwill and intangible assets with indefinite useful lives are not amortized, but are reviewed at least annually for impairment. The Company completes its annual impairment test during the fourth quarter of each year. In addition, the Company evaluates the carrying amount between such annual valuations if events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Events or circumstances may include, but are not limited to, a significant change in legal factors or in the business climate, adverse action or assessment by a regulator, unanticipated competition, loss of key personnel, possible sale or disposal of a reporting unit or a significant portion of a reporting unit, significant changes in financial projections or significant changes in the market capitalization. At October 31, 2013 and December 31, 2013, the estimated fair value of the goodwill at our PDIC reporting unit and the indefinite-lived intangible assets exceeded their corresponding carrying amount including recorded goodwill; however, in the first quarter of 2014 the following events changed which reduced the fair value of the PDIC reporting unit:
•
Except certain cost of sales related to copper inventory, all of the BsF denominated revenues and expenses for future periods reflected remeasurement using the SICAD 1 rate versus the prior official rate of 6.30 BsF per U.S. dollar. Due to the changes in the currency exchange system and the rate used to remeasure the financial statements of the Venezuelan entity, the Company's estimated future operating results were determined to be lower than historical and previously projected future profit levels. Refer to Note 22 - Venezuelan Operations for additional information.
•
In the first quarter of 2014, the Venezuelan President used decree power to pass the Law of Costs, Earnings, and Fair Profits, which became effective in January 2014, authorizing, among other things, the Venezuelan government to set maximum pricing limits in the private sector. Therefore, the majority of the Company’s product portfolio in Venezuela is subject to price controls, which may restrict the Company’s ability to increase prices more than 30% higher than product costs. Until this law is removed or revised to allow for a higher level of pricing, the Venezuelan operating profit margin is expected to be lower than historical and previously projected future profit levels. In addition, ongoing labor negotiations and expected continuing social unrest in Venezuela are expected to result in lower than historical and previously projected future profit levels. Refer to Note 22 - Venezuelan Operations for additional detail.

•
During the first quarter of 2014, the Company experienced a significant decline in its stock price, resulting in the Company’s market capitalization falling below its book value.
Based upon the combination of the above factors, the Company concluded that goodwill impairment indicators existed as of March 28, 2014. As a result, the Company performed an interim goodwill impairment analysis as of March 28, 2014. The Company engaged an outside valuation firm to assist in valuing the Company’s reporting unit and preparing the goodwill impairment analysis. To determine the fair value of the reporting unit (Level 3), the Company employed an income and market-based approach with each being weighted equally. Under the income approach, the Company used a discounted cash flow method to calculate the fair value based on the present value of estimated future cash flows. Assumptions used in the discounted cash flow method, such as forecasted operating results, expected growth rates, working capital needs, tax rates, and cost of capital, were based on the then current market conditions and were consistent with internal management projections. The cost of capital rate selected was based on consideration of the risks inherent in the investment and market rates of return available from alternative investments of similar type and quality as of the valuation date. The guideline public company method was used for the market approach. The approach provided an estimate of value using multiples of earnings derived from the market values of publicly traded companies in the wire and cable industry. In addition to the selection of guideline companies, the market approach included an analysis of the Company’s financial and operating performance risk, profitability, and growth as compared to the reporting unit.

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The Company performed the first step (“Step 1”) of the goodwill impairment assessment at March 28, 2014. In Step 1 of the goodwill impairment test, the Company compared the fair value of the reporting unit, the entities purchased in the October 31, 2007 PDIC acquisition, to its carrying amount, including goodwill of $154.5 million. Based on the results of the valuation, the carrying amount of the reporting unit exceeded the fair value. Based on the results of Step 1 of the impairment analysis and the preliminary results of Step 2, the Company believed that an impairment loss was probable and based on a preliminary estimate, after consultation with a third party valuation specialist, the Company recognized an impairment charge equal to the total recorded PDIC goodwill of $155.1 million in the ROW operating segment. The impairment charge was recorded in the goodwill impairment charge caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).
In the second quarter of 2014, the Company completed Step 2 of the goodwill impairment test ("Step 2") to determine if any adjustment to the goodwill impairment charge was required. The Step 2 analysis required the Company to perform a theoretical purchase price allocation for the reporting unit to determine the implied fair value of goodwill and to compare the implied fair value of goodwill to the recorded amount of goodwill. Based on the analysis, no modification of the initial impairment estimate was required in the second quarter of 2014.
Based on the decrease of our cash flow projections for the PDIC reporting unit, the Company also completed an impairment test for the trade name in the first quarter of 2014. The fair value of the trade name is based on the discounted cash flows the trade name can be expected to generate in the future. Based on the results of the valuation, the carrying amount of the trade name exceeded the fair value. The impairment valuation resulted in a $93.4 million impairment charge in the first quarter related to the trade name in the ROW operating segment. The impairment charge was recorded in the indefinite-lived intangible asset impairment charge caption in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). In the second quarter of 2014 in connection with the completion of the above mentioned Step 2 analysis, the Company reassessed the remaining life of the PDIC trade name and concluded it was no longer indefinite. In the second quarter, the Company reclassified the PDIC trade name to a definite-lived asset with an estimated remaining life of 10 years based on increased political and economic instability in countries in which the trade name is utilized.
8.     Accrued Liabilities
Warranty Accrual
The warranty accrual balance at September 26, 2014 and December 31, 2013 was $11.5 million and $14.1 million, respectively. The Company accrues liabilities under service and warranty policies based upon specific claims and a review of historical warranty and service claims experience. Adjustments are made to the accruals as claims data and historical experience change. In addition, the Company incurs discretionary costs to service its products in connection with product performance issues.

Changes in the carrying amount of the service and product warranty accrual are below (in millions):
Balance, December 31, 2013
$
14.1

Net provisions for warranties issued
4.3

Payments and other related to the warranty accrual
(6.1
)
Foreign currency translation
(0.8
)
Balance, September 26, 2014
$
11.5


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9.
Long-Term Debt
(in millions)
September 26, 2014
 
December 31, 2013
North America
 
 
 
5.75% Senior Notes due 2022
$
600.0

 
$
600.0

Subordinated Convertible Notes due 2029
429.5

 
429.5

Debt discount on Subordinated Convertible Notes due 2029
(260.2
)
 
(261.5
)
Senior Floating Rate Notes due 2015
125.0

 
125.0

Revolving Credit Facility
245.1

 
225.0

Other
9.0

 
9.0

Europe and Mediterranean
 
 
 
Revolving Credit Facility
74.8

 
—

Other Credit Facilities
6.1

 
17.0

Other
7.6

 
10.3

Rest of World (“ROW”)
 
 
 
Credit facilities
286.9

 
232.6

Total debt
1,523.8

 
1,386.9

Less current maturities
407.4

 
250.3

Long-term debt
$
1,116.4

 
$
1,136.6

At September 26, 2014, maturities of long-term debt during the twelve month periods beginning September 26, 2014 through September 27, 2019 and thereafter are $407.4 million, $11.1 million, $2.7 million, $320.9 million and $0.9 million, respectively, and $780.8 million thereafter.

The fair value of the Company's long-term debt, as noted below, was estimated using quoted market prices where available. For long-term debt not actively traded, fair values were based on valuations from third-party banks and market quotations for similar types of borrowing arrangements.  
5.75% Senior Notes due 2022
The Company's 5.75% Senior Notes are summarized in the table below:
 
5.75% Senior Notes 
(in millions)
September 26, 2014
 
December 31, 2013
Face Value
$
600.0

 
$
600.0

Fair Value (Level 2)
570.0

 
588.0

Interest Rate
5.75
%
 
5.75
%
Interest Payment
Semi-Annual: Apr 1 & Oct 1
Maturity Date
October 2022
Guarantee
Jointly and severally guaranteed by the Company's wholly owned U.S. subsidiaries
 
 
5.75% Senior Notes
 
Beginning Date
Percentage
Call Option (1)
October 1, 2017
102.875%
 
October 1, 2018
101.917%
 
October 1, 2019
100.958%
 
October 1, 2020 and thereafter
100.000%
(1)
The Company may, at its option, redeem the 5.75% Senior Notes on or after the stated beginning dates at percentages noted above (plus accrued and unpaid interest). Additionally, the Company, may on or prior to October 1, 2015 redeem in the aggregate up to 35% of the aggregate principal amount of 5.75% Senior Notes issued with the cash proceeds from one or more equity offerings, at a redemption price in cash equal to 105.75% of the principal plus accrued and unpaid interest so long as (i) at least 65% of the aggregate principal amount of the 5.75% Senior Notes issued remains outstanding immediately after

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giving effect to any such redemption; and (ii) notice of any such redemption is given within 60 days after the date of the closing of any such equity offering. In addition, at any time prior to October 1, 2017, the Company may redeem some or all of the 5.75% Senior Notes at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest, plus a make whole premium.

