ALPINE GROUP INC /DE/ - 10-K Annual Report

Back to GetFilings.com

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED APRIL 30, 1996

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 1-9078
------------------------

THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 22-1620387
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1790 BROADWAY
NEW YORK, NEW YORK 10019-1412
(Address of principal (Zip code)
executive offices)

Registrant's telephone number, including area code 212-757-3333
------------------------

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- ------------------------------------------------------------------- -------------------------------

Common Stock, par value $.10 per share............................. American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
------------------------

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 if disclosure of delinquent filers pursuant to Item
S-K is not contained herein, and will not be contained, to the best of the
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /

At July 23, 1996, the registrant had 18,281,516 shares of common stock, par
value $.10 per share, outstanding, and the aggregate market value of the
outstanding shares of voting stock held by non-affiliates of the registrant on
such date was $69,047,777.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART I

ITEM 1. BUSINESS
GENERAL

The Alpine Group, Inc. (together with its subsidiaries, unless the context
otherwise requires, "Alpine" or the "Company") is a diversified industrial
company principally engaged in the manufacture and sale of copper wire and cable
for the telecommunications industry, specialty refractory products for the iron
and steel, aluminum and glass industries, and data communications and other
electronic products for military and commercial applications. Alpine has
positioned itself as a major participant in these industries through a series of
strategic acquisitions. Alpine entered the copper telecommunications wire and
cable industry with the acquisition (the "Superior Acquisition") in 1993 of
Superior Telecommunications Inc. ("Superior"), formerly Superior TeleTec Inc. On
May 11, 1995, Alpine became one of the two largest North American manufacturers
of copper telecommunications wire and cable products with the acquisition (the
"Alcatel Acquisition") of the U.S. and Canadian copper telecommunications wire
and cable business (the "Alcatel Business") of Alcatel NA Cable Systems, Inc.
and Alcatel Canada Wire, Inc. (collectively, "Alcatel NA"). In November 1995,
Alpine acquired (the "BICC Asset Acquisition") the assets of BICC Philips,
Inc.'s Canadian copper telecommunications wire and cable business (the "BICC
Assets"). In December 1994, Alpine acquired (the "Adience Acquisition") Adience,
Inc. ("Adience"), one of the largest domestic manufacturers and installers of
specialty refractory products. Alpine entered the data communications and
electronics industry with its acquisition of DNE Technologies, Inc. ("DNE") in
February 1992. See Note 6 to Alpine's consolidated financial statements.

TELECOMMUNICATIONS WIRE AND CABLE. Superior is a leading manufacturer of
copper telecommunications wire and cable products for the local loop segment of
the telecommunications network. The local loop is the segment of the
telecommunications network that connects the customer's premises to the nearest
telephone company switch or central office. Copper telecommunications wire and
cable is the most widely used medium for transmission in the local loop, which
comprises approximately 160 million residential and business access lines in the
United States.

Superior manufactures a wide variety of copper telecommunications wire and
cable products, ranging in size from a single twisted pair wire to a 4,200 pair
cable, including hybrid cable products such as coaxial/copper wire and optical
fiber/copper wire combinations. These products are variously configured for
aerial and underground use in the local loop. Superior has also developed high
speed data communication copper wire products, including unshielded twisted pair
("UTP") wire for on-premise applications, such as in computer networks.
Superior's products are sold primarily to the regional Bell operating companies
("RBOCs") and the three major independent telephone companies under multi-year
supply arrangements.

Superior has led a recent consolidation in the copper telecommunications
wire and cable industry by acquiring the Alcatel Business and the BICC Assets.
Through these acquisitions, Superior increased its annual production capacity
from 28 billion conductor feet ("bcf") in one plant to an aggregate of 92 bcf in
four geographically disbursed plants. Due to further industry-wide
consolidation, total industry capacity has been reduced, the number of
manufacturers has declined and the size of the remaining manufacturers has
increased. As a result of this and other factors, Superior has become a key
supplier to certain of the RBOCs and believes that it will continue to be able
to compete effectively as the RBOCs consolidate their vendor base and seek to
stabilize their sources of supply. In addition, the consolidation and increased
demand have led to a recent improvement in the pricing environment for
Superior's products.

REFRACTORIES. Adience is one of the largest U.S. manufacturers and
installers of specialty refractory products, which are used primarily by the
iron and steel industry. Specialty refractory products are consumable materials
used as insulation on surfaces exposed to high temperatures such as those
generated by molten metals. Over the past year, Adience has provided refractory
products and services

1

to every integrated steel producer in the United States and Canada, and Adience
believes that it is the only major U.S. manufacturer that provides a full range
of refractory products and installation services to the iron and steel industry.
Adience also manufactures specialty refractory products for use in the
production of aluminum and glass and is one of the few rebuilders of coke ovens
in the United States.

DATA COMMUNICATIONS AND ELECTRONICS. DNE designs and fabricates data
communications equipment, integrated access devices and other electronic
products. DNE is a supplier to the U.S. defense industry of data and voice
multiplexers used in tactical secure military applications. Multiplexers are
integrated access devices that combine several information carrying channels
into one line, thereby permitting simultaneous multiple voice and data
communications over a single line. DNE also produces military avionic products,
including switches, dimmers, relays and other electrical controllers, various
sensors and refueling amplifiers. DNE has reduced its dependence on the defense
market in recent years, primarily through the development of contract subsystem
manufacturing services for commercial and (non-defense) governmental customers.

Although the copper telecommunications wire and cable and refractory
products industries are mature, Alpine believes that ongoing alignment of
productive capacity with market demand, technological developments that have
enhanced the bandwidth capacity of the existing copper wire and cable
telecommunications infrastructure, industry consolidation and Alpine's emphasis
on new, higher margin products will strengthen Alpine's profitability, cash flow
and competitive position. Alpine's strategy in the telecommunications products
business is to: (1) respond to the current and changing needs of its customers'
communications networks and continue to expand its business in the local loop by
continuing to develop, manufacture and sell a full line of copper wire and cable
products; (2) expand its product lines to include transmission media such as
data cable, including UTP products, and hybrid coaxial/copper wire and
fiber/copper products; (3) take advantage of strategic acquisition opportunities
in data cable, the local loop and its other markets; and (4) expand its
international business through increased export sales and the establishment of
joint ventures or similar arrangements and otherwise increase its presence in
international markets. Alpine's strategy in the data communications and
electronics business is to expand its data communications products business by
developing commercial versions of its integrated access devices, which could
potentially require a significant investment of capital, and marketing such
products to the telecommunications industry, including Alpine's
telecommunications wire and cable customers. Alpine's strategy in the
refractories business is to expand the types of products and services that it
supplies to its existing customers; and expand its marketing efforts in order to
sell its products to new domestic and foreign customers.

Alpine was incorporated in New Jersey on May 7, 1957 and reincorporated in
Delaware on February 3, 1987. Its principal executive offices are located at
1790 Broadway, New York, New York 10019-1417 and its telephone number is (212)
757-3333.

TELECOMMUNICATIONS WIRE AND CABLE BUSINESS

COPPER TELECOMMUNICATIONS WIRE AND CABLE INDUSTRY

The telephone network in the United States is comprised of three major
components: the distribution or local loop portion, the trunking portion and the
long distance portion. The local loop portion of the telephone network is
comprised of (i) the connection between a home or business and the nearest
telephone pole or other outside location and (ii) the connection between the
telephone pole or outside location and the nearest telephone company switch,
either at the telephone company's central office or at a remote location. The
trunking portion of the network connects telephone central offices and remote
switch locations to each other and provides some intercity connections, while
the long distance portion of the telephone network also provides the
interconnection between cities. The following diagram represents the use of
copper wire and cable within the typical telephone network architecture.

2

Page 3 contains a diagram of the United States telecommunications
infrastructure, including the composition of the distribution, feeder, intercity
trunking and interoffice trunking cables between telephone company central
offices, remote digital switches, office buildings and private residences.

3

Copper telecommunications wire and cable is the most widely used medium for
transmission in the local loop, which currently comprises approximately 160
million residential and business access lines in the United States. The
installed base of copper wire and cable in the local loop represents an
investment of over $150 billion that must be maintained by the RBOCs and other
local telephone companies. Although other media, such as optical fiber cable, is
used for trunk lines between central offices, local loop lines continue to be
copper-based. Local loop lines are continually maintained and replaced,
providing a steady demand for copper wire and cable.

The copper telecommunications wire and cable industry manufactures a variety
of cable products, which are used in burial or aerial applications,
predominantly in the local loop. The industry also manufactures several types of
copper telecommunications wire products, including: (i) outside service wire,
which is also referred to as telephone distribution wire, used in direct burial
or aerial applications mainly to connect a home or business to the nearest
telephone pole or other outside location and (ii) inside or premise wire used
within a building to connect various telephone devices to the telephone network.

The basic unit of virtually all copper telecommunications wires and cables
is the "twisted pair," a pair of insulated wires twisted around each other. Both
wires in the pair are used to complete the telephone connection. Twisted pairs
are bundled together to form telephone wires and cables. The basic unit of
measure for copper wire and cable is in billions of conductor feet (bcf), which
is calculated by measuring the length of each insulated wire in a twisted pair.

Based on data published by the U.S. Department of Commerce, Superior
estimates that domestic production of copper telephone cable and outside service
wire was $1.1 billion in 1993. A substantial majority of the copper telephone
cable and outside service wire sold in the United States is purchased by the
RBOCs and other domestic telephone companies. An estimated 5% to 10% of industry
sales are in the export markets. Small amounts of these products are sold to the
military, other government agencies, construction companies and in the homeowner
market. It is estimated that the seven RBOCs (Ameritech Corporation, Bell
Atlantic Corporation, BellSouth Corporation, NYNEX Corporation, Pacific Telesis
Group, SBC Communications, Inc. (formerly Southwestern Bell) and U.S. West,
Inc.) purchase approximately 60% of the copper telephone cable and outside
service wire purchased by U.S. telephone companies, while three major
independent telephone holding companies (Alltel Corporation, GTE Corporation and
Sprint Corporation) purchase an additional 25%, and over 1,200 small local
telephone operating companies purchase the remainder.

Demand for copper telecommunications wire and cable is dependent on several
factors, including the rate at which new lines are installed in homes and
businesses ("access lines"); the level of spending for highways, bridges and
other parts of the infrastructure, which often necessitates installation of new
telephone cables; and the level of general maintenance spending by telephone
companies. The installation of new access lines is in turn dependent on the
level of new construction and, increasingly in recent years, on demand for
second telephone lines and lines dedicated to facsimile machines and computer
modems, which are used for, among other purposes, business communications and
access to the Internet.

Alpine believes that copper will continue to be the transmission medium of
choice in the local loop due to factors such as: the significant investment in
the installed base of copper cable in the local loop which must be maintained by
the RBOCs and other local telephone companies; the significantly lower
installation and maintenance costs of copper compared to optical fiber and other
media; technological advancements that expand the bandwidth of the installed
local loop copper network, such as integrated services digital network,
high-bit-rate digital subscriber line and asymmetric digital subscriber line,
which allow the continued use of copper as the transmission medium for the new
voice, data, video and multi-media uses demanded by customers; and the
increasing demand for new services, which, because of technological advances,
can be supported by a copper-based local loop.

The commercial development of fiber optics has had and is expected to
continue to have an effect on Superior's copper telecommunications wire and
cable business. Optical fiber technology has had a

4

major impact on certain components of the telecommunications network where its
utilization is cost-effective, particularly in trunk lines and the long distance
network. To a lesser degree, optical fiber cable has been deployed in certain
high-density feeder applications between telephone company central offices or
remote locations and major distribution points, which has further reduced the
total market for products manufactured by Superior. In the local loop portion of
the telecommunications network, however, copper wire has remained the most
widely used medium for transmission. Telephone companies are evaluating (and in
certain cases installing on a test basis) alternative technologies for providing
video entertainment or other new services, including coaxial and optical fiber
cable. Superior believes, however, that the great majority of businesses and
homes in America will continue to be connected with the telecommunications
infrastructure via a copper-based local loop. Nevertheless, because the
telecommunications industry is undergoing rapid and intense technological
change, it is not possible at this time to predict the impact that these
developments may have on the total demand for copper wire in the local loop. A
relatively small decline in the level of purchases of telecommunications wire
and cable by the RBOCs and other telephone companies could have a
disproportionately adverse effect on the copper telecommunications wire and
cable industry, including Superior.

Wireless technologies such as microwave, satellite and cellular transmission
have had, and will continue to have, an impact on the market for copper
telecommunications wire and cable telecommunications products. In addition,
there can be no assurance that other, newly-developed technologies will not have
an adverse impact on the market for copper telecommunications wire and cable
products.

SUPERIOR'S COPPER WIRE AND CABLE PRODUCTS

Superior manufactures a wide variety of copper telecommunications wire and
cable products. Cable is the transmission medium in the part of the local loop
from a local telephone company's central office to a local switch and from the
switch to a connection adjacent to a home or business location (either at a
telephone pole or another outside location such as a pedestal). Wire is the
transmission medium that runs from the telephone pole or other outside location
adjacent to a home or business to the end user's access device, and may be
either outside or on-premises. Alpine's products include cable, outside wire and
premises wire products, ranging in size from a single twisted pair wire to a
4,200 pair cable. These products are variously configured for aerial and
underground use in the local loop and for on-premise applications.

The basic unit of virtually all copper telecommunications wires and cables
is the "twisted pair," a pair of insulated wires twisted around each other. Both
wires in the pair are used to complete the telecommunications connection.
Twisted pairs are bundled together to form telecommunications wires and cables.
The basic unit of measure for copper wires and cable is in billions of conductor
feet (bcf), which is calculated by measuring the length of each wire in a
twisted pair.

Superior's copper telecommunications cable products range in size and are
differentiated by design variations depending on where the cable is to be
installed. Cable products used for direct underground burial are designed to be
water-resistant and are filled with compounds to prevent moisture from getting
into the cable structure. The individual copper wires in these cables utilize
either a solid polyethylene or polypropylene insulation or cellular polyethylene
covered with a solid polyethylene skin. Cable products used for underground duct
or aerial applications, where water penetration is not a major concern, are
designed with solid polyethylene insulation and no filling compound. The copper
telecommunications cable products normally have metallic shields for electrical
and mechanical protection and electromagnetic shielding of the copper wires, as
well as an outer polyethylene jacket.

Superior's outside service wire products range in size from a single twisted
pair to a six-pair product. Similar to copper cable products, outside service
wire products are designed for both direct burial and aerial applications and
are also manufactured in a variety of designs, including a number of different
metallic shield configurations and several different jacketing materials.

5

Superior's copper telecommunications wire for interior use, or premises
wire, generally range in size from a single twisted pair to a four-pair product.
Premises wire is used within buildings to connect telecommunications devices
(telephones, facsimile machines and computer modems) to the telecommunications
network and, in commercial buildings, to establish Local Area Network's
("LAN's"). All of Alpine's premises wire has been listed by Underwriters'
Laboratories, which is required by most local building codes.

An important element of Superior's strategy in the telecommunications wire
and cable business is to expand into performance-enhanced copper-based wire
products that provide opportunities for higher growth and higher margins than
Superior's current product lines. As described below, Superior has introduced
and is in the process of introducing a number of new products in this regard.

In fiscal 1995, Superior introduced a line of UTP copper wire products
designed for high-speed data transmission across private networks. Superior
believes that UTP, which was first introduced into the market in the early 1990s
as an alternative to optical fiber, has become the medium of choice for private
data network communications due to its (i) significant installation and
maintenance cost advantages over optical fiber cable and (ii) its performance
capabilities, which are sufficient to address a substantial portion of the
market for private data networks requiring high-speed transmission rates.
Superior's sales of UTP products, which have been limited due to a lack of
availability of teflon, a component of UTP products, were $4.5 million in fiscal
1996.

Superior also has recently developed or is in the process of developing a
number of other new products, including (i) hybrid products combining
twisted-pair copper wires with coaxial or optical fiber cable for outside
service or on-premise use, (ii) aerial drop non-metallic support products, which
utilize fiberglass yarn and twisted-pair copper wires for outside service use
and (iii) riser products, which are copper wires used inside high-rise buildings
or telephone central offices for LAN-based vertical connections.

MARKETING AND DISTRIBUTION

During fiscal 1996, 90.0% of Superior's net sales were to the RBOCs and
major U.S. independent telephone companies, 1.0% were made outside the United
States and Canada and the remaining 9.0% were made to other telephone companies
in the United States and Canada, construction companies and others.

Superior sells to the RBOCs and other major independent telephone companies
on a direct basis through a sales force of five salespersons. The remainder of
Superior's products are sold through distributors, original equipment
manufacturers and sales representatives and agents, including sales
representatives in South America. Alpine believes that there will be
opportunities for international expansion of its wire and cable business, either
through export sales and the establishment of joint ventures or similar
arrangements.

Superior's sales to telephone companies are generally pursuant to multi-year
supply agreements in which the customer agrees to have Superior supply certain
of the customer's wire or cable needs as the primary supplier during the term of
the agreement. Prior to awarding a contract, customers forecast their needs and
manufacturers such as Superior bid and quote prices based upon the forecasted
order amount, although customers are not obligated to purchase the forecasted
amount or any minimum amount. Superior currently has multi-year agreements with
respect to certain of its wire and cable products with six of the seven RBOCs
and with the three major independent telephone companies. For fiscal 1996, sales
to BellSouth Corporation, North Supply Corporation (Sprint), GTE Corporation,
SBC Communications, Inc. and NYNEX Corporation accounted for 21.5%, 17.2%,
16.1%, 12.8% and 12.5% of Superior's net sales of wire and cable products,
respectively. No other single customer accounted for more than 10% of Superior's
wire and cable sales. Additionally, as is customary in the industry, Superior's
sales to customers other than large telephone companies are primarily on the
"spot" market on the basis of short-term purchase orders. In recent years these
sales have declined as a proportion of total sales.

6

MANUFACTURING PROCESS AND QUALITY CONTROL

Copper rod is the base component for most of Superior's wire and cable
products. The manufacturing processes for these products require that the copper
rod be drawn and insulated. Superior purchases copper rod of 5/16" diameter from
third-party suppliers. Superior then "draws" the wire to one of four American
wire gauges ("AWGs"). Wire drawing is the process of reducing the conductor
diameter by pulling the copper rod through a converging die until the specified
AWG is attained. Since the reduction is limited by the breaking strength of the
conductor, this operation is repeated several times internally within the
machine. As the wire becomes smaller, less pulling force is required. Therefore,
machines operating in specific size ranges are required. Take-up containers or
spools are generally large, allowing one person to operate several machines.
Individual copper wires are then typically insulated with plastic compounds
through an extrusion process. Extrusion involves the feeding, melting and
pumping of a compound through a die to shape it in final form as it is applied
to insulate the wire. Superior uses five primary types of insulating material
compounds; high density polyethylene, high density cellular polyethylene foam,
flame retardant polyethylene, fluoropolymers and polyvinyl chloride. Superior
purchases these insulating compounds from a variety of suppliers.

Superior's products also require that the insulated wire be "twisted" so
that two insulated single conductors are combined to create a twisted pair.
Superior's products are often "cabled" or "stranded" so that multiple twisted
pairs of insulated wires are combined to form larger units of multiple pair
cables. Typically, cabling or stranding is done only on large (e.g., 25 or more)
numbers of pairs. Smaller numbers of pairs (e.g., fewer than 25) are not cabled,
but are sent directly for jacketing.

Once insulated, Superior's copper wire and cable products are "jacketed" or
covered through the application of filling, flooding and shielding compounds to
the insulated wire. Products to be installed underground are protected by
metallic shielding (e.g., aluminum and steel) for electrical and mechanical
isolation and by plastic compounds of polyvinyl chloride or polyethylene for
protection against water and other sources of corrosion and interference. After
the wire and cable products are fabricated, they are packaged and shipped either
directly to customers or to distributors.

RAW MATERIALS

The principal raw materials used by Superior in the manufacture of its wire
and cable products are copper, aluminum, bronze, steel and plastics such as
polyethylene and polyvinyl chloride. These raw materials are available from
several sources and Superior has not experienced any shortages in the recent
past.

The cost of copper, the most significant raw material used by Superior in
its wire and cable business, has been subject to considerable volatility over
the past several years. However, this volatility has not had, nor is it expected
to have, an impact on Superior's profitability due to customers' contractual
arrangements that provide for the pass-through of changes in copper costs
through price revisions. Nevertheless, sharp increases in the price of copper
can reduce demand if telephone companies decide to defer their purchases of
copper telecommunications wire and cable products until copper prices decline.

The production of UTP products is dependent upon teflon, which is currently
manufactured by only two producers and is in short supply. As a result, Alpine
is currently evaluating alternative production methods in order to increase the
quantity of production per pound of teflon or to eliminate its requirement.
Until this is resolved or the supply of teflon increases, Alpine will have to
limit its production of UTP products. From time to time, particular plastics
have been difficult to obtain, but in recent years none of these shortages has
required Superior to limit production. The inability of Superior to obtain
sufficient quantities of raw materials could adversely affect its operating
results.

7

FOREIGN SALES

Superior's copper wire and cable business has a plant in Winnipeg, Manitoba
that supplies both the Canadian and U.S. markets. Superior's fiscal 1996 copper
wire and cable sales to customers outside the United States and Canada were $3.3
million, or 0.9% of copper wire and cable sales, of which the majority were in
Latin America.

COMPETITION

The copper telecommunications wire and cable business is very competitive.
Superior has three major domestic competitors in the copper telecommunications
wire and cable business: Cable Systems International, Inc., General Cable
Corporation, a subsidiary of Wassall, plc; and Essex Group Incorporated, a
subsidiary of BCP/Essex Holding, Inc. Competition in this market is based on
price, service and quality. Because several RBOCs have adopted policies of
limiting the number of their suppliers and requiring that these suppliers
provide additional services, the degree of competition based on service is
increasing.

DATA COMMUNICATIONS AND ELECTRONICS

PRODUCTS

DNE designs and manufactures data communications equipment, integrated
access devices and electronic equipment for defense, government and commercial
applications. It is the largest supplier to the U.S. defense forces of data and
voice multiplexers used in tactical secure military applications. Multiplexers
are integrated access devices that combine several information-carrying channels
into one line, thereby permitting simultaneous multiple voice and data
communications over a single line. DNE also produces military avionic products,
including switches, dimmers, relays and other electronic controllers, sensors
and refueling amplifiers.

DNE's strategy in this area is to expand its data communications products
business by developing commercial versions of its integrated access devices,
which could potentially require a significant investment of capital, and by
marketing such products to the telecommunications industry, including Alpine's
telecommunications wire and cable customers. DNE has developed and begun
marketing a data and voice multiplexer product for the commercial market.

DNE has reduced its dependence on the defense market in recent years
primarily by taking advantage of opportunities to manufacture equipment on a
contract basis. DNE provides contract manufacturing services for subassembly
equipment to approximately five original equipment manufacturers in the
technology industry and NASA. DNE expects to add additional commercial customers
in the future and to expand its contract manufacturing services business
provided to its existing commercial customers. Sales to NASA are not expected
after the current contract expires in fiscal 1997. In fiscal 1996, DNE's sales
to customers other than the departments of the U.S. government accounted for
36.0% of sales, compared to 42.0% of sales in fiscal 1995.

REFRACTORY PRODUCTS AND SERVICES

GENERAL

Adience is one of the largest manufacturers and installers of specialty
refractory products in the United States. Refractory products are consumable
materials used as insulation on surfaces exposed to high temperatures, such as
those generated by molten metals. The manufacture, installation and maintenance
of specialty refractory products to the iron and steel industry represented over
73% of Adience's fiscal 1996 net sales. Adience is also among the leading
manufacturers in the United States of specialty refractory products for use in
the production of glass and aluminum and is one of the few rebuilders of coke
ovens in the United States.

REFRACTORY PRODUCTS AND SERVICES

Adience manufactures a wide range of refractory products and specializes in
producing refractory materials that are custom designed for specific industrial
applications and customers. The principal products are monolithic (unformed)
refractory materials, slide gates, bottom pour refractories and

8

bricks and blocks. Adience also provides installation and maintenance services
for its customers. Monolithic refractory materials are cement-like materials
that are mixed with water on the customer's premises and applied to surfaces
exposed to high temperatures. Slide gates and bottom pour refractories are
pre-formed units that allow the discharge of molten metal from the bottom of the
furnace, rather than from the top, resulting in reduced iron and steel
impurities. Adience manufactures a wide range of bricks and blocks, which are
used to line industrial furnaces. Because of the high temperatures involved in
the manufacturing and movement of molten iron and other molten materials, the
equipment employed in such processes must utilize linings made of refractory
products, which deteriorate and must be repaired or replaced frequently. The
largest customer for Adience's products and services is the iron and steel
industry, followed by the glass, aluminum, cement and co-generation industries.

Certain of Adience's refractory products are used to line furnaces, troughs,
runways and other surfaces exposed to molten glass or the molten tin used in the
float glass method of production. All of these products are manufactured
according to customer specifications. In addition, certain of Adience's
refractory products are distinguished by their resistance to corrosion.
Corrosion resistance is particularly important in the glass industry where,
unlike the steel industry, certain refractory products are designed to last for
up to 10 years.

The manufacturing process for specialty refractory products involves the
mixing and, in some cases, the kiln firing of various raw materials,
particularly fireclays and minerals such as bauxites and aluminas. Adience
operates eight principal refractory plants located near major industrial centers
in the United States and Canada. Adience designs its refractory products for
specific applications and customer needs.

Adience also provides a variety of services, primarily to its iron and steel
customers: it installs refractory products manufactured by it and others; it
provides on-site maintenance of refractory products; and it rebuilds coke ovens.
The ability to react quickly to customer requests for products or installation
and maintenance services is particularly important in the refractory industry
because of the extremely high cost of manufacturing downtime in the iron and
steel industry. Consequently, Adience maintains refractory service facilities
located near its major customers in the United States and Canada. Each facility
has the equipment and skilled staff required for the installation and
maintenance of refractory products. Other personnel required for installation
projects are hired on an as-needed basis from readily available local union
labor pools and are employed by Adience only for the duration of each job.

One of Adience's strategic initiatives in the refractories business is to
extend sales of its refractory products and services into the steel making phase
of the integrated iron and steel mills. Currently, Adience supplies its products
and services primarily to the iron making and handling area of an integrated
iron and steel mill. The steel ladle and continuous casting phases utilize
substantially greater amounts of refractory products than Adience's traditional
area of focus and therefore represent a potential area for growth. To strengthen
Adience's leadership position in the monolithic refractory business, Adience is
also emphasizing the use of shotcrete technology in the installation of its
unformed refractory materials. This technology permits a lower cost and faster
installation of monolithic refractory materials in applications previously
dominated by brick refractories. Adience is developing robotic application
equipment permitting the installation of refractories at higher temperatures
than currently possible, thereby resulting in less facility downtime.

MARKETING AND DISTRIBUTION

The iron and steel industry has historically been the major consumer of
Adience's products and services. For fiscal 1995 and 1996, sales to the iron and
steel industry accounted for 64% and 73%, respectively, of refractory product
net sales. Other customers for Adience's specialty refractory materials are the
glass, aluminum, cement and cogeneration industries. Adience also sells its
refractory products to other refractory contractors and buys refractory products
produced by other manufacturers in performing its contracting services.

9

Within the iron and steel industry, Adience's principal customers have
traditionally been the largest companies in the industry. USX-US Steel Group,
Inc., Bethlehem Steel Corporation and LTV Steel Company, Inc. together accounted
for approximately 31.0% and 33.6% of the net sales of this business segment for
fiscal 1995 and 1996, respectively. USX-US Steel Group, Inc., alone accounted
for 13.0% and 15.2% of this business segment's net sales during fiscal 1995 and
1996, respectively. Each of the other companies accounted for less than 10% of
this business segment's net sales during such periods. Marketing of Adience's
products and services is conducted by a sales force working out of 15 sales
offices located in 8 states and Canada.

RAW MATERIALS

In manufacturing its specialty refractory products, Adience uses more than
100 different raw materials which come from a variety of sources, the majority
of which are obtained within the United States. Some of the more important raw
materials are alumina, bauxite, silicon carbide, calcium aluminate cements and
clays. The number of sources of supply varies with each raw material. Adience
believes that it is not dependent in its manufacturing processes on any one
source of supply.

FOREIGN SALES

For the year ended April 30, 1996, foreign sales of refractory products
totaled $16.7 million, or 14.7% of refractory product sales. Foreign sales of
refractory products consisted primarily of sales by Adience's Canadian plant.

COMPETITION

In the production of refractory materials, Adience competes with a number of
companies, including North American Refractories Co., Harbison Walker, A.P.
Green Industries, Inc., National Refractories Co. and Premier Refractories &
Chemicals, Inc., some of which are larger than Adience.

Adience's primary competitors in the installation of refractory products are
in-house employees of iron and steel companies and also regional refractory
service contractors which, unlike Adience, do not engage in the production of
such materials. Other major refractory producers typically contract with these
regional companies to install the product, or their customers install the
products themselves. Competition is based primarily on service, price and
product performance. Adience believes that its ability to produce, install and
maintain its refractory products without dependence upon third parties
strengthens its competitive position.

RESEARCH AND DEVELOPMENT

In response to the changing requirements of the telecommunications industry,
Superior has focused its recent product development activities on performance
enhanced copper-based wire products that are designed to meet the existing and
future needs of the telephone companies. Several of these projects have been
undertaken in conjunction with Superior's telephone company customers and
include the development of composite cables that include copper twisted pair
wire and coaxial cable or optical fibers in a single cable construction.
Superior is currently developing shielded twisted pair products and the retail
packaging of certain of its products for on-premise use as well as extensions of
its UTP products, such as patch cords for use in connecting Superior products
within premises and 25-pair UTP cables for certain data transmission
applications. Superior expects to explore new product development opportunities
to meet the evolving needs of its customers.

Constant revisions to industry processes and chemistries require changes in
refractory products to meet customer demand. Adience maintains research and
development facilities for improving existing refractory products and
installation methods and developing new products for existing and new markets.

In order to compete for contracts, DNE frequently invests its own funds on
research and development in order to determine the financial and practical
feasibility of manufacturing the products. DNE is currently in the process of
developing a new multiplexer for secure communications for a U.S. government
agency.

10

Although Alpine currently holds certain trademarks, licenses and patents,
none is considered to be material to its businesses.

Alpine's research and development expense during fiscal 1994, 1995 and 1996
amounted to $1.2 million, $1.6 million, and $2.5 million, respectively.

EMPLOYEES

As of April 30, 1996, Alpine employed 2,250 people, including 1,485 in the
telecommunications wire and cable business, 560 in the refractories business,
193 in the data communications and electronics business and 12 at Alpine's
corporate offices.

The number of individuals employed in the refractories business does not
reflect members of the building trades, who are hired by Adience as required.
Approximately 279 persons employed in Adience's specialty refractory business
and approximately 412 persons employed in Superior's telecommunications wire and
cable business are represented by unions.

Alpine considers relations with its employees to be satisfactory.

