GENERAL CABLE CORP /DE/ - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended October 1, 2004
Commission File No. 1-12983

GENERAL CABLE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		06-1398235
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

4 Tesseneer Drive
Highland Heights, KY 41076-9753
(Address of principal executive offices)

(859) 572-8000
(Registrant’s telephone number, including area code)

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, and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes [X] No [ ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:


Class	Outstanding at October 29, 2004
Common Stock, $0.01 par value		39,312,155

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)


	Three Fiscal Months Ended						Nine Fiscal Months Ended
	October 1,			September 30,			October 1,			September 30,
	2004			2003			2004			2003
Net sales	$	489.3		$	382.5		$	1,485.4		$	1,133.1
Cost of sales		430.5			337.1			1,326.0			998.7

Gross profit		58.8			45.4			159.4			134.4
Selling, general and administrative expenses		39.1			31.9			115.9			93.6

Operating income		19.7			13.5			43.5			40.8
Other expense		—			—			(0.9	)		—
Interest income (expense):
Interest expense		(9.1	)		(10.4	)		(27.6	)		(33.1	)
Interest income		0.1			0.1			0.3			0.3

		(9.0	)		(10.3	)		(27.3	)		(32.8	)

Earnings before income taxes		10.7			3.2			15.3			8.0
Income tax provision		(3.3	)		(1.1	)		(4.6	)		(2.8	)

Net income		7.4			2.1			10.7			5.2
Less preferred stock dividends		(1.5	)		—			(4.5	)		—

Net income applicable to common shareholders	$	5.9		$	2.1		$	6.2		$	5.2

Earnings per share
Earnings per common share	$	0.15		$	0.06		$	0.16		$	0.16

Weighted average common shares		39.3			33.1			39.2			33.1

Earnings per common share-assuming dilution	$	0.15		$	0.06		$	0.16		$	0.16

Weighted average common shares-assuming dilution		40.0			33.6			39.9			33.4

See accompanying Notes to Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets
(in millions, except share data)


	October 1,			December 31,
	2004			2003
	(unaudited)
Assets
Current Assets:
Cash	$	31.7		$	25.1
Receivables, net of allowances of $16.8 million at October 1, 2004 and $15.6 million at December 31, 2003		363.6			268.9
Inventories		273.8			256.7
Deferred income taxes		13.5			13.5
Prepaid expenses and other		26.4			24.9

Total current assets		709.0			589.1
Property, plant and equipment, net		334.2			333.3
Deferred income taxes		95.7			76.5
Other non-current assets		48.2			50.6

Total assets	$	1,187.1		$	1,049.5

Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable	$	332.9		$	250.6
Accrued liabilities		127.8			99.6
Current portion of long-term debt		1.5			2.3

Total current liabilities		462.2			352.5
Long-term debt		351.7			338.1
Deferred income taxes		19.1			9.6
Other liabilities		104.3			109.2

Total liabilities		937.3			809.4

Shareholders’ Equity:
Redeemable convertible preferred stock, 2,070,000 shares at redemption value (liquidation preference of $50.00 per share)		103.5			103.5
Common stock, $0.01 par value, issued and outstanding shares:
October 1, 2004 – 39,246,059 (net of 4,885,823 treasury shares)
December 31, 2003 – 38,908,512 (net of 4,828,225 treasury shares)		0.4			0.4
Additional paid-in capital		143.3			140.8
Treasury stock		(51.0	)		(50.4	)
Retained earnings		60.7			54.5
Accumulated other comprehensive loss		(2.5	)		(5.5	)
Other shareholders’ equity		(4.6	)		(3.2	)

Total shareholders’ equity		249.8			240.1

Total liabilities and shareholders’ equity	$	1,187.1		$	1,049.5

See accompanying Notes to Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(in millions, unaudited)


	Nine Fiscal Months Ended
	October 1,			September 30,
	2004			2003
Cash flows of operating activities:
Net income	$	10.7		$	5.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		27.3			23.2
Foreign currency exchange loss		0.9			—
Deferred income taxes		(9.7	)		(5.8	)
(Gain) loss on disposal of property		(0.6	)		0.4
Changes in operating assets and liabilities:
Increase in receivables		(94.1	)		(16.9	)
(Increase) decrease in inventories		(12.6	)		22.2
(Increase) decrease in other assets		(0.9	)		19.5
Increase in accounts payable, accrued and other liabilities		99.7			10.4

Net cash flows of operating activities		20.7			58.2

Cash flows of investing activities:
Capital expenditures		(24.1	)		(11.8	)
Proceeds from properties sold		2.4			1.9
Other, net		(0.4	)		(1.3	)

Net cash flows of investing activities		(22.1	)		(11.2	)

Cash flows of financing activities:
Preferred stock dividends paid		(4.5	)		—
Repayment of loans from shareholders		0.4			1.0
Proceeds from exercise of stock options		0.2			—
Net change in revolving credit borrowings		13.8			(13.3	)
Net change in other debt		(1.9	)		(25.5	)
Repayment of long-term debt		—			(14.1	)

Net cash flows of financing activities		8.0			(51.9	)

Increase (decrease) in cash		6.6			(4.9	)
Cash – beginning of period		25.1			29.1

Cash – end of period	$	31.7		$	24.2

Supplemental Information
Cash paid (received) during the period for:
Income tax payments, net of refunds	$	5.1		$	(9.7	)

Interest paid	$	20.9		$	26.1

See accompanying Notes to Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders’ Equity
(dollars in millions, share amounts in thousands)
(unaudited)


	Preferred				Common														Accumulated
	Stock				Stock					Add’l									Other			Other
										Paid in			Treasury			Retained			Comprehensive			Shareholders’
	Shares		Amount		Shares			Amount		Capital			Stock			Earnings			Income/ (Loss)			Equity			Total
Balance, December 31, 2002		—	$	—		33,135		$	0.4	$	100.0		$	(50.0	)	$	59.9		$	(44.6	)	$	(4.8	)	$	60.9
Comprehensive income:
Net income																	5.2									5.2
Foreign currency translation adjustment																				15.2						15.2
Gain on change in fair value of financial instruments, net of $0.5 million tax expense																				1.0						1.0

Comprehensive income																										21.4
Amortization of restricted stock and other											0.4												0.1			0.5
Repayment of loans from shareholders						(74	)				(0.4	)		(0.4	)								1.5			0.7
Other						22					0.2												(0.1	)		0.1

Balance, September 30, 2003		—	$	—		33,083		$	0.4	$	100.2		$	(50.4	)	$	65.1		$	(28.4	)	$	(3.3	)	$	83.6

Balance, December 31, 2003		2,070	$	103.5		38,909		$	0.4	$	140.8		$	(50.4	)	$	54.5		$	(5.5	)	$	(3.2	)	$	240.1
Comprehensive income:
Net income																	10.7									10.7
Foreign currency translation adjustment																				(1.0	)					(1.0	)
Unrealized investment gain																				0.5						0.5
Gain on change in fair value of financial instruments, net of $1.7 million tax expense																				3.5						3.5

Comprehensive income																										13.7
Preferred stock dividend																	(4.5	)								(4.5	)
Issuance of restricted stock						341					2.9												(2.9	)		—
Amortization of restricted stock																							0.4			0.4
Exercise of stock options						31					0.2															0.2
Repayment of loans from shareholders						(58	)				(0.6	)		(0.6	)								1.1			(0.1	)
Other						23																				—

Balance, October 1, 2004		2,070	$	103.5		39,246		$	0.4	$	143.3		$	(51.0	)	$	60.7		$	(2.5	)	$	(4.6	)	$	249.8

See accompanying Notes to Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. General

General Cable Corporation and Subsidiaries (General Cable) is a leading global developer and manufacturer in the wire and cable industry. The Company sells copper, aluminum and fiber optic wire and cable products worldwide. The Company’s operations are divided into three main segments: energy, industrial & specialty and communications. As of October 1, 2004, General Cable operated 27 manufacturing facilities in nine countries and two regional distribution centers in North America in addition to the corporate headquarters in Highland Heights, Kentucky.

2. Summary of Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of General Cable Corporation and its wholly-owned subsidiaries. The Company adopted FIN 46 as revised (Consolidation of Variable Interest Entities) which resulted in the consolidation of its fiber optic joint venture in the first quarter of 2004. Prior to the first quarter of 2004, the joint venture was accounted for under the equity method of accounting. Accordingly, other non-current assets included an investment in the joint venture of $3.5 million at December 31, 2003. All transactions and balances among the consolidated companies have been eliminated. Certain reclassifications have been made to the prior year to conform to the current year’s presentation.

Basis of Presentation

The accompanying unaudited consolidated financial statements of General Cable Corporation and Subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the three and nine fiscal months ended October 1, 2004 are not necessarily indicative of results that may be expected for the full year. These financial statements should be read in conjunction with the audited financial statements and notes thereto in General Cable’s 2003 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 12, 2004.

The Company’s fiscal year end is December 31. Prior to the fiscal quarter ended October 1, 2004, the Company’s fiscal quarters consisted of three month periods. Beginning with the fiscal quarter ended October 1, 2004, the Company’s fiscal quarters have been changed to the 13-week periods ending on the Friday nearest to the end of March, June and September. This change did not have a material impact on the Company’s results of operations, financial position, or its cash flows.

Revenue Recognition

Revenue is recognized when goods are shipped to the customer, title and risk of loss are transferred, pricing is fixed or determinable and collectibility is reasonably assured.

Earnings Per Share

Earnings per common share are computed based on the weighted average number of common shares outstanding. Earnings per common share-assuming dilution are computed based on the weighted average number of common shares outstanding and the dilutive effect of stock options and restricted stock units outstanding. See further discussion in Note 11.

Foreign Currency Translation

For operations outside the United States that prepare financial statements in currencies other than the U.S. dollar, results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at spot exchange rates at the end of the period. Foreign currency translation adjustments are included as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. The effects of changes in exchange rates between the designated functional currency and the currency in which a transaction is denominated are recorded as foreign currency transaction gains (losses). See further discussion in Note 4.

Inventories

General Cable values all of its North American inventories and its non-North American metal inventories using the last-in first-out (LIFO) method and all remaining inventories using the first-in first-out (FIFO) method. Inventories are stated at the lower of cost or market value. The Company determines whether a lower of cost or market provision is required on a

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

quarterly basis by computing whether inventory on hand, on a LIFO basis, can be sold at a profit based upon current selling prices less variable selling costs. No provision was required in the first nine fiscal months of 2004 or 2003. In the event that a provision is required in some future period, the Company will determine the amount of the provision by writing down the value of the inventory to the level where its sales, using current selling prices less variable selling costs, will result in a profit.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Costs assigned to property, plant and equipment relating to acquisitions are based on estimated fair values at that date. Depreciation is provided using the straight-line method over the estimated useful lives of the assets: new buildings, from 15 to 50 years; and machinery, equipment and office furnishings, from 3 to 15 years. Leasehold improvements are depreciated over the life of the lease.

Fair Value of Financial Instruments

Financial instruments are defined as cash or contracts relating to the receipt, delivery or exchange of financial instruments. Except as otherwise noted, fair value approximates the carrying value of such instruments.

Forward Pricing Agreements for Purchases of Copper and Aluminum

In the normal course of business, General Cable enters into forward pricing agreements for purchases of copper and aluminum to match certain sales transactions. General Cable expects to recover the cost of copper and aluminum under these agreements as a result of firm sales price commitments with customers.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 results could differ from those estimates.

Concentration of Credit Risk

General Cable sells a broad range of products throughout primarily the United States, Canada, Europe and the Asia Pacific region. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers, including members of buying groups, composing General Cable’s customer base. Ongoing credit evaluations of customers’ financial condition are performed, and generally, no collateral is required. General Cable maintains reserves for potential credit losses and such losses, in the aggregate, have not exceeded management’s estimates. Certain subsidiaries also maintain credit insurance for certain customer balances.

Derivative Financial Instruments

Derivative financial instruments are utilized to manage interest rate, commodity and foreign currency risk. General Cable does not hold or issue derivative financial instruments for trading purposes. Statement of Financial Accounting Standards (SFAS) No. 133, “Accounting For Derivative Instruments and Hedging Activities,” as amended, requires that all derivatives be recorded on the balance sheet at fair value. The accounting for changes in the fair value of the derivative depends on the intended use of the derivative and whether it qualifies for hedge accounting. SFAS No. 133, as applied to General Cable’s risk management strategies, may increase or decrease reported net income, and shareholders’ equity, or both, prospectively depending on changes in interest rates and other variables affecting the fair value of derivative instruments and hedged items, but will have no effect on cash flows or economic risk. See further discussion in Note 8.

