UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

[X ][X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee[No Fee Required]

For the fiscal year ended December 31, 19941997
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]

For the transition period from to
___________ ___________

Commission File Number 1-7418
______file number 1-10211
_______

ESSEX GROUP, INC.
______________________________________________________----------------------------------------------------
(Exact name of registrant as specified in its charter)

MICHIGAN 35-1313928
__________________________________________________________________________- --------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1601 WALL STREET, FORT WAYNE, INDIANA 46802
__________________________________________________________________________- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number:number, including area code: (219) 461-4000

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

Name of each exchange on
Title of each class which registered

10% Senior Notes due 2003 Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:

None
__________________________________________________________________________
(Title of class)- --------------------------------- -------------------------

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

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.

[X ] [X] Yes
[ ] No

No voting stock is held by non-affiliates of the registrant.

As of February 28, 1995January 31, 1998 the registrant had outstanding 100 shares of $.01
Par Value Common Stock.

The registrant does not have a class of equity securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934.

DOCUMENTS INCORPORATED BY REFERENCE

- NonePortions of the Proxy Statement prepared for the 1998 Annual Meeting of
Shareholders of Essex International Inc. are incorporated by reference
into Part III of this report.

Portions of the Essex International Annual Report on Form 10-K are
incorporated by reference into Part III of this report.

PART I

ITEM 1. BUSINESS

GENERAL

Essex Group, Inc. (the "Company") develops, manufacturesis a wholly owned subsidiary of
Essex International Inc. ("Essex International") (formerly known as
BCP/Essex Holdings Inc.). The principal asset of Essex International is
all of the outstanding common stock of the Company.

In October 1992, Essex International was acquired by Bessemer
Holdings, L.P. ("BHLP") (an affiliate and marketssuccessor in interest to
Bessemer Capital Partners, L.P.), certain present and former employees of
Essex and other investors.

On May 1, 1997, Essex International completed its initial public
offering (the "Offering") of 6,546,700 shares of common stock, including
3,546,700 shares sold by certain existing shareholders. In connection
with the Offering, BCP/Essex Holdings Inc.'s name was changed to Essex
International Inc.

The Company, founded in 1930, is a leading North American developer,
manufacturer and distributor of electrical wire and cable and electrical insulation
products.products serving over 11,000 customers worldwide in a wide range of
industrial markets from its 28 manufacturing facilities and 38 service
centers located throughout the United States and Canada. Among the
Company's products are building wire for commercial and residential
and commercialconstruction applications; magnet wire and insulation materials for
electromechanical devices such as motors, transformers and electrical
controls; copper voice and datacom wire; industrial wire for applications
in construction, appliances, recreational vehicles and industrial
facilities; and automotive wire and specialty wiring assemblies for
automobiles and trucks; industrial wires for applications
in appliances, construction and recreational vehicles; voice and data
communication wire and cable; and insulation products including mica paper
and mica-based composites. The Company's operations at December 31, 1994
included 26 domestic manufacturing facilities and employed approximately
3,850 persons.

The Company was founded in Detroit, Michigan in 1930 to manufacture
electrical wire harnesses for automobiles exclusively for the Ford Motor
Company. United Technologies Corporation ("UTC") acquired the Company in
1974 and operated it as a wholly-owned subsidiary. On February 29, 1988,
MS/Essex Holdings Inc. ("Holdings"), acquired the Company from UTC. The
outstanding common stock of Holdings was beneficially owned by the Morgan
Stanley Leveraged Equity Fund II, L.P., certain directors and members of
management of Holdings and the Company, and others.

On October 9, 1992, Holdings was acquired (the "Acquisition") by
merger (the "Merger") of B E Acquisition Corporation ("BE") with and into
Holdings with Holdings surviving under the name BCP/Essex Holdings Inc.
BE was a newly organized Delaware corporation formed for the purpose of
effecting the Acquisition. The shareholders of BE included Bessemer
Capital Partners, L.P. ("BCP"), affiliates of Goldman, Sachs & Co.
("Goldman Sachs"), affiliates of Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), Chemical Equity Associates, A California Limited Partnership
("CEA"), and members of management and other employees of the Company. As
a result of the Merger, the stockholders of BE became stockholders of
Holdings. In 1993, BCP transferred its ownership interest in Holdings to
Bessemer Holdings, L.P. ("BHLP"), an affiliate of BCP. See note 2 to the
table included herein setting forth information regarding beneficial
ownership of Holdings common stock under the caption "Item 12. Security
Ownership of Certain Beneficial Owners and Management" for information
regarding BHLP.trucks.

PRODUCT LINES

The following table sets forth for each of the three years in the three
year
period ended December 31, 19941997 the dollar amounts and percentages of sales
of each of the Company's major product lines and identifies the
division (defined below) with which each line is associated:

1lines:

Sales
Percentage of Sales
------------------------------ -----------------------
1994 1993 1992 1994 1993 1992
------ ------ ------ ------ ------ ---------------------------------------------------
1995 1996 1997
---- ---- ----
(In millions)

Building wire (WCD) $403.9 $332.2 $374.6 40% 38% 41%406.1 $487.1 $761.7
Magnet wire (MWI) 306.9 240.9 230.3 30 28 25
Automotive & industrial wire (EPD) 132.0 114.0 108.3 13 13 12388.2 388.8 412.1
Communication wire & cable (EPD) 119.3 135.9 154.0 12 16 17
Insulation products (MWI) 46.4 43.7 40.1177.5 166.8 187.9
Industrial wire 63.4 71.0 121.6
Automotive wire 97.3 91.2 93.9
Other (a) 69.2 127.1 124.1
------ ------ ------

Total $1,201.7 $1,332.0 $1,701.3
======== ======== ========

Percentage of Sales
---------------------------------------------
1995 1996 1997
---- ---- ----
(In millions)

Building wire 34% 37% 45%
Magnet wire 32 29 24
Communication wire 15 13 11
Industrial wire 5 5 57
Automotive wire 8 7 6
Other 1.6 2.1 2.1 --(a) --(a) --(a)
-------- ------ ------ ----- ----- -----6 9 7
--- --- ---

Total $1,010.1 $868.8 $909.4 100% 100% 100% ======== ====== ====== ===== ===== =====100%

(a) Less than 1.0%.

DIVISION OPERATIONS

The Company classifies its operations into three major divisions
based onIncludes sales of third-party manufactured products, including
electrical insulating products, electric motors, motor repair parts
and pump seals sold through the markets served: Wire and Cable Division ("WCD"); Magnet Wire
and Insulation Division ("MWI") and Engineered Products Division ("EPD").
In 1994, the former Telecommunications Products Division ("TPD") was
merged with and into EPD. The electrical wire products manufactured and
sold by TPD were incorporated within a new Communications business unitCompany's distribution business.

An overview of EPD to facilitate the realignmenteach of the Company's communication wire
manufacturing capacity from primarily outside-plant telecommunication
cables to a broader mix of voice and data communication wire and cable
products. A business overview of each major divisionproduct lines is set forth
below.

WIRE AND CABLE DIVISIONBuilding Wire

Industry. The Company estimates that domestic building wire industry
sales have grown approximately 20% from 1993 to 1997. Sales growth in the
building wire industry has resulted primarily from renovation activity, as
well as new nonresidential and residential construction. For 1997,
approximately two-thirds of industry sales volume was attributable to
renovation activity and one-third to new construction. Both new
construction and renovation growth are also being affected by the
increased number of circuits and amperage handling capacity needed to
support the increasing demand for electrical services.

The building wire industry has experienced significant consolidation
in recent years, declining from approximately 28 manufacturers in 1980 to
seven primary manufacturers in 1997. The Company believes this
consolidation is due primarily to cost efficiencies achieved by the larger
building wire producers as they capitalize on the benefits of vertical
integration and of manufacturing, purchasing and distribution economies of
scale. The Company believes that it is one of the two leading domestic
manufacturers of building wire.

Products. WCDThe Company, which began manufacturing building wire in
1933, develops, manufactures and marketsdistributes a complete line of building
wire products. These products include a wide variety of thermoplastic and
other related wire products. Specific examples includethermoset insulated wires for the commercial and industrial construction
markets and service entrance cable, underground feeder wire and
nonmetallic jacketed wire and cable for the residential marketconstruction
market.

Sales and Distribution. The Company sells its building wire products
nationally through an internal sales force and manufacturers
representatives. The customer base is large and diverse, consisting
primarily of electrical distributors and consumer product retailers. The
Company maintains a varietynumber of insulated wires
forstrategically located stocking locations
across the nonresidential commercial market.United States and Canada to meet customers' "just-in-time"
inventory needs. The ultimate end users of the Company's building wire
products are electrical contractors and "do-it-yourself" consumers.

WCD alsoMagnet Wire

Industry. The independent North American supply of magnet wire has
experienced continued growth since 1990 and was, by Company estimates,
approximately 900 million copper equivalent pounds sold in 1997. Sales
growth in the magnet wire industry is driven by increasing demand for
electrical devices containing motors for the home and automobile, along
with continuing consumer and government pressure for higher energy
efficiency from these devices (energy efficient motors utilize materially
more magnet wire per unit than their traditional counterparts). Strong
consumer demand for greater numbers of electrical convenience items in
homes, offices and vehicles has resulted in increased sales of household
appliances and increased use of electric motors in vehicles.

Due to the substantial capital costs associated with magnet wire
production, the importance of quality to original equipment manufacturers,
stringent technological requirements and the cost efficiencies achieved by
larger magnet wire producers, significant industry consolidation has
occurred during the past ten years. In addition, the percentage of
domestic magnet wire produced by independent magnet wire manufacturers,
such as the Company, has grown as the manufacturing capacity of captive
magnet wire producers (electrical equipment manufacturers who internally
produce their own magnet wire) has declined as a result of outsourcing
over the last several years. Consequently, through the Company's efforts
to improve its manufacturing capabilities, product development and cost
efficiencies, the Company has successfully capitalized on the market
opportunities presented and positioned itself as one of the two leading
independent domestic producers of magnet wire.

Products. The Company offers a comprehensive product line, including
over 500 types of magnet wire used in a wide variety of electromagnetic
devices, such as motors, transformers, control devices, relays, generators
and solenoids. Such electromagnetic devices are found in industrial,
household and automotive applications.

Sales and Distribution. The Company's magnet wire products are sold
to original equipment manufacturers, motor repair shops, coil
manufacturers and independent distributors. Products are marketed
nationally through an internal sales force and the Company's Essex
Brownell distribution business. In 1997, approximately three-fourths of
the company's magnet wire sales were to end users and one-fourth to
distributors.

Communication Wire

Industry. The Company focuses on two segments of the copper
communication wire market: (i) outside plant ("OSP") wire and cable for
voice communication in the local loop segment of telephone networks; and
(ii) datacom premise wire and cable within homes and offices for local
area computer networks ("LANs"), Internet connectivity, and other
applications. OSP and datacom wire and cable industry sales have grown at
compound annual growth rates of 6% and 12%, respectively, from 1993 to
1997.

The local loop segment of the telecommunication network connects
homes and offices to the nearest telephone company switch or central
office. Although other transmission media, such as fiber optic cable, are
extensively used for long distance or trunk lines, copper wire and cable,
with its lower installation cost, improved electronics and ease of repair,
is the most widely used medium for transmission in the local loop, which
comprises approximately 160 million residential and business access lines
across the United States. As a result of consolidation in the OSP copper
wire industry, total industry capacity has declined and the number of
manufacturers has been reduced.

Datacom wire and cable is used within buildings to connect
telecommunication devices (telephones, facsimile machines and computer
modems) to the telecommunications network and to establish LANs. Rapid
technological advances in communication and computer systems have created
increasing demand for greater bandwidth capabilities in data transmission
cable products. The Company expects demand for enhanced datacom wire
products to increase significantly in the future, particularly as office
buildings are upgraded to accommodate advanced network requirements. In
addition, the Company believes that demand for multiple residential access
lines will increase as more households install additional lines for
facsimile machines, access to the internet and for home offices.
Significant capital investments are required by manufacturers in order to
keep pace with the demand for product quality and the rapid pace of
technological change.

Products. Although the Company maintains a strong presence in the
OSP market, it continues to shift its focus to the datacom wire and cable
market which provides potentially greater long-term growth opportunities.
Sales volumes of the Company's datacom wire products have grown at a
compound annual growth rate of 40% since 1992. Additionally, the Company
recently developed a broad band "extra terrestrial" cable to support new
technologies within the OSP market segment, and an enhanced category five
wire for high-speed LAN applications within the datacom market.

Sales and Distribution. While a significant amount of OSP has
historically been sold directly to domestic telephone companies, the
Company has recently focused its sales of both OSP and datacom wire to
domestic and international distributors and representatives who in turn
resell to contractors, international and domestic telephone companies and
private overseas contractors for installation in the industrial,
commercial and residential markets.

Industrial Wire

Industry. Significant factors influencing industrial wire sales
growth include the construction and expansion of manufacturing plants,
mine expansion and consumer spending for hard goods. Due to the diversity
of product offerings within this industry, the Company's competition is
fragmented across the product lines and markets served.

Products. The Company develops, manufactures and markets a broad
line of industrial wire and cable consisting ofproducts including appliance wire, motor
lead wire, submersible pump cable, power cable, bulk flexible cord, power
supply cord sets, welding cable and recreational vehicle wire.

TheseSales and Distribution. The Company sells industrial wire and cable
products are sold primarily to appliance and power tool manufacturers, suppliers of
electrical and electronic original equipment manufacturers, electrical
distributors and to welding products distributors. The industrialIndustrial wire and
cable product line was transferred
from EPD to WCD in the fourth quarter 1994 to more effectively align the
related marketing and manufacturing efforts of the Company. For
accounting and reporting purposes this change did not become effective
until January 1, 1995.

Sales and Marketing. WCD has produced building wire and cable in the
United States since 1933. WCD has developed and maintained a large and

diverse customer base, selling primarily to electrical distributors,
hardware wholesalers and consumer product retailers. WCD productscables are marketed nationally through manufacturers representatives anda combination of a Company sales
force. WCD also maintains distribution facilities throughout the
United States,force and one in Canada.

Historically, approximately 65% of WCD's buildingmanufacturers representatives.

Automotive Wire

Industry. The automotive primary wire market is
attributablehas experienced strong
growth over the last decade due to remodelinghigher production levels of new
vehicles and repair activity while the remaining 35% is
attributable to new residential and nonresidential construction.

MAGNET WIRE AND INSULATION DIVISION

Products. MWI develops and manufactures magnet wire and insulation
products for the electrical equipment and electronics industriesa significant increase in the United States. MWI offers a comprehensive lineinstallation of insulationelectrical
options in vehicles, which deliver increased safety, convenience and
magnetengine performance to the consumer. These electrical options include
power windows, supplemental restraint systems, digital displays, keyless
entry, traction control, electronic suspension and anti-lock brakes.

The increasing demand for copper wire content in vehicles has created
strong demand for thinner-gauge wire, which in turn requires significant
manufacturing sophistication. The Company and its major competitors also
face stringent demands by automotive manufacturers to increase cost
efficiency, thereby increasing the required levels of capital investment
to remain competitive in this industry.

Products. The Company's automotive wire products including over 500 typesinclude primary
wire for use in engine and body harnesses, ignition wire, battery cable
and specialty wiring assemblies. Through a joint venture with Raychem
Corp., the Company has begun to develop a high-temperature resistant,
thinner-gauge automotive wire designed to meet future specialized needs of
magnet wire used in a wide
variety of motors, coils, relays, generators, solenoids and transformers.the automotive industry.

Sales and Marketing. Historically, 66% of MWI sales have been made
directly to end users and 34% of sales have been to distributors.Distribution. The Company distributes electrical insulating materials and certain appliance
and magnetsells automotive wire products
primarily to tier-one motor vehicle manufacturer suppliers. The Company
has diversified its customer base for automotive wire products through
its IWI distribution chain ("IWI"). IWI
is a national distributor providing the Company access to small original
equipment manufacturerssteadily improving product quality and motor repair markets.

A joint venture between the Company and the Furukawa Electric
Company, LTD., Tokyo, Japan ("Femco") was established in 1988 to market
magnet wire products, with special emphasis on products required by
Japanese manufacturers for their production facilities in the United
States. In 1993, the Company completed construction of a new magnet wire
manufacturing facility that is occupied by both the Company and Femco.

ENGINEERED PRODUCTS DIVISION

Products. EPD develops, manufactures and markets a variety of
electrical wire products including automotive products (primary wire,
ignition wire, and battery cable), and a broad line of plastic insulated
and jacketed voice and data communication wire and cable. Further, the
acquisition of Interstate Industries, Inc. ("Interstate Industries") in
the fourth quarter 1993 provided EPD the manufacturing capability to
produce specialty wiring assemblies, including heavy truck harnesses, and
automotive ignition wire assemblies.increased productivity achieved
through continuous process improvements. Automotive products are sold
primarily to suppliers of automotive original equipment manufacturers
while communication wire products are
marketed primarily in the United
States for local area networks and telephone networks applications, with
some sales to overseas markets. EPD's industrial wire product line was
transferred to WCD in the fourth quarter 1994 (see the Wire and Cable
Division business overview above.) New product design and materials
development activities for EPD and WCD are supported by EPD's product
development and materials engineering laboratory.

Sales and Marketing. Historically, EPD has had one principal
customer for its automotive products, although the importance of this
customer has declined in relative terms due to the expansion of the
division's overall customer base and inclusion of operations from another
division. The customer accounted for approximately 39%, 40% and 16% of
EPD's revenues in 1992, 1993 and 1994 respectively, although in absolute
terms, sales to this principal customer have remained steady during the

period. Diversification of the division's sales base has been achieved in
part as the result of the retention of an independent sales organization
to provide EPD with the means necessary to attract and service new
automotive customers. EPD's principal automotive customer continues to be
serviced by a dedicated sales representative who isthrough a Company employee.
Sales representatives from MWI also service some of the division's other
automotive wire customers. Voicesales force and data communication wire products are
sold principally to communications system contractors and domestic
telephone companies and to telephone companies and private contractors
overseas.

BUSINESS DEVELOPMENT

The Company has established plans to increase sales across many of
its product lines by expanding product offerings within compatible
markets, targeting new global markets for existing products and expanding
penetration in those overseas markets where a presence has already been
established. To accomplish this objective, the Company expects to make
business acquisitions and capital investments in new plant and equipment
as necessary in the United States and intends to pursue select investments
in strategic partners and participate in joint ventures off-shore. A
senior executive directs new business development and international
activities for the Company.

MANUFACTURING STRATEGYmanufacturers' representatives.

Manufacturing Strategy

The Company's manufacturing strategy is primarily focused on
maximizing product quality and production efficiencies. The Company has
achievedefficiencies while maintaining a
high level of vertical integration through internal production of its
principal raw materials: copper rod, magnet wire enamels and extrudable
polymeric compounds. The Company believes one of its primary cost and
quality advantages in the magnet wire business is the ability to produce
most of its enamel and copper rod requirements internally. Similarly, the
Company believes its ability to develop and produce PVC and rubber
compounds, which are used as insulation and jacketing materials for many
of its building wire, communication wire, automotive industrial and communicationindustrial wire
products, provides costcompetitive advantages because the process achieves greater control over the
cost and quality of essential components used in production.production can be
achieved. These operations are supported by the Company's metallurgical,
chemical and polymer development laboratories.

To further optimize production efficiencies, the Company invests in
new plants and equipment, pursues plant rationalizations, and participates
in joint venture opportunities. During the period 1988 through 1991, the
Company invested an average $13.4 million per year on capital projects.
During the period 1992 through 1994 the Company invested an average $29.2
million per year on capital projects. The major projects in this most
recent period entailed increasing capacity and upgrading equipment. No
single capital project expenditure in 1994 exceeded $4.0 million.

MANUFACTURING PROCESS

Copper rod is the base component for most of the Company's wire
products. The Company buys copper cathode from a variety of producers and
dealers and also reclaims and reprocesses high grade scrap copper from its
own and other operations. See "Metals Operations." After the rod is
manufactured at the Company's rod mills, it is shipped to other

manufacturing facilities where it is processed into the wire and cable
products produced by the Company. See "Copper Rod Production."

The manufacturing processes for all of the Company's wire and cable
products require that the copper rod be drawn and insulated. Certain
products also require that the wire be "bunched" or "cabled".

Wire Drawing. Wire drawing is the process of reducing the metal
conductor diameter by pulling it through a converging die until the
specified product size is attained. Since the reduction is limited by the
breaking strength of the metal conductor, this operation is repeated
several times internally within the machine. As the wire becomes smaller,
less pulling force is required. Therefore, machines operating in specific
size ranges are required. Take-up containers or spools are generally
large, allowing one person to operate several machines.

Bunching. Bunching is the process of twisting together single wire
strands to form a concentric construction ranging from seven to over 200
strands. The major purpose of bunching is to provide improved flexibility
while maintaining current carrying capacity. For some applications (for
example, automotive uses), the final wire must be concentric, requiring
accurate control of the bare wire's mechanical properties, tension, and
diameter. In other applications, such as building wire, different
diameters are used within the single conductors to produce a round wire.

Insulating. The magnet wire insulating materials (enamels)
manufactured by the Company's chemical processing facility are polymeric
materials produced by one of two methods. One method involves the
blending of commercial resins which are dissolved in various solvents and
then modified with catalysts, pigments, cross-linking agents and dyes.
The other method involves building polymer resins to desired molecular
weights in reactor systems.

The enamelling process used in the manufacture of some magnet wire
involves applying several thin coats of liquid enamel and evaporating the
solvent in baking chambers. Some enamels require a specific chemical
reaction in the baking chamber to fully cure the film. Enamels are
generally applied to the wires in excess, which is then metered off with
dies or rollers; however, some applications apply only the required amount
of liquid enamel.

Most other wire products are insulated with thermoplastic, thermoset
or rubber compounds through an extrusion process. Extrusion involves the
feeding, melting and pumping of a compound through a die to shape it into
final form as it is applied to the wire. The Company has the capability
to manufacture all three types of jacketing and insulating compounds,
which are then extruded onto wire.

Once the wire is fabricated, it is packaged and shipped to regional
warehouses, distributors or directly to customers.

METALS OPERATIONS

Although the Company classifies its business into three principal
divisions (see "Division Operations" above) the metals operations, due to
cost efficiencies, are centrally organized.Metals Operations

Copper is the criticalprimary component of the Company's overall cost
structure, comprising approximately 56% of the Company's 19941997 total production cost
of sales.

5goods sold. Due to the critical nature of copper to its business, the
Company has centrally organized its metal operations. Through
centralization, the Company carefully manages its copper procurement,
internal distribution, manufacturing and scrap recycling processes.

The Company's metals operations are vertically integrated in the
production of copper rod, and therod. The Company believes that only a few of its
competitors are able to match this capability. The Company manufactures
most of its copper rod requirements and purchases the remainder from
various suppliers.

COPPER PROCUREMENT

The Company's copper procurement activities are centralized.Copper Procurement. In 19941997, the Company purchased approximately
238,000365,000 tons of copper.copper, entirely from North American copper producers and
metals merchants constituted the source for
approximately 98%merchants. To ensure a steady supply of such copper.

Under producer contracts,copper, the Company
commits to take a specified
tonnage per month.contracts with copper producers and metals merchants. Most producer contracts have
a one-year term. Pricing provisions vary, but they are based on the New York Commodity Exchange,
Inc. ("COMEX") price plus a premium. Under merchant contracts, prices are
alsonormally based on the
COMEX price, plus a premium. Payment terms are
negotiated.premium to cover transportation and payment terms.
Additionally, to a limited extent, the Company utilizes forwardCOMEX fixed price and futures contracts to
manage its commodity price risk on this principal raw material.risk. The companyCompany does not hold or issue thesesuch
contracts for investment or trading purposes.

Historically, the Company has had adequate supplies of raw materialscopper
available to it from producers and dealers,merchants, both foreign and domestic.
Competition from other users of copper has not affected the Company's
ability to meet its copper procurement requirements. However, no
assurance can be given that the Company will be able to procure adequate
supplies of copper to meet its future needs.

COPPER ROD PRODUCTIONCopper Rod Production. The production of copper rod is an essential
part of the Company's manufacturing process. Through vertical integration,process and strategy. By
manufacturing its own rod, the Company's
abilityCompany is able to manufacture rod providesmaintain greater control
over the cost and quality of the principal component used in producing most of the Company's
products. Copper rod is manufactured by a continuous casting process
where high quality copper cathodes are melted in a shaft furnace. The
molten copper is transferred to a holding furnace and siphoned directly
onto a casting wheel where it is cooled and subsequently rolled into
copper rod. The rod is subjected to quality control tests to determine
that it meets the high quality standards of the Company's products.
Numerous other quality tests are performed throughout the process to
determine rod characteristic and provide proper utilization of rod by
plants requiring specific processing requirements. Finally, the rod is
packaged for shipment via an automatic in-line coiling packaging device.this critical raw material.

The Company's rod production facilities are strategically located
near its major wire producing plants to minimize freight costs. During
the third quarter 1994, the Company commenced production from a fifthFrom its
five continuous casting unit at an existing facility to further supply its rod
requirements and reduce costs. With the addition of this unit,units, the Company has the capability to produce
approximately 85% of its rod requirements, while purchasing the balance
from external sources.

6 External rod purchases are used to cover rod
requirements at manufacturing locations where shipping Company-produced
rod is not cost effective and when the Company's rod requirements exceed
its production capacity.

COPPER SCRAP RECLAMATIONCopper Scrap Reclamation. The Company's Metals Processing Center
receives clean, high quality copper scrap from a majority of the Company's magnet wire
plants. Copper scrap is processed in rotary furnaces, which also have
refining capability to remove impurities. A casting process is employed to manufacture copper
rod from scrap material. ThisThe Company uses a continuous
casting process is unique in the
industry in the conversion ofto convert scrap material directly into copper rod.
Manufacturing cost economies, particularly in the form of energy savings,
result from the
Company'sthis direct productionconversion technique. Additionally, management
believes that internal reclamation of scrap copper provides greater
control over the cost to recover the Company's principal manufacturing by-product.by-
product. The Company also, from time to time, obtains magnet wire scrap
from other copper wire producers and processes it along with the internalits
internally generated scrap.

EXPORTSExports

Sales of exported goods approximated $52.7$55.5 million, $70.6$85.8 million and
$75.5$107.9 million for the years ended December 31, 1994, 1993,1995, 1996 and 1992,1997,
respectively. CommunicationBuilding wire, magnet wire and communication cables are
Essex' primary exports; Canada and Mexico are the Company's primary product
exports.

BACKLOGlargest export markets.

Backlog; Returns

The Company has no significant order backlog in thatbecause it follows the
industry practice of producing its products on an ongoing basis to meet
customer demand without significant delay. The Company believes that the
ability to supply orders in a timely fashion is a competitive factor in
the markets in which it operates. COMPETITIONHistorically, returns have had no
material adverse effect on the Company's results of operations.

Competition

In each of the Company's operating divisions,businesses, the Company experiences
competition from at least one major competitor.company. However, due to the
diversity of the Company's product lines as a whole, no single competitorcompany
competes with the Companyit across the entire spectrum of the Company's product
lines. Thus, the Company's diversity of products and diversity of end
users insulate it from adverse conditions in any one business unit or any
one product line. Many of the Company's competitors do not have such
diversity.

Many of the Company's products are made to industry specifications,
and are therefore essentially fungible with those of competitors.
Accordingly, in these markets the Company is subject in many markets to competition on the
basis of price, delivery time, customer service and its ability to meet
specialty needs. The Company believes it enjoys strong customer relations
resulting from its long participation in the industry, its emphasis placed on
customer service, its commitment to quality control, reliability and its
substantial production resources. The Company's distribution networks
enable it to compete effectively with respect to delivery time. From time
to time, the Company has experienced reduced margins in certain markets
due to price cuttingunfavorable market conditions.

Environmental Compliance

The Company does not believe that compliance with environmental laws
and regulations will have a material effect on the level of capital
expenditures of the Company or its business, financial condition, cash
flows or results of operations. The Company does not currently anticipate
material capital expenditures for environmental control facilities. No
material expenditures relating to these matters were made in 1995, 1996 or
1997. In connection with the February 1988 acquisition of Essex from
United Technologies Corporation ("UTC") by competitors.