ENVIRONMENTAL MATTERS

Alpine's manufacturing operations are subject to numerous federal, state and
local laws and regulations relating to the storage, handling, emission,
transportation and discharge of hazardous materials and waste products.
Compliance with these laws has not been a material cost to Alpine and has not
had a material effect upon its capital expenditures, earnings or competitive
position. Violation of such laws or regulations, even if inadvertent, could have
an adverse impact on the operations, business or financial results of Alpine.

Operations of Alpine have resulted in releases of hazardous substances at
sites currently or formerly owned or operated by Alpine. Alpine is presently
involved in investigatory and remedial activities at certain sites under the
oversight of state governmental authorities, as described below.

Soil and groundwater at Superior's Brownwood, Texas facility has been found
to be contaminated with volatile organic compounds as a result of operations at
the facility which management believes occurred prior to Superior's acquisition
of the facility. Superior is in the process of obtaining approval for a
remediation plan from the Texas Natural Resource Conservation Commission. Based
upon investigations performed to date, the Company believes that the cost of
this remediation will not be in excess of $0.5 million. Pursuant to an agreement
between Superior and the former owner of the facility, the Company has been
reimbursed for approximately 85% of the costs incurred to date in connection
with the investigation and remediation of this facility, and is entitled to
reimbursement of future expenses at percentages ranging from 85% to 25%
(depending on the time at which such expenses are incurred), subject to an
aggregate expense reimbursement of not less than 75%.

In connection with the sale of a facility in Woburn, Massachusetts formerly
owned by and currently under lease to DNE, low levels of volatile organic
compounds were discovered in shallow groundwater. DNE has assumed responsibility
for this contamination pursuant to an indemnity granted to the purchaser of the
facility, which indemnity is in turn guaranteed by Alpine. This facility has
been designated as a non-priority site by the Massachusetts Department of
Environmental Protection ("MDEP") which granted a waiver to Alpine allowing it
to proceed with further investigation and, if necessary, remediation, of the
groundwater contamination without MDEP oversight, subject to certain conditions.
In accordance with the waiver, investigation and remediation efforts must be
completed by August 1997. Based on the results of a Phase II comprehensive site
assessment completed during May 1996, it appears that no remedial activities are
warranted for this site, but approximately $10,000 may be required to perform
MDEP filing and response actions. Alpine has also assumed responsibility for and
indemnified purchasers against liabilities associated with contamination, if
any, existing at other of its former facilities. In particular, in connection
with the sale of its former East Windsor, Connecticut facility and pursuant to
Connecticut property transfer laws, the Company was required by the Connecticut
Department of Environmental Protection ("CDEP") to

11

develop a plan to investigate the existence of contamination, if any, at that
facility. The Company has developed and submitted to CDEP the required plan and
is awaiting CDEP approval of the scope of its proposed investigation. Based upon
information available to date, Alpine does not believe the costs associated with
fulfilling its obligations with respect to the East Windsor facility will have a
material adverse effect on its operations, business or financial results.

Certain Adience facilities contain areas which may have been used for the
disposal of waste materials generated by facility operations, some of which may
contain elements or compounds classified as hazardous under environmental laws
or which may otherwise cause environmental contamination. If it is determined
that past disposal practices have resulted in releases of contaminants to soil
or groundwater, remediation of such contamination may be required. If
substantial environmental contamination is found at any or all of the Adience
facilities, this could have a material adverse effect on the operations,
business and financial results of Alpine.

ITEM 2. PROPERTIES

Alpine conducts its operations primarily at the facilities set forth below:

LOCATION SQUARE FOOTAGE LEASED/OWNED
- --------------------------------------------------------- -------------- ----------------------------

TELECOMMUNICATIONS WIRE AND CABLE
MANUFACTURING FACILITIES
Brownwood, Texas....................................... 328,000 Leased (expires 2013)
(five five-year-renewals)
Winnipeg, Manitoba..................................... 190,000 Owned
Elizabethtown, Kentucky................................ 163,000 Owned
Tarboro, North Carolina................................ 295,000 Owned
CORPORATE OFFICE
Atlanta, Georgia....................................... 20,000 Leased (expires 2001)

Depending on product mix, capacity in this segment ranges from 85 bcf to 92
bcf. Each facility is operating at utilization rates of between 90% and 95%.
Facilities in this segment are suitable and adequate for the business. Capital
spending plans for the operations in this segment are primarily designed to keep
up with current technology and to increase capacity in existing product lines.

REFRACTORIES
MANUFACTURING FACILITIES
Washington, Pennsylvania.................... 201,881 Owned
Snow Shoe, Pennsylvania..................... 171,425 Owned
South Webster, Ohio......................... 125,082 Owned
Crown Point, Indiana........................ 79,116 Owned
Altoona, Pennsylvania....................... 47,260 Owned
Smithville, Ontario......................... 47,000 Owned
Canon City, Colorado........................ 44,286 Owned
Johnstown, Pennsylvania..................... 30,000 Owned
CORPORATE OFFICE
Carnegie, Pennsylvania...................... 77,500 Owned

The corporate headquarters for Adience's operations are located in a
facility which is also used for warehousing.

Depending on product mix, capacity in this segment ranges from 300,000 to
350,000 tons of refractory products. The facilities are operating at various
utilization rates with an overall utilization of between 45% and 50%. Facilities
in this segment are adequate and suitable for the business. Capital spending
plans are primarily designed to modify existing product lines.

12

DATA COMMUNICATIONS AND ELECTRONICS
Wallingford, Connecticut...................... 155,000 Owned

DNE's facility is adequate and suitable for the businesses being conducted
and operates at a utilization rate of between 50% and 60%.

The facility in Wallingford, Connecticut is subject to a mortgage held by
the Connecticut Development Authority as security for a $5.0 million loan.

SQUARE FOOTAGE LEASED/OWNED
-------------- ----------------------------

CORPORATE OFFICES
New York, New York....................................... 5,375 Leased (expires 2002)

ITEM 3. LEGAL PROCEEDINGS

Adience's J.H. France unit, which was merged into Adience in December 1991,
has been named as a party in approximately 3,000 pending lawsuits, some of which
contain both multiple claimants and multiple defendants, filed in twelve
jurisdictions principally by employees and former employees of certain customers
of J.H. France, alleging in certain cases that a single product, a plastic
insulating cement manufactured more than 20 years ago by J.H. France, caused
them to suffer from asbestosis related diseases and in other cases alleging that
products manufactured or sold by J.H. France caused silica related diseases. The
majority of the lawsuits seek monetary damages ranging from $20,000 to $1.0
million each. J.H. France and its insurance carrier historically have settled
these lawsuits, typically for an average amount per case of less than the
minimum amount stated. Punitive damages have also been claimed in some cases.

In addition to the lawsuits against J.H. France, Adience, as successor in
interest to BMI Inc., has been named a party in approximately 390 pending
lawsuits, some of which contain both multiple claimants and multiple defendants,
filed in the States of Pennsylvania, Ohio, Michigan, West Virginia, Wisconsin,
Kentucky and Indiana, principally by employees and former employees of certain
customers of Adience alleging that products produced by Adience caused
silicosis, not asbestosis, in such persons. The majority of such lawsuits seek
monetary damages ranging from $20,000 each, which is the minimal jurisdictional
requirement for personal injury cases in a majority of such state courts, to
$1.0 million each. Adience and its insurance carriers historically have settled
these lawsuits for an average amount per case of less than the minimum amount
stated. Virtually all such claims and all costs of defense for these cases are
covered by insurance.

The insurance companies which had issued policies covering the J.H. France
cases initially denied coverage for these claims. In June 1993, the Supreme
Court of Pennsylvania held that the insurance policies covering the claims in
these J.H. France cases covered liabilities and defense costs up to the amounts
of the limits of the respective policies, without regard to the period of time
said policies were in effect. As a result of this judicial determination and
based upon Adience's experience in obtaining dismissals or settlements in closed
cases, Adience anticipates, although no assurance can be given, that the
expected costs and liabilities in such pending cases will be adequately covered
by insurance and that the aggregate limits on the insurance policies in effect
exceed the liabilities and defense costs which will be incurred in the 3,000
J.H. France cases and the other 390 cases, for which the scope of coverage has
never been an issue.

Adience's Furnco unit has recently been named, although not effectively
served, as the sole defendant in nine separate lawsuits, each of which contains
one plaintiff (i.e., either husband or husband and wife). At this time,
investigation is continuing as to the nature and extent of such suits, as well
as the extent of insurance coverage therefore.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Alpine did not submit any matter to a vote of securityholders during the
fourth quarter of the fiscal year ended April 30, 1996.

13

PART II

ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER MATTERS

(a) Market Information

Alpine's Common Stock, $0.10 par value (the "Alpine Common Stock"), is
listed on the American Stock Exchange (the "AMEX") under the symbol AGI. The
following table sets forth the range of high and low sales prices for Alpine
Common Stock on the AMEX for fiscal 1995 and 1996.

HIGH LOW
--------- ---------

Fiscal 1995
First Quarter............................................................. 7 5/8 4 3/8
Second Quarter............................................................ 8 3/8 5 1/8
Third Quarter............................................................. 6 4 1/8
Fourth Quarter............................................................ 5 7/8 4 5/8
Fiscal 1996
First Quarter............................................................. 6 1/2 4 1/4
Second Quarter............................................................ 6 3/4 4 3/16
Third Quarter............................................................. 5 3/4 3 5/8
Fourth Quarter............................................................ 4 5/8 3 5/16

(b) Holders

At July 23, 1996, 18,281,516 shares of Alpine Common Stock were issued and
outstanding, and there were approximately 8,000 record holders thereof.

(c) Dividends

Alpine has no recent history of paying dividends and does not intend to
declare dividends on the Alpine Common Stock in the foreseeable future. Certain
provisions of Alpine's debt instruments and of the Company's outstanding
preferred stock have the effect of currently prohibiting Alpine from paying cash
dividends.

ITEM 6. SELECTED FINANCIAL DATA

HISTORICAL FINANCIAL DATA

Set forth below are certain selected historical consolidated financial data
of Alpine. This information should be read in conjunction with the Consolidated
Financial Statements of Alpine and related notes thereto appearing elsewhere
herein and "Item 7. Management's Discussion and Analysis of

14

Financial Condition and Results of Operations." The selected historical
consolidated financial data for, and as of the end of, each of the fiscal years
in the five-year period ended April 30, 1996 are derived from the audited
consolidated financial statements of Alpine.

FISCAL YEAR ENDED APRIL 30, (1)
------------------------------------------------------------
1992 1993 1994 1995 1996
--------- ---------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Net sales......................................... $ 6,786 $ 27,897 $ 68,510 $ 198,135 $ 524,113
Cost of sales..................................... 4,239 15,915 56,250 169,125 453,785
--------- ---------- ----------- ----------- -----------
Gross profit.................................. 2,547 11,982 12,260 29,010 70,328
Selling, general and administrative............... 4,808 10,482 12,168 20,487 35,148
Amortization of goodwill and other intangible
charges.......................................... 283 395 2,292 1,527 2,658
--------- ---------- ----------- ----------- -----------
Operating income (loss)....................... (2,544) 1,105 (2,200) 6,996 32,522
Interest income................................... 484 209 242 345 2,146
Interest expense.................................. (3,127) (2,301) (2,363) (8,197) (27,795)
Other income (expense), net....................... (604) (1,469) (506) 28 22
--------- ---------- ----------- ----------- -----------
Income (loss) from continuing operations
before income taxes.......................... (5,791) (2,456) (4,827) (828) 6,895
Provision for income taxes........................ -- -- (68) (348) (1,676)
--------- ---------- ----------- ----------- -----------
Income (loss) from continuing operations...... (5,791) (2,456) (4,895) (1,176) 5,219
(Loss) from discontinued operations (2)........... (3,082) (8,377) (25,236) (4,868) (2,213)
--------- ---------- ----------- ----------- -----------
Income (loss) before extraordinary item....... (8,873) (10,833) (30,131) (6,044) 3,006
Extraordinary item -- gain (loss) on early
extinguishment of debt (3)....................... 888 (1,262) (47) -- (4,856)
--------- ---------- ----------- ----------- -----------
Net (loss).................................... $ (7,985) $ (12,095) $ (30,178) $ (6,044) $ (1,850)
--------- ---------- ----------- ----------- -----------
--------- ---------- ----------- ----------- -----------
INCOME (LOSS) PER SHARE OF COMMON STOCK:
Continuing operations........................... $ (0.78) $ (0.32) $ (0.38) $ (0.11) $ 0.23
Discontinued operations......................... (0.42) (0.94) (1.78) (0.27) (0.12)
Extraordinary item -- gain (loss) on early
extinguishment of debt......................... .12 (0.14) -- -- (0.27)
--------- ---------- ----------- ----------- -----------
$ (1.08) $ (1.40) $ (2.16) $ (0.38) $ (0.16)
--------- ---------- ----------- ----------- -----------
--------- ---------- ----------- ----------- -----------
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital................................... $ 9,745 $ 7,256 $ 24,594 $ 7,080 $ 50,679
Total assets...................................... 34,312 27,998 113,796 233,778 354,904
Total debt........................................ 19,817 13,637 43,745 119,179 209,777
Preferred stock................................... 5,177 4,677 6,177 17,250 11,758
Total stockholders' equity........................ 5,867 10,602 47,998 44,658 43,136

- ------------------------

(1) Alpine's results of operations have been significantly impacted by
acquisitions in fiscal 1992, 1994, 1995 and 1996. On February 22, 1992,
Alpine acquired DNE for a cash purchase price of $7.1 million. On November
11, 1993, Alpine acquired Superior for $60.8 million in cash and Alpine
Common Stock. On December 21, 1994, Alpine acquired Adience for $10.7
million in a combination of cash, Alpine 8% preferred stock and PolyVision
Corporation common stock. On May 11, 1995, Alpine's subsidiary, Superior,
completed the Alcatel Acquisition for $103.4 million in cash. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations."

15

(2) In July 1995, Alpine completed the spin-off of its information display
segment, PolyVision Corporation, which consisted of Alpine PolyVision Inc.
("APV"), Posterloid Corporation and Information Display Technologies, Inc.
The results of operations for this segment have been reflected as (loss)
from discontinued operations for all periods presented. See Note 5 to
Alpine's Consolidated Financial Statements.

(3) The extraordinary gain (loss) recorded during the fiscal years ended April
1992, 1993, 1994 and 1996 is related to the early extinguishment of debt.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

Alpine, through its three subsidiaries, Superior, Adience and DNE, is
engaged in the manufacture and sale of: (1) telecommunications wire and cable
products for the telecommunications industry (Superior), (2) specialty
refractory products for the iron, steel, glass, aluminum, cement and
cogeneration industries (Adience), and (3) data communications and electronics
products and systems for defense, governmental and commercial applications
(DNE).

RESULTS OF OPERATIONS

To facilitate a meaningful comparison between periods, this Management's
Discussion and Analysis focuses on pro forma information for the periods
covered, which management believes provides the most meaningful comparability
among historical periods. Period-to-period comparisons of Alpine's historical
financial information are less relevant to an understanding of Alpine due to the
significance of the Superior Acquisition on November 11, 1993, the Adience
acquisition on December 21, 1994, and the Alcatel Acquisition on May 11, 1995,
all of which were accounted for under the purchase method, with the results from
these operations included in Alpine's consolidated results on a prospective
basis, from the date of their respective acquisitions.

The following comparative table includes operating statement data for Alpine
on an industry segment basis. Such industry segment operating data is presented
on an historical reporting basis for the years ended April 30, 1994, 1995 and
1996. Further, pro forma operating data is included in the table to reflect the
Superior, Adience and Alcatel Acquisitions as if they occurred on May 1, 1993.
Such pro forma data includes the historical results of operations of Alpine, the
historical results of the Alcatel Business, Superior and Adience prior to their
respective acquisition by Alpine, and certain pro forma adjustments as more
fully described in the footnotes accompanying the comparative table below. The
pro forma data is not necessarily indicative of the results that would have been
achieved had such acquisitions actually occurred on May 1, 1993, nor are they
necessarily indicative of Alpine's future results.

In fiscal 1996, 90% of Superior's sales of telecommunications wire and cable
products were made to six of the RBOCs and three major independent telephone
companies. Superior's sales to these customers are generally pursuant to
multi-year supply agreements under which the customer agrees to have Superior
provide certain of the customer's wire or cable needs as a primary supplier
during the term of the agreement. Prior to awarding a contract, customers
specifically forecast their needs and manufacturers such as Superior bid and
quote prices based on the forecasted order amount -- although customers are not
obligated to purchase the forecasted amount or, in most cases, any minimum
amount. These supply agreements provide for the pass-through of copper costs on
specified terms. Generally, the copper price component passed through in each
contract for a particular quarter is based on the average COMEX copper price
over the three-month period ending at or before the beginning of that quarter.
Each month Superior estimates its product deliveries several months into the
future and enters into price commitments with its suppliers for a portion of its
estimated copper rod requirements for delivery on a forward basis. Superior uses
these forward purchase commitments to minimize the differences between its raw
material copper costs charged to cost of sales and the pass-through pricing
charged to its customers.

16

FISCAL YEARS ENDED APRIL 30,
----------------------------------------------------------------------
1994 1995 1996
---------------------- ---------------------- ----------------------
HISTORICAL PRO FORMA HISTORICAL PRO FORMA HISTORICAL PRO FORMA
----------- --------- ----------- --------- ----------- ---------
(DOLLARS IN MILLIONS)

Net sales
Telecommunications wire and cable............. $ 46.8 $ 311.9 $ 136.6 $ 340.8 $ 384.2 $ 391.8
Data communications and electronics........... 21.7 21.7 27.9 27.9 26.2 26.2
Refractories.................................. -- 98.8 33.6 100.9 113.7 113.7
----- --------- ----------- --------- ----------- ---------
Combined net sales.......................... 68.5 432.4 198.1 469.6 524.1 531.7
----- --------- ----------- --------- ----------- ---------
----- --------- ----------- --------- ----------- ---------
Gross profit (1)(2)
Telecommunications wire and cable............. $ 4.0 $ 34.0 $ 14.2 $ 28.4 $ 39.6 $ 40.3
Data communications and electronics........... 8.3 8.3 8.2 8.2 7.9 7.9
Refractories.................................. -- 15.4 6.6 18.4 22.8 22.8
----- --------- ----------- --------- ----------- ---------
Combined gross profit....................... 12.3 57.7 29.0 55.0 70.3 71.0
----- --------- ----------- --------- ----------- ---------
----- --------- ----------- --------- ----------- ---------
Selling, general and administrative expense (3)
Telecommunications wire and cable............. $ 2.0 $ 5.3 $ 5.1 $ 6.2 $ 8.3 $ 8.4
Data communications and electronics........... 6.6 6.6 6.5 6.5 5.8 5.8
Refractories.................................. -- 16.6 5.7 16.0 15.0 15.0
Corporate..................................... 3.6 3.6 3.2 3.2 6.0 6.0
----- --------- ----------- --------- ----------- ---------
Combined selling, general and administrative
expense.................................... 12.2 32.1 20.5 31.9 35.1 35.2
----- --------- ----------- --------- ----------- ---------
----- --------- ----------- --------- ----------- ---------
Amortization of goodwill (4)
Telecommunications wire and cable............. $ 0.5 $ 1.5 $ 1.0 $ 1.4 $ 1.5 $ 1.4
Data communications and electronics........... 1.8 1.8 -- -- -- --
Refractories.................................. -- 1.5 0.5 1.2 1.2 1.2
----- --------- ----------- --------- ----------- ---------
Combined amortization of goodwill........... 2.3 4.8 1.5 2.6 2.7 2.6
----- --------- ----------- --------- ----------- ---------
----- --------- ----------- --------- ----------- ---------
Operating income (3)
Telecommunications wire and cable............. $ 1.5 $ 27.2 $ 8.1 $ 20.8 $ 29.8 $ 30.5
Data communications and electronics........... (0.1) (0.1) 1.7 1.7 2.1 2.1
Refractories.................................. -- (2.7) 0.4 1.2 6.6 6.6
Corporate..................................... (3.6) (3.6) (3.2) (3.2) (6.0) (6.0)
----- --------- ----------- --------- ----------- ---------
Combined operating income................... (2.2) 20.8 7.0 20.5 32.5 33.2
----- --------- ----------- --------- ----------- ---------
----- --------- ----------- --------- ----------- ---------

AS A PERCENTAGE OF NET SALES
----------------------------------------------------------------------

Gross margin
Telecommunications wire and cable............. 8.5% 10.9% 10.4% 8.3% 10.3% 10.3%
Data communications and electronics........... 38.2 38.2 29.4 29.4 30.2 30.1
Refractories.................................. -- 15.6 19.6 18.2 20.1 20.1
Combined gross margin....................... 18.0 13.3 14.6 11.7 13.4 13.4
Operating income margin
Telecommunications wire and cable............. 3.2% 8.7% 5.9% 6.1% 7.8% 7.8%
Data communications and electronics........... (0.5) (0.5) 6.1 6.1 8.0 8.0
Refractories.................................. -- (2.7) 1.2 1.2 5.8 5.8
Combined operating income margin............ (3.2) 4.8 3.5 4.4 6.2 6.2

- ------------------------
(1) Cost of goods sold has been reduced by $3.5 million, $4.5 million and $0.1
million in fiscal 1994, 1995 and 1996, respectively, to reflect changes in
historical depreciation resulting from Alpine's allocation of the purchase
price for the Superior, Adience and Alcatel Acquisitions.

17

(2) Cost of goods sold has been further reduced by $2.6 million and $2.5 million
in fiscal 1994 and 1995, respectively, to reflect reduced operating expenses
and other charges at Superior and Adience resulting primarily from the
reduction in headcount at the Alcatel Business and inventory write downs at
Adience. At the time of the Adience Acquisition, Alpine management
determined that certain Adience product lines would be discontinued. Adience
recorded a charge to reduce the carrying value of the related inventory to
net realizable value, which charge has been eliminated in the proforma
results presentation.

(3) Selling, general and administrative expense has been adjusted to reflect
changes to historical depreciation expense and eliminate expenses incurred
by Adience, Superior and the Alcatel Business which would not have been
incurred if the related acquisition had occurred on May 1, 1993. The
elimination of these expenses amounted to $14.5 million, $11.2 million and
$0.3 million in fiscal 1994, 1995 and 1996, respectively, of which $12.5
million and $9.1 million, in fiscal 1994 and 1995, respectively, represented
elimination of management fees and allocated administrative fees incurred by
the Alcatel Business.

(4) Amortization of goodwill has been adjusted to reflect changes resulting from
Alpine's allocation of the purchase price for the Superior, Adience and the
Alcatel Acquisitions.

FISCAL 1996 COMPARED TO FISCAL 1995

NET SALES

PRO FORMA BASIS. Fiscal 1996 pro forma net sales were $531.7 million,
representing an increase of $62.1 million, or 13.2%, over fiscal 1995 pro forma
net sales of $469.6 million.

Superior's fiscal 1996 pro forma net sales of $391.8 million increased $51.0
million, or 15.0%, over fiscal 1995 pro forma net sales of $340.8 million.
Approximately $18.0 million of the increase in pro forma net sales was
attributable to the contractual pass through, in the form of increased selling
prices, of higher copper costs in fiscal 1996. Of the remaining $33.0 million
increase in pro forma net sales, approximately $6.0 million resulted from
non-copper based price increases instituted during fiscal 1996 under multi-year
customer supply agreements with the remainder of the increase (approximately
$27.0 million) being the result of higher unit sales volumes.

The price increases instituted during fiscal 1996 related to both outside
plant wire and cable products and reflected a reversal of a trend of lower
market prices experienced in fiscal 1994 and early fiscal 1995. During this
period, industry-wide capacity exceeded demand resulting in a very competitive
market environment. Since such time, reductions in manufacturing capacity
coupled with increasing product demand have resulted in an easing of competitive
pressures and a rise in market prices. The Alcatel Business operations, which
were acquired in May 1995, were particularly impacted by the cycle of lower
market prices in fiscal 1994. This was due to the timing of its contract
expirations and the resulting rebidding and obtaining of new contract awards
during a period of very competitive pricing. Superior, which assumed
responsibility for the Alcatel Business's customer contractual obligations in
connection with the Alcatel acquisition, was successful in obtaining price
increases in fiscal 1996 on a substantial portion of the Alcatel Business
contracts. Additionally, Superior was successful during fiscal 1996 in obtaining
more modest price increases on substantially all of its existing contractual
arrangements. The aforementioned contractual price increases, which were
instituted throughout fiscal 1996, had the most significant impact on
profitability during the third and fourth fiscal quarters of fiscal 1996.

Higher unit sales volumes in fiscal 1996 occurred across all of Superior's
product lines, including cable, wire and premise wire products. The increase in
unit sales volume was attributable to an expansion of multi-year contractual
arrangements under new contract awards with several RBOCs and a major
independent telephone holding company, as well as to a general increased level
of demand for telecommunications wire and cable products.

18

DNE's net sales in fiscal 1996 were $26.2 million, which represented a
decline of $1.7 million, or 6.1%, as compared to fiscal 1995. Increase sales in
DNE's contract manufacturing services operations and military data
communications and avionics operations were offset by completion in fiscal 1995
of a major contract with NASA for the manufacture of hardware interface modules.

Adience's fiscal 1996 net sales were $113.7 million, representing an
increase of $12.8 million, or 12.7% over pro forma fiscal 1995 net sales of
$100.9 million. Approximately $6.0 million of the fiscal 1996 pro forma sales
increase was attributable to increased activity in Adience's contracting
services for rebuilding coke ovens and approximately $3.0 million was
attributable to higher sales of refractory block products to the plate glass
industry. The remainder of the fiscal 1996 comparative sales increase resulted
from a number of factors including favorable market conditions with modest
increases in demand, introduction of new products and the entry of new
geographic markets, including international markets.

HISTORICAL BASIS. On an historical basis, Alpine's comparative net sales
grew from $198.1 million in fiscal 1995 to $524.1 million in fiscal 1996, an
increase of $326.0 million. The comparative increase in fiscal 1996 net sales
was attributable to the inclusion of the results of operations of Adience and
the Alcatel Business during substantially all of fiscal 1996, and the increase
in selling prices and unit volume growth in Superior's telecommunications wire
and cable products during fiscal 1996, offset somewhat by the aforementioned
reduction in DNE's net sales.

GROSS PROFIT

PRO FORMA BASIS. Pro forma gross profit in fiscal 1996 was $71.0 million,
representing an increase of $16.0 million, or 29.1%, over fiscal 1995 pro forma
gross profit of $55.0 million. The pro forma gross margin in fiscal 1996 was
13.4% as compared to 11.7% in fiscal 1995.

Superior's pro forma gross profit increased by $11.9 million, or 41.9%, to
$40.3 million in fiscal 1996. Superior's fiscal 1996 pro forma gross margin
increased to 10.3% as compared to 8.3% in fiscal 1995. Superior's gross margin
improved from 8.1% in the first quarter, increasing to 9.2%, 10.6% and 13.3% in
the second, third and fourth quarters, respectively. The continued improvement
in gross margin during fiscal 1996 resulted from: (1) the aforementioned price
increases instituted during fiscal 1996, the primary impact of which was
reflected in the third and fourth quarters of the fiscal year; (2) non-copper
raw material cost reductions, impacting primarily the fourth quarter of fiscal
1996; (3) improved production efficiencies caused by higher production levels;
and (4) cost savings resulting from the completion of the transition of the
Alcatel Business operations during the latter half of the fiscal year.

DNE's gross profit for fiscal 1996 was $7.9 million, representing a decline
of $0.3 million, or 3.7%, as compared to fiscal 1995. The reduction in DNE's
fiscal 1996 gross profit was attributable to lower net sales, the effect of
which was partially offset by a slight increase in DNE's fiscal 1996 gross
margin of 30.1% as compared to 29.4% in fiscal 1995.

Adience's pro forma gross profit increased by $4.4 million, or 23.9%, to
$22.8 million in fiscal 1996. Adience's pro forma gross margin increased to
20.1% for fiscal 1996 as compared to 18.2% for fiscal 1995 . The comparative pro
forma gross margin improvement in fiscal 1996 was due primarily to the
elimination of unprofitable product lines and cost reductions in Adience's
specialty block division, and a proportional increase in revenues from Adience's
coke oven rebuilding division which generates higher gross margins as compared
to Adience's other divisions.

HISTORICAL BASIS. On an historical basis, gross profit increased from $29.0
million in fiscal 1995 to $70.3 million in fiscal 1996, representing an increase
of $41.3 million, or 142%. During this same period, the gross margin declined
from 14.6% to 13.4%. The comparative increase in fiscal 1996 gross profit was
directly attributable to the inclusion of the Alcatel Business and Adience
during substantially all of fiscal 1996. Similarly, the decline in gross margin
was due to the inclusion of these acquired operations which operate in
relatively lower gross margin markets as compared to DNE.

19

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES ("SG&A EXPENSES")

PRO FORMA BASIS. Pro forma SG&A expenses in fiscal 1996 were $35.2 million,
an increase of $3.3 million, or 10.3%, as compared to fiscal 1995.

Superior's pro forma SG&A expenses in fiscal 1996 were $8.4 million as
compared to fiscal 1995 pro forma SG&A expenses of $6.2 million. This increase
was attributable to a number of factors, including duplicative transitionary
data processing charges associated with the Alcatel acquisition, higher expenses
associated with the development and support of data processing system upgrades,
expansion of international and other marketing activities associated with new
product lines and entering new geographic markets and/or increase in inside
sales and marketing staff to support the overall increase in sales demand.

DNE's SG&A expenses declined by $0.7 million or 10.8%, to $5.8 million in
fiscal 1996. This reduction was due primarily to a reorganization of DNE's sales
and marketing efforts and the elimination of overhead associated with activities
in non-strategic product lines and markets.

Adience's SG&A expenses of $15.0 million declined $1.0 million, or 6.3%, as
compared to fiscal 1995 pro forma SG&A expenses of $16.0 million. Adience's
lower SG&A expenses in fiscal 1996 resulted from reductions in corporate
staffing in fiscal 1996 associated with the completion of an overall corporate
reorganization, and a reduction in sales and marketing staff associated with a
consolidation of its sales force across product lines and markets.

HISTORICAL BASIS. On an historical basis, SG&A expenses increased from
$20.5 million in fiscal 1995 to $35.1 million in fiscal 1996. The principal
cause for the increase in SG&A expenses was the inclusion of Adience's
operations for the entire fiscal 1996 periods, incremental SG&A expenses
resulting from the growth in operations due to Superior's acquisition of the
Alcatel Business and the overall increase in corporate activities.

OPERATING INCOME.

PRO FORMA BASIS. On a pro forma basis, operating income for fiscal 1996
increased $12.7 million, or 62.0%, from $20.5 million during fiscal 1995 to
$33.2 million during fiscal 1996.

Superior's pro forma operating income reflected an increase of $9.7 million
for fiscal 1996. Such increase was due to higher sales and higher gross margins
(particularly during the third and fourth fiscal quarters of 1996), offset
somewhat by higher SG&A expenses.