Foreign currency and commodity contracts are used to hedge future sales and purchase commitments. Interest rate swaps are used to achieve a targeted mix of floating rate and fixed rate debt. Unrealized gains and losses on these derivative financial instruments are recorded in other comprehensive income until the underlying transaction occurs and is recorded in the income statement at which point such amounts included in other comprehensive income are recognized in income which generally will occur over periods less than one year.

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Stock-Based Compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. General Cable has chosen to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of the grant over the amount an employee must pay to acquire the stock. No compensation cost for stock options is reflected in net income, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.


	Three Fiscal Months Ended						Nine Fiscal Months Ended
	October 1,			September 30,			October 1,			September 30,
	2004			2003			2004			2003
Net income applicable to common shareholders, as reported	$	5.9		$	2.1		$	6.2		$	5.2
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects		(0.5	)		(0.5	)		(1.6	)		(1.2	)

Pro forma net income applicable to common shareholders	$	5.4		$	1.6		$	4.6		$	4.0

Earnings per share:
Basic – as reported	$	0.15		$	0.06		$	0.16		$	0.16
Basic – pro forma	$	0.14		$	0.05		$	0.12		$	0.12
Diluted – as reported	$	0.15		$	0.06		$	0.16		$	0.16
Diluted – pro forma	$	0.14		$	0.05		$	0.12		$	0.12

New Standards

In January 2003, FIN No. 46, as revised “Consolidation of Variable Interest Entities” was issued. FIN 46 is intended to achieve more consistent application of consolidation policies to variable interest entities. Application of FIN 46 is required in financial statements of public entities that have interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of entities is required in financial statements for periods ending after March 15, 2004. Accordingly, the Company has adopted FIN 46 which resulted in the consolidation of its fiber optic joint venture in the first quarter of 2004. The adoption of FIN 46 did not have a material affect on its financial position, results of operations or cash flows. See further discussion in Note 3.

In December 2003, SFAS No. 132 (R), “Employers’ Disclosure about Pensions and Other Postretirement Benefits” was issued. This statement revised employers’ disclosure requirements about pension plans and other postretirement benefit plans. The annual disclosure requirements apply to fiscal years ending after December 15, 2003, except for the disclosure of expected future benefit payments, which must be disclosed for fiscal years ending after June 15, 2004. Interim disclosure requirements are generally effective for interim periods beginning after December 15, 2003. Accordingly, the Company has adopted SFAS No. 132(R).

3. Acquisitions and Divestitures

During the second quarter of 2002, General Cable formed a joint venture company to manufacture and market fiber optic cables. General Cable contributed assets, primarily inventory and machinery and equipment, to a subsidiary company which was then contributed to the joint venture in exchange for a $10.2 million note receivable which resulted in a $5.6 million deferred gain on the transaction. The Company will recognize the gain as the note is repaid. The October 1, 2004 and December 31, 2003 balance sheets included a $10.2 million note receivable from the joint venture partner in other non-

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

current assets. The December 31, 2003 balance sheet included a deferred gain from the initial joint venture formation of $5.6 million in other liabilities.

In January 2004, the Company reduced its ownership percentage in the joint venture from 49% to 40% and as a result the deferred gain was reduced to $4.8 million. The October 1, 2004 balance sheet included the $4.8 million deferred gain in other liabilities. Beginning in the first quarter of 2004 the Company consolidated the joint venture company as a result of the adoption of FIN No. 46, as revised. Accordingly, the Company recorded a 60% minority interest in the net losses of the joint venture company in SG&A expense and the October 1, 2004 balance sheet included a $3.7 million minority interest in the joint venture company in other liabilities. For the third quarter of 2004, the joint venture company had sales of $5.4 million and an operating loss and net loss of $0.7 million. For the first nine fiscal months of 2004, the joint venture company had sales of $16.5 million and an operating loss and net loss of $1.1 million. At October 1, 2004, the joint venture company had total assets of $11.1 million, total liabilities of $5.1 million and total equity of $6.0 million. Prior to the first quarter of 2004, the joint venture company was accounted for under the equity method of accounting. At December 31, 2003, other non-current assets included an investment in the joint venture of $3.5 million.

4. Other Expense

Other expense includes foreign currency transaction gains or losses which result from changes in exchange rates between the designated functional currency and the currency in which a transaction is denominated. During the nine fiscal months ended October 1, 2004, the Company recorded a $0.9 million loss resulting from an unfavorable foreign currency transaction loss.

5. Inventories

Inventories consisted of the following (in millions):


	October 1,		December 31,
	2004		2003
Raw materials	$	24.8	$	25.5
Work in process		46.4		34.9
Finished goods		202.6		196.3

Total	$	273.8	$	256.7

At October 1, 2004 and December 31, 2003, $226.6 million and $202.4 million, respectively, of inventories were valued using the LIFO method. Approximate replacement costs of inventories valued using the LIFO method totaled $264.3 million at October 1, 2004 and $218.2 million at December 31, 2003.

If in some future period the Company was not able to recover the LIFO value of its inventory at a profit when replacement costs were lower than the LIFO value of the inventory, the Company would be required to take a charge to recognize in its income statement all or a portion of the higher LIFO value of the inventory.

6. Restructuring Charges

Changes in accrued restructuring costs were as follows (in millions):


	Severance			Facility
	and Related			Closing
	Costs			Costs			Total
Balance, December 31, 2003	$	1.4		$	2.9		$	4.3
Provisions, net		2.3			4.1			6.4
Utilization		(3.2	)		(3.6	)		(6.8	)

Balance, October 1, 2004	$	0.5		$	3.4		$	3.9

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The Company’s Taunton, Massachusetts facility ceased operations on January 30, 2004, and employed approximately 50 associates and was comprised of approximately 131,000 square feet of space. The Company is also refocusing operations at its Marion, Indiana facility. The Company is realigning production and expects to be able to maintain many of the jobs at this facility. The Company has substantially closed its South Hadley, Massachusetts facility in the third quarter of 2004. This facility employed approximately 40 associates and was comprised of approximately 150,000 square feet of space. Charges of $6.7 million ($6.3 million included in cost of sales and $0.4 million in SG&A) were recorded in the first nine fiscal months of 2004 for the actions being taken. The Company’s Plano, Texas rod mill facility ceased operations at the end of June 2004 and employed approximately 30 associates and was comprised of approximately 60,000 square feet of space. During the second quarter of 2004 the Company sold most of the equipment utilized in the rod mill facility. Proceeds from the sale of equipment were partially offset by costs related to closing the facility which resulted in a net gain of $0.3 million in the fiscal nine months ended October 1, 2004. All of the restructuring charges are reflected in the corporate segment.

7. Long-Term Debt

Long-term debt consisted of the following (in millions):


	October 1,			December 31,
	2004			2003
Senior notes due 2010	$	285.0		$	285.0
Revolving loans		56.8			43.0
Other		11.4			12.4

Total debt		353.2			340.4
Less current maturities		1.5			2.3

Long-term debt	$	351.7		$	338.1

Weighted average interest rates were as follows:
Senior notes due 2010		9.5	%		9.5	%
Revolving loans		4.6	%		3.9	%
Other		2.1	%		2.1	%

On November 24, 2003, the Company completed a comprehensive refinancing of its bank debt that improved its capital structure and provided increased financial and operating flexibility by reducing leverage, increasing liquidity and extending debt maturities. The refinancing included the following: (i) the private placement of 7-year senior unsecured notes, (ii) a new senior secured revolving credit facility, (iii) the private placement of redeemable convertible preferred stock and (iv) a public offering of common stock. The Company applied the net proceeds from these refinancing transactions to repay all amounts outstanding under its former senior secured revolving credit facility, senior secured term loans and accounts receivable asset-backed securitization facility and to pay fees and expenses related to the refinancing.

The senior unsecured notes (the “Notes”) were issued in the amount of $285.0 million, bear interest at a fixed rate of 9.5% and mature in 2010. The estimated fair value of the Notes was approximately $316.4 million at October 1, 2004 and $305.0 million at December 31, 2003.

The new senior secured revolving credit facility is a five year $240.0 million asset based revolving credit agreement (the “Credit Agreement”). The Credit Agreement is secured by substantially all U.S. and Canadian assets. Borrowing availability is based on eligible U.S. and Canadian accounts receivable and inventory and certain U.S. fixed assets. As of October 1, 2004, the Company had outstanding borrowings of $56.8 million and availability of $147.4 million under the terms of the Credit Agreement. Availability of borrowings under the fixed asset component of the new facility is reduced quarterly over a seven-year period by $5.7 million per annum beginning in 2004. The new facility also includes a sub-facility for letters of credit of up to $50.0 million. At October 1, 2004, the Company had outstanding letters of credit of $34.6 million.

Borrowings under the Credit Agreement bear interest at LIBOR plus 2.75% and/or prime plus 1.50%, at the Company’s option through June 30, 2004. Effective July 1, 2004, borrowings under the Credit Agreement bear interest at a rate of LIBOR plus 2.50% to 3.00% and/or prime plus 1.25% to 1.75% depending upon the Company’s fixed charge coverage ratio,

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

as defined by the Credit Agreement. The interest rate on outstanding borrowings was 4.6% at October 1, 2004. Under the Credit Agreement, the Company pays a commitment fee of 0.50% per annum on the unused portion of the commitment. In connection with the refinancing, the Company incurred fees and expenses aggregating $7.1 million, which are being amortized over the term of the Credit Agreement.

The Credit Agreement contains covenants that limit capital spending, the payment of dividends to holders of common stock and require a minimum fixed charge coverage ratio, as defined. At October 1, 2004, the Company was in compliance with all covenants under the Credit Agreement.

The Company amended its Credit Agreement, effective October 22, 2004, which reduced the interest rate on borrowings under the credit facility by 50 basis points, increased the annual capital spending limit and provided for the ability to swap up to $100 million of its existing fixed rate Senior notes to a floating interest rate.

The Company’s former credit facility was entered into in 1999 with one lead bank as administrative agent, and a syndicate of lenders. The former facility, as amended, consisted of term loans in dollars and foreign currencies and revolving loans in dollars. The weighted average interest rate on borrowings under the former credit facility for the period January 1, 2003 through September 30, 2003 was 6.2%.

8. Financial Instruments

General Cable is exposed to various market risks, including changes in interest rates, foreign currency and commodity prices. To manage risk associated with the volatility of these natural business exposures, General Cable enters into interest rate, commodity and foreign currency derivative agreements as well as copper and aluminum forward purchase agreements. General Cable does not purchase or sell derivative instruments for trading purposes.

General Cable has utilized interest rate swaps and interest rate collars to achieve a targeted mix of floating rate and fixed rate debt. Under the swap agreements, General Cable paid a fixed rate while the counterparty paid to General Cable the difference between the fixed rate and the three-month LIBOR rate.

During 2001, the Company entered into several interest rate swaps which effectively fixed interest rates for borrowings under the former credit facility and other debt. At October 1, 2004, the remaining outstanding interest rate swap had a notional value of $9.0 million, an interest rate of 4.49% and matures in October 2011. The Company does not provide or receive any collateral specifically for this contract. The fair value of interest rate derivatives are based on quoted market prices and third party provided calculations, which reflect the present values of the difference between estimated future variable-rate receipts and future fixed-rate payments. At October 1, 2004 and December 31, 2003, the net unrealized loss on the interest rate derivative and the related carrying value was $0.7 million.

The Company enters into forward exchange contracts principally to hedge the currency fluctuations in certain transactions denominated in foreign currencies, thereby limiting the Company’s risk that would otherwise result from changes in exchange rates. Principal transactions hedged during the year were firm sales and purchase commitments. The fair value of foreign currency contracts represents the amount required to enter into offsetting contracts with similar remaining maturities based on quoted market prices. At October 1, 2004 and December 31, 2003, the net unrealized gain (loss) on the net foreign currency contracts was $0.1 million and $(0.8) million, respectively.

Outside of North America, General Cable enters into commodity futures contracts for the purchase of copper and aluminum for delivery in a future month to match certain sales transactions. At October 1, 2004 and December 31, 2003, General Cable had an unrealized gain of $4.2 million and $0.1 million, respectively, on the commodity futures.