EMPLOYEESthe Company's previous
stockholders (the "1988 Acquisition"), and associated Stock Purchase
Agreement with UTC dated January 15, 1988 (the "1988 Acquisition
Agreement"), UTC indemnified the Company with respect to certain
environmental liabilities. See "Item 3. Legal Proceedings" for further
discussion of the Company's environmental liabilities and the UTC
indemnity.

Employees

As of December 31, 1994 the Company1997 Essex employed approximately 1,2551,700 salaried
and 2,5953,400 hourly employees in 3335 states. Labor unions represent
approximately 52%50% of the Company's work force. Collective bargaining
agreements expire at various times between 19951998 and 1998. Contracts

72001 with contracts
covering approximately 28%34% of the Company's unionized work force willdue to
expire at various times during 1995.in 1998. The Company believes that it will be
able to renegotiate itsthese contracts covering such unionized employees on
terms that will not be materially adverse to it, however,it. However, no assurance
can be given to that effect. The Company believes that its relations with
both unionized and nonunionized employees have been good.satisfactory.

ITEM 2. PROPERTIES

At December 31, 19941997 the Company operated 2628 manufacturing facilities
in 1216 states. Except as indicated below, all of the facilities are owned
by the Company, subject to certain liens granted to the lenders pursuant
to the Essex Revolving Credit Agreement (as defined herein) or its
subsidiaries. The Company believes that its facilities and equipment are
reasonably suited to its needs and are properly maintained and adequately
insured.

The following table sets forth certain information with respect to
the manufacturing facilities of the CompanyEssex at December 31, 1994:1997:

Square
Operation Location Feet
--------- -------- ------

Engineered Products . . . . . . Chester, SC 218,000
Hoisington,
Building Wire Anaheim, CA 174,000
Columbia City, IN 400,000
Lithonia, GA 144,000
Pauline, KS 239,000
Kosciusko, MS 90,000(a)
Lexington, MS 43,000
Marion, IN 50,000
Orleans, IN 425,000501,000
Sikeston, MO 189,000
Tiffin, OH 260,000

Magnet Wire . . . . . . . . . . Charlotte, NC 26,000 (Leased)
Fort Wayne, IN 181,000
Franklin, IN 35,000(b)35,000(a)
Franklin, TN 289,000 (Leased)
Kendallville, IN 88,000
Rockford, IL 319,000
Vincennes, IN 267,000

Communication Wire Chester, SC 218,000
Hoisington, KS 239,000

Industrial Wire Florence, AL 129,000
Lafayette, IN 350,000
Pana, IL 110,000
Pawtucket, RI 412,000
Phoenix, AZ 34,000

Automotive Wire Kosciusko, MS 90,000(b)
Marion, IN 50,000
Orleans, IN 425,000

Insulation Newmarket, NH 132,000
(2 facilities)
Rockford, IL 319,000
Rutland, VT 61,000

Vincennes, IN 267,000

Metals Processing . . . . . . . Columbia City, IN 75,000
Jonesboro, IN 56,000

Wire and Cable . . . . . . . . Anaheim, CA 174,000 Columbia City, IN 400,000
Lafayette, IN(c) 350,000
Lithonia, GA 144,000
Marion, IN(c)(d) 254,000 (Leased)
Pana, IL(c) 110,000
Pauline, KS 501,000
Tiffin, OH 260,00075,000
Jonesboro, IN 56,000

(a) The Company is the lessee of approximately 30,000 square feet of the
Kosciusko, MS facility.

(b) The total square footage of the Franklin, IN facility is
approximately 70,000 of which 35,000 square feet is leased to
Femco as described in the third succeeding paragraph below.

(c) These facilities were transferred from the Engineered Products
Division to the Wire and Cable Division late in 1994. (See Division
Operations-Wire and Cable Division.)

(d) The Marion, IN (WCD) facility will be closed effective May 31, 1995.(b) Approximately 30,000 square feet is leased.

In addition to the facilities described in the table above, the
Company owns or leases 24 warehouses38 service centers throughout the United States plus
one each inand
Canada and the Philippines, to facilitate the sale and distribution of its products. The
Company owns and maintains executive and administrative offices in Fort
Wayne, Indiana.

The Company believes that its plants are generally adequate to
service the requirements of its customers. Overall, the Company's plants are utilized
to a substantial, but not full degree. The extent of current
utilization is generally consistent with historical patterns, and, in the
view of the
Company,management, is satisfactory. The Company does not view any of its
plants as being substantially underutilized, except for Marion, IN (WCD), Lafayette,
IN (WCD) and Lexington, MS (EPD), at which less than 50% of the available
space and/or facility is utilized.underutilized. Most plants operate on 24 hour-a-day
schedules, of no
less than three eight hour shifts,on either a five days a week.day or seven day per week basis. During 1994,1997,
the Company's facilities operated overall at approximately 82% of capacity,
with MWI at nearly 100%, EPD at 66%, and WCD at 85% of90% capacity.

The property in Franklin, Indiana is a magnet wire manufacturing
facility occupied by both the Company and Femco.a joint venture between the
Company and the Furukawa Electric Company, LTD., Tokyo, Japan ("Femco").
Half of the Franklin, Indiana building is leased to Femco which was established in 1988 as a
joint venture between the Company and The Furukawa Electric Company, LTD.,
Tokyo, Japan. Femco
manufactures and markets magnet wire with special emphasis on products
required by Japanese manufacturers with production facilities in the
United States. See Division Operations--Magnet Wire and
Insulation.

ITEM 3. LEGAL PROCEEDINGS

LEGAL AND ENVIRONMENTAL MATTERS

The Company is engaged in certain routine litigation arising in the
ordinary course of business. TheWhile the outcome of litigation can never be
predicted with certainty the Company does not believe that the
adverse determinationany of any pendingits
existing litigation, either singlyindividually or in the aggregate, wouldwill have a
material adverse effect upon its business, financial condition, cash flows
or results of operations.

PotentialThe Company's operations are subject to environmental liabilitylaws and
regulations in each of the jurisdictions in which it operates governing,
among other things, emissions into the air, discharges to waters, the Company arises from both
on-site contamination by,use,
handling and off-site disposal of hazardous substances.substances and the investigation and
remediation of soil and groundwater contamination both on-site at Company
facilities and at off-site disposal locations. On-site contamination at
certain Company facilities is the result of historic disposal activities,
including activities attributable to Company operations and those
occurring prior to the use of a facility site by the Company. Off-site
liability would include cleanupincludes clean-up responsibilities at various sites, to be
remedied under federal or state statutes, for which the Company has been
identified by the United States Environmental Protection Agency (the
"EPA") (or the equivalent state agency) as a Potentially Responsible Party
("PRP"). 9

The Company hasCertain environmental laws have been named in government proceedings which involve
environmental matters with potentialconstrued to impose
liability for the entire cost of remediation costs and, in certain
instances, sanctions.upon a PRP at a site without
regard to fault or the lawfulness of the disposal activity.

Once the Company has been named as a PRP, it estimates the extent of
its potential liability based upon its past experience with similar sites
and a number of factors, including, among other things, the number and
financial viability of other identified PRPs, the total anticipated cost
of the remediation and the relative contribution by the Company, in volume
and type, of Company waste at the site. TheMost of the sites for which the Company
believesis currently named as a PRP are covered by an indemnity (the "general
indemnity") from UTC that subjectwas granted in connection with the 1988
Acquisition. Pursuant to the $4.0 million "basket" described below and four other identified sites, it
will not bear the cost of investigation and cleanup at any of these sites
because, pursuant to the Stock Purchase Agreement dated January 15, 1988
(the "1988 Acquisition Agreement") covering the 1988 Acquisition,general indemnity, UTC agreed to indemnify
the Company against all losses as defined in the 1988
Acquisition Agreement, incurred under any environmental protection and
pollution control laws or resulting from or in connection with damage or
pollution to the environment and arising from events, operations or activities
of the Company prior to February 29, 1988, or from conditions or
circumstances existing at or prior to February 29, 1988. Except for
certain matters relatingIn order to permit compliance,be
covered by the Company believes that
it is fully indemnified with respect to conditions, eventsgeneral indemnity, the condition, event, and circumstancescircumstance
must have been known to UTC prior to February 29, 1988, (i.e., matters
referred to in documents which were in UTC's possession, custody or
control prior to the 1988 Acquisition or matters identified to UTC through
the due diligence of Holdings.) Further, the Company is indemnified,
subject to a $4.0 million "basket" (the "Basket"), for losses related to
any environmental events, conditions, or circumstances identified prior to
February 28, 1993 to the extent such losses were not caused by activities
of the Company after February 29, 1988. None of the foregoing was
affectedThe sites covered
by the change in control of Holdings on October 9, 1992.general indemnity are handled directly by UTC, and all payments
required to be made are paid directly by UTC. These sites are all mature
sites where allocations have been settled and remediation is well underway
or has been completed. The Company is not aware of any inability or
refusal on the part of UTC to pay amounts whichthat are owing under the UTC indemnity. There are
currently nogeneral
indemnity or any disputes between the Company and UTC concerning matters
that
are covered by the indemnification butgeneral indemnity.

UTC also provided an additional environmental indemnity, referred to
as the "basket indemnity." This indemnity relates to liabilities arising
from environmental events, conditions or circumstances existing at or
prior to February 29, 1988, that only became known to UTC in the five-year
period commencing February 29, 1988. As to such liabilities, the Company
is responsible for the first $4.0 million incurred. Thereafter, UTC has
agreed to indemnify the Company fully for any liabilities in excess of
$4.0 million. The Company is currently named as a PRP at three sites
which meet the criteria for the basket indemnity. Those sites are Fisher
Calo Chemical and Solvents Corporation, Kingsbury, IN ("Fisher Calo");
Organic Chemicals, Inc., Grandville, MI; and USS Lead Refinery Inc., East
Chicago, IL. Based on records showing very small quantities of material
shipped to Organic Chemicals Inc. and USS Lead Refinery Inc., the Company
has determined that its liability, if any, for these sites will be de
minimis. At Fisher Calo, the Company entered into a consent decree that
defined its share as 0.25% and established an expected liability of $0.1
million, which has been accrued. Expenses at these three sites, up to
$4.0 million, will be incurred by the Company rather than UTC, as the
basket has not been exhausted under the basket indemnity.

In addition, there are discussing
application offive sites where the Basket to certain post-February 28, 1993 claims. ThereCompany is either named
as a PRP or a defendant in a civil lawsuit which are four identified sites not covered by the
general indemnity or the Basket asbasket indemnity. They are Ascon Landfill,
Huntington Beach, CA; A-1 Disposal Corp., Allegan County, MI; Milford
Mill, Beaver County, UT; Uniontown Landfill, Uniontown, IN; and Daley
Drum, Rockford, IL. Ascon Landfill was an oil percolation refining
center. The Company received a request for information from the
California Department of Toxic Substance Control in 1994 and replied that
it has been appliedno records linking the Company to date.the site. A-1 Disposal Corp.
stored and treated hazardous waste. The Company was one of a number of
PRPs who entered into a consent decree with the Michigan Department of
Natural Resources to clean the site. The Company has made accrualspaid its assessment
for the remediation. Although the shares and sources of funding for five-
year monitoring expenses have not been established, the Company believes
that its share will be minimal. The Milford Mill site was a copper mill
used by the Company in the early 1970s. The Company is one of four PRPs
notified by the EPA. The EPA conducted a removal action at the site and
incurred $0.2 million in costs, for which it is currently seeking
reimbursement from the PRPs. The Uniontown Landfill is the subject of a
civil lawsuit in which the Company is one of several defendants sued by
the owner of the landfill to cover expected
liability where sufficient information is available to make an assessment.recover alleged site investigation and
groundwater remediation costs. The Company does not believe that it is
responsible for any disposal at this site and is vigorously defending
itself. In May 1997 the Company responded to a request for information
from the EPA regarding Daley Drum, a drum disposal and reconditioning site
in operation from 1971 to 1988. The Company responded that it had no
records showing use of the site but that a few employees at the Company's
Rockford, IL plant recall sending empty drums to the site for
reconditioning. The extent of the EPA's inquiry and the scope of any
potential remediation at the site is unknown at this time. The Company
has provided a reserve in the amount of $0.9 million to cover
environmental contingencies. This accrual is based on management's best
estimate of the Company's exposure in light of relevant available
information, including the UTC indemnity,allocations and remedies set forth in
applicable consent decrees, third party estimates of remediation costs,
actual remediation costs incurred, the probable ability of other PRPs to
pay their proportionate share of remediation costs, the conditions at each
site and the number of participating parties. The Company currently does
not believe that any of the environmental proceedings in which it is
involved and for which it may be liable under the Basket or otherwise will individually or in the
aggregate have a material adverse effect upon its business, financial
condition, cash flows or results of operations and noneoperations. There can be no assurance
that future developments will not alter this conclusion. None of the
cases described above involves sanctions, for amounts
of $0.1 millionfines or more.

In 1967, following an investigation regardingadministrative
penalties against the alleged violation
of United States antitrust laws,Company.

Since approximately 1990, the Company agreedhas been named as a defendant
in a number of product liability lawsuits brought by electricians and
other skilled tradesmen claiming injury from exposure to asbestos found in
electrical wire products produced a number of years ago. At December 31,
1997, the number of cases pending against the Company was 101, involving
approximately 308 claims. The Company's strategy is to defend these cases
vigorously. The Company believes that its liability, if any, in these
matters and the related defense costs will not have a material adverse
effect either individually or in the aggregate upon its business,
financial condition, cash flows or results of operations. There can be no
assurance, however, that future it
would refrain from tying the sale of magnet wire to the purchase of other
products.developments will not alter this
conclusion.

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

None during the fourth quarter of 1994.

10None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The Company is a wholly owned subsidiary of Essex International.
There is no established public trading market for the Company's common
stock of
the Company or of its parent, Holdings. The common stock of the Company
and its parent has not been traded or sold publicly and accordingly no
information with respect to sales prices or quotations is available.

11stock.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth (i)presents summary selected historical consolidated
financial data of the Company prior to the Acquisition ("Predecessor") as
of and for the nine month period ended September 30, 1992 and each of the
years in the two year period ended December 31, 1991, (ii) selected
historical consolidated financial data of the Company after the
Acquisition ("Successor") as of and for the years ended December 31, 1994
and 1993 and the three month period ended December 31, 1992, and, (iii)
combined historical consolidated financial data of Successor for the three
month period ended December 31, 1992 and Predecessor for the nine month
period ended September 30, 1992. This data should be read in conjunction
with "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and the consolidated financial statements and related
notes included elsewhere herein. The selected historical consolidated
financial data presented below as of and for each of the years in the two
year period ended December 31, 1991, were derived from the audited
consolidated financial statements of Predecessor (not presented herein).
The selected historical consolidated financial data presented below, as of
and for thefive years ended
December 31, 1994 and 1993, the three month period
ended December 31, 1992 and the nine month period ended September 30,
1992, were derived from the consolidated financial statements of Successor
and Predecessor, which were audited by Ernst & Young LLP, independent
auditors, whose report with respect thereto, together with such financial
statements, appears elsewhere herein.1997.

StatementResults of Operations Data:Operations:

Net sales $1,010,075 $868,846 $209,354 $909,351 $699,997$885,492 $992,001
Other income/(expense)
-net (910) 188 145 1,237 1,092 522 1,415
---------- -------- -------- -------- ---------------- --------

1,009,165 869,034 209,499 910,588 701,089 886,014 993,416
---------- -------- -------- -------- ---------------- --------

Cost of goods sold 846,611 745,875 186,026 780,148 594,122 753,077 838,048
Selling and
administrative 85,129 75,489 22,349 81,958 59,609 80,227 80,267
Interest(b) 24,554 25,241 8,086 22,591 14,505 24,969 31,893
Unusual items(c) - - - 18,139 18,139 - -
---------- -------- -------- -------- ---------------- --------

SUCCESSOR COMBINED(a) PREDECESSOR
----------------------------- ---------- ------------------------
Three Twelve Nine
Month Month Month
Period Period Period
In Thousands of Year Ended Ended Ended Ended Year Ended
Dollars, Except December 31, December December September December 31,
Ratio Data ------------------- 31, 31, 30, ----------------
1994 1993 1992 1992 1992 1991 1990
------------------- ------ ------ ------ ------ ------ ------ ------
Total costs and
expenses 956,294 846,605 216,461 902,836 686,375 858,273 950,208
------- ------- ------- ------- ------- ------- -------$868.8 $1,010.1 $1,201.7 $1,332.0 $1,701.3
Income (loss) before
income taxes and
extraordinary charge 52,871 22,429 (6,962) 7,752 14,714 27,741 43,208
Provision (benefit)
for income taxes(d) 22,700 13,052 (1,900) 7,378 9,278 13,241 12,760
------- ------- ------- ------- ------- ------- -------from operations $47.7 $77.4 $76.9 $106.6 $177.5
Income (loss) before
extraordinary charge 30,171 9,377 (5,062) 374 5,436 14,500 30,448$ 9.3 $30.2 $22.5 $37.6 $84.1
Extraordinary charge net of
income tax benefit(e)benefit (a) 3.3 - 3,3673.0 1.2 -
122 122 1,471 -
------- ------- ------- ------- ------- ------- ------------- -------- -------- -------- --------

Net Incomeincome (loss) $30,171 $ 6,010 $(5,062)6.0 $ 25230.2 $ 5,314 $13,029 $30,448
======= ======= ======= ======= ======= ======= =======
Pro-forma net income
reflecting income
taxes on a separate
return basis(d) $21,699
=======
Balance Sheet Data19.5 $ 36.4 $ 84.1
====== ======== ======== ======== ========

Financial Position (at end
of period)year):
Working capital $191,062 $155,136 $123,935 $162,661$124,485 $164,293

Total assets 750,300 706,997 703,147 447,874 413,648 443,963
Long-term$707.0 $750.3 $744.5 $841.2 $862.7
Total debt (including current
portion) 200,000 200,000 221,289 189,890 193,580 247,426
Stockholder's$200.0 $200.0 $424.5 $463.8 $353.5
Stockholders' equity 333,903 303,732 297,722 132,257 120,354 112,325
Other Data:

Additions to
property, plant$303.7 $333.9 $114.7 $151.1 $235.2

Additional Information:
Capital expenditures $26.2 $30.1 $28.6 $25.6 $42.1
Copper equivalent pounds
shipped (b) 517.6 553.2 551.4 643.8 800.2
Average COMEX price per
copper pound $0.85 $1.07 $1.35 $1.06 $1.04
Depreciation and equipment $30,109 $26,167 $14,705 $31,180 $16,475 $13,242 $19,072
Ratio of earnings to
fixed charges(f) 3.0 1.7 - 1.9 2.0 2.3
Deficiency of
earnings to fixed
charges(f) - - $7,078 - - -

Amortization $29.9 $31.4 $34.2 $33.9 $34.3
(Footnotes on following page)

(Footnotes continued from previous page)

(a) Represents a combination of Successor's three month period ended
December 31, 1992 and Predecessor's nine month period ended September
30, 1992. Such combined results are not directly comparable to the
consolidated results of operations of the Predecessor for each of the
two years ended December 31, 1991, nor are they necessarily
indicative of the results for the full year due to the effects of the
Acquisition and Merger and related refinancings and the concurrent
adoption of Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes," ("FAS 109"). (See Notes to
Consolidated Financial Statements.) Financial data of the Company as
of October 1, 1992 and thereafter reflect the Acquisition using the
purchase method of accounting, and accordingly, the purchase price
was allocated to assets and liabilities based upon their estimated
fair values. However, to the extent that Holdings management had a
continuing investment interest in Holdings' common stock, such fair
values (and contributed stockholder's equity) were reduced
proportionately to reflect the continuing interest (approximately
10%) at the prior historical cost basis.

(b) In connection with the Acquisition and Merger, debt issuance costs of
$1.5 million and $1.8 million associated with debt retired were
included in interest expense for the year ended December 31, 1993 and
the three month period ended December 31, 1992, respectively.

(c) In connection with the Acquisition and Merger, the Predecessor
recorded certain merger related expenses of $18.1 million consisting
primarily of bonus and option payments to certain employees and
certain merger fees and expenses, which have been charged to the
Predecessor's operations in the nine month period ended September 30,
1992.

(d) Holdings and the Company file a consolidated U.S. federal income tax
return. Through December 31, 1990 the deductible expenses of
Holdings (primarily interest) were included in the calculation of the
Company's income taxes under a tax sharing agreement with Holdings.
The tax sharing agreement was amended, effective January 1, 1991, to
provide that the Company's aggregate income tax liability be
calculated as if it were to file a separate return with its
subsidiaries. The tax benefit recorded in 1990 for the deductible
expenses of Holdings was $8.7 million. The pro forma net income
reflecting income taxes on a separate return basis is presented for
1990 as if such benefit had not been recorded.

(e) During 1993, Successorthe Company recognized extraordinary charges of $3.1
million, net of applicable tax benefit, representing the write offwrite-off
of unamortized debt issuance costs associated with the repayment of the
outstanding balancetermination
of the Company's term loans,credit facility under its former credit
agreement, and $0.3 million, net of applicable tax benefit,
representing the net loss resulting from the redemption of the
Company's 12 3/8% Senior Subordinated Debentures ("Debenture Repurchases").due 2000. During
19921995 and 1991,
Predecessor made Debenture Repurchases which had a carrying value1996, the Company recognized extraordinary charges of $13.8$3.0
million and $42.0$1.2 million, respectively. Therespectively, net loss
resulting from these repurchases, which includesof applicable tax
benefit, representing the write off of a
portionwrite-offs of unamortized debt issuance
costs was reflected as an
extraordinary charge of $0.1 million and $1.5 million, net of

applicable income tax benefit for Predecessor during 1992 and 1991,
respectively.

(f) For purposes of this computation, earnings consist of income before
income taxes plus fixed charges (excluding capitalized interest).
Fixed charges consist of interest on indebtedness (including
capitalized interest and amortization of deferred financing fees)
plus that portion of lease rental expense representativeassociated with the termination of the interest factor (deemedCompany's former credit
agreements.

(b) Copper equivalent pounds include aluminum pounds which have been
converted to be one-third of lease rental expense).
Earnings of the Successor were insufficient to cover fixed charges by
the amount of $7.1 million for the three month period ended
December 31, 1992.a copper pound equivalent basis.

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

INTRODUCTION

The CompanyOverview

Essex, founded in 1930, is engaged in one principal line of business, the
productiona leading North American developer,
manufacturer and distributor of electrical wire and cable.cable and insulation
products serving over 11,000 customers worldwide in a wide range of
industrial markets from its 28 manufacturing facilities and 38 service
centers located throughout the United States and Canada. The Company classifies its
operations into three major divisions based on the markets served: WireCompany's
products include building wire for commercial and Cable Division, Magnet Wireresidential construction
applications; magnet wire and Insulation Divisioninsulation materials for electromechanical
devices such as motors, transformers and Engineered
Products Division. In 1994, the former Telecommunications Products
Division was merged withelectrical controls; copper voice
and into the Engineered Products Division. See
"Business"datacom wire; industrial wire for a descriptionapplications in construction,
appliances, recreational vehicles and industrial facilities; and
automotive wire and specialty wiring assemblies for automobiles and
trucks.

RESULTS OF OPERATIONS

The following table sets forth for each of the principal products offered by each
division and the total sales for each major product line for thethree years
ended 1994, 1993 and 1992.

For financial statement purposes, the Acquisition and Merger was
accounted for by Holdings as a purchase acquisition effective October 1,
1992. Because the Company is a wholly-owned subsidiary of Holdings, the
effects of the Acquisition and Merger have been reflected in the Company's
financial statements, resulting in a new basis of accounting to reflect
estimated fair values at that date. As a result, the Company's financial
statements for the periods subsequent to September 30, 1992 are presented
on the Successor's new basis of accounting, while the financial statements
for September 30, 1992 and prior periods are presented on the
Predecessor's historical cost basis of accounting. The consolidated
results of operations of the Company for the twelve month
period ended December 31, 1992 are not directly comparable to1997 the consolidated resultsdollar amounts of operationssales of each of the
Predecessor dueCompany's major product lines:

Years Ended December 31,
---------------------------------------------
1995 1996 1997
---- ---- ----
(In millions)

Building wire 406.1 $487.1 $761.7
Magnet wire 388.2 388.8 412.1
Communication wire 177.5 166.8 187.9
Industrial wire 63.4 71.0 121.6
Automotive wire 97.3 91.2 93.9
Other (a) 69.2 127.1 124.1
------ ------ ------

Total $1,201.7 $1,332.0 $1,701.3
======== ======== ========

- ----------

(a) Includes sales of third-party manufactured products, including
electrical insulating products, electric motors, motor repair parts
and pump seals sold through the Company's distribution business.

The following table sets forth the percentage relationship of net
sales to the effects of the Acquisition and
Merger and related refinancings and the concurrent adoption of FAS 109.
See Notes 1 and 7 of Notes to Consolidated Financial Statements.

In connectioncertain income statement items:

Years Ended December 31,
------------------------------------------------
1995 1996 1997
---- ---- ----
(In millions)

Net sales 100.0% 100.0% 100.0%
Cost of goods sold 85.8 82.8 80.5
Selling and administrative
expense 7.8 9.1 9.1
Other expense, net 0.1 0.1 -
----- ----- -----

Income from operations 6.3 8.0 10.4
Interest expense 2.8 3.0 2.2

Income before income taxes
and extraordinary charge 3.5 5.0 8.2
Provision for income taxes 1.6 2.2 3.3
--- --- ---

Income before extraordinary
charge 1.9 2.8 4.9
Extraordinary charge - debt
retirement, net of income
tax benefit 0.3 0.1 -

Net income 1.6% 2.7% 4.9%
==== ==== ====

1997 Compared with the Acquisition and Merger and concurrent adoption
of FAS 109, the Successor recognized $142.2 million of excess of cost over
net assets acquired that is being amortized over 35 years on the straight
line method.

RESULTS OF OPERATIONS

THE YEAR ENDED DECEMBER 31, 1994 COMPARED WITH THE YEAR ENDED
DECEMBER 31, 19931996

Net sales for 19941997 were $1,010.1$1,701.3 million or 16.3%27.7% higher than 1993,
reflecting product price increases, higher sales volumes and inclusion of
Interstate Industries sales (see Business-Division Operations-Engineered
Products Division). Sales volumes in
1994 were at record levels for the

third straight year, exceeding the 1993 sales volume by approximately
6.9%. The Company believes the1996, resulting from improved sales volume resulted from
increased demand for wire products within the served markets which wasand better product pricing,
partially attributable to a growing economy and to increased usage of the
Company's wire in end products, especially as these factors affected the
markets servedoffset by the Magnet Wire and Insulation Division. Higher product
prices reflected a marked increase inlower copper costs and improved product
pricing. Copper is the Company's principal raw material.prices. The 19941997 daily average COMEX
copper price rose 23.9% from 1993 and, notwithstanding the
magnitude of the price increase, copper costs were generally passed on to
customers through product pricing, as is customarywas 1.9% lower than in the Company's
business. For1996. 1997 sales volume was at a
discussion of the Company's practices with respect to the
purchase, internal distribution and processing of copper, see "Business-
Metals Operations." Also see "General Economic Conditions and Inflation"
under this caption.

Sales for the Magnet Wire and Insulation Division increased 24.1%
over 1993, drivenrecord level, exceeding 1996 by a 21.8%24.3%. This growth in sales volume was
attributable to increased product demand across most of the Company's
served markets and higher copper
prices, partially offset bythe full year benefit of the October 1996 acquisition
of Triangle Wire & Cable, Inc. ("Triangle"). The Company's gross margin,
expressed as a higher proportionpercentage of customer-owned coppernet sales, improved significantly during 1997
to 19.5% from 17.2% in 1996. Gross margins improved as a result of better
conditions in the division'sCompany's building wire markets, economies of scale
derived from higher sales mix. Improvedvolume and lower per unit manufacturing costs
attributable to continued productivity improvements.

Building wire sales volumesin 1997 increased 56.4% from 1996 due primarily
to improved sales volume and product pricing (without regard to copper
costs). A substantial portion of the increased sales volume was
attributable to Triangle while the remaining improvement was the result of
increased demand within the served markets. Building wire demand
exhibited continued strength during 1997 resulting from new non-
residential construction and a sustained expansion of the replacement and
upgrade segment of the market. Additionally, both new construction and
renovation activity are being affected by the increased number of circuits
and amperage handling capacity needed to support increasing demand for
electrical services. Building wire gross margins during 1997 improved
significantly over the comparable period in 1996 due to the
above-mentioned strength of product demand, improved product pricing and
enhanced productivity as a result of the integration of Triangle.

