UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     .

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		41076-9753
Highland Heights, KY		(Zip Code)
(Address of principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

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 May 1, 2006
Common Stock, $0.01 per value			50,544,232

 

 

GENERAL CABLE CORPORATION AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT
ON FORM 10-Q

		PAGE
PART I Financial Information
Item 1. Condensed Consolidated Financial Statements
Statements of Operations - For the three fiscal months ended March 31, 2006 and April 1, 2005			3
Balance Sheets - March 31, 2006 and December 31, 2005			4
Statements of Cash Flows - For the three fiscal months ended March 31, 2006 and April 1, 2005			5
Statements of Changes in Shareholders’ Equity - For the three fiscal months ended March 31, 2006 and April 1, 2005			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3. Quantitative and Qualitative Disclosures about Market Risk			47
Item 4. Controls and Procedures			47
PART II Other Information
Item 1A. Risk Factors			48
Item 6. Exhibits			48
Signature			49
Index to Exhibits			50
EX-12.1
EX-31.1
EX-31.2
EX-32.1

GENERAL CABLE CORPORATION AND SUBSIDIARIES

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

(unaudited)

		Three Fiscal Months Ended
		March 31,				April 1,
		2006				2005
Net sales		$	804.3			$	554.2
Cost of sales			706.7				486.8
Gross profit			97.6				67.4
Selling, general and administrative expenses			55.4				43.2
Operating income			42.2				24.2
Other income (expense)			0.8				(0.1	)
Interest income (expense):
Interest expense			(10.1	)			(10.3	)
Interest income			0.5				0.4
			(9.6	)			(9.9	)
Income before income taxes			33.4				14.2
Income tax provision			(12.0	)			(5.2	)
Net income			21.4				9.0
Less: preferred stock dividends			(0.1	)			(1.5	)
Net income applicable to common shareholders		$	21.3			$	7.5
Earnings per share
Earnings per common share		$	0.43			$	0.19
Weighted average common shares			50.0				39.2
Earnings per common share-assuming dilution		$	0.41			$	0.18
Weighted average common shares-assuming dilution			51.6				50.7

See accompanying Notes to Condensed Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets
(in millions, except share data)

		March 31,				December 31,
		2006				2005
		(unaudited)
Assets
Current Assets:
Cash		$	63.0			$	72.2
Receivables, net of allowances of $10.8 million at March 31, 2006 and $8.6 million at December 31, 2005			633.6				542.9
Inventories			389.0				363.9
Deferred income taxes			41.9				41.9
Prepaid expenses and other			46.6				48.6
Total current assets			1,174.1				1,069.5
Property, plant and equipment, net			367.9				366.4
Deferred income taxes			52.5				52.5
Other non-current assets			35.5				34.8
Total assets		$	1,630.0			$	1,523.2
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable		$	538.1			$	472.3
Accrued liabilities			189.3				212.2
Current portion of long-term debt			7.1				6.4
Total current liabilities			734.5				690.9
Long-term debt			465.2				445.2
Deferred income taxes			12.9				13.4
Other liabilities			88.7				80.4
Total liabilities			1,301.3				1,229.9
Shareholders’ Equity:
Redeemable convertible preferred stock, at redemption value (liquidation preference of $50.00 per share): March 31, 2006 – 101,949 outstanding shares December 31, 2005 – 129,916 outstanding shares			5.1				6.5
Common stock, $0.01 par value, issued and outstanding shares: March 31, 2006 – 50,425,943 (net of 4,991,105 treasury shares) December 31, 2005 – 49,520,209 (net of 4,968,755 treasury shares)			0.5				0.5
Additional paid-in capital			253.2				246.3
Treasury stock			(52.7	)			(52.2	)
Retained earnings			125.1				103.8
Accumulated other comprehensive loss			(2.5	)			(6.8	)
Other shareholders’ equity			—				(4.8	)
Total shareholders’ equity			328.7				293.3
Total liabilities and shareholders’ equity		$	1,630.0			$	1,523.2

See accompanying Notes to Condensed Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows
(in millions, unaudited)

		Three Fiscal Months Ended
		March 31,				April 1,
		2006				2005
Cash flows of operating activities:
Net income		$	21.4			$	9.0
Adjustments to reconcile net income to net cash flows of operating activities:
Depreciation and amortization			12.5				9.0
Foreign currency exchange (gain) loss			(0.8	)			0.1
Deferred income taxes			2.7				(1.1	)
Loss on disposal of property			0.7				0.3
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Increase in receivables			(86.4	)			(30.3	)
Increase in inventories			(15.7	)			(24.3	)
Decrease in other assets			3.2				13.1
Increase in accounts payable, accrued and other liabilities			32.2				19.1
Net cash flows of operating activities			(30.2	)			(5.1	)
Cash flows of investing activities:
Capital expenditures			(8.0	)			(7.2	)
Proceeds from properties sold			0.4				—
Acquisitions, net of cash acquired			—				(7.5	)
Other, net			(0.8	)			(0.3	)
Net cash flows of investing activities			(8.4	)			(15.0	)
Cash flows of financing activities:
Preferred stock dividends paid			(0.1	)			(1.5	)
Excess tax benefits from stock-based compensation			3.3				—
Net change in revolving credit borrowings			19.2				20.1
Proceeds of other debt			0.6				1.0
Proceeds from exercise of stock options			6.1				0.2
Net cash flows of financing activities			29.1				19.8
Effect of exchange rate changes on cash			0.3				(1.6	)
Decrease in cash			(9.2	)			(1.9	)
Cash – beginning of period			72.2				36.4
Cash – end of period		$	63.0			$	34.5
Supplemental Information
Cash paid during the period for:
Income tax payments, net of refunds		$	5.8			$	(2.8	)
Interest paid		$	3.1			$	2.4
Non-cash investing and financing activities:
Issuance of nonvested shares		$	5.3			$	1.5
Entrance into capital leases		$	0.1			$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

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

																														Accumulated
																		Add’l												Other				Other
		Preferred Stock								Common Stock								Paid in				Treasury				Retained				Comprehensive				Shareholders’
		Shares				Amount				Shares				Amount				Capital				Stock				Earnings				Income/ (Loss)				Equity				Total
Balance, December 31, 2004			2,070			$	103.5				39,336			$	0.4			$	144.1			$	(51.0	)		$	86.4			$	22.4			$	(4.4	)		$	301.4
Comprehensive income:
Net income																											9.0												9.0
Foreign currency translation adjustment																															(8.4	)							(8.4	)
Unrealized investment loss																															(0.4	)							(0.4	)
Gain on change in fair value of financial instruments, net of $0.4 tax expense																															0.6								0.6
Comprehensive income																																							0.8
Preferred stock dividend																											(1.5	)											(1.5	)
Issuance of nonvested shares											129								1.5																(1.5	)			—
Exercise of stock options											23								0.2																				0.2
Amortization of nonvested shares																																			0.2				0.2
Other			—				—				10				—				0.2				—				0.5				—				(0.1	)			0.6
Balance, April 1, 2005			2,070			$	103.5				39,498			$	0.4			$	146.0			$	(51.0	)		$	94.4			$	14.2			$	(5.8	)		$	301.7
Balance, December 31, 2005			130			$	6.5				49,520			$	0.5			$	246.3			$	(52.2	)		$	103.8			$	(6.8	)		$	(4.8	)		$	293.3
Comprehensive income:
Net income																											21.4												21.4
Foreign currency translation adjustment																															(0.2	)							(0.2	)
Unrealized investment gain																															1.6								1.6
Gain on change in fair value of financial instruments, net of $1.7 tax expense																															2.9								2.9
Comprehensive income																																							25.7
Preferred stock dividend																											(0.1	)											(0.1	)
Reclass of unearned stock compensation																			(4.8	)															4.8				—
Issuance of nonvested shares											213																												—
Stock option expense																			0.2																				0.2
Exercise of stock options											564								6.1																				6.1
Treasury shares related to nonvested stock vesting											(22	)											(0.5	)															(0.5	)
Amortization of nonvested shares																			0.6																				0.6
Excess tax benefits from stock-based compensation																			3.3																				3.3
Conversion of preferred stock			(28	)			(1.4	)			140								1.4																				—
Other											11								0.1																				0.1
Balance, March 31, 2006			102			$	5.1				50,426			$	0.5			$	253.2			$	(52.7	)		$	125.1			$	(2.5	)		$	—			$	328.7

See accompanying Notes to Condensed Consolidated Financial Statements.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed 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 March 31, 2006, General Cable operated 28 manufacturing facilities in eleven 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 condensed consolidated financial statements include the accounts of General Cable Corporation and its wholly-owned subsidiaries. Investments in 50% or less owned joint ventures in which the Company has the ability to exercise significant influence are accounted for under the equity method of accounting. The Company adopted FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities,” which resulted in the consolidation of its fiber optic joint venture in the first quarter of 2004. In the fourth quarter of 2004, the Company unwound the joint venture and as of December 31, 2004, owned 100% of the business and in 2005 merged the entity into its principal U.S. operating subsidiary. All intercompany transactions and balances among the consolidated companies have been eliminated.