The 5.75% Senior Notes' indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to (i) incur additional indebtedness and guarantee indebtedness; (ii) pay dividends or make other distributions or repurchase or redeem their capital stock; (iii) purchase, redeem or retire debt; (iv) issue certain preferred stock or similar equity securities; (v) make loans and investments; (vi) sell assets; (vii) incur liens; (viii) enter into transactions with affiliates; (ix) enter into agreements restricting the Company's subsidiaries' ability to pay dividends; and (x) consolidate, merge or sell all or substantially all assets. However, these covenants are subject to exceptions and qualifications.

The 5.75% Senior Notes may also be repurchased at the option of the holders in connection with a change of control (as defined in the indenture governing the 5.75% Senior Notes) or in connection with certain asset sales.
Subordinated Convertible Notes due 2029
The Company’s convertible debt instruments outstanding as of September 26, 2014 and December 31, 2013 were as follows:
 
Subordinated Convertible
Notes
(in millions)
September 26, 2014
 
December 31, 2013
Face value
$
429.5

 
$
429.5

Debt discount
(260.2
)
 
(261.5
)
Book value
169.3

 
168.0

Fair value (Level 1)
313.1

 
462.8

Maturity date
Nov 2029
Stated annual interest rate
4.50% until Nov 2019
2.25% until Nov 2029
Interest payments
Semi-annually:
May 15 & Nov 15
Senior Floating Rate Notes
The Company’s Senior Floating Rate Notes outstanding as of September 26, 2014 and December 31, 2013 were as follows:
 
Senior Floating Rate Notes
(in millions)
September 26, 2014
 
 
 
December 31, 2013
Face value
$
125.0

 
 
 
$
125.0

Fair value (Level 1)
125.0

 
 
 
124.1

Interest rate
2.6
%
 
 
 
2.6
%
Interest payment
3-month LIBOR rate plus 2.375%
Quarterly: Jan 1, Apr 1, Jul 1 & Oct 1
Maturity date
Apr 2015
Guarantee
Jointly and severally guaranteed by the Company’s wholly-owned U.S. subsidiaries
The Company may, at its option, redeem the Senior Floating Rate Notes, in whole or in part, at a redemption price equal to 100% of the principal amount redeemed, plus accrued interest and unpaid interest. The Senior Floating Rate Notes may also be repurchased at the option of the holders in connection with a change of control (as determined in the indenture governing the Senior Floating Rate Notes) or in connection with certain asset sales.
Asset-Based Revolving Credit Facility (“Revolving Credit Facility”)
On July 21, 2011, the Company entered into a $400 million Revolving Credit Facility, which was first amended in 2012 to increase the facility size to $700 million and then subsequently amended and restated on September 6, 2013 and further amended on October 22, 2013, May 20, 2014, September 23, 2014 and October 28, 2014, to, among other things, increase the Revolving Credit Facility to $1.0 billion, $630 million of which may be borrowed by the U.S. borrower, $300 million of which may be borrowed by the European borrowers and $70 million of which may be borrowed by the Canadian borrower. The Revolving Credit Facility contains

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restrictions including limitations on, among other things, distributions and dividends, acquisitions and investments, indebtedness, liens and affiliate transactions. The Revolving Credit Facility provides the Company with flexibility and the restrictions in the Revolving Credit Facility generally only apply in the event that the Company's availability under the Revolving Credit Facility falls below certain specific thresholds.
The Revolving Credit Facility has a maturity date of September 6, 2018. The maturity date of the Revolving Credit Facility will automatically become due December 31, 2014, if the Company's Senior Floating Rate Notes are not refinanced with indebtedness that matures or is mandatorily redeemable or is redeemable at the option of the holders thereof not earlier than the date that is 6 months after September 6, 2018 unless, if such notes are not refinanced, there is at least $100 million of availability under the Revolving Credit Facility and the fixed charge coverage ratio (as defined in the Revolving Credit Facility) is not less than 1.15 to 1.00, in each case after giving pro forma effect to the repayment of such notes. The commitment amount under the Revolving Credit Facility may be increased by an additional $250 million, subject to certain conditions and approvals as set forth in the Revolving Credit Facility. The Company capitalized $4.9 million in 2013, $2.3 million in 2012 and $4.8 million in 2011 in deferred financing costs in connection with the Revolving Credit Facility. The Revolving Credit Facility requires maintenance of a minimum fixed charge coverage ratio of 1.00 to 1.00 if availability under the Revolving Credit Facility is less than the greater of $100 million or 10% of the then existing aggregate lender commitment under the Revolving Credit Facility. The fair value of the Revolving Credit Facility approximates the carrying value.
The Company’s Revolving Credit Facility is summarized in the table below:
 
Revolving Credit Facility
(in millions)
September 26, 2014
 
December 31, 2013
Outstanding borrowings
$
319.9

 
$
225.0

Total credit under facility
1,000.0

 
1,000.0

Undrawn availability(1)
412.1

 
298.4

Interest rate
2.2
%
 
2.0
%
Outstanding letters of credit
$
29.6

 
$
112.7

Original issuance
July 2011
Maturity date
Sept 2018
(1) Total undrawn availability for the U.S. borrower, the Canadian borrower and the European borrowers at September 26, 2014 is $263.9 million, $69.6 million and $78.6 million, respectively. Total undrawn availability for the U.S. borrower, the Canadian borrower and the European borrowers at December 31, 2013 was $102.1 million, $53.1 million and $143.2 million, respectively.
Europe and Mediterranean Credit Facilities
The Company’s Europe and Mediterranean credit facilities are summarized in the table below: 
 
Europe and Mediterranean Credit Facilities
(in millions)
September 26, 2014
 
December 31, 2013
Outstanding borrowings
$
6.1

 
$
17.0

Undrawn availability
36.6

 
48.8

Interest rate – weighted average
7.0
%
 
6.7
%
Maturity date
Various; all due within 1 year

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ROW Credit Facilities
The Company’s ROW credit facilities are summarized in the table below: 
 
ROW Credit Facilities
(in millions)
September 26, 2014
 
December 31, 2013
Outstanding borrowings
$
286.9

 
$
232.6

Undrawn availability
238.1

 
302.2

Interest rate – weighted average
6.0
%
 
4.6
%
Maturity date
Various; $275.1 million due within 1 year
The Company’s ROW credit facilities are short term loans utilized for working capital purposes. The fair value of the ROW credit facilities approximates the carrying value due to the short term nature of the facilities.
10.
Financial Instruments
The Company is exposed to various market risks, including changes in interest rates, foreign currency and raw material (commodity) prices. To manage risks associated with the volatility of these natural business exposures, the Company enters into interest rate, commodity and foreign currency derivative agreements, as well as copper and aluminum forward pricing agreements. The Company does not purchase or sell derivative instruments for trading purposes. The Company does not engage in derivative contracts for which a lack of marketplace quotations would necessitate the use of fair value estimation techniques.

As of September 26, 2014 and December 31, 2013, there were no outstanding interest rate swaps. In the nine months ended September 27, 2013, the Company utilized interest rate swaps to manage its interest expense exposure by fixing its interest rate on a portion of the Company’s floating rate debt. The Company did not provide or receive any collateral specifically for these contracts.

The Company enters into commodity instruments to hedge the purchase of copper, aluminum and lead in future periods and foreign currency exchange contracts principally to hedge the currency fluctuations in certain transactions denominated in foreign currencies, thereby reducing the Company’s risk that would otherwise result from changes in exchange rates. Principal transactions hedged during the year were firm sales and purchase commitments. The fair value of foreign currency contracts represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices.

As of September 26, 2014 and December 31, 2013, there were no derivatives that were designated as cash flow hedges. In the three months ended September 27, 2013, the Company had no commodity instruments and foreign currency exchange contracts accounted for as cash flow hedges. In the nine months ended September 27, 2013, the Company accounted for certain commodity instruments and foreign currency exchange contracts as cash flow or economic hedges. Changes in the fair value of derivatives that are designated as cash flow hedges are recorded in other comprehensive income and reclassified to the income statement when the effects of the items being hedged are realized. Changes in the fair value of economic hedges are recognized in current period earnings.
Fair Value of Derivatives Instruments
The notional amounts and fair values of derivatives not designated as cash flow hedges at September 26, 2014 and December 31, 2013 are shown below (in millions).
 