DNE's income in fiscal 1996 of $2.1 million increased $0.3 million or 23.5%
from fiscal 1995 with such increase due primarily to administrative expense and
overhead cost reductions.

Adience's pro forma operating income improved from $1.2 million in fiscal
1995 to $6.6 million in fiscal 1996. Adience's improved operating profit was
attributable to higher sales, reductions in cost and overhead and elimination of
unprofitable product lines.

The aggregate increase in comparative pro forma operating income at Alpine's
operating subsidiaries for fiscal 1996 of $15.5 million (an increase of 65.4%)
was partially offset by a comparative increase in fiscal 1996 corporate expenses
of $2.8 million.

HISTORICAL BASIS. On an historical basis, operating income increased from
$7.0 million in fiscal 1995 to $32.5 million for fiscal 1996, an increase of
$25.5 million. The comparative increase in fiscal 1996 operating income was
attributable to the inclusion of the operations of the Alcatel Business and
Adience's operations in fiscal 1996, along with unit sales volume and price
increases in the telecommunications wire and cable operations.

20

NET INTEREST EXPENSE

During fiscal 1996, Alpine incurred net interest expense of $25.6 million as
compared to net interest expense of $7.9 million in fiscal 1995. The increase in
interest expense was due primarily to interest cost associated with debt assumed
in the Adience acquisition and debt incurred in connection with the Alcatel
acquisition.

As described in Note 9 to Alpine's Consolidated Financial Statements, on
July 21, 1995, Alpine refinanced a substantial portion of its debt by the
placement of $153.0 million of Senior Secured Notes due 2003 (net proceeds after
discount, commissions and expenses amounted to $135.0 million) and by entering
into an $85.0 million revolving credit facility (of which $48.6 million was
drawn at April 30, 1996). Management believes that the refinancing, if reflected
on a pro forma basis, would not have had a material impact on net interest
expense in the current fiscal year.

INCOME TAX EXPENSE

Alpine did not incur any regular federal income tax expense in fiscal 1996
or 1995. However, Alpine did incur federal alternative minimum tax expense,
state income tax expense and foreign tax expense (subject to the potential
future benefit of foreign tax credits) during such periods with such amounts
reflected as income tax expense in the statement of operations.

DISCONTINUED OPERATIONS

On June 14, 1995, Alpine distributed to its stockholders (the "PolyVision
Spin-Off") shares of common stock of its information display subsidiary,
PolyVision Corporation ("PolyVision"). Alpine currently owns approximately 19%
of the outstanding PolyVision common stock and 98% of its preferred stock.
PolyVision had net sales of $35.6 million for the fiscal year ended April 30,
1996. Prior to the PolyVision Spin-Off, two Alpine subsidiaries, Alpine
PolyVision, Inc. ("APV") and Posterloid Corporation ("Posterloid"), were merged
into subsidiaries of PolyVision (the "PolyVision Merger"). For all periods
presented herein, PolyVision, APV and Posterloid are reflected as discontinued
operations.

Loss from discontinued operations for fiscal 1996 amounted to $2.2 million,
net of tax, which included, among other things, a one-time $1.6 million charge
related to certain contractual employee termination matters associated with the
aforementioned distribution of Polyvision. In fiscal 1995, loss from
discontinued operations amounted to $4.9 million. Such charges in fiscal 1995
included the accrual of operating losses expected to be incurred by APV and
Posterloid through the anticipated date of the Polyvision Spin-Off.

EXTRAORDINARY LOSS

During fiscal 1996, Alpine incurred an extraordinary loss from
extinguishment of debt of $5.1 million, offset by an extraordinary gain of $0.3
million, net of tax. The extraordinary loss related primarily to the write-off
of unamortized deferred loan fees associated with debt that was repaid in
conjunction with the refinancing described in Note 9 to Alpine's Consolidated
Financial Statements. The extraordinary gain reflected the discounted redemption
in August 1995 of a $2.5 million subordinated note payable.

FISCAL 1995 COMPARED TO FISCAL 1994

NET SALES

PRO FORMA BASIS. Fiscal 1995 pro forma net sales were $469.6 million,
representing an increase of $37.2 million, or 8.6%, as compared to fiscal 1994.

Superior's pro forma net sales for fiscal 1995 of $340.8 million, were $28.9
million, or 9.3%, greater than fiscal 1994 pro forma net sales of $311.9
million. However, a majority of the fiscal 1995 sales increase ($27.0 million)
was attributable to the pass-through of higher copper cost during fiscal 1995.
Excluding the impact of such higher copper costs, Superior's comparative fiscal
1995 pro forma

21

net sales were relatively flat. During fiscal 1995, Superior's stand-alone
historical operations (excluding the pro forma impact of the Alcatel Business)
actually reflected a $29.6 million, or 27.6%, increase in net sales. This
increase in net sales from Superior's stand-alone historical operations included
a $16.0 million increase in sales of wire products, which increase included the
impact of two new multi-year supply agreements for outside plant wire products
and increased sales of premise wire products (including UTP). Sales growth in
fiscal 1995 from Superior's historical operations also included a $5.0 million
increase in outside plant cable product sales, again resulting from new
multi-year supply agreement awards.

The stand-alone historical operations of the Alcatel Business in fiscal 1995
reflected a decline in net sales of $19.0 million after eliminating the impact
of the higher copper cost pass-through. This decline resulted from a decrease in
both sales volume and selling prices. The decrease in sales volume, estimated at
$10.0 million, was the result of the loss of two major RBOC contracts in the
latter part of fiscal 1994 (a portion of which was awarded to Superior), and
reflected a trend in the RBOC market towards the concentration of supplier
relationships. Partially offsetting the reduction in sales volume from the
aforementioned RBOC contracts, was the impact of higher sales in the spot market
and the impact of two new multi-year supply agreements entered into by the
Alcatel Business in the first half of fiscal 1995. However, the general weak
market conditions that existed during the first half of fiscal 1995 (May 1994 -
October 1994), resulted in such new business being booked at lower selling
prices, the impact of which on net sales was estimated at approximately $8.0
million in fiscal 1995.

DNE's net sales in fiscal 1995 increased by $6.2 million, or 28.6%, to $27.9
million. This increase was attributable to the aforementioned NASA contract
which accounted for $7.0 million in fiscal 1995 revenue. Net sales of data
communications and avionics products to the military declined in fiscal 1995 to
$15.9 million as compared to $18.6 million in fiscal 1994. The decline in
military product sales was offset by growth in commercial contract manufacturing
revenues of approximately $3.5 million in fiscal 1995.

Adience's pro forma net sales during fiscal 1995 were $100.9 million
representing an increase of $2.1 million, or 2.1%, as compared to pro forma net
sales of $98.8 million during fiscal 1994. The increase was due to increased
sales of Alpine's specialty products and services, particularly monolithic
(unformed) refractories, as well as an increase in rebuilding services for coke
ovens, partially offset by a decrease in sales of maintenance services. Sales of
refractory bricks to the iron and steel industry declined due to the
discontinuation of numerous unprofitable product lines. Sales of block to the
flat plate glass industry remained essentially unchanged.

HISTORICAL BASIS. On an historical basis, net sales increased from $68.5
million in fiscal 1994 to $198.1 million in fiscal 1995, an increase of $129.6
million or 189%. This increase was primarily attributable to the inclusion of
Superior's operations for a full year in fiscal 1995 as compared to
approximately five and one half months of Superior's operations included in the
fiscal 1994 results, as well as the inclusion in fiscal 1995 of approximately
four months of the operations of Adience.

GROSS PROFIT

PRO FORMA BASIS. Pro forma gross profit for fiscal 1995 as compared to
fiscal 1994 declined by $2.7 million to $55.0 million. The pro forma gross
margin for this period declined from 13.4% in fiscal 1994 to 11.7% in fiscal
1995.

Superior's pro forma gross profit in fiscal 1995 of $28.4 million reflected
a decline of $5.6 million as compared to fiscal 1994. During this same period,
the gross margin declined from 10.9% in fiscal 1994 to 8.3% in fiscal 1995. As
was the case with net sales in fiscal 1995, there was a notable distinction
between the trend in gross profit and gross margin for Superior's stand-alone
historical operations as compared to the Alcatel Business stand-alone historical
operations. In fiscal 1995, Superior's stand-alone historical operations
reflected an increase in gross profit of $4.3 million (a 44.0% increase over
fiscal 1994). During this same period, the gross margin from Superior's
historical operations increased to 10.4% in fiscal 1995 from 9.2% in fiscal
1994. The improvement in gross

22

margin from Superior's historical operations in fiscal 1995 was the result of:
(i) the increase in, and the higher proportion of, outside plant wire and
premise wire sales which typically generate higher percentage margins than
outside plant cable sales; (ii) the increase in overall product demand in the
latter half of fiscal 1995 and the reduction in industry-wide capacity resulting
in higher pricing on products not subject to multi-year supply agreements; and
(iii) higher production volumes which resulted in a proportional reduction in
the fixed cost component of cost of goods sold.

The fiscal 1995 gross profit for the historical operations of the Alcatel
Business declined by $10.1 million as compared to fiscal 1994. The gross margin
for this same period declined from 10.4% to 5.5% (7.5% if adjusted to exclude
the impact of the pass-through of higher copper costs). The reduction in the
Alcatel Business historical gross profit and gross margin during fiscal 1995 was
the result of the replacement of lost contract business with spot market sales
and business under new supply agreements in the latter half of fiscal 1994,
which was during a period of extremely competitive market pricing.

During fiscal 1995, DNE's gross profit remained relatively unchanged at $8.2
million. During this same period, DNE's gross margin declined from 38.2% in
fiscal 1994 to 29.4% in fiscal 1995. A change in product mix from primarily
higher margin military products in fiscal 1994 to a mix of military products and
lower margin commercial and government contract manufacturing services caused
this decline.

Adience's pro forma gross profit for fiscal 1995 was $18.4 million,
representing an increase of $3.0 million, or 19.5%, from pro forma gross profit
of $15.4 million for fiscal 1994. The pro forma gross margin increased to 18.2%
during fiscal 1995, as compared to 15.6% during fiscal 1994. The improvement in
pro forma gross margin during fiscal 1995 was the result of management efforts
to: (1) discontinue unprofitable product lines, (2) increase product prices, (3)
increase productivity through headcount reductions, (4) consolidate operations,
and (5) continue to focus on higher margin products such as monolithic and
bottom pour refractories and slidegates.

HISTORICAL BASIS. On an historical basis, gross profit increased from $12.3
million in fiscal 1994 to $29.0 million in fiscal 1995. This increase was due to
the inclusion of Superior's and Adience's operations in Alpine's historical
results in fiscal 1995.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

PRO FORMA BASIS. Fiscal 1995 pro forma SG&A expenses were $31.9 million,
which were comparable to fiscal 1994 pro forma SG&A expenses of $32.1 million.

Superior's pro forma SG&A expenses in fiscal 1995 were $6.2 million, an
increase of $0.9 million over fiscal 1994 pro forma SG&A expenses. This increase
reflected higher marketing and engineering expenses associated with the
expansion of Superior's product lines into the premise wire markets and the
growth in revenues in Superior's traditional wire and cable products and
markets.

DNE's SG&A expenses in fiscal 1995 as compared to fiscal 1994 were basically
flat at $6.5 million.

Adience's pro forma SG&A expenses during fiscal 1995 were $16.0 million, as
compared to $16.6 million during fiscal 1994, a decrease of 3.8%. This decrease
resulted from reductions in corporate overhead and insurance expense, partially
offset by increased personnel expense in the sales, research and development and
other areas.

HISTORICAL BASIS. On an historical basis, fiscal 1995 SG&A expenses
increased by $8.3 million to $20.5 million. This increase was due to the same
factors that gave rise to the increase in net sales and gross profit as
discussed above.

OPERATING INCOME

PRO FORMA BASIS. Fiscal 1995 comparative pro forma operating income
declined by $0.3 million or 1.4%, to $20.5 million. This decline was due to
lower comparative pro forma gross profit in fiscal

23

1995 which was attributable to lower sales volumes and gross margins in the
historical operations of the Alcatel Business during such period, offset by
improved gross margins and gross profit in Adience's operations.

HISTORICAL BASIS. In fiscal 1995 the historical operating income was $7.0
million as compared to a fiscal 1995 operating loss of $2.2 million. This
improvement was due to the inclusion of Superior's operations and, to a lesser
degree, Adience's operations in fiscal 1995.

INTEREST EXPENSE

Net interest expense in fiscal 1995 was $7.9 million, representing an
increase of $5.8 million over fiscal 1994 net interest expense of $2.1 million.
The acquisition of Adience during fiscal 1995 and the inclusion of a full year
of Superior's operations resulted in an increase in interest expense of $4.5
million which, along with a $1.2 million increase in corporate interest expense,
accounted for substantially all of the increase.

LOSS FROM DISCONTINUED OPERATIONS

As previously discussed, the loss from discontinued operations in fiscal
1995 and 1994 of $4.9 million and $25.2 million, respectively, related primarily
to losses incurred by APV during such period. The loss in fiscal 1994 included a
$21.7 million non cash charge related to the acquisition of minority ownership
interest in APV which was accounted for, and expensed as, purchased research and
development.

LIQUIDITY AND CAPITAL RESOURCES

In fiscal 1996, Alpine generated $38.4 million in cash flow from continuing
operating activities, approximately $17.2 million of which represented
reductions in net working capital deployed, including a $8.2 million reduction
in accounts receivable. Partially offsetting cash flow from continuing operating
activities was $1.0 million of cash used for discontinued operations. Cash flow
used for investing activities of $126.4 million included $103.4 million used in
connection with the Alcatel Acquisition, $6.2 million invested in marketable
securities, $3.1 million loaned to PolyVision, $5.4 million related to the BICC
Asset Acquisition and $6.2 million in other capital expenditures. Cash provided
by financing activities of $74.6 million included net borrowings from the sale
of the Alcatel Acquisition Notes and the refinancing of a significant portion of
Alpine's debt (both of which are more fully described below), partially offset
by $12.6 million in capitalized financing costs related to the Alcatel
Acquisition Notes and the aforementioned refinancing, $3.7 million used for open
market repurchases of Alpine Common Stock, and $0.7 million in preferred stock
dividends.

During fiscal 1996 Alpine completed the Alcatel Acquisition, consummated a
refinancing of a significant portion of its debt, and completed the PolyVision
Spin-Off. These transactions have had a material impact on Alpine's financial
condition and liquidity.

The Alcatel Acquisition was completed on May 11, 1995, and included a
purchase price of $103.4 million which was paid in cash and was financed by the
issuance of the $140.0 million Alcatel Acquisition Notes, due in 1997 (see Notes
6 and 9 to Alpine's Consolidated Financial Statements).

On July 21, 1995, Alpine completed a refinancing which included the
placement of $153.0 million principal amount of Senior Secured Notes ("Senior
Notes") (net proceeds after discount and expenses amounted to $135.0 million)
due in 2003. Alpine also entered into an $85.0 million revolving credit facility
("Credit Facility") of which $48.6 million was outstanding at April 30, 1996.
Proceeds from the Senior Notes and the Credit Facility along with a portion of
cash reserves were used to (1) redeem the Alcatel Acquisition Notes, (2) redeem
at a discount $44.1 million in face amount of Adience's 11% Senior Notes, (3)
repay $31.8 million in short-term borrowings, and (4) redeem, repay, or reduce
other outstanding indebtedness of Alpine. At April 30, 1996, Alpine's capital
structure included $209.8 million of long-term debt (including current
maturities of $2.1 million) and stockholders' equity of $43.1 million (including
$11.8 million of convertible preferred stock). At April 30, 1996, Alpine did not
have any short-term borrowings.

24

With respect to debt maturities, the refinancing eliminated $31.8 million of
short-term borrowings due within the next 12 months and redeemed entirely the
Alcatel Acquisition Notes which were due in 1997. This debt was replaced with
the Senior Notes and the Credit Facility, neither of which have any principal
payment requirements until their respective maturities (2000 with respect to the
Credit Facility and 2003 with respect to the Senior Notes). Debt remaining after
the refinancing, other than the Senior Notes and the Credit Facility, amounted
to $20.1 million at April 30, 1996, with required principal payments in the next
12 months of $2.1 million and aggregate required principal payments over the
next 5 years of $5.1 million.

Alpine believes the aforementioned refinancing has had a positive impact on
its financial condition and liquidity by substantially lengthening the
maturities on its debt while creating liquidity through funds availability under
its Credit Facility.

With respect to liquidity, Alpine's excess consolidated availability under
its Credit Facility (based on eligible accounts receivable and inventory)
amounted to approximately $26.0 million as of April 30, 1996 which, when
combined with cash and marketable securities, resulted in total cash and credit
availability of approximately $34.8 million. While the Credit Facility does
include sublimit restrictions on outstanding borrowings allocated to Alpine's
principal subsidiaries (Superior, Adience and DNE), such sublimits are not
expected to negatively impact, over the next 12 months or in future years, the
liquidity of Superior, Adience or DNE. There are also no restrictions on
utilizing borrowings under the Credit Facility to pay interest on the Senior
Notes or any of Alpine's other debt so long as Alpine is in compliance with its
related loan covenants.

With respect to commitments, Alpine projects that cash interest expense over
the next 12 months will approximate $24-$25 million which, when combined with
principal repayment requirements, will result in total annual debt service
requirements (principal and interest) of approximately $27.7 million. Further,
the Company also expects to invest, on an annual recurring basis, approximately
$6-$9 million in capital expenditures. Accordingly, Alpine expects its total
capital commitments and debt service requirements over the next 12 months to
approximate $30-$34 million.

Alpine intends to fund its capital expenditure and debt service commitments
from funds generated from operations. The Company has experienced significant
growth in its operating cash flow during fiscal 1996 due to (1) the impact of
the Alcatel Acquisition, (2) improvements in Adience's operating results, and
(3) subject to certain commitments discussed below, the elimination of the
negative cash flow impact of funding development expenses associated with
Alpine's APV activities which was included in the PolyVision Spin-off. During
fiscal 1996, Alpine generated earnings before interest, taxes, depreciation, and
amortization ("EBITDA") of $45.8 million ($46.4 million on a pro forma basis,
assuming the Alcatel Acquisition occurred as of May 1, 1995). Accordingly,
Alpine expects to be able to fund all of its anticipated operating commitments
on an annual basis from internally generated cash flow without using existing
cash reserves or excess availability under the Credit Facility, except to fund
seasonal working capital fluctuations.

In connection with the PolyVision Spin-off, Alpine entered into an
arrangement pursuant to which Alpine agreed to lend to PolyVision, from time to
time prior to May 24, 1997, up to $5.0 million to be used by PolyVision to fund
its working capital needs. Borrowings under the agreement are unsecured and bear
interest at a market rate. The principal balance outstanding is due on May 24,
2005, subject to mandatory prepayment of principal and interest from the net
cash proceeds of any public or private equity offering or debt financing
completed by PolyVision at any time prior to maturity. Alpine's obligation to
lend such funds to PolyVision is subject to a number of conditions, including
review by Alpine of the proposed use of such funds by PolyVision. As of April
30, 1996, Alpine had advanced approximately $3.1 million to PolyVision under
this arrangement, with a remaining commitment for funding of approximately $1.9
million. Alpine believes its existing cash and credit availability will be
sufficient to fund this remaining commitment without materially affecting
Alpine's overall liquidity.

25

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Alpine's consolidated financial statements at April 30, 1995 and 1996 and
for each of the three years in the period ended April 30, 1996 and the report of
the independent accountants thereon and financial statement schedules required
under Regulation S-X are submitted herein as a separate section following Item
14 of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT

The information required by this Item is incorporated herein by reference to
Alpine's definitive Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the end of the
fiscal year covered by this report ("Alpine's Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference to
Alpine's Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated herein by reference to
Alpine's Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to
Alpine's Proxy Statement.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1), (a)(2) See the separate section of this report following Item 14
for a list of financial statements and schedules filed herewith.

(a)(3) Exhibits as required by Item 601 of Regulation S-K are listed in
Item 14(c) below.

(b) The Company did not file any Reports on Form 8-K during the fourth
quarter of fiscal 1996.

ITEM 14(C) EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

2(a) Asset Purchase Agreement, dated as of March 17, 1995 by and among Alcatel NA Cable Systems, Inc.,
Alcatel Canada Wire, Inc. Superior Cable Corporation and Superior Teletec Inc. (the "Alcatel
Acquisition Agreement") (incorporated herein by reference to Exhibit 1 to the Current Report on Form
8-K of Alpine dated May 24, 1995)
2(b)* Agreement Regarding Certain Employee Benefit Plans, amending the Alcatel Acquisition Agreement, dated
June 10, 1996
2(c) Amendment dated May 11, 1995 to Asset Purchase Agreement by and among Alcatel NA Cable Systems, Inc.,
Alcatel Canada Wire, Inc., Superior Cable Corporation and Superior Teletec Inc. (incorporated herein
by reference to Exhibit 2 to the Current Report on Form 8-K of Alpine dated May 24, 1995)

26

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

2(d) Agreement and Plan of Merger, dated as of December 21, 1994, as amended, by and among Information
Display Technology, Inc., IDT PolyVision Acquisition Corp., IDT Posterloid Acquisition Corp., The
Alpine Group, Inc., Alpine/PolyVision, Inc. and Posterloid Corporation (incorporated herein by
reference to Exhibit 2 to Amendment No. 1 to Alpine's Statement on Schedule 13D relating to its
beneficial ownership of equity securities of Information Display Technology, Inc. dated December 28,
1994)
2(e) Amendment to the Agreement and Plan of Merger, dated as of December 21, 1994, by and among Information
Display Technology, Inc., IDT PolyVision Acquisition Corp., IDT Posterloid Acquisition Corp., The
Alpine Group, Inc., Alpine/PolyVision, Inc. and Posterloid Corporation (incorporated herein by
reference to Exhibit 1 to Amendment No. 2 to Alpine's Statement on Schedule 13D relating to its
beneficial ownership of equity securities of Information Display Technology Inc. dated May 5, 1995)
2(f) Amended and Restated Stock Purchase Agreement, dated as of October 11, 1994, by and among The Alpine
Group, Inc. and certain stockholders of Adience, Inc. ("Adience") as listed therein, as amended
(incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K dated
January 5, 1995)
3(a) Certificate of Incorporation of Alpine (incorporated herein by reference to Exhibit 3(a) to the Annual
Report on Form 10-K of Alpine for the year ended April 30, 1995 (the "1995 10-K"))
3(b) Amendment to the Certificate of Incorporation of Alpine (incorporated herein by reference to Exhibit
3(aa) of Post-Effective Amendment No. 1 to the Registration Statement on Form S-3 (Registration No.
33-53434) of Alpine, as filed with the Commission on May 12, 1993)
3(c) Certificate of the Powers, Designations, Preferences and Rights of the 9% Cumulative Convertible
Preferred Stock of Alpine (incorporated herein by reference to Exhibit 1 to the Quarterly Report on
Form 10-Q of Alpine for the quarter ended January 31, 1989)
3(d) Certificate of the Powers, Designations, Preferences and Rights of the 9% Cumulative Convertible Senior
Preferred Stock of Alpine (incorporated herein by reference to Exhibit 3(c) to the Annual Report on
Form 10-K of Alpine for the fiscal year ended April 30, 1992 ("1992 10-K"))
3(e) Certificate of the Powers, Designations, Preferences and Rights of the 8.5% Cumulative Convertible
Senior Preferred Stock of Alpine (incorporated herein by reference to Exhibit 3(e) to the Annual
Report on Form 10-K of Alpine for the fiscal year ended April 30, 1994)
3(f) Certificate of the Powers, Designations, Preferences and Rights of the 8% Cumulative Convertible Senior
Preferred Stock of the Company (incorporated herein by reference to Exhibit 3(f) to the 1995 10-K)
3(g) By-laws of Alpine (incorporated herein by reference to Exhibit 3(g) to the 1995 10-K)
4(a) Indenture, dated as of October 1, 1986, between Alpine and Manufacturers Hanover Trust Company
("MHTC"), as trustee, relating to the 13 1/2% Senior Subordinated Debentures due 1996 of the Company
(incorporated herein by reference to Exhibit 4 to Amendment No. 2 to the Registration Statement on
Form S-1 (Registration No. 33-7709) of Alpine, as filed with the Commission on October 3, 1986)
4(b) First Supplemental Indenture to the above Indenture, dated as of February 3, 1989, between Alpine and
MHTC, as trustee (incorporated herein by reference to Exhibit 4(b) to the 1995 10-K)
4(c) Second Supplemental Indenture to the above Indenture, dated as of October 31, 1989, between Alpine and
MHTC, as trustee (incorporated herein by reference to Exhibit 4(c) to the 1995 10-K)

27

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

4(d) Indenture, dated as of October 31, 1989, between Alpine and IBJ Schroder Bank & Trust Company ("IBJ"),
as trustee, relating to the Convertible Secured Senior Subordinated Notes due July 31, 1996, of Alpine
(incorporated herein by reference to Exhibit 4(d) to the 1995 10-K)
4(e) First Supplemental Indenture to the above Indenture, dated as of March 28, 1991, between Alpine and
IBJ, as trustee (incorporated herein by reference to Exhibit 4 to the Current Report on Form 8-K of
Alpine dated April 10, 1991 (the "April 1991 8-K"))
4(f) Second Supplemental Indenture to the above Indenture, dated as of April 10, 1992, between Alpine and
IBJ, as trustee (incorporated herein by reference to Exhibit 4(f) to the 1992 10-K)
4(g) Indenture, dated as of June 30, 1993, between Adience, Inc. ("Adience") and IBJ, as trustee
(incorporated herein by reference to Registration Statement No. 33-72024 of Adience, Inc.)
10(a) Amended and Restated 1984 Restricted Stock Plan of Alpine (incorporated herein by reference to Exhibit
10.5 to Form S-4 (Registration No. 33-9978) of Alpine, as filed with the Commission on October 5, 1993
(the "S-4 Registration Statement")
10(b) Amended and Restated 1987 Long Term Equity Incentive Plan of Alpine (incorporated herein by reference
to Exhibit 10.4 to the S-4 Registration Statement)
10(c) Stock Purchase Agreement, dated February 14, 1992, by and between Alpine and Dataproducts Corporation,
relating to the purchase of shares of capital stock of DNE (incorporated herein by reference to
Exhibit 1 to the Current Report on Form 8-K of Alpine dated March 2, 1992 (the "March 1992 8-K"))
10(d) Loan Agreement, dated as of February 13, 1992, by and among Alpine, DNE and the Connecticut Development
Authority (incorporated herein by reference to Exhibit 3 to the March 1992 8-K)
10(e) Agreement and Plan of Merger by and between Alpine and Superior TeleTec Inc., dated as of June 17, 1993
and amended on September 24, 1993 (incorporated herein by reference to Exhibit 2 to the S-4
Registration Statement)
10(f) Exchange Agreement, dated June 17, 1993 by and among Alpine, PV Partners, Suez Ventures, EUROC, and
Samuel Montagu Finance (incorporated herein by reference to Exhibit 10.1 to the S-4 Registration
Statement)
10(j) Lease Agreement by and between ALP(TX) QRS 11-28, Inc., and Superior TeleTec Transmission Products,
Inc., dated as of December 16, 1993 (incorporated herein by reference to Exhibit (i) to the Quarterly
Report on Form 10-Q of Alpine for the Quarter ended January 31, 1994)
10(k) Amended and Restated Debt Exchange Agreement, dated as of October 11, 1994, among Alpine and certain
debtholders of Adience as listed therein (as amended through April 14, 1995) (incorporated herein by
reference to Exhibit 10(k) to the 1995 10-K)
10(l) Note Purchase Agreement by and among Alpine, Superior TeleTec, Inc., Superior Cable Corporation and
Nomura International Trust Company (incorporated herein by reference to Exhibit 3 to Alpine's Current
Report on Form 8-K dated May 24, 1995)
10(m) Letter Agreement, dated May 24, 1995, by and between Alpine and PolyVision Corporation ("PolyVision")
relating to $5,000,000 credit commitment (incorporated herein by reference to Exhibit 10(m) to 1995
10-K)
10(o) First Amendment to Lease Agreement, dated as of May 10, 1995, by and between ALP (TX) QRS 11-28, Inc.
and Superior Teletec Inc. (incorporated herein by reference to Exhibit 10(o) to the 1995 10-K)

28

EXHIBIT
NUMBER DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------

10(p) Purchase Agreement, dated as of July 14, 1995, by and among Alpine, Adience, Superior
Telecommunications Inc., Superior Cable Corporation, Merrill Lynch & Co., Nomura Securities
International, Inc. and First Albany Corporation (incorporated herein by reference to Exhibit 10(p) to
the 1995 10-K)
10(q)* Employment Agreement, dated as of April 26, 1996, by and between Alpine and Steven S. Elbaum
10(r)* Employment Agreement, dated as of April 26, 1996, by and between Alpine and Stewart H. Wahrsager
10(s)* Employment Agreement, dated as of April 26, 1996, by and between Alpine and Bragi F. Schut
10(t)* Employment Agreement, dated as of April 26, 1996, by and between Alpine and Stephen M. Johnson
10(u)* Employment Agreement, dated as of April 26, 1996, by and between Alpine and David S. Aldridge
10(v) Second Amendment to Lease Agreement, dated as of July 21, 1995, by and between ALP(TX) QRS H-28, Inc.
and Superior Telecommunications Inc. (incorporated herein by reference to Exhibit 10(x) to the 1995
10-K)
10(w) Loan and Security Agreement, dated as of July 21, 1995, by and between Alpine, Shawmut Capital
Corporation, Nationsbank of Georgia, N.A., and Creditanstalt Corporation Finance, Inc. (incorporated
herein by reference to Exhibit 10(y) to the 1995 10-K)
10(x) Amendment dated as of June 30, 1995, to Amended and Restated Debt Exchange Agreement dated as of
October 11, 1984, among Alpine and certain debtholders of Adience, as listed therein (incorporated
herein by reference to Exhibit 10(bb) to the 1995 10-K)
10(y) Supplemental Indenture, dated as of July 21, 1995, to Indenture by and between Adience and IBJ dated as
of June 30, 1993 (incorporated herein by reference to Exhibit 10(cc) to the 1995 10-K)
10(z) Indenture, dated as of July 15, 1995, by and among Alpine, Adience, Superior Telecommunications Inc.,
Superior Cable Corporation and Marine Midland Bank ("Marine Midland"), as trustee (incorporated herein
by reference to Exhibit 10(ee) to the 1995 10-K)
10(aa) Pledge Agreement, dated as of July 21, 1995, by and between Alpine and Marine Midland (incorporated
herein by reference to Exhibit 10(ff) to the 1995 10-K)
12 Computation of ratio of earnings to fixed charges.
21* List of Subsidiaries
23(a)* Consent of Arthur Andersen LLP
27* Financial Data Schedule
28* Alpine is herewith filing as exhibits the following financial statements relating to Alpine's
subsidiaries, Superior and Adience, each of which has guaranteed Alpine's 12 1/2% Senior Secured Notes
due 2003, and the stock of each of which subsidiaries has been pledged to secure such Notes.