Basis of Presentation

The accompanying unaudited condensed 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 fiscal months ended March 31, 2006, are not necessarily indicative of results that may be expected for the full year. The December 31, 2005, consolidated balance sheet amounts are derived from the audited financial statements but do not include all disclosures herein required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the audited financial statements and notes thereto in General Cable’s 2005 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2006. The Company’s fiscal year end is December 31. The Company’s fiscal quarters consist of a 13-week period ending on the Friday nearest to the end of the calendar months of March, June and September.

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. These estimates are based on historical experience and information that is available to management about current events and actions the Company may take in the future. Significant items subject to estimates and assumptions include valuation allowances for sales incentives, accounts receivable, inventory and deferred income taxes; legal, environmental, asbestos and customer reel deposit liabilities; assets and obligations related to pension and other post-retirement benefits; business combination accounting and related purchase accounting valuations; and self insured workers compensation and health insurance reserves. There can be no assurance that actual results will not differ from these estimates.

Revenue Recognition

The majority of the Company’s 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 estimated based upon historical experience and other relevant factors and is recorded within the same period that the revenue is recognized. The Company also has revenue arrangements with multiple deliverables where the multiple deliverables are divided into separate units of accounting when the delivered items have value on a standalone basis, there is objective and reliable evidence of undelivered items and the general right of return is substantially in the control of the Company. Revenue arrangements of this type are

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

generally contracts where the Company is hired to both produce and install a certain product. Revenue is recognized for the product upon title transfer to the customer but revenue recognition on installation is deferred until installation is complete.

Stock-Based Compensation

General Cable has various plans which provide for granting options and common stock to certain employees and independent directors of the Company and its subsidiaries. Prior to the first quarter of 2006, the Company accounted for compensation expense related to such transactions using the “intrinsic value” based method under the provisions of Accounting Principles Board (“APB”) Opinion No. 25 and its related interpretations and therefore recognized no compensation cost for stock options. On January 1, 2006, the Company adopted SFAS 123 (Revised 2004), “Share-Based Payment” (“SFAS 123(R)”) under the modified prospective transition method, and therefore, prior periods have not been retrospectively adjusted to include prior period compensation expense. The Company has applied SFAS 123(R) to new awards and to awards modified, repurchased or cancelled after January 1, 2006. Additionally, compensation cost for the portion of the awards for which the requisite service had not been rendered, that were outstanding as of January 1, 2006, is being recognized as the requisite service is rendered on or after January 1, 2006 (generally over the remaining vesting period). The compensation cost for that portion of awards has been based on the grant-date fair value of those awards as calculated previously for pro forma disclosures. General Cable’s equity compensation plans are described more fully in Note 11.

The following table illustrates the pro forma effect on net income and earnings per share for the three fiscal month period ended April 1, 2005 if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in millions, except per share data).

		Three Fiscal
		Months Ended
		April 1, 2005
Net income as reported		$	9.0
Less: preferred stock dividends			(1.5	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(0.2	)
Pro forma net income for basic EPS computation		$	7.3
Net income as reported		$	9.0
Less: preferred stock dividends, if applicable			n/a
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(0.2	)
Pro forma net income for diluted EPS computation		$	8.8
Earnings per share:
Basic — as reported		$	0.19
Basic — pro forma		$	0.19
Diluted — as reported		$	0.18
Diluted — pro forma		$	0.17

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

In determining the pro forma amounts above for the first three fiscal months of 2005 and the compensation cost related to options for the first three fiscal months of 2006, the fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

		March 31,				April 1,
		2006				2005
Risk-free interest rate (a)			4.7	%			4.4	%
Expected dividend yield (b)			N/A				N/A
Expected option life (c)		4.6 years				6.5 years
Expected stock price volatility (d)			62.6	%			32.1	%
Weighted average fair value of options granted		$	12.73			$	4.52

Earnings Per Share

Earnings per common share is computed based on the weighted average number of common shares outstanding. Earnings per common share-assuming dilution is computed based on the weighted average number of common shares outstanding and the dilutive effect of stock options outstanding and the assumed conversion of the Company’s preferred stock, if applicable. See further discussion in Note 12.

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.

Business Combination Accounting

Acquisitions entered into by the Company are accounted for using the purchase method of accounting. The purchase method requires management to make significant estimates. Management must determine the cost of the acquired entity based on the fair value of the consideration paid or the fair value of the net assets acquired, whichever is more clearly evident. This cost is then allocated to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. In addition, management, with the assistance of valuation professionals, must identify and estimate the fair values of intangible assets that should be recognized as assets apart from goodwill. Management utilizes third-party appraisals to assist in estimating the fair value of tangible property, plant and equipment and intangible assets acquired.

Inventories

General Cable values all its North American inventories and all of 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 quarterly

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

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 three fiscal months of 2006 or 2005. 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.

The Company has consignment inventory at certain of its customer locations for purchase and use by the customer or other parties. General Cable retains title to the inventory and records no sale until it is ultimately sold either to the customer storing the inventory or to another party. In general, the value and quantity of the consignment inventory is verified by General Cable through either cycle counting or annual physical inventory counting procedures. At March 31, 2006, the Company had approximately $29.3 million of consignment inventory at locations not operated by the Company with approximately 83% of the consignment inventory being located throughout the United States and Canada.

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 2 to 15 years. Leasehold improvements are depreciated over the life of the lease unless acquired in a business combination, in which case the leasehold improvements are amortized over the shorter of the useful life of the assets or a term that includes the reasonably assured life of the lease. Depreciation expense for the three fiscal months ended March 31, 2006 and April 1, 2005 was $11.4 million and $8.3 million, respectively.

On December 27, 2005, General Cable entered into a capital lease for certain pieces of equipment being used at the Company’s Indianapolis polymer plant. The capital lease agreement provides that the lease payments for the machinery and equipment will be approximately $0.6 million semi-annually, or approximately $1.2 million on an annual basis. The lease expires in December of 2010, and General Cable has the option to purchase the machinery and equipment for fair value at the end of the lease term. The present value of the minimum lease payments on the capital lease at inception was approximately $5.0 million and was reflected in fixed assets and in short-term ($0.9 million) and long-term ($4.1 million) lease obligations in the Company’s December 31, 2005 balance sheet.

Capital leases included within property, plant and equipment on the balance sheet were $5.8 million at March 31, 2006 and $5.7 million at December 31, 2005. Accumulated depreciation on capital leases was $0.8 million at March 31, 2006 and $0.5 million at December 31, 2005.

The Company periodically evaluates the recoverability of the carrying amount of long-lived assets (including property, plant and equipment and intangible assets with determinable lives) whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. The Company evaluates events or changes in circumstances based mostly on actual historical operating results, but business plans, forecasts, general and industry trends, and anticipated cash flows are also considered. An impairment is assessed when the undiscounted expected future cash flows derived from an asset are less than its carrying amount. Impairment losses are measured as the amount by which the carrying value of an asset exceeds its fair value and are recognized in earnings. The Company also continually evaluates the estimated useful lives of all long-lived assets and, when warranted, revises such estimates based on current events. No material impairment charges occurred during the three fiscal months ended March 31, 2006 and April 1, 2005.