September 26, 2014
 
December 31, 2013
 
Notional
Amount
 
Fair Value
 
Notional
Amount
 
Fair Value
 
Asset (1)
 
Liability (2)
 
Asset (1)
 
Liability (2)
Derivatives not designated as cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
Commodity futures
$
114.5

 
$
2.6

 
$
1.6

 
$
173.7

 
$
1.2

 
$
7.6

Foreign currency exchange
165.9

 
2.8

 
4.3

 
223.2

 
6.0

 
1.7

 
 
 
$
5.4

 
$
5.9

 
 
 
$
7.2

 
$
9.3

 
(1)
Balance recorded in “Prepaid expenses and other” and “Other non-current assets”
(2)
Balance recorded in “Accrued liabilities” and “Other liabilities”


16
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As of September 26, 2014 and December 31, 2013, all financial instruments held by the Company were subject to enforceable master netting arrangements held by various financial institutions. In general, the terms of our agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty.  The Company's accounting policy is to not offset these positions in the Condensed Consolidated Balance Sheets.  As of September 26, 2014 and December 31, 2013, the net positions of the enforceable master netting agreements are not significantly different from the gross positions noted in the table above. Depending on the extent of an unrealized loss position on a derivative contract held by the Company, certain counterparties may require collateral to secure the Company's derivative contract position. As of September 26, 2014 and December 31, 2013, there were no contracts held by the Company that required collateral to secure the Company's derivative positions.

For the derivative instruments that were designated and qualified as cash flow hedges in the nine months ended September 27, 2013, unrealized gains and losses on the derivative were reported as a component of accumulated other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings, which generally occured over periods of less than one year. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness were recognized in current earnings. For the three months ended September 27, 2013, the Company had no commodity instruments or foreign currency exchange contracts that were accounted for as cash flow hedges.
 
Nine Fiscal Months Ended September 27, 2013
(in millions)
Amount of Comprehensive Income (Loss) Recognized in Accumulated OCI on Derivatives (Effective Portion)
 
Amount of Gain (Loss) Reclassified from
Accumulated  OCI into Income
 
Location
Derivatives designated as cash flow hedges:
 
 
 
 
 
Interest rate swaps
$
0.1

 
$
(0.1
)
 
Interest expense
Commodity futures
(1.3
)
 
(1.9
)
 
Cost of sales
 
$
(1.2
)
 
$
(2.0
)
 
 
For derivative instruments that are not designated as cash flow hedges, the unrealized gain or loss on the derivatives is reported in current earnings. For the three fiscal months ended September 26, 2014 and September 27, 2013, the Company recorded a gain of $6.0 million and a gain of $2.9 million, respectively, for derivative instruments not designated as cash flow hedges in other income (expense). For the nine fiscal months ended September 26, 2014 and September 27, 2013, the Company recorded a loss of $4.7 million and $17.5 million, respectively, for derivative instruments not designated as cash flow hedges in other income (expense).
Other Forward Pricing Agreements
In the normal course of business, the Company enters into forward pricing agreements for the purchase of copper and aluminum for delivery in a future month to match certain sales transactions. The Company accounts for these forward pricing arrangements under the “normal purchases and normal sales” scope exception because these arrangements are for purchases of copper and aluminum that will be delivered in quantities expected to be used by the Company over a reasonable period of time in the normal course of business. For these arrangements, it is probable at the inception and throughout the life of the arrangements that the arrangements will not settle net and will result in physical delivery of the inventory. At September 26, 2014 and December 31, 2013, the Company had $26.6 million and $10.1 million, respectively, of future copper and aluminum purchases that were under forward pricing agreements. At September 26, 2014 and December 31, 2013, the fair value of these arrangements was $25.4 million and $10.6 million, respectively, and the Company had an unrealized loss of $1.2 million and an unrealized gain of $0.5 million, respectively, related to these transactions. The Company expects the unrealized gains under these agreements to offset firm sales price commitments with customers. Depending on the extent of the unrealized loss position on certain forward pricing agreements, certain counterparties may require collateral to secure the Company’s forward purchase agreements. There were no funds posted as collateral as of September 26, 2014 or December 31, 2013.

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11.
Income Taxes
The Company’s effective tax rate for the three months ended September 26, 2014 and September 27, 2013 was 3.6% and 68.9% respectively. The low effective tax rate for the three months ended September 26, 2014 was primarily due to the combined impact of no tax benefits being available for the $14.1 million Venezuelan currency revaluation loss, recording a relatively small $2.3 million tax benefit on $119.6 million of asset-related costs and restructuring charges, and the impact of full year forecasted operational losses incurred in jurisdictions where valuation allowances are recorded against net deferred tax assets.  These unfavorable effective tax rate drivers were partially offset by an $8.0 million income tax benefit associated with uncertain tax position reserve releases during the three months ended September 26, 2014. The effective tax rate for the three months ended September 27, 2013 was negatively influenced by the impact of recording no tax benefit on full year forecasted losses in jurisdictions where valuation allowances were recorded against deferred tax assets. 
The Company’s effective tax rate for the nine months ended September 26, 2014 and September 27, 2013 was 2.8% and 1,758.8% respectively. The low effective tax rate on the pre-tax loss for the nine months ended September 26, 2014 was primarily due to a relatively small income tax benefit recorded on the significant pre-tax charges related to asset impairments, restructuring charges, Venezuela currency devaluation loss, and other operational losses incurred in jurisdictions where valuation allowances are recorded against net deferred tax assets.  In the first quarter, a $19.9 million income tax benefit was recognized due to the reversal of deferred tax liabilities associated with the $93.4 million PDIC trade name impairment charge, a $0.1 million income tax benefit was recognized on the $155.1 million PDIC goodwill impairment charge, no income tax benefit was recognized on the $8.8 million Venezuela lower of cost or market inventory charge, and no income tax benefit was recognized related to the $83.1 million Venezuelan currency devaluation charge. In the second and third quarters, a $2.8 million income tax benefit was recorded on $146.3 million of asset-related costs and restructuring charges and no tax benefit was recognized related to the $11.6 million of net Venezuelan currency revaluation losses. These unfavorable effective tax rate drivers were partially offset by $14.7 million of uncertain tax position reserve releases recorded in nine months ended September 26, 2014. The extremely high effective tax rate on the pre-tax income for the nine months ended September 27, 2013 reflects the combined impact of the small $1.7 million pre-tax income, no tax benefit on the Venezuelan currency devaluation loss, the greater mix of earnings in high tax jurisdictions, and the impact of full year forecasted losses in jurisdictions where valuation allowances were recorded against deferred tax assets.
During the third quarter of 2014, the Company accrued approximately $1.3 million of income tax expense for uncertain tax positions likely to be taken in the current year and for interest and penalties on tax positions taken in prior periods, all of which would have a favorable impact on the effective tax rate, if recognized. In addition, $8 million of income tax benefits were recognized due to statute of limitation expirations associated with various uncertain tax positions.

The Company files income tax returns in numerous tax jurisdictions around the world. Due to uncertainties regarding the timing and outcome of various tax audits, appeals and settlements, it is difficult to reliably estimate the amount of unrecognized tax benefits that could change within the next twelve months. The Company believes it is reasonably possible that approximately $9 million of unrecognized tax benefits could change within the next twelve months due to the resolution of tax audits and statute of limitations expiration.

The Internal Revenue Service ("IRS") currently is in the process of examining the Company's 2012 consolidated income tax return.  The IRS completed its examination of the Company's 2007 through 2010 consolidated income tax returns in the second quarter of 2013 with insignificant tax adjustments.  With limited exceptions, tax years prior to 2009 are no longer open in major foreign, state, or local tax jurisdictions.

18
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12.
Employee Benefit Plans
The Company provides retirement benefits through contributory and noncontributory qualified and non-qualified defined benefit pension plans covering eligible domestic and international employees as well as through defined contribution plans and other postretirement benefits.