Sales of magnet wire during 1997 improved 6.0% from 1996 due
primarily to higher sales volume. Sales volume improvements were
attributable to increased demand for magnet wire productsin most served markets,
particularly the transformer and generator markets. The Company
attributes the increase in demand to growth in the automotive,domestic economy,
strong consumer demand for additional electrical convenience items in
homes, offices and vehicles and greater use of magnet wire for more energy
efficient electric motor and transformer marketsmotors. Higher energy efficient electric motors
require materially more magnet wire. Magnet wire gross margins improved
during 1997 as well as increased sales to distributors.
The Wire and Cable Division's sales increased 21.7% compared to 1993,1996 primarily due principally to lower production costs
associated with higher copper prices and improved product pricing.
Increased demand within the buildingsales volume.

Communication wire market contributed to reduced
competitive pricing pressures which had adversely impacted this market in
1993. The Wire and Cable Division's sales volume was comparable to 1993.
The Engineered Products Division's salesfor 1997 were essentially flat compared to
1993 as sales growth12.6% above 1996 due to higher
automotiveOSP and datacom wire sales volume. OSP sales in 1997 were 10.4% higher
than in 1996 which is attributable to improved business conditions within
the repair and replacement segment of the copper communication cable
market. Datacom wire sales for 1997 increased 13.3% compared to 1996,
reflecting increased product demand for expanding applications such as
LANs, facsimile machines, Internet connectivity and other premise uses
within homes, offices and commercial and industrial places of business.
Communication wire gross margins in 1997 improved from 1996 due to higher
sales volume higher copper
prices and inclusionbetter datacom pricing occurring in the last six months
of Interstate Industries was offset by lower
communication1997.

Industrial wire sales. Automotive wire volumessales in 1997 increased approximately
12.9% from 199371.3% over 1996 due to a strengthening automotive market (new car and
light truckan
increase in sales volume, in the United Statesprimarily mining cable, welding cable, power
supply cord sets and bulk flexible cord, of which a substantial portion
was approximately 10% higher
in 1994 than 1993), and the addition of several new customers. See
"Business-Division Operations-Engineered Products Division". Interstate
Industries provided approximately $14.0 million of additional sales in
1994. Communicationattributable to Triangle. Industrial wire sales volume decreased 19.1%gross margins for 1997
improved from 1993 resulting
from a 46.6% decline in export sales,1996 due primarily to higher sales volume.

Automotive wire sales in 1997 increased pricing
pressures3.0% over 1996. United
States and Canadian light vehicle production for 1997 were at high levels
approximating 1996 production. This business unit has had considerable
success expanding its customer sales base of automotive wire harness
manufacturers. Gross margins in 1997 approximated 1996 levels.

Other sales in 1997 decreased from foreign competitors, partially offset by an 8.8%
improvement1996. Distribution business unit
sales of third-party manufactured products, primarily within the motor
repair segment, declined due, in domestic communication wire sales.part, to unusually mild seasonal weather
conditions which necessitated fewer replacement motors and repair parts
for motors, transformers and pumps.

Cost of goods sold increased 13.5%for 1997 was 24.3% higher than in 1994 compared with 19931996 due
primarily to increased copper and other material costs (essentially
resins), higher sales volumes and inclusion of Interstate Industries,
partially offset by a change in product mix.volume. The Company's cost of goods sold as a
percentage of net sales was 83.8%82.8% and 85.8%80.5% in 19941996 and 1993,1997,
respectively. The cost of goods sold percentage in 1994 was favorable to
1993 duedecrease resulted
primarily tofrom the impact of improved building wire product pricing andas
well as lower per unit manufacturing costs resulting fromattributable to continued
productivity programs, including capital investments and higher
manufacturing volumes.investments. Also, the
operations of Triangle have been effectively integrated, thereby driving
substantial improvements in productivity.

Selling and administrative expenses in 19941997 were 12.8% higher than
199327.5% above 1996 due
primarily to increasedincremental commission, selling and warehouse expenses
associated with Triangle. However, selling and administrative expenses,
as a percentage of sales, commissions attributable to higher
sales, inclusion of Interstate Industries and higher incentive
compensation accruals related to improved 1994 operating results. These
expenses were partially offset, however, by lower amortization charges9.1% in 1994 due to the expiration in February 1993 of a non-compete agreement

161997 which is consistent with UTC. Amortization charges, in the amount of $1.1 million, were
recorded in 1993 in connection with this non-compete agreement.1996.

Interest expense in 19941997 was 2.7% below 1993 due primarily5.8% lower than in 1996. Notwithstanding
incremental borrowings to lower
deferredfinance the acquisition of Triangle, the
Company's outstanding debt amortization chargeswas reduced substantially through the
application of the proceeds received from the Offering and a reduction in weighted average
debt outstanding, partially offset by an increase in the Company's average
interest rate from 9.7% to 10.4%. Deferred debt amortization charges
decreased from 1993 due primarily to the repayment in May 1993portion of
the term
loans (the "Term Credit") under the credit agreement entered into in
September 1992 (the "Credit Agreement") and the redemption in June 1993strong cash flows provided by operating activities. Interest expense
was further reduced by lower rates of the 12 3/8% Senior Subordinated Debentures due 2000 (the "Debentures"),
partially offset by the May 1993 issuance of the 10% Senior Notes due 2003
(the "Senior Notes"). The decrease in weighted average debt outstanding
resulted primarily from reduced usage ofinterest on the Company's revolving
credit facility during 1994 compareddue to 1993.lower LIBOR rates (as defined herein) and an
improved leverage ratio resulting in a reduced interest "spread" over
LIBOR. The increase inCompany's average interest
rate reflected the higher rate of interest payable on the Senior Notes
compared with the rate of interest on its long-term debt in
1997 declined 30 basis points from 1996.

Income tax expense was 39.8% of pretax income in 1997 compared with
43.6% in 1996 due to the Term Credit, which was repaid
fromincrease in pretax income reducing the saleimpact of
the Senior Notes,amortization of excess cost over net assets acquired, which is not
deductible for income tax purposes.

The Company recorded net income of $84.1 million for 1997 compared to
net income of $36.4 million in 1996. The 1996 results include
extraordinary charges of $1.2 million ($2.0 million before applicable tax
benefit) for the write-off of unamortized deferred debt expense associated
with the Company's former revolving credit agreement. In 1996, a former
revolving credit agreement was terminated in connection with the Triangle
acquisition.

1996 Compared with 1995

Net sales for 1996 were $1,332.0 million or 10.8% greater than in
1995 resulting primarily from improved sales volume and increased sales
attributable to the Brownell acquisition in September 1995 and the
Triangle acquisition in October 1996, partially offset by lower copper
prices. The 1996 average COMEX copper price was 21.5% lower than in 1995.
Sales volume for 1996 exceeded 1995 by 16.9%. Improved sales volume
resulted primarily from increased demand for the Company's magnet wire,
building wire, and industrial wire products.

Building wire sales for 1996 increased as compared to 1995 due
primarily to an increase in sales volume, product pricing (without regard
to copper costs) and incremental sales attributable to the Triangle
acquisition, partially offset by a decline in copper prices. Building
wire market demand exhibited continued growth during 1996 on the strength
of new non-residential construction and sustained expansion of the
renovation segment of the market. The Company believes this growth in
demand was the leading cause for the improvement in market prices during
the second half of 1996 over the depressed market conditions of 1995 and
the first half of 1996.

Sales of magnet wire in 1996 were essentially equal to those in 1995
reflecting increased sales volume offset by declining copper prices.
Sales volume improvements were attributable to increased demand for magnet
wire in the electric motor and transformer markets due in part to the
increased use of magnet wire for increased energy efficiency. Sales
increases were also a result of increased sales to distributors.

Communication wire sales for 1996 were below those in 1995 due to the
decrease in copper prices partially offset by increased sales of datacom
products. Datacom sales were up 21.2% as compared to 1995, reflecting
continued strong growth in this segment of the communication wire market.
OSP sales were 14.3% lower than 1995, reflecting, in part, a decline in
export sales, as the Company focused on strong domestic markets.

Automotive wire sales in 1996 were below those in 1995 due to the
decrease in copper prices partially offset by improved sales volume as
North American new car and light truck sales volume increased just over
1.0% in 1996. Industrial wire sales in 1996 were above those in 1995 by
12.0% due to an increase in sales volume partially offset by the decline
in copper prices. The increase in sales volume was partially due to
incremental sales attributable to the Triangle acquisition. Other sales
in 1996 increased significantly over 1995 due to the effect of inclusion
of full-year sales from the Brownell acquisition.

Cost of goods sold for 1996 was 7.0% higher than in 1995 due
primarily to higher sales volume and increased sales attributable to the
Brownell and Triangle acquisitions, partially offset by lower copper
prices. Essex' cost of goods sold as a percentage of net sales was 85.8%
and 82.8% in 1995 and 1996, respectively. Cost of goods sold as a
percentage of net sales decreased compared to 1995 due primarily to the
marked decline in copper costs, improved building wire product pricing
(without regard to copper costs), a change in product mix associated with
the Brownell acquisition, which tended to distribute more value-added
products, and higher manufacturing volume leading to increased
manufacturing efficiency.

Selling and administrative expenses for 1996 were 29.6% above 1995,
due primarily to increased selling, distribution and administrative
expenses attributable to the Brownell and Triangle acquisitions and
increased distribution and commission expenses due to higher sales volume
experienced during 1996.

Interest expense in 1996 was $5.3 million higher than in 1995 due
primarily to additional borrowings under the Company's new credit
facilities to effect the May 1995 redemption (the "Redemption") of all of
Essex International's outstanding Senior Discount Debentures due 2004 (the
"Debentures"). The Company's average interest rate of
interest ondecreased from 9.4% in
1995 to 8.6% in 1996 due to the Debentures, which were also redeemed.

Other expense consists primarily of write-offs related to fixed asset
disposals occurring in the normal course of business.Redemption.

Income tax expense was 42.9%43.6% of pretax income in 19941996 compared with
58.2% in 1993.46.7% for 1995. The effective income tax rate of the CompanyEssex is higher than the
approximate statutory rate of 40%40.0% due to the effect of the amortization
of excess of cost over net assets, acquired which is not deductible for income tax
purposes.

With respect to the Omnibus Budget
Reconciliation Act of 1993 ("OBRA 1993"), the Company's 1993 tax balances
were adjusted to reflect the new federal statutory tax rate of 35%. The
adjustment increased income tax expense by approximately $2.3 million in
1993 or 10.0% of pretax income.

The Company recorded net income of $30.2$36.4 million in 1994 asfor 1996 compared to
net income of $6.0$19.5 million in 1993.1995. The 19931996 and 1995 results include
extraordinary charges of $3.4$1.2 million and $3.0 million, respectively ($5.52.0
million and $5.0 million, respectively, before applicable tax benefits)benefit),
for the write-off of unamortized deferred debt expense associated with the
repayment ofCompany's former revolving credit agreements. In 1996, the Term Credit and redemption
of the Debentures.

THE YEAR ENDED DECEMBER 31, 1993 COMPARED WITH THE TWELVE MONTHS ENDED
DECEMBER 31, 1992

Net sales for 1993 were $868.8 million or 4.5% lower than 1992.
Record sales volume in 1993 exceeded the previous record-level volume of
1992 by approximately 5.1% butformer
revolving credit agreement was more than offset by reduced product
prices reflecting lower copper costs, the Company's principal raw
material, and competitive pricing pressures. Copper costs are generally
passed on to customers through product pricing. The average price for
copper on the COMEX declined 17.0% from 1992. The Company believes the
improved sales volume resulted from increased demand for wire products
within the served markets and was attributable to an improving economy,
especially as it affected the markets served by the Magnet Wire and
Insulation and Engineered Products Divisions. For a discussion of the
Company's practices with respect to the purchase, internal distribution
and processing of copper, see "Business-Metals Operations." Also see
"General Economic Conditions and Inflation" under this caption.

Sales for the Magnet Wire and Insulation Division were up 5.3%
compared to 1992. Sales volume increased 12.5% over 1992 resulting from
increased demand for magnet wire products in the automotive, electric
motor and transformer markets in addition to increased sales to
distributors. Product pricing was down approximately 6.9% due primarily
to lower copper prices in 1993 compared to 1992. The Engineered Products
Division experienced a 5.3% increase in sales over 1992 attributable
primarily to increased demand for the division's automotive wire products.
Automotive wire volumes increased approximately 21% from 1992 due in part
to improved demand from its primary customer and to several new accounts.
See "Business-Division Operations-Engineered Products Division". Of the
increased automotive sales volume, 27% resulted from new customers. Sales
of non-automotive products also experienced volume improvements despite
decreased demand for pump and welding cable products resulting from
flooding in the midwest during 1993. The Wire and Cable, and
Telecommunication Products Divisions experienced sales declines in 1993
compared with 1992. The Wire and Cable Division's sales were off 11.3%
from 1992 due principally to lower copper prices and reduced product
pricing. Volume was down slightly compared with 1992 due mainly to
selective market participation during part of the year. Sales by the
Telecommunication Products Division were down approximately 11.8% compared
with 1992. In addition to reduced product pricing, unit sales volume to
the domestic telephone markets was down 22.0% partially offset by a 19.3%
increase in export unit volume. Product demand within the domestic
markets was down due primarily to general uncertainty about the economy as
well as the ongoing restructuring of the U.S. telephone cable industry.

Cost of goods sold decreased 4.4% in 1993 compared with 1992 due
primarily to lower copper prices partially offset by higher sales volume
and additional depreciation expense resulting from the application of
purchase accountingterminated in connection with the Acquisition and Merger andTriangle
acquisition. In 1995, the concurrent adoption of FAS 109 (See Notes 1 and 7 of Notes to Consolidated
Financial Statements). The Company's cost of goods sold as a percentage
of net salesformer revolving credit agreement was
85.8% in each of 1993 and 1992. The cost of goods sold
percentage in 1993 was adversely impacted by generally lower selling
prices and additional depreciation expense resulting from the application
of purchase accountingterminated in connection with the AcquisitionRedemption of the Debentures.

Liquidity, Capital Resources and MergerFinancial Condition

General

The Company's aggregate notes payable to banks and long-term debt at
December 31, 1997 was $353.5 million, and its stockholders' equity was
$235.2 million. The resulting ratio of debt to total capitalization
improved to 60% from 75% at December 31, 1997. As of December 31, 1997,
the Company was in compliance with all covenants under the agreements
governing its outstanding indebtedness.

Credit Facilities and Lines of Credit

The Company maintains the following credit facilities: (i) a $370.0
million revolving credit agreement amended and restated effective April
23, 1997, by and among the Company, Essex International Inc., the Lenders
named therein, and The Chase Manhattan Bank, as administrative agent (the
"Revolving Credit Agreement"); (ii) a $25.0 million agreement and lease
dated as of April 12, 1995 by and between the Company and Mellon Leasing
Corporation (the "Sale and Leaseback Agreement"); (iii) a $15.0 million
(U.S. dollar) credit agreement by and between a subsidiary of the Company
and the concurrent adoptionBank of FAS 109 partially offsetMontreal (the "Canadian Credit Agreement"); and (iv) bank
lines of credit with various lending banks which provide for unsecured
borrowings for working capital of up to $50.0 million.

The Revolving Credit Agreement, which terminates October 31, 2001,
provides for up to $370.0 million in revolving loans, subject to specified
percentages of eligible assets and reduced by lower manufacturing
costs resulting from increasedoutstanding borrowings under
the Canadian Credit Agreement and unsecured bank lines of credit. The
Revolving Credit Agreement loans bear floating rates of interest, at the
Company's option, at bank prime plus 0.50% or a reserve adjusted
Eurodollar rate ("LIBOR") plus 1.50%. The spreads over the prime and
LIBOR rates can be reduced to 0% and .375%, respectively, if a specified
leverage ratio is achieved. Based upon the specified leverage ratio at
December 31, 1997, the Company's floating rate of interest for borrowings
under the Revolving Credit Agreement is LIBOR plus 0.375%. The average
commitment fees during the revolving loan period are between 0.125% to
0.375% of the average daily unused portion of the available credit based
upon certain financial ratios. Indebtedness under the Revolving Credit
Agreement is secured by a pledge of the capital stock of Essex and its
subsidiaries and by a first lien on substantially all assets of the
Company and its subsidiaries. The Company's ability to borrow under the
Revolving Credit Agreement is restricted by the financial covenants
contained therein as well as by certain debt limitation covenants
contained in the indenture under which the 10% Senior Notes due 2003 (the
"Senior Notes") were issued (the "Senior Note Indenture"). As of December
31, 1997, the Company had $130.3 million of undrawn capacity utilization. Costbased upon a
borrowing base of goods sold$265.0 million, reduced by outstanding borrowings under:
(i) the Essex Revolving Credit Agreement ($100.0 million), (ii) unsecured
bank lines of credit ($28.1 million) and (iii) the Canadian Credit
Agreement ($6.6 million).

The Revolving Credit Agreement contains various covenants which
include, among other things: (a) the maintenance of certain financial
ratios and compliance with certain financial tests and limitations; (b)
limitations on investments and capital expenditures; (c) limitations on
cash dividends paid; and (d) limitations on leases and the sale of assets.
Through December 31, 1997, the Company fully complied with all of the
financial ratios and covenants contained in 1992 includesthe Revolving Credit
Agreement.

The Sale and Leaseback Agreement provides $25.0 million for the sale
and leaseback of certain of the Company's fixed assets. The lease
obligation has a chargeseven-year term expiring in May 2002. The principal
component of $2.6 million relatingthe rental is paid quarterly, with the amount of each of the
first 27 payments equal to planned plant
consolidations, primarily costs to move2.5% of lessor's cost of the equipment, and personnel related
expenses. Expenditures in 1993 relatedthe
balance due at the final payment. The interest component is paid on the
unpaid principal balance and is calculated by lessor at LIBOR plus 2.5%.
The effective interest rate can be reduced by 0.25% to this charge1.125% if certain
specified financial conditions are achieved.

As of December 31, 1997, $6.6 million was outstanding under the
Canadian Credit Agreement and amounts
remainingincluded as notes payable to be spent are not material to the consolidated financial
statements. Raw material costs in 1993, excluding copper, were generally
unchanged from 1992.

Selling and administrative expenses in 1993 were 7.9% lower than 1992
due primarily to the expiration of a non-compete agreement with UTC in the
first quarter 1993 resulting in the elimination of the related
amortization charge, a $2.1 million reductionbanks in the
Company's health
insurance expense and a $1.5 million accrual in 1992 for the relocation of
a business unit in 1993. In connection with the 1988 Acquisition, UTC
agreed that until March 1, 1993, it would not engage in any business
directly competing with any business carried onConsolidated Balance Sheets. Borrowings are secured by the
Company on February
29, 1988. The $34.0 million purchase price allocatedsubsidiary's accounts receivable. Interest rates for borrowings under the
Canadian Credit Agreement are based upon Canadian market rates for
banker's acceptances with spreads similar to the covenant notRevolving Credit
Agreement. The Canadian Credit Agreement terminates on May 30, 1998,
although it may be extended for successive one-year periods upon the
mutual consent of the subsidiary and the Bank of Montreal.

The Company had $28.1 million outstanding of unsecured bank lines of
credit at December 31, 1997. Such amount is included in notes payable to
compete was amortized over five years on the straight line method. The
reduction in health insurance expense was attributable to favorable
experience in health related expenditures. Partially offsetting these

expense reductions was a $4.0 million amortization charge recorded in 1993
for excess of cost over net assets acquired compared to a $1.0 million
charge recorded in 1992 and a $2.5 million reductionbanks in the Company's allowance for doubtful accounts recorded in 1992. In connection withConsolidated Balance Sheets. These lines of credit
bear interest at rates subject to agreement between the Acquisition and Merger and concurrent adoption of FAS 109, the Successor
recognized $142.2 million of excess of cost over net assets acquired that
is being amortized over 35 years on the straight line method. The
Company's allowance for doubtful accounts was reduced on the basis of the
collection of a substantial receivable which had been considered doubtful
as well as management's assessment of collection risk in the primary
markets served.

Interest expense in 1993 was $25.2 million as compared to $22.6
million in 1992. The increase was principally caused by $19.0 million in
additional weighted average debt outstanding and an increase in the
Company's average interest rate incurred (from 8.9% to 9.7%). The
additional debt outstanding was primarily attributable to Acquisition-
related borrowingsCompany and the
May 1993 issuancelending banks.

Cash Flow and sale by the Company of
the Senior Notes. Average interest rates increased reflecting the higher
interest rate on the Senior Notes compared with the rate of interest on
the Term Credit which was repaid from the sale of the Senior Notes,
partially offset by the redemption of all outstanding Debentures which
were also repaid in connection with the issuance of the Senior Notes.

In connection with the Acquisition and Merger, the Company incurred
certain merger related expenses in the amount of $18.1 million consisting
primarily of bonus and option payments to certain employees, and certain
merger fees and expenses which were charged to operations of the
Predecessor in 1992. These Acquisition and Merger expenses had the effect
of reducing 1992 net income by $12.5 million (after applicable tax benefit
of $5.6 million). See Note 1 of Notes to Consolidated Financial
Statements.

Income tax expense was $13.1 million, or 58.2% of pretax income in
1993 compared with $7.4 million, or 95.2%, of pretax income in 1992. The
Company elected not to step up its tax bases in the assets acquired in
either the Acquisition or the 1988 Acquisition. Accordingly, the
Company's income tax bases in the assets acquired have not been changed
from those prior to the 1988 Acquisition. Depreciation and amortization
of the higher allocated financial statement bases are not deductible for
income tax purposes, thus causing the effective income tax rate of the
Predecessor to be generally higher than the combined federal and state
statutory rate. Because of the adoption of FAS 109 by the Successor,
concurrent with the Acquisition, deferred income taxes have been provided
for bases differences in all assets and liabilities other than excess of
cost over net assets acquired. With respect to OBRA 1993, the Company's
1993 tax balances were adjusted to reflect the new federal statutory tax
rate of 35%. The adjustment increased income tax expense by approximately
$2.3 million for 1993 or 10.0% of pretax income. See Note 7 of Notes to
Consolidated Financial Statements.

The Company recorded net income of $6.0 million in 1993 as compared
to net income of $0.3 million in 1992. The 1993 results include
extraordinary charges of $3.4 million ($5.5 million before applicable tax
benefits) associated with the repayment of the Term Credit and redemption
of the Debentures. The 1992 results include $18.1 million of Acquisition
and Merger related expenses, $12.5 million net of applicable tax benefit,
and a $0.1 million extraordinary charge ($0.2 million before applicable

tax benefit) resulting from the partial repurchase of a portion of the
outstanding Debentures.

LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION

The Company had a ratio of debt (consisting of current and non-
current portions of long-term debt) to stockholder's equity of
approximately 0.6 to 1 at December 31, 1994 and 0.7 to 1 at December 31,
1993.Working Capital

In general, the Company requires liquidity for working capital,
capital expenditures, cashdebt repayments, interest expenses and taxes. Commencing in
November, 1995 the Company may also need to provide Holdings with
sufficient cash to enable Holdings to pay interest on any of its Senior
Discount Debentures due 2004 (the "Holdings Debentures") which may then be
outstanding. Of particular
significance to the Company is its working capital requirements which
increase whenever the Companyit experiences strong incremental demand in its business
and/or a significant rise in copper prices. Historically, the Company has
satisfied its liquidity requirements through a combination of funds
generated from operating activities together with funds available under
its credit facilities. Based upon historical experience and the
substantial availability of funds under its revolving credit facility,facilities, the Company expects
that its usual sources of liquidity will be more than sufficient to enable it to
meet its cash requirements for working capital, capital expenditures, debt
repayments, interest and taxes and payments to Holdings for 1995.in 1998.

Operating Activities. Net cash provided by operating activities in
19941997 was $37.1$103.9 million, compared to $60.7$67.5 million in 1993.1996. The reductionincrease
in cash provided by operating activities was due primarily to
increased cash requirements to fundthe result of
higher receivable balances resulting
from higher copper prices and increased sales volume in 1994,net income, partially offset by improved net income.higher accounts receivable related
to strong fourth quarter 1997 sales.

Investing Activities. Capital expenditures of $30.1$42.1 million in 19941997
were $3.9$16.6 million greatermore than in 1993. No single capital project expenditure1996. In 1997, approximately $7.4 million
was invested in 1994
exceeded $4.0 million. The major projects in 1994 entailed increasing
capacitymagnet wire ovens to improve quality and upgrading equipment. The Company expects to make capitalincrease
manufacturing productivity. Capital expenditures in 1995 approximating 1994 expenditure1998 are expected to
be at or above 1997 levels and will be used to improve manufacturing
efficiency and expand capacity, complete modernization projects, reduce costs and ensure
continued compliance with regulatory provisions.capacity. At December 31, 1994,1997, approximately $8.0$5.0
million was committed to outside vendors for capital expenditures. The
Company'sCompany sold an idle plant during 1997 realizing $2.7 million in net
proceeds. The Revolving Credit Agreement imposes limitations on capital
expenditures, business acquisitions and investments.

Financing Activities. The net proceeds of the Offering, after
underwriting commissions and other associated expenses, were approximately
$46.2 million, of which $29.5 million was used to repay the senior
unsecured note agreement dated as restatedof April 17, 1995, by and amended in
April 1993 (the "Restated Credit Agreement") imposes annual limits onamong the
Company, Essex International, as guarantor, the lenders named therein and
The Chase Manhattan Bank, as administrative agent. The remaining proceeds
were applied to the Company's capital expenditures and business acquisitions.

During 1994, the Company also used its $175 million revolving credit
facility (the "Revolving Credit") to satisfy liquidity needs. This
facility is available to the Company under the RestatedRevolving Credit Agreement. The amount available for borrowingnet
proceeds were received from Essex International in the form of an
intercompany transfer.

Considerations Relating to Essex International's Cash Obligations

Essex International is a holding company with no operations and
virtually no assets other than its ownership of the outstanding common
stock of the Company. All of such stock is pledged, however, to the
lenders under the Revolving Credit at any timeAgreement. Accordingly, Essex
International's ability to meet its cash obligations is reduced by the amount of outstanding borrowings and letters of credit
and may be further reduced depending upon the amount ofdependent on the
Company's "eligible assets" as defined. In addition, the amount of Revolving Credit
availableability to the Company is also subjectpay dividends, to certain debt limitation
covenants containedloan, or otherwise advance or
transfer funds to Essex International in the indenture under which the Senior Notes were
issued (the "Indenture"). The Revolving Credit expires in 1998.
Revolving Credit loans bear interest at floating rates at bank prime rate
plus 1.25% or a reserve adjusted Eurodollar rate (LIBOR) plus 2.25%. The
effective interest rate can be reduced by 0.25%amounts sufficient to 0.75% if certain

specified financial conditions are achieved. At December 31, 1994, the
amount of Revolving Credit available to the Company was $175.0 million
reduced by outstanding letters of credit of $12.1 million. During 1994,
average borrowings under the Company's revolving credit facility were $2.3
million compared to $10.1 million in 1993.

The Restated Credit Agreement and the Indenture contain provisions
which may restrict the liquidity of the Company. These include
restrictions on the incurrence of additional indebtedness and mandatory
principal repayment requirements for all indebtedness that exceeds the
Borrowing Base as defined in the Restated Credit Agreement or exceeds the
Indenture debt limitation covenants. Through December 31, 1994, the
Company fully complied with all of the financial ratios and covenants
contained in the Restated Credit Agreement and the Indenture.

CONSIDERATIONS RELATING TO HOLDINGS' CASH OBLIGATIONS

The Companyservice
Essex International's cash obligations.