Goodwill and Other Intangible Assets

Goodwill and intangible assets with indefinite useful lives are not amortized, but are reviewed at least annually for impairment. If the carrying amount of goodwill or an intangible asset with an indefinite life exceeds its fair value, an impairment loss is recognized in the amount equal to the excess. There was no goodwill on the Company’s balance sheet as of March 31, 2006 or December 31, 2005, and no impairment of intangible assets with indefinite lives was identified during the three fiscal months ended March 31, 2006 and April 1, 2005. The Company has various trademarks and intangible pension assets, included in other non-current assets, totaling $5.6 million at March 31, 2006 and $4.0 million at December 31, 2005, that are not amortized.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

Separate intangible assets that are not deemed to have an indefinite life are amortized over their useful lives. Amortizable intangible assets, included in other non-current assets, at March 31, 2006 and December 31, 2005 consist of the following (in millions):

		March 31, 2006												December 31, 2005
										Accumulated												Accumulated
		Life				Cost				Amortization				Life				Cost				Amortization
Patents			12			$	1.8			$	*				—			$	—			$	—
Customer Lists			10				0.4				0.1				10				0.4				*
Total						$	2.2			$	0.1							$	0.4			$	*

The total intangible amortization expense for three fiscal months ended March 31, 2006 was not significant and also was not significant for the three fiscal months ended April 1, 2005.

The estimated amortization expense, assuming no residual value and using the straight-line method, for the next five years beginning January 1, 2006 through December 31, 2010 is as follows (in millions):

2006		$	0.2
2007		$	0.2
2008		$	0.2
2009		$	0.2
2010		$	0.2

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. At March 31, 2006 and December 31, 2005, General Cable had $141.3 million and $106.2 million, respectively, of future copper and aluminum purchases that were under forward pricing agreements. The fair market value of the forward pricing agreements was $158.3 million and $117.6 million at March 31, 2006 and December 31, 2005, respectively. General Cable expects to recover the cost of copper and aluminum under these agreements as a result of firm sales price commitments with customers.

Pension Plans

The Company and certain of its subsidiaries have defined benefit pension plans covering certain of its domestic regular full-time employees and, to a lesser extent, international employees. Pension benefits are based on formulas that reflect the employees’ years of service and compensation during the employment period and participation in the plans. The pension expense recognized by the Company is determined using various assumptions, including the expected long-term rate of return on plan assets, the discount rate used to determine the present value of future pension benefits and the rate of compensation increases. See Note 9 in the Notes to Condensed Consolidated Financial Statements for further information.

Self-insurance

The Company is self-insured for certain employee medical benefits, worker’s compensation benefits, environmental and asbestos-related issues. The Company purchases stop-loss coverage in order to limit its exposure to any significant level of employee medical and worker’s compensation claims. Certain insurers are also partly responsible for coverage on many of the asbestos-related issues. Self-insured losses are accrued based upon estimates of the aggregate liability for uninsured claims incurred using the Company’s own historical claims experience.

Concentration of Labor Subject to Collective Bargaining Agreements

At March 31, 2006, approximately 7,300 persons were employed by General Cable, and collective bargaining agreements covered approximately 4,450 employees, or 61% of total employees, at various locations around the world. During the five calendar years ended December 31, 2005, the Company experienced two strikes in North America and one strike in Asia Pacific all of which were settled on satisfactory terms. There were no other major strikes at any of the Company’s facilities

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

during the five years ended December 31, 2005, and there have been no strikes during the three fiscal months ended March 31, 2006. The only strike that occurred in 2005 was at the Company’s Lincoln, Rhode Island manufacturing facility, and it lasted approximately two weeks. In the United States and Canada, union contracts will expire at one facility in 2006 (consisting of two separate contracts) and two facilities in 2007, representing approximately 2% and 3%, respectively, of total employees as of March 31, 2006. The first of the two contracts expiring at the Company’s U.S. facility in 2006 was successfully negotiated and ratified on March 5, 2006. In Europe, Mexico and Asia Pacific, labor agreements are generally negotiated on an annual or bi-annual basis. The Company believes that its relationships with its employees are good.

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. General Cable customers generally receive a 30 to 60 day payment period on purchases from the Company. Certain automotive aftermarket customers of the Company receive payment terms ranging from 60 days to 180 days, which is common in this particular market. 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. Bad debt expense associated with uncollectible accounts for the three fiscal months ended March 31, 2006 and April 1, 2005 was $0.1 million and $1.4 million, respectively.

Income Taxes

The Company and certain of its wholly-owned subsidiaries file a consolidated U.S. federal income tax return. Other subsidiaries of the Company file tax returns in their local jurisdictions.

The Company provides for income taxes on all transactions that have been recognized in the Consolidated Financial Statements in accordance with SFAS No. 109. Accordingly, the impact of changes in income tax laws on deferred tax assets and deferred tax liabilities are recognized in net earnings in the period during which such changes are enacted.

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 and forecasted results of operations, including the losses realized earlier in the decade, and has considered the implementation of prudent and feasible tax planning strategies. At March 31, 2006, the Company had recorded a net deferred tax asset of $79.1 million ($39.4 million current and $39.7 million long term). Approximately $7.5 million of this deferred tax asset must be utilized prior to its expiration in the period 2007-2009. 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.

Derivative Financial Instruments

Derivative financial instruments are utilized to manage interest rate, commodity and foreign currency risk as it relates to both transactions and the Company’s net investment in its European operations. 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 (loss) until the underlying transaction occurs and is recorded in the income statement at which point such amounts included in other comprehensive income (loss) are recognized in earnings which generally will occur over periods less than one year.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

In October 2005, the Company entered into a U.S. dollar to Euro cross currency and interest rate swap agreement that qualifies as a net investment hedge of the Company’s net investment in its European operations in order to hedge the effects of the changes in spot exchange rates on the value of the net investment. The swap is marked-to-market quarterly using the “spot method” to measure the amount of hedge ineffectiveness. Changes in the fair value of the swap as they relate to spot exchange rates are recorded as other comprehensive income (loss) whereas changes in the fair value of the swap as they relate to the interest rate differential and the change in interest rate differential since the last marked-to-market date are recognized currently in earnings for the period.

Shipping and Handling Costs

All shipping and handling amounts billed to a customer in a sale transaction are classified as revenue. Shipping and handling costs associated with storage and handling of finished goods and storage and handling of shipments to customers are included in cost of sales and totaled $27.5 million and $20.3 million, respectively, for the three fiscal months ended March 31, 2006 and April 1, 2005.

Advertising Expense

Advertising expense consists of expenses relating to promoting the Company’s products, including trade shows, catalogs, and e-commerce promotions, and is charged to expense when incurred. Advertising expense was $1.5 million and $1.5 million for the three fiscal months ended March 31, 2006 and April 1, 2005, respectively.

New Standards

In February 2006, SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments—an Amendment of FASB Statements No. 133 and 140,” was issued. This statement provides companies with relief from having to separately determine the fair value of an embedded derivative that would otherwise be required to be bifurcated from its host contract in accordance with SFAS No. 133 by allowing companies to make an irrevocable election to measure a hybrid financial instrument at fair value in its entirety, with changes in fair value recognized in earnings. The election may be made on an instrument-by-instrument basis and can be made only when a hybrid financial instrument is initially recognized or undergoes a remeasurement event. SFAS No. 155 also requires that interests in securitized financial assets be evaluated to identify whether they are freestanding derivatives or hybrid financial instruments containing an embedded derivative that requires bifurcation. SFAS No. 155 is effective for all financial instruments acquired, issued, or subject to a remeasurement event occurring in fiscal years beginning after September 15, 2006. The Company is currently evaluating the impact of adopting SFAS No. 155 on its consolidated financial position, results of operations and cash flows.

In March 2006, SFAS No. 156, “Accounting for Servicing of Financial Assets—an Amendment of FASB Statement No. 140,” was issued. SFAS No. 156 requires recognition of a servicing asset or liability at fair value each time an obligation is undertaken to service a financial asset by entering into a servicing contract. SFAS No. 156 also provides guidance on subsequent measurement methods for each class of servicing assets and liabilities and specifies financial statement presentation and disclosure requirements. SFAS No. 156 is effective for fiscal years beginning after September 15, 2006. The Company is currently evaluating the impact of adopting SFAS No. 156 on its consolidated financial position, results of operations and cash flows.