ADIENCE, INC.

Consolidated Financial Statements:

Consolidated balance sheets at April 30, 1995 and April 30, 1996

Consolidated statements of operations for the period from December 21,
1994 to April 30, 1995 and the year ended April 30, 1996.

Consolidated statement of stockholder's equity for the period from
December 21, 1994 to April 30, 1995 and the year ended April 30, 1996.

29

Consolidated statements of cash flows for the period from December 21,
1994 to April 30, 1995 and the year ended April 30, 1996.

Notes to consolidated financial statements

SUPERIOR TELECOMMUNICATIONS INC.

Consolidated Financial Statements:

Consolidated balance sheets at April 30, 1995 and April 28, 1996

Consolidated statements of operations and retained earnings for the
period from November 11, 1993 to May 1, 1994 and the years ended April 30,
1995 and April 28, 1996.

Consolidated statements of cash flows for the period from November 11,
1993 to May 1, 1994 and the years ended April 30, 1995 and April 28, 1996.

Notes to consolidated financial statements
- ------------------------
*Filed herewith.

30

SIGNATURES

Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated: July , 1996

THE ALPINE GROUP, INC.

By:

-----------------------------------
Steven S. Elbaum
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Chairman of the Board and Chief
- ------------------------------------------- Executive Officer (principal July 26, 1996
Steven S. Elbaum executive officer)

Vice President and Treasurer
- ------------------------------------------- (principal financial and July 26, 1996
David S. Aldridge accounting officer)

- -------------------------------------------
Kenneth G. Byers, Jr. Director July 26, 1996

- -------------------------------------------
Randolph Harrison Director July 26, 1996

- -------------------------------------------
John C. Jansing Director July 26, 1996

- -------------------------------------------
Ernest C. Janson, Jr. Director July 26, 1996

- -------------------------------------------
James R. Kanely Director July 26, 1996

- -------------------------------------------
Gene E. Lewis Director July 26, 1996

- -------------------------------------------
Bragi F. Schut Director July 26, 1996

31

INDEX TO FINANCIAL STATEMENTS

AUDITED CONSOLIDATED FINANCIAL STATEMENTS:

Report of independent public accountants............................................. F-2
Consolidated balance sheets at April 30, 1995 and 1996............................... F-3
Consolidated statements of operations for the years ended April 30, 1994, 1995 and
1996................................................................................ F-4
Consolidated statements of stockholders' equity for the three years ended April 30,
1996................................................................................ F-5
Consolidated statements of cash flows for the years ended April 30, 1994, 1995 and
1996................................................................................ F-8
Notes to consolidated financial statements........................................... F-10

SCHEDULE:

Schedule I -- Condensed Financial Information of Registrant (Parent Company)......... F-35

F-1

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Alpine Group, Inc.:

We have audited the accompanying consolidated balance sheets of The Alpine
Group, Inc. ("Alpine") (a Delaware corporation) and subsidiaries as of April 30,
1995 and 1996, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended April 30, 1996. These consolidated financial statements and the financial
statement schedule referred to below are the responsibility of Alpine's
management. Our responsibility is to express an opinion on these consolidated
financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
The Alpine Group, Inc. and subsidiaries as of April 30, 1995 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended April 30, 1996 in conformity with generally accepted accounting
principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for the purpose of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

Arthur Andersen LLP

Atlanta, Georgia
June 14, 1996

F-2

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS

APRIL 30,
--------------------
1995 1996
--------- ---------
(IN THOUSANDS)

Current assets:
Cash and cash equivalents............................................ $ 15,546 $ 1,119
Marketable securities................................................ 1,495 7,713
Accounts receivable (less allowance for doubtful accounts of $956 in
1995 and $506 in 1996).............................................. 41,255 60,670
Inventories.......................................................... 35,242 68,990
Other current assets................................................. 5,347 7,850
--------- ---------
Total current assets............................................... 98,885 146,342
Property, plant, and equipment, net.................................... 52,240 99,425
Long-term investments and other assets................................. 16,941 26,403
Goodwill and other intangibles, net.................................... 65,712 82,734
--------- ---------
Total assets....................................................... $ 233,778 $ 354,904
--------- ---------
--------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Short-term borrowings................................................ $ 33,135 $ --
Current portion of long-term debt.................................... 2,022 2,132
Accounts payable..................................................... 31,655 53,167
Accrued expenses..................................................... 24,993 40,364
--------- ---------
Total current liabilities.......................................... 91,805 95,663
--------- ---------
Long-term debt, less current portion................................... 84,022 207,645
--------- ---------
Other long-term liabilities............................................ 7,560 6,632
--------- ---------
Adience acquisition obligation......................................... 5,733 1,828
--------- ---------
Commitments and contingencies
Stockholders' equity:
8% cumulative convertible preferred stock at liquidation value....... 11,823 9,831
9% cumulative convertible preferred stock at liquidation value....... 1,927 1,927
8.5% cumulative convertible preferred stock at liquidation value..... 3,500 --
Common stock, $.10 par value; authorized 25,000,000 shares;
17,429,141 shares issued in 1995 and 19,307,012 shares issued in
1996................................................................ 1,743 1,931
Capital in excess of par value....................................... 103,114 113,843
Cumulative translation adjustment.................................... 144 (82)
Accumulated deficit.................................................. (76,050) (78,998)
--------- ---------
46,201 48,452
Less: shares of common stock in treasury, at cost; 1995, 233,290
shares; 1996, 1,025,496 shares........................................ (1,229) (4,806)
Receivable from stockholders......................................... (314) (510)
--------- ---------
Total stockholders' equity........................................... 44,658 43,136
--------- ---------
Total liabilities and stockholders' equity......................... $ 233,778 $ 354,904
--------- ---------
--------- ---------

The accompanying notes are an integral part of these consolidated financial
statements.

F-3

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED APRIL 30,
-------------------------------
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE
DATA)

Net sales................................................... $ 68,510 $ 198,135 $ 524,113
Cost of goods sold.......................................... 56,250 169,125 453,785
--------- --------- ---------
Gross profit.............................................. 12,260 29,010 70,328
Selling, general and administrative......................... 12,168 20,487 35,148
Amortization of goodwill and other intangible charges....... 2,292 1,527 2,658
--------- --------- ---------
Operating income (loss)................................... (2,200) 6,996 32,522
Interest income............................................. 242 345 2,146
Interest expense............................................ (2,363) (8,197) (27,795)
Other income (expense), net................................. (506) 28 22
--------- --------- ---------
Income (loss) from continuing operations before income
taxes.................................................... (4,827) (828) 6,895
Provision for income taxes.................................. (68) (348) (1,676)
--------- --------- ---------
Income (loss) from continuing operations.................. (4,895) (1,176) 5,219
Loss from discontinued operations........................... (25,236) (4,868) (2,213)
--------- --------- ---------
Income (loss) before extraordinary item................... (30,131) (6,044) 3,006
Extraordinary (loss) on early extinguishment of debt........ (47) -- (4,856)
--------- --------- ---------
Net (loss).............................................. (30,178) (6,044) (1,850)
Preferred stock dividends................................... 414 801 1,098
--------- --------- ---------
(Loss) applicable to common stock......................... $ (30,592) $ (6,845) $ (2,948)
--------- --------- ---------
--------- --------- ---------
Income (loss) per share of common stock:
Continuing operations..................................... $ (0.38) $ (0.11) $ 0.23
Discontinued operations................................... (1.78) (0.27) (0.12)
Extraordinary (loss) on early extinguishment of debt...... -- -- (0.27)
--------- --------- ---------
Net (loss) per share of common stock.................... $ (2.16) $ (0.38) $ (0.16)
--------- --------- ---------
--------- --------- ---------

The accompanying notes are an integral part of these consolidated statements.

F-4

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE YEARS ENDED APRIL 30, 1996

8.5%
CUMULATIVE
9% CUMULATIVE CONVERTIBLE
CONVERTIBLE PREFERRED
COMMON STOCK CAPITAL PREFERRED STOCK STOCK
------------------------- IN EXCESS ------------------------- -----------
SHARES AMOUNT OF PAR SHARES AMOUNT SHARES
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Balance at April 30, 1993............... 10,435,922 $ 1,044 $ 43,961 4,677 $ 4,677 --
Compensation expense related to stock
options and grants..................... 419
Dividends on preferred stock............
Issuance of stock in subsidiary......... 27
Shares issued pursuant to employment
agreements............................. 4,974 48
Exercise of stock options............... 298,905 30 966
Exercise of warrant..................... 50,000 5 145
Conversion of convertible notes......... 82,403 8 308
Issuance of 8.5% cumulative convertible
preferred stock........................ (300) 5,000
Conversion of convertible preferred
stock.................................. 553,884 55 3,445 (2,000) (2,000) (1,500)
Shares issued in connection with the
early extinguishment of debt........... 15,715 2 179
Shares issued for directors' fees....... (10)
Acquisition of Alpine PolyVision, Inc.
minority interest...................... 2,164,099 217 19,260
Acquisition of Superior
Telecommunications, Inc................ 4,467,610 447 41,145
Net (loss) for the year ended April 30,
1994...................................
----------- ----------- ----------- ----------- ----------- -----------
Balance at April 30, 1994............... 18,073,512 $ 1,808 $ 109,593 2,677 $ 2,677 3,500
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------

TREASURY STOCK RECEIVABLE
ACCUMULATED ------------------------- FROM
AMOUNT DEFICIT SHARES AMOUNT STOCKHOLDER TOTAL

----------- ----------- ----------- ----------- ----------- -----------

Balance at April 30, 1993............... -- $ (38,613) (36,227) $ (153) $ (314) $ 10,602

Compensation expense related to stock
options and grants..................... 419

Dividends on preferred stock............ (414) (414)

Issuance of stock in subsidiary......... 27

Shares issued pursuant to employment
agreements............................. 48

Exercise of stock options............... 996

Exercise of warrant..................... 150

Conversion of convertible notes......... 316

Issuance of 8.5% cumulative convertible
preferred stock........................ 5,000 4,700

Conversion of convertible preferred
stock.................................. (1,500)
Shares issued in connection with the
early extinguishment of debt........... 181

Shares issued for directors' fees....... 21,716 92 82

Acquisition of Alpine PolyVision, Inc.
minority interest...................... 19,477

Acquisition of Superior
Telecommunications, Inc................ 41,592

Net (loss) for the year ended April 30,
1994................................... (30,178) (30,178)

----------- ----------- ----------- ----------- ----------- -----------

Balance at April 30, 1994............... $ 3,500 $ (69,205) (14,511) $ (61) $ (314) $ 47,998

----------- ----------- ----------- ----------- ----------- -----------

----------- ----------- ----------- ----------- ----------- -----------

The accompanying notes are an integral part of these consolidated financial
statements.

F-5

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (CONTINUED)
FOR THE THREE YEARS ENDED APRIL 30, 1996

9% CUMULATIVE 8% CUMULATIVE
CAPITAL CONVERTIBLE CONVERTIBLE
COMMON STOCK IN PREFERRED STOCK PREFERRED STOCK
---------------------- EXCESS ------------------- -------------------
SHARES AMOUNT OF PAR SHARES AMOUNT SHARES AMOUNT
----------- -------- --------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Balance at April 30, 1994..... 18,073,512 $ 1,808 $ 109,593 2,677 $ 2,677 -- --
Compensation expense related
to stock options and
grants....................... 114,579 11 377
Dividends on preferred
stock........................
Foreign currency
translation..................
Conversion of convertible
preferred stock.............. 140,000 14 736 (750) (750)
Conversion of convertible
notes........................ 7,165 1 40
Exercise of stock options..... 93,885 9 247
Shares issued for directors'
fees......................... 21
Purchase of treasury stock....
Exchange of common stock for
preferred stock.............. (1,000,000) (100) (7,900) 160,000 8,000
Acquisition of Adience,
Inc.......................... 82,267 4,113
Repurchase of preferred
stock........................ (5,787) (290)
Net (loss) for the year ended
April 30, 1995...............
----------- -------- --------- -------- -------- -------- --------
Balance at April 30, 1995..... 17,429,141 $ 1,743 $ 103,114 1,927 $ 1,927 236,480 $ 11,823
----------- -------- --------- -------- -------- -------- --------
----------- -------- --------- -------- -------- -------- --------

8.5% CUMULATIVE

CONVERTIBLE
PREFERRED STOCK FOREIGN TREASURY STOCK RECEIVABLE
------------------- ACCUMULATED CURRENCY ------------------- FROM
SHARES AMOUNT DEFICIT TRANSLATION SHARES AMOUNT STOCKHOLDERS TOTAL
-------- -------- ---------- ---------- -------- -------- ---------- --------

Balance at April 30, 1994..... 3,500 $ 3,500 $ (69,205) -- (14,511) $ (61) $ (314) $ 47,998
Compensation expense related
to stock options and
grants....................... 388
Dividends on preferred
stock........................ (801) (801)
Foreign currency
translation.................. 144 144
Conversion of convertible
preferred stock..............
Conversion of convertible
notes........................ 41
Exercise of stock options..... 256
Shares issued for directors'
fees......................... 10,221 43 64
Purchase of treasury stock.... (229,000) (1,211) (1,211)
Exchange of common stock for
preferred stock..............
Acquisition of Adience,
Inc.......................... 4,113
Repurchase of preferred
stock........................ (290)
Net (loss) for the year ended
April 30, 1995............... (6,044) (6,044)
-------- -------- ---------- ----- -------- -------- ---------- --------
Balance at April 30, 1995..... 3,500 $ 3,500 $ (76,050) $ 144 (233,290) $(1,229) $ (314) $ 44,658
-------- -------- ---------- ----- -------- -------- ---------- --------
-------- -------- ---------- ----- -------- -------- ---------- --------

The accompanying notes are an integral part of these consolidated financial
statements.

F-6

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY -- (CONTINUED)
FOR THE THREE YEARS ENDED APRIL 30, 1996

9% CUMULATIVE 8% CUMULATIVE
CAPITAL CONVERTIBLE CONVERTIBLE
COMMON STOCK IN PREFERRED STOCK PREFERRED STOCK
---------------------- EXCESS ------------------- -------------------
SHARES AMOUNT OF PAR SHARES AMOUNT SHARES AMOUNT
----------- -------- --------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

Balance at April 30, 1995..... 17,429,141 $ 1,743 $ 103,114 1,927 $ 1,927 236,480 $ 11,823
Compensation expense related
to stock options and
grants....................... 123,584 12 591
Loans to stockholders.........
Dividends on preferred
stock........................
Foreign currency
translation..................
Conversion of convertible
preferred stock.............. 737,476 74 3,804
Conversion of convertible
notes........................ 51,483 5 246
Exercise of stock options..... 46,060 5 115
Shares issued for directors'
fees......................... (18)
Purchase of treasury stock....
Retirement of Adience 11%
Senior Notes................. 44,900 2,244
Adience acquisition and debt
exchange reset............... 919,268 92 4,945 (84,731) (4,236)
PolyVision merger and
distribution................. 1,046
Net (loss) for the year ended
April 30, 1996...............
----------- -------- --------- -------- -------- -------- --------
Balance at April 30, 1996..... 19,307,012 $ 1,931 $ 113,843 1,927 $ 1,927 196,649 $ 9,831
----------- -------- --------- -------- -------- -------- --------
----------- -------- --------- -------- -------- -------- --------

8.5% CUMULATIVE

CONVERTIBLE
PREFERRED STOCK FOREIGN TREASURY STOCK RECEIVABLE
------------------- ACCUMULATED CURRENCY ------------------- FROM
SHARES AMOUNT DEFICIT TRANSLATION SHARES AMOUNT STOCKHOLDERS TOTAL
-------- -------- ---------- ---------- -------- -------- ---------- --------

Balance at April 30, 1995..... 3,500 $ 3,500 $ (76,050) $ 144 (233,290) $(1,229) $ (314) $ 44,658
Compensation expense related
to stock options and
grants....................... 603
Loans to stockholders......... (196) (196)
Dividends on preferred
stock........................ (1,098) (1,098)
Foreign currency
translation.................. (226) (226)
Conversion of convertible
preferred stock.............. (3,500) (3,500) 378
Conversion of convertible
notes........................ 5,000 20 271
Exercise of stock options..... 120
Shares issued for directors'
fees......................... 11,042 59 41
Purchase of treasury stock.... (808,248) (3,656) (3,656)
Retirement of Adience 11%
Senior Notes................. 2,244
Adience acquisition and debt
exchange reset............... 801
PolyVision merger and
distribution................. 1,046
Net (loss) for the year ended
April 30, 1996............... (1,850) (1,850)
-------- -------- ---------- ---------- -------- -------- ---------- --------
Balance at April 30, 1996..... -- -- $ (78,998) $ (82) (1,025,496) $(4,806) $ (510) $ 43,136
-------- -------- ---------- ---------- -------- -------- ---------- --------
-------- -------- ---------- ---------- -------- -------- ---------- --------

The accompanying notes are an integral part of these consolidated statements.

F-7

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED APRIL 30,
-------------------------------
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS)

Cash flows from operating activities:
Income (loss) from continuing operations............................ $ (4,895) $ (1,176) $ 5,219
Adjustments to reconcile income (loss) to net cash provided by (used
for) operations:
Depreciation and amortization..................................... 4,425 6,169 12,566
Amortization of deferred financing costs and accretion of debt
discount......................................................... 232 885 2,564
Compensation expense related to stock options and grants.......... 497 388 603
Other, net........................................................ 651 30 271
Change in assets and liabilities, net of effects from companies
acquired:
Accounts receivable............................................... (3,409) (8,001) 8,165
Inventories....................................................... 2,157 (3,164) (975)
Other current assets.............................................. 31 (659) (187)
Other assets...................................................... (95) (2,126) (268)
Accounts payable and accrued expenses............................. (219) 11,123 9,966
Other long-term liabilities....................................... 224 (288) 454
--------- --------- ---------
Cash provided by (used for) continuing operations................... (401) 3,181 38,378
--------- --------- ---------
(Loss) from discontinued operations................................. (25,236) (4,868) (2,213)
Adjustments to reconcile (loss) to net cash (used for) discontinued
operations:
Depreciation and amortization..................................... 1,032 746 --
Loss recognized on purchase of R&D and other related charges...... 21,312 -- --
Change in net assets.............................................. (74) (11) 1,257
--------- --------- ---------
Cash (used for) discontinued operations........................... (2,966) (4,133) (956)
--------- --------- ---------
Cash provided by (used for) operating activities...................... (3,367) (952) 37,422
--------- --------- ---------
Cash flows from investing activities:
Capital expenditures for continuing operations...................... (1,565) (2,275) (6,228)
Capital expenditures for acquisition of BICC assets................. -- -- (5,447)
Capital expenditures for discontinued operations.................... (397) (360) --
Acquisitions, net of cash acquired.................................. (19,197) 802 (105,216)
(Investment in) proceeds from sale of marketable securities......... (1,268) 477 (6,218)
Advances to PolyVision Corporation.................................. -- -- (3,086)
Other............................................................... -- 124 (222)
--------- --------- ---------
Cash (used for) investing activities.................................. (22,427) (1,232) (126,417)
--------- --------- ---------
Cash flows from financing activities:
Short-term borrowings (repayments).................................. (118) 20,685 (21,000)
Borrowings under revolving credit facilities, net................... 7,271 (1,530) 16,643
Long-term borrowings of continuing operations....................... 17,034 636 281,726
Long-term borrowings of discontinued operations..................... 690 -- --
Repayments of long-term borrowings of continuing operations......... (3,771) (3,408) (185,776)
Repayments of long-term borrowings of discontinued
operations......................................................... (54) (70) --
Proceeds from exercise of stock options............................. 1,072 256 120
Capitalized financing costs......................................... -- -- (12,573)
Issuance of preferred stock, net.................................... 4,278 -- --
Dividends on preferred stock........................................ (414) (505) (720)
Purchase of treasury shares......................................... -- (1,211) (3,656)
Other............................................................... 27 370 (196)
--------- --------- ---------
Cash provided by financing activities................................. 26,015 15,223 74,568
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents.................. 221 13,039 (14,427)
Cash and cash equivalents at beginning of year........................ 2,286 2,507 15,546
--------- --------- ---------
Cash and cash equivalents at end of year.............................. $ 2,507 $ 15,546 $ 1,119
--------- --------- ---------
--------- --------- ---------

The accompanying notes are an integral part of these consolidated financial
statements.

F-8

THE ALPINE GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEAR ENDED APRIL 30,
-------------------------------
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS)

Supplemental Disclosures:
Cash interest paid................................................ $ 1,579 $ 5,615 $ 19,810
--------- --------- ---------
Noncash investing and financing activities:
Exchange of common stock for preferred stock:
Preferred stock acquired........................................ $ 3,500 $ 750 $ 7,736
--------- --------- ---------
Dividends on preferred stock exchanged.......................... $ 451
---------
Common stock issued............................................. $ 3,500 $ 750 $ 8,915
--------- --------- ---------
Exchange of preferred stock for common stock:
Common stock acquired........................................... $ 8,000
---------
Preferred stock issued.......................................... $ 8,000
---------
Preferred stock issued in connection with the retirement of
Adience 11% Senior Notes......................................... $ 2,244
---------
Common stock issued in connection with the acquisition of minority
interest in Alpine Polyvision, Inc............................... $ 19,477
---------
Common stock issued in connection with the purchase of an R&D
partnership interest............................................. $ 1,251
---------
Common stock of a subsidiary issued in connection with the
purchase of an R&D partnership]interest.......................... $ 1,664
---------
Acquisition of businesses:
Assets, net of cash acquired...................................... $ (93,018) $(107,837) $(126,127)
Common stock issued............................................... 41,592 -- --
Preferred stock issued............................................ -- 4,113 --
Contingent consideration.......................................... -- 5,733 --
Liabilities assumed............................................... 32,229 98,793 22,718
--------- --------- ---------
Net cash (paid) received.......................................... $ (19,197) $ 802 $(103,409)
--------- --------- ---------
Conversion of notes and exchange of debentures:
Conversions and retirements of debt............................... $ 625 $ 38 $ 300
--------- --------- ---------
Fair value of common stock issued................................. $ 674 $ 41 $ 251
--------- --------- ---------

The accompanying notes are an integral part of these consolidated statements.

F-9

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

The accompanying consolidated financial statements include the accounts of
The Alpine Group, Inc. ("Alpine") and its subsidiaries (collectively "Alpine" or
the "Company", unless the content otherwise requires). Alpine's consolidated
financial statements are prepared in accordance with generally accepted
accounting principles which requires that management make estimates and
assumptions that affect the reported amounts. Actual results could differ from
those estimates. Alpine was incorporated in New Jersey on May 7, 1957 and
reincorporated in Delaware on February 3, 1987.

The consolidated financial statements include all majority-owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.

Alpine conducts business in three industry segments: telecommunication wire
and cable products (through Superior Telecommunications Inc. -- "Superior");
refractory products (through Adience Inc. -- "Adience") and data communications
and electronics (through DNE Systems Inc. -- "DNE"). Superior is a leading
manufacturer of copper telecommunication wire and cable products for the local
loop segment of the telecommunications network. The local loop is the segment of
the telecommunications network that connects the customer's premises to the
nearest telephone company switch or central office. Superior contributed more
than 70% of Alpine's fiscal 1996 consolidated revenues. Adience is one of the
largest U.S. manufacturers and installers of specialty refractory products,
which are used primarily by the iron and steel industry. Specialty refractory
products are consumable materials used as insulation on surfaces exposed to high
temperatures such as those generated by molten metals. Adience contributed more
than 20% of Alpine's fiscal 1996 consolidated revenues. DNE develops and
manufactures data communications and other equipment, including multiplexers for
defense, government and commercial applications and provides contract
manufacturing services to the electronics industry. DNE's revenues comprised
less than 10% of Alpine's fiscal 1996 consolidated revenues.

CONTRACT REVENUE RECOGNITION

Revenues related to certain of DNE's and Adience's long-term contracts are
recognized by the percentage of completion method measured on the basis of costs
incurred to estimated total costs which approximates contract performance to
date. Provisions for losses on uncompleted contracts are made if it is
determined that a contract will ultimately result in a loss. Recognized revenue
is that percentage of total contractual revenue that incurred costs to date bear
to estimated total costs after giving effect to the most recent estimates of
costs to complete. All other revenues are recognized when the products are
delivered or services performed.

CASH AND CASH EQUIVALENTS

All highly liquid investments purchased with a maturity at acquisition of 90
days or less are considered to be cash equivalents.

INVENTORIES

Inventories, other than inventoried costs relating to DNE's long- term
contracts, are stated at the lower of cost or market, using the first-in,
first-out (FIFO) or average cost method. Inventoried costs relating to DNE's
long-term contracts and programs are stated at actual production cost, including
factory overhead, initial tooling and other related nonrecurring costs, reduced
by the cost related to revenue recognized. Included in the accompanying
consolidated balance sheets are inventories of DNE relating to contracts and
programs having production cycles longer than one year.

F-10

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are provided over
the estimated useful lives of the assets using the straight-line method. The
estimated lives are as follows:

Buildings and improvements................................ 5 to 32 years
Machinery and equipment................................... 3 to 12 years

Maintenance and repairs are charged to expense as incurred. Long-term
improvements are capitalized as additions to property, plant and equipment. Upon
retirement, or other disposal, the asset cost and related accumulated
depreciation are removed from the accounts and the net amount, less any
proceeds, is charged or credited to income.

GOODWILL AND OTHER INTANGIBLES

The excess of the purchase price over the net identifiable assets of
businesses acquired by Alpine is amortized ratably over periods not exceeding 30
years. Accumulated amortization of goodwill intangibles at April 30, 1995, and
1996 was $2.3 million and $5.0 million, respectively. Alpine periodically
reviews goodwill and other intangibles to assess recoverability from future
operations using undiscounted cash flows, in accordance with the provisions of
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The adoption of this statement had no effect on Alpine's consolidated financial
position or results of operations as of, or for the years ended, April 30, 1995
and 1996. During fiscal 1994, Alpine expensed $1.5 million of unamortized
intangible assets relating to a DNE product line which was not forecasted to
generate sufficient income to recover the carrying value of such intangible
asset.

DEFERRED FINANCING COSTS

The costs incurred in connection with certain debt financings are included
in the consolidated balance sheets in long-term investments and other assets and
are being amortized through the relevant maturity dates of the outstanding debt.

FOREIGN CURRENCY TRANSLATION

The financial position and results of operations of Alpine's foreign
subsidiaries are measured using local currency as the functional currency.
Assets and liabilities of operations denominated in foreign currencies are
translated into U.S. dollars at exchange rates in effect at year-end, while
revenues and expenses are translated at average exchange rates prevailing during
the year. The resulting translation gains and losses are charged directly to
cumulative translation adjustment, a component of stockholders' equity, and are
not included in net income until realized through sale or liquidation of the
investment. Foreign exchange gains and losses incurred on foreign currency
transactions are included in net income.

CONCENTRATIONS OF CREDIT RISK

During fiscal 1994, 1995, and 1996, sales to the six regional Bell operating
companies and three major independent telephone companies represented 74%, 78%,
and 90%, respectively, of Superior's net sales. At April 30, 1995 and 1996,
accounts receivable from these customers were $14.0 million, and $41.9 million,
respectively.

At April 30, 1995 and 1996, Adience accounts receivable from customers in
the iron and steel industry were $10.7 million and $13.1 million, respectively.

F-11

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECLASSIFICATIONS

Certain reclassifications have been made to the 1994 and 1995 consolidated
financial statements to conform with the 1996 presentation.

2. INVESTMENTS
Effective May 1, 1993, Alpine began accounting for its investments in
accordance with Statement of Financial Accounting Standards No. 115 "Accounting
for Certain investments in Debt and Equity Securities" ("SFAS No. 115"). This
statement requires that the Company's investments in equity securities be
classified as "trading securities" or "available for sale securities". The
Company's short-term investments are comprised of marketable securities, all
classified as trading securities. In accordance with SFAS No. 115, net
unrealized holding gains and losses are included in net earnings and net
realized gains and losses are determined on the specific identification cost
basis. The Company's long-term equity investment in PolyVision Corporation
("PolyVision") (see Note 6) is classified as an equity security available for
sale and in accordance with SFAS No. 115 unrealized gains and losses, if any,
would be included as a component of stockholders' equity until realized. The
adoption of this statement did not have a material impact on Alpine's
consolidated financial position or results of operations for the year ended
April 30, 1994.

3. INVENTORIES
The components of inventories are as follows:

1995 1996
--------- ---------
(IN THOUSANDS)

Raw materials....................................................... $ 11,969 $ 14,885
Work in process..................................................... 8,716 14,870
Finished goods...................................................... 14,557 39,235
--------- ---------
$ 35,242 $ 68,990
--------- ---------
--------- ---------

4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:

1995 1996
--------- -----------
(IN THOUSANDS)

Land.............................................................. $ 2,547 $ 4,408
Buildings and improvements........................................ 16,853 26,755
Machinery and equipment........................................... 39,774 84,712
--------- -----------
59,174 115,875
Less: accumulated depreciation.................................... 6,934 16,450
--------- -----------
$ 52,240 $ 99,425
--------- -----------
--------- -----------

Depreciation expense for the years ended April 30, 1994, 1995 and 1996 was
$2.1 million, $4.6 million, and $9.9 million, respectively.

5. DISCONTINUED OPERATIONS
In fiscal 1995, Alpine adopted a plan to dispose of its information display
segment consisting of its interest in Alpine PolyVision, Inc. ("APV") and
Posterloid Corporation ("Posterloid") resulting in the historical financial
statements of Alpine being restated to reflect these operations as discontinued.
In May 1995, APV and Posterloid were merged (the "PolyVision Merger") into
PolyVision Corporation

F-12

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. DISCONTINUED OPERATIONS (CONTINUED)
("PolyVision") (formerly Information Display Technology, Inc.), a subsidiary of
Adience (See Note 6). Prior to the merger Alpine's ownership in PolyVision, APV
and Posterloid was 70%, 98% and 100%, respectively.

Following the PolyVision Merger, Alpine owned 98% of PolyVision's
outstanding preferred stock with a liquidation preference of $25.0 million and
94% of the outstanding PolyVision common stock. In accordance with FASB
Technical Bulletin 85-5, the increase in equity ownership from 70% to 94% was
recorded as the acquisition of a minority interest at its estimated fair value.
Because the minority interest was acquired by an Alpine subsidiary issuing
stock, and because Alpine subsequently distributed to its stockholders most of
the PolyVision common stock owned by it, the excess of the fair value of the
minority interest acquired over the book value of the interests given up in APV
and Posterloid, has been added, net of tax impact, directly to capital surplus.

On June 14, 1995, Alpine distributed to its stockholders 73% of the
outstanding PolyVision common stock (the "PolyVision Spin-Off"). This
distribution, when combined with shares of PolyVision common stock used as
partial consideration in connection with the Adience Acquisition and the
retirement of the Adience 11% Senior Secured Notes (the "Adience Senior Notes")
(see Notes 6 and 9), resulted in the ownership by Alpine of less than 20% of the
outstanding shares of PolyVision common stock. Accordingly, Alpine is accounting
for its remaining PolyVision investment at its fair value as a security
available-for-sale, which amount ($11.5 million at April 30, 1996) is included
in long-term investments and other assets in the accompanying balance sheet.
Because the shares of PolyVision common stock distributed had a negative book
value, Alpine's stockholders' equity was not reduced by the PolyVision Spin-Off.

