Our connectivity products are produced and sold primarily by the Networking business segment for data networking applications. Connectivity products include connectors, patch panels, and interconnect hardware and other components. They are typically sold as part of anend-to-end structured cabling solution.

Our other products include cabinets, enclosures, racks, raceways and enclosures,ties for organizing and managing cable; tubing and sleeving products to protect and organize wire and cable,cable; passive components such as Power Over Ethernet modules,modules; and services.

Our Electronics business segment designs, manufactures and markets metallic and fiber optic wirecable and cable products,wire, with applications in a wide variety of markets. We group these into the following broader markets: Industrial; Video, Sound and Security; and Transportation and Defense (as described in more detail below). The Electronics business segment contributed approximately 63%59%, 69%63%, and 68%69% of Belden CDT’s consolidated revenues in 2005, 2004 2003 and 2002,2003, respectively.

Industrial.   We define the industrial market broadly to include applications ranging from advanced industrial networking and robotics to traditional instrumentation and control systems. Our products are used in discrete manufacturing and process operations involving the connection of computers, programmable controllers, robots, operator interfaces, motor drives, sensors, printers and other devices. Many industrial environments, such as petrochemical and other harsh-environment operations, require cables with exterior armor or jacketing that can endure physical abuse and exposure to chemicals, extreme temperatures and outside elements. Other applications require conductors, insulating, and jacketing materials that can withstand repeated flexing. We offer multiconductor, coaxial, fiber optic and composite cables for all these applications. We provide insulated single-conductor lead andhook-up wire, including heat-resistant PTFE lead wire for electrical leads in motors, internal wiring, and test equipment. We also supply heat-shrinkable tubing and wire management products to protect and organize wire and cable assemblies. We sell our industrial products primarily through wire specialist distributors, industrial distributors and re-distributors, and directly to original equipment manufacturers (OEMs(OEMs)).

Video, Sound and Security.   We manufacture a variety of multiconductor and coaxial products which distribute audio and video signals for use in broadcast television (including digital television and HDTV)high definition television), broadcast radio, pre- and post-production facilities, recording studios and public facilities such as casinos, arenas and stadiums. Our audio/video cables are also used in connection with microphones, musical instruments, audio mixing consoles, effects equipment, speakers, paging systems and consumer audio products. We offer a complete line of composite cables for the emerging market in home networking. Our

Transportation and Defense.Defense.  We provide specialized cables for use in commercial and military aircraft, including cables forfly-by-wire systems, fuel systems, and in-flight entertainment systems. Some of these products withstand extreme temperatures (up to 2000°2000º F), are highly flexible, or are highly resistant to abrasion. We work with OEMs to have our products specified on aircraft systems and sell either directly to the OEMs or to specialized distributors or subassemblers. For the automotive market, we supply specialized cables for halogen headlights, for the oxygen sensors in catalytic converters, for air-bag actuators, and for satellite radio receivers. We market a

Our Networking business segment designs, manufactures and markets metallicprovides multiconductor, coaxial, and fiber optic cable products, connectors, and connectivity products. The segment also designs, manufacturescable management products in two markets: networking and sells cable products for the telecommunications market, cabinets and enclosures for network equipment, passive components such as Power Over Ethernet modules, and certain accessories for the management of cabling systems.telecommunications. The Networking business segment contributed approximately 37%41%, 31%37%, and 32%31% of Belden CDT’s consolidated revenues in 2005, 2004 2003 and 20022003 respectively.

Networking.   We design, manufacture and market enabling technologies for the physical communications infrastructure within and between buildings. End-use applications are hospitals, financial institutions, government, service providers, transportation, data centers, manufacturing, industrial and enterprise customers. In the Networkingnetworking market, we supply cable and connectivity productssolutions for the electronic and optical transmission of data, voice, and multimediavideo over local and wide area networks. Products infor this segmentmarket include high-performance cables (including copper multiconductor, coaxial, and fiber optic cables)10-gigabit Ethernet technologies over copper), connectors, wiring racks, panels, and interconnecting hardware, intelligent patching devices, Power over Ethernet panels, and cable management solutions for completeend-to-end network structured wiring systems. Due to the expense and difficulty of installing fiber as compared with copper cables and the cost of transmitters, repeaters and other electronics required for a fiber optic system, fiber cables have generally been limited to riser applications and backbone sections of the local area network. Copper cables, which can also be used in riser and backbone applications, are predominant in premise wiring and horizontal portions of network systems.