In July 2005, the FASB issued an exposure draft, “Accounting for Uncertain Tax Positions: an Interpretation of FASB Statement 109.” This proposed Interpretation clarifies accounting for uncertain tax positions in accordance with SFAS No. 109. Specifically, the Interpretation requires recognition of a Company’s best estimate of the impact of a tax position only if that position is probable of being sustained by an audit based only on the technical merits of the position. Tax positions failing the probable recognition threshold would result in adjustments in recorded deferred tax assets or liabilities and changes in income tax payables or receivables. This Interpretation, as originally drafted, would become effective for the first fiscal year ending after December 15, 2005. However, the FASB currently does not expect to issue a final Interpretation until the second quarter of 2006 with the planned effective date being the first quarter of 2007. The Company is currently evaluating the impact of adopting this proposed Interpretation on its consolidated financial position, results of operations and cash flows.

In September 2005, the FASB issued an exposure draft, “Earnings per Share – an amendment of FASB Statement No. 128.” This proposed statement seeks to clarify guidance for mandatorily convertible instruments, the treasury stock method, contracts that may be settled in cash or shares, and contingently issuable shares. The proposed statement would amend the computational guidance for calculating the number of incremental shares included in diluted shares when applying the treasury stock method, would further amend the treasury stock method to treat as assumed proceeds the carrying amount of an extinguished liability upon issuance of shares, would eliminate the provision of Statement 128 that allows an entity not to

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

assume share settlement in contracts that may be settled in either cash or shares, would define a mandatorily convertible instrument and its effects on basic EPS, and would eliminate the weighted-average computation for calculating contingently issuable shares. This statement, if approved, would become effective for interim and annual periods ending after June 15, 2006. The Company is currently evaluating the impact of adopting this proposed statement on its consolidated financial position, results of operations and cash flows.

In March 2006, the FASB issued an exposure draft, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans—an Amendment of FASB Statements No. 87, 88, 106, and 132(R).” This proposed statement requires an employer that sponsors one or more defined benefit pension or other postretirement plans to recognize an asset or liability for the over-funded or under-funded status of its defined benefit postretirement plans. Employers would be required to record all unrecognized prior service costs and unrecognized actuarial gains and losses in accumulated other comprehensive income (loss), and these amounts would then be reclassified into earnings as components of net periodic benefit cost/income pursuant to the current recognition and amortization provisions of SFAS No. 87 and SFAS No. 106. The proposed statement also requires an employer to measure plan assets and benefit obligations as of the date of the employer’s statement of financial position. This statement, if approved, would become effective for fiscal years ending after December 15, 2006 except for the requirement to measure plan assets and benefit obligations as of the statement of financial position date, which would become effective for fiscal years beginning after December 15, 2007.

3. Acquisitions and Divestitures

In the first quarter of 2005, the Company acquired certain assets of Draka Comteq’s business in North America for a purchase price of $7.5 million in cash, subject to post-closing adjustments. The Company incurred $0.1 million of costs and expenses associated with the acquisition. The assets acquired are located in Franklin, Massachusetts and manufacture specialty electronics and datacom products. The assets acquired included machinery and equipment, inventory, prepaid assets and intangible assets, net of the assumption of trade payables. The purchase price has been allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of the acquisition. During the second quarter of 2005, the final purchase price was agreed with Draka resulting in a cash payment of approximately $0.2 million to the Company. The pro forma effects of the acquisition were not material.

On December 22, 2005, the Company completed its purchase of the shares of the wire and cable manufacturing business of SAFRAN SA, a diverse, global high technology company. The acquired business is known under the name Silec Cable, S.A.S. (“Silec”). Silec^® is based in Montereau, France and employs approximately 1,000 associates with nearly one million square feet of manufacturing space in that location. In 2005, prior to the acquisition date, Silec^® reported global sales of approximately $282.7 million of which about 52% were linked to energy infrastructure. In the high-voltage and extra high-voltage market, Silec^® is a recognized leader around the world providing the critical link to bring power from the grid into major urban areas. The consideration paid for the acquisition was approximately $82.8 million including fees and expenses at closing which represented 85% of the total estimated purchase price, subject to adjustment under the terms of the definitive share purchase agreement. A preliminary purchase price allocation based on the estimated fair values, or other measurements as applicable, of the assets acquired and the liabilities assumed at the date of acquisition has been reflected in the Consolidated Balance Sheet as of December 31, 2005 and the Condensed Consolidated Balance Sheet as of March 31, 2006. This allocation is preliminary, and up to this point, approximately $3.4 million has been allocated to intangible assets and no in-process research and development costs have been identified to be written off, although these allocations could change as further valuations are completed. Pro forma results of the Silec^® acquisition are not material.

On December 30, 2005, the Company completed the acquisition of the Mexican ignition wire set business of Beru AG, a worldwide leading manufacturer of diesel cold start systems. The acquired business is known under the name Beru S.A. de C.V. (Beru S.A.). Beru S.A. is based in Cuernavaca, Mexico and employs approximately 100 associates with one hundred thousand square feet of manufacturing space. Beru S.A. operates an automotive aftermarket assembly and distribution operation with annual revenues of approximately $7 million per year. Pro forma results of the Beru S.A. acquisition are not material.

The results of operations of the acquired businesses discussed above have been included in the consolidated financial statements since the respective dates of acquisition.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

4. Other Income (Expense)

Other income (expense) includes foreign currency transaction gains or losses which result from changes in exchange rates between the designated functional currency and the currency in which a transaction is denominated. The Company recorded a $0.8 million net gain during the three fiscal months ended March 31, 2006 resulting from foreign currency transaction gains. The Company recorded a $(0.1) million loss during the three fiscal months ended April 1, 2005 resulting from foreign currency transaction losses.

5. Inventories

Inventories consisted of the following (in millions):

		March 31,				December 31,
		2006				2005
Raw materials		$	40.9			$	40.6
Work in process			72.7				56.2
Finished goods			275.4				267.1
Total		$	389.0			$	363.9

At March 31, 2006 and December 31, 2005, $303.8 million and $285.7 million, respectively, of inventories were valued using the LIFO method. Approximate replacement costs of inventories valued using the LIFO method totaled $465.8 million at March 31, 2006 and $410.5 million at December 31, 2005.

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 and				Facility
		Related Costs				Closing Costs				Total
Balance, December 31, 2005		$	1.0			$	0.5			$	1.5
Provisions, net			(0.2	)			—				(0.2	)
Utilization			(0.4	)			(0.2	)			(0.6	)
Balance, March 31, 2006		$	0.4			$	0.3			$	0.7

The December 31, 2005 balance represents previously accrued costs related to the Company’s discontinued operations and the closure of certain industrial cable and communications cable manufacturing facilities in prior years. The utilization of these provisions in the first three fiscal months of 2006 was $0.4 million of severance and related costs and $0.2 million of facility closing costs.

7. Long-Term Debt

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

		March 31,				December 31,
		2006				2005
Senior notes due 2010		$	285.0			$	285.0
Revolving loans			134.3				115.1
Spanish term loan			36.4				35.4
Capital leases			5.3				5.2
Other			11.3				10.9
Total debt			472.3				451.6
Less current maturities			7.1				6.4
Long-term debt		$	465.2			$	445.2

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

Weighted average interest rates on the above outstanding balances were as follows:

Senior notes due 2010			9.5	%			9.5	%
Revolving loans			6.3	%			6.4	%
Spanish term loan			3.7	%			3.4	%
Capital leases			6.5	%			6.5	%
Other			3.8	%			3.8	%

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 $307.2 million at March 31, 2006.

The senior secured revolving credit facility, as amended, is a five year $300.0 million asset based revolving credit agreement (the “Credit Agreement”). The Credit Agreement is guaranteed by the Company’s U.S. and Canadian subsidiaries and is secured by substantially all U.S. and Canadian assets. The lenders have also received a pledge of all of the capital stock of the Company’s existing domestic subsidiaries and any future domestic subsidiaries. Borrowing availability is based on eligible U.S. and Canadian accounts receivable and inventory and certain U.S. fixed assets. As of March 31, 2006, the Company had outstanding borrowings of $134.3 million and availability of approximately $131.3 million under the terms of the Credit Agreement. Availability of borrowings under the fixed asset component of the facility, as amended, is reduced quarterly over a seven-year period by $7.1 million per annum. This may result in a reduction in the overall availability depending upon the calculation of eligible accounts receivable and inventory. The facility also includes a sub-facility for letters of credit of up to $50.0 million. The Company had outstanding letters of credit related to this revolving credit agreement of $32.9 million at March 31, 2006.

During the fourth quarter of 2004, the Company amended the Amended and Restated Credit Agreement which lowered the borrowing rate at that point by 50 basis points, increased the annual capital spending limit and provided for the ability to swap up to $100 million of existing fixed rate Notes to a floating interest rate.