During fiscal 1996 the Company recorded a loss from discontinued operations
of $2.2 million, net of applicable taxes. The loss included a one-time $1.6
million charge related to certain contractual employee termination matters
associated with the distribution of PolyVision.

6. ACQUISITIONS

ALCATEL ACQUISITION

On May 11, 1995, Alpine completed the acquisition (the "Alcatel
Acquisition") of the U.S. and Canadian copper wire and cable business (the
"Alcatel Business") of Alcatel NA Cable Systems, Inc. and Alcatel Canada Wire,
Inc. (collectively, "Alcatel NA"), which was financed with the proceeds of the
sale by Superior of $140.0 million aggregate principal amount of notes (the
"Alcatel Acquisition Notes"). The Alcatel Acquisition Notes were subsequently
redeemed with the proceeds of Alpine's refinancing (see Note 9).

The following reflects the allocation of the purchase price to the net
assets of the Alcatel Business based upon the estimated fair values of such
assets:

AMOUNT
-------------
(IN
THOUSANDS)

Acquisition cost........................................................... $ 103,409
Less, historical book value of net assets at May 11, 1995.................. (80,909)
Write-up of property, plant and equipment.................................. (5,718)
Accrual of Alcatel employee relocation and severance costs................. 500
-------------
Acquisition goodwill....................................................... $ 17,282
-------------
-------------

The acquisition cost of $103.4 million includes $102.9 million paid in cash
to Alcatel NA, and acquisition expenses of approximately $500,000.

F-13

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. ACQUISITIONS (CONTINUED)
The Alcatel Acquisition has been accounted for using the purchase method,
and accordingly, the results of operations of the Alcatel Business are included
in the Company's consolidated results on a prospective basis from the date of
the acquisition. Goodwill is being amortized over 30 years.

ADIENCE ACQUISITION

On December 21, 1994, Alpine acquired 82.3% of the outstanding common stock
of Adience which, when combined with Adience common stock previously purchased
by Alpine, resulted in Alpine owning 87.2% of Adience's outstanding common stock
on such date (the "Adience Acquisition"). Initial consideration paid in the
Adience Acquisition consisted of 82,267 shares of Alpine's 8% cumulative
convertible senior preferred stock ("8% Preferred Stock"), with a liquidation
preference of $4.1 million, 170,615 shares of PolyVision common stock and $2.6
million in cash which included payment of expenses associated with the
acquisition. On July 21, 1995, Alpine acquired the remaining 12.8% of Adience
common stock for $1.8 million in cash.

The terms under which the aforementioned PolyVision common stock was
delivered by Alpine to the Adience stockholders included a valuation reset under
certain conditions. The valuation reset required Alpine to deliver additional
consideration payable at the option of Alpine in either Alpine 8% Preferred
Stock, additional shares of PolyVision common stock, or a combination of both.
The valuation reset is payable in an amount equal to 170,615 (the number of
PolyVision common shares originally delivered), multiplied by the difference
(the "Valuation Difference"), if any, between $33.60 and the greater of: (1) the
average closing price for a share of PolyVision common stock on the 20 trading
days preceding August 1, 1995, and (2) $11.25 per share.

During fiscal 1996, certain of the former Adience stockholders agreed to
exchange 39,825 shares of the 8% Preferred Stock received in the Adience
Acquisition and terminate the right to receive $1.9 million in additional
consideration payable under the aforementioned valuation reset, in consideration
for the issuance by Alpine of 491,184 shares of Alpine common stock and the
delivery of 129,542 additional shares of PolyVision common stock. The excess of
the amount of valuation reset consideration due ($1.9 million) over the fair
market value of the consideration issued in this transaction was accounted for
as a reduction in the purchase price for Adience's common stock.

Also in connection with the Adience Acquisition, Alpine entered into a debt
exchange agreement with the holders of a majority of Adience's 11% Senior Notes.
The debt exchange agreement, which was completed on July 21, 1995, resulted in
Alpine retiring $44.1 million aggregate principle amount of Adience's 11% Senior
Notes ($40.1 million recorded amount) for $35.3 million in cash, 44,900 shares
of 8% Preferred Stock with a liquidation preference of $2.2 million, and 66,801
shares of PolyVision common stock, subject to a valuation reset under certain
conditions. The valuation reset required Alpine to deliver to the former Adience
note holders an amount equal to 66,801 multiplied by the Valuation Difference
(as defined above). On October 31, 1995, the former Adience note holders agreed
to exchange the 44,900 shares of 8% Preferred Stock received in the debt
exchange and terminate the right to receive $1.5 million in value under the
valuation reset, in consideration for the issuance by Alpine of 428,084 shares
of Alpine common stock and the delivery of 121,929 additional shares of
PolyVision common stock. The difference between the recorded value of the
Adience 11% Senior Notes and the value of the exchange consideration paid or
issued by Alpine in the debt exchange has been recorded as a reduction in the
purchase price for Adience's common stock.

PRO FORMA FINANCIAL DATA

Unaudited condensed pro forma results of operations which give effect to the
Alcatel Acquisition and Adience Acquisition as if both transactions had occurred
on May 1, 1994 are presented below. The

F-14

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. ACQUISITIONS (CONTINUED)
pro forma amounts reflect acquisition related purchase accounting adjustments,
including adjustments to depreciation and amortization expense. The pro forma
financial information does not purport to be indicative of either the results of
operations that would have occurred had the acquisitions taken place at the
beginning of the periods presented or of future results of operations.

PRO FORMA
(UNAUDITED)
------------------------
1995 1996
----------- -----------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)

Net sales.................................................................. $ 469,572 $ 531,634
Income (loss) from continuing operations before income taxes............... (5,888) 6,973
Income (loss) from continuing operations before extraordinary item......... (6,236) 5,297

(Loss) from discontinued operations........................................ (4,868) (2,213)
Extraordinary (loss) on early extinguishment of debt....................... -- (4,856)
Net (loss)................................................................. (11,104) (1,772)
Income (loss) per share of common stock:
Continuing operations.................................................... $ (0.42) $ 0.22
Discontinued operations.................................................. (0.27) (0.12)
Extraordinary (loss) on early extinguishment of debt..................... -- (0.27)
Net (loss)................................................................. (0.69) (0.17)

SUPERIOR ACQUISITION

On November 9, 1993, Alpine's stockholders approved an Agreement and Plan of
Merger pursuant to which Superior's parent merged into Alpine, resulting in
Superior becoming a wholly-owned subsidiary of Alpine. Alpine paid approximately
$19.2 million in cash (including approximately $2.2 million in merger-related
expenses), issued 4,467,610 shares of its common stock (subject to adjustments
for redemption of fractional shares) and assumed existing stock options as
consideration for the merger.

The merger was accounted for using the purchase method and, accordingly,
Superior's results of operations have been included in Alpine's consolidated
results on a prospective basis from the date of the merger. The total purchase
price paid for Superior (including merger related expenses) amounted to $60.8
million and has been allocated to the fair market value of Superior's assets and
liabilities as of the merger date resulting in goodwill of approximately $29.3
million. Goodwill is being amortized on a straight line basis over 30 years.

F-15

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. LONG-TERM INVESTMENTS AND OTHER ASSETS
Long-term investments and other assets consist of the following:

1995 1996
--------- ---------
(IN THOUSANDS)

Investment in PolyVision (a).................................................. $ 11,202 $ 11,502
Advances to PolyVision (b).................................................... -- 3,086
Deferred financing charges (net of accumulated amortization).................. 2,561 8,483
Other assets.................................................................. 3,178 3,332
--------- ---------
$ 16,941 $ 26,403
--------- ---------
--------- ---------

- ------------------------
(a) Reflects the investment in PolyVision remaining after the PolyVision
spin-off. Alpine's investment in PolyVision consists of $25.0 million face
amount of PolyVision 8% preferred stock and PolyVision common stock.

(b) In connection with the PolyVision Merger, Alpine entered into an agreement
with PolyVision pursuant to which Alpine agreed to lend to PolyVision from
time to time prior to May 24, 1997, up to $5.0 million to be used by
PolyVision to fund its working capital needs. Borrowings under the agreement
are unsecured and bear interest at a rate reflecting Alpine's cost of funds
(13.0% at April 30, 1996). The principal balance outstanding is due on May
24, 2005, subject to mandatory prepayment of principal and interest, in
whole or in part, from the net cash proceeds of any public or private equity
or debt financing by PolyVision at any time before maturity. Alpine's
obligation to lend such funds to PolyVision is subject to a number of
conditions, including review by Alpine of the proposed use of such funds by
PolyVision.

8. ACCRUED EXPENSES
Accrued expenses consist of the following:

1995 1996
--------- ---------
(IN THOUSANDS)

Accrued wages, salaries and employee benefits................................. $ 5,172 $ 7,854
Accrued insurance............................................................. 5,673 10,693
Accrued interest.............................................................. 5,608 5,770
Other accrued expenses........................................................ 14,148 16,047
--------- ---------
$ 24,993 $ 40,364
--------- ---------
--------- ---------

9. DEBT
On July 21, 1995 Alpine completed a refinancing of a substantial portion of
its then outstanding debt. The refinancing was completed with the proceeds from
the placement of $153.0 million principal amount of 12.25% Senior Secured Notes
(the "Senior Notes") and an $85.0 million revolving credit facility (the "Credit
Facility") entered into in conjunction with the Senior Note placement. The
principal use of proceeds from the Senior Notes and Credit Facility included,
(i) repayment of the Alcatel Acquisition Notes (see Note 6), (ii) repayment of
$21.0 million face amount of 13.5% Senior Secured Notes, (iii) repayment of the
outstanding balance under subsidiary revolving credit facilities, and (iv) $35.3
million used to retire $44.1 million aggregate principled amount of Adience's
11% Senior Notes (see Note 6).

In connection with the aforementioned refinancing the Company recognized an
extraordinary charge of $4.9 million, net of taxes of $279,000 on the early
extinguishment of debt.

F-16

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. DEBT (CONTINUED)
At April 30, 1995 and 1996, long-term debt consists of the following:

1995 1996
----------- -----------
(IN THOUSANDS)

12.25% Senior Secured Notes due 2003 (face value $153,000,000) (a)................... $ -- $ 141,070
Revolving credit facility (b)........................................................ -- 48,654
10% Convertible Senior Subordinated Notes (face value $1,104,000, and $804,000 at
April 30, 1995 and 1996, respectively) (c).......................................... 860 804
Adience 11% Senior Secured Notes due in 2002 (face value $49,079,000 and $4,989,000
at April 30, 1995 and 1996, respectively) (d)....................................... 44,386 4,674
Mortgage loan (e).................................................................... 5,297 4,996
Lease finance obligations (f)........................................................ 5,967 5,853
Subsidiary revolving credit facilities............................................... 29,505 --
13.5% Senior Secured Notes (face value $21,000,000).................................. 20,790 --
13.5% Senior Subordinated Debentures................................................. 1,551 --
Term loan............................................................................ 5,386 --
Subordinated note (g)................................................................ 2,469 --
Other................................................................................ 2,968 3,726
----------- -----------
Total debt....................................................................... 119,179 209,777
Less: short-term borrowings and current portion...................................... 35,157 2,132
----------- -----------
Long-term debt................................................................... $ 84,022 $ 207,645
----------- -----------
----------- -----------

At April 30, 1996, the fair value of Alpine's debt is estimated to be $226.1
million with such estimates based on the quoted market prices for the same or
similar issues or on the current rates offered to Alpine for debt of the same
remaining maturities.

The aggregate maturities of long-term debt for the five years subsequent to
April 30, 1996, are as follows (in thousands):

FISCAL YEAR
- -------------------------------------------------------------------------

1997.................................................................... $ 2,132
1998................................................................... 1,068
1999................................................................... 749
2000................................................................... 561
2001................................................................... 50,378

- ------------------------
(a) The Senior Notes are due 2003 and pay interest semiannually on January 15
and July 15 of each year. The Senior Notes were issued at a price of 91.74%
and the discount is being added to the recorded amount through maturity
utilizing the effective interest method. The Senior Notes are secured by a
pledge of the capital stock of Superior and Adience and are guaranteed by
certain subsidiaries of Alpine.

(b) Interest on the Credit Facility is payable monthly at a rate of LIBOR plus
2.25% or prime plus 0.375% (8.1% at April 30, 1996). Borrowings under the
facility are subject to a borrowing base determined as a percentage of
eligible accounts receivable and inventory (as defined). As of April 30,
1996, total borrowing availability amounted to approximately $81.0 million.
Loans under the Credit Facility are guaranteed by Superior and Adience and
are secured by substantially all of Alpine's assets, other than capital
stock of its subsidiaries, real estate, and other fixed assets. The facility
terminates in July 2000.

F-17

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. DEBT (CONTINUED)
(c) The Convertible Senior Subordinated Notes due July 31, 1996 pay interest
semi-annually on January 31 and July 31 of each year and are convertible
into Alpine common stock through July 31, 1996 at a conversion price of
$4.92 per share. The original issue discount is added to the recorded amount
through maturity utilizing the effective interest method. During fiscal
1996, holders of $237,000 recorded amount of Notes ($300,000 face amount)
exchanged such notes for 51,483 shares of Alpine common stock. During fiscal
1995, holders of $29,500 recorded amount ($37,750 face amount) exchanged
such notes for 7,165 shares of Alpine common stock. During fiscal 1994,
holders of $498,000 recorded amount ($833,750 face amount) exchanged such
notes for 133,886 shares of Alpine common stock.

(d) The Adience 11% Senior Secured Notes are due in 2002 and are redeemable at
the option of Adience after December 15, 1997 and pay interest semi-annually
on June 15 and December 15. The Adience Senior Notes are secured by a lien
on substantially all of the assets of Adience.

(e) The mortgage loan is payable by DNE to the Connecticut Development Authority
("CDA"). The loan is guaranteed by Alpine and collateralized by DNE's real
estate, machinery and equipment. The loan is payable March 2002 and is
subject to a 20-year amortization schedule. The interest rate is 7.25%
through February 28, 1999 and the higher of 7.25% or the yield on U.S.
Treasury securities with the same maturity thereafter.

(f) The lease finance obligations result from the sale/leaseback of two
properties during fiscal 1994 which, because of Alpine's continuing
involvement in the form of repurchase options, have been recorded under the
finance method. The lease finance obligations at April 30, 1996 consist of:
(a) $5.0 million related to the sale/leaseback of Superior's manufacturing
facility and (b) $853,000 related to the sale/leaseback of a manufacturing
facility owned by DNE.

The Superior sale/leaseback transaction included a sales price of $5.0
million and net cash proceeds (after fees and expenses) of $4.5 million. The
term of the leaseback is twenty years, with five additional option terms (at
Superior's election) of five years each. Superior has a one time option to
repurchase the property during the eleventh year of the lease term at the
greater of the property's Fair Market Value (as defined in the lease) or
$5.0 million plus related ancillary costs. Annual lease payments are
approximately $630,000, and are subject to adjustments based on changes in
short-term interest rates (monthly) and increases in the consumer price
index (on a triannual basis). Until the repurchase option expires or is
exercised, all lease payments will be reflected as interest expense. The
related asset, which is being depreciated over its estimated useful life,
has a net carrying value of $6.9 million as of April 30, 1996 and is
classified as property, plant and equipment in the consolidated balance
sheet.

The DNE sale/leaseback transaction included a sales price of $1.3 million
and a lease term of nine years. Alpine has an option to repurchase the
property during the fourth and fifth years of the lease term for $1.3
million plus ancillary costs; however, the lessor may elect to terminate the
lease in lieu of accepting such repurchase offer. Annual lease payments are
$178,000 and are subject to annual adjustments based on increases in the
consumer price index. As of April 30, 1996, remaining total lease payments
amounted to $1.1 million, of which $853,000 will be applied against
principal and $209,000 will be recorded as interest expense. The related
asset, which is being depreciated over the term of the lease and has a net
carrying value of $785,000 as of April 30, 1996, is classified in long-term
investments and other assets in the consolidated balance sheet.

(g) The subordinated note payable to the previous owner of DNE was redeemed in
August 1995 at a discount.

F-18

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. DEBT (CONTINUED)
Alpine's indentures and credit agreements contain certain covenants which,
among other matters, restrict or limit the ability of Alpine to pay dividends
and incur indebtedness. Alpine must also maintain certain ratios regarding
working capital, interest coverage, debt service, leverage and net worth, among
other restrictions.

10. INCOME (LOSS) PER SHARE
The computation of fully diluted net loss per share was antidilutive in each
of the periods presented; therefore, the amounts reported for primary and fully
diluted are the same. Net income (loss) per share was determined by dividing net
loss, as adjusted, by applicable weighted average shares outstanding. The loss
was adjusted by the aggregate amount of dividends on Alpine's preferred stock
which amounted to $414,000, $801,000 and $1.1 million in fiscal 1994, 1995 and
1996, respectively. The number of shares used in computing (loss) per share was
14,156,143, 17,857,905 and 17,987,219 in fiscal 1994, 1995 and 1996,
respectively.

11. STOCK OPTIONS AND RESTRICTED STOCK PLAN
Under Alpine's 1987 Long-Term Equity Incentive Plan (the "Plan"), 2,440,215
shares of common stock are reserved for issuance. There were 1,065,000 and
27,561 shares of common stock available under the Plan for granting of options
at April 30, 1995 and 1996, respectively. Participation in the Plan is limited
generally to key employees and directors of Alpine and its subsidiaries. The
Plan provides for grants of incentive and non-incentive stock options. In
addition to options, the Plan permits the grant of stock appreciation rights
(SARs) and phantom stock units (Units). Under the Plan, options are not
exercisable in the first year nor after ten years from the date of grant and no
option may be granted after October 1997. Where the exercise price of stock
options granted under the Plan is less than the market value of Alpine common
stock at the date of grant, non-cash compensation expense is recorded based on
the difference between the exercise price and market value. This non-cash charge
is amortized over the vesting period of the options and is included in selling,
general and administrative expense.

During fiscal 1994, Alpine exchanged options to purchase 482 shares of
common stock of a subsidiary for options to purchase 150,000 shares of Alpine
common stock at an exercise price of $3.00 per share.

During fiscal 1994, in conjunction with the acquisition of Superior (see
Note 6), Alpine assumed Superior's obligations with respect to options issued
and outstanding prior to the merger, resulting in the conversion of Superior
options into options to purchase 268,853 shares of Alpine common stock.

F-19

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. STOCK OPTIONS AND RESTRICTED STOCK PLAN (CONTINUED)
The following table summarizes stock option activity for fiscal 1994, 1995
and 1996:

SHARES PRICE RANGE
----------- ---------------

Outstanding at April 30, 1993......................................... 1,545,333 $ 1.00-$ 9.88
Exercised........................................................... (311,405) $ 1.00-$ 8.82
Granted............................................................. 516,500 $ 3.00-$12.00
Superior options assumed............................................ 268,853 $ 2.88-$ 8.63
Canceled............................................................ (98,000) $ 7.50-$10.75
-----------
Outstanding at April 30, 1994......................................... 1,921,281 $ 2.50-$12.00
Exercised........................................................... (193,885) $ 1.75-$ 6.77
Canceled............................................................ (11,500) $ 6.60-$10.75
-----------
Outstanding at April 30, 1995......................................... 1,715,896 $ 2.50-$12.00
Exercised........................................................... (80,816) $ 2.05-$ 3.33
Canceled............................................................ (132,528) $ 2.46-$ 6.66
Adjustment for PolyVision Spin-Off.................................. 361,059
Granted............................................................. 1,368,133 $ 3.75-$ 5.13
-----------
Outstanding at April 30, 1996......................................... 3,231,744 $ 2.05-$ 9.84
-----------
-----------

In November 1995, the exercise price of stock options outstanding and the
number of Alpine shares which such options were exercisable into were adjusted
to reflect the effect of the PolyVision Spin-Off.

At April 30, 1996, 1,659,913 options were exercisable, which options expire
between February 1997 and May 2006. The average exercise price for all
outstanding options at April 30, 1996 was $4.73 per share.

Alpine also has a Restricted Stock Plan under which a maximum of 600,000
shares of Alpine common stock have been reserved for issuance. At April 30,
1996, there are 161,678 shares available for issuance. During fiscal 1996,
non-cash compensation expense of $603,000 was recorded representing the market
value of Alpine common stock issued under the Restricted Stock Plan, amortized
over the applicable vesting period related to the grants.

12. POSTRETIREMENT HEALTH CARE BENEFITS
Superior provides postretirement employee health care benefits for certain
employees. The policy provides each employee and spouse, upon reaching normal or
early retirement and upon achieving certain minimum service requirements, a
fixed monthly benefit for the purchase of Superior-sponsored health care
insurance. The amount of the fixed monthly benefit will not be increased in the
future, notwithstanding medical-based inflation cost increases.

F-20

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. POSTRETIREMENT HEALTH CARE BENEFITS (CONTINUED)
The postretirement health care benefit obligation which is included in
long-term liabilities in the accompanying balance sheets, consisted of the
following at April 30, 1995 and 1996:

1995 1996
--------- ---------
(IN THOUSANDS)

Retirees.............................................................. $ 733 $ 427
Fully eligible active plan participants............................... 164 284
Other active plan participants........................................ 596 571
--------- ---------
1,493 1,282
Unrealized net gain from past experiences and change in assumptions... -- 211
--------- ---------
$ 1,493 $ 1,493
--------- ---------
--------- ---------

Net periodic postretirement benefit cost includes the following components
for fiscal 1994, 1995 and 1996:

1994 1995 1996
----- ---------- ----------
(IN THOUSANDS)

Service cost for benefits earned...................................... $ 24 $ 45 $ 45
Interest cost on accumulated postretirement benefit obligation........ 37 118 117
--- ----- -----
$ 61 $ 163 $ 162
--- ----- -----
--- ----- -----

An increase in the health care cost trend assumptions would not change the
annual expense or obligation amounts as the employer cost is effectively capped.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 6.5%, 8% and 7.75% for fiscal 1994, 1995
and 1996, respectively.

13. DEFINED CONTRIBUTION RETIREMENT PLANS
The Company sponsors several defined contribution plans covering
substantially all U.S. employees. These plans provide for limited company
matching of participants' contributions. Alpine's contributions to these plans
during fiscal 1994, 1995, and 1996 were $240,000, $516,000, and $808,000,
respectively.

14. DEFINED BENEFIT RETIREMENT PLANS
Certain employees of Adience and Superior participate in various defined
benefit retirement plans. These plans generally provide for payment of benefits,
based on the employee's length of service and earnings. In connection with the
Alcatel acquisition (see Note 6), Superior is evaluating alternative retirement
planning options and, in substantially all cases, participation in these plans
has been frozen. Expense recorded by Superior for fiscal year 1996 service under
these plans was approximately $442,000.

Superior sponsors a defined benefit pension plan for employees of its
Canadian manufacturing facility also previously owned by Alcatel. Benefits under
the plan are based on length of service. Plan assets and the projected benefit
obligations for service to date for the plan aggregate approximately $2.3
million. Net periodic pension costs are not material to the consolidated
financial statements.

Plan assets and projected benefit obligations for service to date for
Adience's defined benefit pension plans aggregated approximately $7.2 million
and $6.8 million at April 30, 1995 and 1996,

F-21

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

14. DEFINED BENEFIT RETIREMENT PLANS (CONTINUED)
respectively. Net periodic pension costs for the year ended April 30, 1996 are
not material to the consolidated financial statements. Plan assets are invested
in cash, short-term investments, equities, and fixed income instruments.

The actuarial present value of the projected benefit obligation at April 30,
1996 and 1995 was determined using weighted average discount rates of 7.5% to
8.0%. The expected long-term rate of return on plan assets was 7.5% and 8.0% at
April 30, 1995 and 1996, respectively. Plan assets are invested in cash,
short-term investments, equities and fixed income instruments.

Certain union employees of Adience and its subsidiary are covered by
multi-employer defined benefit retirement plans. Expense relating to these plans
amounted to $0.4 million and $1.6 million for the year ended April 30, 1995 and
1996, respectively.

15. INCOME TAXES
The provision for taxes on income from continuing operations, net of
utilization of net operating
losses, is comprised of the following:

(IN THOUSANDS)
-------------------------------
1994 1995 1996
--------- --------- ---------

Federal:
Current.......................................................... $ -- $ -- $ 213
Deferred......................................................... -- 122 --
State:
Current.......................................................... 20 316 909
Deferred......................................................... 48 (148) 129
Foreign:
Current.......................................................... -- 58 349
Deferred......................................................... -- -- 76
--------- --------- ---------
$ 68 $ 348 $ 1,676
--------- --------- ---------
--------- --------- ---------

F-22

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. INCOME TAXES (CONTINUED)
A reconciliation of Alpine's income (loss) from continuing operations before
income taxes for financial statement purposes to its Federal taxable income
(loss) from continuing operations for the years ended April 30, 1994, 1995, and
1996 is as follows:

1994 1995 1996
--------- --------- ---------
(IN THOUSANDS)

Income (loss) from continuing operations before income taxes for
financial statement purposes......................................... $ (4,827) $ (828) $ 6,895
--------- --------- ---------
Differences between income (loss) from continuing operations before
income taxes for financial statement purposes and taxable income
(loss):
Permanent differences:
Amortization of goodwill and other intangible charges............. 2,292 1,527 2,372
Net income of foreign subsidiary.................................. -- (114) 30
Non-deductible business expenses.................................. 49 225 492
Other............................................................. (359) (84) (34)
Net changes in temporary differences:
Stock options and stock grants.................................... 421 320 (365)
Real estate valuation and related provisions...................... (1,682) (530) (82)
Sale/leaseback.................................................... (1,914) (10) --
Amortization of intangibles....................................... 765 (83) (202)
Depreciation...................................................... 450 1,097 (269)
Inventory......................................................... (279) (2,711) 1,835
Employee benefits................................................. (401) (356) 439
Other items, net.................................................. 485 236 473
--------- --------- ---------
Net differences................................................. (173) (483) 4,689
--------- --------- ---------
Taxable income (loss) from continuing operations...................... $ (5,000) $ (1,311) $ 11,584
--------- --------- ---------
--------- --------- ---------

At April 30, 1996, Alpine had unused net operating loss carryforwards of
approximately $8.0 million that can be used to offset future taxable income.
These loss carryforwards do not include the Adience pre-acquisition loss
carryforwards discussed below. The net operating loss carryforwards expire in
various amounts from fiscal years 2003 to 2010 as follows:

OPERATING
LOSS
-------------
(IN
THOUSANDS)

2003................................................................. $ 844
2004................................................................. 3,177
2005................................................................. 232
2010................................................................. 3,700
-------------
$ 7,953
-------------
-------------

Alpine has entered into certain transactions that have resulted in ownership
changes under Section 382 of the Internal Revenue Code of 1986 which imposes
annual limitations on the amount of future taxable income which may be offset by
Alpine's pre-change net operating loss carryforward. The unused portion of the
annual limitations for any year may be carried forward to increase the annual
limitation in succeeding years.

F-23

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. INCOME TAXES (CONTINUED)
As further discussed in Note 6, Alpine acquired Adience on December 21,
1994. Accordingly, from that date Adience was included in Alpine's consolidated
federal tax return. At December 21, 1994, Adience had net operating loss
carryforwards aggregating approximately $19.7 million. Such carryforwards are
available to offset Alpine's future consolidated taxable income subject to the
imposition of an annual limitation on the amount of taxable income of Alpine
which may be offset by net operating loss carryforwards of Adience that were
generated prior to December 20, 1994.

Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," requires the recognition of deferred tax assets and liabilities for both
the expected future tax impact of temporary differences arising from assets and
liabilities whose tax bases are different from financial statement amounts, and
for the expected future tax benefit to be derived from tax loss carryforwards.
The statement also requires that a valuation allowance be established if it is
more likely than not that all or a portion of deferred tax assets will not be
realized. Realization of the future tax benefits is dependent on Alpine's
ability to generate taxable income within the carryforward period and the
periods in which net temporary differences reverse. No assurance can be given
that sufficient taxable income will be generated for utilization of the net
operating loss carryforwards and reversal of temporary differences.

Items that result in deferred tax assets (liabilities) and the related
valuation allowance at April 30, 1995 and 1996 are as follows:

1995 1996
---------- ----------
(IN THOUSANDS)

Inventory................................................................... $ 1,198 $ 1,921
Sale/leaseback.............................................................. 1,923 1,927
Accruals not currently deductible for tax................................... 6,103 8,991
Compensation expense related to unexercised stock options and stock
grants..................................................................... 1,218 1,146
Tax net operating loss carryforwards........................................ 17,195 13,839
Tax capital loss carryforwards.............................................. 1,200 --
Alternative minimum tax credit carryforwards 419 738
Foreign tax credit carryforwards............................................ 275 275
Depreciation................................................................ (13,376) (13,643)
Long-term investments....................................................... -- (3,196)
Other....................................................................... 780 482
---------- ----------
16,935 12,480
Less: valuation allowance................................................... (17,536) (16,178)
---------- ----------
Net deferred tax liability.................................................. $ (601) $ (3,698)
---------- ----------
---------- ----------

The deferred tax liability of $601,000 and $3.7 million at April 30, 1995
and 1996, respectively, includes $601,000 and $502,000, relating to the state
and foreign tax impact of certain temporary differences. The remaining $3.2
million deferred tax liability at April 30, 1996 relates to the tax effect of
the difference between the tax basis and financial statement basis of the
Company's equity investment in PolyVision (see Note 7). The deferred tax
liability is included in other long-term liabilities in the accompanying
consolidated balance sheet.

Alpine's tax returns for years subsequent to 1980 have not been reviewed by
the Internal Revenue Service (the "IRS"). Availability of the net operating loss
carryforwards might be challenged by the IRS upon examination of such returns
which could affect the availability of such carryforwards

F-24

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15. INCOME TAXES (CONTINUED)
incurred prior or subsequent to the aforementioned change in ownership or both.
Alpine believes, however, that the IRS challenges that would limit the
utilization of net operating loss carryforwards will not have a material adverse
effect on Alpine's financial position.

16. COMMITMENTS AND CONTINGENCIES
Total rent expense under cancelable and non-cancelable operating leases was
$483,000, $1.4 million, and $2.8 million for the years ended April 30, 1994,
1995, and 1996, respectively.

At April 30, 1996, future minimum lease payments under non-cancelable
operating leases are as follows:

REAL AND
PERSONAL
PROPERTY
-------------
(IN
THOUSANDS)

Fiscal Year:
1997............................................................... $ 1,281
1998............................................................... 1,000
1999............................................................... 757
2000............................................................... 630
2001............................................................... 472
-------------
$ 4,140
-------------
-------------

Approximately 30.7% of the Company's total labor force is covered by
collective bargaining agreements. Two collective bargaining agreements
representing 8.9% of Alpine's total labor force will expire within one year.