Foreign currency and commodity contracts are used to hedge future sales and purchase commitments. Interest rate swaps are used to manage interest expense exposure by fixing the interest rate on a portion of floating rate debt. Unrealized gains and losses on these derivative financial instruments are recorded in other comprehensive income until the underlying transaction occurs and is recorded in the income statement at which point such amounts included in other comprehensive income are recognized in income which generally will occur over periods less than one year.

In North America, General Cable enters into forward pricing agreements for the purchase of copper and aluminum for delivery in a future month to match certain sales transactions. General Cable had an unrealized gain of $7.9 million at

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

October 1, 2004 and $2.4 million at December 31, 2003 related to these transactions. General Cable expects to offset the unrealized gains under these agreements as a result of firm sale price commitments with customers.

9. Pension Plans and Other Post-retirement Benefits

General Cable provides retirement benefits through contributory and noncontributory pension plans for the majority of its regular full-time employees. Pension expense under the defined contribution plans sponsored by General Cable in the United States equaled four percent of each eligible employee’s covered compensation. In addition, General Cable sponsors employee savings plans under which General Cable may match a specified portion of the contribution made by eligible employees.

Benefits provided under the defined benefit plans sponsored by General Cable are generally based on years of service multiplied by a specific fixed dollar amount. Contributions to these pension plans are based on generally accepted actuarial methods, which may differ from the methods used to determine pension expense. The amounts funded for any plan year are neither less than the minimum required under federal law nor more than the maximum amount deductible for federal income tax purposes.

General Cable also has post-retirement benefit plans that provide medical and life insurance for certain retirees and eligible dependents. General Cable funds the plans as claims or insurance premiums are incurred.

The components of net periodic benefit cost for pension and other post-retirement benefits were as follows (in millions):


	Three Fiscal Months Ended											Nine Fiscal Months Ended
	October 1,					September 30,						October 1,					September 30,
	2004					2003						2004					2003
	Pension			Other		Pension			Other			Pension			Other		Pension			Other
Service cost	$	0.5		$	0.1	$	0.5		$	0.1		$	1.6		$	0.2	$	1.4		$	0.2
Interest cost		2.2			0.1		2.3			0.2			6.6			0.4		6.9			0.5
Expected return on plan assets		(2.3	)		—		(1.9	)		—			(6.8	)		—		(5.6	)		—
Amortization of prior service cost		—			—		—			(0.2	)		—			—		—			(0.5	)
Net amortization and deferral		0.9			—		1.2			—			2.7			—		3.6			—

Total defined benefit plans expense		1.3			0.2		2.1			0.1			4.1			0.6		6.3			0.2
Total defined contribution plans expense		1.5			—		1.4			—			4.5			—		3.9			—

Total	$	2.8		$	0.2	$	3.5		$	0.1		$	8.6		$	0.6	$	10.2		$	0.2

10. Shareholders’ Equity

General Cable is authorized to issue 75 million shares of common stock and 25 million shares of preferred stock.

In the fourth quarter of 2003, the Company completed a comprehensive refinancing of its bank debt. The refinancing included the private placement of 2,070,000 shares of redeemable convertible preferred stock and a public offering of 5,807,500 shares of common stock.

The Company’s preferred stock has a liquidation preference of $50.00 per share. Dividends accrue on the convertible preferred stock at the rate of 5.75% per annum and are payable quarterly in arrears. Dividends are payable in cash, shares of General Cable common stock or a combination thereof. Holders of the convertible preferred stock are entitled to convert any or all of their shares of convertible preferred stock into shares of General Cable common stock, at an initial conversion price of $10.004 per share. The conversion price is subject to adjustments under certain circumstances. General Cable is obligated to redeem all outstanding shares of convertible preferred stock on November 24, 2013 at par. The Company may, at its option, elect to pay the redemption price in cash or in shares of General Cable common stock with an equivalent fair value, or any combination thereof. The Company has the option to redeem some or all of the outstanding shares of convertible preferred stock in cash beginning on the fifth anniversary of the issue date. The redemption premium will initially equal one-half the dividend rate on the convertible preferred stock and decline ratably to par on the date of mandatory redemption. In

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

the event of a change in control, the Company has the right to either redeem the preferred stock for cash or to convert the preferred stock to common stock.

The Company has two equity compensation plans, the 1997 Stock Incentive Plan and the 2000 Stock Option Plan. The 1997 Stock Incentive Plan authorizes a maximum of 4,725,000 shares, options or units of Common Stock to be granted. Stock options are granted to employees selected by the Compensation Committee of the Board or the Chief Executive Officer at prices which are not less than the closing market price on the date of grant. The Compensation Committee (or Chief Executive Officer) has authority to set all the terms of each grant. The majority of the options granted under the plan expire in 10 years and become fully exercisable ratably over three years of continued employment or become fully exercisable after three years of continued employment. Restrictions on the majority of shares awarded to employees under the plan expire ratably over a three-year period or expire after six years from the date of grant. Restricted stock units were awarded to employees in November 1998 as part of a Stock Loan Incentive Plan.

The 2000 Stock Option Plan as amended authorizes a maximum of 1,500,000 non-incentive options to be granted. No other forms of award are authorized under this plan. Stock options are granted to employees selected by the Compensation Committee of the Board or the Chief Executive Officer at prices which are not less than the closing market price on the date of grant. The Compensation Committee (or Chief Executive Officer) has authority to set all the terms of each grant. The majority of the options granted under the plan expire in 10 years and become fully exercisable ratably over three years of continued employment or become fully exercisable after three years of continued employment.

In November 1998, General Cable entered into a Stock Loan Incentive Plan (SLIP) with executive officers and key employees. Under the SLIP, the Company loaned $6.0 million to facilitate open market purchases of General Cable common stock. A matching restricted stock unit (MRSU) was issued for each share of stock purchased under the SLIP. The fair value of the MRSUs at the grant date of $6.0 million, adjusted for subsequent forfeitures, was amortized to expense over the initial five-year vesting period. In June 2003, all executive officers repaid their loans plus interest that were originally made under the SLIP in the amount of $1.8 million. The Company accepted, as partial payment for the loans, common stock owned by the executive officers and restricted stock units previously awarded to them under the SLIP. In July 2003, the Company approved an extension of the loan maturity for the remaining participants in the SLIP for an additional three years to November 2006, subject in the extension period to a rate of interest of 5.0%. As part of the loan extension the vesting schedule on the MRSUs was also extended so that the MRSUs vest in November 2006. If the vesting requirements are met, one share of General Cable common stock will be issued in exchange for each MRSU. There are 82,932 MRSUs outstanding as of October 1, 2004. During the third quarter of 2004, certain employees repaid their loans plus interest that were originally made under the SLIP in the amount of $1.4 million. The Company accepted, as partial payment for the loans, common stock owned by the employees and restricted stock units previously awarded to them under the SLIP.

During the first quarter of 2001, 355,500 shares of restricted common stock with performance accelerated vesting features were awarded to certain senior executives under the Company’s 1997 Stock Incentive Plan, as amended. Under the terms of this plan, the Company can award restricted common stock to executives and key employees with such features. The restricted shares vest six years from the date of grant unless certain performance criteria are met. The performance measure used to determine vesting is the Company’s stock price. The stock price targets must be sustained for 20 business days in order to trigger accelerated vesting. During the second quarter of 2001, as a result of the achievement of performance criteria, restrictions on 50% of the stock expired and the Company recognized accelerated amortization of $1.2 million.

In January 2004, 340,500 shares of restricted common stock with performance accelerated vesting features were awarded to Company executives and key employees under the Company’s 1997 Stock Incentive Plan, as amended. The restricted shares vest ratably from the second anniversary of the date of grant to the sixth anniversary unless certain performance criteria are met. The performance measure used to determine accelerated vesting is earnings per share.

Amortization of all outstanding restricted stock awards and MRSUs in the first nine fiscal months of 2004 and 2003 was $0.4 million and $0.5 million, respectively.

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The components of accumulated other comprehensive income (loss) consisted of the following (in millions):


	October 1,			December 31,
	2004			2003
Foreign currency translation adjustment	$	16.6		$	17.6
Pension adjustments, net of tax		(23.3	)		(23.3	)
Change in fair value of derivatives, net of tax		2.8			(0.7	)
Unrealized investment gains		1.4			0.9

Total	$	(2.5	)	$	(5.5	)

Other shareholder’s equity consisted of the following (in millions):


	October 1,			December 31,
	2004			2003
Loans to shareholders	$	(1.6	)	$	(2.8	)
Restricted stock		(3.0	)		(0.4	)

Total	$	(4.6	)	$	(3.2	)

11. Earnings Per Common Share

A reconciliation of the numerator and denominator of basic earnings per common share to diluted earnings per common share is as follows (in millions):


	Three Fiscal Months Ended					Nine Fiscal Months Ended
	October 1,			September 30,		October 1,			September 30,
	2004			2003		2004			2003
Numerator:
Net income	$	7.4		$	2.1	$	10.7		$	5.2
Less: preferred stock dividends		(1.5	)		—		(4.5	)		—

Net income applicable to common shareholders	$	5.9		$	2.1	$	6.2		$	5.2

Denominator:
Denominator for basic EPS-weighted average shares outstanding		39.3			33.1		39.2			33.1
Dilutive effect of stock options and restricted stock units		0.7			0.5		0.7			0.3

Denominator for diluted EPS-adjusted weighted average shares outstanding		40.0			33.6		39.9			33.4

Earnings per common share - basic	$	0.15		$	0.06	$	0.16		$	0.16

Earnings per common share - diluted	$	0.15		$	0.06	$	0.16		$	0.16

The diluted earnings per common share computation excludes the impact of 1.6 million and 2.1 million stock options and restricted stock units in the third quarter and first nine fiscal months of 2004, respectively, because their impact was anti-dilutive. The computation for the third quarter and first nine fiscal months of 2003 excludes the impact of 2.4 million and 2.5 million stock options and restricted stock units because their impact was anti-dilutive. This computation also excludes the impact of the assumed conversion of the Company’s preferred stock (which was issued in the fourth quarter of 2003) because its impact was anti-dilutive in the third quarter and first nine fiscal months of 2004.

12. Segment Information

General Cable has three reportable operating segments: energy, industrial & specialty and communications. These segments are strategic business units organized around three product categories that follow management’s internal organization structure.

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

The energy segment manufactures and sells wire and cable products that include low-, medium- and high-voltage power distribution and power transmission products. The industrial & specialty segment manufactures and sells wire and cable products that conduct electrical current for industrial, OEM, commercial and residential power and control applications. The communications segment manufactures and sells wire and cable products that transmit low-voltage signals for voice, data, video and control applications.

Segment net sales represent sales to external customers. Segment operating income (loss) represents income (loss) before interest income, interest expense, other income (expense), other financial costs and income taxes. The operating loss included in corporate for the three fiscal months ended October 1, 2004 consisted of a $1.5 million charge related to the remediation of a former manufacturing facility, a $1.8 million charge related to the rationalization of certain of the Company’s industrial cable manufacturing facilities and a $0.3 million charge related to the closure of the Company’s rod mill facility. The operating loss included in corporate for the nine fiscal months ended October 1, 2004 consisted of a $1.5 million charge related to the remediation of a former manufacturing facility, a $6.7 million charge related to the rationalization of certain of the Company’s industrial cable manufacturing facilities and a $0.3 million net gain related to the closure of Company’s rod mill facility. For the three and nine fiscal month period ended September 30, 2003, the corporate operating loss of $0.6 million and $1.7 million, respectively, consisted of a charge for severance related to the Company’s ongoing cost cutting efforts in Europe. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (see Note 2). The Company has recorded the operating items discussed above in the corporate segment rather than reflect such items in the energy, industrial & specialty or communications segments operating income. These items are reported in the corporate segment because they are not considered in the operating performance evaluation of the energy, industrial & specialty or communications segment by the Company’s chief operating decision-maker, its Chief Executive Officer.

Corporate assets included cash, deferred income taxes, certain property and prepaid expenses and other current and non-current assets.

Summarized financial information for the Company’s operating segments for the three and nine month fiscal period is as follows (in millions).