During the second quarter of 2005, the Company amended the Amended and Restated Credit Agreement which increased the borrowing limit on the senior secured revolving credit facility from $240.0 million to $275.0 million. Additionally, the amendment increased the maximum amount permitted under the facility for investments in joint ventures from $10 million to $25 million.

During the fourth quarter of 2005, the Company further amended the Amended and Restated Credit Agreement which increased the borrowing limit on the senior secured revolving credit facility from $275.0 million to $300.0 million. Additionally, the amendment extended the maturity date by almost two years to August 2010, lowered borrowing costs by approximately 65 basis points and reduced unused facility fees. Also, the amendment eliminated or relaxed several provisions, including eliminating the annual limit on capital expenditures, expanding permitted indebtedness to include acquired indebtedness of newly acquired foreign subsidiaries, and increasing the level of permitted loan-funded acquisitions. Finally, the amendment satisfied the financing conditions to the Company’s inducement offer to convert shares of its 5.75% Series A Redeemable Convertible Preferred Stock into its common stock, which was announced and commenced on November 9, 2005. Specifically, the amendment permitted the Company to draw funds from its credit facility to pay the conversion offer premium plus the funds necessary to make a final dividend payment to holders of the preferred stock who converted their shares in the inducement offer. For more information on the inducement offer, see Note 16 of the Company’s Notes to Consolidated Financial Statements as filed with the SEC on the Annual Report Form 10-K for 2005.

Borrowings under the Credit Agreement, as amended, bear interest at a rate of LIBOR plus 1.00% to 1.75% and/or prime plus 0.00% to 0.50% depending upon the Company’s excess availability, as defined by the Credit Agreement. The weighted average interest rate on borrowings outstanding under the Credit Agreement during the first three fiscal months of 2006 was 5.97%. Under the Credit Agreement, the Company pays a commitment fee of 0.25%, as amended, per annum on the unused

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

portion of the commitment. In connection with the November 2003 refinancing and related subsequent amendments to the Credit Agreement, the Company incurred fees and expenses aggregating $8.4 million, which are being amortized over the term of the Credit Agreement.

The Credit Agreement, as amended, contains covenants that limit the payment of dividends to holders of common stock and require a minimum fixed charge coverage ratio, as defined, only when excess availability, as defined, is below a certain threshold. At March 31, 2006, the Company was in compliance with all covenants under the Credit Agreement.

On December 22, 2005, Grupo General Cable Sistemas, S.A., a wholly owned Spanish subsidiary of General Cable, entered into both a term loan facility and a revolving credit facility totaling €75 million. This combined facility was entered into to provide Euro-denominated borrowings to partly fund the subsidiary’s acquisition of Silec^® and to provide funds for general corporate needs of the European business. See Note 3 of this document for more details on the acquisition of Silec^®.

The term loan facility of €50 million is available in up to three tranches, with an interest rate of Euribor plus 0.8% to 1.5% depending on certain debt ratios. The term loan is repayable in fourteen semi-annual installments, maturing seven years following the draw down of each tranche. As of March 31, 2006, $36.4 million is currently drawn under this term loan facility, leaving undrawn availability of approximately $24.2 million.

The revolving credit facility of €25 million matures at the end of five years and carries an interest rate of Euribor plus 0.6% to 1.0% depending on certain debt ratios. No funds are currently drawn under this revolving credit facility, leaving undrawn availability of approximately $30.3 million as of March 31, 2006. Commitment fees ranging from 15 to 25 basis points per annum on any unused commitments under the revolving credit facility will be assessed to Grupo General Cable Sistemas, S.A., and are payable on a quarterly basis.

The combined facility is subject to certain financial ratios of the European group, the most restrictive of which is net debt to EBITDA (earnings before interest, taxes, depreciation and amortization). In addition, the indebtedness under the combined facility is guaranteed by the Company’s Portuguese subsidiary, General Cable Celcat Energia E Telecomunicacoes, S.A., and by the recently acquired Silec Cable, S.A.S.

During 2005 and the three fiscal months ended March 31, 2006, one of the Company’s international operations contracted with a bank to transfer accounts receivable that it was owed from one customer to the bank in exchange for payments of approximately $1 million and $0.5 million, respectively. As the transferor, the Company surrendered control over the financial assets included in the transfers and has no further rights regarding the transferred assets. The transfers were treated as sales and the approximate $1.5 million received was accounted for as proceeds from the sales. All assets sold were removed from the Company’s balance sheet upon completion of the transfers, and no further obligations exist under these agreements.

At March 31, 2006, maturities of long-term debt (excluding capital leases) during twelve month periods beginning April 1, 2006 through April 1, 2011 are $6.1 million, $5.5 million, $5.5 million, $5.5 million and $424.7 million, respectively, and $19.7 million thereafter.

At March 31, 2006, maturities of capital lease obligations during twelve month periods beginning April 1, 2006 through April 1, 2011 are $1.0 million, $1.0 million, $1.0 million, $1.1 million and $1.2 million, respectively.

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 it relates to both transactions and the Company’s net investment in its European operations, 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 manage its interest expense exposure by fixing its interest rate on a portion of the Company’s floating 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.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

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 March 31, 2006, 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, that qualify as cash flow hedges as defined in SFAS No. 133, 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 March 31, 2006 and December 31, 2005, the net unrealized loss on the interest rate derivative and the related carrying value was $(0.3) million and $(0.4) million, respectively.

The Company enters into forward exchange contracts, that qualify as cash flow hedges as defined in SFAS No. 133, 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 March 31, 2006 and December 31, 2005, the net unrealized gain on the net foreign currency contracts was $2.7 million and $0.3 million, respectively.

Outside of North America, General Cable enters into commodity futures contracts, that qualify as cash flow hedges as defined in SFAS No. 133, for the purchase of copper and aluminum for delivery in a future month to match certain sales transactions. At March 31, 2006 and December 31, 2005, General Cable had an unrealized gain of $16.9 million and $11.6 million, respectively, on the commodity futures.

Unrealized gains and losses on the derivative financial instruments discussed above are recorded in other comprehensive income (loss) until the underlying transaction occurs and is recorded in the income statement at which point such amounts included in other comprehensive income (loss) are recognized in earnings which generally will occur over periods less than one year. During the three fiscal months ended March 31, 2006, a $2.9 million gain was reclassified from other comprehensive income to the income statement. During the three fiscal months ended April 1, 2005, a $0.4 million gain was reclassified from other comprehensive income to the income statement.

In October 2005, the Company entered into a U.S. dollar to Euro cross currency and interest rate swap agreement with a notional value of $150 million, that qualifies as a net investment hedge of the Company’s net investment in its European operations, in order to hedge the effects of the changes in spot exchange rates on the value of the net investment. The swap has a term of just over two years with a maturity date of November 15, 2007. The fair value of the cross currency and interest rate swap is based on third party provided calculations. At March 31, 2006 and December 31, 2005, the net unrealized gain (loss) on the swap was $(1.7) million and $1.6 million, respectively. The swap is marked-to-market quarterly using the “spot method” to measure the amount of hedge ineffectiveness. Changes in the fair value of the swap as they relate to spot exchange rates are recorded as other comprehensive income (loss) whereas changes in the fair value of the swap as they relate to the interest rate differential and the change in interest rate differential since the last marked-to-market date, equaling approximately $1.1 million and $1.0 million, respectively, as of March 31, 2006 and December 31, 2005, are recognized currently in earnings for the period.

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. At March 31, 2006 and December 31, 2005, General Cable had $141.3 million and $106.2 million, respectively, of future copper and aluminum purchases that were under forward pricing agreements. At March 31, 2006 and December 31, 2005, General Cable had an unrealized gain of $17.0 million and $11.4 million, respectively, 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 covering certain of its domestic regular full-time employees and, to a lesser extent, international employees. Pension expense under the defined contribution plans sponsored by General Cable in the United States equaled up to 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 contributions made by eligible employees.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

Benefits provided under 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
		March 31, 2006								April 1, 2005
		Pension				Other				Pension				Other
Service cost		$	0.7			$	0.1			$	0.5			$	—
Interest cost			2.5				0.1				2.4				0.1
Expected return on plan assets			(2.8	)			—				(2.7	)			—
Net amortization and deferral			1.2				—				0.9				—
Total defined benefit plans expense			1.6				0.2				1.1				0.1
Total defined contribution plans expense			2.3				—				1.8				—
Total		$	3.9			$	0.2			$	2.9			$	0.1

Defined benefit plan cash contributions for the three fiscal months ended March 31, 2006 were $1.0 million. Defined benefit plan cash contributions for the three fiscal months ended April 1, 2005 were $1.0 million.