The components of net periodic benefit cost for pension benefits were as follows (in millions): 
 
Three Fiscal Months Ended
 
September 26, 2014
 
September 27, 2013
 
U.S.
Plans
 
Non-U.S.
Plans
 
U.S.
Plans
 
Non-U.S.
Plans
Service cost
$
0.5

 
$
1.4

 
$
0.5

 
$
1.6

Interest cost
2.0

 
1.5

 
1.8

 
1.4

Expected return on plan assets
(2.6
)
 
(0.8
)
 
(2.3
)
 
(0.5
)
Amortization of prior service cost
—

 
0.3

 
—

 
0.4

Amortization of net loss
1.2

 
0.1

 
2.0

 
0.2

Net pension expense
$
1.1

 
$
2.5

 
$
2.0

 
$
3.1


 
Nine Fiscal Months Ended
 
September 26, 2014
 
September 27, 2013
 
U.S.
Plans
 
Non-U.S.
Plans
 
U.S.
Plans
 
Non-U.S.
Plans
Service cost
$
1.5

 
$
4.2

 
$
1.4

 
$
5.0

Interest cost
6.0

 
4.8

 
5.4

 
4.2

Expected return on plan assets
(7.9
)
 
(2.4
)
 
(6.9
)
 
(1.5
)
Amortization of prior service cost
0.1

 
0.9

 
—

 
1.2

Amortization of net loss
3.6

 
0.3

 
6.2

 
0.6

Settlement loss
—

 
4.5

 
—

 
—

Net pension expense
$
3.3

 
$
12.3

 
$
6.1

 
$
9.5

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net pension expense over the next fiscal year is $5.2 million. The prior service cost to be amortized from accumulated other comprehensive income into net pension expense over the next fiscal year is immaterial.
Defined benefit pension plan cash contributions for the three fiscal months ended September 26, 2014 and September 27, 2013 were $3.3 million and $2.4 million, respectively. Defined benefit pension plan cash contributions for the nine fiscal months ended September 26, 2014 and September 27, 2013 were $9.9 million and $7.2 million, respectively.
In the second quarter of 2014, the Company recorded a pre-tax non-cash settlement loss of $4.5 million for the termination of a pension plan related to the closure of one of the North America manufacturing plants.
Refer to Note 3 - Restructuring for charges for contractual termination benefits under ASC 712 - Compensation - Nonretirement Postemployment Benefits.




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13.
Total Equity
The Company is authorized to issue 200 million shares of common stock and 25 million shares of preferred stock. Condensed consolidated statements of changes in total equity are presented below for the nine months ended September 26, 2014 and September 27, 2013 (in millions):
 
 
 
General Cable Total Equity
 
 
 
Total Equity
 
Common
Stock
Amount
 
Add’l
Paid in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income/(Loss)
 
Non-Controlling
Interest
Balance, December 31, 2013
$
1,379.8

 
$
0.6

 
$
699.6

 
$
(155.3
)
 
$
847.4

 
$
(112.1
)
 
$
99.6

Comprehensive income (loss)
(532.7
)
 

 

 

 
(464.4
)
 
(48.0
)
 
(20.3
)
Common stock dividend
(26.6
)
 

 

 

 
(26.6
)
 

 

Excess tax benefit from stock compensation
(0.6
)
 

 
(0.6
)
 

 

 

 

Purchase of non-controlling interest
(0.3
)
 

 
(1.5
)
 

 

 

 
1.2

Dividends paid to non-controlling interest
(5.2
)
 

 

 

 

 

 
(5.2
)
Repurchase of common shares
(30.7
)
 

 

 
(30.7
)
 

 

 

Other – issuance pursuant to restricted stock, stock options and other
10.6

 

 
10.0

 
0.6

 

 

 


Balance, September 26, 2014
$
794.3

 
$
0.6

 
$
707.5

 
$
(185.4
)
 
$
356.4

 
$
(160.1
)
 
$
75.3

 
 
 
General Cable Total Equity
 
 
 
Total Equity
 
Preferred
Stock
Amount
 
Common
Stock
Amount
 
Add’l
Paid in
Capital
 
Treasury
Stock
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income/(Loss)
 
Non-Controlling
Interest
Balance, December 31, 2012
$
1,448.2

 
$
3.8

 
$
0.6

 
$
676.7

 
$
(137.0
)
 
$
892.2

 
$
(104.6
)
 
$
116.5

Comprehensive income (loss)
(50.3
)
 
 
 
 
 
 
 
 
 
(31.6
)
 
(19.7
)
 
1.0

Common and preferred stock dividend
(18.1
)
 
 
 
 
 
 
 
 
 
(18.1
)
 
 
 
 
Excess tax benefit from stock based compensation
(1.0
)
 
 
 
 
 
(1.0
)
 
 
 
 
 
 
 
 
Purchase of non-controlling interest
(4.0
)
 
 
 
 
 
8.1

 
 
 
 
 
 
 
(12.1
)
Dividends paid to non-controlling interest
(3.2
)
 
 
 
 
 


 
 
 
 
 
 
 
(3.2
)
Repurchase of treasury shares
(19.5
)
 
 
 
 
 
 
 
(19.5
)
 
 
 
 
 
 
Other – issuance pursuant to restricted stock, stock options and other
9.7

 
 
 
 
 
8.9

 
0.8

 
 
 
 
 


Balance, September 27, 2013
$
1,361.8

 
$
3.8

 
$
0.6

 
$
692.7

 
$
(155.7
)
 
$
842.5

 
$
(124.3
)
 
$
102.2

The components of accumulated other comprehensive income (loss) as of September 26, 2014 and December 31, 2013, respectively, consisted of the following (in millions):
 
September 26, 2014
 
December 31, 2013
 
Company
Common
Shareholders
 
Non-Controlling
Interest
 
Company
Common
Shareholders
 
Non-Controlling
Interest
Foreign currency translation adjustment
$
(121.1
)
 
$
(28.4
)
 
$
(67.1
)
 
$
(24.5
)
Change in fair value of pension benefit obligation, net of tax
(46.6
)
 
(2.8
)
 
(52.6
)
 
(2.9
)
Company deferred stock held in rabbi trust, net of tax
7.3

 
—

 
7.3

 
—

Other
0.3

 
—

 
0.3

 
—

Accumulated other comprehensive income (loss)
$
(160.1
)
 
$
(31.2
)
 
$
(112.1
)
 
$
(27.4
)
The following is the detail of the change in the Company's accumulated other comprehensive income (loss) from December 31, 2013 to September 26, 2014 including the effect of significant reclassifications out of accumulated other comprehensive income (loss) (in millions, net of tax):

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Foreign currency translation
 
Change of fair value of pension benefit obligation
 
Deferred stock held in rabbi trust
 
Other
 
Total
Balance, December 31, 2013
$
(67.1
)
 
$
(52.6
)
 
$
7.3

 
$
0.3

 
$
(112.1
)
Other comprehensive income before reclassifications
(54.0
)
 
—

 
—

 
—

 
(54.0
)
Amounts reclassified from accumulated other comprehensive income
—

 
6.0

 
—

 
—

 
6.0

Net current - period other comprehensive income
(54.0
)
 
6.0

 
—

 
—

 
(48.0
)
Balance, September 26, 2014
$
(121.1
)
 
$
(46.6
)
 
$
7.3

 
$
0.3

 
$
(160.1
)
The following is the detail of the change in the Company's accumulated other comprehensive income (loss) from December 31, 2012 to September 27, 2013 including the effect of significant reclassifications out of accumulated other comprehensive income (loss) (in millions, net of tax):
 
Foreign currency translation
 
Change of fair value of pension benefit obligation
 
Change in fair value of derivatives
 
Deferred stock held in rabbi trust
 
Other
 
Total
Balance, December 31, 2012
$
(27.9
)
 
$
(84.4
)
 
$
0.1

 
$
7.3

 
$
0.3

 
$
(104.6
)
Other comprehensive income before reclassifications
(24.6
)
 
—

 
(0.8
)
 
—

 
—

 
(25.4
)
Amounts reclassified from accumulated other comprehensive income
—

 
5.0

 
0.7

 
—

 
—

 
5.7

Net current - period other comprehensive income
(24.6
)
 
5.0

 
(0.1
)
 
—

 
—

 
(19.7
)
Balance, September 27, 2013
$
(52.5
)
 
$
(79.4
)
 
$
—

 
$
7.3

 
$
0.3

 
$
(124.3
)
The following is the detail of the reclassifications out of accumulated other comprehensive income (loss) for the three and nine months ended September 26, 2014 (in millions, net of tax):
 
