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Wesco International Annual Report, Year Ended Dec 31, 2005

Filing Date
Filed March 15, 2006
Period End
December 31, 2005
Security
WCC
In the record · 2016–202610-K1210-Q338-K143

WCC filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 143 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Mar ’18Mar ’18
  2. Deal closed8-K · Jun ’20Jun ’20
  3. Material agreement8-K · Mar ’22Mar ’22
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 15, 2006. Cited figures are marked; the original filing is the authoritative source.

WESCO International, Inc. reported net sales of $4,421.1 milliona for fiscal 2005, up from $3,741.3 million in 2004, with net income of $103.5 million, or $2.10 per diluted share, compared with $64.9 million, or $1.47 per diluted share, in 2004.

The filing attributes the sales increase primarily to strong growth in markets served, acquisitions and market share gains, and states that sales volume contributed the largest share of growth, with price increases of approximately 4.0% and acquisitions contributing about 2.8%. Income from operations rose to $209.3 millionb, or 4.7% of net sales, and the company credits sales growth, acquisitions and cost containment. Selling, general and administrative expenses fell to 13.9% of sales from 14.6% in 2004, and interest expense declined to $30.2 million from $40.8 million as the company refinanced its 9.125% Senior Subordinated Notes due 2008 with lower-cost debt.

The balance sheet strengthened with stockholders' equity rising to $491.5 millionc from $353.6 million, but total long-term debt, including current portion, was $403.6 million at year-end. In 2005 the company completed the acquisitions of Carlton-Bates Company for approximately $248.5 million net of cash acquired and Fastec Industrial Corp. for $28.7 million net of cash acquired, financed partly through a receivables facility and the issuance of $150 million of 7.50% Senior Subordinated Notes due 2017 and $150 million of 2.625% Convertible Senior Debentures due 2025. Operating cash flow was $295.1 million, including $189.0 million drawn under the Receivables Facility.

The company's management expects overall economic growth to continue through 2006, with improved margin and productivity expected to produce enhanced financial performance. The filing also discloses a pending lawsuit from a former supplier seeking damages in excess of $17 milliond, with a trial scheduled for October 2006, and a subsequent event in which Dana Corporation's U.S. domestic entities filed for Chapter 11 protection, with $9.7 million of receivables due from them as of March 3, 2006.

02—Key points

Key Highlights

  1. Net sales rose 18.2% to $4,421.1 million in 2005, driven by volume growth, price increases and acquisitions.
  2. Net income increased to $103.5 million, or $2.10 per diluted share, versus $64.9 million, or $1.47 per diluted share, in 2004.
  3. Income from operations grew to $209.3 million, or 4.7% of net sales, up from 4.0% in 2004.
  4. Interest expense fell to $30.2 million from $40.8 million after refinancing the 9.125% Senior Subordinated Notes due 2008 with lower-cost 2017 Notes and Debentures.
  5. Stockholders' equity increased to $491.5 million, while total long-term debt including current portion was $403.6 million.
  6. Acquisitions of Carlton-Bates Company (approximately $248.5 million net of cash acquired) and Fastec Industrial Corp. were completed in 2005.
  7. Operating cash flow was $295.1 million, including $189.0 million from the Receivables Facility; a pending supplier lawsuit seeks more than $17 million in damages.

03—Questions

Frequently Asked Questions

  1. What drove WESCO's sales growth in 2005?

    The filing states that sales increased 18.2% to $4,421 million, primarily from strong growth in markets served, acquisitions and market share gains. Price increases contributed approximately 4.0% and acquisitions contributed $104.4 million, or approximately 2.8%, over 2004 sales, while higher sales volume accounted for the remaining 10.5%.

  2. How did the company's debt position change in 2005?

    The company redeemed all of its 9.125% Senior Subordinated Notes due 2008 and replaced them with $150 million of 7.50% Senior Subordinated Notes due 2017 and $150 million of 2.625% Convertible Senior Debentures due 2025. Total indebtedness was $403.6 million at December 31, 2005, and the company reported a $14.9 million loss on debt extinguishment.

  3. What acquisitions did WESCO complete in 2005?

    WESCO acquired Carlton-Bates Company on September 29, 2005 for $248.5 million net of cash acquired, and Fastec Industrial Corp. on July 29, 2005 for $28.7 million net of cash acquired plus a $3.0 million promissory note. The filing states that the Carlton-Bates operating results contributed $76.8 million of revenue in the fourth quarter of 2005.

  4. What are the main legal and customer risks disclosed?

    A former supplier has sued WESCO in a Florida state court seeking damages in excess of $17 million for alleged failure to purchase product, with a trial scheduled for October 2006. Separately, Dana Corporation's U.S. domestic entities filed Chapter 11 petitions on March 3, 2006; Dana represented $48.5 million of WESCO's 2005 sales, and WESCO had $9.7 million of receivables due from those entities as of March 3, 2006.

  5. What is management's outlook for 2006?

    Management anticipates that overall economic growth will continue through 2006, which is expected to lead to increased product demand and sales growth. It expects its continued focus on margin and operating productivity improvement to produce enhanced financial performance in 2006, and plans to use cash flow and credit facilities to fund working capital, capital expenditures and debt repayment.

04—Continue

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