The Company has additional contracts related to pension benefits outside of the United States not included in the tables and financial figures above due to their designation as nonparticipating annuity contracts as defined by SFAS 87. These annuity contracts cover 12 retired and 11 current employees in the Company’s operations in Spain, and the contracts act as irrevocable transfers of risk from the Company to the other party to the contracts, an insurance company. The cost of the benefits covered by the annuity contracts is recorded based on the premiums, or costs, required to purchase the contracts. The service cost component of net pension cost was $0.3 million in 2005, $0.2 million in 2004, and $0.3 million in 2003. The benefits covered by the annuity contracts are excluded from the projected benefit obligation and the accumulated benefit obligation of the Company, and the annuity contracts are excluded from the Company’s plan assets as required by SFAS 87.

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. As of March 31, 2006, 101,949 shares of redeemable convertible preferred stock remained outstanding. The reduction in redeemable convertible preferred stock shares is mainly due to an inducement offer made by the Company in the fourth quarter of 2005. For more information, see Note 16 of the Company’s Notes to Consolidated Financial Statements as filed with the SEC on the Annual Report Form 10-K for 2005.

The 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 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.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

The Company maintains a deferred compensation plan (“Deferred Compensation Plan”). This plan is available to directors and certain officers and managers of the Company. The plan allows participants to defer all or a portion of their directors’ fees and/or salary and annual bonuses, as applicable, and it permits participants to elect to contribute and defer all or any portion of his or her nonvested stock and stock awards. All deferrals to the participants’ accounts vest immediately; Company contributions vest according to the vesting schedules in the qualified plan, and nonvested stock vests according to the schedule designated by the award. The Company makes matching and retirement contributions (currently equal to 6%) of compensation paid over the maximum allowed for qualified pension benefits, whether or not the employee elects to defer any compensation. The Deferred Compensation Plan does not have dollar limits on tax-deferred contributions. The assets of the Deferred Compensation Plan are held in a Rabbi Trust (“Trust”) and, therefore, are available to satisfy the claims of the Company’s creditors in the event of bankruptcy or insolvency of the Company. Participants have the right to request that their account balance be determined by reference to specified investment alternatives (with the exception of the portion of the account which consists of deferred nonvested and subsequently vested stock). With certain exceptions, these investment alternatives are the same alternatives offered to participants in the General Cable Retirement and Savings Plan for Salaried Associates. In addition, participants have the right to request that the Plan Administrator re-allocate the deferral among available investment alternatives; provided, however that the Plan Administrator is not required to honor such requests. Distributions from the plan are generally made upon the participants’ termination as a director and/or employee, as applicable, of the Company. Participants receive payments from the plan in cash, either as a lump sum payment or through equal annual installments from between one and ten years, except for the nonvested and subsequently vested stock, which the participants receive in shares of General Cable stock. The Company accounts for the Deferred Compensation Plan in accordance with EITF 97-14, “Accounting for Deferred Compensation Arrangements Where Amounts Earned are Held in a Rabbi Trust and Invested.”

Assets of the Trust, other than the nonvested and subsequently vested stock of the Company, are invested in funds covering a variety of securities and investment strategies, including a General Cable stock fund. Mutual funds available to participants are publicly quoted and reported at market value. The Company accounts for these investments in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” The Trust also holds nonvested and subsequently vested stock shares of the Company. The Company’s nonvested and subsequently vested stock that is held by the Trust has been accounted for in additional paid-in capital since the adoption of SFAS 123(R) on January 1, 2006, and prior to that date had been accounted for in other shareholders’ equity in the consolidated balance sheet, and the market value of this nonvested and subsequently vested stock was $20.7 million as of March 31, 2006 and $13.6 million as of December 31, 2005. The market value of the assets held by the Trust, exclusive of the market value of the shares of the Company’s nonvested and subsequently vested stock, at March 31, 2006 and December 31, 2005 was $10.0 million and $8.3 million, respectively, and is classified as “other non-current assets” in the consolidated balance sheet. Amounts payable to the plan participants at March 31, 2006 and December 31, 2005, excluding the market value of the shares of the Company’s nonvested and subsequently vested stock, was $10.0 million and $8.3 million, respectively, and is classified as “other liabilities” in the consolidated balance sheet.

In accordance with EITF 97-14, all market value fluctuations of the Trust assets, exclusive of the shares of nonvested and subsequently vested stock of the Company, have been reflected in other comprehensive income (loss). Increases or decreases in the market value of the deferred compensation liability, excluding the shares of nonvested and subsequently vested stock of the Company held by the Trust, are included as compensation expense in the consolidated statements of operations. Based on the changes in the total market value of the Trust’s assets, exclusive of the nonvested and subsequently vested stock, the Company recorded net compensation expense (income) of $1.6 million and $(0.4) million, respectively, for the three fiscal months ended March 31, 2006 and April 1, 2005. See Note 11 for compensation costs recorded on nonvested and subsequently vested stock shares.

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. During the third quarter of 2004, certain employees repaid

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

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 second quarter of 2005, the remaining participants in the SLIP repaid their loans plus interest that were originally made under the SLIP in the amount of $2.2 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. Approximately $0.2 million of the loans were forgiven. There are no MRSUs outstanding as of March 31, 2006.

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

		March 31,				December 31,
		2006				2005
Foreign currency translation adjustment		$	14.0			$	14.2
Pension adjustments, net of tax			(33.4	)			(33.4	)
Change in fair value of derivatives, net of tax			11.4				8.5
Unrealized investment gains			5.1				3.5
Other			0.4				0.4
Total		$	(2.5	)		$	(6.8	)

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

		March 31,				December 31,
		2006				2005
Loans to shareholders		$	—			$	—
Nonvested stock			—				(4.8	)
Total		$	—			$	(4.8	)

The nonvested stock amount was reclassed to additional paid-in capital as part of the adoption of SFAS 123(R). See Note 11 for details.

11. Share-Based Compensation

The adoption of SFAS 123(R)’s fair value method has resulted in share-based expense in the amount of $0.2 million related to stock options for the three fiscal months ended March 31, 2006, which is included as a component of selling, general and administrative expenses. No compensation expense related to stock options was recorded during the three fiscal months ended April 1, 2005 under APB 25. In addition, the Company continued to record compensation expense related to nonvested stock awards as a component of selling, general and administrative expense. The three fiscal months ended March 31, 2006 included $0.3 million of compensation costs related to performance-based nonvested stock awards (as compared to $0.1 million for the three fiscal months ended April 1, 2005) and $0.3 million related to all other nonvested stock awards (as compared to $0.1 million for the three fiscal months ended April 1, 2005). For the three fiscal months ended March 31, 2006, all share-based compensation costs lowered pre-tax earnings by $0.8 million, lowered net income by $0.5 million, and lowered basic and diluted earnings per share by less than $0.01 per share.

SFAS 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required prior to SFAS 123(R). For the three fiscal months ended March 31, 2006, the $3.3 million excess tax benefit classified as a financing cash flow would have been classified as an operating cash inflow if the Company had not adopted SFAS 123(R). The Company has elected the alternative method, as discussed in SFAS 123(R)-3, to calculate the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of SFAS 123(R).

General Cable currently has share-based compensation awards outstanding under three plans. These plans allow the Company to fulfill its incentive award obligations generally by granting nonqualified stock options and nonvested stock awards. New shares are issued when nonqualified stock options are exercised and when nonvested stock awards are granted. There have been no material modifications made to these plans during the three fiscal months ended March 31, 2006. On May 10, 2005, the General Cable Corporation 2005 Stock Incentive Plan (“2005 Plan”) was approved and replaced the two previous equity compensation plans, the 1997 Stock Incentive Plan and the 2000 Stock Option Plan. The Compensation Committee of the Board of Directors will no longer grant any awards under the previous plans but will continue to administer awards which were previously granted under the 1997 and 2000 plans. The 2005 Plan authorized a maximum of 1,800 thousand shares to be

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

granted. Shares reserved for future grants, including options, under the 2005 Plan, approximated 1,447 thousand at March 31, 2006.