Three Fiscal Months Ended
Nine Fiscal Months Ended
 
 
September 26, 2014
September 26, 2014
 
 
Amount reclassified from accumulated other comprehensive income (loss)
Amount reclassified from accumulated other comprehensive income (loss)
Affected line item in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)
Amortization of defined pension items, net of tax:
 
 
 
  Prior service cost
0.2

0.6

SG&A
Net loss
0.8

2.2

SG&A
Settlement Loss
—

3.2

SG&A
Total
$
1.0

$
6.0

 

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Three Fiscal Months Ended
Nine Fiscal Months Ended
 
 
September 27, 2013
September 27, 2013
 
 
Amount reclassified from accumulated other comprehensive income (loss)
Amount reclassified from accumulated other comprehensive income (loss)
Affected line item in the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss)
Change in fair value of derivatives, net of tax:
 
 
 
Commodity contracts
$
(0.3
)
$
0.7

Cost of Sales
Total - Change in fair value of derivatives
(0.3
)
0.7

 
Amortization of defined pension items, net of tax:
 
 
 
  Prior service cost
0.3

0.8

SG&A
Net loss
1.4

4.2

SG&A
Total - Amortization of defined benefit pension items
1.7

5.0

 
Total
$
1.4

$
5.7

 
Stock Repurchase Programs
On December 10, 2013, the Company's Board of Directors authorized the extension of the Company’s existing $125 million share repurchase program through the end of 2014. Stock purchases under this program may be made through the open market and privately negotiated transactions at times and in such amounts as deemed appropriate by a special committee appointed by the Board. Under this stock repurchase program the Company purchased no common shares during the three months ended September 26, 2014. Under this stock repurchase program the Company purchased $30.7 million, or 1,000,000 common shares at an average price of $30.73 per share, during the nine months ended September 26, 2014. Under this stock repurchase program the Company purchased $0.5 million, or 18,493 common shares at an average price of $29.99 per share, during the three months ended September 27, 2013 and $19.5 million, or 597,531 common shares at an average price of $32.65 per share, during the nine months ended September 27, 2013. The Company's future repurchase of shares is subject to the terms of the Company's Revolving Credit Facility and the indentures governing the Subordinated Convertible Notes, Senior Floating Notes and 5.75% Senior Notes.
Dividends on Common Stock
On May 20, 2013, the Company's Board of Directors authorized the payment of a regular quarterly dividend. During the three and nine months ended September 26, 2014, the Company paid a quarterly cash dividend of $0.18 per share per quarter, or approximately $8.8 million and $26.6 million in total. During the three and nine months ended September 27, 2013, the Company declared and paid a quarterly cash dividend of $0.18 per share per quarter (starting in the second quarter of 2013), or approximately $8.9 million and $17.8 million in total. Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors. In determining dividends, the Board of Directors takes into consideration items such as general business conditions, financial performance, projected cash flows and anticipated financing needs. Future payments of dividends are also subject to the Company's Revolving Credit Facility, the indentures governing the Subordinated Convertible Notes, Senior Floating Rate Notes and 5.75% Senior Notes, and the requirements of Delaware General Corporation law.
Deferred Compensation Plan
The Company maintains a deferred compensation plan (“Deferred Compensation Plan”) under the terms and conditions disclosed in the Company’s 2013 Annual Report on Form 10-K. The Company accounts for the Deferred Compensation Plan in accordance with ASC 710 - Compensation–General as it relates to arrangements where amounts earned are held in a rabbi trust. The market value of mutual fund investments, nonvested and subsequently vested stock and restricted stock in the rabbi trust was $32.6 million and $42.0 million as of September 26, 2014 and December 31, 2013, respectively. The market value of the assets held by the rabbi trust, exclusive of the market value of the shares of the Company’s nonvested and subsequently vested restricted stock, restricted stock units held in the deferred compensation plan and Company stock investments by participants’ elections, at September 26, 2014 and December 31, 2013 was $21.7 million and $22.2 million, respectively, and is classified as “other non-current assets” in the Condensed Consolidated Balance Sheets. Amounts payable to the plan participants at September 26, 2014 and December 31, 2013, excluding the market value of the shares of the Company’s nonvested and subsequently vested restricted stock and restricted stock units held, were $23.3 million and $24.2 million, respectively, and are classified as “other liabilities” in the Condensed Consolidated Balance Sheets.

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14.     Share-Based Compensation
The Company has various plans that provide for granting restricted stock units, performance stock units, restricted stock and stock options to certain employees and independent directors of the Company and its subsidiaries. The Company recognizes compensation expense for share-based payments based on the fair value of the awards at the grant date. The Black-Scholes valuation model is used to determine the fair value of non-qualified stock options. The fair value of performance stock units is determined using a Monte Carlo simulation model. Restricted stock units and restricted stock awards fair value is based on the Company market stock price on the date of grant. The table below summarizes share-based compensation for the three and nine fiscal months ended September 26, 2014 and September 27, 2013 (in millions).
 
Three Fiscal Months Ended
 
September 26, 2014
 
September 27, 2013
Non-qualified stock option expense
$
0.5

 
$
1.5

Non-vested stock awards expense
2.8

 
2.2

Immediately vested stock awards expense
0.1

 
—

Total pre-tax share-based compensation expense
$
3.4

 
$
3.7

Excess tax benefit (deficiency) on share-based compensation (1)
$
(0.5
)
 
$
—

 
Nine Fiscal Months Ended
 
September 26, 2014
 
September 27, 2013
Non-qualified stock option expense
$
2.3

 
$
4.2

Non-vested stock awards expense
9.5

 
6.0

Immediately vested stock awards expense
0.8

 
—

Total pre-tax share-based compensation expense
$
12.6

 
$
10.2

Excess tax benefit (deficiency) on share-based compensation (1)
$
(0.6
)
 
$
0.1

(1)
Cash inflows (outflows) recognized as financing activities in the Condensed Consolidated Statements of Cash Flows.
The Company records share-based compensation expense as a component of Selling, general and administrative expenses.

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Table of Contents

15.     Redeemable Non-controlling Interest
On October 1, 2012, the Company participated in a share subscription for 60% of the outstanding and issued shares of Procables. The existing shareholders immediately prior to the subscription (the “Sellers” or “Minority Shareholders”) maintained control of the remaining 40% of the shares. The Company and the Minority Shareholders also agreed to certain put and call options with regard to the remaining 40% interest in Procables retained by the Minority Shareholders. For a 36-month period commencing on the fifth anniversary of the closing date, the Minority Shareholders may exercise a put option to sell their entire 40% interest in Procables to the Company. The Company shall be irrevocably obligated to purchase the shares (the "Put Option"). In addition, the Company has a call option (the "Call Option") to purchase the Minority Shareholders’ 40% interest in Procables, during the 36-month period commencing on the expiration of the Put Option period. The consideration to be exchanged, per share in the event of a Put Option or Call Option shall be the higher of the following (1) the final per share purchase price; or (2) a price per share based on the Company's enterprise value equal to seven times the average of its earnings before interest, taxes, depreciation and amortization (“EBITDA”) over the two most recently audited year-end financial statements immediately prior to the option being exercised, minus the 12-month average Net Indebtedness, as defined in the agreement, of the Company for the most recent audited fiscal year (“EBITDA average”). The Company determined that the Put Option is embedded within the noncontrolling interest shares that are subject to the Put Option. The redemption feature requires classification of the Minority Shareholder's interest in the Condensed Consolidated Balance Sheets outside of equity under the caption “Redeemable non-controlling interest.”

The redeemable non-controlling interest of Procables was recorded on the acquisition date based on the estimated fair value of the shares including the embedded Put Option. The fair value of the Put Option was estimated at the higher of the final per share purchase price or EBITDA average. At September 26, 2014, the final per share purchase price was greater than the EBITDA average; therefore, the redeemable non-controlling interest was valued at the same cost as the fair value determined at the opening balance sheet date subject to foreign currency translation. Subsequent adjustments to the value of the redeemable noncontrolling interest due to the redemption feature, if any, will be recognized as they occur and recorded within Net income (loss).

The following is a rollforward of the redeemable non-controlling interest (in millions):
Balance, December 31, 2013
$
17.0

Net income (loss)
—

Foreign currency translation
(0.7
)
Balance, September 26, 2014
$
16.3

16.     Shipping and Handling Costs
All shipping and handling amounts billed to a customer in a sales transaction are classified as revenue. Shipping and handling costs associated with storage and handling of finished goods and shipments to customers are included in cost of sales and totaled $37.9 million and $42.3 million, respectively, for the three fiscal months ended September 26, 2014 and September 27, 2013 and $119.6 million and $117.8 million, respectively, for the nine fiscal months ended September 26, 2014 and September 27, 2013.