Adience's J.H. France unit, which was merged into Adience in December 1991,
has been named as party in approximately 3,000 pending lawsuits, some of which
contain both multiple claimants and multiple defendants, filed in twelve
jurisdictions principally by employees and former employees of certain customers
of J.H. France, alleging in certain cases that a single product, a plastic
insulating cement manufactured more than 20 years ago by J.H. France, caused
them to suffer from asbestosis related diseases and in other cases alleging that
products manufactured or sold by J.H. France, caused silica related diseases.
The majority of the lawsuits seek monetary damages ranging from $20,000 to $1.0
million each. J.H. France and its insurance carrier have historically settled
these lawsuits, typically for an average amount per case of less than the
minimum amount stated. Punitive damages have also been claimed in some cases.

In addition to the lawsuits against J.H. France, Adience, as successor in
interest to BMI, has been named a party in approximately 390 pending lawsuits,
some of which contain both multiple claimants and multiple defendants, filed in
the States of Pennsylvania, Ohio, Michigan, West Virginia, Wisconsin, Kentucky
and Indiana, principally by employees and former employees of certain customers
of Adience alleging that products produced by Adience caused silicosis, not
asbestosis, in such persons. The majority of such lawsuits seek monetary damages
ranging from $20,000 each, which is the minimal jurisdictional requirement for
personal injury cases in a majority of such state courts, to $1.0 million each.
Adience and its insurance carriers have historically settled these lawsuits for
an average amount per case of less than the minimum amount stated. Virtually all
such claims and all costs of defense for these cases are covered by insurance.

The insurance companies which had issued policies covering the J.H. France
cases initially denied coverage for these claims. In June 1993, the Supreme
Court of Pennsylvania held that the insurance

F-25

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. COMMITMENTS AND CONTINGENCIES (CONTINUED)
policies covering the claims in these J.H. France cases covered liabilities and
defense costs up to the amounts of the limits of the respective policies,
without regard to the period of time said policies were in effect. As a result
of this judicial determination and based upon Adience's experience in obtaining
dismissals or settlements in closed cases, Adience anticipates, although no
assurance can be given, that the expected costs and liabilities in such pending
cases will be adequately covered by insurance and that the aggregate limits on
the insurance policies in effect exceed the liabilities and defense costs which
will be incurred in the 3,000 J.H. France cases and the other 390 cases, for
which the scope of coverage has never been an issue.

Adience's Furnco unit has recently been named, although not effectively
served, as the sole defendant in nine separate lawsuits, each of which contains
one plaintiff (i.e., either husband or husband and wife). At this time,
investigation is continuing as to the nature and extent of such suits, as well
as the extent of insurance coverage therefor.

Alpine is subject to other legal proceedings and claims which have primarily
arisen in the ordinary course of business and have not been finally adjudicated.

Certain executives of the Company have employment contracts which generally
provide minimum base salaries aggregating approximately $1.6 million, cash
bonuses based on the Company's achievement of certain performance objectives,
discretionary stock options and restricted stock grants (see Note 11), and
certain retirement and other employee benefits. Further, in the event of
termination or voluntary resignation for good reason accompanied by a change in
control of the Company, as defined, such employment agreements provide for
severance payments equal to two times annual cash compensation, and the
continuation for stipulated periods of other benefits, as defined.

In the opinion of management, based on its examination of such matters and
discussions with counsel, the ultimate resolution of all pending or threatened
litigation, claims and assessments will have no material adverse effect upon
Alpine's consolidated financial position, liquidity or results of operations.

17. RELATED PARTY TRANSACTIONS
In March 1994, Steib & Company, ("Steib"), an investment partnership in
which two Alpine officers have a majority interest, purchased 5.8% of Adience
common stock at a price 20% higher than paid by Alpine for its purchase of 4.9%
of Adience common stock in December 1993. In January 1995, following completion
of Alpine's purchase of an additional 82.3% of Adience common stock, including
the common stock owned by Steib, Alpine reimbursed Steib for costs incurred by
Steib in connection with its investment in Adience common stock. In connection
with these transactions, Steib agreed to terminate a three-year advisory
agreement with Adience and voluntarily surrender options to purchase 7.2% of
Adience common stock at $1.25 per share.

Prior to fiscal 1994, certain of the executive officers and directors of
Alpine held direct and indirect ownership interests in APV. As a result of an
exchange transaction, the equity ownership in APV was converted into Alpine
common stock or options to acquire common stock. Pursuant to the exchange
transaction, an investment company in which Alpine's Chairman and Chief
Executive Officer was the managing general partner, received 907,504 shares of
Alpine common stock, and two officers of Alpine received an aggregate 687,554
shares of Alpine common stock and 50,000 options to purchase Alpine common stock
for $3.00 per share, all in exchange for their respective APV ownership
interests.

F-26

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17. RELATED PARTY TRANSACTIONS (CONTINUED)
During fiscal 1988, Alpine loaned certain officers $463,000 relating to the
exercise of stock options of which $163,000 has been repaid. The unpaid balance,
which is deducted from stockholders' equity and is repayable in Alpine common
stock, bears interest at prime plus 0.5% and is payable in July 1996.

18. PREFERRED STOCK
Alpine has authorized 500,000 shares of preferred stock with a par value of
$1.00 per share. The preferred stock may be issued at the discretion of the
Board of Directors in one or more series with differing terms, limitations and
rights.

At April 30, 1996 Alpine has outstanding, 196,649 shares of 8% Cumulative
Convertible Senior Preferred Stock ("8% Preferred Stock"), 1,750 shares of 9%
Cumulative Convertible Senior Preferred Stock ("9% Senior Preferred Stock") and
177 shares of 9% Cumulative Convertible Preferred Stock ("9% Preferred Stock").
The 8% Preferred Stock has a liquidation value of $50 per share while each of
the other series has a liquidation value of $1,000 per share. During fiscal
1996, 84,731 shares of 8% Senior Preferred Stock plus accrued dividends were
retired in connection with the valuation reset under the Adience acquisition and
debt exchange (see Note 6). Also during 1996, 3,500 shares of 8.5% cumulative
convertible senior preferred stock plus accrued dividends were converted through
negotiated conversions into 737,476 shares of Alpine common stock. During fiscal
1995, 750 shares of 9% Preferred Stock plus accrued dividends were converted
through negotiated conversions for 140,000 shares of Alpine common stock. During
fiscal 1994, 1,500 shares of the 8.5% Preferred Stock and 2,000 shares of the 9%
Senior Preferred Stock plus accrued dividends were converted through negotiated
conversions into 553,884 shares of Alpine common stock.

The 9% Senior Preferred Stock is senior in ranking to holders of Alpine's
common stock, 8% Preferred Stock and the 9% Preferred Stock. Each share is
convertible at any time into shares of Alpine common stock at a conversion price
of $7.90 per share, subject to customary adjustments. Alpine may redeem the
stock, in whole or in part, at a price equal to the liquidation value (i) during
the period commencing three years from and ending on the seventh year after the
date of issuance, if for any 30 trading days within a period of 45 consecutive
trading days ending five (5) days prior to the date of the notice of such
redemption, the market price of Alpine's common stock equals or exceeds one
hundred forty percent (140%) of the conversion price, or (ii) subsequent to the
seventh year after issuance of the preferred stock.

The 8% Preferred Stock ranks senior to the 9% Preferred Stock but junior to
the issued and outstanding 9% Senior Preferred Stock. The shares are convertible
at any time into Alpine common stock (subject to customary adjustment) at a
conversion price of $6.125 per share, except for 160,000 shares issued in
connection with the exchange of 1.0 million shares of Alpine common stock during
fiscal 1995 which have a conversion price of $4.52 per share. Alpine may redeem
the 8% Preferred Stock for $50 per share plus accrued dividends, if any, at any
time after the third anniversary of the date of issuance.

The 9% Senior Preferred Stock carries 100 votes per share and the 8%
Preferred Stock is entitled to vote that number of shares into which the shares
are convertible. The 8% Preferred Stock and the 9% Senior Preferred Stock vote
as a single class with Alpine's common stock on all matters submitted to
stockholders. In addition, the 9% Senior Preferred Stock is entitled to vote as
a separate class in the event of any proposal to (i) amend any of the principal
terms of the preferred stock; (ii) authorize, create, issue or sell any class of
stock senior to or on a parity with the 9% Senior Preferred Stock as to
dividends or liquidation preference; or (iii) merge into or consolidate with, or
sell all or substantially

F-27

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18. PREFERRED STOCK (CONTINUED)
all of the assets of Alpine to another entity. The holders of not less than
66 2/3% of the 8% Preferred Stock and the 9% Senior Preferred Stock must approve
any transaction subject to the class voting rights.

The 9% Preferred Stock is convertible into 105 1/2 shares of common stock,
subject to customary adjustments. Alpine may redeem the stock at any time, in
whole or in part at a price equal to the liquidation value per share.

19. SEGMENT INFORMATION
Alpine conducts business in three segments: telecommunications wire and
cable products (through Superior, acquired in November 1993, and the Alcatel
Business, acquired in May 1995); refractories (through Adience, acquired in
December 1994); and data communications and electronics (through DNE, acquired
in February, 1992).

F-28

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. SEGMENT INFORMATION (CONTINUED)
The following provides information about each business segment as of April
30, 1994, 1995, and 1996:

1994 1995 1996
----------- ----------- -----------
(IN THOUSANDS)

Net sales (a):
Telecommunications wire and cable.............................. $ 46,857 $ 136,578 $ 384,237
Refractories................................................... -- 33,650 113,700
Data communications and electronics............................ 21,653 27,907 26,176
----------- ----------- -----------
$ 68,510 $ 198,135 $ 524,113
----------- ----------- -----------
----------- ----------- -----------
Operating income (loss):
Telecommunications wire and cable.............................. $ 1,625 $ 8,128 $ 29,885
Refractories................................................... -- 383 6,558
Data communications and electronics............................ (75) 1,710 2,039
Corporate...................................................... (3,750) (3,225) (5,960)
----------- ----------- -----------
$ (2,200) $ 6,996 $ 32,522
----------- ----------- -----------
----------- ----------- -----------
Identifiable assets at year end:
Telecommunications wire and cable.............................. $ 89,687 $ 98,785 $ 226,282
Refractories................................................... -- 104,300 97,028
Data communications and electronics............................ 15,340 16,820 18,020
Corporate (b).................................................. 8,769 13,873 13,574
----------- ----------- -----------
$ 113,796 $ 233,778 $ 354,904
----------- ----------- -----------
----------- ----------- -----------
Depreciation and amortization expense:
Telecommunications wire and cable.............................. $ 1,562 $ 3,570 $ 7,575
Refractories................................................... -- 1,670 4,207
Data communications and electronics............................ 2,697 872 732
Corporate...................................................... 166 57 52
----------- ----------- -----------
$ 4,425 $ 6,169 $ 12,566
----------- ----------- -----------
----------- ----------- -----------
Capital expenditures (c):
Telecommunications wire and cable.............................. $ 420 $ 1,388 $ 9,337
Refractories................................................... -- 426 1,767
Data communications and electronics............................ 1,140 394 449
Corporate...................................................... 5 67 122
----------- ----------- -----------
$ 1,565 $ 2,275 $ 11,675
----------- ----------- -----------
----------- ----------- -----------

(a) (i) Two customers in the telecommunications wire and cable segment
accounted for 30% and 16% of net sales in fiscal 1995 and five
customers accounted for 22%, 17%, 16%, 13% and 13% of sales in fiscal
1996.

(ii) Three customers in the refractories segment accounted for 31% and 34%
of net sales in fiscal 1995 and 1996, respectively, of which one
accounted for 13.5% and 15% in fiscal 1995 and 1996, respectively.

(iii) The data communications and electronics segment has historically been
dependent on government funding of programs in which it participates.
Significant changes in the levels of

F-29

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. SEGMENT INFORMATION (CONTINUED)
funding for such programs could have a materially adverse effect on the
segment. Sales to agencies of the U.S. government were 86.4%, 82.3%,
and 66.4% of net sales of this segment for fiscal 1994, 1995, and 1996,
respectively.

(b) Includes investment in PolyVision.

(c) During fiscal 1996 Superior acquired certain Canadian assets of BICC
Phillips for $5.4 million, which amount is reflected in capital
expenditures.

20. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

FISCAL 1995 QUARTER ENDED
-------------------------------------------------------------
JULY 31 OCTOBER 31 JANUARY 31 APRIL 30 YEAR
--------- ------------- ----------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE)

Net sales........................................ $ 39,330 $ 40,552 $ 45,900 $ 72,353 $ 198,135
Gross profit..................................... 5,685 5,278 6,355 11,692 29,010
Operating income................................. 1,888 1,411 840 2,857 6,996
Income (loss) from continuing operations......... 838 249 (1,954) (309) (1,176)
(Loss) from discontinued operations.............. (826) (4,042)(a) -- -- (4,868)
--------- ------------- ----------- --------- -----------
Net income (loss)............................ $ 12 $ (3,793) $ (1,954) $ (309) $ (6,044)
--------- ------------- ----------- --------- -----------
--------- ------------- ----------- --------- -----------
Income (loss) per share of common stock:
Continuing operations.......................... $ 0.04 $ 0.01 $ (0.12) $ (0.04) $ (0.11)
Discontinued operations........................ (0.05) (0.22) -- -- (0.27)
--------- ------------- ----------- --------- -----------
Net (loss)................................... $ (0.01) $ (0.21) $ (0.12) $ (0.04) $ (0.38)
--------- ------------- ----------- --------- -----------
--------- ------------- ----------- --------- -----------

(a) Includes a $3.0 million pretax provision for estimated losses through the
disposition date.

FISCAL 1995 QUARTER ENDED
---------------------------------------------------------------
JULY 31 OCTOBER 31 JANUARY 31 APRIL 30 YEAR
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE)

Net sales.......................................... $ 128,784 $ 136,252 $ 119,504 $ 139,573 $ 524,113
Gross profit....................................... 16,328 16,523 15,708 21,769 70,328
Operating income................................... 7,753 7,711 6,426 10,632 32,522
Income from continuing operations.................. 1,354 981 221 2,663 5,219
(Loss) from discontinued operations................ (379) (1,834) -- -- (2,213)
Extraordinary gain (loss) on early extinguishment
of debt........................................... (5,180) 324 -- -- (4,856)
----------- ----------- ----------- ----------- -----------
Net income (loss).............................. $ (4,205) $ (529) $ 221 $ 2,663 $ (1,850)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Income (loss) per share of common stock:
Continuing operations............................ $ 0.06 $ 0.04 $ -- $ 0.13 $ 0.23
Discontinued operations.......................... (0.02) (0.11) -- -- (0.12)
Extraordinary gain (loss) on early extinguishment
of debt......................................... (0.30) 0.02 -- -- (0.27)
----------- ----------- ----------- ----------- -----------
Net income (loss).............................. $ (0.26) $ (0.05) $ -- $ 0.13 $ (0.16)
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------

21. SUBSIDIARY GUARANTEES
On July 21, 1995, Alpine issued and sold $153,000,000 principal amount of
12.25% Senior Secured Notes (the "Senior Notes") (see Note 9). The Senior Notes
are fully and unconditionally guaranteed

F-30

THE ALPINE GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

21. SUBSIDIARY GUARANTEES (CONTINUED)
on a senior secured basis by Superior and Adience (wholly owned subsidiaries of
Alpine) and Superior Cable Corp. (a wholly owned subsidiary of Superior
Telecommunications Inc.) The Adience subsidiary guarantee, however, is
subordinated in right of payment to $5.0 million of Adience's 11% Senior Secured
Notes outstanding. The subsidiary guarantees rank pari passu in right of payment
with other senior debt of Alpine (including the Credit Facility) and other
senior debt of the subsidiary guarantors. The subsidiary guarantors have also
guaranteed the indebtedness outstanding under Alpine's Credit Facility (see Note
9). The Senior Notes, however, are effectively subordinated to the loans and
subsidiary guarantees under the Credit Facility and to other secured debt of
Alpine and the subsidiary guarantors to the extent of the assets securing the
Credit Facility or such other secured debt.

There are no contractual restrictions on the ability of the subsidiaries to
make distributions to Alpine to service indebtedness, including interest
payments on the Senior Notes. Separate financial statements and related
disclosures for the subsidiary guarantors are included herein as exhibits. The
following condensed consolidating information presents condensed financial
statements as of April 30, 1995, and 1996 of (a) Alpine on a parent company
basis with its investments in subsidiaries accounted for under the equity method
(Parent Company), (b) the combined subsidiary guarantors, (c) the combined
subsidiary non-guarantors, and (d) Alpine on a consolidated basis.

F-31

THE ALPINE GROUP, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FISCAL YEAR ENDED APRIL 30, 1995
------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- ----------- -------------- ----------- ------------
(IN THOUSANDS)

Net sales................................... $ 166,561 $ 31,574 $ 198,135
Cost of goods sold.......................... 146,670 22,455 169,125
---------- ----------- -------------- ----------- ------------
Gross profit.............................. 19,891 9,119 29,010
Selling, general and administrative
expenses................................... $ 2,992 10,233 7,262 20,487
Amortization of goodwill.................... 1,527 1,527
---------- ----------- -------------- ----------- ------------
Operating income (loss)................... (2,992) 8,131 1,857 6,996
Interest (expense), net..................... (1,316) (5,714) (822) (7,852)
Other income (expense)...................... (531) 328 231 28
Allocated charges........................... 111 (111)
---------- ----------- -------------- ----------- ------------
Income from continuing operations before
income tax............................... (4,728) 2,745 1,155 (828)
Equity in income of subsidiaries............ (3,266) 107 $ 3,159
---------- ----------- -------------- ----------- ------------
(7,994) 2,852 1,155 3,159 (828)
Income tax (expense) benefit................ 1,950 (2,217) (81) (348)
---------- ----------- -------------- ----------- ------------
Income (loss) from continuing
operations............................... (6,044) 635 1,074 3,159 (1,176)
(Loss) from discontinued operations......... (4,868) (4,868)
---------- ----------- -------------- ----------- ------------
Net income (loss)......................... $ (6,044) $ 635 $ (3,794) $ 3,159 $ (6,044)
---------- ----------- -------------- ----------- ------------
---------- ----------- -------------- ----------- ------------

FISCAL YEAR ENDED APRIL 30, 1996
------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
---------- ----------- -------------- ----------- ------------
(IN THOUSANDS)

Net sales................................... $ 485,065 $ 39,048 $ 524,113
Cost of goods sold.......................... 425,852 27,933 453,785
---------- ----------- -------------- ----------- ------------
Gross profit.............................. 59,213 11,115 70,328
Selling, general and administrative
expenses................................... $ 5,960 20,820 8,368 35,148
Amortization of goodwill.................... 2,802 $ (144) 2,658
---------- ----------- -------------- ----------- ------------
Operating income (loss)................... (5,960) 35,591 2,747 144 32,522
Interest (expense), net..................... (19,214) (6,093) (342) (25,649)
Other income (expense)...................... (33) 55 22
Intercompany interest....................... 18,517 (18,183) (334)
---------- ----------- -------------- ----------- ------------
Income from continuing operations before
income tax............................... (6,690) 11,315 2,126 144 6,895
Equity in income of subsidiaries............ 3,685 545 -- (4,230)
---------- ----------- -------------- ----------- ------------
(3,005) 11,860 2,126 (4,086) (6,895)
Income tax (expense) benefit................ 5,421 (6,028) (1,069) (1,676)
---------- ----------- -------------- ----------- ------------
Income from continuing operations......... 2,416 5,832 1,057 (4,086) 5,219
(Loss) from discontinued operations......... (2,213) (2,213)
---------- ----------- -------------- ----------- ------------
Income before extraordinary item............ 203 5,832 1,057 (4,086) 3,006
Extraordinary gain (loss) on early
extinguishment of debt................... (2,053) (2,969) 166 (4,856)
---------- ----------- -------------- ----------- ------------
Net income (loss)........................... $ (1,850) $ 2,863 $ 1,223 $ (4,086) $ (1,850)
---------- ----------- -------------- ----------- ------------
---------- ----------- -------------- ----------- ------------

F-31

THE ALPINE GROUP, INC.
CONDENSED CONSOLIDATING BALANCE SHEET

AS OF APRIL 30, 1995
-------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
----------- ----------- -------------- ----------- ------------
(IN THOUSANDS)

Assets
Current assets............................ $ 15,006 $ 67,045 $ 18,022 $ (1,188) $ 98,885
Property, plant and equipment, net........ 114 47,544 4,582 52,240
Goodwill, net............................. 70,100 (4,388) 65,712
Investment in and advances to
subsidiaries............................. 59,556 4,972 (64,528)
Other non-current assets.................. 2,738 18,687 (2,903) (1,581) 16,941
----------- ----------- -------------- ----------- ------------
Total assets............................ $ 77,414 $ 203,376 $ 24,673 $ (71,685) $ 233,778
----------- ----------- -------------- ----------- ------------
----------- ----------- -------------- ----------- ------------
Liabilities and stockholders' equity
Current liabilities....................... $ 24,489 $ 59,547 $ 7,793 $ (24) $ 91,805
Long-term debt............................ 2,534 73,023 8,465 84,022
Other non-current liabilities............. 5,733 14,190 651 (7,281) 13,293
Equity.................................... 44,658 56,616 7,764 (64,380) 44,658
----------- ----------- -------------- ----------- ------------
Total liabilities and stockholders'
equity................................. $ 77,414 $ 203,376 $ 24,673 $ (71,685) $ 233,778
----------- ----------- -------------- ----------- ------------
----------- ----------- -------------- ----------- ------------

AS OF APRIL 30, 1996
-------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
----------- ----------- -------------- ----------- ------------
(IN THOUSANDS)

Assets
Current assets............................ $ 8,924 $ 124,489 $ 17,417 $ (4,488) $ 146,342
Property, plant and equipment, net........ 146 94,793 4,486 99,425
Goodwill, net............................. 86,561 (3,827) 82,734
Investment in and advances to
subsidiaries............................. 217,564 (161,063) (2,474) (54,027)
Other non-current assets.................. 23,666 2,030 707 26,403
----------- ----------- -------------- ----------- ------------
Total assets............................ $ 250,300 $ 146,810 $ 20,136 $ (62,342) $ 354,904
----------- ----------- -------------- ----------- ------------
----------- ----------- -------------- ----------- ------------
Liabilities and stockholders' equity
Current liabilities....................... $ 12,413 $ 78,582 $ 5,883 $ (1,215) $ 95,663
Long-term debt............................ 189,847 12,349 5,449 207,645
Other non-current liabilities............. 4,904 10,695 676 (7,815) 8,460
Equity.................................... 43,136 45,184 8,128 (53,312) 43,136
----------- ----------- -------------- ----------- ------------
Total liabilities and stockholders'
equity................................. $ 250,300 $ 146,810 $ 20,136 $ (62,342) $ 354,904
----------- ----------- -------------- ----------- ------------
----------- ----------- -------------- ----------- ------------

F-32

THE ALPINE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDED APRIL 30, 1995
-----------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
--------- ----------- -------------- ----------- ------------
(IN THOUSANDS)

Cash flows from operating activities:
Income (loss) from continuing operations.... $ (6,044) $ 635 $ 1,074 $ 3,159 $ (1,176)
Adjustments to reconcile income (loss) to
net cash provided by (used for) continuing
operations:
Depreciation, amortization and other
non-cash charges........................... 647 5,857 938 7,442
Changes in assets and liabilities........... (986) (2,854) 755 (3,085)
Cash used for discontinued operations....... (4,133) (4,133)
--------- ----------- ------- ----------- ------------
Cash flows provided by (used for) operating
activities................................... (6,383) 3,638 (1,366) 3,159 (952)
--------- ----------- ------- ----------- ------------
Cash flows from investing activities:
Acquisition, net of cash.................... (2,424) 3,226 802
Capital expenditures........................ (67) (1,768) (440) (2,275)
Other....................................... 2,777 (2,536) 241
--------- ----------- ------- ----------- ------------
Cash flows provided by (used for) investing
activities................................... 286 (1,078) (440) (1,232)
--------- ----------- ------- ----------- ------------
Cash flows from financing activities:
Repayments of long-term borrowings.......... (2,263) (1,215) (3,478)
Short-term borrowings....................... 20,685 20,685
Intercompany transactions................... (1,647) 557 4,249 3,159
Borrowings (repayments) under revolving
credit facilities, net..................... (2,157) 627 (1,530)
Other....................................... (1,472) 928 90 (454)
--------- ----------- ------- ----------- ------------
Cash flows provided by (used for) financing
activities................................... 17,566 (2,935) 3,751 (3,159) 15,223
--------- ----------- ------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents.................................. 11,469 (375) 1,945 13,039
--------- ----------- ------- ----------- ------------
Cash and cash equivalents at the beginning of
the period................................... 1,830 4 673 2,507
--------- ----------- ------- ----------- ------------
Cash and cash equivalents at the end of the
period....................................... $ 13,299 $ (371) $ 2,618 $ -- $ 15,546
--------- ----------- ------- ----------- ------------
--------- ----------- ------- ----------- ------------

F-33

THE ALPINE GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FISCAL YEAR ENDED APRIL 30, 1996
---------------------------------------------------------------------
PARENT SUBSIDIARY SUBSIDIARY ELIMINATING
COMPANY GUARANTORS NON-GUARANTORS ENTRIES CONSOLIDATED
------------ ------------ -------------- ----------- ------------
(IN THOUSANDS)

Cash flows from operating activities:
Income from continuing operations....... $ 2,416 $ 5,832 $ 1,057 $ (4,086) $ 5,219
Adjustments to reconcile income to net
cash provided by (used for) continuing
operations:
Depreciation, amortization and other
non-cash charges..................... 2,675 12,359 843 (144) 15,733
Changes in assets and liabilities..... 3,663 16,797 (3,034) 17,426
Cash used for discontinued
operations........................... (956) (956)
------------ ------------ ------- ----------- ------------
Cash flows provided by (used for)
operating activities..................... 7,798 34,988 (1,134) (4,230) 37,422
------------ ------------ ------- ----------- ------------
Cash flows from investing activities:
Acquisition, net of cash................ (103,409) (103,409)
Proceeds from (investments in)
marketable securities.................. (6,218) (6,218)
Capital expenditures.................... (122) (5,381) (725) (6,228)
Investment in PolyVision................ (3,086) (3,086)
Other................................... (3,157) (5,669) 1,250 (7,576)
------------ ------------ ------- ----------- ------------
Cash flows provided by (used for)
investing activities..................... (12,583) (114,459) 525 (126,517)
------------ ------------ ------- ----------- ------------
Cash flows from financing activities:
Long-term borrowings.................... 140,357 141,317 52 281,726
Repayments of long-term borrowings...... (1,701) (181,425) (2,650) (185,776)
Short-term borrowings................... (21,000) (21,000)
Intercompany transactions............... (169,926) 163,299 2,397 4,230
Borrowings (repayments) under revolving
credit facilities, net................. 58,099 (40,334) (1,122) 16,643
Other................................... (13,660) (3,365) 100 (16,925)
------------ ------------ ------- ----------- ------------
Cash flows provided by (used for)
financing activities..................... (7,831) 79,492 (1,223) 4,230 74,668
------------ ------------ ------- ----------- ------------
Net increase (decrease) in cash and cash
equivalents.............................. (12,616) 21 (1,832) (14,427)
------------ ------------ ------- ----------- ------------
Cash and cash equivalents at the beginning
of the period............................ 13,299 (371) 2,618 15,546
------------ ------------ ------- ----------- ------------
Cash and cash equivalents at the end of
the period............................... $ 683 $ (350) $ 786 $ -- $ 1,119
------------ ------------ ------- ----------- ------------
------------ ------------ ------- ----------- ------------

F-34

SCHEDULE 1
THE ALPINE GROUP, INC.
(PARENT COMPANY)
CONDENSED BALANCE SHEET
ASSETS

APRIL 30,
----------------------
1995 1996
--------- -----------
(IN THOUSANDS)

Current assets:
Cash and cash equivalents.............................................................. $ 13,299 $ 683
Marketable securities.................................................................. 1,495 7,713
Other current assets................................................................... 212 528
--------- -----------
Total current assets................................................................. 15,006 8,924
Advances and loans to subsidiaries....................................................... 7,503 163,816
Investment in consolidated subsidiaries.................................................. 52,053 53,748
Property, plant and equipment, net....................................................... 114 146
Long-term investments and other assets................................................... 2,738 23,666
--------- -----------
TOTAL ASSETS............................................................................. $ 77,414 $ 250,300
--------- -----------
--------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Short-term borrowings.................................................................. $ 20,790 $ --
Current portion of long-term debt...................................................... 150 804
Accounts payable....................................................................... 744 324
Accrued expenses....................................................................... 2,805 11,285
--------- -----------
Total current liabilities............................................................ 24,489 12,413
--------- -----------
Long-term debt, less current portion..................................................... 2,534 189,847
--------- -----------
Other long-term liabilities.............................................................. -- 3,076
--------- -----------
Adience acquisition obligation........................................................... 5,733 1,828
--------- -----------
Stockholders' equity:
8% Cumulative Convertible Preferred Stock at liquidation value......................... 11,823 9,831
9% Cumulative Convertible Preferred Stock at liquidation value......................... 1,927 1,927
8.5% Cumulative Convertible Preferred Stock at liquidation value....................... 3,500 --
Common stock, $.10 par value; authorized 25,000,000 shares; issued: 1995, 17,429,141
shares; 1996, 19,307,012 shares....................................................... 1,743 1,931
Capital in excess of par value......................................................... 103,114 113,843
Cumulative translation adjustment...................................................... 144 (82)
Accumulated deficit.................................................................... (76,050) (78,998)
--------- -----------
46,201 48,452
Less shares in treasury, at cost:
1995, 233,290 shares; 1996, 1,025,496 shares........................................... (1,229) (4,806)
Receivable from stockholders........................................................... (314) (510)
--------- -----------
Total stockholders' equity........................................................... 44,658 43,136
--------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY................................................. $ 77,414 $ 250,300
--------- -----------
--------- -----------

F-35

SCHEDULE 1
(CONTINUED)

THE ALPINE GROUP, INC.
(PARENT COMPANY)
CONDENSED STATEMENTS OF OPERATIONS

YEAR ENDED APRIL 30,
--------------------------------
1994 1995 1996
---------- --------- ---------
(IN THOUSANDS)

Revenues:
Interest income............................................................. $ 105 $ 345 $ 1,357
Intercompany interest....................................................... -- -- 18,517
Corporate charges........................................................... 360 111 --
---------- --------- ---------
465 456 19,874
---------- --------- ---------
Expenses:
General and administrative.................................................. 3,750 2,992 5,960
Interest expense............................................................ 484 1,661 20,571
Other expense............................................................... 445 531 33
---------- --------- ---------
4,679 5,184 26,564
---------- --------- ---------
(4,214) (4,728) (6,690)
---------- --------- ---------
Equity in net income (loss) of subsidiaries before extraordinary item (a)..... (25,917) (1,316) 6,893
---------- --------- ---------
Income (loss) before extraordinary item....................................... (30,131) (6,044) 203
Extraordinary (loss) on early extinguishment of debt.......................... (47) -- (2,053)
---------- --------- ---------
Net (loss).................................................................. $ (30,178) $ (6,044) $ (1,850)
---------- --------- ---------
---------- --------- ---------

- ------------------------
(a) Equity in net income (loss) of subsidiaries before extraordinary item
includes losses from discontinued operations of $25.2 million, $4.9 million
and $2.2 million in fiscal 1994, 1995 and 1996, respectively. (See Note 5 to
the consolidated financial statements.)