Essex International expects that it may makereceive certain cash payments
to
Holdings or other affiliatesfrom the Company from time to time to the extent cash is available and to
the extent it is permitted to do so under the terms of the RestatedRevolving Credit
Agreement and the Senior Note Indenture. Such payments may include (i) cash interest in an amount sufficient to enable Holdings to
meet the first semi-annual cash interest payment on November 15, 1995 on
any of the Holdings Debentures then outstanding; (ii) an
amount necessary under the tax sharing agreement between Essex
International and the Company and Holdings to enable HoldingsEssex International to pay the
Company's taxes as if computed on an unconsolidated basis; (iii)(ii) an annual
management fee to an affiliate of BHLP of up to $1.0 million; (iv) amounts to redeem outstanding Holdings Debentures or to
repurchase them to the extent they may become available for repurchase in
the open market at prices which Holdings and
the Company find attractive
and to the extent such redemptions or repurchases are permitted under the
terms of the instruments governing Holdings and the Company's
indebtedness; and (v)(iii) certain other amounts to meet ongoing expenses of HoldingsEssex
International (such amounts are considered to be immaterial both
individually and in the aggregate, however, because HoldingsEssex International
has no operations, other than those conducted through the Company, or
employees)employees thereof). To the extent the Company makes any such payments, it
will do so out of operating cash flow, borrowings under the RestatedRevolving
Credit Agreement or other sources of funds it may obtain in the future
and onlysubject to the extent such payments are
permitted under the terms of the RestatedRevolving Credit Agreement and the Senior Note
Indenture.

Except for mandatory cash interest payments related to the
Holding Debentures, each of the foregoing payments is either completely
discretionary on the part of the Company or may be waived by an affiliate
of the Company.Long-Term Liquidity Considerations

The Holdings Debentures are unsecured debt of Holdings and are
effectively subordinated to all outstanding indebtedness of the Company,
including the Senior Notes and will be effectively subordinated to other
indebtedness incurred by direct and indirect subsidiaries of Holdings, if
issued. The Holdings Debentures were issued at an original issue
discount. At December 31, 1994, the Holdings Debentures had a carrying
value, net of repurchases, of $259.0 million. They will accrete to their
full face value (an aggregate principal amount of $272.9 million, assuming
no further repurchases by the Company or Holdings) on May 15, 1995.
Commencing that date, the Holdings Debentures will accrue interest payable
semiannuallymature in cash beginning November 15, 1995 at the rate of 16.0% per
annum. Holdings will have several alternatives with respect to the
Holdings Debentures: it could pay cash interest on the Holdings

Debentures (which would entail approximately $22 million in cash payments
semiannually assuming no change in the aggregate principal amount of
Holdings Debentures outstanding), or Holdings could redeem some or all of
the Holdings Debentures. In either case, Holdings will have cash needs
which are considerably greater than its present requirements.

Holdings' Series A Cumulative Redeemable Exchangeable Preferred
Stock, Liquidation Preference $25 Per Share (the "Series A Preferred
Stock"), which was issued in connection with the Acquisition2003 and Merger,
provides that dividends may be paid in kind at the option of Holdings
until 1998 and is not subject to mandatory redemption until 2004 (except
upon the occurrence of certain specified events). The Series A Preferred
StockCompany may
be redeemed commencing in May 1998, in whole or in part, at the optionredemption
prices ranging from 103.75% of Holdings after September 30, 1995
at a percentage of liquidation preference declining from 107.5%principal in 1998 to 100% beginning September 30,in 2001. Should
the Senior Notes be redeemed in May 1998, plus accumulated and unpaid dividends. For
the year ended December 31, 1994, Holdings recorded dividends in kind of
$6.0redemption premium would
amount to $7.5 million. The Restated Credit Agreement permits Holdings to pay
dividends in cash on the Series A Preferred Stock subject to certain
limitations. Although dividends on the Series A Preferred Stock have
historically been paid in additional shares of Series A Preferred Stock,
Holdings can make no assurances that future dividends will not be paid in
cash.

Because Holdings is a holding company with no operations and has
virtually no assets other than the outstanding capital stockterms of the Sale and Leaseback Agreement
include a balloon payment of $8.1 million in 2002. The Company (allexpects
that its traditional sources of which is pledged to the lenders under the Restated Credit
Agreement), Holdings' abilityliquidity will enable it to meet its
long-term cash obligations will be
dependent upon the Company's ability to pay dividends, loan or to
otherwise advance or transfer funds to Holdings in sufficient amounts.
The Company believes that the Restated Credit Agreementrequirements for working capital, capital expenditures,
interest and the Indenture
permit the Company to dividend or otherwise provide funds to Holdings to
enable Holdings to meet its known cash obligations during the next twelve
months provided that the Company meets certain conditions. Among such
conditions, however, are that the Company meet various financial
maintenance tests. There can be no assurance that such tests will be met
at any given time when Holdings may require cash, in which case the
Company would not be able to pay dividends to Holdings without the consent
of the percentage of the lenders specified in the Restated Credit
Agreement and/or the holders of the percentage of the Senior Notes
specified in the Indenture. There can be no assurance that the Company
would be able to obtain such consents, or meet the terms on which such
consents might be granted if they were obtainable. Moreover, a violation
of the Restated Credit Agreement and/or the Indenture could lead to an
event of default and acceleration of outstanding indebtedness under the
Restated Credit Agreement and to acceleration of the indebtedness
represented by the Senior Notes and the Holdings Debentures. Because the
capital stock of the Company and its subsidiaries,taxes, as well as virtually
all of the assets of the Company and its subsidiaries, are pledged to the
lendersdebt repayment obligations under the
Restated Credit Agreement, such lenders would have a
claim over such assets prior to holders of the Senior NotesSale and the
Holdings Debentures. In the event Holdings were unable to meet its cash
obligations, a sequence of events similar to that described above could
ultimately occur.

In light of the fact that the Holdings Debentures will begin to pay
cash interest for the first time during 1995, Holdings may give
consideration to effecting a redemption of such securities. Holdings will
also have the ability to effect a redemption of the Series A Preferred

Stock on or after September 30, 1995. If Holdings were to seek redemption
of either or both the Holdings Debentures and the Series A Preferred
Stock, it could have several sources from which to obtain the necessary
funds to effect such redemptions including funds from theLeaseback Agreement.

The Company's operations borrowingsinvolve the use, disposal and cleanup of
certain substances regulated under the Restated Credit Agreement, the sale of
stock by either Holdings or theenvironmental protection laws. The
Company the issuance of new debt
securities by either Holdings or the Company or some combination of the
foregoing. In any case, however, pursuit of each of the foregoing options
will be subject to covenantshas accrued $0.9 million for environmental remediation and
restrictions contained in the Restated
Credit Agreement and the Indenture relating to debt incurrence,
transactions between the Company and Holdings, the ability of the Company
to pay dividends to Holdings or otherwise undertake payment of Holdings'
obligations and the pledgerestoration costs. The accrual is based upon management's best estimate
of the Company's outstanding common stockexposure in light of relevant available information
including the allocations and remedies set forth in applicable consent
decrees, third-party estimates of remediation costs, the estimated ability
of other potentially responsible parties to pay their proportionate share
of remediation costs, the nature of each site and the number of
participating parties. Subject to the lenders underdifficulty in estimating future
environmental costs, the Restated Credit Agreement. There can be no
assuranceCompany expects that Holdings will decideany sum it may have to redeem either the Holdings
Debentures or the Series A Preferred Stock during 1995, or, if it seeks to
do so, that it will be successfulpay
in its ability to finance any such
redemption.

GENERAL ECONOMIC CONDITIONS AND INFLATION

The Company faces various economic risks ranging from an economic
downturn adversely impacting the Company's primary markets to marked
fluctuationsconnection with environmental matters in copper prices. In the short-term, pronounced changes in
the price of copper tend to affect the Wire and Cable Division's gross
profits because such changes affect raw material costs more quickly than
those changes can be reflected in the pricingexcess of the Wire and Cable
Division's products. In the long-term, however, copper price changesamounts recorded
or disclosed will not have
not had a material adverse effect on gross profits because cost changes
generally have been passed throughits financial
position, results of operations or cash flows.

Derivative Financial Instruments

The Company, to customers over time. In addition,a limited extent, uses forward fixed price contracts
and derivative financial instruments to manage foreign currency exchange
and commodity price risks. To protect the Company's anticipated cash
flows from the risk of adverse foreign currency exchange fluctuations for
firm sales and purchase commitments, the Company believesenters into foreign
currency forward exchange contracts. Copper, the Company's principal raw
material, experiences marked fluctuations in market prices, thereby
subjecting the Company to copper price risk with respect to copper
purchases on fixed customer sales contracts. Derivative financial
instruments in the form of copper futures contracts are utilized by the
Company to reduce those risks. The Company does not hold or issue
financial instruments for investment or trading purposes. The Company is
exposed to credit risk in the event of nonperformance by counterparties
for foreign exchange forward contracts, metal forward price contracts and
metals futures contracts but the Company does not anticipate
nonperformance by any of these counterparties. The amount of such
exposure is generally the unrealized gains with respect to the underlying
contracts.

Impact of Year 2000

The Company is currently working to determine the impact of the year
2000 issue on the processing of date-sensitive information by the
Company's computerized information systems. The year 2000 problem is the
result of computer programs being written using two digits (rather than
four) to define the applicable year. Any of the Company's programs that
have time-sensitive software may recognize a date using "00" as the year
1900 rather than the year 2000, which could result in miscalculations or
system failures. Based on information available at this time, costs of
addressing potential problems are not currently expected to have a
material adverse impact on the Company's financial position, results of
operations or cash flows in future periods. The Company is currently
engaged in identifying and resolving all significant year 2000 issues in a
timely manner.

General Economic Conditions and Inflation

Although net sales are heavily influenced by the price of copper, the
Company's major raw material, the Company's profitability is generally not
affected by changes in copper prices because the Company generally has
been able to pass on its sensitivity to downturns in its primary
markets is less significant than it might otherwise be duecost of copper to its diverse
customer base and its strategy of attemptingcustomers. The Company
attempts to match its copper purchases with its needs. During 1994, the Company experienced general improvement
in most of its markets served coinciding with general economic conditions.production requirements
and thereby minimize copper cathode and rod inventories. The Company
cannot predict eitherfuture copper prices or the continuationeffect of current economic
conditions orfluctuations in the
cost of copper on the Company's future results of its operations in light thereof.operating results.

The Company believes that it is not particularlyonly affected by inflation except to the
extent that the economy in general is thereby affected. Should
inflationary pressures drive costs higher, the Company believes that
general industry competitive price increases would sustain operating
results, although there can be no assurance that this will be the case.
SUBSEQUENT EVENT

Holdings presently intends to effect at least a partial redemption of
the Holdings Debentures at par value plus accrued interest on or about May
15, 1995, when the Holdings Debentures accrete to their full face value.
Holdings expects to finance this redemption through cash received fromIn addition, the Company believes that its sensitivity to downturns in its
primary markets is less significant than it might otherwise be due to its
diverse customer base, broad product line and its strategy of attempting
to match its copper purchases with its needs.

Information Regarding Forward-Looking Statements

This document contains various forward-looking statements and
information that are based on management's belief, as well as assumptions
made by way of repayment of an intercompany account payable and a
dividend. The Company expectsinformation currently available to obtain the necessary funds for such cash
payments from borrowings under a new credit agreement and a capital lease
financing facility. To the extent a full redemption of the Holdings
Debentures is effected, additional financing is expected to be obtainedmanagement. Any statements
made that are not historical in nature, including statements preceded by
the Company through an unsecured term loan.

The Companywords "intend", "expect", "would", and certain lenders have agreed in principle to a new
credit agreement (the "New Credit Agreement") involving a senior secured
revolving credit facility of up to $260 million (the "New Revolving
Credit") subject to specified percentages of eligible assets. The New
Credit Agreement is expected to replace the existing Credit Agreement and
its $175 million revolving credit facility. The New Revolving Credit is
expected to have a five year maturity with interest rates, commitment
fees, collateral and covenants comparable to the existing Restated Credit
Agreement. Additionally,similar expressions are
forward-looking statements. Although the Company and one ofbelieves that the
lending banks have
agreedexpectations reflected in principle to a capital lease facility (the "Capital Lease
Facility"), which is expected to generate proceeds of approximately $25
million, before associated fees and expenses, from the sale and leaseback
of certain of its fixed assets. The Company may have available for its
use an unsecured term loan facility (the "Term Loan Facility") to
refinance a portion of the Holdings Debentures. The applicable terms and
conditions of the New Credit Agreement, the Capital Lease Facility and the
Term Loan Facility have not yet been finalized.

Theresuch forward-looking statements are reasonable,
it can begive no assurance that Holdingssuch expectations will completeprove to have been
correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual
results may vary materially from those expected. Among the redemptionkey factors
that may have a direct bearing on the Company's operating results and
refinancing as described above.forward-looking statements included herein are fluctuations in the
economy, acquisition and consolidation activity in the Company's
businesses, the willingness of customers to accept more distant
distribution channels, demand for the Company's products, the impact of
price competition and fluctuations in the price of copper.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

Report of Independent Auditors . . . . . . . . . . . . . . F-1

Consolidated Balance Sheets:
Successor asA of December 31, 19941997 and 1993 . . . . . .1996 F-2

Consolidated Statements of Operations:
Successor for the years ended December 31, 1994
and 1993, andFor each of the three monthyears in the period
ended December 31, 1992 . . . . . . . . . . . . . . . . . . . F-3
Predecessor for the nine month period ended
September 30, 1992 . . . . . . . . . . . . . . . . . .1997 F-3

Consolidated Statements of Cash Flows:
Successor for the years ended December 31, 1994
and 1993, andFor each of the three monthyears in the period
ended December 31, 1992 . . . . . . . . . . . . . . . . . . . F-4
Predecessor for the nine month period ended
September 30, 1992 . . . . . . . . . . . . . . . . . .1997 F-4

Notes to Consolidated Financial Statements . . . . . . . . F-5

INDEX TO FINANCIAL STATEMENT SCHEDULES

II. Valuation and Qualifying Accounts . . . . . . . . . . . . . S-1

All other schedules have been omitted because they are not
applicable or not required or because the required information is included
in the consolidated financial statements or notes thereto.

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

Not applicable.

24
PART III

ITEMS 10, 11, 12 and 13.

As described below, certain information appearing in the Essex
International's Proxy Statement to be furnished to shareholders in
connection with the 1998 Annual Meeting, is incorporated by reference in
this Form 10-K Annual Report.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTDirectors and Executive Officers

Information regarding Essex International's directors is
incorporated by reference to the "Directors" section of
Essex International's Proxy Statement to be furnished to
shareholders in connection with the 1998 Annual Meeting.
Information regarding Essex International's executive
officers is incorporated by reference to the Executive
Officer section of Item 10 of Essex International's
Annual Report on Form 10-K. Information regarding the
Company's directors and executive officers is included
below.

ITEM 11. Executive Compensation

This information is incorporated by reference to the
"Executive Compensation" section of Essex International's
Proxy Statement to be furnished to shareholders in
connection with the 1998 Annual Meeting.

ITEM 12. Security Ownership of Certain Beneficial Owners and
Management

This information is incorporated by reference to the
"Security Ownership of Certain Beneficial Owners and
Management" section of Essex International's Proxy
Statement to be furnished to shareholders in
connection with the 1998 Annual Meeting.

ITEM 13. Certain Relationships and Related Transactions

This information is incorporated by reference to the "Certain
Transactions" section of Essex International's Proxy
Statement to be furnished to shareholders in connection with
the 1998 Annual Meeting.

Directors and Executive Officers of the Company

The following table sets forth information concerning the Directorsdirectors
and Executive Officersexecutive officers of the Company:

Name Age Position
____ ___ ________

Stanley C. Craft 56- ---- ---- ---------

Steven R. Abbott 50 President and Chief Executive
Officer; Director (Chairman)
Steven R. Abbott 47 President - Wire and Cable Division; Director
Robert J. Faucher 5053 Executive Vice President; Director
Dominic A. Lucenta 44 Senior Vice President - Engineered Products Division;
Director
Robert D. Lindsay 40 Director
Charles W. McGregor 5356 Executive Vice President
- Magnet WireDebra F. Minott 42 Senior Vice President, General
Counsel and Insulation Division;
DirectorSecretary
Curtis A. Norton 52 Senior Vice President
David A. Owen 4951 Executive Vice President and Chief
Financial Officer; Director
Thomas A. Twehues 62Gregory R. Schriefer 45 Executive Vice President; Director
Ward W. Woods 52 Director

Messrs. Craft,President

Mr. Abbott and Twehues havehas been directorsa director since 1988.
Messrs. Lindsay and Woods became directors of the Company in 1992. Messrs. Owen and Faucher
became directors in 1993, and Mr. McGregor was
elected as a director in April 1994.1993. Directors of the Company are elected annually
to serve until the next annual meeting of stockholders of the Company or
until their successors have been elected or appointed and qualified.
Executive officers are appointed by, and serve at the discretion of, the
Board of Directors of the Company.

Mr. Craft is Chairman of the Board of Directors of the Company. He
has served asSteven R. Abbott was appointed President and Chief Executive Officer
of the Company since
March 1992 and as President since September 1991. Mr. Craft was Vice
President - Finance, Treasurer and Chief Financial Officer of the Company
from March 1988 to August 1991.Essex International on February 26, 1996. He was Executive Vicethe
President of the European operations of the CompanyWire and Cable Sector from November 1986September 1995 to February
1988.
Mr. Craft is also a Director of Holdings.

Mr. Abbott was appointed1996 and President of the Wire and Cable Division infrom September 1993.1993 to
September 1995. He was President of the Magnet Wire and Insulation
Division from 1987 to 1993. Mr. Abbott has been employed by the Company
since 1967. Mr. Abbott is also a director of Essex International.

Robert J. Faucher was appointed Executive Vice President in September
1995. He was President of the Engineered Products Division inof Essex from
January 1992. He was1992 to September 1995 and Vice President, Operations in the
Industrial Products Division of Essex from June 1988 to January 1992. HeMr.
Faucher joined the Company in 1985 as Vice President, Planning.

Mr. Lindsay is the sole shareholderDominic A. Lucenta was appointed Senior Vice President in charge of
Human Resources in April 1994. From October 1992 to April 1994 he was
Vice President of Human Resources and presidentfrom 1990 to 1992 he was Director of
a corporation
which is a manager of a limited liability company that is the general
partner of BHLP. Mr. Lindsay is the sole shareholder of a corporation
that is the general partnerHuman Resources for various divisions of the partnership which isCompany. He was director of
Risk Management from 1988 to 1990. He joined the general
partner of BCP.Company in 1979.

Charles W. McGregor was appointed Executive Vice President in October
1996. He is also the sole shareholder of corporations which are
the general partnerswas President of the two partnerships affiliated with BHLPMagnet Wire and BCPInsulation Sector of Essex
from September 1995 to which the Company and Holdings paid the fees described under Item 13
below. Mr. LindsayOctober 1996. He was Managing Director of Bessemer Securities

Corporation ("BSC"), the principal limited partner of BHLP and BCP, from
January 1991 to June 1993. Prior to joining BSC, Mr. Lindsay was a
Managing Director in the Merchant Banking Division of Morgan Stanley &
Co., Incorporated. He is a Director of Stant Corporation and private
companies. Mr. Lindsay is also a Director of Holdings.

Mr. McGregor was appointed President of the Magnet Wire
and Insulation Division inof Essex from September 1993. He1993 to September 1995 and
prior to that was Director of Manufacturing for the Division from 1987 to
1993. Mr. McGregor has been employed by the Company since 1970.

Debra F. Minott was appointed Senior Vice President and General
Counsel in October 1994 and was appointed Secretary in April 1995. She
has been employed by the Company since October 1994. From September 1983
to October 1994, Ms. Minott held various technical assignmentslegal positions at Eli Lilly &
Company.

Curtis A. Norton was appointed Senior Vice President in charge of
Corporate Support Operations in April 1996. He was Vice President of
Corporate Support Operations from September 1995 to April 1996. He was
Vice President of Purchasing from April 1994 to September 1995 and
Director of Purchasing from 1989 to 1994. Mr. Norton has been employed by
the Company since January 1970.

Mr.1981.

David A. Owen was appointed Executive Vice President and Chief
Financial Officer of the Company in March 1994. He had been appointed Vice PresidentPresident-
Finance and Chief Financial Officer of the Company in March 1993, and Treasurer of the Company in April
1992. Prior to that time, Mr. Owen was Director, Treasury and Financial
Services for the Company.Essex. Mr. Owen has been employed in various financial capacities by the Company since 1976.

Mr. Twehues has beenGregory R. Schriefer was appointed Executive Vice President sincein
October 1996. He was Vice President and General Manager of Building Wire
Products from September 1993.
He had been1995 to October 1996 and was Vice President,
Manufacturing of the Wire and Cable Division since 1981.from April 1994 to September
1995. Mr. Twehues started his careerSchriefer has been employed in salesvarious positions with the
Wire and Cable Division in
1960.

Mr. Woods is the sole shareholder and president of a corporation
which is the principal manager of a limited liability company that is the
general partner of BHLP. Mr. Woods is the sole shareholder of a
corporation that is the general partner of the partnership which is the
general partner of BCP. He is also the sole shareholder of corporations
which are the managing general partners of the two partnerships affiliated
with BHLP and BCP to which the Company and Holdings paid the fees
described under Item 13 below. Mr. Woods is President and Chief Executive
Officer of BSC, the principal limited partner of BHLP and BCP. Mr. Woods
joined BSC in 1989. For ten years prior to joining BSC, Mr. Woods was a
senior partner of Lazard Freres & Co., an investment banking firm. He is
chairman of Overhead Door Corporation and Stant Corporation. He is a
director of Boise Cascade Corporation, Freeport-McMoran Inc. and several
private companies. Mr. Woods is also Chairman of the Board of Directors
of Holdings.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

The directors of the Company receive no compensation for their
service as directors except for reimbursement of expenses incidental to
attendance at meetings of the Board of Directors.

The following table sets forth the cash compensation paid by or
incurred on behalf of the Company to its Chief Executive Officer and four
other most highly compensated executive officers of the Company for each
of the three years ended December 31, 1994.

SUMMARY COMPENSATION TABLE

Long Term
Annual Compensation
Compensation Awards
----------------- ------------

Number of
Securities
Underlying
Options/ All Other
Salary Bonus SARs Compensation
Name and Principal Position Year ($) ($) (#) (1) ($) (2) (3)
--------------------------- ---- ------- ------- ------------ ------------

Stanley C. Craft 1994 293,763 400,000 150,000 22,174
President and 1993 278,754 130,000 40,000 12,534
Chief Executive 1992 241,672 99,650 18,000 1,378,573
Officer (CEO)

Steven R. Abbott 1994 182,502 200,000 120,000 8,306
President - Wire 1993 172,500 72,000 25,000 8,599
and Cable Division 1992 151,120 49,275 15,000 908,158

David A. Owen 1994 145,257 165,000 100,000 6,894
Executive Vice 1993 132,682 53,000 25,000 6,312
President and Chief
Financial Officer (CFO)

Charles W. McGregor 1994 132,504 165,000 100,000 7,787
President - Magnet Wire 1993 103,215 50,000 25,000 8,547
and Insulation Division

Robert J. Faucher 1994 149,379 145,000 100,000 8,568
President - Engineered 1993 141,876 55,000 25,000 6,916
Products Division 1992 126,942 40,575 35,000 665,143

(1) All awards are for options to purchase the number of shares of common
stock of Holdings indicated, provided, however, that the number of
shares for which all options are exercisable and the exercise price
therefor may be reduced by the Board of Directors of Holdings in
accordance with a specified formula. (See "Security Ownership of
Certain Beneficial Owners and Management.")

(2) All Other Compensation in 1994 consists of Company contributions to
the defined contribution and deferred compensation plans on behalf of
the executive officer and imputed income on excess Company-paid life
insurance premiums. The following table identifies and quantifies
these amounts for the named executive officers:

27
S.C. Craft S.R. Abbott D.A. Owen C.W. McGregor R.J. Faucher
---------- ----------- --------- ------------- ------------

Company matching under the
defined contribution and
deferred compensation plans $16,825 $7,209 $6,055 $6,482 $7,132

Imputed income on excess
life insurance premiums 5,349 1,097 839 1,305 1,436
-------- -------- -------- -------- --------

Total $22,174 $8,306 $6,894 $7,787 $8,568
======== ======== ======== ======== ========

(3) All Other Compensation in 1992 includes principally divestiture and
retention bonuses paid in connection with the Acquisition and Merger.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term (2)
------------------------------------------------------------------------ ---------------------
Number of
Securities % of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#) (1) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
------------------- ------------- ------------- ------------ ---------- ---------- ----------

Stanley C. Craft 150,000 17.3 2.86 1/01/05 269,567 683,135

Steven R. Abbott 120,000 13.9 2.86 1/01/05 215,653 546,508

David A. Owen 100,000 11.6 2.86 1/01/05 179,711 455,423

Charles W. McGregor 100,000 11.6 2.86 1/01/05 179,711 455,423

Robert J. Faucher 100,000 11.6 2.86 1/01/05 179,711 455,423

(1) In January 1995 options to purchase 865,000 shares of Holdings common
stock were granted in respect of performance for the year ended
December 31, 1994. All such options become exercisable on January 1,
1998.

(2) The potential realizable value assumes a per-share market price at
the time of the grant to be approximately $2.86 with an assumed rate
of appreciation of 5% and 10%, respectively, compounded annually for
10 years.

The following table details the December 31, 1994 year end estimated
value of each named executive officer's unexercised stock options. All
unexercised options are to purchase the number of shares of common stock
of Holdings indicated, provided, however, that the Board of Directors of
Holdings may require that, in lieu of the exercise of any options, such
options be surrendered without payment of the exercise price, in which
case the number of shares issuable upon exercise of such options shall be
reduced by the quotient of (i) the aggregate exercise price that would
have been otherwise payable divided by (ii) the amount paid for each share
of Holdings common stock in the Merger (approximately $2.86 per share).
See "Security Ownership of Certain Beneficial Owners and Management."

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION/SAR VALUES

Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Year-End (#) Year-End ($)
Shares Acquired Value Realized Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable (1)(2)
------------------- --------------- -------------- --------------- -------------------

Stanley C. Craft - - 583,000(E) 1,078,464(E)
190,000(U) - (U)

Steven R. Abbott - - 273,000(E) 503,367(E)
145,000(U) - (U)

David A. Owen - - 52,000(E) 93,844(E)
125,000(U) - (U)

Charles W. McGregor - - 45,500(E) 82,519(E)
125,000(U) - (U)

Robert J. Faucher - - 145,000(E) 260,598(E)
125,000(U) - (U)

(E) Exercisable

(U) Unexercisable

(1) The estimated value of unexercised in-the-money stock options held at
the end of 1994 assumes a per-share fair market value of
approximately $2.86 and per-share exercise prices of $1.00 and $1.25
as applicable.

(2) The options to purchase Holdings common stock granted in 1995 and
1994 in respect of performance for the years ended December 31, 1994
and 1993, respectively, were issued with an exercise price of $2.86
per share.

Pension Plans. The Company provides benefits under a defined benefit
pension plan (the "Pension Plan") and a supplemental executive retirement
plan (the "SERP"). The following table illustrates the estimated annual
normal retirement benefits at age 65 that will be payable under the
Pension Plan and SERP.

PENSION PLAN TABLE

Years of Service
-----------------------------------------------------------
Remuneration 15 20 25 30 35
------------ -- -- -- -- --

125,000 $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
150,000 33,750 45,000 56,250 67,500 78,750

175,000 39,375 52,500 65,625 78,750 91,875
200,000 45,000 60,000 75,000 90,000 105,000

225,000 50,625 67,500 84,375 101,250 118,125
250,000 56,250 75,000 93,750 112,500 131,250

300,000 67,500 90,000 112,500 135,000 157,500
400,000 90,000 120,000 150,000 180,000 210,000

450,000 101,250 135,000 168,750 202,500 236,250
500,000 112,500 150,000 187,500 225,000 262,500

The remuneration utilized in calculating the benefits payable under
the plans is the compensation reported in the Summary Compensation Table
under the captions Salary and Bonus. The formula utilizes the
remuneration for the five consecutive plan years within the ten completed
calendar years preceding the participant's retirement date that produces
the highest final average earnings.

As of December 31, 1994, the years of credited service under the
Pension Plan for each of the executive officers named in the Summary
Compensation Table were as follows: Mr. Craft, twenty-five years and nine
months; Mr. Abbott, twenty-five years and seven months; Mr. Owen, eighteen
years and eight months; Mr. McGregor, twenty-four years and eleven months;
and Mr. Faucher, twenty-two years and six months.

The benefits listed in the Pension Plan Table are based on the
formula in the Pension Plan using a straight-life annuity and are subject
to an offset of 50% of the participant's annual unreduced Primary
Insurance Amount under Social Security. In addition, benefits for
credited service for years prior to 1974 are calculated using the formula
in effect at that time and would reflect a lesser benefit than outlined in
the Pension Plan Table for those years. Benefits under the Pension Plan
are also offset by benefits to which the participant is entitled under any
defined benefit plan of UTC (other than accrued benefits transferred to
the Pension Plan).