	Three Fiscal Months Ended
			Industrial &
	Energy		Specialty		Communications		Corporate			Total
Net Sales:
October 1, 2004	$	169.3	$	174.5	$	145.5	$	—		$	489.3
September 30, 2003		138.2		128.5		115.8		—			382.5
Operating Income (Loss):
October 1, 2004		10.8		8.7		3.8		(3.6	)		19.7
September 30, 2003		11.6		0.7		1.8		(0.6	)		13.5


	Nine Fiscal Months Ended
			Industrial &
	Energy		Specialty		Communications		Corporate			Total
Net Sales:
October 1, 2004	$	520.4	$	561.6	$	403.4	$	—		$	1,485.4
September 30, 2003		413.5		395.1		324.5		—			1,133.1
Operating Income (Loss):
October 1, 2004		28.2		18.2		5.0		(7.9	)		43.5
September 30, 2003		29.4		7.8		5.3		(1.7	)		40.8
Identifiable Assets:
October 1, 2004		310.0		375.7		331.7		169.7			1,187.1
December 31, 2003		269.5		325.1		302.9		152.0			1,049.5

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements

13. Supplemental Guarantor Information

General Cable Corporation and its material North American wholly-owned subsidiaries fully and unconditionally guarantee the $285.0 million of Senior Notes due 2010 of General Cable Corporation (the Issuer) on a joint and several basis. The following presents financial information about the Issuer, guarantor subsidiaries and non-guarantor subsidiaries in millions. All of the Company’s subsidiaries are “restricted subsidiaries” for purposes of the Senior Notes. Intercompany transactions are eliminated.


	Statements of Operations
	Three Fiscal Months Ended October 1, 2004
				Guarantor			Non-Guarantor
	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales:
Customers	$	—		$	327.1		$	162.2		$	—		$	489.3
Intercompany		99.7			—			4.7			(104.4	)		—

		99.7			327.1			166.9			(104.4	)		489.3
Cost of sales		85.1			295.7			138.7			(89.0	)		430.5

Gross profit		14.6			31.4			28.2			(15.4	)		58.8
Selling, general and administrative expenses		13.2			29.3			12.0			(15.4	)		39.1

Operating income		1.4			2.1			16.2			—			19.7
Interest income (expense):
Interest expense		(7.4	)		(21.9	)		(0.7	)		20.9			(9.1	)
Interest income		9.5			9.1			2.4			(20.9	)		0.1

		2.1			(12.8	)		1.7			—			(9.0	)
Earnings (loss) before income taxes		3.5			(10.7	)		17.9			—			10.7
Income tax (provision) benefit		(1.5	)		3.4			(5.2	)		—			(3.3	)

Net income (loss)		2.0			(7.3	)		12.7			—			7.4
Less preferred stock dividends		(1.5	)		—			—			—			(1.5	)

Net income (loss) applicable to common shareholders	$	0.5		$	(7.3	)	$	12.7		$	—		$	5.9

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements


	Condensed Balance Sheets
	As of October 1, 2004
			Guarantor		Non-Guarantor
	Issuer		Subsidiaries		Subsidiaries		Eliminations			Total
Assets
Current assets:
Cash	$	0.1	$	9.3	$	22.3	$	—		$	31.7
Receivables, net of allowances		—		196.1		167.5		—			363.6
Inventories		—		182.4		91.4		—			273.8
Deferred income taxes		1.5		12.0		—		—			13.5
Prepaid expenses and other		1.2		23.4		1.8		—			26.4

Total current assets		2.8		423.2		283.0		—			709.0
Property, plant and equipment, net		0.3		205.9		128.0		—			334.2
Deferred income taxes		—		93.5		2.2		—			95.7
Intercompany accounts		643.1		119.4		152.9		(915.4	)		—
Investment in subsidiaries		33.7		352.4		—		(386.1	)		—
Other non-current assets		6.5		39.3		2.4		—			48.2

Total assets	$	686.4	$	1,233.7	$	568.5	$	(1,301.5	)	$	1,187.1

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	136.5	$	196.4	$	—		$	332.9
Accrued liabilities		15.8		75.4		36.6		—			127.8
Current portion of long-term debt		—		—		1.5		—			1.5

Total current liabilities		15.8		211.9		234.5					462.2
Long-term debt		285.0		65.8		0.9		—			351.7
Deferred income taxes		—		12.6		6.5		—			19.1
Intercompany accounts		35.0		789.4		91.0		(915.4	)		—
Other liabilities		32.9		68.3		3.1		—			104.3

Total liabilities		368.7		1,148.0		336.0		(915.4	)		937.3

Total shareholders’ equity		317.7		85.7		232.5		(386.1	)		249.8

Total liabilities and shareholders’ equity	$	686.4	$	1,233.7	$	568.5	$	(1,301.5	)	$	1,187.1

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements


	Condensed Balance Sheets
	As of December 31, 2003
			Guarantor		Non-Guarantor
	Issuer		Subsidiaries		Subsidiaries		Eliminations			Total
Assets
Current assets:
Cash	$	—	$	3.7	$	21.4	$	—		$	25.1
Receivables, net of allowances		—		149.2		119.7		—			268.9
Inventories		—		169.9		86.8		—			256.7
Deferred income taxes		1.5		12.0		—		—			13.5
Prepaid expenses and other		1.2		22.8		0.9		—			24.9

Total current assets		2.7		357.6		228.8		—			589.1
Property, plant and equipment, net		0.5		218.5		114.3		—			333.3
Deferred income taxes		—		72.5		4.0		—			76.5
Intercompany accounts		623.4		132.4		163.6		(919.4	)		—
Investment in subsidiaries		33.7		345.3		—		(379.0	)		—
Other non-current assets		7.0		42.8		0.8		—			50.6

Total assets	$	667.3	$	1,169.1	$	511.5	$	(1,298.4	)	$	1,049.5

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	—	$	104.5	$	146.1	$	—		$	250.6
Accrued liabilities		8.1		73.0		18.5		—			99.6
Current portion of long-term debt		—		—		2.3		—			2.3

Total current liabilities		8.1		177.5		166.9		—			352.5
Long-term debt		285.0		52.1		1.0		—			338.1
Deferred income taxes		—		2.7		6.9		—			9.6
Intercompany accounts		31.2		761.5		126.7		(919.4	)		—
Other liabilities		32.9		67.8		8.5		—			109.2

Total liabilities		357.2		1,061.6		310.0		(919.4	)		809.4

Total shareholders’ equity		310.1		107.5		201.5		(379.0	)		240.1

Total liabilities and shareholders’ equity	$	667.3	$	1,169.1	$	511.5	$	(1,298.4	)	$	1,049.5

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements


	Statements of Cash Flows
	Nine Fiscal Months Ended October 1, 2004
				Guarantor			Non-Guarantor
	Issuer			Subsidiaries			Subsidiaries			Eliminations		Total
Cash flows of operating activities:
Net income (loss)	$	7.0		$	(26.3	)	$	30.0		$	—		$	10.7
Adjustment to reconcile net income (loss) to net cash provided by (used by) operating activities:
Depreciation and amortization		0.2			25.0			2.1			—			27.3
Foreign currency exchange loss		0.9			—			—			—			0.9
Deferred income taxes		—			(11.3	)		1.6			—			(9.7	)
Gain on disposal of property		—			(0.6	)		—			—			(0.6	)
Changes in operating assets and liabilities:
Increase in receivables		—			(46.9	)		(47.2	)		—			(94.1	)
Increase in inventories		—			(12.5	)		(0.1	)		—			(12.6	)
(Increase) decrease in other assets		0.5			1.7			(3.1	)		—			(0.9	)
Increase in accounts payable, accrued and other liabilities		7.7			34.5			57.5			—			99.7

Net cash flows of operating activities		16.3			(36.4	)		40.8			—			20.7

Cash flows of investing activities:
Capital expenditures		—			(10.8	)		(13.3	)		—			(24.1	)
Proceeds from properties sold		—			2.4			—			—			2.4
Other, net		(0.2	)		(0.2	)		—			—			(0.4	)

Net cash flows of investing activities		(0.2	)		(8.6	)		(13.3	)		—			(22.1	)

Cash flows of financing activities:
Intercompany accounts		(12.1	)		36.9			(24.8	)		—			—
Preferred stock dividends paid		(4.5	)		—			—			—			(4.5	)
Repayment of loans from shareholders		0.4			—			—			—			0.4
Proceeds from exercise of stock options		0.2			—			—			—			0.2
Net change in revolving credit borrowings		—			13.8			—			—			13.8
Repayment of other debt		—			(0.1	)		(1.8	)		—			(1.9	)

Net cash flows of financing activities		(16.0	)		50.6			(26.6	)		—			8.0

Increase in cash		0.1			5.6			0.9			—			6.6
Cash – beginning of period		—			3.7			21.4			—			25.1

Cash – end of period	$	0.1		$	9.3		$	22.3		$	—		$	31.7

GENERAL CABLE CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements


	Statements of Cash Flows
	Nine Fiscal Months Ended September 30, 2003
				Guarantor			Non-Guarantor
	Issuer			Subsidiaries			Subsidiaries			Eliminations		Total
Cash flows of operating activities:
Net income (loss)	$	5.6		$	(18.9	)	$	18.5		$	—	$	5.2
Adjustment to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		0.6			21.3			1.3			—		23.2
Deferred income taxes		(0.5	)		(2.8	)		(2.5	)		—		(5.8	)
Loss on sale of property or business		—			0.3			0.1			—		0.4
Changes in operating assets and liabilities:
(Increase) decrease in receivables		—			1.9			(18.8	)		—		(16.9	)
Decrease in inventories		—			14.8			7.4			—		22.2
Decrease in other assets		1.5			17.6			0.4			—		19.5
Increase (decrease) in accounts payable, accrued and other liabilities		8.1			5.2			(2.9	)		—		10.4

Net cash flows of operating activities		15.3			39.4			3.5			—		58.2

Cash flows of investing activities:
Capital expenditures		—			(6.1	)		(5.7	)		—		(11.8	)
Proceeds from properties sold		—			1.9			—			—		1.9
Other, net		—			(1.3	)		—			—		(1.3	)

Net cash flows of investing activities		—			(5.5	)		(5.7	)		—		(11.2	)

Cash flows of financing activities:
Intercompany accounts		(10.1	)		(8.1	)		18.2			—		—
Net changes in revolving credit borrowings		(6.2	)		(7.1	)		—			—		(13.3	)
Repayment of loans from shareholders		1.0			—			—			—		1.0
Net change in other debt		—			(6.6	)		(18.9	)		—		(25.5	)
Repayment of long-term debt		—			(11.7	)		(2.4	)		—		(14.1	)

Net cash flows of financing activities		(15.3	)		(33.5	)		(3.1	)		—		(51.9	)

Decrease in cash		—			0.4			(5.3	)		—		(4.9	)
Cash – beginning of period		—			8.1			21.0			—		29.1

Cash – end of period	$	—		$	8.5		$	15.7		$	—	$	24.2

GENERAL CABLE CORPORATION AND SUBSIDIARIES

ITEM 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand General Cable Corporation. MD&A is provided as a supplement to the Company’s Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements (“Notes”) and should be read in conjunction with these Consolidated Financial Statements and Notes. This overview provides the Company’s perspective on the sections included in MD&A. MD&A includes the following:

• General – a general description of the Company’s business, financial information by geographic regions, raw material price volatility and seasonal trends.

• Current Business Environment – the Company’s perspective on the challenges it faces and its relative competitive advantage.

• Acquisitions and Divestitures – a brief history of acquisitions and divestitures as they relate to the financial statements presented.

• Critical Accounting Estimates – a discussion of the accounting policies that require critical judgments and estimates.

• The Refinancing – a description of the comprehensive refinancing in the fourth quarter of 2003.

• Results of Operations – an analysis of the Company’s results of operations for the financial statement periods presented.

• Liquidity and Capital Resources – an analysis of cash flows, sources and uses of cash.

General

General Cable is a leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the energy, industrial & specialty and communications markets. Energy cables include low-, medium- and high-voltage power distribution and power transmission products for overhead and buried applications. Industrial & specialty wire and cable products conduct electrical current for industrial, OEM, commercial and residential power and control applications. Communications wire and cable products transmit low-voltage signals for voice, data, video and control applications.