F-36

SCHEDULE 1
(CONTINUED)

THE ALPINE GROUP, INC.
(PARENT COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS

YEAR ENDED APRIL 30,
-----------------------------------
1994 1995 1996
---------- --------- ------------
(IN THOUSANDS)

Cash provided by (used for) operating activities............................ $ (2,566) $ (6,383) $ 7,798
---------- --------- ------------
Cash flows from investing activities:
Capital expenditures...................................................... (5) (67) (122)
Acquisitions, net of cash acquired........................................ (17,000) (2,424) --
Investment in/sale of subsidiaries........................................ 773 -- (3,157)
Proceeds from (investment in) marketable securities....................... (1,268) 477 (6,218)
Dividends received from subsidiaries...................................... 17,610 2,000 --
Loan to PolyVision Corporation............................................ -- -- (3,086)
Other..................................................................... -- 300 --
---------- --------- ------------
Cash provided by (used for) investing activities............................ 110 286 (12,583)
---------- --------- ------------
Cash flows from financing activities:
Short-term borrowings (repayments)........................................ (118) 20,685 (21,000)
Borrowings under revolving credit facility................................ -- -- 58,099
Long-term borrowings...................................................... 123 -- 140,357
Repayments of long-term borrowings........................................ -- -- (1,701)
Capitalized financing costs............................................... -- -- (9,208)
Dividends on preferred stock.............................................. (414) (505) (720)
Proceeds from stock options exercised..................................... 1,072 256 120
Advances and loans to subsidiaries, net................................... (1,809) (1,659) (169,926)
Issuance of preferred stock (net)......................................... 4,700 -- --
Purchase of treasury shares............................................... -- (1,211) (3,656)
Other..................................................................... -- -- (196)
---------- --------- ------------
Cash provided by (used for) financing activities............................ 3,554 17,566 (7,831)
---------- --------- ------------
Net increase (decrease) in cash and cash equivalents........................ 1,098 11,469 (12,616)
Cash and cash equivalents at beginning of year.............................. 732 1,830 13,299
---------- --------- ------------
Cash and cash equivalents at end of year.................................... $ 1,830 $ 13,299 $ 683
---------- --------- ------------
---------- --------- ------------
Supplemental cash flow disclosures:
Interest paid............................................................. $ 376 $ 1,287 $ 13,973
---------- --------- ------------
---------- --------- ------------

F-37

SCHEDULE 1
(CONTINUED)

THE ALPINE GROUP, INC.
(PARENT COMPANY)
APPENDIX A

APRIL 30,
----------------------
1995 1996
--------- -----------
(IN THOUSANDS)

Long-term debt:
Long-term debt consists of:
12.25% Senior Secured Notes due 2003 face value $153,000,000(a)....................... $ $ 141,070
Revolving credit facility (a)......................................................... -- 48,654
13.5% Senior Subordinated Debentures (a).............................................. 1,551 --
10% Convertible Senior Subordinated Notes due July 31, 1996 ($1,104,000 and $804,500
face value at April 30, 1995 and 1996, respectively) (a)............................. 860 804
Other................................................................................. 273 123
--------- -----------
2,684 190,651
Less, current portion................................................................... 150 804
--------- -----------
$ 2,534 $ 189,847
--------- -----------
--------- -----------

- ------------------------
(a) See Note 9 to the consolidated financial statements

Minimum current maturities of long-term debt outstanding as of April 30,
1996, are as follows:

FISCAL YEAR AMOUNT
- --------------------------------------------------------------- ---------

1997........................................................... $ 804
1998........................................................... --
1999........................................................... --
2000........................................................... --
2001........................................................... $ 48,654

F-38

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of
our report dated June 14, 1996 included in this Form 10-K, into The Alpine
Group, Inc.'s previously filed Registration Statements on Forms S-8 (File Nos.
2-70015 and 33-62544) and on Forms S-3 (File Nos. 33-30246 and 33-53434).

Arthur Andersen LLP

Atlanta, Georgia
July 26, 1996

F-39

EXHIBIT 28

ADIENCE, INC.

CONSOLIDATED FINANCIAL STATEMENTS
AS OF APRIL 30, 1995 AND 1996
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Adience, Inc.:

We have audited the accompanying consolidated balance sheets of Adience,
Inc. (a Delaware Corporation and wholly owned subsidiary of The Alpine Group,
Inc.) and Subsidiary as of April 30, 1995 and 1996 and the related consolidated
statements of operations, stockholder's equity and cash flows for the period
from December 21, 1994 to April 30, 1995 and for the year ended April 30, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these combined financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Adience, Inc. and Subsidiary
as of April 30, 1995 and 1996, and the results of their operations and their
cash flows for the period from December 21, 1994 to April 30, 1995 and the year
ended April 30, 1996 in conformity with generally accepted accounting
principles.

Arthur Andersen LLP

Pittsburgh, Pennsylvania
June 7, 1996

2

ADIENCE, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS

APRIL 30,
----------------------
1995 1996
----------- ---------
(IN THOUSANDS)

Current assets:
Cash and cash equivalents........................................................... $ 1,974 $ 412
Accounts receivable (less allowance for doubtful accounts of $897,000 in 1995 and
$340,000 in 1996).................................................................. 17,983 17,183
Inventories......................................................................... 9,547 11,264
Other current assets................................................................ 6,188 5,668
----------- ---------
Total current assets.............................................................. 35,692 34,527
----------- ---------
Property, plant and equipment, net.................................................... 22,082 22,751
Goodwill, net......................................................................... 38,163 38,030
Net assets of discontinued operations................................................. 8,030 --
Note receivable from affiliate........................................................ -- 2,049
Other long-term assets................................................................ 2,080 1,603
----------- ---------
Total assets...................................................................... $ 106,047 $ 98,960
----------- ---------
----------- ---------

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Short-term borrowings............................................................... $ 14,387 $ --
Current portion of long-term debt................................................... 714 844
Accounts payable.................................................................... 8,722 7,909
Accrued expenses and other liabilities.............................................. 19,492 18,203
----------- ---------
Total current liabilities......................................................... 43,315 26,956
----------- ---------
Notes payable to parent............................................................... -- 54,908
----------- ---------
Due to parent......................................................................... -- 6,133
----------- ---------
Payable to affiliate.................................................................. 3,583 --
----------- ---------
Long-term debt, less current portion.................................................. 47,213 6,258
----------- ---------
Other long-term liabilities........................................................... 3,076 2,968
----------- ---------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $0.01; 20,000,000 shares authorized, 10,100,000 shares
issued at April 30, 1995........................................................... 101 --
Common stock, par value $1.00; 1,000 shares authorized, 10 shares issued at April
30, 1996........................................................................... -- --
Additional paid-in capital.......................................................... 12,303 5,710
Cumulative translation adjustment................................................... 144 132
Accumulated deficit................................................................. (3,688) (4,105)
----------- ---------
Total stockholder's equity........................................................ 8,860 1,737
----------- ---------
Total liabilities and stockholder's equity........................................ $ 106,047 $ 98,960
----------- ---------
----------- ---------

The accompanying notes are an integral part of these consolidated financial
statements.

3

ADIENCE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM DECEMBER 21, 1994 TO APRIL 30, 1995
AND THE YEAR ENDED APRIL 30, 1996

1995 1996
--------- -----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)

Net sales............................................................................. $ 33,650 $ 113,700
Cost of goods sold.................................................................... 27,011 90,931
--------- -----------
Gross profit........................................................................ 6,639 22,769
Selling, general, and administrative expense.......................................... 5,742 14,965
Amortization of goodwill.............................................................. 515 1,246
--------- -----------
Operating income.................................................................... 382 6,558
Interest income....................................................................... 42 217
Interest expense...................................................................... (2,836) (8,452)
Other income, net..................................................................... 286 289
--------- -----------
(Loss) before income tax expense and extraordinary item............................. (2,126) (1,388)
Income tax expense.................................................................... (58) (375)
--------- -----------
(Loss) before extraordinary item.................................................... (2,184) (1,763)
Extraordinary (loss) on early extinguishment of debt.................................. -- (158)
--------- -----------
Net (loss).......................................................................... $ (2,184) $ (1,921)
--------- -----------
--------- -----------

The accompanying notes are an integral part of these consolidated financial
statements

4

ADIENCE, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
FOR THE PERIOD FROM DECEMBER 21, 1994 TO APRIL 30, 1996

ADDITIONAL RETAINED FOREIGN TOTAL
COMMON PAID IN EARNINGS CURRENCY STOCKHOLDER'S
STOCK CAPITAL (DEFICIT) TRANSLATION EQUITY
----------- ----------- --------- ------------- ------------

Balance at December 21, 1994........................ $ 101 $ 12,303 $ (1,504) $ 10,900
Net (loss)........................................... (2,184) (2,184)
Cumulative translation adjustment.................... $ 144 144
----------- ----------- --------- ----- ------------
Balance at April 30, 1995.......................... 101 12,303 (3,688) 144 8,860
Purchase accounting adjustment....................... (2,505) (2,505)
Recapitalization..................................... (101) 101 --
Acquisition of minority interest..................... 1,596 1,504 3,100
Dividend............................................. (5,785) (5,785)
Net (loss)........................................... (1,921) (1,921)
Cumulative translation adjustment.................... (12) (12)
----------- ----------- --------- ----- ------------
Balance at April 30, 1996.......................... $ -- $ 5,710 $ (4,105) $ 132 $ 1,737
----------- ----------- --------- ----- ------------
----------- ----------- --------- ----- ------------

The accompanying notes are an integral part of these consolidated financial
statements

5

ADIENCE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM DECEMBER 21, 1994 TO APRIL 30, 1995
AND THE YEAR ENDED APRIL 30, 1996

1995 1996
--------- ----------

(IN THOUSANDS)
Cash flows from operating activities:
Net (loss) before extraordinary item................................................. $ (2,184) $ (1,763)
Adjustments to reconcile net (loss) to net cash (used for) operating activities:
Depreciation and amortization...................................................... 1,621 4,207
Amortization of deferred financing costs........................................... 260 184
Change in assets and liabilities:
Accounts receivable.............................................................. (2,520) 702
Inventories...................................................................... 139 (1,717)
Other current assets............................................................. (509) (564)
Accounts payable and accrued expenses............................................ (85) (7,168)
Other............................................................................ (145) 23
--------- ----------
Cash (used for) operating activities................................................... (3,423) (6,096)
--------- ----------
Cash flows from investing activities:
Capital expenditures................................................................. (160) (1,767)
Other................................................................................ (124) (338)
--------- ----------
Cash (used for) investing activities................................................... (284) (2,105)
--------- ----------
Cash flows from financing activities:
Borrowings (repayments) under revolving line of credit, net.......................... 1,919 (14,387)
Borrowings from (advances to) parent................................................. (100) 58,913
Advances to affiliates............................................................... -- (2,049)
Long-term borrowings................................................................. 636 --
Repayment of long-term borrowings.................................................... -- (35,838)
--------- ----------
Cash provided by financing activities.................................................. 2,455 6,639
--------- ----------
Net (decrease) in cash and cash equivalents.......................................... (1,252) (1,562)
Cash at beginning of period............................................................ 3,226 1,974
--------- ----------
Cash at end of period.................................................................. $ 1,974 $ 412
--------- ----------
Supplemental disclosures:
Cash interest paid during the period (including interest paid to parent)............. $ 902 $ 7,120
--------- ----------
Cash paid during the period for income taxes......................................... $ 76 $ 344
--------- ----------
Non-cash investing and financing activities:
Debt retired in exchange for parent company preferred stock.......................... $ 2,245
----------
Dividend paid to parent in the form of a property distribution....................... $ 5,785
----------

The accompanying notes are an integral part of these consolidated financial
statements

6

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

On December 21, 1994, The Alpine Group, Inc. ("Alpine") acquired 82.3% of
Adience Inc. ("Adience") outstanding common stock which when combined with
Adience common stock previously purchased by Alpine, resulted in Alpine owning
87.2% of Adience's outstanding common stock on such date (the "Adience
Acquisition"). On July 21, 1995, in connection with a recapitalization, Alpine
acquired the remaining 12.8% of Adience common stock.

Adience is engaged in the manufacture, sale, installation and maintenance of
specialty refractory products. Refractory products are used in virtually every
industrial process requiring heating or containment at a high temperature of a
solid, liquid or gas. Refractory products are ceramic materials used as
insulation on surfaces that are exposed to high temperatures. Adience also
provides installation and maintenance services in connection with its specialty
refractory products to the steel, aluminum, glass, petrochemical and other
non-ferrous industries.

Adience consists of three refractory units: BMI-FRANCE, Findlay and Furnco.
BMI-FRANCE engages in the manufacture, sale, installation and maintenance of
specialty unformed refractory products and bricks. Findlay manufactures and
sells specialty refractory block used in the production of glass and glass
products. Furnco is engaged in the rebuilding, repair and maintenance of coke
ovens.

Adience's wholly-owned subsidiary, Adience Canada, Inc. ("Adience Canada"),
owns and operates its own headquarters and refractory manufacturing facility in
Ontario, Canada, from where it markets Adience's full range of products
throughout Canada.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
Adience and its wholly-owned subsidiary Adience Canada. All significant
intercompany accounts and transactions have been eliminated from the
consolidated financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.

CASH AND CASH EQUIVALENTS

Adience considers all highly liquid investments with a maturity of 90 days
or less to be cash equivalents.

INVENTORIES

Inventories are stated at the lower of cost or market with cost determined
on the first-in, first-out (FIFO) or average cost method.

7

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The components of inventories are:

APRIL 30, APRIL 30,
1995 1996
----------- ---------

(IN THOUSANDS)
Raw materials........................................................ $ 3,037 $ 3,799
Work in process...................................................... 1,488 1,654
Finished goods....................................................... 5,022 5,811
----------- ---------
$ 9,547 $ 11,264
----------- ---------
----------- ---------

REVENUE RECOGNITION

Revenues related to certain of Adience's long-term contracts are recognized
by the percentage of completion method measured on the basis of costs incurred
to estimated total costs which approximates contract performance to date.
Provisions for losses on uncompleted contracts are made if it is determined that
a contract will ultimately result in a loss. Recognized revenue is that
percentage of total contractual revenue that incurred costs to date bear to
estimated total costs after giving effect to the most recent estimates of costs
to complete. All other revenues are recognized when the products are delivered
or services performed.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is stated at cost less accumulated
depreciation. Depreciation expense is provided over the estimated useful lives
using the straight-line method. Amortization of assets under capital leases is
included in depreciation expense. Improvements to existing equipment that
materially extend the life of properties are capitalized as incurred.

Maintenance and repairs are charged to expense as incurred and amounted to
$2.0 million for the period ended April 30, 1995 and $5.2 million for the year
ended April 30, 1996.

GOODWILL

The excess of the purchase price over net identifiable assets acquired is
amortized ratably over 30 years on the straight-line method. Goodwill is
periodically reviewed to access recoverability from future operations using
undiscounted cash flows, in accordance with the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Impairments
would be recognized in operating results if a permanent diminution in value
occurred.

FOREIGN CURRENCY TRANSLATION

The financial position and results of operations of Adience Canada is
measured using local currency as the functional currency. Assets and liabilities
of operations denominated in foreign currencies are translated into U.S. dollars
at exchange rates in effect at year-end, while revenues and expenses are
translated at average exchange rates prevailing during the year. The resulting
translation gains and losses are charged directly to cumulative translation
adjustment, a component of stockholders' equity, and are not included in net
income until realized through sale or liquidation of the investment. Foreign
exchange gains and losses incurred on foreign currency transactions are included
in net income.

CONCENTRATIONS OF CREDIT RISK

At April 30, 1995 and 1996, accounts receivable from customers in the steel
and steel-related industries total approximately $11.5 million and $13.1
million, respectively.

8

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. CONTRACTS IN PROGRESS
The status of costs, billings and estimated earnings on uncompleted
construction contracts was as follows:

COSTS AND ESTIMATED BILLINGS IN EXCESS
EARNINGS IN EXCESS OF COSTS AND
OF BILLINGS ESTIMATED EARNINGS TOTAL
------------------- ------------------- ---------

(IN THOUSANDS)
April 30, 1995:
Costs and estimated earnings........................ $ 994 $ 491 $ 1,485
Billings............................................ 41 656 697
------- ----- ---------
$ 953 $ 165 $ 788
------- ----- ---------
April 30, 1996
Costs and estimated earnings........................ $ 1,274 $ 14 $ 1,288
Billings............................................ 110 23 133
------- ----- ---------
$ 1,164 $ 9 $ 1,155
------- ----- ---------
------- ----- ---------

3. SHORT TERM BORROWINGS
On July 21, 1995, Adience's revolving credit facility was repaid.
Termination fees of $158,000 associated with repayment of the revolving credit
facility were recorded as an extraordinary loss on the early extinguishment of
debt.

4. LONG-TERM DEBT
Long-term debt consisted of the following:

APRIL 30, APRIL 30,
1995 1996
--------- -----------

(IN THOUSANDS)
11% Senior Secured Notes due 2002 (face value $49,079,000 and $4,988,000 at
April 30, 1995 and 1996, respectively) (a).................................... $ 45,496 $ 4,675
Capital lease obligations (b).................................................. 621 1,025
Notes payable with monthly installments of principal and interest of $22,000
through December 1997, interest at 10%........................................ 587 378
Industrial Development Authority Note with monthly installments of principal
and interest of $2,000 through March 2010, interest at 2%..................... 343 321
Machinery and equipment loan with monthly installments of principal and
interest of $5,000 through March 2002, interest at 2%......................... 361 308
Other (interest ranges from 10.25% to 13%)..................................... 519 395
--------- -----------
47,927 7,102
Less: current portion of long-term debt........................................ 714 844
--------- -----------
$ 47,213 $ 6,258
--------- -----------
--------- -----------

At April 30, 1996, the fair value of Adience's long-term debt approximated
its recorded value based on quoted market prices for the same or similar issues
or on current rates offered to Adience for debt of the same remaining
maturities.

9

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. LONG-TERM DEBT (CONTINUED)
Principal maturities of long-term debt obligations for the years ended April
30, are as follows (in thousands):

1997................................................. $ 844
1998................................................. 707
1999................................................. 361
2000................................................. 143
2001................................................. 105

(a) The Senior Secured Notes have an annual interest rate of 11% and were issued
under an indenture agreement dated as of June 30, 1993. The Senior Secured
Notes are redeemable at the option of Adience after December 15, 1997. The
Senior Secured Notes are not guaranteed by Adience Canada. The Senior
Secured Notes are secured by a lien on all of Adience's assets, subject to
certain conditions. Adience, on a consolidated basis, has certain
restrictive covenants which are customary for such financings including,
among other things, limitations on additional indebtedness and limitations
on asset sales.

On July 21, 1995, Adience redeemed $44.1 million face value of the Senior
Secured Notes (see Note 10).

(b) Property, plant and equipment at April 30, 1995 and 1996 includes equipment,
automobiles and trucks under capital lease obligations with a net book value
of $1.5 million and $1.8 million, respectively. During the year ended April
30, 1996 Adience entered into capital lease obligations amounting to
$810,000.

5. DISCONTINUED OPERATIONS
As of December 21, 1994 Alpine and Information Display Technology, Inc.
("IDT"), formerly a majority-owned subsidiary of Adience, entered into an
Agreement and Plan of Merger, which provided for the merger of Alpine's
information display group (a business segment of Alpine), comprised of Alpine
PolyVision, Inc. ("APV") and Posterloid Corporation ("Posterloid"), with and
into two separate wholly-owned subsidiaries of IDT formed for the purpose of
acquiring APV and Posterloid. To effectuate the merger in fiscal 1996, a portion
of Adience's equity interest in IDT was distributed to Alpine as a dividend in
kind, with the remainder distributed as part of the Senior Secured Notes
redemption (see Note 10). In addition, the balance of the amounts due IDT
(classified in the April 30, 1995 balance sheet as "Payable to affiliate") was
assigned to Alpine. Further, the balance sheet at April 30, 1995 reflects the
net assets of IDT as "Net assets of discontinued operations."

6. RESEARCH AND DEVELOPMENT EXPENSE
Adience incurred research and development expense of $366,000 and $1,116,000
for the period ended April 30, 1995 and the year ended April 30, 1996,
respectively.

7. INCOME TAXES
Net (loss) income before income taxes, and extraordinary item consisted of:

APRIL 30, APRIL 30,
1995 1996
--------- ---------

(IN THOUSANDS)
Domestic............................................................. $ (2,291) $ (2,308)
Canadian............................................................. 165 920
--------- ---------
$ (2,126) $ (1,388)
--------- ---------
--------- ---------

10

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)
Federal, foreign, and state income tax expense (benefit) consisted of the
following:

APRIL 30, APRIL 30,
1995 1996
----------- -----------

(IN THOUSANDS)
Current:
Federal/state....................................................... $ (822) $ 636
Foreign............................................................. 48 305
----------- -----------
Total current......................................................... (774) 941
----------- -----------
Deferred:
Federal/State....................................................... 822 (536)
Foreign............................................................. 10 70
Other............................................................... -- (100)
----------- -----------
Total deferred........................................................ 832 (566)
----------- -----------
Total income tax provision............................................ $ 58 $ 375
----------- -----------
----------- -----------

A reconciliation of income tax expense reported in the accompanying
statements of operations to the amount of income tax expense that would result
from applying the federal statutory rate of 34% to income before income tax
expense and extraordinary item for the periods presented is as follows:

APRIL 30, APRIL 30,
1995 1996
----------- ---------

(IN THOUSANDS)
Expected Federal income tax expense (benefit) at Federal statutory
tax rate $ (723) $ (472)
Increase (decreases):
Effect of Canadian income taxes.................................... 58 407
Change in valuation allowance...................................... 162 (1,800)
Amortization of goodwill........................................... 175 424
Deferred gain related to IDT....................................... 426 --
Extinquishment of debt............................................. -- 1,989
Other items........................................................ (40) (173)
----------- ---------
$ 58 $ 375
----------- ---------
----------- ---------

11

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. INCOME TAXES (CONTINUED)
Deferred tax liabilities (assets) are comprised of the following at April
30, 1996 and 1995:

APRIL 30, APRIL 30,
1995 1996
---------- ----------

(IN THOUSANDS)
Property, plant and equipment..................................... $ 4,968 $ 4,827
Pension accrual................................................... 270 270
Other............................................................. -- 112
---------- ----------
Gross deferred tax liabilities.................................. 5,238 5,209
---------- ----------
Inventory......................................................... (329) (260)
Insurance and benefit accruals.................................... (4,019) (5,090)
Bad debt reserve.................................................. (382) (181)
State income and sales/use tax liability.......................... (25) (50)
Environmental liability........................................... (518) (475)
NOL carryforwards................................................. (10,426) (9,890)
Foreign tax credits............................................... (276) (276)
Minimum tax credits............................................... (402) (402)
Other............................................................. (507) (486)
---------- ----------
Gross deferred tax assets....................................... (16,884) (17,110)
Valuation allowance............................................... 11,848 12,117
---------- ----------
Net deferred tax liability...................................... $ 202 $ 216
---------- ----------
---------- ----------

Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", requires the recognition of deferred tax assets and liabilities for both
the expected future tax impact of temporary differences arising from assets and
liabilities whose tax bases are different from financial statement amounts, and
for the expected future tax benefit to be derived from tax loss carryforwards.
The statement also requires that a valuation allowance be established if it is
more likely than not that all or a portion of deferred tax assets will not be
realized. Realization of the future tax benefits is dependent on Adience's
ability to generate taxable income within the periods in which net temporary
differences reverse.

As of April 30, 1996, Adience has a net operating loss carryforward for
domestic federal income tax purposes of approximately $19.7 million which will
expire in 2009, 2010 and 2011. Minimum tax and foreign tax credits of $678,000
are also available to offset federal income tax liabilities to the extent that
regular tax exceeds tentative minimum tax in subsequent years. Effective
December 21, 1994, as part of the Adience acquisition, Adience had an ownership
change, as defined by Section 382 of the Internal Revenue Code, which may limit
Adience's ability to utilize the pre-ownership change portion of its net
operating loss carryforwards. An examination of Adience's consolidated U.S.
income tax returns for 1988 through 1993 is currently underway. Any resulting
adjustments for those years may impact Adience's net operating loss
carryforwards. Management believes that the recorded liability is adequate to
cover the final assessment.

8. EMPLOYEE BENEFITS
During 1992, Adience initiated a 401(k) Savings Plan. This plan covers
substantially all non-bargaining employees, who meet minimum age and service
requirements. Adience matches employee contributions of up to 8 percent of
compensation at a rate of 25 percent. Amounts charged against income totaled
$173,000 and $369,000 for the period ended April 30, 1995 and the year ended
April 30, 1996, respectively.

12

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. EMPLOYEE BENEFITS (CONTINUED)
Adience and its subsidiary maintain various defined benefit pension plans
covering substantially all hourly employees. The plans provide pension benefits
based on the employee's years of service or the average salary for a specific
number of years of service. Adience's funding policy is to make annual
contributions to the extent deductible for federal income tax purposes.

Plan assets and projected benefit obligations for service to date for
Adience's defined benefit pension plans aggregated approximately $6.8 million
and $7.2 million at April 30, 1995 and 1996, respectively. The components of net
periodic pension cost for the year ended April 30, 1996 is not material to the
consolidated financial statements. Plan assets are invested in cash, short-term
investments, equities, and fixed income instruments. The actuarial present value
of the projected benefit obligation at April 30, 1995 and 1996 was determined
using a weighted average discount rate of 7.5%. The expected long-term rate of
return on plan assets was 7.5% and 8.0% at April 30, 1995 and 1996,
respectively.

Certain union employees of Adience and its subsidiary are covered by
multi-employer defined benefit retirement plans. Expense relating to these plans
amounted to $0.4 million and $1.6 million for the period ended April 30, 1995
and the year ended April 30, 1996, respectively.

In December 1990, the Financial Accounting Standards Board issued SFAS No.
106 "Employers' Accounting for Post-retirement Benefits Other Than Pensions"
(SFAS No. 106), that requires that the projected future cost of providing
post-retirement benefits, such as health care and life insurance, be recognized
as an expense as employees render service instead of when the benefits are paid.
Adience currently provides only life insurance benefits to certain of its hourly
and salaried employees on a fully insured basis. Adoption of SFAS No. 106 did
not have a material impact on Adience's consolidated financial statements. In
November 1992, the Financial Accounting Standards Board issued new rules that
require that the projected future cost of providing post-employment benefits be
recognized as an expense as employees render service instead of when the
benefits are paid. Adience believes its accrual for post-employment benefits is
adequate.

9. COMMITMENTS AND CONTINGENCIES
Adience leases certain buildings, machinery, and equipment under both short-
and long-term lease arrangements. Future minimum lease commitments under
non-cancelable operating leases are not significant. Rental expense approximated
$634,000 and $2,058,000 for the period ended April 30, 1995 and the year ended
April 30, 1996, respectively.

Adience's J.H. France unit, which was merged into Adience in December 1991,
has been named as party in approximately 3,000 pending lawsuits, some of which
contain both multiple claimants and multiple defendants, filed in twelve
jurisdictions principally by employees and former employees of certain customers
of J.H.France, alleging in certain cases that a single product, a plastic
insulating cement manufactured more than 20 years ago by J.H.France, caused them
to suffer from asbestosis related diseases and in other cases alleging that
products manufactured or sold by J.H.France, caused silica related diseases. The
majority of the lawsuits seek monetary damages ranging from $20,000 to $1.0
million each. J.H.France and its insurance carrier have historically settled
these lawsuits, typically for an average amount per case of less than the
minimum amount stated. Punitive damages have also been claimed in some cases.

In addition to the lawsuits against J.H.France, Adience, as successor in
interest to BMI, has been named a party in approximately 390 pending lawsuits,
some of which contain both multiple claimants and multiple defendants, filed in
the States of Pennsylvania, Ohio, Michigan, West Virginia, Wisconsin, Kentucky
and Indiana, principally by employees and former employees of certain customers
of Adience alleging that products produced by Adience caused silicosis, not
asbestosis, in such persons.

13

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The majority of such lawsuits seek unstated monetary damages ranging from
$20,000 each, which is the minimal jurisdictional requirement for personal
injury cases in a majority of such state courts, to $1.0 million each. Adience
and its insurance carriers have historically settled these lawsuits for an
average amount per case of less than the minimum amount stated. Virtually all
such claims and all costs of defense for these cases are covered by insurance.

The insurance companies which had issued policies covering the J.H.France
cases initially denied coverage for these claims. In June 1990, the Supreme
Court of Pennsylvania held that the insurance policies covering the claims in
these J.H. France cases covered liabilities and defense costs up to the amounts
of the limits of the respective policies, without regard to the period of time
said policies were in effect. As a result of this judicial determination and
based upon Adience's experience in obtaining dismissals or settlements in closed
cases, Adience anticipates, although no assurance can be given, that the
expected costs and liabilities in such pending cases will be adequately covered
by insurance and that the aggregate limits on the insurance policies in effect
exceed the liabilities and defense costs which will be incurred in the 3,000
J.H.France cases and the other 390 cases, for which the scope of coverage has
never been an issue.

Adience's Furnco unit has recently been named, although not effectively
served, as the sole defendant in nine separate lawsuits, each of which contains
one plaintiff (i.e., either husband or husband and wife). At this time,
investigation is continuing as to the nature and extent of such suits, as well
as the extent of insurance coverage therefor.

Adience is subject to other legal proceedings and claims which have
primarily arisen in the ordinary course of business and have not been finally
adjudicated.

In the opinion of management, based on its examination of such matters and
discussions with counsel, the ultimate resolution of all pending or threatened
litigation, claims and assessments will not have a material adverse effect upon
Adience's consolidated financial position, liquidity or results of operations.

10. RELATED PARTY TRANSACTIONS
On July 21, 1995, Alpine completed the placement of $153 million of 12.25%
Senior Secured Notes (the "Alpine Notes") and entered into an $85 million credit
facility (the "Credit Facility") . The Alpine Notes and Credit Facility are
guaranteed by Adience and Superior Telecommunications Inc. ("Superior"), another
subsidiary of Alpine. The Alpine Notes are also secured by a pledge of the
capital stock of Superior and Adience.

In connection with the placement of the Senior Notes and the closing of the
Credit Facility, Adience entered into financing arrangements with Alpine whereby
Alpine advanced funds to Adience. The proceeds of the funds advanced were used
to redeem $44.1 million face value of 11% Senior Secured Notes and the Adience
credit facility (see Note 4) plus accrued interest and to fund working capital
requirements. At April 30, 1996 Adience is indebted to Alpine under notes
payable amounting to $61.0 million related to such financing arrangements.