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Stanley C. Craft, Ward W. Woods and Robert Lindsay constitute
the Compensation Committee of the Board of Directors of the Company. See
footnote (2) under the caption "Security Ownership of Certain Beneficial
Owners and Management" for a description of the relationship between
Messrs. Lindsay and Woods and BHLP and the information set forth under the
caption "Certain Relationships and Related Transactions" for a description
of certain transactions between the Company and BCP or BHLP and between
Holdings and BCP or BHLP.

Mr. Lindsay is also a member of the Compensation Committee of the
Holdings Board of Directors. The other members of such committee are
Messrs. Joseph H. Gleberman and Gary B. Appel. Mr. Gleberman is a Partner
of Goldman Sachs and Mr. Appel is a Managing Director of DLJ. The
Holdings Compensation Committee fixes the compensation paid to the
Company's executive officers, based in part on the recommendation of Mr.
Craft. See the information set forth under the caption "Certain
Relationships and Related Transactions" for a description of certain
transactions between the Company and DLJ and Goldman Sachs and their
respective affiliates. The Holdings Compensation Committee considers
compensation of executive officers of the Company to the extent it is paid
by or affects Holdings, as is the case when options to purchase Holdings
stock are granted to executive officers of Holdings.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the issued and outstanding common stock of the Company is
owned beneficially and of record by Holdings. Holdings has pledged such
stock to the lenders under the Restated Credit Agreement in support of its
guarantee of the Company's obligations thereunder. In the event of a
default by Holdings of its obligations under such guarantee, the lenders
under the Restated Credit Agreement could exercise their powers under such
pledge and thereby obtain control of the Company.

The following table sets forth certain information regarding the
beneficial ownership of the common stock of Holdings as of February 28,
1995 by (i) each beneficial owner of more than 5% of the outstanding
common stock of Holdings, (ii) each director of Holdings, (iii) all
directors and officers of Holdings as a group, (iv) all directors and
officers of the Company as a group, and (v) all directors, officers and
management of the Company as a group.

31
Number of Shares Percentage Ownership
of Common Stock of Common Stock(1)
------------------------------------- -------------------------
Sole Shared Sole Shared
Voting Voting Voting Voting Com-
Name and Address Power Power Combined Power Power bined
---------------- --------- ----------- ---------- ------ ------ -----

Bessemer Holdings, 24,496,331 6,465,862(3) 30,962,193 69.7% 16.5%(3) 79.1%
L.P.(2)
630 Fifth Avenue
New York, NY 10111

GS Capital Partners, 6,615,448 - 6,615,448 17.7 - 17.7
L.P.(4)
85 Broad Street
New York, NY 10004

DLJ International 5,487,925 - 5,487,925 14.2 - 14.2
Partners, C.V.(5)
140 Broadway
New York, NY 10005

Stanley C. Craft(6) - 883,000 883,000 - 2.5 2.5
1601 Wall Street
Fort Wayne, IN 46802

All directors and - 30,962,193 30,962,193 - 79.1 79.1
officers of Holdings
as a group
(6 persons)(7)

All directors and - 30,962,193 30,962,193 - 79.1 79.1
officers of the
Company as a group
(8 persons)(8)

All directors, officers - 30,962,193 30,962,193 - 79.1 79.1
and management of the
Company as a group
(43 persons)(9)

(1) Percentages have been calculated assuming, in the case of each person
or group listed, the exercise of all warrants and options owned
(which are exercisable within sixty days following February 28, 1995)
by each such person or group, respectively, but not the exercise of
any warrants or options owned by any other person or group listed.

(2) BHLP is a limited partnership the only activity of which is to make
private structured investments. The primary limited partner of BHLP
is Bessemer Securities Corporation ("BSC"), a corporation owned by
trusts whose beneficiaries are descendants of Henry Phipps and
charitable trusts established by such descendants. Each of Messrs.
Ward W. Woods and Robert D. Lindsay, directors of Holdings, and Mr.
Michael B. Rothfeld, is a sole shareholder of a corporation which is

a manager of the limited liability company which is the sole general
partner of BHLP. In addition, each of Messrs. Woods, Lindsay and
Rothfeld are the sole shareholders of corporations which are the
general partners of each of the partnerships affiliated with BHLP and
BCP, respectively, to which the Company and Holdings paid the fees
described under Item 13 below. Mr. Woods is the President and Chief
Executive Officer of BSC. Each of Messrs. Woods, Lindsay and
Rothfeld disclaim beneficial ownership of the shares of common stock
of Holdings owned or controlled by BHLP.

(3) Consists of (a) all shares of common stock owned by officers,
employees, former employees and retirees of the Company and its
subsidiaries, or their respective estates (a total of 2,489,762
shares), which shares are subject to a proxy held by BHLP which
provides that BHLP may vote such shares on all matters presented to
stockholders other than (i) the sale or merger of Holdings or the
Company; (ii) any amendment to the certificate of incorporation of
Holdings which would adversely affect the terms of the common stock
and (iii) the election of directors in the event that BHLP does not
include at least one member of management of the Company in its
nominees for directors of Holdings and (b) all shares of common stock
issuable upon exercise of options held by officers, employees and
retirees of the Company and its subsidiaries, or their respective
estates (a total of 3,976,100 shares). Pursuant to the terms of the
applicable options agreements, the aggregate number of shares
issuable upon exercise of such options can be reduced. All shares
issuable upon exercise of the foregoing options are subject to the
proxy held by BHLP.

(4) Held by GS Capital Partners, L.P. (an affiliate of Goldman, Sachs)
and certain of its affiliates, and includes 2,241,103 shares issuable
upon exercise of warrants.

(5) Includes 3,425,635 shares issuable upon exercise of warrants held by
affiliates and employees of DLJ.

(6) Includes 583,000 shares issuable upon exercise of options held by Mr.
Craft, which, pursuant to the applicable option agreement, may be
reduced to 377,405 shares. All shares owned by Mr. Craft and all
shares issuable to Mr. Craft upon exercise of options are subject to
the proxy described in footnote (3) above. Mr. Craft is the only
director of Holdings who is a record owner of common stock.

(7) Consists of (a) the 24,496,331 shares of common stock owned by BHLP,
which, together with the shares described in (b), (c) and (d) below,
may be deemed to be beneficially owned by Messrs. Woods and Lindsay
(which beneficial ownership is disclaimed by Messrs. Woods and
Lindsay see footnote (2) above), (b) 550,637 shares of common stock
owned by the officers of Holdings included in this group, (c) 738,750
shares issuable to the officers of Holdings included in this group
upon exercise of options which, pursuant to the applicable option
agreements, may be reduced and (d) 1,939,125 shares of common stock
and 3,237,350 shares of common stock issuable upon exercise of
options (also subject to reduction) owned by other employees, former
employees and retirees of the Company and its subsidiaries, or their
respective estates. All shares described in (b), (c) and (d) are
subject to the proxy described in footnote (3) above.

(8) Consists of (a) 24,496,331 shares of common stock owned by BHLP,
which, together with the shares described in (b), (c) and (d) below,
may be deemed to be beneficially owned by Messrs. Woods and Lindsay
(which beneficial ownership is disclaimed by Messrs. Woods and
Lindsay see footnote (2) above), (b) 1,000,360 shares of common stock
owned by the other directors and officers of the Company included in
this group, (c) 1,778,250 shares issuable to the other directors and
officers of the Company included in this group upon exercise of
options which, pursuant to the applicable option agreements, may be
reduced and (d) 1,489,402 shares of common stock and 2,197,850 shares
of common stock issuable upon exercise of options (also subject to
reduction) owned by other employees, former employees and retirees of
the Company and its subsidiaries, or their respective estates. All
shares described in (b), (c) and (d) are subject to the proxy
described in footnote (3) above.

(9) Consists of (a) the 24,496,331 shares of common stock owned by BHLP,
which, together with the shares described in (b) and (c) below, may
be deemed to be beneficially owned by Messrs. Woods and Lindsay
(which beneficial ownership is disclaimed by Messrs. Woods and
Lindsay see footnote (2) above), (b) 2,489,762 shares of common stock
owned by officers, employees, former employees and retirees of the
Company and its subsidiaries, or their respective estates included in
this group and (c) 3,976,100 shares issuable to officers, employees,
former employees and retirees of the Company and its subsidiaries, or
their respective estates included in this group upon exercise of
options which, pursuant to the applicable options agreements, may be
reduced. All shares described in (b) and (c) are subject to the
proxy described in footnote (3) above.

MANAGEMENT STOCKHOLDER AGREEMENTS

The members of the Company's management who are stockholders of
Holdings (each a "Management Stockholder") are parties to various
agreements pertaining to their ownership of Holdings' common stock and
options therefor. Set forth below is a summary of certain provisions of
these agreements, each of which is filed as an exhibit to this Annual
Report. Capitalized terms set forth below and not otherwise defined have
the meanings assigned thereto in the relevant agreements.

Management Stockholders and Registration Rights Agreement. The
Management Stockholders and Registration Rights Agreements generally
prohibit Management Stockholders from transferring shares of common stock
of Holdings owned by them before the earlier of (i) an initial public
offering by Holdings (or any successor thereto) (an "IPO") and (ii)
October 9, 1996. Thereafter, if any Management Stockholder receives a
bona fide offer to purchase any of his common stock, such Management
Stockholder may transfer such common stock only after offering such common
stock first to Holdings and then, if not accepted by Holdings, to BHLP, in
each case on the same terms and conditions as such bona fide offer.

Any Management Stockholder who retires from the Company, dies or
becomes disabled prior to the earlier of (i) an IPO and (ii) October 9,
1996, will have a "put right" for 90 days (180 days in case of death) by
which he, or his estate may require Holdings to repurchase all his shares
of common stock of Holdings at a price equal, at the option of Holdings,
to (i) the higher of (x) the last price paid by BHLP, Holdings or a
Management Stockholder for shares of common stock of Holdings and (y)

approximately $2.86 per share or (ii) the fair market value of the shares
of common stock of Holdings as determined by an independent appraiser or
investment banking firm selected by the Board of Directors of Holdings
(the value determined pursuant to clause (i) or (ii) being the "Fair
Market Value"). Holdings will be required to repurchase such shares at
such price, unless such repurchase would violate any applicable law or
regulation or any agreement pursuant to which Holdings incurred any debt,
in which case Holdings may defer such repurchase until such repurchase
would no longer result in any such violation. Holdings will have a "call
right" for 365 days by which it can repurchase, at Fair Market Value, any
or all of the shares of common stock of Holdings belonging to the
Management Stockholder or his estate if, prior to the earlier of (i) an
IPO and (ii) October 9, 1996, the Management Stockholder's employment is
terminated for any reason, whether due to his retirement, resignation,
death, disability or otherwise. Under certain circumstances, Holdings may
pay the purchase price of any common stock of Holdings repurchased from a
Management Stockholder pursuant to the put rights and call rights
described above by delivery of a subordinated note.

Management Stockholders also have certain "piggyback" registration
rights in the event that Holdings registers shares of its common stock for
sale under the Securities Act of 1933.

Stock Option. Grants of options to purchase common stock of Holdings
have been made to management and employees of the Company pursuant to, and
are subject to the provisions of, an Amended and Restated Stock Option
Plan and individual stock option agreements. According to the terms of
the foregoing plan and form of agreement, any options granted in the
future thereunder will become exercisable upon the occurrence of: (i) the
passage of 3 years; (ii) the death, retirement or disability of the
optionee; (iii) a Company Sale (which shall be deemed to have occurred if
any person becomes the beneficial owner of 50% or more of the combined
voting power of Holdings' securities or acquires substantially all the
assets of Holdings or the Company), in proportion to the percentage of
Holdings' common stock sold; or(iv) the sale by BHLP (as successor in
interest to BCP) of 25% or more of the then outstanding common stock of
Holdings, in each case in proportion to the percentage of Holdings stock
sold by BHLP. Such options are generally not transferable. Options owned
by Management Stockholders are subject to the same put rights and call
rights applicable to shares of common stock owned by Management
Stockholders.

Holdings may require that an option be surrendered and cancelled
without payment of the exercise price. In this event, the optionee is
entitled to receive a number of shares of Holdings common stock equal to
the number specified in the grant, reduced by the quotient of the
aggregate exercise price otherwise payable and the fair market value per
share as of October 9, 1992.

INVESTORS SHAREHOLDERS AGREEMENT

Set forth below is a summary of certain terms of the Investors
Shareholders Agreement among Holdings, BHLP (as successor in interest to
BCP), affiliates of Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), affiliates of Goldman Sachs and CEA. Capitalized terms used
below and not otherwise defined have the meaning assigned thereto in the
Investors Shareholders Agreement.

Holdings, BHLP, certain affiliates of DLJ, certain affiliates of
Goldman Sachs and CEA (collectively, the "Investor Shareholders") are
parties to an Investors Shareholders Agreement that provides restrictions
on the transferability of Holdings' common stock and other matters,
certain of which are summarized below.

Board of Directors. The Investors Shareholders Agreement provides
that the Board of Directors of Holdings shall consist of seven directors.
BHLP has the right to nominate five directors, at least one of whom will
be a member of all committees of the Board of Directors of Holdings and at
least one of whom will be a member of the management of the Company. The
Board of Directors of Holdings currently includes four BHLP nominees,
including Mr. Stanley C. Craft, Chief Executive Officer of the Company and
Holdings. Similarly, so long as affiliates of DLJ and affiliates of
Goldman Sachs hold at least a specified minimum percentage of the shares
of common stock of Holdings and Series A Preferred Stock originally
purchased by them (and under certain other limited circumstances), the
affiliates of DLJ have the right to nominate one director and the
affiliates of Goldman Sachs have the right to nominate one director, each
of whom will be a member of all of Holdings' Board Committees.

Each of the Investor Shareholders is required to vote all of its
voting shares in favor of the directors so nominated. If any vacancy is
created on the Board of Directors of Holdings, it will be filled in
accordance with the foregoing nomination procedures.

Significant Business Decisions. The Investors Shareholders Agreement
provides that certain specified significant transactions require approval
of the Holdings Board of Directors. In addition, amendments to Holdings'
Certificate of Incorporation and By-laws that adversely affect the terms
of the common stock, amendments to the Investors Shareholders Agreement,
certain significant acquisitions, dispositions, the incurrence of debt
beyond specified amounts and certain transactions with affiliates require,
in addition to the approval of a majority of the Board of Directors of
Holdings, the approval of at least one BHLP-nominated director and, so
long as the affiliates of DLJ or the affiliates of Goldman Sachs hold at
least a specified minimum investment in Holdings, one director nominated
by the affiliates of DLJ or by the affiliates of Goldman Sachs.

Other Rights. The Investors Shareholders Agreement also includes
various rights of first offer, tag-along and pre-emptive rights among the
Investor Shareholders. Holdings and the Investor Shareholders are also
parties to registration rights agreements relating to Holdings' common
stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company incurred advisory fees of approximately $1.0 million,
$1.0 million and $0.2 million payable to affiliates of BHLP and BCP in
1994, 1993 and 1992, respectively. Pursuant to an advisory services
agreement among Holdings, the Company and an affiliate of BHLP, the
Company agreed to pay such affiliate an annual advisory fee of $1.0
million. The Company also incurred advisory fees of $0.2 million in 1992,
payable to Morgan Stanley & Co., Incorporated, an affiliate of the former
controlling shareholder of Holdings. In addition, the Company incurred
management fees to Holdings of $1.9 million in 1992. No such fee was
incurred in 1994 or 1993.

In connection with the Acquisition, the Company paid to an affiliate
of BCP a financial advisory fee of approximately $1.9 million and to
Morgan Stanley & Co., Incorporated a financial services fee of
approximately $3.6 million and Holdings paid to an affiliate of BCP an
acquisition advisory fee of approximately $1.9 million. See footnote (2)
under Item 12 above for a description of the relationship of Messrs. Woods
and Lindsay, directors of the Company, with such BCP affiliate.

Pursuant to an engagement letter dated July 22, 1992 among BCP, BE
and DLJ, as amended by a letter agreement dated October 9, 1992 among BCP,
BE, DLJ and Goldman Sachs (collectively, the "Engagement Letter"),
Holdings paid DLJ a financial advisory fee of $1.0 million upon
consummation of the Acquisition. In addition, Holdings paid an affiliate
of DLJ a $1.0 million commitment fee in connection with its commitment to
purchase Series A Preferred Stock of BE.

The engagement letter also gives DLJ and Goldman Sachs the right, but
not the obligation, subject to certain conditions, to act as financial
advisor to the Company and Holdings until the fifth anniversary of the
Acquisition on a co-exclusive basis in connection with all acquisition,
divestiture and other financial advisory assignments relating to Holdings
or the Company and to act as co-exclusive managing placement agents or co-
exclusive managing underwriters in connection with any debt or equity
financing which is either privately placed or publicly offered (excluding
commercial bank debt or other senior debt which is privately placed other
than any private placement which contemplates a registration of,
registered exchange offer for, or similar registration with respect to
such securities). In connection with any other senior debt financing
which is privately placed (excluding any private placement of senior debt
which contemplates a registration, registered exchange offer for, or
similar registration with respect to such securities), DLJ has the right,
but not the obligation, to act as co-managing placement agent or co-
managing underwriter, together only with Chemical Bank. Holdings has
retained the right to designate DLJ or Chemical Bank as lead placement
agent or lead managing underwriter.

Pursuant to such engagement, DLJ and Goldman Sachs acted as
underwriters in the offerings of the Senior Notes, and in such capacity
received aggregate underwriting discounts and commissions of $5.3 million.
For any further services performed by DLJ or Goldman Sachs pursuant to the
Engagement Letters, DLJ and Goldman Sachs are entitled to fees competitive
with those customarily charged by DLJ, Goldman Sachs and other major
investment banks in similar transactions and to customary out of pocket
fee and expense reimbursement and indemnification and contribution
agreements.

37since 1981.
PART IV

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

(a) 1. Financial Statements

The financial statements listed under Item 8 are filed
as a part of this report.

2. Financial Statement Schedules

The financial statement scheduleschedules listed under Item 8
isare filed as a part of this report.

3. Exhibits

The exhibits listed on the accompanying Index to
Exhibits are filed as a part of this report.

(b) No reportsReports on Form 8-K were filed by the Company during the
fourth quarter of 1994.

388-K:

None.
SIGNATURES

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

ESSEX GROUP, INC.
Date (Registrant)

March 29, 1995, 1998 By /s/ David A. Owen
______________ _____________________________________- -------------- ------------------------------------
David A. Owen
Executive Vice President and
Chief Financial Officer; Director
(Principal Financial Officer)

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

Date

March 29, 1995, 1998 /s/ Stanley C. Craft
______________ _______________________________________
Stanley C. CraftSteven R. Abbott
- -------------- -------------------------------------
Steven R. Abbott
President and Chief Executive Officer;
Director
(Principal Executive Officer)

March 29, 1995, 1998 /s/ David A. Owen
______________ _______________________________________- -------------- --------------------------------------
David A. Owen
Executive Vice President,
Chief Financial Officer; Director
(Principal Financial Officer)

March 29, 1995 /s/ Steven R. Abbott
______________ _______________________________________
Steven R. Abbott
Director

March 29, 1995, 1998 /s/ Robert J. Faucher
______________ _______________________________________- -------------- --------------------------------------
Robert J. Faucher
Director

March 29, 1995 /s/ Charles W. McGregor
______________ _______________________________________
Charles W. McGregor
Director

March 29, 1995 /s/ Thomas A. Twehues
______________ _______________________________________
Thomas A. Twehues
Director

March 29, 1995 /s/ Robert D. Lindsay
______________ _______________________________________
Robert D. Lindsay
Director

March 29, 1995 /s/ Ward W. Woods, Jr.
______________ _______________________________________
Ward W. Woods, Jr.
Director

March 29, 1995, 1998 /s/ James D. Rice
______________ _______________________________________- -------------- --------------------------------------
James D. Rice
Senior Vice President,
Corporate Controller
(Principal Accounting Officer)
40
ESSEX GROUP, INC.

INDEX OF EXHIBITS
(Item 14(a)(3))

Exhibit
No. Description
- --------------------------------------------------------------------------
2.012.01- Agreement and Plan of Merger, dated as of July 24, 1992, (the
"Merger Agreement"), between
B E Acquisition Corporation and BCP/Essex Holdings Inc.the Registrant (then known as
MS/Essex Holdings Inc.), incorporated by reference to Exhibit 2.1
to BCP/Essex Holdings
Inc.'s (then known as MS/Essex Holdings Inc.)the Registrant's Current Report on Form 8-K, filed with the
Securities and Exchange Commission (the "Commission") on August 10,
1992 (Commission File No. 1-10211).
2.02
2.02- Amendment dated as of October 1, 1992, to the Agreement and Plan of
Merger between B E Acquisition Corporation and BCP/Essex
Holdings Inc. (then known as MS/Essex Holdings Inc.),the Registrant,
incorporated by reference to Exhibit 2.2 to BCP/Essex Holdings Inc.'sthe Registrant's
Current Report on Form 8-K, filed with the Securities and Exchange
Commission on October
26, 1992 (Commission File No. 1-10211).
3.01
3.01- Certificate of Incorporation of the registrantRegistrant (Incorporated by
reference to Exhibit 3.01 to the Company'sRegistrant's Registration
Statement on Form S-1, File No. 33-20825).
3.02
3.02- By-Laws of the registrant,Registrant, as amended. (Incorporated by reference
to Exhibit 3.02 to the Company'sRegistrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
4.01
4.01- Indenture dated as of May 7, 1993, among Essex Group, Inc. and NBD
Bank, National Association, as Trustee, under which the 10% Senior
Notes Due 2003 are outstanding, incorporated by reference to
Exhibit 4.1 to the Company'sEssex Registration Statement on Pre-Effective
Amendment No. 1 to Form S-2 (Commission File No. 33-59488).
9.01 Investors Shareholders
4.02- Credit Agreement dated as of October 9, 1992,
among B E Acquisition Corporation, Bessemer Capital Partners,
L.P., certain affiliates of Donaldson, Lufkin & Jenrette,31, 1996, between BCP/Essex
Holdings Inc., certain affiliates of Goldman, Sachs & Co.,the Registrant, the lenders named therein and Chemical Equity
Associates, a California Limited Partnership,The
Chase Manhattan Bank, as administrative agent, incorporated by
reference to Exhibit 28.110.1 to BCP/Essex Holdings Inc.'s Currentthe Registrant's Quarterly Report on
Form 8-K,10-Q, filed with the Securities and Exchange
Commission on October 26, 1992November 13, 1996
(Commission File No. 1-10211).
9.021-7418)
4.03- Amended and Restated Credit Agreement, dated as of October 31,
1996, among Essex International, the Registrant, the lenders named
therein and The Chase Manhattan Bank, as administrative agent,
incorporated by reference to Exhibit 4.5 to Amendment No. 2 of
Essex International's Registration Statement on Form S-1, filed
with the Commission on April 10, 1997 (Commission File No.
333-22043)
4.04- Agreement and Lease dated as of April 12, 1995, between Mellon
Leasing Corporation and the Registrant, incorporated by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q,
filed with the Commission on May 12, 1995

ESSEX GROUP, INC.

INDEX OF EXHIBITS
(Item 14(a)(3))

Exhibit
No. Description
- --------------------------------------------------------------------------
4.05- Amendment No. 1 dated as of June 1, 1997 to the Agreement and Lease
dated as of April 12, 1995, between Mellon Leasing Corporation and
the Registrant, incorporated by reference to Exhibit 4.9 to the
Registrant's Quarterly Report on Form 10-Q, filed with the
Commission on November 7, 1997 (Commission File No. 1-7418)
4.06- Amendment No. 2 dated as of September 2, 1997 to the Agreement and
Lease dated as of April 12, 1995, between Mellon Leasing
Corporation and the Registrant, incorporated by reference to
Exhibit 4.10 to the Registrant's Quarterly Report on Form 10-Q,
filed with the Commission on November 7, 1997 (Commission File
No. 1-7418)
9.01- Management Stockholders and Registration Rights Agreement dated as
of October 9, 1992, among B E Acquisition Corporation, Bessemer
Capital Partners, L.P. and certain employees of the registrantRegistrant and
its subsidiaries, incorporated by reference to Exhibit 28.3 to
BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Securities and Exchange Commission on October 26, 1992 (Commission File No. 1-10211).
9.03 Form of Irrevocable Proxy dated as of October 9, 1992, granted to
Bessemer Capital Partners, L.P. by certain employees of the
registrant and its subsidiaries, incorporated by reference to
Exhibit 28.4 to BCP/Essex Holdings Inc.'s Current Report on Form
8-K, filed with the Securities and Exchange Commission on October
26, 1992 (Commission File No. 1-10211).
10.01 Amendment and Restatement of Credit Agreement dated May 7, 1993,
incorporated by reference to Exhibit 28.7 to the Company's
Registration Statement on Pre-Effective Amendment No. 3 to Form
S-2 (Commission File No. 33-59488).

Exhibit
No. Description
--------------------------------------------------------------------------

10.02 Credit
10.01- Advisory Services Agreement dated as of September 25, 1992, among B E
Acquisition Corporation, BCP/Essex Holdings Inc., the registrant,
the lenders named therein and Chemical Bank, as agent,
incorporated by reference to Exhibit 4.6 to BCP/Essex Holdings
Inc.'s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on October 26, 1992 (Commission File No.
1-10211).
10.03 Engagement Letter dated July 22,December 15, 1992, among
Bessemer Capital Partners, L.P., B E Acquisition Corporation,BCP/Essex Holdings Inc. and Donaldson, Lufkin
& Jenrette, Inc.,the
Registrant incorporated by reference to Exhibit 10.1010.15 to registrant'sBCP/Essex
Holdings Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1992 (Commission File No. 1-7418).
10.04 Amendment dated October 9, 1992 among Bessemer Capital Partners,
L.P., B E Acquisition Corporation, Donaldson, Lufkin & Jenrette,
Inc. and Goldman, Sachs and Co., to Engagement Letter dated July
22, 1992 among Bessemer Capital Partners, L.P., B E Acquisition
Corporation and Donaldson, Lufkin & Jenrette, Inc., incorporated
by reference to Exhibit 10.11 to registrant's Annual Report on
Form 10-K for the year ended December 31, 1992 (Commission File
No. 1-7418).
12.01 Computation of Ratio of Earnings to Fixed Charges.
21.01 Subsidiaries of the registrant.
99.01 Registration Rights Agreement dated as of October 9, 1992, among
B E Acquisition Corporation, certain affiliates of Donaldson,
Lufkin & Jenrette, Inc., certain affiliates of Goldman, Sachs &
Co., and Chemical Equity Associates, A California Limited
Partnership, incorporated by reference to Exhibit 28.2 to
BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Securities and Exchange Commission on October 26, 1992
(Commission File No. 1-10211).
99.02
10.02- Amended and Restated Stock Option Plan ("Stock Option Plan"), of
BCP/Essex Holdings Inc., incorporated by reference to Exhibit 4.7
to BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Securities and
Exchange Commission on October 26, 1992 (Commission File No. 1-
10211).

421-10211)
10.03- Amendment No. 1 to the Stock Option Plan, incorporated by reference
to Exhibit 99.04 to BCP/Essex Holdings Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1996, filed with the
Commission on February 19, 1997 (Commission File No. 1-10211)
10.04- Amendment No. 2 to the Stock Option Plan, incorporated by reference
to Exhibit 10.10 to Essex International Inc.'s Registration
Statement on Form S-1, filed with the Commission on August 14, 1997
(Commission File No. 333-33591)
21.01- Subsidiaries of the Registrant
27.01- Financial Data Statement - December 31, 1997

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholder
Essex Group, Inc.

We have audited the accompanying consolidated balance sheets of Essex
Group, Inc. Successor as of December 31, 19941997 and 19931996 and the related consolidated
statements of operationsincome and cash flows of Essex Group,
Inc. Successor for the years ended December 31, 1994 and 1993 andeach of the three monthyears in the
period ended December 31, 1992, and the consolidated
statements of operations and cash flows of Essex Group, Inc. Predecessor
for the nine month period ended September 30, 1992.1997. Our audits also included the financial
statement scheduleschedules listed in the Index at Item 14
(a)14(a). These financial
statements and scheduleschedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.