The 2005 Stock Incentive Plan authorizes the following types of awards to be granted: (i) Stock Options (both Incentive Stock Options and Nonqualified Stock Options); (ii) Stock Appreciation Rights; (iii) Nonvested Stock Awards; (iv) Performance Awards; and (v) Stock Units, as more fully described in the 2005 Plan. Each award is subject to such terms and conditions consistent with the 2005 Plan as determined by the Compensation Committee and as set forth in an award agreement and awards under the 2005 Plan were granted at not less than the closing market price on the date of grant.

The 2000 Stock Option Plan (“2000 Plan”) as amended authorized a maximum of 1,500 thousand non-incentive options to be granted. No other forms of award were authorized under this plan. Stock options were granted to employees selected by the Compensation Committee of the Board or the Chief Executive Officer at prices which were not less than the closing market price on the date of grant. The Compensation Committee (or Chief Executive Officer) had authority to set all the terms of each grant.

The 1997 Stock Incentive Plan (“1997 Plan”) authorized a maximum of 4,725 thousand nonvested shares, options or units of common stock to be granted. Stock options were granted to employees selected by the Compensation Committee of the Board or the Chief Executive Officer at prices which were not less than the closing market price on the date of grant. The Compensation Committee (or Chief Executive Officer) had authority to set all the terms of each grant.

Stock Options

All options awarded under the 2005 Plan have a term of 10 years from the grant date. The majority of the options vest three years from grant date. The majority of the options granted under the 2000 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. The majority of the options granted under the 1997 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.

A summary of stock option activity since the Company’s most recent fiscal year end is as follows (options in thousands):

						Weighted
						Average
		Options				Exercise
		Outstanding				Price
Balance At December 31, 2005			3,144			$	10.90
Granted			109				23.18
Exercised			(564	)			10.83
Forfeited or Expired			(22	)			21.86
Balance At March 31, 2006			2,667			$	11.29

At March 31, 2006, the aggregate intrinsic value of all outstanding options was $50.8 million with a weighted average remaining contractual term of 5.3 years, of which 2,365 thousand of the outstanding options are currently exercisable with an aggregate intrinsic value of $46.3 million, a weighted average exercise price of $10.75 and a weighted average remaining contractual term of 4.8 years. Since December 31, 2005, the weighted average grant date fair value of options granted was $12.73, the total intrinsic value of options exercised was $8.4 million and 979 thousand options have vested, net of forfeitures, with a total fair value of $2.6 million. At March 31, 2006, the total compensation cost related to nonvested options not yet recognized was $1.7 million with a weighted average expense recognition period of 3 years.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

Additional information regarding options outstanding as of March 31, 2006 is as follows (options in thousands):

						Weighted				Weighted								Weighted
						Average				Average								Average
Range of		Options				Exercise				Remaining				Options				Exercise
Option Prices		Outstanding				Price				Contractual Life				Exercisable				Price
$0 - $7			847			$	4.03			6.8 years					828			$	4.00
$7 - $14			1,282				11.92			4.8 years					1,108				11.95
$14 - $21			115				14.25			3.4 years					115				14.24
$21 - $28			423				23.09			4.3 years					314				23.06

Nonvested Stock

The majority of the nonvested stock awards issued under the 2005 Plan are restricted as to transferability and salability with these restrictions being removed in equal annual installments over the five-year period following the grant date. The majority of the nonvested stock awards issued under the 1997 Plan are restricted as to transferability and salability with these restrictions expiring ratably over a three-year or five-year period, expiring after six years from the date of grant or expiring ratably from the second anniversary to the sixth anniversary of the date of grant.

During the first quarter of 2001 and 2004, approximately 356 thousand and 341 thousand, respectively, nonvested common stock shares with performance accelerated vesting features were awarded to certain senior executives and key employees under the Company’s 1997 Stock Incentive Plan, as amended. The nonvested shares vest either six years from the date of grant or 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 vesting is either the Company’s stock price or earnings per share. As of March 31, 2006, 696 thousand shares were issued as nonvested performance shares and approximately 459 thousand shares have vested. Approximately 45 thousand shares have been cancelled.

In prior periods, unearned stock compensation was recorded within shareholders’ equity at the date of award based on the quoted market price of the Company’s common stock on the date of grant and was amortized to expense using the straight-line method from the grant date through the earlier of the vesting date or the estimated retirement eligibility date. Upon adoption of SFAS 123(R), the $4.8 million of unearned stock compensation as of December 31, 2005 was required to be charged against additional paid-in capital.

A summary of all nonvested stock activity since the Company’s most recent fiscal year end is as follows (shares in thousands):

						Weighted
						Average
		Shares				Grant Date
		Outstanding				Fair Value
Balance At December 31, 2005			743			$	9.90
Granted			229				23.48
Vested			(262	)			8.73
Forfeited			—				—
Balance At March 31, 2006			710			$	14.72

As of March 31, 2006, there was $1.3 million of total unrecognized compensation cost related to performance-based nonvested stock and $8.1 million of total unrecognized compensation cost related to all other nonvested stock. The cost is expected to be recognized over a weighted average period of 2.8 years for the performance-based nonvested stock and 4.4 years for all other nonvested stock.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

12. Earnings Per Common Share

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

		Three Fiscal Months Ended
		March 31,				April 1,
		2006				2005
Earnings per common share — basic:
Net income		$	21.4			$	9.0
Less: preferred stock dividends			(0.1	)			(1.5	)
Net income for basic EPS computation (1)		$	21.3			$	7.5
Weighted average shares outstanding for basic EPS computation (2)			50.0				39.2
Earnings per common share — basic		$	0.43			$	0.19
Earnings per common share — diluted:
Net income		$	21.4			$	9.0
Less: preferred stock dividends, if applicable			(0.1	)			n/a
Net income for diluted EPS computation(1)		$	21.3			$	9.0
Weighted average shares outstanding			50.0				39.2
Dilutive effect of stock options and restricted stock units			1.1				1.2
Dilutive effect of assumed conversion of preferred stock, if applicable			0.5				10.3
Weighted average shares outstanding for diluted EPS computation(2)			51.6				50.7
Earnings per common share — diluted		$	0.41			$	0.18

The earnings per common share — assuming dilution computation excludes the impact of an insignificant amount of stock options in the first three fiscal months of 2006 and 1.6 million stock options and restricted stock units in the first three fiscal months of 2005 because their impact was anti-dilutive.

13. 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.

The energy segment manufactures and sells wire and cable products that include low-, medium-, high- and extra 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 and data applications. Segment net sales represent sales to external customers. Segment operating income represents income before interest income, interest expense, other income (expense), other financial costs or income taxes. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies (see Note 2).

Corporate assets included cash, deferred income taxes, certain property, including property held for sale, prepaid expenses and other current and non-current assets. The property held for sale consists of real property remaining from the Company’s closure of certain manufacturing operations in the amount of $2.5 million at March 31, 2006 and $3.1 million at December 31, 2005. These properties are actively being marketed for sale.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

Summarized financial information for the Company’s operating segments for the three fiscal months ended March 31, 2006 and April 1, 2005 is as follows (in millions).

		Three Fiscal Months Ended
						Industrial &
		Energy				Specialty				Communications				Corporate				Total
Net Sales:
March 31, 2006		$	300.1			$	354.2			$	150.0			$	—			$	804.3
April 1, 2005			196.5				241.2				116.5				—				554.2
Operating Income:
March 31, 2006			18.5				19.9				3.8				—				42.2
April 1, 2005			12.3				9.2				2.7				—				24.2
Identifiable Assets:
March 31, 2006			509.6				646.8				315.6				158.0				1,630.0
December 31, 2005			473.7				580.8				301.8				166.9				1,523.2

14. Commitments and Contingencies

Certain present and former operating sites, or portions thereof, currently or previously owned or leased by current or former operating units of General Cable are the subject of investigations, monitoring or remediation under the United States Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or Superfund), the Federal Resource Conservation and Recovery Act or comparable state statutes or agreements with third parties. These proceedings are in various stages ranging from initial investigations to active settlement negotiations to implementation of the cleanup or remediation of sites.