Such notes payable to Alpine include:

(1) An $49.0 million note payable due in 2003 (subject to certain
mandatory prepayment requirements), with interest payable semiannually at an
annual rate of 14%; and

(2) $4.7 million in borrowings under a revolving credit facility between
Alpine and Adience due in 2000, with interest payable monthly at the greater
of prime plus 0.375% or LIBOR plus

14

ADIENCE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. RELATED PARTY TRANSACTIONS (CONTINUED)
2.25%. Borrowings from Alpine by Adience under the revolving credit facility
are subject to a borrowing base determined as a percentage of eligible
accounts receivable and inventory. The revolving credit facility is secured
by a pledge of Adience's accounts receivable and inventory.

(3) $2.4 million in subordinated notes due in 2003 with interest at 12%.

Total interest expense charged by Alpine to Adience under the aforementioned
financing arrangements amounted to approximately $5.8 million for the year ended
April 30, 1996.

In November 1995, Adience entered into a note agreement whereby Adience
Canada advanced approximately $2.0 million to Superior Cable Corporation,
Superior's Canadian subsidiary. The advance bears interest at 8%.

Alpine allocates certain direct expenses to its subsidiaries, the most
significant of which is insurance expense which is allocated based upon
projected payrolls, property values and forecasted losses. Such allocated costs
totaled $1.3 million for the year ended April 30, 1996 and were applied as an
increase in the amount Due to parent. There were no such allocations for the
period ended April 30, 1995.

15

SUPERIOR TELECOMMUNICATIONS INC.
AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF THE ALPINE GROUP, INC.)

CONSOLIDATED FINANCIAL STATEMENTS
AS OF APRIL 30, 1995 AND APRIL 28, 1996
TOGETHER WITH AUDITORS' REPORT

16

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF THE ALPINE GROUP, INC.)

CONSOLIDATED FINANCIAL STATEMENTS
AS OF APRIL 30, 1995 AND APRIL 28, 1996

TABLE OF CONTENTS

PAGE
-----

Report of independent public accountants................................................................... 18

Consolidated financial statements

Consolidated balance sheets as of April 30, 1995 and April 28, 1996...................................... 19

Consolidated statements of operations and retained earnings for the period from November 11, 1993 to May
1, 1994 and for the years ended April 30, 1995 and April 28, 1996....................................... 20

Consolidated statements of cash flows for the period from November 11, 1993 to May 1, 1994 and for the
years ended April 30, 1995 and April 28, 1996........................................................... 21

Notes to consolidated financial statements................................................................. 22

17

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of Superior Telecommunications Inc.:

We have audited the accompanying consolidated balance sheets of Superior
Telecommunications Inc. (a Georgia Corporation and wholly-owned subsidiary of
The Alpine Group, Inc.) and Subsidiary as of April 30, 1995 and April 28, 1996
and the related consolidated statements of operations and retained earnings and
cash flows for the period from November 11, 1993 to May 1, 1994 and for the
years ended April 30, 1995 and April 28, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Superior Telecommunications
Inc. and subsidiary as of April 30, 1995 and April 28, 1996 and the results of
their operations and their cash flows for the period from November 11, 1993 to
May 1, 1994 and for the years ended April 30, 1995 and April 28, 1996 in
conformity with generally accepted accounting principles.

/s/ ARTHUR ANDERSEN LLP

Atlanta, Georgia
June 7, 1996

18

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

ASSETS

APRIL 30, APRIL 28,
1995 1996
--------- -----------
(IN THOUSANDS)

Current assets:
Cash and cash equivalents........................................................... $ 4 $ 11
Accounts receivable (less allowance for doubtful accounts of $40,000 in 1995 and
$151,000 in 1996).................................................................. 18,268 47,936
Inventories......................................................................... 19,665 51,721
Other current assets................................................................ 1,041 4,656
--------- -----------
Total current assets.............................................................. 38,978 104,324
--------- -----------
Property, plant and equipment, net.................................................... 26,132 72,877
Goodwill, net......................................................................... 32,161 48,414
Due from parent....................................................................... -- 15,103
Other long-term assets................................................................ 1,017 431
--------- -----------
Total assets...................................................................... $ 98,288 $ 241,149
--------- -----------
--------- -----------

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Current portion of long-term debt................................................... $ 1,600 $ --
Accounts payable.................................................................... 16,281 43,464
Accrued expenses and other liabilities.............................................. 3,640 11,164
--------- -----------
Total current liabilities......................................................... 21,521 54,628
--------- -----------
Notes payable to parent............................................................... -- 122,154
--------- -----------
Note payable to affiliate............................................................. -- 1,981
--------- -----------
Long-term debt, less current portion.................................................. 25,320 6,170
--------- -----------
Deferred income taxes................................................................. 5,693 5,893
--------- -----------
Other long-term liabilities........................................................... 1,493 1,493
--------- -----------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $.01; 10,000 shares authorized, 1,000 shares issued......... -- --
Additional paid-in capital.......................................................... 41,144 41,144
Cumulative translation adjustment................................................... -- (215)
Retained earnings................................................................... 3,117 7,901
--------- -----------
Total stockholder's equity........................................................ 44,261 48,830
--------- -----------
Total liabilities and stockholder's equity........................................ $ 98,288 $ 241,149
--------- -----------
--------- -----------

The accompanying notes are an integral part of these consolidated financial
statements.

19

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

FOR THE PERIOD FROM NOVEMBER 11, 1993 TO MAY 1, 1994
AND FOR THE YEARS ENDED APRIL 30, 1995 AND APRIL 28, 1996

1994 1995 1996
----------- ------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net sales............................................................. $ 46,857 $ 136,578 $ 384,237
Cost of goods sold.................................................... 42,849 122,428 344,565
----------- ------------- --------------
Gross profit........................................................ 4,008 14,150 39,672
Selling, general, and administrative expense.......................... 1,950 5,010 8,375
Amortization of goodwill.............................................. 433 1,124 1,556
----------- ------------- --------------
Operating income.................................................... 1,625 8,016 29,741
Interest expense, net................................................. (1,097) (2,878) (16,118)
----------- ------------- --------------
Income before income tax expense and extraordinary item............. 528 5,138 13,623
Income tax expense.................................................... (332) (2,217) (6,028)
----------- ------------- --------------
Income before extraordinary item.................................... 196 2,921 7,595
Extraordinary (loss) on early extinguishment of debt, net............. -- -- (2,811)
----------- ------------- --------------
Net income.......................................................... 196 2,921 4,784
Retained earnings at beginning of period.............................. -- 196 3,117
----------- ------------- --------------
Retained earnings at end of period.................................... $ 196 $ 3,117 $ 7,901
----------- ------------- --------------
Income per share of common stock:
Income before extraordinary item.................................... $ 196.00 $ 3,117.00 $ 7,595.00
Extraordinary (loss) on early extinguishment of debt................ -- -- (2,811.00)
----------- ------------- --------------
Net income per share of common stock.................................. $ 196.00 $ 3,117.00 $ 4,784.00
----------- ------------- --------------
----------- ------------- --------------

The accompanying notes are an integral part of these consolidated financial
statements.

20

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE PERIOD FROM NOVEMBER 11, 1993 TO MAY 1, 1994
AND FOR THE YEARS ENDED APRIL 30, 1995 AND APRIL 28, 1996

1994 1995 1996
--------- --------- ------------
(IN THOUSANDS)

Cash flows from operating activities:
Net income before extraordinary item........................................ $ 196 $ 2,921 $ 7,595
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization............................................. 1,563 3,714 7,719
Amortization of deferred financing costs.................................. 124 253 360
Deferred income taxes..................................................... 332 90 (1,300)
Change in assets and liabilities:
Accounts receivable..................................................... (3,119) (4,024) (526)
Inventories............................................................. 1,098 (2,260) 717
Other current assets.................................................... 169 (142) 41
Accounts payable........................................................ 571 4,629 12,296
Accrued expenses and other liabilities.................................. (381) 317 860
--------- --------- ------------
Cash provided by operating activities......................................... 553 5,498 27,762
--------- --------- ------------
Cash flows from investing activities:
Proceeds from equipment sales............................................... 43 33 276
Acquisitions, net of cash acquired.......................................... -- -- (103,409)
Capital expenditures........................................................ (420) (1,388) (3,890)
Capital expenditure from acquisition of BICC assets......................... -- -- (5,447)
Capitalized merger costs.................................................... (2,203) (316) --
Other....................................................................... 12 150 (160)
--------- --------- ------------
Cash used for investing activities............................................ (2,568) (1,521) (112,630)
--------- --------- ------------
Cash flows from financing activities:
Borrowings (repayments) under revolving line of credit, net................. 1,628 (2,033) (16,500)
Borrowings from parent...................................................... -- -- 106,977
Borrowings from affiliate................................................... -- -- 1,981
Long-term borrowings........................................................ 5,000 -- 141,369
Repayment of long-term borrowings........................................... (3,300) (2,314) (145,587)
Capitalized financing costs................................................. (1,315) (15) (3,365)
Other....................................................................... -- 385 --
--------- --------- ------------
Cash provided by (used for) financing activities.............................. 2,013 (3,977) 84,875
--------- --------- ------------
Net (decrease) increase in cash and cash equivalents.......................... (2) -- 7
--------- --------- ------------
Cash at beginning of period................................................... 6 4 4
--------- --------- ------------
Cash at end of period......................................................... $ 4 $ 4 $ 11
--------- --------- ------------
Supplemental disclosures:
Cash interest paid during the period including interest paid to parent........ $ 738 $ 2,825 $ 16,512
--------- --------- ------------
Cash paid during the period for income taxes.................................. $ -- $ 228 $ 237
--------- --------- ------------
Noncash investing and financing activities:
Acquisition of business:
Assets, net of cash acquired.............................................. $ 126,127
Liabilities assumed....................................................... (22,718)
------------
Net cash paid........................................................... $ 103,409
------------
------------

The accompanying notes are an integral part of these consolidated financial
statements.

21

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

Prior to November 11, 1993, Superior Telecommunications Inc. (the "Company")
was a wholly-owned subsidiary of Superior TeleTec Inc. On November 11, 1993 (the
"Merger Date"), Superior TeleTec Inc. merged with The Alpine Group, Inc.
("Alpine") resulting in the Company becoming a wholly-owned subsidiary of
Alpine.

The Company is engaged in the manufacture and sale of copper wire and cable
for the telecommunications industry.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, Superior Cable Corporation,
(collectively, "Superior"). All significant intercompany accounts and
transactions have been eliminated.

CASH AND CASH EQUIVALENTS

Superior considers all highly liquid investment purchases with a maturity of
90 days or less to be cash equivalents.

FISCAL PERIODS

Superior operates on a fiscal year ending on the Sunday closest to April 30,
which coincides with Alpine's fiscal year end. The accompanying financial
statements include the period from the Merger Date through May 1, 1994 and the
fiscal years ended April 30, 1995 and April 28, 1996.

INVENTORIES

Inventories are stated at the lower of cost or market, using the first-in,
first-out ("FIFO") method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated
depreciation. Depreciation is provided over the estimated useful lives of the
assets using the straight-line method. The estimated useful lives are as
follows:

Building and improvements........................... 10 to 30 years

Machinery and equipment............................. 3 to 12 years

Maintenance and repairs are charged to expense as incurred. Long-term
improvements are capitalized as additions to property, plant and equipment. Upon
retirement or other disposal, the asset cost and related accumulated
depreciation are removed from the accounts.

GOODWILL

The excess of the purchase price over the net identifiable assets of
businesses acquired is amortized ratably over periods not exceeding 30 years.
Accumulated amortization of goodwill at April 30, 1995 and April 28, 1996 was
$1.6 million and $3.1 million, respectively. Superior periodically reviews
goodwill and other intangibles to assess recoverability from future operations
using undiscounted cash flows, in accordance with the provision of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets to Be Disposed Of". Impairments would be recognized in
operating results if a permanent diminution in value occurred. The adoption of
this statement had no effect on Superior's consolidated financial position or
results of operations as of or for the years ended April 30, 1995 or April 28,
1996.

22

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FOREIGN CURRENCY TRANSLATION

The financial position and results of operations of Superior's foreign
subsidiary are measured using local currency as the functional currency. The
assets and liabilities of the operations denominated in a foreign currency are
translated into U.S. dollars at the exchange rate in effect at year-end, while
revenues and expenses are translated at average exchange rates prevailing during
the year. The resulting translation gains and losses are charged directly to
cumulative translation adjustment, a component of stockholder's equity, and are
not included in net income until realized through sale or liquidation of the
investment.

CONCENTRATIONS OF CREDIT RISK

Sales to the six regional Bell operating companies and three major
independent telephone companies represented 74%, 78% and 90% of Superior's net
sales for the periods ended May 1, 1994, April 30, 1995, and April 28, 1996,
respectively. Accounts receivable from these customers were $14.1 million and
$43.1 million at April 30, 1995 and April 28, 1996, respectively.

RECLASSIFICATION

Certain reclassifications have been made to the 1994 and 1995 consolidated
financial statements to conform with the 1996 presentation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. INVENTORIES
The components of inventories are as follows:

1995 1996
--------- ---------

(IN THOUSANDS)
Raw materials....................................................... $ 6,879 8,669
Work in process..................................................... 4,325 9,807
Finished goods...................................................... 8,461 33,245
--------- ---------
$ 19,665 $ 51,721
--------- ---------
--------- ---------

3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:

1995 1996
--------- ---------

(IN THOUSANDS)
Land................................................................ $ 926 $ 2,768
Building and improvements........................................... 6,600 16,025
Machinery and equipment............................................. 22,319 63,882
--------- ---------
29,845 82,675
Less accumulated depreciation....................................... 3,713 9,798
--------- ---------
$ 26,132 $ 72,877
--------- ---------
--------- ---------

Depreciation expense for the periods ended May 1, 1994, April 30, 1995 and
April 28, 1996 was $1.1 million, $2.6 million and $6.2 million, respectively.

23

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. ALCATEL ACQUISITION
On May 11, 1995, Superior completed the acquisition of the U.S. and Canadian
copper wire and cable business of Alcatel NA Cable Systems, Inc. and Alcatel
Canada Wire, Inc. ("Alcatel NA", collectively) which was financed with the
proceeds of the sale by Superior of $140.0 million aggregate principal amount of
notes (the "Alcatel Acquisition Notes"). The Alcatel Acquisition Notes were
subsequently redeemed with the proceeds of funds advanced by Alpine (see Note
7). The following reflects the allocation of the purchase price of net assets
based upon the estimated fair values of such assets (in thousands):

Acquisition cost................................................. $ 103,409
Less historical book value of net assets at May 11, 1995......... (80,909)
Write-up of property, plant and equipment........................ (5,718)
Accrual of Alcatel employee relocation and severance costs....... 500
---------
Acquisition goodwill............................................. $ 17,282
---------
---------

The acquisition cost of $103.4 million included $102.9 million paid in cash
to Alcatel NA and acquisition expenses of approximately $500,000.

The acquisition has been accounted for using the purchase method, and
accordingly, the results of operations of the acquired business are included in
Superior's results on a prospective basis from the date of acquisition.
Unaudited condensed pro forma results of operations for the years ended April
30, 1995 and April 28, 1996. which give effect to the acquisition as if the
transaction had occurred on May 1, 1994 are presented below. The pro forma
amounts reflect acquisition-related purchase accounting adjustments, including
adjustments to depreciation and amortization expense. The pro forma financial
information does not purport to be indicative of either the results of
operations that would have occurred had the acquisition taken place at the
beginning of the period or of future results of operations.

PRO FORMA
(UNAUDITED)
------------------------
1995 1996
----------- -----------

(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
Net sales........................................................ $ 340,756 $ 391,758
Income before income tax expense and extraordinary item.......... 5,249 13,701
Income before extraordinary item................................. 3,149 7,673
Net income....................................................... 3,149 4,862
Income per share of common stock:
Income before extraordinary item............................... $ 315.00 $ 767.00
Net income..................................................... 315.00 456.00

5. ACCRUED EXPENSES
Accrued expenses consist of the following:

1995 1996
--------- ---------

(IN THOUSANDS)
Accrued wages, salaries and benefits................................. $ 938 $ 5,098
Other accrued expenses............................................... 2,702 6,066
--------- ---------
$ 3,640 $ 11,164
--------- ---------
--------- ---------

24

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. DEBT
Debt consists of the following:

1995 1996
--------- ---------

(IN THOUSANDS)
Lease finance obligation (a)......................................... $ 5,000 $ 5,000
Promissory note (b).................................................. -- 1,170
Revolving credit loan (c)............................................ 16,534 --
Term loan (c)........................................................ 5,386 --
--------- ---------
Total debt........................................................... 26,920 6,170
Less current maturities.......................................... 1,600 --
--------- ---------
Long-term debt....................................................... $ 25,320 $ 6,170
--------- ---------
--------- ---------

At April 28, 1996, the fair value of Superior's long-term debt approximated
its recorded value based on quoted market prices for the same or similar issues
or on current rates offered to Superior for debt of the same remaining
maturities.
- ------------------------
(a) The lease finance obligation resulted from a sale/leaseback of Superior's
manufacturing facility in December 1993 which, due to Superior's continuing
involvement in the form of a repurchase option, has been recorded under the
finance method. The sale/leaseback transaction included a sales price of
$5.0 million and net cash proceeds (after fees and expenses) of
approximately $4.5 million. The term of the leaseback is 20 years, with 5
additional option terms (at Superior's election) of 5 years each. Superior
has a one time option to repurchase the property during the eleventh year of
the lease term at the greater of the property's fair market value (as
defined in the lease) or $5.0 million plus related ancillary costs. Annual
lease payments are approximately $630,000 and are subject to adjustments
based on changes in short term interest rates (monthly) and increases in the
consumer price index (on a triennial basis). Until the repurchase option
expires or is exercised, all lease payments will be reflected as interest
expense. The related asset, which is being depreciated over its estimated
useful life, has a net carrying value of $6.9 million at April 28, 1996 and
is classified as land and buildings in the accompanying balance sheet.

(b) The promissory note is payable to BICC Phillips, Inc. from whom Superior
acquired certain wire and cable manufacturing assets on November 28, 1995.
The note does not bear interest and is due on December 31, 1996. The note
will be repaid from borrowings under Superior's revolving credit facility
(see Note 7).

(c) The revolving credit loan and term loan represented borrowings by Superior
under credit facilities which were repaid during fiscal 1996 from the
proceeds of the Alcatel Acquisition Notes (see Note 4).

7. RELATED PARTY TRANSACTIONS
On July 21, 1995, Alpine completed the placement of $153 million of 12.25%
Senior Secured Notes (the "Alpine Notes") and entered into an $85 million credit
facility (the "Credit Facility"). The Alpine Notes and Credit Facility are
guaranteed by Superior and Adience, Inc. ("Adience"), another subsidiary of
Alpine. The Alpine Notes are also secured by a pledge of the capital stock of
Superior and Adience.

In connection with the placement of the Senior Notes and the closing of the
Credit Facility, Superior entered into financing arrangements with Alpine
whereby Alpine advanced funds to Superior. The proceeds of the funds advanced
were used to redeem the Alcatel Acquisition Notes (see

25

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. RELATED PARTY TRANSACTIONS (CONTINUED)
Note 4) plus accrued interest and to fund working capital requirements. At April
28, 1996 Superior is indebted to Alpine under notes payable amounting to $122.2
million related to such financing arrangements.

Such notes payable to Alpine include:

(1) An $88.9 million note payable due in 2003 (subject to certain
mandatory prepayment requirements), with interest payable semiannually at an
annual rate of 14%; and

(2) $33.3 million in borrowings under a revolving credit facility
between Alpine and Superior due in 2000, with interest payable monthly at
prime plus 0.375% or LIBOR plus 2.25%. Borrowings from Alpine by Superior
under the revolving credit facility are subject to a borrowing base
determined as a percentage of eligible accounts receivable and inventory.
The revolving credit facility is secured by a pledge of Superior's accounts
receivable and inventory.

In connection with the redemption of the Alcatel Acquisition Notes, Superior
recognized a $2.8 million extraordinary loss, net of taxes of $2.0 million, on
the early extinguishment of debt during the year ended April 28, 1996.

Total interest expense charged by Alpine to Superior under the
aforementioned financing arrangements amounted to approximately $12.4 million
for the year ended April 28, 1996.

In November 1995, Superior entered into a note agreement whereby Adience's
Canadian subsidiary advanced approximately $2.0 million to Superior Cable
Corporation, Superior's Canadian subsidiary. The advance bears interest at 8%
and is payable on demand.

The due from parent in the accompanying balance sheet is comprised of a
non-interest bearing receivable from Alpine which arose primarily from funds
advanced by Superior in connection with Alpine's debt refinancing.

Alpine allocates certain direct expenses to its subsidiaries, the most
significant of which is insurance expense which is allocated based upon
projected payrolls, property values and forecasted losses. Such allocated costs
totaled $1.8 million for the year ended April 28, 1996 and were applied as a
reduction of amounts due from parent.

8. INCOME TAXES
For Federal income tax purposes, Superior's taxable income is included as
part of a consolidated federal return filed by Alpine. Superior does, however,
file separate state income tax returns. Superior accounts for income taxes on a
stand-alone basis, as if it filed a separate Federal return, with any current
Federal income taxes due being reflected as a payable to Alpine.

26

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
U.S. income tax expense (benefit) for the periods ended May 1, 1994, April
30, 1995 and April 28, 1996 consists of the following:

1994 1995 1996
--------- --------- ---------

(IN THOUSANDS)
Current:
Federal....................................................... $ -- $ 1,830 $ 6,569
State......................................................... -- 297 759
--------- --------- ---------
-- 2,127 7,328
Deferred:
Federal....................................................... 288 78 (1,160)
State......................................................... 44 12 (140)
--------- --------- ---------
332 90 (1,300)
--------- --------- ---------
Total income tax expense........................................ $ 332 $ 2,217 $ 6,028
--------- --------- ---------
--------- --------- ---------

Due to losses incurred in its foreign operations which were acquired in
fiscal 1996, no foreign income taxes were recorded for the year ended April 28,
1996.

A reconciliation of income tax expense reported in the accompanying
statements of operations to the amount of income tax expense that would result
from applying the federal statutory rate of 34% to income before income tax
expense and extraordinary item for the periods ended May 1, 1994, April 30, 1995
and April 28, 1996 is as follows:

1994 1995 1996
--------- --------- ---------

(IN THOUSANDS)
Expected income tax expense at Federal statutory tax rate................. $ 179 $ 1,747 $ 4,632
Nondeductible goodwill amortization....................................... 147 382 383
State income tax expense, net of Federal tax benefit...................... 29 204 408
Net tax loss of foreign subsidiary........................................ -- -- 327
Other, net................................................................ (23) (116) 278
--------- --------- ---------
Total income tax expense.............................................. $ 332 $ 2,217 $ 6,028
--------- --------- ---------
--------- --------- ---------

At April 28, 1996, Superior had foreign net operating loss carryforwards of
$1,486,000 generated by its wholly-owned foreign subsidiary, Superior Cable
Corporation ("SCC"). Such carryforwards are available to offset SCC's future
taxable income through fiscal year 2002.

Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes", requires the recognition of deferred tax assets and liabilities for both
the expected future tax impact of temporary differences arising from assets and
liabilities whose tax bases are different from financial statement amounts, and
for the expected future tax benefit to be derived from tax loss carryforwards.
The statement also requires that a valuation allowance be established if it is
more likely than not that all or a portion of deferred tax assets will not be
realized. Realization of the future tax benefits is dependent on Superior's
ability to generate taxable income within the periods in which net temporary
differences reverse.

27

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
Items that result in deferred tax assets (liabilities) and the related
valuation allowance at April 30, 1995 and April 28, 1996 are as follows:

CURRENT LONG-TERM
-------------------- --------------------
1995 1996 1995 1996
--------- --------- --------- ---------

(IN THOUSANDS)
Depreciation and amortization.................................. $ -- $ -- $ (8,118) $ (8,450)
Sale / leaseback............................................... $ -- $ -- 1,734 1,708
Accruals not currently deductible for tax...................... 314 1,276 691 626
Inventory reserves............................................. 309 539 -- --
Inventory cost capitalization.................................. 121 443 -- --
Tax net operating loss carryforwards........................... -- -- -- 550
Other.......................................................... 15 -- -- --
--------- --------- --------- ---------
759 2,258 (5,693) (5,566)
Less valuation allowance................................... -- -- -- (327)
--------- --------- --------- ---------
$ 759 $ 2,258 $ (5,693) $ (5,893)
--------- --------- --------- ---------
--------- --------- --------- ---------

9. NET INCOME PER SHARE
Net income per share is derived by dividing net income by the weighted
average number of shares of common stock outstanding during the year. For the
periods ended May 1, 1994, April 30, 1995 and April 28, 1996, the number of
shares used in computing net income per share was 1,000.

10. DEFINED CONTRIBUTION RETIREMENT PLANS
Superior maintains profit sharing plans with 401(k) components for the
benefit of certain of its employees. The profit sharing component of the plans
allow for discretionary contributions, whereas the 401(k) components provide for
employee contributions through salary reduction election with certain mandatory
employer matching contributions. For the periods ended May 1, 1994, April 30,
1995 and April 28, 1996, Superior made or accrued matching contributions of
$60,000, $211,000 and $228,000, respectively.

11. DEFINED BENEFIT RETIREMENT PLANS
During fiscal 1996, certain employees of Superior participated in various
defined benefit retirement plans sponsored by Alcatel NA. These plans generally
provide for payment of benefits, commencing at retirement between the ages of 55
and 65, based on the employee's length of service and earnings. In connection
with the Alcatel acquisition, Superior is evaluating alternative retirement
planning options and, in substantially all cases, participation in these plans
has been frozen. Expense recorded for fiscal year 1996 service under these plans
was approximately $304,000.

During fiscal 1996, Superior also sponsored a defined benefit pension plan
for employees of one of its manufacturing facilities previously owned by Alcatel
NA. Benefits under that plan, which were also based on length of service and
earnings, were frozen effective December 31, 1995 and the plan was replaced with
a defined contribution plan. The amount charged to pension expense for fiscal
year 1996 under the plan was $138,000. The accrued pension liability related to
this plan was $67,000 at April 30, 1996 and is included in accrued liabilities
in the accompanying balance sheet.

In addition, Superior sponsored a defined benefit pension plan for employees
of its Canadian manufacturing facility also previously owned by Alcatel NA.
Benefits under the plan are based on length of service. The amount charged for
pension expense for fiscal year 1996 under the plan was $58,000.

28

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. DEFINED BENEFIT RETIREMENT PLANS (CONTINUED)
The following table shows the plans' funded status and the amount recognized
in the balance sheet at April 30, 1996:

Accumulated benefit obligation (100% vested)................... $2,105,000
----------
Projected benefit obligation................................... $2,314,000
Fair value of plan assets...................................... 2,388,000
----------
Plan assets in excess of projected benefit obligation.......... 74,000
Unrecognized net (gain) loss................................... (74,000)
----------
Prepaid pension cost....................................... $ 0
----------
----------

A discount rate of 8% and an expected long-term rate of return on net assets
of 8% were assumed for the above actuarial calculations.

12. POSTRETIREMENT HEALTH CARE BENEFITS
Superior provides postretirement health care benefits for certain employees.
The policy provides each employee and spouse, upon reaching normal or early
retirement and upon achieving certain minimum service requirements, a fixed
monthly benefit for the purchase of Superior-sponsored health care insurance.
The amount of the monthly benefit will not be increased in the future,
notwithstanding medical-based inflation cost increases.

The accumulated postretirement health care benefit obligation which is
included in long-term liabilities in the accompanying balance sheet, consists of
the following:

1995 1996
--------- ---------

(IN THOUSANDS)
Retirees.............................................................. $ 733 $ 427
Fully eligible active plant participants.............................. 164 284
Other active plan participants........................................ 596 571
--------- ---------
1,493 1,282
Unrealized net gain from past experience and changes in assumption.... -- 211
--------- ---------
$ 1,493 $ 1,493
--------- ---------
--------- ---------

Net periodic postretirement health care benefit costs includes the following
components for the periods ended May 1, 1994, April 30, 1995 and April 28, 1996:

1994 1995 1996
--------- --------- ---------

(IN THOUSANDS)
Service cost on benefits earned....................................... $ 24 $ 45 $ 45
Interest cost on accumulated postretirement benefit obligation........ 37 118 117
--- --------- ---------
$ 61 $ 163 $ 162
--- --------- ---------
--- --------- ---------

An increase in the health care cost trend assumptions would not change the
annual expense or obligation amounts as the employer cost is effectively capped.

The weighted average discount rate used in determining the accumulated post
retirement benefit obligation was 6.5%, 8% and 7.75% for the periods ended May
1, 1994, April 30, 1995 and April 28, 1996, respectively.

29

SUPERIOR TELECOMMUNICATIONS INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. MAJOR CUSTOMERS
Two customers accounted for 26% and 14%, and 30% and 16% of revenues for the
periods ended May 1, 1994 and April 30, 1995, respectively. Five customers
accounted for 22%, 17%, 16%, 13% and 13% of revenues for the year ended April
28, 1996.

14. COMMITMENTS AND CONTINGENCIES
As of April 28, 1996, future minimum lease payments under noncancelable
operating leases are as follows (in thousands):

Fiscal year ending April:
1997..................................................... $ 513
1998..................................................... 400
1999..................................................... 380
2000..................................................... 371
2001..................................................... 320
Thereafter............................................... 53
---------
$ 2,037
---------
---------

For the periods ended May 1, 1994, April 30, 1995 and April 28, 1996,
Superior's rental and lease expense was $288,000, $555,000 and $668,000,
respectively.

Approximately 28% of Superior's total labor force is covered by collective
bargaining agreements. One collective bargaining agreement representing 11% of
Superior's total labor force will expire within one year.

Soil and groundwater at Superior's Brownwood, Texas facility has been found
to be contaminated with volatile organic compounds as a result of operations at
the facility which management believes occurred prior to the acquisition of the
facility. Superior is in the process of obtaining approval for a remediation
plan from the Texas Natural Resource Conservation Commission. Based upon
investigations performed to date, Superior believes the cost of this remediation
will not be in excess of $500,000. Pursuant to an agreement between Superior and
the former owner of the facility, Superior has been reimbursed for approximately
85% of the costs incurred to date in connection with the investigation and
resulting remediation of this facility, and is entitled to reimbursement of
future expenses at percentages ranging from 85% to 25% (depending on the time at
which such expenses are incurred), subject to an aggregate expense reimbursement
of not less than 75%.

Superior is subject to other legal proceedings and claims which have
primarily arisen in the ordinary course of business and have not been finally
adjudicated.

In the opinion of management, based on its examination of such matters and
discussions with counsel, the ultimate resolution of all pending or threatened
litigation, claims and assessments will have no material adverse affect upon
Superior's financial position, liquidity or results of operations.

30