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

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Essex Group, Inc. Successor at December 31, 19941997 and 19931996 and the consolidated
results of their operations and their cash flows of Essex Group,
Inc. Successor for the years ended December 31, 1994 and 1993, andeach of the three
monthyears in the period ended December 31, 1992, and of Essex Group,
Inc. Predecessor for the nine month period ended September 30, 1992,1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related
financial statement schedule,schedules, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.

ERNST & YOUNG LLP

Indianapolis, Indiana
January 27, 1995, except for Note 14 as to
which the date is March 21, 1995

F-11998

ESSEX GROUP, INC.

CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)

December 31,
---------------------------
In Thousands of Dollars, Except Per Share Data 1994 1993
--------------------------------------------------------------------------------------------------------------
1996 1997
-------- --------

ASSETS

Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $16,894 $10,346$ 2,899 $ 2,832
Accounts receivable (net of
allowance of $3,537$5,239 and $2,811 . . . . . . . . . . . . . . . . . . 144,595 116,733$5,583) 189,717 191,737
Inventories . . . . . . . . . . . . . . . . . . . . . 145,706 139,357217,643 233,020
Other current assets . . . . . . . . . . . . . . . . . 20,496 9,738
-------- --------12,147 14,077
------- -------

Total current assets . . . . . . . . . . . . . 327,691 276,174422,406 441,666

Property, plant and equipment, net . . . . . . . . . . . 276,134 273,084280,489 287,832
Excess of cost over net assets
acquired (net of accumulated
amortization of $9,145$17,388 and
$5,081) . . . . . 133,100 137,164$21,610) 126,619 123,222
Other intangible assets and deferred
costs (net of accumulated
amortization of $5,146$4,501 and $2,986) . . . . . . . . . . . . . . . . . . . . . . 11,563 13,921$4,103) 7,417 5,478
Other assets . . . . . . . . . . . . . . . . . . . . . . 1,812 6,654
-------- --------

$750,300 $706,997
======== ========4,294 4,468
------- -------

$841,225 $862,666
======= =======

See Notes to Consolidated Financial Statements
F-2
ESSEX GROUP, INC.

CONSOLIDATED BALANCE SHEETS - continued

December 31,
---------------------------
InContinued
(In Thousands of Dollars, Except Per Share Data 1994 1993
--------------------------------------------------------------------------------------Data)

December 31,
------------------------
1996 1997
-------- --------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable to banks $ 30,913 $ 34,752
Current portion of long-term debt 11,576 2,500
Accounts payable . . . . . . . . . . . . . . . . . . . $47,421 $45,53571,243 63,845
Accrued liabilities . . . . . . . . . . . . . . . . . 45,821 42,86363,313 69,271
Deferred income taxes . . . . . . . . . . . . . . . . 10,408 14,27715,151 15,796
Due to Holdings . . . . . . . . . . . . . . . . . . . 32,979 18,363
-------- --------Essex International 5,153 8,759
------- -------

Total current liabilities . . . . . . . . . . . 136,629 121,038198,349 194,923

Long-term debt . . . . . . . . . . . . . . . . . . . . . 200,000 200,000421,340 316,250
Due to Essex International - 46,241
Deferred income taxes . . . . . . . . . . . . . . . . . . 72,771 77,79458,043 54,438
Other long-term liabilities . . . . . . . . . . . . . . . 6,997 4,433

Stockholders'12,427 15,650

Stockholder's equity:
Common stock, par value $.01 per
share; 1,000 shares authorized;
100 shares issued and outstanding;
plus additional paid inpaid-in capital . . . . . . . . . . . . . 302,784 302,784104,036 104,036
Retained earnings . . . . . . . . . . . . . . . . . . 31,119 948
-------- --------47,030 131,128
------- -------

Total stockholders'stockholder's equity . . . . . . . . . . 333,903 303,732
-------- --------

$750,300 $706,997
======== ========151,066 235,164
------- -------

$841,225 $862,666
======= =======

See Notes to Consolidated Financial Statements
F-3
ESSEX GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONSINCOME
(In Thousands of Dollars)

SUCCESSOR PREDECESSOR
-------------------------------------- ------------
Three Month Nine Month
Year Ended Year Ended Period Ended PeriodYears Ended
December 31,
December 31, December 31, September 30,
In Thousands of Dollars 1994 1993 1992 1992
---------------------------------------------------------------------------------------------------------------------------
1995 1996 1997
-------- -------- --------

REVENUES:
Net sales $1,010,075 $868,846 $209,354 $699,997
Interest income 246 265 88 73
Other income 1,553 1,724 87 921
--------- -------- -------- --------

1,011,874 870,835 209,529 700,991
--------- -------- -------- --------

COSTS AND EXPENSES:$1,201,650 $1,332,049 $1,701,329
Cost of goods sold 846,611 745,875 186,026 594,1221,030,511 1,102,460 1,370,232
Selling and administrative
85,129 75,489 22,349 59,609expenses 93,250 120,885 154,103
Other expense (income), net 1,032 2,151 (515)
--------- --------- ---------

Income from operations 76,857 106,553 177,509
Interest expense 24,554 25,241 8,086 14,505
Other expense (income) 2,709 1,801 30 (98)
Merger related expenses - - - 18,139
-------- -------- -------- --------
959,003 848,406 216,491 686,277
-------- -------- -------- --------34,683 39,994 37,711
--------- --------- ---------

Income (loss) before income
taxes and extraordinary charge 52,871 22,429 (6,962) 14,71442,174 66,559 139,798
Provision (benefit) for income taxes 22,700 13,052 (1,900) 9,278
-------- -------- -------- --------19,680 28,988 55,700
--------- --------- ---------

Income (loss) before
extraordinary charge 30,171 9,377 (5,062) 5,43622,494 37,571 84,098
Extraordinary charge - debt
retirement, net of income
tax benefit 2,971 1,183 -
3,367 - 122
-------- -------- -------- ----------------- --------- ---------

Net income (loss) $30,171 $ 6,01019,523 $ (5,062)36,388 $ 5,314
======== ======== ======== ========

84,098
========= ========= =========

See Notes to Consolidated Financial Statements
F-4
ESSEX GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)

OPERATING ACTIVITIES
Net income (loss) $30,171 $6,010 $(5,062) $5,314$ 19,523 $ 36,388 $ 84,098

Adjustments to reconcile
net income (loss) to cash provided
by operating activities:
Depreciation and
amortization 31,420 29,879 8,743 16,91334,205 33,944 34,275
Non cash interest
expense 2,630 4,968 3,251 1,4601,990 1,935 1,789
Non cash pension
expense 2,328 2,124 591 2,8521,947 3,021 2,834
Provision (credit) for losses
on accounts receivable 1,332 850 75 (1,848)
Provision (benefit)676 1,175 1,037
Benefit for deferred
income taxes (8,964) (622) (1,581) 1,267
(Gain) loss(1,025) (7,417) (2,960)
Loss on disposal of
property, plant and
equipment 1,354 436 (44) (389)2,610 1,679 1,710
Loss on repurchase of debt 4,951 1,971 - 5,519 - 200

Changes in operating
assets and liabilities:
(Increase) decrease
in accounts receivable (27,160) (5,314) 18,275 (24,426)
Increase(10,665) 6,288 (3,057)
(Increase) decrease
in inventories (4,515) (5,659) (863) (5,130)3,762 (16,109) (15,377)
Increase (decrease)
in accounts payable
and accrued liabilities 4,575 (720) 1,750 10,90118,901 6,164 (3,600)
Net (increase) decrease
in other assets
and liabilities (10,725) 4,908 (2,347) (2,589)11,378 (6,319) (452)
Increase (decrease) in
due to Holdings 14,616 18,288 (12,017) 18,128
--------Essex International (32,595) 4,769 3,606
-------- -------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 37,062 60,667 10,771 22,653
-------- -------- -------- --------55,658 67,489 103,903
======= ======== ========

See Notes to Consolidated Financial Statements

F-5
ESSEX GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS SUCCESSOR PREDECESSOR
--------------------------------------- ------------
Three Month Nine Month
Year Ended Year Ended Period Ended Period- Continued
(In Thousands of Dollars, Except Per Share Data)

Years Ended
December 31,
December 31, December 31, September 30,
In Thousands of Dollars 1994 1993 1992 1992
---------------------------------------------------------------------------------------------------------------------------
1995 1996 1997
-------- -------- --------

INVESTING ACTIVITIES
Additions to property,
plant and equipment (30,109) (26,167) (14,705) (16,475)(28,555) (25,569) (42,141)
Proceeds from disposal
of property, plant and
equipment 227 352 45 2,179
Investment2,419 533 3,619
Acquisitions (24,934) (79,395) -
Other investments (459) (285) (1,362)
Issuance of equity
interest in a subsidiary and
joint venture (236) (4,970)1,063 - (1,220)
---------
-------- -------- --------

NET CASH USED FOR
INVESTING ACTIVITIES (30,118) (30,785) (14,660) (15,516)
--------(50,466) (104,716) (39,884)
-------- -------- --------

FINANCING ACTIVITIES
Proceeds from senior notes - 200,000 - -long-term debt 428,390 493,900 348,600
Repayment of long-term debt (215,640) (473,734) (462,766)
Proceeds from term loannotes payable
to banks 160,030 537,550 765,846
Repayment of notes payable
to banks (148,270) (518,397) (762,007)
Dividends paid to Essex
International (238,748) - - 130,000 -
Retire prior indebtedness - - (94,000) -
Net increase (decrease) in
revolving loan - (11,000) 11,000 33,000
Net payments of other
long-term debt (396) (120,500) (9,500) (34,540)
Repurchase of 12 3/8% senior
subordinated debentures - (89,983) (11,692) (2,291)
Cash dividends paid - - (7,500) -
Debt issuance costs (4,691) (2,350) -
(7,086) (17,232) (653)
--------Intercompany transfer from
Essex International - - 46,241
-------- -------- --------

NET CASH PROVIDED BY
(USED FOR) FINANCING
ACTIVITIES (396) (28,569) 1,076 (4,484)(18,929) 36,969 (64,086)
-------- -------- -------- ---------------

NET INCREASE (DECREASE)DECREASE IN CASH AND
CASH EQUIVALENTS 6,548 1,313 (2,813) 2,653(13,737) (258) (67)
Cash and cash equivalents
at beginning of period 10,346 9,033 11,846 9,193
--------year 16,894 3,157 2,899
-------- -------- --------

Cash and cash equivalents
at end of period $16,894 $10,346 $9,033 $11,846
========year $ 3,157 $ 2,899 $ 2,832
======== ======== ========

See Notes to Consolidated Financial Statements
F-6
ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In Thousands of Dollars
- -----------------------

NOTE 1 ORGANIZATION AND ACQUISITION

ACQUISITION OF THE COMPANY

OnSIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

In February 29, 1988, BCP/Essex Holdings Inc. (successor in interest to
MS/Essex Holdings Inc. ("Holdings"Essex International"), acquired Essex Group, Inc.
(the "Company"("the Company") from United Technologies Corporation ("UTC") (the "1988
Acquisition") and operated it as a wholly-owned
subsidiary ("Predecessor").

The outstanding common stock of Holdings was
beneficially owned by the Morgan Stanley Leveraged Equity Fund II, L.P.
("MSLEF II"), certain directors and members of management of Holdings and
the Company, and others.

OnIn October 9, 1992, HoldingsEssex International was acquired (the "Acquisition")
by merger (the "Merger") of B E Acquisition Corporation ("BE") with and into
Holdings with Holdings surviving under the name BCP/Essex Holdings Inc.
("Successor"). BE was a newly organized Delaware corporation formed for
the purpose of effecting the Acquisition. Shareholders of BE include
Bessemer Capital Partners, L.P. ("BCP"), affiliates of Goldman, Sachs &
Co. ("Goldman Sachs"), affiliates of Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), Chemical Equity Associates, A California Limited Partnership and
members of management and other employees of the Company. Pursuant to the
Acquisition and Merger, (i) stockholders of Holdings, prior to the
Acquisition and Merger, became entitled to receive approximately $2.86 for
each outstanding share of common stock of Holdings held by them, (ii)
holders of options to purchase Holdings common stock, other than those
persons entering into an option continuation agreement, became entitled to
receive the difference between approximately $2.86 per share and the per
share exercise price of such options and (iii) the capital stock of BE was
converted into capital stock of Holdings. The Acquisition and Merger
resulted in a change in control of Holdings. Further, the Acquisition and
Merger occurred at the Holdings level and, therefore, did not directly
affect the Company's status as a wholly-owned subsidiary of Holdings. In
December 1993, BCP transferred its ownership interest in Holdings to
Bessemer Holdings, L.P. ("BHLP") an(an affiliate of BCP.

In connection with the Acquisition and Merger,successor in
interest to Bessemer Capital Partners, L.P.), certain present and former
employees of the Company recorded
certain merger related expenses of $18,139 consisting primarily of bonus
and option payments to certain employees, and certain merger fees and
expenses, which were charged to operations as of September 30, 1992.

For financial statement purposes, the Acquisition and Merger was
accounted for by Holdings as a purchase acquisition effective October 1,
1992. Because the Company is a wholly-owned subsidiary of Holdings, theother investors. The effects of the
Acquisition and Merger have been reflected in the Company's
financial statements, resultingresulted in a new basis of accounting reflecting estimated
fair values for the Successor's assets and liabilities at that
date.as of October 1, 1992. However, to
the extent that Holdings'Essex International's management had a continuing
investment interest in Holdings'Essex International's common stock, such fair
values (andand contributed stockholder's equity)stockholders' equity were reduced proportionately
to reflect the continuing interest (approximately 10%) at the prior
historical cost basis.

As a result, the Company's financial statements for the periods

F-7

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

subsequentconnection with Essex International's initial public offering (the
"Offering") on May 1, 1997, Essex International's name was changed from
BCP/Essex Holdings Inc. to September 30, 1992 are presented on the Successor's new
basis of accounting, while the financial statements for September 30, 1992
and prior periods are presented on the Predecessor's historical cost basis
of accounting.

The aggregate purchase price of Holdings and a reconciliation to the
initial capitalization of Successor are as follows:

Purchase price, including related fees:

Purchase price, excluding Seller's expenses . . . . $138,445
Related fees and expenses . . . . . . . . . . . . . 6,168
--------
144,613
Less reduction to reflect proportionate historical
cost basis for management's continuing common stock
interest . . . . . . . . . . . . . . . . . . . . . (15,259)
--------

129,354
Holdings debt ($191,645) and deferred debt
issuance costs, deferred and refundable income
taxes and other minor Holdings amounts not
reflected in Successor financial statements
(See Note 9) . . . . . . . . . . . . . . . . . . . 173,430
--------

Initial capitalization of Successor . . . . . . . . $302,784
========

The allocation of the purchase price to historical assets and
liabilities of the Company was as follows:

Net assets at prior historical cost . . . . . . . . . . . . . . . . . . $132,257
Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . 18,959
Increase in property, plant and equipment . . . . . . . . . . . . . . . 98,131
Deferred debt expense and changes in other assets and liabilities . . . 1,335
Long-term debt premium . . . . . . . . . . . . . . . . . . . . . . . . (5,812)
Adjust deferred income taxes to new basis . . . . . . . . . . . . . . . (84,331)
Excess of cost over net assets acquired . . . . . . . . . . . . . . . . 142,245
--------
$302,784
========

F-8

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

The unaudited pro forma consolidated net loss for the twelve month
period ended December 31, 1992 would have been $6,026 assuming the
Acquisition and Merger had occurred on January 1, 1992 (no effect on
revenues). The primary pro forma effects are revised depreciation and
amortization charges, interest expense and income taxes.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION AND BUSINESS SEGMENTEssex International Inc.

Consolidation

The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. All intercompany accounts
and transactions have been eliminatedeliminated.

Use of Estimates

The consolidated financial statements were prepared in consolidation.conformity
with generally accepted accounting principles thereby requiring management
to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.

Nature of Operations

The Company operates in one industry segment. The Company develops,
manufactures and markets electrical wire and cable and insulation
products. AmongThe Company's principal products in order of revenue are:
building wire for the Company's products areconstruction industry; magnet wire for
ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------
electromechanical devices such as motors, transformers and electrical
controls; building wire for the
construction industry; wire for automotive and appliance applications;
voice and data communication wire and cable; industrial wire for
applications in construction, appliances and insulation productsrecreational vehicles; and
automotive wire and specialty wiring assemblies for the electrical industry.automobiles and
trucks. The Company's customers are principally located throughout the
United States, without significant concentration in any one region or any
one customer. The Company performs periodic credit evaluations of its
customers' financial condition and generally does not require collateral.

CASH AND CASH EQUIVALENTSCash and Cash Equivalents

All highly liquid investments with a maturity of three months or less
at the date of purchase are considered to be cash equivalents.

INVENTORIESIncome Taxes

Essex International and the Company file a consolidated U.S. federal
income tax return. The Company operates under a tax sharing agreement
with Essex International whereby the Company's aggregate income tax
liability is calculated as if it filed a separate tax return with its
subsidiaries.

Inventories

Inventories are stated at cost, determined principally on the
last-in, first-out ("LIFO") method, which is not in excess of market.

PROPERTY, PLANT AND EQUIPMENTProperty, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated
over estimated useful lives using the straight-line method.

INVESTMENT IN JOINT VENTURE

An investmentInvestments in aJoint Ventures

Investments in joint venture isventures are stated at cost adjusted for the
Company's share of undistributed earnings or losses.

INCOME TAXES

Effective October 1, 1992, concurrent with the new basisExcess of accounting, the Successor adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," ("FAS 109"). FAS 109
requires recognition of deferred tax liabilities and assets for the

F-9

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

expected future tax consequences of events that have been included in the
financial statements or tax returns. Using this method, deferred tax
liabilities and assets are determined based on the difference between the
financial statement and tax bases of assets and liabilities. These
deferred taxes are measured by applying current tax laws. Through
September 30, 1992, deferred income taxes were provided by Predecessor for
significant timing differences in the recognition of revenue and expense
for tax and financial statement purposes.

Holdings and the Company file a consolidated U.S. federal income tax
return. The Company operates under a tax sharing agreement with Holdings
whereby the Company's aggregate income tax liability is calculated as if
it filed a separate tax return with its subsidiaries.

EXCESS OF COST OVER NET ASSETS ACQUIREDCost Over Net Assets Acquired

Excess of cost over net assets acquired primarily represents the
excess of Holdings contribution to capital, based on itsEssex International's purchase price over the fair value of the
net assets acquired in the Acquisition, and is being amortized by the
straight-line method over 35 years. OTHER INTANGIBLE ASSETSEssex International's excess of cost
over net assets acquired is assessed for potential impairment whenever
existing facts and circumstances indicate the carrying value of those
assets may not be recoverable. The assessment process consists of
ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In connection withThousands of Dollars
- -----------------------

estimating the 1988 Acquisition,future undiscounted cash flows of the businesses for which
the excess of cost over net assets acquired relates and comparing the
resultant amount to their carrying value to determine if an impairment has
occurred. If an impairment has occurred, an impairment loss would be
recognized for the excess of the carrying value over the fair value, as
measured on a covenant not to compete
agreement was entered into whereby, in general, UTC agreed that until
March 1, 1993, it would not engage in or carry on any business directly
competing with any business carried on bydiscounted cash flow basis, of the Company on February 29,
1988. The $34,000 purchase price allocated by the Predecessor to the
covenant not to compete was classified as anexcess of cost over net
assets acquired.

Other Intangible Assets and Deferred Costs

Other intangible assetassets and wasdeferred costs consist primarily of
deferred debt issuance costs and are being amortized over five years through February 1993.

RECOGNITION OF REVENUEthe lives of the
applicable debt instruments using the straight line or bonds outstanding
method and charged to operations as additional interest expense.

Other Long-Term Liabilities

Other long-term liabilities consist primarily of accrued liabilities
under the Company-sponsored defined benefit pension plans for salary and
hourly employees and the supplemental executive retirement plan.

Recognition of Revenue

Substantially all of the Company's revenue is recognized at the time the product is
shipped.

POSTRETIREMENT AND POSTEMPLOYMENT BENEFITSRecently Issued Accounting Standards

In 1993,January 1997, the Company adopted Statement of Financial Accounting Standards Board issued
Statement No. 106 "Employers' Accounting for Postretirement Benefits Other
Than Pensions"131, "Disclosures about Segments of an Enterprise and
Statement of Financial Accounting Standards No. 112
"Employers' Accounting for Postemployment Benefits". The effect of
adopting the new rules was not materialRelated Information" ("FAS 131"), which is required to the Company's 1993 consolidated
results of operations or financial condition.

UNUSUAL ITEMS

Included in Successor's cost of goods sold for the three month period
endedbe adopted on
December 31, 1992 is a charge1998. At that time, the Company will be required to report
certain information about operating segments in complete financial
statements and in condensed financial statements of approximately $2,600interim periods issued
to reflectstockholders. It also requires reporting of certain information about
products and services, geographic areas in which the estimated cost of plant consolidations, primarily costsCompany operates and
major customers.

The Company has not yet completed the analysis required to move equipment
and personnel related expenses. Amounts spent in 1993 and 1994, and

F-10determine
the potential impact on its segment disclosure.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars, -----------------------

amounts remainingExcept Per Share Data
- ----------------------------------------------

NOTE 2 ACQUISITION

On October 31, 1996, the Company acquired substantially all of the
assets and certain liabilities of Triangle Wire & Cable, Inc. of Lincoln,
Rhode Island and its Canadian affiliate, FLI Royal Wire & Cable
("Triangle"), related to be spent atthe sales, marketing, manufacturing and
distribution of electrical wire and cable. The acquisition included four
manufacturing facilities which produce a broad range of building and
industrial wire and cable. The total purchase price for the net assets of
Triangle, including acquisition costs, was $72,410. The acquisition was
financed from proceeds received under the Company's revolving credit
agreement.

The acquisition was recorded under the purchase method of accounting
and accordingly, the results of operations of Triangle for the two months
and year ended December 31, 19941996 and December 31, 1997, respectively, are
not material toincluded in the accompanying consolidated financial statements. InThe
purchase price was allocated to assets acquired and liabilities assumed
based on their respective fair values at the nine month period ended
September 30, 1992, Predecessor recorded a chargedate of approximately $1,500
to sellingacquisition. The
allocation of the purchase price is summarized as follows:

Current assets $73,574
Property, plant and administrative expensesequipment 14,556
Current liabilities (17,304)
Deferred taxes 1,584
------
$72,410
======

The following unaudited pro forma consolidated financial information
for the relocationCompany for 1995 and 1996 are presented assuming the acquisition
had occurred on January 1, 1995:

1995 1996
---- ----

Net sales $1,505,196 $1,561,224
Income before extraordinary charge 21,032 40,112
Net income 18,061 38,929

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of a business
unit which was completed in 1993.Dollars
- -----------------------

NOTE 3 INVENTORIES

The pro forma consolidated financial information does not purport to
present what the Company's consolidated results of operations would
actually have been if the acquisition had occurred on January 1, 1995 and
is not intended to project future results of operations.

The components of inventories are as follows:

December 31,
-------------------------------
1994 1993
---------- ----------1996 1997
-------- --------

Finished goods . . . . . . . . . . . . . . $130,236 $97,332$171,213 $162,570
Raw materials and work
in process . . . . . 54,560 27,927
-------- --------
184,796 125,25956,840 54,146
------- -------
228,053 216,716
LIFO reserve . . . . . . . . . . . . . . . (39,090) 14,098
-------- --------

$145,706 $139,357
======== ========(10,410) 16,304
------- -------
$217,643 $233,020
======= =======

Principal elements of cost included in the Company's inventories are copper, other
purchased materials, direct labor and manufacturing overhead. Inventories
valued using the LIFO method amounted to $141,847$210,454 and $136,980$222,957 at December
31, 19941996 and 1993,1997, respectively.
F-11
ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

NOTE 4 PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment are as follows:

December 31,
----------------------------
1994 1993
---------- ----------

Land . . . . . . . . . . . . . . . . . . . . $ 9,319 $ 9,255
Buildings and improvements . . . . . . . . . 87,113 82,664
Machinery and equipment . . . . . . . . . . 225,343 201,871
Construction in process . . . . . . . . . . 11,486 9,667
-------- --------

333,261 303,457
Less: accumulated depreciation . . . . . . . 57,127 30,373
-------- --------

$276,134 $273,084
======== ========

NOTE 5 ACCRUED LIABILITIES

Accrued liabilities include the following:

December 31,
----------------------------
1994 1993
---------- ----------

Salaries, wages and employee benefits . . . $15,418 $12,099
Amounts due customers . . . . . . . . . . . 5,352 4,328
Other . . . . . . . . . . . . . . . . . . . 25,051 26,436
-------- --------

$45,821 $42,863
======== ========

NOTE 6 LONG-TERM DEBT

BANK FINANCING

In connection with the Acquisition and Merger, the Company entered
into a credit agreement dated September 25, 1992, among the Company,

F-12

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

Holdings, the lenders named therein and Chemical Bank, as agent (the
"Credit Agreement"). Under the Credit Agreement, the Company borrowed
$130,000 in term loans (the "Term Credit") of which $94,000 was used to
repay all indebtedness outstanding under the previous credit agreement and
the balance was used to pay a portion of the consideration payable to
Holdings' shareholders and option holders in the Merger and certain fees
and expenses in connection with the Acquisition and Merger and for other
general corporate purposes. In May 1993, the Company applied $111,000 of
the proceeds from the sale of its 10% Senior Notes due 2003 (the "Senior
Notes") to repay the outstanding balance under the Term Credit. See
Senior Notes below. The Company recognized an extraordinary charge of
$3,055, net of applicable tax benefit of $1,953, in the second quarter of
1993 representing the write-off of unamortized debt costs associated with
the outstanding Term Credit.

In May 1993, an amendment and restatement of the Credit Agreement
(the "Restated Credit Agreement") became effective. The Restated Credit
Agreement provides for $175,000 in revolving credit, subject to specified
percentages of eligible assets, reduced by outstanding letters of credit
($12,079 at December 31, 1994) (the "Revolving Credit"). Further, the
amount of Revolving Credit available to the Company is also subject to
certain debt limitation covenants contained in the indenture under which
the Senior Notes were issued. The Revolving Credit expires in 1998.
Revolving Credit loans bear interest at floating rates at bank prime rate
plus 1.25% or a reserve adjusted Eurodollar rate (LIBOR) plus 2.25%. The
effective interest rate can be reduced by 0.25% to 0.75% if certain
specified financial conditions are achieved. Commitment fees during the
revolving loan period are 0.5% of the average daily unused portion of the
available credit. At December 31, 1994 and 1993, the Company's
incremental borrowing rate under the Restated Credit Agreement, including
applicable margins, approximated 9.0% and 7.3%, respectively.

The Restated Credit Agreement contains various covenants which
include, among other things: (a) the maintenance of certain financial
ratios and compliance with certain financial tests and limitations; (b)
limitations on investments and capital expenditures; (c) limitations on
cash dividends paid; and (d) limitations on leases and the sale of assets.
Through December 31, 1994, the Company fully complied with all of the
financial ratios and covenants contained in the Restated Credit Agreement.

The indebtedness under the Restated Credit Agreement is guaranteed by
Holdings and all of the Company's subsidiaries, and is secured by a pledge
of the capital stock of the Company and its subsidiaries and by a first
lien on substantially all assets.

SENIOR NOTES

At December 31, 1994 and 1993 $200,000 aggregate principal amount of
its Senior Notes were outstanding which bear interest at 10% per annum
payable semiannually and are due in May 2003. Net proceeds in May 1993 to
the Company from the sale of the Senior Notes, after underwriting

F-13

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

discounts, commissions and other offering expenses, were $193,450. The
Company applied $111,000 of such proceeds to the repayment of the Term
Credit and in June 1993 applied the balance of such proceeds, together
with new borrowings under the Revolving Credit, to redeem all of its
outstanding 12 3/8% Senior Subordinated Debentures due 2000 (the
"Debentures").

The Senior Notes rank pari passu in right of payment with all other
senior indebtedness of the Company. To the extent that any other senior
indebtedness of the Company is secured by liens on the assets of the
Company, the holders of such secured senior indebtedness will have a claim
prior to any claim of the holders of the Senior Notes as to those assets.