Certain statements in this report including, without limitation, statements regarding future financial results and performance, plans and objectives, capital expenditures and the Company’s management’s beliefs, expectations or opinions, are forward-looking statements. Actual results may differ materially from those statements as a result of factors, risks and uncertainties over which the Company has no control. Such factors include economic and political consequences resulting from the September 2001 terrorist attack and the war with Iraq, domestic and local country price competition, particularly in certain segments of the power cable market and other competitive pressures; general economic conditions, particularly in construction; changes in customer or distributor purchasing patterns in our business segments; the Company’s ability to increase manufacturing capacity and productivity; the financial impact of any future plant closures; the Company’s ability to successfully complete and integrate acquisitions and divestitures; the Company’s ability to negotiate extensions of labor agreements on acceptable terms; the Company’s ability to service debt requirements and maintain adequate domestic and international credit facilities and credit lines; the Company’s ability to pay dividends on its preferred stock; the impact of unexpected future judgments or settlements of claims and litigation; the Company’s ability to achieve target returns on investments in its defined benefit plans; the Company’s ability to avoid limitations on utilization of net operating losses for income tax purposes; the cost of raw materials, including copper; the Company’s ability to increase its selling prices during periods of increasing raw material costs; the impact of foreign currency fluctuations; the impact of technological changes; and other factors.

General Cable analyzes its worldwide operations in two geographic groups: 1) North America and 2) International. The following table sets forth net sales and operating income by geographic group for the periods presented, in millions of dollars:


	Three Fiscal Months Ended												Nine Fiscal Months Ended
	October 1,						September 30,						October 1,						September 30,
	2004						2003						2004						2003
	Amount			%			Amount			%			Amount			%			Amount			%
Net sales:
North America	$	327.7			67	%	$	272.4			71	%	$	987.8			67	%	$	793.3			70	%
International		161.6			33	%		110.1			29	%		497.6			33	%		339.8			30	%

Total net sales	$	489.3			100	%	$	382.5			100	%	$	1,485.4			100	%	$	1,133.1			100	%

Operating income (loss):
North America	$	6.3			27	%	$	1.2			9	%	$	10.2			20	%	$	8.1			19	%
International		17.0			73	%		12.9			91	%		41.2			80	%		34.4			81	%

Subtotal		23.3			100	%		14.1			100	%		51.4			100	%		42.5			100	%

Corporate and other operating items		(3.6	)					(0.6	)					(7.9	)					(1.7	)

Total operating income	$	19.7					$	13.5					$	43.5					$	40.8

More than 90% of international net sales are derived from energy and industrial & specialty cable sales. As a result, these businesses have not been significantly impacted by the global telecommunications spending downturn and the Company’s European business specifically is currently benefiting from a renewed focus on the energy cable infrastructure in Europe and a shift towards environmentally friendly cables.

General Cable’s reported net sales are directly influenced by the price of copper, and to a lesser extent, aluminum. The price of copper and aluminum has historically been subject to considerable volatility with the daily selling price of copper cathode on the COMEX averaging $1.29 per pound in the third quarter of 2004 and $0.80 per pound in the third quarter of 2003 and the daily price of aluminum rod averaging $0.85 per pound in the third quarter of 2004 and $0.68 per pound in the third quarter of 2003. In the first nine months of 2004 and 2003, copper cathode on the Comex averaged $1.25 per pound and $0.77 per pound, respectively. The daily price of aluminum averaged $0.83 per pound in the first nine months of 2004 and $0.67 per pound in the first nine months of 2003. General Cable generally passes changes in copper and aluminum prices along to its customers, although there are timing delays of varying lengths depending upon the volatility of metals prices, the type of product, competitive conditions and particular customer arrangements. A significant portion of the Company’s energy and communications business and, to a lesser extent, the Company’s industrial business has metal escalators written into customer contracts under a variety of price setting and recovery formulas. The remainder of the Company’s business requires that the cost of higher metal prices be recovered through negotiated price increases with customers. In these instances, the ability to increase the Company’s selling prices may lag the movement in metal prices by a period of time as the customer price increases are implemented. As a result of this and a number of other practices intended to match copper and aluminum purchases with sales, profitability over time has historically not been significantly affected by changes in copper and aluminum prices. General Cable does not engage in speculative metals trading or other speculative activities. Also, the Company does not engage in activities to hedge the underlying value of its copper and aluminum inventory.

The Company is also experiencing significant inflationary pressure on raw materials other than copper and aluminum used in cable manufacturing, such as insulating compounds, steel and wood reels, and higher energy costs. The Company has increased selling prices in most of its markets in order to offset the negative effect of increased raw material prices and other costs. However, the Company’s ability to ultimately realize these price increases will be influenced by competitive conditions in its markets, which includes underutilized manufacturing capacity. In addition, a continuing rise in raw material prices, when combined with the normal lag time between an announced customer price increase and its effective date in the market, may result in the Company not fully recovering these increased costs. If the Company was not able to adequately increase selling prices in a period of rising raw material costs, the Company would experience a decrease in reported earnings.

General Cable generally has experienced and expects to continue to experience certain seasonal trends in sales and cash flow. Larger amounts of cash are generally required during the first and second quarters of the year to build inventories in anticipation of higher demand during the spring and summer months, when construction activity increases. In general, receivables related to higher sales activity during the spring and summer months are collected during the fourth quarter of the year.

Current Business Environment

In North America, General Cable has been operating for some time in a difficult business environment. The wire and cable industry is competitive, mature and cost driven. In many business segments, there is little differentiation among industry participants from a manufacturing or technology standpoint. During 2004, the Company’s end markets have shown signs of recovery. There has been significant merger and acquisition activity which, we believe, may lead to a reduction in the deployment of inefficient, high cost capacity in the industry. In the energy segment, the 2003 power outages in the U.S., Canada and Europe emphasized a need to upgrade the power transmission infrastructure used by electric utilities, which may, over time, cause an increase in demand for General Cable’s energy products. In addition, tax legislation was recently passed in the United States which includes the renewal of tax credits for producing power from wind. This may also cause an increase in demand for the Company’s products as the Company is a significant manufacturer of wire and cable used in wind farms. In the industrial & specialty segment industrial construction spending in North America, which influences industrial cable demand, is significantly below the peak levels experienced over the last ten years. However, for the fourth consecutive quarter, the Company has seen strengthening demand which may indicate a turnaround in industrial construction spending in North America. This segment has also experienced increased demand for cables utilized in industrial repairs and maintenance and the automotive aftermarket. Over the last two years, the communications segment also has experienced a significant decline from historical spending levels for outside plant telecommunications products and a weak market for switching/local area networking cables. Demand for communications wire and cable products has improved over the last several quarters and the Company believes it will benefit from the consolidation of competitors which occurred early this year in the communications market. The Company anticipates, based on recent regulatory announcements, further deployment of fiber optic products into the telephone network. Increased spending by the telephone companies on fiber deployment may negatively impact their purchases of the Company’s copper based telecommunications cable products. However, this impact may be somewhat mitigated in that the Company believes it will benefit from the further investment in fiber broadband networks as its customers will most likely need to upgrade a portion of their copper network to support the fiber network. Additionally, the Company participates in the fiber cable market through a joint venture company.

General Cable believes its investment in Lean Six Sigma training, coupled with effectively utilized manufacturing assets, provides a cost advantage compared to many of its competitors and generates cost savings which help offset rising raw material prices and other general economic cost increases. In addition, General Cable’s customer and supplier integration capabilities, one-stop selling and geographic and product balance are sources of competitive advantage. As a result, the Company believes it is well positioned, relative to its competitors, in the current business environment.

As part of General Cable’s ongoing efforts to reduce total operating costs, the Company continuously evaluates its ability to more efficiently utilize existing manufacturing capacity. Such evaluation includes the costs associated with and benefits to be derived from the combination of existing manufacturing assets into fewer plant locations and the possible outsourcing of certain manufacturing processes. The Company previously announced the rationalization and refocusing of operations of certain of its industrial cable manufacturing plants which resulted in a $7.6 million charge in the fourth quarter of 2003 (of which approximately $1.3 million were cash payments) and a $6.7 million charge in the first nine months of 2004 (of which approximately $3.5 million were cash payments). Additional charges (currently estimated to be $3.8 million, of which approximately $3.6 million will be cash payments) are expected to be incurred in the fourth quarter of 2004 as the planned actions are completed. During the second quarter of 2004, the Company closed its rod mill operation and sold certain equipment utilized in that operation which resulted in a net gain of $0.6 million. Costs related to the disposition of this facility, which are being incurred in the second half of 2004, are expected to approximate the second quarter gain.

Acquisitions and Divestitures

General Cable actively seeks to identify key trends in the industry to migrate its business to capitalize on expanding markets and new niche markets or exit declining or non-strategic markets in order to achieve better returns. The Company also sets aggressive performance targets for its business and intends to refocus or divest those activities which fail to meet targets or do not fit long-term strategies.

49% to 40% and as a result the deferred gain was reduced to $4.8 million. The October 1, 2004 balance sheet included the $4.8 million deferred gain in other liabilities. Beginning in the first quarter of 2004 the Company has consolidated the joint venture company as a result of the adoption of FIN No. 46, as revised. For the first nine fiscal months of 2004, the joint venture had sales of $16.5 million and an operating loss and net loss of $1.1 million. At October 1, 2004, the joint venture had total assets of $11.1 million, total liabilities of $5.1 million and total equity of $6.0 million. Prior to the first quarter of 2004, the joint venture company was accounted for under the equity method of accounting. At December 31, 2003, other non-current assets included an investment in the joint venture of $3.5 million.

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. A summary of significant accounting policies is provided in Note 2 to the Consolidated Financial Statements. The application of these policies requires management to make estimates and judgments that affect the amounts reflected in the financial statements. Management based its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The critical judgments impacting the financial statements include determinations with respect to inventory valuation, pension accounting, the valuation allowance for deferred income taxes and revenue recognition.

Inventory Valuation

General Cable utilizes the LIFO method of inventory accounting for its metals inventory. The Company’s use of the LIFO method results in its income statement reflecting the current costs of metals, while metals inventories in the balance sheet are valued at historical costs as the LIFO layers were created. As a result of volatile copper prices, the replacement cost of the Company’s copper inventory exceeded the historic LIFO cost by approximately $34 million at October 1, 2004 and by approximately $13 million at December 31, 2003. If the Company was not able to recover the LIFO value of its inventory at a profit in some future period when replacement costs were lower than the LIFO value of the inventory, the Company would be required to take a charge to recognize in its income statement all or a portion of the higher LIFO value of the inventory. Additionally, if LIFO inventory quantities are reduced in a period when replacement costs are lower than the LIFO value of the inventory, the Company would experience a decline in reported earnings. Conversely, if LIFO inventory quantities are reduced in a period when replacement costs exceed the LIFO value of the inventory, the Company would experience an increase in reported earnings.

Pension Accounting

Pension expense for the defined benefit pension plans sponsored by General Cable is determined based upon a number of actuarial assumptions, including an expected long-term rate of return on assets of 8.5%. This assumption was based on input from actuaries, including their review of historical 10 year, 20 year, and 25 year rates of inflation and real rates of return on various broad equity and bond indices in conjunction with the diversification of the asset portfolio. The expected long-term rate of return on assets is based on an asset allocation assumption of 65% allocated to equity investments, with an expected real rate of return of 7%, and 35% to fixed-income investments, with an expected real rate of return of 3%, and an assumed long-term rate of inflation of 3.5%. Because of market fluctuations, the actual asset allocations as of October 1, 2004 and December 31, 2003 were 65% and 74%, respectively, of equity investments and 35% and 26%, respectively, of fixed-income investments. Management believes that long-term asset allocation on average will approximate the Company’s assumptions and that an 8.5% long-term rate of return is a reasonable assumption.

The determination of pension expense for the defined benefit pension plans is based on the fair market value of assets as of the measurement date. Investment gains and losses are recognized in the measurement of assets immediately. Such gains and losses will be amortized and recognized as part of the annual benefit cost to the extent that unrecognized net gains and losses from all sources exceed 10% of the greater of the projected benefit obligation or the market value of assets.

The determination of future pension obligations utilizes a discount rate based on a review of long-term bonds that receive one of the two highest ratings given by a recognized rating agency which are expected to be available during the period to maturity of the projected pension benefit obligations, and input from our actuaries. The discount rate used at December 31, 2003 was 6.0%.