Certain present and former operating units of General Cable in the United States have been named as potentially responsible parties (PRPs) at several off-site disposal sites under CERCLA or comparable state statutes in federal court proceedings. In each of these matters, the operating unit of General Cable is working with the governmental agencies involved and other PRPs to address environmental claims in a responsible and appropriate manner.

At March 31, 2006 and December 31, 2005, General Cable had an accrued liability of approximately $2.1 million and $2.3 million, respectively, for various environmental-related liabilities of which General Cable is aware. American Premier Underwriters Inc., a former parent of General Cable, agreed to indemnify General Cable against all environmental-related liabilities arising out of General Cable’s or its predecessors’ ownership or operation of the Indiana Steel & Wire Company and Marathon Manufacturing Holdings, Inc. businesses (which were divested by General Cable), without limitation as to time or amount. While it is difficult to estimate future environmental-related liabilities accurately, General Cable does not currently anticipate any material adverse impact on its results of operations, financial position or cash flows as a result of compliance with federal, state, local or foreign environmental laws or regulations or cleanup costs of the sites discussed above.

As part of the acquisition of the worldwide energy cable and cable systems business of BICC plc, BICC plc agreed to indemnify General Cable against environmental liabilities existing at the date of the closing of the purchase of the business. The indemnity is for an eight-year period ending in 2007 while General Cable operates the businesses subject to certain sharing of losses (with BICC plc covering 95% of losses in the first three years, 80% in years four and five and 60% in the remaining three years). The indemnity is also subject to the overall indemnity limit of $150 million, which applies to all warranty and indemnity claims in the transaction. In addition, BICC plc assumed responsibility for cleanup of certain specific conditions at several sites operated by General Cable and cleanup is mostly complete at those sites. In the sale of the European businesses to Pirelli in August 2000, the Company generally indemnified Pirelli against any environmental-related 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 businesses sold to Pirelli terminated upon the sale of those businesses to Pirelli. At this time, there are no claims outstanding under the general indemnity provided by BICC plc. In addition, the Company generally indemnified Pirelli against other claims relating to the prior operation of the business. Pirelli has asserted claims under this indemnification. The Company is continuing to investigate these claims and believes that the reserves currently included in the Company’s balance sheet are adequate to cover any obligation it may have.

General Cable had agreed to indemnify Raychem HTS Canada, Inc. against certain environmental liabilities arising out of the operation of the business it sold to Raychem HTS Canada, Inc. prior to its sale. The indemnity was for a five year period from

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

the closing of the sale, which ended in April 2006, and was subject to an overall limit of $60 million. No outstanding claims exist under this expired indemnity.

General Cable has also agreed to indemnify Southwire Company against certain environmental liabilities arising out of the operation of the business it sold to Southwire prior to its sale. The indemnity is for a ten year period from the closing of the sale, which ends in the fourth quarter of 2011, and is subject to an overall limit of $20 million. At this time, there are no claims outstanding under this indemnity.

As part of the acquisition of Silec^®, SAFRAN SA agreed to indemnify General Cable against environmental losses arising from breach of representations and warranties on environmental law compliance and against losses arising from costs General Cable could incur to remediate property acquired based on a directive of the French authorities to rehabilitate property in regard to soil, water and other underground contamination arising before the closing date of the purchase. These indemnities are for a six-year period ending in 2011 while General Cable operates the businesses subject to certain sharing of losses (with SAFRAN covering 100% of losses in year one, 75% in years 2 and 3, 50% in year 4, and 25% in years five and six). The indemnities are subject to an overall limit of €4.0 million.

In addition, Company subsidiaries have been named as defendants in lawsuits alleging exposure to asbestos in products manufactured by the Company. At March 31, 2006, there were approximately 7,800 non-maritime claims and 33,300 maritime asbestos claims outstanding. At March 31, 2006 and December 31, 2005, General Cable had accrued approximately $2.5 million and $2.5 million, respectively, for these lawsuits.

The Company does not believe that the outcome of the litigation will have a material adverse effect on its results of operations, financial position or cash flows.

General Cable is also involved in various routine legal proceedings and administrative actions. Such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on its result of operations, cash flows or financial position.

In conjunction with the assessment that the Company carried out as a result of the requirements of FIN 47, “Accounting for Conditional Asset Retirement Obligations,” the Company identified various operating facilities that contain encapsulated asbestos that existing legislation would require the Company to dispose of with special procedures upon a demolition or major renovation of the facilities. No liability has currently been recognized on the Company’s Condensed Consolidated Balance Sheet for these special procedures since the Company does not have the information available to estimate a range of potential settlement dates. The estimate is not possible due to the fact that the operating facilities are in full use and no plans in any budget, forecast or other forward-looking plan of the Company currently projects any of these facilities to undergo demolition or major renovation. At any time in the future when any of these facilities is designated for demolition or major renovation, the Company will then have the information it needs to estimate and record the potential liability, and the Company intends to do so at that time.

The Company’s principal U.S. operating subsidiary has unconditionally guaranteed the payments required to be made to the parties involved in the cross currency and interest rate swap that the Company entered into in 2005. The guarantee continues until the commitment under the swap has been paid in full, including principal plus interest, with the final amount due in November 2007. The maximum exposure under this guarantee was approximately $174.6 million as of March 31, 2006, but the net exposure position was a favorable $4.0 million. As of March 31, 2006, the amount that was recorded for this liability was not significant.

The Company had outstanding letters of credit related to its revolving credit agreement of approximately $32.9 million and $34.4 million, respectively, as of March 31, 2006 and April 1, 2005. These letters of credit are primarily renewed on an annual basis, and the majority of the amount relates to risks associated with an outstanding industrial revenue bond, with self insurance claims and with defined benefit plan termination.

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

15. 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.

Condensed Statements of Operations
Three Fiscal Months Ended March 31, 2006

										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
Net sales:
Customers		$	—			$	454.9			$	349.4			$	—			$	804.3
Intercompany			12.2				—				—				(12.2	)			—
			12.2				454.9				349.4				(12.2	)			804.3
Cost of sales			—				403.3				303.4				—				706.7
Gross profit			12.2				51.6				46.0				(12.2	)			97.6
Selling, general and administrative expenses			11.4				34.0				22.2				(12.2	)			55.4
Operating income			0.8				17.6				23.8				—				42.2
Other income (expense)			—				(0.1	)			0.9				—				0.8
Interest income (expense):
Interest expense			(6.4	)			(15.4	)			(1.5	)			13.2				(10.1	)
Interest income			12.5				0.2				1.0				(13.2	)			0.5
			6.1				(15.2	)			(0.5	)			—				(9.6	)
Income before income taxes			6.9				2.3				24.2				—				33.4
Income tax provision			(2.4	)			(1.5	)			(8.1	)			—				(12.0	)
Net income			4.5				0.8				16.1				—				21.4
Less: preferred stock dividends			(0.1	)			—				—				—				(0.1	)
Net income applicable to common shareholders		$	4.4			$	0.8			$	16.1			$	—			$	21.3

GENERAL CABLE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — (Continued)

Condensed Statements of Operations
Three Fiscal Months Ended April 1, 2005

										Non-
						Guarantor				Guarantor
		Issuer				Subsidiaries				Subsidiaries				Eliminations				Total
Net sales:
Customers		$	—			$	351.9			$	202.3			$	—			$	554.2
Intercompany			112.2				—				5.2				(117.4	)			—
			112.2				351.9				207.5				(117.4	)			554.2
Cost of sales			98.1				316.8				174.3				(102.4	)			486.8
Gross profit			14.1				35.1				33.2				(15.0	)			67.4
Selling, general and administrative expenses			12.5				28.6				17.1				(15.0	)			43.2
Operating income			1.6				6.5				16.1				—				24.2
Other expense			—				(0.1	)			—				—				(0.1	)
Interest income (expense):
Interest expense			(7.4	)			(11.6	)			(1.2	)			9.9				(10.3	)
Interest income			9.5				—				0.8				(9.9	)			0.4
			2.1				(11.6	)			(0.4	)			—				(9.9	)
Income (loss) before income taxes			3.7				(5.2	)			15.7				—				14.2
Income tax (provision) benefit			(1.3	)			1.4				(5.3	)			—				(5.2	)
Net income (loss)			2.4				(3.8	)			10.4				—				9.0
Less: preferred stock dividends			(1.5	)			—				—				—				(1.5	)
Net income (loss) applicable to common shareholders		$	0.9			$	(3.8	)		$	10.4			$	—			$	7.5