24
Tables of Contents


17.
Earnings (Loss) Per Common Share
The Company applies the two-class method of computing basic and diluted earnings per share. Future declarations of dividends and the establishment of future record dates and payment dates are subject to the final determination of our Board of Directors.
A reconciliation of the numerator and denominator of earnings (loss) per common share-basic to earnings (loss) per common share-assuming dilution is as follows (in millions, except per share data):
 
Three Fiscal Months Ended
 
Nine Fiscal Months Ended
(in millions, except per share data)
September 26, 2014
 
September 27, 2013
 
September 26, 2014
 
September 27, 2013
Earnings (loss) per common share – basic:
 
 
 
 
 
 
 
Net income (loss) attributable to Company common shareholders
$
(124.2
)
 
$
5.7

 
$
(464.4
)
 
$
(31.9
)
Less: Net income allocated to participating securities (4)
—

 
0.1

 
—

 
0.1

Net income (loss) for basic EPS computations (1)
(124.2
)
 
5.6

 
(464.4
)
 
(32.0
)
Weighted average shares outstanding for basic EPS computation (2)
48.7

 
49.2

 
48.8

 
49.5

Earnings (loss) per common share – basic (3)
$
(2.55
)
 
$
0.11

 
$
(9.52
)
 
$
(0.64
)
Earnings (loss) per common share – assuming dilution:
 
 
 
 
 
 
 
Net income (loss) attributable to Company common shareholders
$
(124.2
)
 
$
5.7

 
$
(464.4
)
 
$
(31.9
)
Add: preferred stock dividends, if applicable
—

 
0.1

 
—

 
—

Net income (loss) for diluted EPS computation (1)
$
(124.2
)
 
$
5.8

 
$
(464.4
)
 
$
(31.9
)
Weighted average shares outstanding including nonvested shares
48.7

 
49.2

 
48.8

 
49.5

Dilutive effect of convertible notes
—

 
1.1

 
—

 
—

Dilutive effect of stock options and restricted stock units
—

 
0.4

 
—

 
—

Weighted average shares outstanding for diluted EPS computation (2)
48.7

 
50.7

 
48.8

 
49.5

Earnings (loss) per common share – assuming dilution
$
(2.55
)
 
$
0.11

 
$
(9.52
)
 
$
(0.64
)
(1)
Numerator
(2)
Denominator
(3)
Under the two-class method, earnings (loss) per share – basic reflects undistributed earnings per share for both common stock and unvested share-based payment awards (restricted stock).
(4)
Outstanding unvested share-based payment awards that contain rights to non-forfeitable dividends are considered participating securities in undistributed earnings in the calculation above.
Under ASC 260 - Earnings per Share and ASC 470 - Debt and because of the Company’s obligation to settle the par value of the Subordinated Convertible Notes in cash, the Company is not required to include any shares underlying the Subordinated Convertible Notes in its weighted average shares outstanding – assuming dilution until the average stock price per share for the quarter exceeds the $36.75 conversion price of the Subordinated Convertible Notes and only to the extent of the additional shares that the Company may be required to issue in the event that the Company’s conversion obligation exceeds the principal amount of the Subordinated Convertible Notes.
Regarding the Subordinated Convertible Notes, the average stock price threshold conditions had not been met as of September 26, 2014. At any such time in the future that threshold conditions are met, only the number of shares issuable under the “treasury” method of accounting for the share dilution would be included in the Company’s earnings per share – assuming dilution calculation, which is based upon the amount by which the average stock price exceeds the conversion price.


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The following table provides examples of how changes in the Company’s stock price would require the inclusion of additional shares in the denominator of the weighted average shares outstanding – assuming dilution calculation for the Subordinated Convertible Notes.
Share Price
Shares Underlying Subordinated Convertible Notes
 
Total Treasury Method Incremental Shares (1)
$36.75
—

 
—

$38.75
603,152

 
603,152

$40.75
1,147,099

 
1,147,099

$42.75
1,640,151

 
1,640,151

$44.75
2,089,131

 
2,089,131

 
(1)
Represents the number of incremental shares that must be included in the calculation of fully diluted shares under GAAP.
18.
Segment Information
The Company conducts its operations through three geographic operating and reportable segments – North America, Europe and Mediterranean, and ROW, which consists of operations in Latin America, Sub-Saharan Africa, the Middle East and Asia Pacific. The Company’s operating segments align with the structure of the Company’s internal management organization. All three segments engage in the development, design, manufacturing, marketing and distribution of copper, aluminum and fiber optic communication, construction, electric utility and electrical infrastructure wire and cable products as well as the North America and ROW segments manufacture and distribute rod mill wire products.

Net revenues as shown below represent sales to external customers for each segment. Intersegment sales have been eliminated. In North America intersegment sales were $7.2 million and $25.0 million, in Europe and Mediterranean, intersegment sales were $9.1 million and $35.9 million and in ROW, intersegment sales were $4.4 million and $20.9 million for the three and nine months ended September 26, 2014, respectively. In North America, intersegment sales were $4.5 million and $13.9 million, in Europe and Mediterranean, intersegment sales were $7.0 million and $21.9 million and in ROW, intersegment sales were $20.6 million and $58.3 million for the three and nine months ended September 27, 2013, respectively.

The chief operating decision maker evaluates segment performance and allocates resources based on segment operating income. Segment operating income represents income from continuing operations before interest income, interest expense, other income (expense), other financial costs and income tax. Summarized financial information for the Company’s reportable segments for the three and nine fiscal months ended September 26, 2014 and September 27, 2013 is as follows:
 
Three Fiscal Months Ended
 
Nine Fiscal Months Ended
(in millions)
September 26, 2014
 
September 27, 2013
 
September 26, 2014
 
September 27, 2013
Net Sales:
 
 
 
 
 
 
 
North America
$
644.1

 
$
663.2

 
$
1,884.1

 
$
2,074.7

Europe and Mediterranean
351.9

 
383.4

 
1,114.5

 
1,180.4

ROW
475.7

 
510.5

 
1,434.5

 
1,504.8

Total
$
1,471.7

 
$
1,557.1

 
$
4,433.1

 
$
4,759.9

 Segment Operating Income (Loss):
 
 
 
 
 
 
 
North America
$
48.0

 
$
25.2

 
$
97.9

 
$
106.6

Europe and Mediterranean
(107.3
)
 
7.6

 
(97.1
)
 
(7.8
)
ROW
(19.3
)
 
10.1

 
(302.4
)
 
47.7

Total
$
(78.6
)
 
$
42.9

 
$
(301.6
)
 
$
146.5

(in millions)
September 26, 2014
 
December 31, 2013
Total Assets:
 
 
 