General Cable evaluates its actuarial assumptions at least annually, and adjusts them as necessary. In 2003, pension expense for the Company’s defined benefit plans was $8.4 million. Based on an expected rate of return on plan assets of 8.5%, a discount rate of 6.0% and various other assumptions, the Company estimates its 2004 pension expense for its defined benefit

plans will decrease approximately $3 million from 2003, primarily due to improved investment performance during 2003. A 1% decrease in the assumed discount rate would increase pension expense by approximately $1.9 million. Future pension expense will depend on future investment performance, changes in future discount rates and various other factors related to the populations participating in the plans. In the event that actual results differ from the actuarial assumptions, the funded status of the defined benefit plans may change and any such change could result in a charge or credit to equity and an increase or decrease in future pension expense and cash contributions.

Deferred Income Tax Valuation Allowance

General Cable records a valuation allowance to reduce deferred tax assets to the amount that it believes is more likely than not to be realized. The valuation of the deferred tax asset is dependent on, among other things, the ability of the Company to generate a sufficient level of future taxable income. In estimating future taxable income, the Company has considered both positive and negative evidence, such as historical results of operations, including the losses realized in recent periods, and has considered the implementation of prudent and feasible tax planning strategies. Approximately $20 million of this deferred tax asset must be utilized prior to its expiration in the period 2006-2009. The remainder of the asset may be used for at least 15 years. This finite life has also been considered by the Company in the valuation of the asset. The Company has and will continue to review on a quarterly basis its assumptions and tax planning strategies and, if the amount of the estimated realizable net deferred tax asset is less than the amount currently on the balance sheet, the Company would reduce its deferred tax asset, recognizing a non-cash charge against reported earnings. At October 1, 2004, the Company had recorded a net deferred tax asset of $86.7 million ($10.1 million current and $76.6 million long term). At October 1, 2004, the Company concluded that, more likely than not, the net deferred tax asset will be realized.

Revenue Recognition

Revenue is recognized when goods are shipped to the customer, title and risk of loss are transferred, pricing is fixed or determinable and collectibility is reasonably assured. Most revenue transactions represent sales of inventory. A provision for payment discounts, product returns and customer rebates is recorded within the same period that the revenue is recognized. Given the nature of the Company’s business, revenue recognition practices do not contain estimates that materially affect results of operations.

New Accounting Standards

In January 2003, FIN No. 46, as revised, “Consolidation of Variable Interest Entities” was issued. FIN 46 is intended to achieve more consistent application of consolidation policies for variable interest entities. Application of FIN 46 is required in financial statements of public entities that have interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of entities is required in financial statements for periods ending after March 15, 2004. Accordingly, the Company has adopted FIN 46, which resulted in the consolidation of its fiber optic joint venture in the first quarter of 2004. The adoption of FIN 46 did not have a material effect on the Company’s financial position, results of operations or cash flows. See further discussion in Note 3 to Notes to Consolidated Financial Statements.

The Refinancing

On November 24, 2003, the Company completed a comprehensive refinancing of its existing bank debt which improved its capital structure and provided increased financial and operating flexibility by reducing leverage, increasing liquidity and extending debt maturities. The refinancing included the following: (i) a new senior secured revolving credit facility, (ii) the private placement of 7-year senior unsecured notes, (iii) the private placement of redeemable convertible preferred stock and (iv) a public offering of common stock. The Company applied the net proceeds from these refinancing transactions to repay all amounts outstanding under its former senior secured revolving credit facility, senior secured term loans and accounts receivable asset-backed securitization facility and to pay fees and expenses of approximately $23 million related to the refinancing. In the refinancing the Company raised $47.6 million through the sale of 5,807,500 shares of common stock at $8.20 per share (which included a 15% over-allotment option exercised on December 2, 2003) and $103.5 million through

the sale of 2,070,000 shares of redeemable convertible preferred stock at $50.00 per share (which included the exercise of an option to purchase additional shares of preferred stock). The preferred stock has an annual dividend rate of 5.75% and a conversion price of $10.004 per share. The refinancing also included $285.0 million of 7-year senior unsecured notes due 2010 and a $240.0 million secured revolving credit facility. The senior unsecured notes bear interest at a fixed rate of 9.5% while loans under the credit facility, as amended, bear interest at a rate of LIBOR plus 200 to 250 basis points, depending on the Company’s fixed charge coverage as defined by the Credit Agreement. See further discussion of the amendment to the credit facility on page 36.

Results of Operations

The following table sets forth, for the periods indicated, statement of operations data in millions of dollars and as a percentage of net sales. Percentages may not add due to rounding.


	Three Fiscal Months Ended												Nine Fiscal Months Ended
	October 1,						September 30,						October 1,						September 30,
	2004						2003						2004						2003
	Amount			%			Amount			%			Amount			%			Amount			%
Net sales	$	489.3			100.0	%	$	382.5			100.0	%	$	1,485.4			100.0	%	$	1,133.1			100.0	%
Cost of sales		430.5			88.0	%		337.1			88.1	%		1,326.0			89.3	%		998.7			88.1	%

Gross profit		58.8			12.0	%		45.4			11.9	%		159.4			10.7	%		134.4			11.9	%
Selling, general and administrative expenses		39.1			8.0	%		31.9			8.3	%		115.9			7.8	%		93.6			8.3	%

Operating income		19.7			4.0	%		13.5			3.5	%		43.5			2.9	%		40.8			3.6	%
Other expense		—			—			—			—			(0.9	)		(0.1	)%		—			—
Interest expense, net		(9.0	)		(1.8	)%		(10.3	)		(2.7	)%		(27.3	)		(1.8	)%		(32.8	)		(2.9	)%

Earnings before income taxes		10.7			2.2	%		3.2			0.8	%		15.3			1.0	%		8.0			0.7	%
Income tax provision		(3.3	)		(0.7	)%		(1.1	)		(0.3	)%		(4.6	)		(0.3	)%		(2.8	)		(0.2	)%

Net income		7.4			1.5	%		2.1			0.5	%		10.7			0.7	%		5.2			0.5	%
Less: preferred stock dividends		(1.5	)		(0.3	)%		—			—			(4.5	)		(0.3	)%		—			—

Net income applicable to common shareholders	$	5.9			1.2	%	$	2.1			0.5	%	$	6.2			0.4	%	$	5.2			0.5	%

Three Fiscal Months Ended October 1, 2004 Compared with Three Fiscal Months Ended September 30, 2003

The net income applicable to common shareholders was $5.9 million, or $0.15 on a per diluted share basis, in the third quarter of 2004 compared to net income applicable to common shareholders of $2.1 million, or $0.06 on a per diluted share basis, in the third quarter of 2003. The net income applicable to common shareholders for the third quarter of 2004 includes a $1.5 million dividend on preferred stock, a $1.5 million pre-tax charge related to the remediation of a former manufacturing facility, and pre-tax charges of $1.8 million and $0.3 million related to the rationalization of certain of the Company’s industrial cable manufacturing facilities and the closure of its rod mill operation, respectively. The net income applicable to common shareholders for the third quarter of 2003 includes a pre-tax charge of $0.8 million for the liquidation of LIFO inventories and a pre-tax charge of $0.6 million for severance related to the Company’s ongoing cost cutting efforts in Europe.

Net Sales

The following tables set forth metal-adjusted net sales and metal pounds sold by segment, in millions. Net sales for the third quarter of 2003 have been adjusted to reflect the 2004 copper COMEX average price of $1.29 (a $0.49 increase compared to the prior period) and the aluminum rod average price of $0.85 per pound (a $0.17 increase compared to the prior period).


	Metal-Adjusted Net Sales
	Three Fiscal Months Ended
	October 1, 2004					September 30, 2003
	Amount		%			Amount			%
Energy	$	169.3		34	%	$	153.1			35	%
Industrial & specialty		174.5		36	%		151.8			35	%
Communications		145.5		30	%		131.8			30	%

Total metal-adjusted net sales		489.3		100	%		436.7			100	%

Metal adjustment		—					(54.2	)

Total net sales	$	489.3				$	382.5

	Metal Pounds Sold
	Three Fiscal Months Ended
	October 1, 2004					September 30, 2003
	Pounds		%			Pounds			%
Energy		62.1		40	%		61.5			43	%
Industrial & specialty		53.8		35	%		47.4			34	%
Communications		39.7		25	%		32.8			23	%

Total metal pounds sold		155.6		100	%		141.7			100	%

Net sales increased 28% to $489.3 million in the third quarter of 2004 from $382.5 million in the third quarter of 2003. The net sales increase included a 3% increase, or $10.5 million, due to the favorable impact of foreign currency exchange rate changes. After adjusting 2003 net sales to reflect the $0.49 increase in the average monthly COMEX price per pound of copper and the $0.17 increase in the average aluminum rod price per pound in 2004, net sales increased 12% to $489.3 million, an increase from $436.7 million in 2003. The increase in metal-adjusted net sales reflect an 11% increase in the energy segment, a 15% increase in the industrial & specialty segment and a 10% increase in the communications segment. Metal pounds sold increased 10% compared to the third quarter of 2003. Metal pounds sold is provided herein as the Company believes this metric to be a good measure of sales volume since it is not impacted by metal prices or foreign currency exchange rate changes and the Company believes its product mix to be relatively constant quarter over quarter.

The 11% increase in metal-adjusted net sales for the energy segment reflects a 5% increase in net sales in North America and a 23% increase in net sales in the Company’s international operations. The North American net sales increase reflects improved sales volume as a result of strong demand from power utilities for primary and secondary distribution cables compared to the third quarter of 2003. The Company anticipates this favorable trend could accelerate if energy legislation in the United States aimed at improving the transmission grid infrastructure is passed. The increase in the Company’s international operations metal-adjusted net sales is due to strong demand for distribution cable, increased wind farm projects and a $3.7 million favorable impact from changes in foreign currency exchange rates.

The 15% increase in metal-adjusted net sales in the industrial & specialty segment reflects a 3% increase in North America and a 30% increase in the Company’s international operations. Net sales of the Company’s North American industrial business increased from the third quarter of 2003 due to continued improvement in demand for cables utilized in industrial construction. Additionally, this segment has benefited from growth in sales of industrial cables utilized in maintenance, repair and plant operations. The net sales of the Company’s international operations increased 30% compared to the third quarter of 2003 as a result of strong demand related to flexible zero-halogen cables in Europe, an area in which the Company’s European operation is a leader and to a lesser extent a $5.0 million favorable impact from changes in foreign currency exchange rates.

The 10% increase in the communications segment metal-adjusted net sales reflects an increase in all product groups. Metal-adjusted net sales of telephone exchange cable increased in the third quarter of 2004 compared to the third quarter of 2003 as the Company benefited from the consolidation of competitors in 2004. Net sales of LAN cables increased in the third quarter of 2004 compared to the third quarter of 2003. This represents the third consecutive quarter with improved LAN cable sales demand compared to the prior year period. Additionally, this segment experienced an increase in sales of electronics products resulting from sustained penetration into targeted niche markets and an increase in wire harness and assembly products.

Selling, General and Administrative Expense

Selling, general and administrative expense increased to $39.1 million in the third quarter of 2004 from $31.9 million in the third quarter of 2003. This increase includes increased variable selling costs as a result of higher sales volume, a $0.8 million impact of increased SG&A expense in our international operations as a result of foreign currency exchanges rate changes, a $0.4 million increase resulting from the consolidation of a joint venture company in 2004 (previously the joint venture company was accounted for under the equity method), $1.1 million related to the Company’s Sarbanes-Oxley compliance work, $1.5 million related to remediation costs associated with a former manufacturing facility, increased fringe benefit costs and $0.3 million of charges related to plant rationalizations.

Operating Income

The following table sets forth operating income by segment, in millions of dollars.


	Operating Income
	Three Fiscal Months Ended
	October 1, 2004						September 30, 2003
	Amount			%			Amount			%
Energy	$	10.8			47	%	$	11.6			82	%
Industrial & specialty		8.7			37	%		0.7			5	%
Communications		3.8			16	%		1.8			13	%

Subtotal excluding corporate charges		23.3			100	%		14.1			100	%

Corporate charges		(3.6	)					(0.6	)

Total operating income	$	19.7					$	13.5

Operating income of $19.7 million for the third quarter of 2004 increased from $13.5 million in the third quarter of 2003. The increase is primarily due to strong performance from the Company’s international operations, increased sales volume in all segments, ongoing cost cutting initiatives in manufacturing expenses and the favorable impact of foreign currency exchange rate changes. Offsetting these increases are increased raw material costs, $1.5 million of costs related to the remediation of a former manufacturing facility and charges of $2.1 million relating to the rationalization of certain industrial cable manufacturing facilities and the closure of the Company’s rod mill facility. Operating income for the third quarter of 2003 included a $0.8 million charge for the liquidation of LIFO inventory quantities and a $0.6 million charge for severance related to the Company’s cost cutting efforts in Europe.