At the option of the Company, the Senior Notes may be redeemed,
commencing in May 1998 in whole, or in part, at redemption prices ranging
from 103.75% in 1998 to 100% in 2001, or at 109% for up to $67,000 with
the proceeds from any public equity offering prior to June 30, 1996. Upon
a Change in Control, as defined in the indenture covering the Senior Notes
(the "Indenture"), each holder of Senior Notes will have the right to
require the Company to repurchase all or any part of such holder's Senior
Notes at a repurchase price equal to 101% of the principal amount thereof.
The Indenture contains various covenants which include, among other
things, limitations on debt, on the sale of assets, and on cash dividends
paid. Through December 31, 1994, the Company fully complied with all of
the financial ratios and covenants contained in the Indenture.

DEBENTURES

The Debentures were due in 2000 and bore interest at 12 3/8% per
annum payable semiannually. However, the Restated Credit Agreement
required the Debentures, which were callable at 106% commencing May 15,
1993, to be retired no later than June 30, 1993. Because of the mandatory
retirement, the Debentures were valued by the Successor at the expected
retirement cost, discounted at 11.5%. In June 1993, the Company redeemed
all outstanding Debentures at 106% of their principal amount, resulting in
a net loss of $312, net of applicable tax benefit of $199, which has been
reported as an extraordinary charge.

During 1992 the Company repurchased outstanding Debentures which had
a carrying value of $13,843. The net loss resulting from this repurchase,
which includes the write-off of a portion of unamortized debt costs,
totalled $122, net of applicable income tax benefit of $78, for
Predecessor, which has been reported as an extraordinary charge.

OTHER

The Company capitalized interest costs of $132, $1,599, $116 and $220
for Successor in 1994 and 1993 and Successor and Predecessor in 1992,
respectively, with respect to qualifying assets.

F-14

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

Total interest paid was $20,826, $20,961, $7,344 and $10,076, for
Successor in 1994 and 1993 and Successor and Predecessor in 1992,
respectively.

There are no maturities of long-term debt within the next five years,
although future amounts outstanding, if any, under the Restated Credit
Agreement would be due in 1998.

SUBSEQUENT EVENT

See Note 14 -- Subsequent Event.

NOTE 7 INCOME TAXES

Effective October 1, 1992, concurrent with the new basis of
accounting, the Successor adopted FAS 109. The Predecessor's statement of
operations for the nine month period ended September 30, 1992 reflects the
historical accounting method for income taxes and has not been restated to
reflect FAS 109. Under FAS 109 assets and liabilities acquired, and the
resulting charges or credits reflected in future statements of operations,
are stated at the gross fair value at the date of acquisition, whereas
under the previous historical method, assets and liabilities and the
resulting charges or credits were recorded at amounts net of the related
tax differences between fair value and the tax basis.

Deferred income taxes at December 31, 1994 and 1993 reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and amounts used
for income tax purposes. Significant components of deferred tax
liabilities and assets are as follows:

F-15

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

December 31,
-------------------------
1994 1993-------------------------------
1996 1997
-------- --------

Deferred tax liabilities:
Property, plantLand $ 9,386 $ 9,342
Buildings and improvements 95,600 96,551
Machinery and equipment . . . . $73,108 $75,923
Inventory . . . . . . . . . . . . . . 28,236 27,935
Other . . . . . . . . . . . . . . . . 4,201 4,274
-------- --------

Total deferred tax liabilities . . . 105,545 108,132
-------- --------
Deferred tax assets:272,621 294,928
Construction in process 14,990 23,376
------- -------

392,597 424,197
Less accumulated
depreciation 112,108 136,365
------- -------

$280,489 $287,832
======= =======

/TABLE

ESSEX GROUP INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

NOTE 5 ACCRUED LIABILITIES

Accrued liabilities . . . . . . . . . 7,671 8,793
Alternative minimum tax ("AMT") credit
carryforward . . . . . . . . . . . . 4,984 -
Other . . . . . . . . . . . . . . . . 9,711 7,268
-------- --------

Total deferred tax assets . . . . . 22,366 16,061
-------- --------

Net deferred tax liabilities . . . $83,179 $92,071
======== ========

The AMT credit carryforward is available to the Company indefinitely to
reduce future years federal income taxes subject to certain limitations.

F-16

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

The components of income tax expense (benefit) are:

SUCCESSOR PREDECESSOR
-------------------------------------- ------------
Three Month Nine Month
Year Ended Year Ended Period Ended Period Ended
December 31, December 31, December 31, September 30,
1994 1993 1992 1992
----------------------------------------------------

Current:
Federal . . . . . . . . $27,157 $10,978 $(431) $6,868
State . . . . . . . . . 4,507 2,696 112 1,143

Deferred:
Federal . . . . . . . . (8,362) 127 (1,297) 1,109
State . . . . . . . . . (602) (749) (284) 158
-------- ------- -------- --------

$22,700 $13,052 $(1,900) $9,278
======== ======= ======== ========

In compliance with the Omnibus Budget Reconciliation Act of 1993, the
Company's tax balances were adjusted in 1993 to reflect the increase in
the federal statutory tax rate from 34% to 35%. The adjustment had the
effect of increasing income tax expense by $2,250 for 1993.

Total income taxes paid were $11,484, $1,131, $8,608 and $6,604 for
Successor in 1994 and 1993 and Successor and Predecessor in 1992,
respectively.

The Predecessor's deferred tax provision is attributable to timing
differences in the recognition of revenue and expense for tax and
financial reporting purposes. Sources of these differences were primarily
related to depreciation and accruals deductible in different periods for
tax purposes.

Principal differences between the effective income tax rate and
the statutory federal income tax rate are:

F-17

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

SUCCESSOR PREDECESSOR
--------------------------------------- -------------
Three Month Nine Month
Year Ended Year Ended Period Ended Period Ended
December 31, December 31, December 31, September 30,
1994 1993 1992 1992
------------- ------------ ------------ ------------

Statutory federal income tax rate . . . 35.0% 35.0% (34.0)% 34.0%
State and local taxes, net of
federal benefit . . . . . . . . . . . 4.8 5.6 (1.6) 5.8
Permanent differences from applying
purchase accounting . . . . . . . . . - - - 12.2
Amortization of excess of cost over net
assets acquired . . . . . . . . . . . 2.7 6.3 5.1 -
Federal rate increase . . . . . . . . . - 10.0 - -
Tax sharing agreement limitation . . . - - - 8.2
Other, net . . . . . . . . . . . . . . .4 1.3 3.2 2.9
------ ------ ------ ------

Effective income tax rate . . . . . . . 42.9% 58.2% (27.3)% 63.1%include the following:

December 31,
-------------------------------
1996 1997
-------- --------

Salaries, wages and
employee benefits $20,271 $27,041
Amounts due customers 11,381 14,142
Other 32,661 28,088
------ ------
$64,313 $69,271
====== ======
====== ======

The Company elected not to step up its tax bases in the assets
acquired. Accordingly, the income tax bases in the assets acquired have
not been changed from pre-1988 Acquisition values. Depreciation and
amortization

NOTE 6 LONG-TERM DEBT

Long-term debt consists of the higher allocated financial statement bases are not
deductible for income tax purposes, thus increasing the effective income
tax rate reflected in the Predecessor's consolidated financial statements.
Under FAS 109, the Successor has recorded deferred income taxes for such
differences.

F-18

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

NOTE 8 RETIREMENT BENEFITS

The Company participates in two defined benefit retirement
plans for substantially all salaried and hourly employees. The Company
also sponsors a supplemental executive retirement plan, which provides
retirement benefits based on the same formula as in effect under the
salaried employees' plan, but which only takes into account compensation
in excess of amounts that can be recognized under the salaried employees'
plan. Salaried plan retirement benefits are generally based on years of
service and the employee's compensation during the last several years of
employment. Hourly plan retirement benefits are based on hours worked and
years of service with a fixed dollar benefit level. The Company's funding
policy is based on an actuarially determined cost method allowable under
Internal Revenue Service regulations, the projected unit credit method.
Pension plan assets consist principally of fixed income and equity
securities and cash and cash equivalents.

The components of net periodic pension cost for the plans are as
follows:

Service cost benefits earned
during the period . . . . . . . . . . $2,964 $2,611 $628 $2,282
Interest costs on projected benefit
obligation . . . . . . . . . . . . . . 3,643 3,521 799 2,479
Actual return on plan assets . . . . . 2,409 (6,078) (841) (1,544)
Net amortization and deferral . . . . . (6,458) 2,573 5 (365)
-------- -------- -------- --------

Net periodic pension cost . . . . . . . $2,558 $2,627 $591 $2,852
======== ======== ======== ========

The following table summarizes the funded status of these pension
plans and the related amounts that are recognized in the consolidated
balance sheets:

F-19following:

December 31,
-------------------------------
1996 1997
-------- --------

10% Senior notes $200,000 $200,000
Revolving loan 179,900 100,000
Lease obligation 31,766 18,750
Term loan 21,250 -
------- -------
432,916 318,750
Less current portion 11,576 2,500
------- -------

$421,340 $316,250
======= =======

/TABLE

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

December 31,
----------------------------------
1994 1993
---------------- -----------------

Actuarial present value of benefit obligation:
Vested . . . . . . . . . . . . . . . . . . . . $29,469 $32,313
Nonvested . . . . . . . . . . . . . . . . . . 2,470 3,110BANK FINANCING

The Company maintains a revolving credit agreement, amended and
restated effective April 23, 1997, by and among the Company, Essex
International, the Lenders named therein, and The Chase Manhattan Bank, as
administrative agent (the "Revolving Credit Agreement"). The Company's
Revolving Credit Agreement expires in 2001 and provides for up to $370,000
in revolving loans, subject to specified percentages of eligible assets,
reduced by outstanding borrowings under the Company's Canadian credit
agreement and unsecured bank lines of credit ($6,632 and $28,120,
respectively, at December 31, 1997), as described below. The Revolving
Credit Agreement also provides a $25,000 letter of credit subfacility.

Revolving Credit Agreement loans bear floating rates of interest, at
the Company's option, at bank prime plus .50% or a reserve adjusted
Eurodollar rate (LIBOR) plus 1.50%. The spreads over the prime and LIBOR
rates can be reduced to 0%, and .375%, respectively, if a specified
leverage ratio is achieved. The average commitment fees during the
revolving loan period are between .125% and .375% of the average daily
unused portion of the available credit based upon certain financial
ratios. At December 31, 1996 and 1997, the rates of interest under the
Revolving Credit Agreement, including applicable margins, averaged 7.1%
and 6.3%, respectively.

Indebtedness under the Revolving Credit Agreement is guaranteed by
the Company and all of the Company's subsidiaries, and is secured by a
pledge of the capital stock of the Company and its subsidiaries and by a
first lien on substantially all assets. The Company's ability to borrow
under the Revolving Credit Agreement is restricted by the financial
covenants contained therein, and by certain debt limitation covenants
contained in the indenture under which the 10% Senior Notes due 2003 (the
"Senior Notes") were issued (the "Senior Note Indenture").

The Company and its subsidiaries also maintain two additional credit
facilities consisting of: (i) a $25,000 agreement and lease dated as of
April 12, 1995 by and between the Company and Mellon Leasing Corporation
ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

(the "Sale and Leaseback Agreement"); and (ii) a $15,000 credit agreement
by and between a subsidiary of the Company and a Canadian chartered bank
(the "Canadian Credit Agreement").

The Sale and Leaseback Agreement provides $25,000 for the sale and
leaseback of certain of the Company's fixed assets. The Sale and
Leaseback Agreement has a seven-year term expiring in May 2002. The
principal component of the rental is paid quarterly, with the amount of
each of the first 27 payments equal to 2.5% of lessor's cost of the
equipment, and the balance is due at the final payment. The interest
component is paid on the unpaid principal balance and is calculated by the
lessor at LIBOR plus 2.5%. The effective interest rate can be reduced by
0.25% to 1.125% if certain specified financial conditions are achieved.
The fixed assets subject to the Sale and Leaseback Agreement (all of which
are machinery and equipment) are included in property, plant and equipment
in the Consolidated Balance Sheets and have a gross cost of $30,867 and
accumulated amortization of $6,605 at December 31, 1997.

Borrowings under the Canadian Credit Agreement are restricted to
meeting the working capital requirements of the subsidiary and are secured
by the subsidiary's accounts receivable. As of December 31, 1997, $6,632
was outstanding under the Canadian Credit Agreement and denoted as notes
payable to banks in the Consolidated Balance Sheets. The Canadian Credit
Agreement bears interest at rates similar to the Revolving Credit
Agreement and terminates May 30, 1998, although it may be extended for
successive one-year periods upon the mutual consent of the subsidiary and
lending bank.

The Company also has bank lines of credit which provide unsecured
borrowings for working capital of up to $25,000 for 1996 and $50,000 for
1997 of which $25,000 and $28,120 were outstanding at December 31, 1996
and 1997, respectively, and denoted as notes payable to banks in the
Consolidated Balance Sheets. These lines of credit bear interest at rates
subject to agreement between the Company and the lending banks. At
December 31, 1996 and 1997, such rates of interest averaged 7.6% and 7.2%,
respectively.

In connection with the Triangle acquisition, the Company terminated
its former revolving credit agreement and recognized an extraordinary
charge of $1,183 ($1,971 before applicable tax benefit) in 1996 for the
write-off of associated unamortized deferred debt costs. In connection
with the redemption of all of its 16% Senior Discount Debentures due 2004
at their principal amount of $272,850 on May 15, 1995, the Company
terminated its then existing credit agreement and recognized an

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

extraordinary charge of $2,971 ($4,951 before applicable income tax
benefit) in 1995 for the write-off of associated unamortized deferred debt
costs.

On May 1, 1997, Essex International completed the Offering of common
stock. The net proceeds to Essex International, after underwriting
commissions and other associated expenses, were approximately $46,241 of
which $29,497 was used to repay borrowings under the Term Loan and the
remaining proceeds were applied to the Revolving Credit Agreement. The
net proceeds were received from Essex International in the form of an
intercompany transfer, which is non-interest bearing, has no formal
repayment schedule and no expiration date.

Senior Notes

At December 31, 1996 and 1997, $200,000 aggregate principal amount of
the Senior Notes were outstanding. The Senior Notes bear interest at 10%
per annum payable semiannually and are due in May 2003. The Senior Notes
rank pari passu in right of payment with all other senior indebtedness of
the Company. To the extent that any other senior indebtedness of the
Company is secured by liens on the assets of the Company, the holders of
such senior indebtedness will have a claim prior to any claim of the
holders of the Senior Notes as to those assets.

At the option of the Company, the Senior Notes may be redeemed,
commencing May 1998 in whole, or in part, at redemption prices ranging
from 103.75% in 1998 to 100% in 2001. Upon a Change in Control, as
defined in the Senior Note Indenture, each holder of Senior Notes will
have the right to require the Company to repurchase all or any part of
such holder's Senior Notes at a repurchase price equal to 101% of the
principal amount thereof. The Senior Note Indenture contains various
covenants which include, among other things, limitations on debt, on the
sale of assets, and on cash dividends paid. Through December 31, 1997 the
Company fully complied with all of the financial ratios and covenants
contained in the Senior Note Indenture.

Other

The Company capitalized interest costs of $565, $558, and $100 in
1995, 1996, and 1997, respectively, with respect to qualifying assets.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

Total interest paid was $32,312, $38,284, and $36,618 in 1995, 1996
and 1997, respectively.

Aggregate annual maturities of long-term debt for the next five years
are:

1998 $ 2,500
1999 2,500
2000 2,500
2001 102,500
2002 8,750

The year 2001 includes repayment of the Essex revolving loan in the
amount of $100,000.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

NOTE 7 INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the deferred tax liabilities and assets are:

December 31,
-------------------------------
1996 1997
-------- --------

Deferred tax liabilities:
Property, plant and
equipment $60,519 $60,927
Inventory 30,114 30,155
Other 4,502 3,794
------ ------

Total deferred tax
liabilities 95,135 94,876

Deferred tax assets:
Accrued liabilities 8,252 8,555
Other 13,689 16,087
------ ------

Total deferred tax assets 21,941 24,642
------ ------

Net deferred tax
liabilities $73,194 $70,234
====== ======

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

The components of income tax expense are as follows:

Years Ended December 31,
---------------------------------------
1995 1996 1997
------ ------ ------

Current:
Federal $14,872 $29,572 $48,093
State 5,833 6,833 10,567

Deferred (Credit):
Federal 1,135 (5,805) (2,377)
State (2,160) (1,612) (583)
------ ------ ------

$19,680 $28,988 $55,700
====== ====== ======

Total income taxes paid were $45,839, $32,536 and $56,319 in 1995,
1996 and 1997, respectively.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

Principal differences between the effective income tax rate and the
statutory federal income tax rate are as follows:

Years Ended December 31,
---------------------------------------
1995 1996 1997
------ ------ ------

Statutory federal
income tax rate 35.0% 35.0% 35.0%
State and local taxes,
net of federal benefit 5.8 5.1 4.6
Excess of cost over
net assets
acquired amortization 3.4 2.1 1.0
Other, net 2.5 1.4 (0.8)
---- ---- ----

Effective income tax rate 46.7% 43.6% 39.8%
==== ==== ====

In connection with the Acquisition of Essex in 1992, the Company
elected not to step up its tax bases in the assets acquired. Accordingly,
the income tax bases in the assets acquired have not been changed from
pre-1988 Acquisition values. Depreciation and amortization of the higher
allocated financial statement bases are not deductible for income tax
purposes, thus increasing the effective income tax rate reflected in the
consolidated financial statements.

NOTE 8 RETIREMENT BENEFITS

The Company sponsors two defined benefit retirement plans for
substantially all salaried and hourly employees. The Company also has a
supplemental executive retirement plan which provides retirement benefits
based on the same formula as in effect under the salaried employees' plan,
but which only takes into account compensation in excess of amounts that
can be recognized under the salaried employees' plan. Salaried plan
retirement benefits are generally based on years of service and the
employee's compensation during the last several years of

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

employment. Hourly plan retirement benefits are based on hours worked and
years of service with a fixed dollar benefit level. The Company's funding
policy is based on an actuarially determined cost method allowable under
Internal Revenue Service regulations, the projected unit credit method.
Pension plan assets consist principally of fixed income and equity
securities and cash and cash equivalents.

The components of net periodic pension cost for the plans are as
follows:

Years Ended December 31,
-------------------------------------
1995 1996 1997
------ ------ ------

Service cost--benefits
earned during the period $ 2,365 $ 3,377 $ 3,521
Interest costs on projected
benefit obligation 3,923 4,715 5,342
Actual return on plan assets (13,597) (5,123) (11,708)
Net amortization and deferral 9,751 268 6,677
------- ------ -------

Net periodic pension cost $ 2,442 $ 3,237 $ 3,832
======= ====== =======

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

The following table summarizes the funded status of these pension
plans and the related amounts that are recognized in the Consolidated
Balance Sheets:

December 31,
-------------------------------
1996 1997
------ ------

Actuarial present value of benefit
obligation:
Vested $ 44,726 $ 54,209
Nonvested 3,804 4,494
------- ------
Accumulated benefit obligation 48,530 58,703
Effect of projected future salary
increases 17,690 23,406
------- ------
Projected benefit obligation 66,220 82,109
Plan assets at fair value 60,131 70,676
------- ------
Projected benefit obligation in excess
of fair value of plan assets (6,089) (11,433)

Unrecognized net gain (5,131) (3,302)
Unrecognized prior service cost (299) (254)
------- -------
Pension liability recognized in
balance sheets $(11,519) $(14,989)
======= =======

Certain actuarial assumptions were revised in 1996 and 1997 resulting
in a decrease of $5,345 and an increase of $6,231, respectively, in the
projected benefit obligation.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

Following is a summary of significant actuarial assumptions used:

Years Ended December 31,
---------------------------------------
1995 1996 1997
------ ------ ------

Discount rates 7.0% 7.5% 7.0%
Rates of increase in
compensation levels 5.0% 5.0% 5.0%
Expected long-term rate of
return on assets 9.0% 9.0% 9.0%

In addition to the defined benefit retirement plans as detailed
above, the Company also sponsors defined contribution savings plans which
cover substantially all salaried and non-union hourly employees of the
Company and certain other hourly employees, represented by collective
bargaining agreements, who negotiate this benefit into their contract.
The purpose of these savings plans is generally to provide additional
financial security during retirement by providing employees with an
incentive to make regular savings. The Company's contributions to the
defined contribution plans totalled $1,123, $1,194, and $2,055 in 1995,
1996 and 1997, respectively.

The Company also sponsors an unfunded, nonqualified deferred
compensation plan which permits certain key management employees to
annually elect to defer a portion of their compensation and earn a
guaranteed interest rate on the deferred amounts. The total amount of
participant deferrals and accrued interest, which is reflected in other
long-term liabilities, was $1,234 and $2,217 at December 31, 1996 and
1997, respectively.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

NOTE 9 STOCKHOLDER'S EQUITY

The following is an analysis of stockholder's equity:

Common
Stock Plus Total
Additional Retained Stockholder's
Paid-In Capital Earnings Equity
--------------- -------- --------

Accumulated benefit obligation . . . . . . . . 31,939 35,423
Effect of projected future salary increases . 9,566 15,409
-------- --------

Projected benefit obligation . . . . . . . . . 41,505 50,832
Plan assets at fair value . . . . . . . . . . . . . . 42,436 45,137
-------- --------
Fair value of plan assets in excess of
(less than) projected benefit obligation . . . . . . 931 (5,695)
Unrecognized net (gain) loss . . . . . . . . . . . . (7,703) 614
Unrecognized prior service cost . . . . . . . . . . . (353) -
-------- --------

Pension liability recognized in balance sheets . . . $(7,125) $(5,081)
======== ========

Certain actuarial assumptions were revised in 1994 and 1993
resulting in a decrease of $13,883 and an increase of $3,448,
respectively, in the projected benefit obligation.

F-20

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

Following is a summary of significant actuarial assumptions used:

Discount rates . . . . . . . . 8.5% 7.0% 8.0% 7.1%
Rates of increase in
compensation levels . . . . . 5.0% 5.0% 6.0% 7.0%
Expected long-term rate of
return on assets . . . . . . . 9.0% 9.0% 9.0% 7.1%

In addition to the defined benefit retirement plans as detailed
above, the Company also sponsors defined contribution savings plans which
cover substantially all salaried employees of the Company and certain
hourly employees, represented by collective bargaining agreements, who
negotiate this benefit into their contract. The hourly plan was
established in 1994. The purpose of these savings plans is generally to
provide additional financial security during retirement by providing
employees with an incentive to make regular savings. The Company's
contributions to the defined contribution plans are based on employee
contributions and totalled $1,088, $1,030, $276 and $733 for Successor in
1994 and 1993 and Successor and Predecessor in 1992, respectively.

During 1994, the Company implemented an unfunded, nonqualified
deferred compensation plan which permits certain key management employees
to annually elect to defer a portion of their compensation and earn a
guaranteed interest rate on the deferred amounts. The total amount of
participant deferrals and accrued interest, which is reflected in other
long-term liabilities, was $101 at December 31, 1994.

F-21

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

NOTE 9 STOCKHOLDERS' EQUITY

The following is an analysis of changes to the Company's
stockholders' equity:

Common
Stock Plus
Additional Total
Paid In Retained Stockholder's
Capital Earnings Equity
---------- ---------- --------------

PREDECESSOR
-----------
Balance at January 1, 1992 . . . . . . . . . . . . . . $58,000 $62,354 $120,354
Net income . . . . . . . . . . . . . . . . . . . . . . - 5,314 5,314
Merger related expenses payable by Holdings . . . . . . 14,089 - 14,089
Cash dividends paid to Holdings . . . . . . . . . . . . - (7,500) (7,500)
-------- -------- --------

Balance at September 30, 1992 . . . . . . . . . . . . . $72,089 $60,168 $132,257
======== ======== ========
SUCCESSOR
---------
Initial capitalization at October 1, 1992:
Initial capitalization . . . . . . . . . . . . . $318,043 $ - $318,043
Reduction of equity to reflect proportionate
historical cost basis for management's
continuing common stock interest . . . . . . . (15,259) - (15,259)
-------- -------- --------

302,784 - 302,784

Net loss . . . . . . . . . . . . . . . . . . . . . . . - (5,062) (5,062)
-------- -------- --------

Balance at December 31, 1992 . . . . . . . . . . . . . 302,784 (5,062) 297,722
Net income . . . . . . . . . . . . . . . . . . . . . . - 6,010 6,010
-------- -------- --------

Balance at December 31, 1993 . . . . . . . . . . . . . 302,784 948 303,732
Net income . . . . . . . . . . . . . . . . . . . . . . - 30,171 30,171
-------- -------- --------

Balance at December 31, 1994 . . . . . . . . . . . . . $302,784 $31,119 $333,903
======== ======== ========

F-22

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

NOTE 10 RELATED PARTY TRANSACTIONS

Advisory services fees of $1,000, $1,000 and $229 were paid to
affiliates of BHLP and BCP for 1994, 1993 and the three month period ended
December 31, 1992, respectively, and to MSLEF II in the amount of $210
during the nine month period ended September 30, 1992. It is expected
that financial advisory fees to an affiliate of BHLP will continue to be
paid for such services in the future. Also, in connection with the
Acquisition and Merger, an affiliate of BCP received financial advisory
fees of $1,900 associated with the financing plus certain out of pocket
expenses. DLJ and Goldman Sachs acted as underwriters in the Senior Notes
offering, and in such capacity received aggregate underwriting discounts
and commissions of $5,300. In addition, during the nine month period
ended September 30, 1992, management fees to Holdings of $1,875 were
incurred.

In May 1989, Holdings issued $342,000 aggregate principal amount
($135,117 aggregate proceeds amount) of its senior discount debentures due
2004 (the "Holdings Debentures"), the proceeds of which were used to pay a
dividend to Holdings shareholders, cash bonuses to certain members of its
management, and related expenses. During 1992, the Company paid cash
dividends of $7,500 which were used to finance a portion of the
Acquisition. As of December 31, 1994, Holdings had a liability of
$258,960 related to the Holdings Debentures. The Holdings Debentures are
unsecured debt of Holdings and are effectively subordinated to all
outstanding indebtedness of the Company, including the Senior Notes, and
will be effectively subordinated to other indebtedness incurred by direct
and indirect subsidiaries of Holdings if issued. Cash payment of interest
at 16% is required to be made by Holdings semiannually commencing November
15, 1995.

Holdings is a holding company with no operations and has virtually
no assets other than its ownership of the outstanding common stock of the
Company. All of such stock is pledged, however, to the lenders under the
Restated Credit Agreement. Accordingly, Holdings' ability to meet its
obligations when due under the terms of its indebtedness will be dependent
on the Company's ability to pay dividends, to loan, or otherwise advance
or transfer funds to Holdings in amounts sufficient to service Holdings'
debt obligations.

NOTE 11 DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE INFORMATION

The Company, to a limited extent, uses forward fixed price contracts
and derivative financial instruments to manage foreign currency exchange
and commodity price risks. The Company does not hold or issue financial
instruments for investment or trading purposes. The Company is exposed to
credit risk in the event of nonperformance by counterparties for foreign
exchange forward contracts, metal forward price contracts and metals
futures contracts but the Company does not anticipate nonperformance by
any of these counterparties. The amount of such exposure is generally the
unrealized gains in the impacted contracts.

F-23

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars, Except Per Copper Data
-----------------------------------------------

FOREIGN EXCHANGE RISK MANAGEMENT

The Company engages in the sale and purchase of goods and services
which periodically require payment or receipt of amounts denominated in
foreign currencies. To protect the Company's related anticipated cash
flows from the risk of adverse foreign currency exchange fluctuations for
firm sales and purchase commitments, the Company enters into foreign
currency forward exchange contracts. At December 31, 1994, the Company
had Deutschemark forward exchange sales and purchase contracts of $5,360
and $1,260, respectively. The fair value of such contracts approximated
contract amount. Foreign currency gains or losses resulting from the
Company' operating and hedging activities are recognized in earnings in
the period in which the hedged currency is collected or paid. The related
amounts due to or from counterparties are included in other liabilities or
other assets.