North America
$
1,373.1

 
$
1,342.0

Europe and Mediterranean
1,061.9

 
1,232.8

ROW
1,587.3

 
2,004.1

Total
$
4,022.3

 
$
4,578.9


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19.
Commitments and Contingencies
Environmental matters
We are subject to a variety of federal, state, local and foreign laws and regulations covering the storage, handling, emission and discharge of materials into the environment, including CERCLA, the Clean Water Act, the Clean Air Act (including the 1990 amendments) and the Resource Conservation and Recovery Act.
Our subsidiaries in the United States have been identified as potentially responsible parties with respect to several sites designated for cleanup under CERCLA or similar state laws, which impose liability for cleanup of certain waste sites and for related natural resource damages without regard to fault or the legality of waste generation or disposal. Persons liable for such costs and damages generally include the site owner or operator and persons that disposed or arranged for the disposal of hazardous substances found at those sites. Although CERCLA imposes joint and several liability on all potentially responsible parties, in application, the potentially responsible parties typically allocate the investigation and cleanup costs based upon, among other things, the volume of waste contributed by each potentially responsible party.
Settlements can often be achieved through negotiations with the appropriate environmental agency or the other potentially responsible parties. Potentially responsible parties that contributed small amounts of waste (typically less than 1% of the waste) are often given the opportunity to settle as “de minimus” parties, resolving their liability for a particular site. We do not own or operate any of the waste sites with respect to which we have been named as a potentially responsible party by the government. Based on our review and other factors, we believe that costs relating to environmental clean-up at these sites will not have a material adverse effect on our results of operations, cash flows or financial position.
At September 26, 2014 and December 31, 2013, we had an accrued liability of approximately $3.7 million and $3.1 million, respectively, for various environmental-related liabilities to the extent costs are known or can be reasonably estimated as a liability. While it is difficult to estimate future environmental-related liabilities accurately, we do not currently anticipate any material adverse effect on our results of operations, financial position or cash flows as a result of compliance with federal, state, local or foreign environmental laws or regulations or cleanup costs of the sites discussed above.
Asbestos litigation
We have been a defendant in asbestos litigation for over 20 years. Our subsidiaries have been named as defendants in lawsuits alleging exposure to asbestos in products manufactured by us. As of September 26, 2014, we were a defendant in approximately 3,275 cases brought in Federal District Courts throughout the United States. In the nine months ended September 26, 2014, 81 asbestos cases were brought against us. In the calendar year 2013, 133 asbestos cases were brought against us. In the last 20 years, we have had no cases proceed to verdict. In many of the cases, we were dismissed as a defendant before trial for lack of product identification. As of September 26, 2014, 47,846 asbestos cases have been dismissed. In the nine months ended September 26, 2014, 25,913 asbestos cases were dismissed. In September 2014, upon receipt from the MDL Court of a current statistical report listing numbers of outstanding cases as well as a list identifying outstanding Maritime/MARDOC cases by plaintiff name, General Cable recorded a dismissal of 25,759 cases reducing its number of pending Maritime/MARDOC cases to 2,679. As of December 31, 2013, 21,933 cases were dismissed. With regards to the approximately 3,275 remaining pending cases, we are aggressively defending these cases based upon either lack of product identification as to whether we manufactured asbestos-containing product and/or lack of exposure to asbestos dust from the use of our product.
As of September 26, 2014, 2,679 pending lawsuits were brought on behalf of plaintiffs by a single admiralty law firm (“MARDOC”) and seek unspecified damages. Plaintiffs in the MARDOC cases generally allege that they formerly worked in the maritime industry and sustained asbestos-related injuries from products that General Cable ceased manufacturing in the mid-1970s. The MARDOC cases are managed and supervised by a federal judge in the United States District Court for the Eastern District of Pennsylvania (“District Court”) by reason of a transfer by the judicial panel on Multidistrict Litigation (“MDL”).
In the MARDOC cases in the MDL, the District Court in May 1996 dismissed all pending cases filed without prejudice and placed them on an inactive administrative docket. To reinstate a MARDOC case from the inactive docket, plaintiffs’ counsel must show that the plaintiff not only suffered from a recognized asbestos related injury, but also must produce specific product identification evidence to proceed against an individual defendant. During 2010, the MDL Court ordered Plaintiffs to identify the defendants against whom they intended to proceed in the Maritime cases. General Cable was not named as a defendant against whom the plaintiffs intended to proceed. As such it is now anticipated that General Cable will be dismissed from all Maritime related lawsuits.
For cases outside the MDL as of September 26, 2014, plaintiffs have asserted monetary damages in 289 cases. In 155 of these cases, plaintiffs allege only damages in excess of some dollar amount (about $381 thousand per plaintiff); in these cases there are no claims for specific dollar amounts requested as to any defendant. In the 134 other cases pending in state and federal district courts (outside the MDL), plaintiffs seek approximately $446 million in damages from as many as 50 defendants. In one case, plaintiffs have asserted damages related to General Cable in the amount of $10 million. In addition, in relation to these 289 cases, there are claims of $313 million in punitive damages from all of the defendants. However, many of the plaintiffs in these cases allege non-malignant injuries. As of September 26, 2014 and December 31, 2013, we had accrued, on a gross basis, approximately

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$4.8 million and $5.2 million, respectively, and as of September 26, 2014 and December 31, 2013, had recovered approximately $0.5 million of insurance recoveries for these lawsuits. The net amount of $4.3 million and $4.7 million, as of September 26, 2014 and December 31, 2013, respectively, represents our best estimate in order to cover resolution of current and future asbestos-related claims.
The components of the asbestos litigation reserve are current and future asbestos-related claims. The significant assumptions are: (1) the number of cases per state, (2) an estimate of the judgment per case per state, (3) an estimate of the percentage of cases per state that would make it to trial and (4) the estimated total liability percentage, excluding insurance recoveries, per case judgment. Management's estimates are based on the Company's historical experience with asbestos related claims. The Company's current history of asbestos claims does not provide sufficient and reasonable information to estimate a range of loss for potential future, unasserted asbestos claims because the number and the value of the alleged damages of such claims have not been consistent. As such, the Company does not believe a reasonably possible range can be estimated with respect to asbestos claims that may be filed in the future.
Settlement payments are made, and the asbestos accrual is relieved, when we receive a fully executed settlement release from the Plaintiff's counsel. As of September 26, 2014 and September 27, 2013, aggregate settlement costs were $9.4 million and $8.7 million, respectively. For the three months ended September 26, 2014 and September 27, 2013, settlement costs totaled $0.2 million and $0.0 million, respectively. For the nine months ended September 26, 2014 and September 27, 2013, settlement costs totaled $0.6 million and $0.2 million, respectively. As of September 26, 2014 and September 27, 2013, aggregate litigation costs were $24.3 million and $22.4 million, respectively. For the three months ended September 26, 2014 and September 27, 2013, litigation costs were $0.3 million and $0.4 million, respectively. For the nine months ended September 26, 2014 and September 27, 2013, litigation costs were $1.2 million and $1.0 million, respectively.
In January 1994, we entered into a settlement agreement with certain principal primary insurers concerning liability for the costs of defense, judgments and settlements, if any, in all of the asbestos litigation described above. Subject to the terms and conditions of the settlement agreement, the insurers are responsible for a substantial portion of the costs and expenses incurred in the defense or resolution of this litigation. In recent years one of the insurers participating in the settlement that was responsible for a significant portion of the contribution under the settlement agreement entered into insurance liquidation proceedings. As a result, the contribution of the insurers has been reduced and we have had to bear a larger portion of the costs relating to these lawsuits. Moreover, certain of the other insurers may be financially unstable, and if one or more of these insurers enter into insurance liquidation proceedings, we will be required to pay a larger portion of the costs incurred in connection with these cases.
European Commission competition matter
As part of the Company’s acquisition of Silec Cable, S.A.S (“Silec”) in December 2005, SAFRAN SA (“SAFRAN”), agreed to indemnify the Company for the full amount of losses arising from, related to or attributable to practices, if any, that are similar to previous practices investigated by the French competition authority for alleged competition law violations related to medium-and high voltage cable markets. The Company has asserted a claim under this indemnity against SAFRAN related to the European Commission’s Statement of Objections, discussed below, to preserve the Company’s rights in case of an adverse European Commission decision.

On July 5, 2011, the European Commission issued a Statement of Objections in relation to its ongoing competition investigation to a number of wire and cable manufacturers in the submarine and underground power cables business, including our Spanish affiliate, Grupo General Cable Sistemas, and its French subsidiary, Silec. The Statement of Objections alleged that the two affiliates engaged in violations of competition law in the underground power cables businesses for limited periods of time. The allegations related to Grupo General Cable Sistemas claimed that it had participated in a cartel from January 2003 to May 2007, while the allegations related to Silec were for the ten month period following its December 22, 2005 acquisition from SAFRAN by Grupo General Cable Sistemas.

Following our formal responses to the Statement of Objections in October 2011 and a hearing in 2012, the European Commission issued a final decision on April 2, 2014. In the decision, the claims of infringement against Grupo General Cable Sistemas were dismissed for lack of evidence of alleged cartel activity. With regard to Silec, the European Commission’s decision imposed a fine of 1.9 million Euros related to the period Silec has been owned by us. This fine was based on participation that allegedly commenced well before Silec was acquired by us. On June 13, 2014, we filed an appeal with the General Court of the European Union challenging the European Commission’s decision as to Silec in Europe based on established precedent. We also continue to pursue our claim for full indemnification for the Silec fine under the terms of the acquisition agreement with SAFRAN SA executed in 2005.