Interest Expense

Net interest expense decreased to $9.0 million in the third quarter of 2004 from $10.3 million in the third quarter of 2003. The decrease in interest expense is the result of lower outstanding borrowings and interest costs under the Company’s new debt structure (see previous refinancing discussion) effective November 24, 2003, a lower credit spread under the Company’s new credit facility and a reduction in the amortization of bank fees relating to the new credit facility compared to the former credit facility.

Tax Provision

The Company’s effective tax rate for the third quarter of 2004 and 2003 was 30.8% and 35.5%, respectively. The effective tax rate for the third quarter of 2004 decreased due to differences in the relative profitability of business operations in various taxing jurisdictions, the utilization of net operating loss carryforwards in foreign tax jurisdictions for which a tax benefit had not been previously recognized, and the inherent volatility of the effective tax rate percentage at low pre-tax book income levels.

Preferred Stock Dividends

During the quarter, the Company accrued $1.5 million in dividends on its preferred stock.

Nine Fiscal Months Ended October 1, 2004 Compared with Nine Fiscal Months Ended September 30, 2003

The net income applicable to common shareholders was $6.2 million, or $0.16 on a per diluted share basis, in the first nine fiscal months of 2004 compared to net income applicable to common shareholders of $5.2 million in the first nine fiscal months of 2003. The net income applicable to common shareholders for the first nine fiscal months of 2004 includes a $4.5

million dividend on preferred stock, a $1.5 million pre-tax charge for remediation costs related to a former manufacturing facility, pre-tax charges of $6.7 million related to the rationalization of certain of the Company’s industrial cable manufacturing facilities, a pre-tax gain of $0.3 million related to the closure of the Company’s rod mill operation and a pre-tax $0.9 million foreign currency transaction loss. The net income applicable to common shareholders for the first nine fiscal months of 2003 includes a pre-tax charge of $1.7 million for severance related to the Company’s ongoing cost cutting efforts in Europe and a pre-tax charge of $0.8 million for the liquidation of LIFO inventory quantities.

Net Sales

The following tables set forth metal-adjusted net sales and metal pounds sold by segment, in millions. Net sales for the first nine fiscal months of 2003 have been adjusted to reflect the 2004 copper COMEX average price of $1.25 (a $0.48 increase compared to the prior period) and the aluminum rod average price of $0.83 per pound (a $0.15 increase compared to the prior period).


	Metal-Adjusted Net Sales
	Nine Fiscal Months Ended
	October 1, 2004					September 30, 2003
	Amount		%			Amount			%
Energy	$	520.4		35	%	$	458.8			35	%
Industrial & specialty		561.6		38	%		465.7			36	%
Communications		403.4		27	%		369.1			29	%

Total metal-adjusted net sales		1,485.4		100	%		1,293.6			100	%

Metal adjustment		—					(160.5	)

Total net sales	$	1,485.4				$	1,133.1

	Metal Pounds Sold
	Nine Fiscal Months Ended
	October 1, 2004					September 30, 2003
	Pounds		%			Pounds			%
Energy		208.4		42	%		192.1			45	%
Industrial & specialty		178.4		36	%		145.7			34	%
Communications		110.2		22	%		92.1			21	%

Total metal pounds sold		497.0		100	%		429.9			100	%

Net sales increased 31% to $1,485.4 million in the first nine fiscal months of 2004 from $1,133.1 million in the first nine fiscal months of 2003. The net sales increase included a 4% increase, or $43.4 million, due to the favorable impact of foreign currency exchange rate changes. After adjusting 2003 net sales to reflect the $0.48 increase in the average monthly COMEX price per pound of copper and the $0.15 increase in the average aluminum rod price per pound in 2004, net sales increased 15% to $1,485.4 million, up from $1,293.6 million in 2003. The increase in metal-adjusted net sales reflects a 13% increase in the energy segment, a 21% increase in the industrial & specialty segment and a 9% increase in the communications segment. Metal pounds sold increased 16% compared to the first nine months of 2003. Metal pounds sold is provided herein as the Company believes this metric to be a good measure of sales volume since it is not impacted by metal prices or foreign currency exchange rate changes and the Company believes its product mix to be relatively constant year over year.

The 13% increase in metal-adjusted net sales for the energy segment reflects a 9% increase in net sales in North America and a 23% increase in net sales in the Company’s international operations. The North American net sales reflect an increase in demand from power utilities for primary and secondary distribution cables compared to the first nine fiscal months of 2003 and a $5.9 million favorable impact from changes in foreign currency exchange rates. The Company anticipates demand could accelerate if energy legislation in the United States aimed at improving the transmission grid infrastructure is passed. The North American sales volume increase also reflects the fact that sales volume in the first nine months of 2003 was negatively impacted by unseasonable weather in the Midwest and Northeast, which affected the ability of the Company’s customers to install cables. The Company’s international operations have benefited from increased demand for distribution cables in addition to a $13.2 million favorable impact from changes in foreign currency exchange rates.

The 21% increase in metal-adjusted net sales in the industrial & specialty segment reflects a 30% increase in the Company’s international operations and a 13% increase in North America. Net sales of the North American industrial business for the first nine fiscal months of 2004 increased compared to the same period last year. The Company believes the continued

improvement in sales volume indicates a recovery in the end markets for these cables. Additionally, this segment has benefited from growth in its domestic automotive aftermarket wire set business and an increase in sales of industrial cables utilized in maintenance, repair and plant operations. The net sales of the Company’s international operations increased 30% which reflects strong demand related to its flexible zero-halogen cables in Europe, an area in which the European operation is a leader and a $20.2 million favorable impact from changes in foreign currency exchange rates.

The 9% increase in the communications segment metal-adjusted net sales reflects an increase in all businesses. Metal-adjusted net sales of telephone exchange cable increased in the first nine fiscal months of 2004 compared to the first nine fiscal months of 2003 as the Company benefited from the consolidation of competitors in 2004. The sales volume in data communication cables, primarily LAN cables, increased in the first nine fiscal months of 2004 compared to the first nine fiscal months of 2003, but continues to experience competitive price pressure. Additionally this segment experienced an increase in sales of electronics products resulting from sustained penetration into targeted niche markets and an increase in sales of wire harness and assembly products.

Selling, General and Administrative Expense

Selling, general and administrative expense increased to $115.9 million in the first nine fiscal months of 2004 from $93.6 million in the first nine fiscal months of 2003. This increase includes increased variable selling costs as a result of higher sales volume, a $3.2 million impact of increased SG&A expense in our international operations as a result of foreign currency exchange rate changes, a $2.1 million increase resulting from the consolidation of a joint venture company beginning in the first quarter of 2004 (previously the joint venture company was accounted for under the equity method), $1.9 million related to the Company’s Sarbanes-Oxley compliance work, $1.5 million related to remediation costs associated with a former manufacturing facility, increased fringe benefit costs and $0.7 million of corporate charges related to plant rationalizations.

Operating Income

The following table sets forth operating income by segment, in millions of dollars.


	Operating Income
	Nine Fiscal Months Ended
	October 1, 2004						September 30, 2003
	Amount			%			Amount			%
Energy	$	28.2			55	%	$	29.4			69	%
Industrial & specialty		18.2			35	%		7.8			18	%
Communications		5.0			10	%		5.3			13	%

Subtotal excluding corporate charges		51.4			100	%		42.5			100	%

Corporate charges		(7.9	)					(1.7	)

Total operating income	$	43.5					$	40.8

Operating income of $43.5 million for the first nine fiscal months of 2004 increased from $40.8 million in the first nine fiscal months of 2003. The increase was primarily the result of strong performance from the Company’s international operations, increased sales volume in all segments, ongoing cost cutting initiatives in manufacturing expenses and the favorable impact of foreign currency exchange rate changes. These increases were partially offset by increased raw material costs (both metal and non-metal) which were not fully recovered through customer price increases, $1.5 million of costs related to the remediation of a former manufacturing facility, and net corporate charges of $6.4 million relating to the rationalization of certain industrial cable manufacturing facilities and the closure of the Company’s rod mill operation.

Other Expense

Other expense of $0.9 million in the first nine months of 2004 includes foreign currency transaction losses which resulted from changes in exchange rates between the designated functional currency and the currency in which the transaction is denominated.

Interest Expense

Net interest expense decreased to $27.3 million in the first nine fiscal months of 2004 from $32.8 million in the first nine fiscal months of 2003. The decrease in interest expense is the result of lower outstanding borrowings and interest costs under the Company’s new debt structure (see previous refinancing discussion) effective November 24, 2003, a lower credit spread

under the Company’s new credit facility and a reduction in the amortization of bank fees relating to the new credit facility compared to the former credit facility.

Tax Provision

The Company’s effective tax rate for the first nine fiscal months of 2004 and 2003 was 30.0% and 35.5%, respectively. The effective tax rate for the first nine fiscal months of 2004 decreased due to differences in the relative profitability of business operations in various taxing jurisdictions, the utilization of net operating loss carryforwards in foreign tax jurisdictions for which a tax benefit had not been previously recognized, and the inherent volatility of the effective tax rate percentage at low pre-tax book income levels.

Preferred Stock Dividends

During the first nine fiscal months of 2004, the Company accrued $4.5 million in dividends on its preferred stock.

Liquidity and Capital Resources

In general, General Cable requires cash for working capital, capital expenditures, debt repayment, salaries and related benefits, interest, preferred dividends and taxes. General Cable’s working capital requirement increases when it experiences strong incremental demand for products and/or significant copper and aluminum price increases. Based upon historical experience and the expected availability of funds under the new credit facility, the Company believes its sources of liquidity will be sufficient to enable it to meet the Company’s cash requirements for working capital, capital expenditures, debt repayment, salaries and related benefits, interest and taxes for at least the next twelve months.

General Cable Corporation is a holding company with no operations of its own. All of the Company’s operations are conducted, and net sales are generated, by its subsidiaries and investments. Accordingly, the Company’s cash flow depends on the cash flows of its operations, in particular, the North American operations upon which it has historically depended the most. However, the Company’s ability to use cash flow from its international operations, if necessary, will likely be adversely affected by limitations on the Company’s ability to repatriate such earnings tax efficiently.

Cash flow provided by operating activities in the first nine fiscal months of 2004 was $20.7 million. This reflects an increase in accounts payable, accrued and other liabilities of $99.7 million and net income before depreciation and amortization, foreign currency exchange loss, deferred income taxes and gain on the disposal of property of $28.6 million. The increase in accounts payable, accrued and other liabilities is primarily due to an increase in accounts payable which reflects greater manufacturing activity by the Company and the increase in metals costs during the first nine months as compared to the fourth quarter of 2003. These positive cash flows were largely offset by a $94.1 million increase in accounts receivable, a $12.6 million increase in inventories and a $0.9 million increase in prepaid and other assets. The increase in accounts receivable reflects improved sales volume experienced in the first nine months of 2004 as a result of improving demand in the Company’s end markets as well as increased pricing in response to increased metals costs. Inventory has increased as a result of the Company’s need to service the improving demand in its end markets. However, inventory turnover for the total Company improved by slightly less than one turn compared to the same period in 2003 due to the Company’s focus on supply chain management, application of Lean principles and increasing integration with its customers. The following table sets forth net cash provided by (used by) operating activities by geographic region for the following periods (in millions):


	Nine Fiscal Months Ended
	October 1, 2004			September 30, 2003
North America	$	(19.3	)	$	54.7
International		40.0			3.5

Total	$	20.7		$	58.2

Cash flow used by investing activities was $22.1 million in the first nine fiscal months of 2004, principally reflecting $24.1 million of capital expenditures. The Company anticipates capital spending to be approximately $35 million in 2004. Additionally, the Company received proceeds of $2.4 from the sale of property, primarily equipment from the Company’s closed facilities.