COMMODITY PRICE RISK MANAGEMENT

Copper is the Company's principal raw material and, as a metal
commodity, experiences marked fluctuations in market prices, thereby
subjecting the Company to copper price risk with respect to firm and
anticipated customer sales contracts. Derivative financial instruments in
the form of copper futures contracts are utilized by the Company to reduce
those risks. At December 31, 1994, the Company had outstanding futures
contracts to hedge 2.8 million pounds of copper (approximately $2,400
contract amount; $3,700 fair value amount) for sale in 1995. Deferred and
unrealized gains on these futures contracts are included within other
assets and will be recognized in earnings in the period in which the
hedged copper is sold or at the point in time when a sale is no longer
expected to occur.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments, exclusive of certain foreign
currency exchange and futures contracts as discussed above, generally
consist of cash and cash equivalents and the Company's long-term debt.
The carrying amounts of the Company's financial instruments approximate
fair value at December 31, 1994, except for the Senior Notes which exceed
fair value by approximately $12,000.

NOTE 12 CONTINGENT LIABILITIES AND COMMITMENTS

F-24

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars, Except Per Copper Data
-----------------------------------------------

conditions, events or circumstances known to UTC prior to February 29,
1988. Further, the Company believes it is indemnified, subject to a
$4,000 "basket" for losses related to any environmental events, conditions
or circumstances identified prior to February 28, 1993, to the extent such
losses were not caused by activities of the Company after February 29,
1988. After consultation with counsel, in the opinion of management, the
ultimate cost to the Company, exceeding amounts provided, will not
materially affect the consolidated financial position or results of
operations.

At December 31, 1994, the Company had purchase commitments of 448.8
million pounds of copper. This is not expected to be either a quantity in
excess of needs or at prices in excess of amounts that can be recovered
upon sale of the related copper products. The commitments are to be
priced based on the New York Commodity Exchange, Inc. ("COMEX") price in
the contractual month of shipment except for 37.8 million pounds of copper
that have been priced at fixed amounts through forward purchase contracts
covered by customer sales agreements at copper prices at least equal to
the Company's copper commitment.

At December 31, 1994, the Company had committed $7,959 to outside
vendors for certain capital projects.

The Company occupies space and uses certain equipment under lease
arrangements. Rent expense was $6,912, $6,224, $1,949 and $4,138 under
such arrangements for 1994 and 1993, the three month period ended December
31, 1992 and the nine month period ended September 30, 1992, respectively.
Rental commitments at
December 31, 1994 $ 302,784 $ 31,119 $ 333,903
Net income - 19,523 19,523
Cash dividend paid
to Holdings (198,748) (40,000) (238,748)
-------- ------- --------

Balance at
December 31, 1995 104,036 10,642 114,678
Net income - 36,388 36,388
-------- ------- --------

Balance at
December 31, 1996 104,036 47,030 151,066
Net income - 84,098 84,098
-------- ------- --------

Balance at
December 31, 1997 $ 104,036 $131,128 $235,164
======== ======= =======

/TABLE

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

NOTE 10 RELATED PARTY TRANSACTIONS

Advisory services fees of $1,000 were paid to an affiliate of BHLP
and BCP for 1995, 1996 and 1997, respectively, and it is expected that
such advisory fees will continue to be paid for such services in the
future. Donaldson, Lufkin & Jenrette Securities Corporation and Goldman,
Sachs & Co., having a substantial ownership in Essex International at the
time, acted as two of the underwriters in the Offering, and in such
capacity received aggregate underwriting discounts and commissions of
approximately $4,400 of which Essex International's portion was $2,300.

NOTE 11 DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE INFORMATION

Foreign exchange risk management

The Company engages in the sale and purchase of goods and services
which periodically require payment or receipt of amounts denominated in
foreign currencies. To protect the Company's related anticipated cash
flows from the risk of adverse foreign currency exchange fluctuations for
firm sales and purchase commitments, the Company enters into foreign
currency forward exchange contracts. At December 31, 1996, the Company
had no forward exchange sales contracts but did have $138 of Deutschemark
purchase contracts whose fair value approximated the contract amount. At
December 31, 1997, the Company had no foreign currency forward exchange
contracts. Foreign currency gains or losses resulting from the Company's
operating and hedging activities are recognized in earnings in the period
in which the hedged currency is collected or paid. The related amounts
due to or from counterparties are included in other liabilities or other
assets.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

Commodity price risk management

Copper, the Company's principal raw material, experiences marked
fluctuations in market prices, thereby subjecting the Company to copper
price risk with respect to copper purchases and to firm and anticipated
customer sales contracts. Derivative financial instruments in the form of
copper futures contracts are utilized by the Company to reduce those
risks.

Purchase or "long" contracts are utilized by the Company to hedge
firm and anticipated sales contracts while sales or "short" contracts are
employed with respect to "carryover" copper purchases. Copper carryover
purchases represent that portion of the Company's current month's copper
purchase commitments priced at the current month's average New York
Commodity Exchange, Inc. ("COMEX") price, but not delivered until the
following month. Short contracts are utilized to mitigate risk that
copper prices, at the time of copper receipt, are likely to be below the
average COMEX price of the incoming copper carryover.

Purchase contracts at December 31, 1996 and 1997 totalled 42.5 and
1.2 million copper pounds, respectively, with contract amounts of $42,000
and $1,000 and estimated fair values of $41,300 and $1,000, respectively.
There were no sales contracts at December 31, 1996. Sales contracts at
December 31, 1997 totalled 25.0 million copper pounds, with a contract
amount of $21,500 and a fair value of $20,800. Deferred and unrealized
gains or losses on these futures contracts ($700 loss and $700 gain at
December 31, 1996 and 1997, respectively) are included within other assets
and will be recognized in earnings in the period in which the hedged
copper is sold to customers and the underlying contracts are liquidated,
when a sale is no longer expected to occur or when the carryover copper is
received.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

Fair value of financial instruments

The Company's financial instruments, exclusive of certain forward
contracts and futures contracts as discussed above, generally consist of
cash and cash equivalents and long-term debt. The carrying amounts of the
Company's cash and cash equivalents approximated fair value at December
31, 1996 and 1997 while the carrying amount of the Senior Notes was less
than fair value by approximately $8,000 and $9,500 at December 31, 1996
and 1997, respectively. Fair values with respect to the Company's foreign
currency forward exchange contracts and copper futures contracts are
determined based on quoted market prices.

NOTE 12 CONTINGENT LIABILITIES AND COMMITMENTS

There are various claims and pending legal proceedings against the
Company including environmental matters and other matters arising out of
the ordinary course of its business. Pursuant to the 1988 Acquisition,
UTC agreed to indemnify the Company against all losses (as defined)
resulting from or in connection with damage or pollution to the
environment and arising from events, operations, or activities of the
Company prior to February 29, 1988 or from conditions or circumstances
existing at February 29, 1988. Except for certain matters relating to
permit compliance, the Company is fully indemnified with respect to
conditions, events or circumstances known to UTC prior to February 29,
1988. The sites covered by this indemnity are handled directly by UTC and
all payments required to be made are paid directly by UTC. The amounts
related to this environmental contingency are not material to the
Company's consolidated financial statements. UTC also provided a second
environmental indemnity which deals with losses related to environmental
events, conditions or circumstances existing at or prior to February 29,
1988, which only became known in the five year window commencing February
29, 1988. As to any such losses, the Company is responsible for the first
$4,000 incurred. Management and its legal counsel periodically review the
probable outcome of pending proceedings and the costs reasonably expected
to be incurred. The Company accrues for these costs when it is probable
that a liability has been incurred and the amount of the loss can be
reasonably estimated. After consultation with counsel, in the opinion of
management, the ultimate cost to the Company, exceeding amounts provided,
will not materially affect its consolidated financial position, cash flows
or results of operations. There can be no assurance, however, that future
developments will not alter this conclusion.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

Since about 1990, the Company has been named as a defendant in a
limited number of product liability lawsuits brought by electricians and
other skilled tradesmen claiming injury from exposure to asbestos found in
electrical wire products produced a number of years ago. At December 31,
1997, the number of cases pending against the Company was 101 involving
approximately 308 claims. The Company's strategy is to defend these cases
vigorously. The Company believes that its liability, if any, in these
matters and the related defense costs will not have a material adverse
effect either individually or in the aggregate upon its business or
financial condition, cash flows or results of operations. There can be no
assurance, however, that future developments will not alter this
conclusion.

At December 31, 1997, the Company had purchase commitments for 765.0
million pounds of copper. This is not expected to be either a quantity in
excess of needs or at prices in excess of amounts that can be recovered
upon sale of the related copper products. The commitments are to be
priced based on the COMEX price in the contractual month of shipment
except for 76.5 million pounds of copper that have been priced at fixed
amounts through forward purchase contracts covered by customer sales
agreements at copper prices at least equal to the Company's copper
commitment.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
- -----------------------

At December 31, 1997 the Company had committed $4,997 to outside
vendors for certain capital projects.

The Company occupies space and uses certain equipment under lease
arrangements. Rent expense was $7,478, $8,941 and $12,176 under such
arrangements for 1995, 1996 and 1997, respectively. Rental commitments at
December 31, 1997 under long-term noncancellable operating leases were as
follows:

Real Estate Equipment Total
----------- --------- -----

1995 $2,427 $2,316 $4,743
1996 1,838 2,186 4,024
1997 1,401 1,225 2,626
1998 1,232 1,015 2,247
1999 1,037 860 1,897
After 1999 12,665 - 12,665
------- ------ -------
$20,600 $7,602 $28,202
======= ====== =======

F-25

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

Real Estate Equipment Total
----------- --------- -----

1998 $ 4,504 $ 4,785 $ 9,289
1999 4,715 3,733 8,448
2000 4,134 2,848 6,982
2001 3,491 957 4,448
2002 2,803 700 3,503
After 2002 7,939 230 8,169
------ ------ ------

$27,586 $13,253 $40,839
====== ====== ======

/TABLE

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars, Except Per Share Data
- ----------------------------------------------

NOTE 13 QUARTERLY FINANCIAL DATA (UNAUDITED)

1994 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
----------------------------------- ------------ ------------ ------------ ------------

Net sales . . . . . . . . . . . . . $231,832 $246,558 $265,897 $265,788
Gross margin . . . . . . . . . . . 40,184 38,680 42,375 42,225

Net income . . . . . . . . . . . . $7,783 $7,145 $7,998 $7,245[CAPTION]

1996 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
- ---------------------- -------- -------- ------- ---------
Net sales $308,410 $337,533 $328,777 $357,329
Gross margin 49,759 52,891 58,964 67,975
Income before
extraordinary charge 6,419 7,654 11,521 11,977

Net income (a) $ 6,419 $ 7,654 $ 11,521 $ 10,794

1997 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
- ---------------------- -------- -------- ------- ---------
Net sales $410,778 $453,331 $445,166 $392,054
Gross margin 79,871 87,710 82,190 81,326

Net income 19,298 23,472 22,045 19,283

1993 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
----------------------------------- ------------ ------------ ------------ ------------

Net sales . . . . . . . . . . . . . $204,309 $230,465 $220,249 $213,823
Gross margin . . . . . . . . . . . 29,543 30,067 27,547 35,814
Income (loss) before
extraordinary charge (b) . . . . 1,536 2,583 (988) 6,246

Net income (loss) (a)(b) . . . . . $1,536 $(784) $(988) $6,246

(a) In the second quarter 1993, the Company recognized an extraordinary
charge of $3,055 net of applicable income tax benefit of $1,953,
representing the write-off of unamortized debt costs associated with
retirement of the outstanding Term Credit. During 1993 the Company
repurchased outstanding Debentures resulting in extraordinary
charges of $312 net of applicable income tax benefits of $199 (See
Note 6).

NOTE 14 SUBSEQUENT EVENT

Holdings presently intends to effect at least a partial redemption of
the Holdings Debentures at par value plus accrued interest on or about May
15, 1995, when the Holdings Debentures accrete to their full face value.
Holdings expects to finance this redemption through cash received from the
Company by way of repayment of an intercompany account payable and a
dividend. The Company expects to obtain the necessary funds for such cash
payments from borrowings under a new credit agreement and a capital lease
financing facility. To the extent a full redemption of the Holdings

F-26

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Continued

In Thousands of Dollars
-----------------------

Debentures is effected, additional financing is expected to be obtained by
the Company through an unsecured term loan.

The Company and certain lenders have agreed in principle to a new
credit agreement (the "New Credit Agreement") involving a senior secured
revolving credit facility of up to $260,000 (the "New Revolving Credit")
subject to specified percentages of eligible assets. The New Credit
Agreement is expected to replace the existing Restated Credit Agreement
and its $175,000 revolving credit facility. The New Revolving Credit is
expected to have a five year maturity with interest rates, commitment
fees, collateral and covenants comparable to the existing Restated Credit
Agreement. Additionally, the Company and one of the lending banks have
agreed in principle to a capital lease facility (the "Capital Lease
Facility"), which is expected to generate proceeds of approximately
$25,000, before associated fees and expenses, from the sale and leaseback
of certain of its fixed assets. The Company may have available for its
use an unsecured term loan facility (the "Term Loan Facility") to
refinance a portion of the Holdings Debentures. The applicable terms and
conditions of the New Credit Agreement, the Capital Lease Facility and the
Term Loan Facility have not yet been finalized.

There can be no assurance that Holdings will complete the redemption
and refinancing as described above.

F-27- ------------

(a) In the fourth quarter of 1996, the Company recognized an
extraordinary charge of $1,183 ($.05 per share assuming dilution),
net of applicable income tax benefit of $788, representing the
write-off of unamortized deferred debt expense in connection with
the termination of its former credit agreement.

SCHEDULE II

ESSEX GROUP, INC.

VALUATION AND QUALIFYING ACCOUNTS

SUCCESSOR PREDECESSOR
------------------------------------------------ ---------------
Three Month Nine Month
Year Ended Year Ended Period Ended Period Ended
December 31, December 31, December 31, September 30,
In Thousands of Dollars 1994 1993 1992 1992
----------------------- --------------------------------------------------------------

Allowance for doubtful
accounts:

Balance at
beginning of period $2,811 $2,455 $2,462 $4,912
Provision 1,332 850 75 (1,848)
Write-offs (900) (765) (177) (763)
Recoveries 294 271 95 161
-------- -------- -------- --------
Balance at end of
period $3,537 $2,811 $2,455 $2,462
======== ======== ======== ========

S-1

EXHIBIT INDEX

Location of Exhibit
Exhibit in Sequential
Number Description of Document Numbering System
--------------------------------------------------------------------------

2.01 Agreement and Plan of Merger, dated as of July 24, 1992 (the
"Merger Agreement"), between B E Acquisition Corporation and
BCP/Essex Holdings Inc. (then known as MS/Essex Holdings Inc.),
incorporated by reference to Exhibit 2.1 to BCP/Essex Holdings
Inc.'s (then known as MS/Essex Holdings Inc.) Current Report on
Form 8-K, filed with the Securities and Exchange Commission on
August 10, 1992 (Commission File No. 1-10211).
2.02 Amendment dated as of October 1, 1992, to the Agreement and Plan
of Merger between B E Acquisition Corporation and BCP/Essex
Holdings Inc. (then known as MS/Essex Holdings Inc.), incorporated
by reference to Exhibit 2.2 to BCP/Essex Holdings Inc.'s Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on October 26, 1992 (Commission File No. 1-10211).
3.01 Certificate of Incorporation of the registrant (Incorporated by
reference to Exhibit 3.01 to the Company's Registration Statement
on Form S-1, File No. 33-20825).
3.02 By-Laws of the registrant, as amended. (Incorporated by reference
to Exhibit 3.02 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991).
4.01 Indenture under which the 10% Senior Notes Due 2003 are
outstanding, incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Pre-Effective Amendment No. 1
to Form S-2 (Commission File No. 33-59488).
9.01 Investors Shareholders Agreement dated as of October 9, 1992,
among B E Acquisition Corporation, Bessemer Capital Partners,
L.P., certain affiliates of Donaldson, Lufkin & Jenrette, Inc.,
certain affiliates of Goldman, Sachs & Co., and Chemical Equity
Associates, a California Limited Partnership, incorporated by
reference to Exhibit 28.1 to BCP/Essex Holdings Inc.'s Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on October 26, 1992 (Commission File No. 1-10211).
9.02 Management Stockholders and Registration Rights Agreement dated as
of October 9, 1992, among B E Acquisition Corporation, Bessemer
Capital Partners, L.P. and certain employees of the registrant and
its subsidiaries, incorporated by reference to Exhibit 28.3 to
BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Securities and Exchange Commission on October 26, 1992
(Commission File No. 1-10211).
9.03 Form of Irrevocable Proxy dated as of October 9, 1992, granted to
Bessemer Capital Partners, L.P. by certain employees of the
registrant and its subsidiaries, incorporated by reference to
Exhibit 28.4 to BCP/Essex Holdings Inc.'s Current Report on Form
8-K, filed with the Securities and Exchange Commission on October
26, 1992 (Commission File No. 1-10211).
10.01 Amendment and Restatement of Credit Agreement dated May 7, 1993,
incorporated by reference to Exhibit 28.7 to the Company's
Registration Statement on Pre-Effective Amendment No. 3 to Form S-
2 (Commission File No. 33-59488).

Location of Exhibit
Exhibit in Sequential
Number Description of Document Numbering System
--------------------------------------------------------------------------

10.02 Credit Agreement dated as of September 25, 1992, among B E
Acquisition Corporation, BCP/Essex Holdings Inc., the registrant,
the lenders named therein and Chemical Bank, as agent,
incorporated by reference to Exhibit 4.6 to BCP/Essex Holdings
Inc.'s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on October 26, 1992 (Commission File No. 1-
10211).
10.03 Engagement Letter dated July 22, 1992 among Bessemer Capital
Partners, L.P., B E Acquisition Corporation, and Donaldson, Lufkin
& Jenrette, Inc., incorporated by reference to Exhibit 10.10 to
registrant's Annual Report on Form 10-K for the year ended
December 31, 1992 (Commission File No. 1-7418).
10.04 Amendment dated October 9, 1992 among Bessemer Capital Partners,
L.P., B E Acquisition Corporation, Donaldson, Lufkin & Jenrette,
Inc. and Goldman, Sachs and Co., to Engagement Letter dated July
22, 1992 among Bessemer Capital Partners, L.P., B E Acquisition
Corporation and Donaldson, Lufkin & Jenrette, Inc., incorporated
by reference to Exhibit 10.11 to registrant's Annual Report on
Form 10-K for the year ended December 31, 1992 (Commission File
No. 1-7418).Agreement and Plan of Merger, dated as of July 24,
1992 (the "Merger Agreement"), between B E Acquisition Corporation
and BCP/Essex Holdings Inc. (then known as MS/Essex Holdings
Inc.), incorporated by reference to Exhibit 2.1 to BCP/Essex
Holdings Inc.'s (then known as MS/Essex Holdings Inc.) Current
Report on Form 8-K, filed with the Securities and Exchange
Commission on August 10, 1992 (Commission File No. 1-10211).
12.01 Computation of Ratio of Earnings to Fixed Charges.
21.01 Subsidiaries of the registrant.
99.01 Registration Rights Agreement dated as of October 9, 1992, among
B E Acquisition Corporation, certain affiliates of Donaldson,
Lufkin & Jenrette, Inc., certain affiliates of Goldman, Sachs &
Co., and Chemical Equity Associates, A California Limited
Partnership, incorporated by reference to Exhibit 28.2 to
BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Securities and Exchange Commission on October 26, 1992
(Commission File No. 1-10211).
99.02 Amended and Restated Stock Option Plan of BCP/Essex Holdings Inc.,
incorporated by reference to Exhibit 4.7 to BCP/Essex Holdings
Inc.'s Current Report on Form 8-K, filed with the Securities and
Exchange Commission on October 26, 1992 (Commission File No. 1-
10211).

EXHIBIT 12.01

ESSEX GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

SUCCESSOR
---------------------------------------------
Three Month
Year Ended Year Ended Period Ended
December 31, December 31, December 31,
In Thousands of Dollars, Except Ratio Data 1994 1993 1992

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

Income (loss) before
taxes and extraordinary
charge $52,871 $22,429 $(6,962)

Add:
Interest Expense 24,554 25,241 8,086

Portion of rents
representative of
interest factor 2,302 2,073 650

Current period
amortization of
interest capitalized
in prior periods 95 8 -
------- ------- -------

Income as adjusted $79,822 $49,751 $1,774
======= ======= =======
Fixed charges:
Interest incurred:
Amount expensed $24,554 $25,241 $8,086
Amount capitalized 132 1,599 116
Portion of rents
representative of
interest factor 2,302 2,073 650
------- ------- -------

Total fixed charges $26,988 $28,913 $8,852
======= ======= =======
Ratio of earnings to
fixed charges (a) 3.0 1.7 -
=== === ===

(a) Earnings of the Successor were insufficient to cover fixed charges by
the amount of $7,078 for the three month period ended December 31,
1992.

EXHIBIT 12.01

ESSEX GROUP, INC.

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES - Continued

PREDECESSOR
------------------------------------------------
Nine Month
Period Ended Year Ended Year Ended
September 30, December 31, December 31,
In Thousands of Dollars, Except Ratio Data 1992 1991 1990
-------------------------------------------------------------------------------------------

Income (loss) before
taxes and extraordinary
charge $14,714 $27,741 $43,208

Add:
Interest Expense 14,505 24,969 31,893

Portion of rents
representative of
interest factor 1,379 1,876 1,856

Current period
amortization of
interest capitalized
in prior periods 48 63 56
------- ------- -------

Income as adjusted $30,646 $54,649 $77,013
======= ======= =======
Fixed charges:
Interest incurred:
Amount expensed $14,505 $24,969 $31,893
Amount capitalized 220 - 107
Portion of rents
representative of
interest factor 1,379 1,876 1,856
------- ------- -------

Total fixed charges $16,104 $26,845 $33,856
======= ======= =======
Ratio of earnings to
fixed charges (a) 1.9 2.0 2.3
=== === ===(In Thousands of Dollars)

Years Ended
December 31,
------------------------------------------
1995 1996 1997
-------- -------- ---------

Allowance for doubtful accounts:

Balance at beginning of year $ 3,537 $ 3,930 $ 5,239
Provision 676 1,782 1,037
Write-offs (476) (738) (1,204)
Recoveries 193 265 511
------ ------ ------

Balance at end of year $ 3,930 $ 5,239 $ 5,583
====== ====== ======

/TABLE

EXHIBIT 21.01

ESSEX GROUP, INC. (MICHIGAN)

SUBSIDIARIES OF THE REGISTRANT

Essex Group, Inc. . . . . . . . . . . . . . . . . . . Delaware

Essex International, Inc. . . . . . . . . . . . . . . Delaware

Essex Wire Corporation . . . . . . . . . . . . . . . Michigan

Diamond Wire & Cable Co. . . . . . . . . . . . . . . Illinois

ExCel Wire and Cable Co. . . . . . . . . . . . . . . Illinois

US Samica Corporation . . . . . . . . . . . . . . . . Vermont

Bristol Wire Company . . . . . . . . . . . . . . . . Delaware

Femco Magnet Wire Corporation . . . . . . . . . . . . Indiana

Essex Group Export Inc. . . . . . . . . . . . . . . . U.S. Virgin Islands

Interstate Industries Holdings Inc. . . . . . . . . . Delaware

Interstate Industries, Inc. . . . . . . . . . . . . . Mississippi

Essex Group Mexico Inc. . . . . . . . . . . . . . . . Delaware

Essex Group Mexico S.A. de C.V. . . . . . . . . . . . Mexico
EXHIBIT 21.01

ESSEX GROUP, INC. (MICHIGAN)

SUBSIDIARIES OF THE REGISTRANT
- ------------------------------------------------------------------------

Essex Group, Inc. Delaware

Essex Canada, Inc. Delaware

Essex Wire Corporation Michigan

Diamond Wire & Cable Co. Illinois

Essex Group Export Inc. U.S. Virgin Islands

Interstate Industries Holdings Inc. Delaware

Interstate Industries, Inc. Mississippi

Essex Group Mexico Inc. Delaware

Essex Group Mexico, S.A. de C.V. Mexico

SX Mauritius Holding Inc. Mauritius

INDEX OF EXHIBITS

Exhibit
No. Description
- --------------------------------------------------------------------------
2.01- Agreement and Plan of Merger, dated as of July 24, 1992, between
B E Acquisition Corporation and the Registrant (then known as
MS/Essex Holdings Inc.), incorporated by reference to Exhibit 2.1
to the Registrant's Current Report on Form 8-K, filed with the
Securities and Exchange Commission (the "Commission") on August 10,
1992 (Commission File No. 1-10211)
2.02- Amendment dated as of October 1, 1992, to the Agreement and Plan of
Merger between B E Acquisition Corporation and the Registrant,
incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K, filed with the Commission on October
26, 1992 (Commission File No. 1-10211)
3.01- Certificate of Incorporation of the Registrant (Incorporated by
reference to Exhibit 3.01 to the Registrant's Registration
Statement on Form S-1, File No. 33-20825)
3.02- By-Laws of the Registrant, as amended. (Incorporated by reference
to Exhibit 3.02 to the Registrant's Annual Report on Form 10-K for
the fiscal year ended December 31, 1991)
4.01- Indenture dated as of May 7, 1993, among Essex Group, Inc. and NBD
Bank, National Association, as Trustee, under which the 10% Senior
Notes Due 2003 are outstanding, incorporated by reference to
Exhibit 4.1 to the Essex Registration Statement on Pre-Effective
Amendment No. 1 to Form S-2 (Commission File No. 33-59488)
4.02- Credit Agreement dated as of October 31, 1996, between BCP/Essex
Holdings Inc., the Registrant, the lenders named therein and The
Chase Manhattan Bank, as administrative agent, incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q, filed with the Commission on November 13, 1996
(Commission File No. 1-7418)
4.03- Amended and Restated Credit Agreement, dated as of October 31,
1996, among Essex International, the Registrant, the lenders named
therein and The Chase Manhattan Bank, as administrative agent,
incorporated by reference to Exhibit 4.5 to Amendment No. 2 of
Essex International's Registration Statement on Form S-1, filed
with the Commission on April 10, 1997 (Commission File No.
333-22043)
4.04- Agreement and Lease dated as of April 12, 1995, between Mellon
Leasing Corporation and the Registrant, incorporated by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q,
filed with the Commission on May 12, 1995

INDEX OF EXHIBITS

Exhibit
No. Description
- --------------------------------------------------------------------------
4.05- Amendment No. 1 dated as of June 1, 1997 to the Agreement and Lease
dated as of April 12, 1995, between Mellon Leasing Corporation and
the Registrant, incorporated by reference to Exhibit 4.9 to the
Registrant's Quarterly Report on Form 10-Q, filed with the
Commission on November 7, 1997 (Commission File No. 1-7418)
4.06- Amendment No. 2 dated as of September 2, 1997 to the Agreement and
Lease dated as of April 12, 1995, between Mellon Leasing
Corporation and the Registrant, incorporated by reference to
Exhibit 4.10 to the Registrant's Quarterly Report on Form 10-Q,
filed with the Commission on November 7, 1997 (Commission File
No. 1-7418)
9.01- Management Stockholders and Registration Rights Agreement dated as
of October 9, 1992, among B E Acquisition Corporation, Bessemer
Capital Partners, L.P. and certain employees of the Registrant and
its subsidiaries, incorporated by reference to Exhibit 28.3 to
BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Commission on October 26, 1992 (Commission File No. 1-10211)
10.01- Advisory Services Agreement dated as of December 15, 1992, among
Bessemer Capital Partners, L.P., BCP/Essex Holdings Inc. and the
Registrant incorporated by reference to Exhibit 10.15 to BCP/Essex
Holdings Inc.'s Annual Report on Form 10-K for the fiscal year
ended December 31, 1992 (Commission File No. 1-10211)
10.02- Amended and Restated Stock Option Plan ("Stock Option Plan"), of
BCP/Essex Holdings Inc., incorporated by reference to Exhibit 4.7
to BCP/Essex Holdings Inc.'s Current Report on Form 8-K, filed with
the Commission on October 26, 1992 (Commission File No. 1-10211)
10.03- Amendment No. 1 to the Stock Option Plan, incorporated by reference
to Exhibit 99.04 to BCP/Essex Holdings Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1996, filed with the
Commission on February 19, 1997 (Commission File No. 1-10211)
10.04- Amendment No. 2 to the Stock Option Plan, incorporated by reference
to Exhibit 10.10 to Essex International Inc.'s Registration
Statement on Form S-1, filed with the Commission on August 14, 1997
(Commission File No. 333-33591)
21.01- Subsidiaries of the Registrant
27.01- Financial Data Schedule - December 31, 1997