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Transformer damage claims

In March 2012, we received formal notice of a claim for damages arising from a transformer fire that occurred in December 2010 allegedly resulting in loss of equipment and some consequential damages at a metal processing facility in Iceland. We supplied and installed cables and terminations to the transformer, which was manufactured and installed by an independent third party, during 2006 and the first quarter of 2007. Our work was inspected and accepted by the customer in March 2007. In August 2012, the customer initiated arbitration proceedings before the ICC Tribunal with a request to arbitrate in Pennsylvania. In September 2012, we initiated litigation in Pennsylvania state court seeking a declaration that we are not liable for any damages associated with the alleged loss resulting from the transformer fire and seeking to enjoin the ICC arbitration proceedings. The customer then moved the case from state to federal district court in the Western District of Pennsylvania which determined on motion that the ICC Tribunal not the court should decide whether the claims were arbitrable in the first instance. A decision on arbitrability is pending before the ICC Tribunal. We believe we have substantial defenses to potential liability in regard to the transformer fire and claimed loss. At this time, we are unable to predict an estimated range of damages or whether we will have any liability, if any, attributable to the transformer fire.
Brazil administrative proceedings
One of our Brazilian subsidiaries is involved in an administrative proceeding with a state treasury office regarding whether tax incentives granted to us by one Brazilian state are applicable to goods sold in another Brazilian state from September 2008 to December 31, 2009. We believe we correctly relied on the tax incentives granted and that we have substantial defenses to their disallowance by the Brazilian state claimant. The principal amount claimed to be due during the contested period is approximately $8 million which does not include penalties and interest which could be substantial. In September 2012, the 1st Chamber of the Administrative Court found that we were not liable for any incentive tax payments claimed by the state treasury office. This decision was appealed by the Brazilian state and the Administrative Court determined in April 2013 that the subsidiary is liable for a part of the contested amount. Our subsidiary is seeking formal judicial review of this latest decision on the merits in the Civil Court and obtained an injunction in April 2013 restraining collection of the tax pending the review process in the Civil Court in further proceedings. The Brazilian state subsequently sought to overturn this injunction and the State Court rejected the application in May 2013. Thereafter, in October 2013, a judge in the State Court set aside the injunction and our subsidiary also took an appeal to the State Court of Appeal, which is awaiting a decision.  The decision setting aside the injunction and the Brazilian state's ability to enforce its purported tax claims were stayed pending the appeal process. In September 2014, the Court reversed the stay at the request of the Brazilian state, and permitted the state to continue with the proceedings to recover the approximately $8 million of contested incentives described above. We promptly filed a motion with the Court to reinstate the stay pending the outcome of the appeal, and we expect the Court to rule on this motion during November 2014. Nonetheless, on October 20, 2014, the Brazilian state issued a summons to collect the approximately $8 million of contested incentives, and we are complying with the terms of the state’s summons.
Brazil tax matters
Our Brazilian subsidiaries have received formal notices of infractions from the Brazilian state authorities related to alleged failures of tax matters associated with the distribution of goods and services from one state to another and alleged failure to file electronic records with the state authorities in regard to inventories, good receipts, and invoices from acquisitions.  The total amount of taxes allegedly due for the infractions including potential interest and penalties is up to $30 million.  At this time, we believe we have defenses to all remaining claims or are unable to predict an estimated range of damages and whether or not a liability will exist for these remaining claims.
Brazil theft claim
As previously reported, on October 29, 2012, the Company announced that it had identified historical accounting errors relating to inventory. We believe that the Brazil inventory accounting issues are, to a significant extent, attributable to a complex theft scheme affecting work in process and finished goods inventory. On July 11, 2014, we received notice of an insurance settlement and receipt of payment on the above theft in the amount of $5 million. 
Government and internal investigations
We have been reviewing, with the assistance of external counsel, certain commission payments involving sales to customers of our subsidiary in Angola. The review has focused upon payment practices with respect to employees of public utility companies, use of agents in connection with such payment practices, and the manner in which the payments were reflected on our books and records. We have determined at this time that certain employees in our Portugal and Angola subsidiaries directly and indirectly made payments at various times from 2002 through 2013 to officials of Angola government-owned public utilities that raise concerns under the FCPA and possibly under the laws of other jurisdictions. We also have been reviewing, with the assistance of external counsel, our use and payment of agents in connection with our Thailand and India operations, which may have implications

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under the FCPA. We have voluntarily disclosed these matters to the SEC and the DOJ and have provided them with additional information at their request. The SEC and DOJ inquiries into these matters are ongoing. We continue to cooperate with the DOJ and the SEC with respect to these matters. At this time, we are unable to predict the nature of any action that may be taken by the DOJ or SEC or any remedies these agencies may pursue as a result of such actions. We are implementing a screening process relating to sales agents that we use outside of the United States, including, among other things, a review of the agreements under which they were retained and a risk-based assessment of such agents to determine the scope of due diligence measures to be performed by a third-party investigative firm. We also have provided anti-corruption training to our global sales force, and ultimately will provide such training to all salaried employees. In addition, we are conducting a search for a Chief Compliance Officer, who will be responsible for the day-to-day management of our compliance function. The Chief Compliance Officer will report to our Chief Executive Officer, and also will have a reporting relationship with the Audit Committee.
As previously disclosed, we conducted internal investigations, subject to the oversight of the Audit Committee of our Board of Directors and with the assistance of external counsel, principally relating to matters resulting in restatements of a number of our previously issued financial statements. The matters addressed in the investigations included (i) inventory accounting errors addressed in the restatements, including those resulting from inventory theft in Brazil, as well as the timing of internal reporting of the inventory accounting issues to senior corporate management at our headquarters in Highland Heights, Kentucky and (ii) historical revenue recognition accounting practices with regard to “bill and hold” sales in Brazil related to aerial transmission projects, including instances where we have determined that the requirements for revenue recognition under GAAP with respect to the bill and hold sales were not met. (“Bill and hold” sales generally are sales meeting specified criteria under GAAP that enable the seller to recognize revenue at the time title to goods and ownership risk is transferred to the customer, even though the seller does not ship the goods until a later time. In typical sales transactions other than those accounted for as bill and hold, title to goods and ownership risk is transferred to the customer at the time of shipment or delivery.) In connection with these matters, among others, our management identified control deficiencies that constituted material weaknesses in our internal control over financial reporting. These material weaknesses resulted in accounting errors that caused us to issue two sets of restated financial statements. In March 2013, principally to correct the inventory accounting errors, we issued restated consolidated financial statements as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009, and unaudited restated financial statements for interim periods in 2011 and interim periods ended on March 30, 2012 and June 29, 2012. In January 2014, principally to correct errors relating to revenue recognition with respect to the bill and hold sales, we issued restated consolidated financial statements (which also encompassed matters addressed in the earlier restatement) as of December 31, 2012, 2011 and 2010 and for the years ended December 31, 2012, 2011, 2010 and 2009, and unaudited restated financial statements for interim periods in 2011 and 2012 and the interim period ended on March 29, 2013. For more information regarding these material weaknesses and the steps we have taken to remediate them, see “Item 9A. Controls and Procedures” in our annual report on Form 10-K for the year ended December 31, 2013.
We voluntarily contacted the SEC to advise it of our initial internal investigation, and we have continued to provide information to the SEC on an ongoing basis, including, among other things, information regarding the matters described above and certain earnings management activities by employees in our ROW segment prior to the end of 2012. As we previously disclosed, these earnings management activities (none of which identified to date had a material effect on our consolidated financial statements) were designed to delay the reporting of expenses or other charges, including improper capitalization of costs, misuse of accruals and failure to timely report inventory shortfalls identified through physical inventory counts. The SEC has issued a formal order of investigation. Pursuant to the formal order, the SEC issued subpoenas to us seeking relevant documents and to certain of our current and former employees seeking their testimony. The SEC has requested information regarding, among other things, the above-described Angola matter, matters that were subject to our internal investigations and earnings management activities by ROW employees. We continue to cooperate with the SEC in connection with its investigation.
Any determination that our operations or activities are not in compliance with existing laws or regulations could result in the imposition of substantial fines, civil and criminal penalties, and equitable remedies, including disgorgement and injunctive relief. Because the government investigations and our review regarding commission payment practices and our use and payment of agents described above are ongoing, we are unable to predict their duration, scope, results, or consequences. Dispositions of these types of matters can result in modifications to business practices and compliance programs, and in some cases the appointment of a monitor to review future business and practices with the objective of effecting compliance with the FCPA and other applicable laws. At this time, the Company is unable to make an estimate of the amount of loss, if any, or range of possible loss that the Company could incur as a result of the foregoing matters.
Purported class action and derivative litigation