Cash flow provided by financing activities in the first nine fiscal months of 2004 was $8.0 million. This reflects an increase in borrowings under the Company’s new revolving credit facility of $13.8 million, which was due in part to the higher working capital requirements discussed above as a result of improving demand in the Company’s end markets as well as the increase in metal prices during the first nine months of 2004. In addition, the Company received $0.4 million in partial

payment of loans from shareholders and $0.2 million in proceeds from the exercise of stock options. This source of cash was partially offset by the payment of preferred stock dividends of $4.5 million and the $1.9 million repayment of other debt.

The Company’s new senior secured revolving credit facility, as amended, provides for up to $240.0 million in borrowings, including a $50.0 million sublimit for the issuance of commercial and standby letters of credit and a $20.0 million sublimit for swingline loans. Advances under the credit facility are limited to a borrowing base computed using defined advance rates for eligible accounts receivable, inventory, equipment and owned real estate properties. The fixed asset component of the borrowing base is subject to scheduled reductions. At October 1, 2004, the Company had undrawn availability of $147.4 million under the new credit facility.

Indebtedness under the credit facility is guaranteed by the Company’s North American subsidiaries and is secured by a first priority security interest in tangible and intangible property and assets of the Company’s North American subsidiaries. Loans under the credit facility bear interest at the Company’s option, equal to either an alternate base rate or an adjusted LIBOR rate plus an applicable margin percentage. The applicable margin percentage is subject to adjustments based upon the consolidated fixed charge coverage ratio, as defined.

The Company pays fees in connection with the issuance of letters of credit and a commitment fee equal to 50 basis points per annum on any unused commitments under the credit facility. Both fees are payable quarterly.

The credit facility requires that the Company comply with certain financial covenants, including a quarterly minimum fixed charge coverage ratio test and an annual maximum capital expenditures level. In addition, the senior secured revolving credit facility and the indenture governing the senior unsecured notes include negative covenants which restrict certain acts, including the payment of dividends to holders of common stock. However, the Company will be permitted to declare and pay dividends or distributions on the convertible preferred stock so long as there is no default under the senior secured revolving credit facility and the Company meets certain financial conditions.

The Company’s European operations participate in arrangements with several European financial institutions who provide extended accounts payable terms to the Company on an uncommitted basis. In general, the arrangements provide for accounts payable terms of up to 180 days. At October 1, 2004, the arrangements had a maximum availability limit of the equivalent of approximately $111 million, of which approximately $91 million was drawn. Should the availability under these arrangements be reduced or terminated, the Company would be required to negotiate longer payment terms or repay the outstanding obligations with suppliers under this arrangement over 180 days and seek alternative financing arrangements which could increase the Company’s interest expense. The Company also has an approximate $25 million uncommitted facility in Europe, which allows the Company to sell at a discount, with limited recourse, a portion of its accounts receivable to a financial institution. At October 1, 2004, this accounts receivable facility was not drawn upon.

During the fourth quarter of 2002, as a result of declining returns in the investment portfolio of the Company’s defined benefit pension plan, the Company was required to record a minimum pension liability equal to the underfunded status of its plan. At December 31, 2002, the Company recorded an after-tax charge of $29.2 million to accumulated other comprehensive income in the equity section of its balance sheet. During 2003, the investment portfolio experienced improved performance and as a result, the Company was able to reduce the after tax charge to accumulated other comprehensive income by $7.3 million. In 2004, pension expense is expected to decrease approximately $3 million from 2003, principally due to improved investment performance during 2003 and cash contributions are expected to increase approximately $6 million from 2003.

As part of General Cable’s ongoing efforts to reduce total operating costs, the Company continuously evaluates its ability to more efficiently utilize existing manufacturing capacity. Such evaluation includes the costs associated with and benefits to be derived from the combination of existing manufacturing assets into fewer plant locations and the possible outsourcing of certain manufacturing processes. The Company previously announced the rationalization and refocusing of operations of certain of its industrial cable manufacturing plants which resulted in a $7.6 million charge in the fourth quarter of 2003 (of which approximately $1.3 million were cash payments) and a $6.7 million charge in the first nine fiscal months of 2004 (of which approximately $3.5 million were cash payments). Additional charges (currently estimated to be $3.8 million, of which approximately $3.6 million will be cash payments) will be incurred during the fourth quarter of 2004 as the planned actions are completed. During the second quarter of 2004, the Company closed its rod mill operation and sold most of the equipment utilized in that operation for proceeds of $1.0 million. These proceeds were partially by a $0.7 million charge related to the closing of the rod mill. Additional costs related to the disposition of this facility, which are expected to be incurred in the fourth quarter of 2004, are currently estimated to be $0.3 million.

Summarized information about the Company’s contractual obligations and commercial commitments as of October 1, 2004 is as follows (in millions of dollars):


	Payments Due by Period
			Less than		1-3		4-5		After 5
	Total		1 Year		Years		Years		Years
Contractual obligations:
Long-term debt	$	353.2	$	1.5	$	0.4	$	57.1	$	294.2
Operating leases		16.0		6.1		7.1		2.8		—
Commodity futures and forward pricing agreements		107.0		106.5		0.5		—		—
Foreign currency contracts		29.3		29.3		—		—		—
Total	$	505.5	$	143.4	$	8.0	$	59.9	$	294.2

The Company will be required to make future cash contributions to its defined benefit pension plans. The estimate for these contributions is approximately $12 million during 2004 and approximately $6 million during 2005. Estimates of cash contributions to be made after 2005 are difficult to make due to the number of variable factors which impact the calculation of defined benefit pension plan contributions. General Cable will also be required to make interest payments on its debt. The Company’s senior unsecured notes require interest payments of $27.1 million a year, beginning in 2004 through 2010. The interest payments to be made on the Company’s revolving loans and other debt are based on variable interest rates and the amount of the borrowings under the revolving credit facility depend upon the Company’s working capital requirements. The Company’s preferred stock dividends are payable in cash or common stock or a combination thereof, in the amount of $6.0 million a year, from 2004 through 2013.

The Company anticipates being able to meet its obligations as they come due based on historical experience and the expected availability of funds under its credit facility.

Off Balance Sheet Assets and Obligations

As part of the BICC plc acquisition, BICC agreed to indemnify General Cable against environmental liabilities existing at the date of the closing of the purchase of the business. In the sale of the businesses to Pirelli, General Cable generally indemnified Pirelli against any environmental liabilities on the same basis as BICC plc indemnified the Company in the earlier acquisition. However, the indemnity the Company received from BICC plc related to the European business sold to Pirelli terminated upon the sale of those businesses to Pirelli. In addition, General Cable has agreed to indemnify Pirelli against any warranty claims relating to the prior operation of the business. General Cable agreed to indemnify Raychem HTS Canada, Inc., a business division of Tyco International, Ltd. for certain environmental liabilities existing at the date of the closing of the sale of the Company’s former Pyrotenax business. General Cable has also agreed to indemnify Southwire Company against certain liabilities arising out of the operation of the business sold to Southwire prior to its sale.

Item 3. Quantitative and Qualitative disclosures about Market Risk

The notional amounts and fair values of these financial instruments at October 1, 2004 and December 31, 2003 are shown below (in millions). The carrying amount of the financial instruments was a net asset of $3.6 million at October 1, 2004 and a liability of $1.4 million at December 31, 2003.


	October 1, 2004					December 31, 2003
	Notional		Fair			Notional		Fair
	Amount		Value			Amount		Value
Interest rate swap	$	9.0	$	(0.7	)	$	9.0	$	(0.7	)
Foreign currency forward exchange		29.3		0.1			38.4		(0.8	)
Commodity futures		41.1		4.2			13.6		0.1

			$	3.6				$	(1.4	)

Item 4. Controls and Procedures

The Company periodically reviews the design and effectiveness of its disclosure controls and internal control over financial reporting. The Company makes modifications to improve the design and effectiveness of its disclosure controls and internal control structure, and may take other corrective action, if its reviews identify a need for such modifications or actions.

The Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), does not expect that its disclosure controls and procedures or its internal controls and procedures for financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgements in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

An evaluation was carried out under the supervision and with the participation of the Company’s management, including the CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, the CEO and CFO have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that material information required to be disclosed in reports that are filed or submitted under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported on a timely basis as provided in the Securities and Exchange Commission rules and forms. There have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that management document and test the internal controls over financial reporting and assert in the Company’s Annual Report on Form 10-K for the year ending December 31, 2004, whether the internal controls over financial reporting at December 31, 2004 are effective. The Company has substantially completed the documentation phase of the project and is currently testing the documented internal controls and evaluating the deficiencies in the design and operational effectiveness of such internal controls that have been identified to date. Management currently believes that it will complete the project and be able to assert in the Annual Report on Form 10-K for the year ending December 31, 2004, that its internal controls over financial reporting at December 31, 2004, are effective. However, significant testing and remediation remain to be completed between now and year end and it is possible that one or more material weaknesses may be identified prior to completion of this project.


	PAGE
PART I Financial Information
Item 1. Consolidated Financial Statements
Statements of Operations - For the three fiscal months and nine fiscal months ended October 1, 2004 and September 30, 2003		3
Balance Sheets - October 1, 2004 and December 31, 2003		4
Statements of Cash Flows - For the nine fiscal months ended October 1, 2004 and September 30, 2003		5
Statements of Changes in Shareholders’ Equity - For the nine fiscal months ended October 1, 2004 and September 30, 2003		6
Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
Item 3. Quantitative and Qualitative Disclosures about Market Risk		37
Item 4. Controls and Procedures		38
PART II Other Information
Item 6. Exhibits		39
Signature		40
EX-10.67
EX-10.68
EX-10.69
EX-12.1
EX-31.1
EX-31.2
EX-32.1

	10.67		Form of Grant Agreement pursuant to the General Cable Corporation 1997 Stock Incentive Plan.

	10.68		Form of Grant Agreement pursuant to the General Cable Corporation 2000 Stock Option Plan.

	10.69		Amended and restated Credit Agreement dated October 22, 2004, between the Company and Merrill Lynch Capital as collateral and syndication agent, UBS AG as Administrative Agent and the lenders signatory thereto.

	12.1		Computation of Ratio of Earnings to Fixed Charges

	31.1		Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) or 15a – 14(a)

	31.2		Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) or 15d – 14(a)

	32.1		Certification pursuant to 18 U.S.C. Section 1350


	General Cable Corporation
Signed: November 5, 2004	By:	/s/ CHRISTOPHER F. VIRGULAK
		Christopher F. Virgulak
		Executive Vice President, Chief Financial Officer and Treasurer (Chief Accounting Officer)

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	Statements of Operations
	Three Fiscal Months Ended September 30, 2003
				Guarantor			Non-Guarantor
	Issuer			Subsidiaries			Subsidiaries			Eliminations			Total
Net sales:
Customers	$	—		$	272.4		$	110.1		$	—		$	382.5
Intercompany		6.7			—			—			(6.7	)		—

		6.7			272.4			110.1			(6.7	)		382.5
Cost of sales		—			254.7			89.1			(6.7	)		337.1

Gross profit		6.7			17.7			21.0			—			45.4
Selling, general and administrative expenses		4.5			18.7			8.7			—			31.9

Operating income		2.2			(1.0	)		12.3			—			13.5
Interest income (expense):
Interest expense		(9.4	)		(16.5	)		(1.0	)		16.5			(10.4	)
Interest income		11.1			5.5			—			(16.5	)		0.1

		1.7			(11.0	)		(1.0	)		—			(10.3	)
Earnings (loss) before income taxes		3.9			(12.0	)		11.3			—			3.2
Income tax (provision) benefit		(1.4	)		4.3			(4.0	)		—			(1.1	)

Net income (loss)	$	2.5		$	(7.7	)	$	7.3		$	—		$	2.1

	•		General – a general description of the Company’s business, financial information by geographic regions, raw material price volatility and seasonal trends.

	•		Current Business Environment – the Company’s perspective on the challenges it faces and its relative competitive advantage.

	•		Acquisitions and Divestitures – a brief history of acquisitions and divestitures as they relate to the financial statements presented.

	•		Critical Accounting Estimates – a discussion of the accounting policies that require critical judgments and estimates.

	•		The Refinancing – a description of the comprehensive refinancing in the fourth quarter of 2003.

	•		Results of Operations – an analysis of the Company’s results of operations for the financial statement periods presented.

	•		Liquidity and Capital Resources – an analysis of cash flows, sources and uses of cash.