We offer complete cable and connectivity system solutions for the segmenttwo major types of the networking market that prefers anstructured cabling solutions: our completeend-to-end integrated product line, and we are also a significant provider of cablesolution for customers who preferlooking for superior performance, and cable alone for users preferring an open-architecture approach, in which the system integrator willopen architecture where integrators specify our copper and fiber cables for use with the connectivity components of other suppliers. Our systems are installed through a network of highly trained system integrators and are supplied locally by authorized distributors.

Communications.   Within the Communicationscommunications market, we supply multiconductor and coaxial cable products that transmit voice, video, and data signals through the public telephone network. Although we exited the North American telecommunications market in 2004, we continue to provide central office cable products worldwide. We provide a full range of telecommunications wire and cable products in Europe, primarily selling directly to service providers including British Telecom, Deutsche Telecom and Matav (in Hungary) and, to a lesser extent, through distributors. We supply outside plant cable (also called exchange cable), service distribution wire and central office cable. We also provide cable cutting and inventory management services to certain telecom customers. In 2005 we announced plans to exit the copper telecom cable business in the United Kingdom; see Note 6,European Operations, to Belden CDT’s Consolidated Financial Statements in Item 8 of this Annual Report onForm 10-K. We exited the North American telecommunications market in 2004.

Also within the Communicationscommunications market, we manufacture flexible, copper-clad coaxial cable for high-speed transmission of voice, data and video (“broadband”)(broadband), used for the “drop” section of cable television (CATV(CATV)) systems and satellite direct broadcast systems (DBS). We sell CATV cable directly to multiple systems operators, who operate CATV systems throughout the world, and through CATV and electronic distributors. In Europe, we manufacture copper-based CATV trunk distribution cables that meet local

We sell to distributors and directly to OEMs and installers of equipment and systems. Sales to the distributor, Anixter International Inc., including sales by both our Electronics business segment and our Networking business segment, represented approximately 20%16% of our sales in 2004. Sales to BT Group PLC by our Networking business segment represented approximately 10% of our total sales.2005.

We have supply agreements with distributors and with OEM customers in the United States, Canada, Europe, and elsewhere. In general, our customers are not contractually obligated to buy our products exclusively, in minimum amounts or for a significant period of time. The loss of one or more large customers or distributors could, at least in the short term, result in lower total sales and profits. However, we believe that our relationships with our customers are satisfactory and that the customers choose Belden CDT products due to, among other reasons, the breadth of our product offering and the quality and performance characteristics of our products.

There are potential risks in our relationships with distributors. For example, adjustments to inventory levels maintained by distributors (which adjustments may be accelerated through consolidation among distributors) may adversely affect sales on a short-term basis. Further, in both segments of our business certain distributors are allowed to return certain inventory, in an amount not to exceed three percent of the prior year’s purchases, in exchange for an order of equal or greater value. We have recorded a liability for the estimated impact of this return policy.

In Europe, we sell directly to telecommunications service providers, and in some cases we have long-term supply agreements, generally three years in duration. Due to the size of these contracts, the award or loss of a contract may have a material impact on the operating performance of the Company. In addition, the order pattern for these customers can vary due to their operational priorities, weather, financial condition, budget constraints, maintenance policies and other factors. During 2005, we announced plans to exit the copper telecom cable business in the United Kingdom no later than the end of our contract with British Telecom which expires in October 2006. Please see Note 6,European Operations, to Belden CDT’s Consolidated Financial Statements in Item 8 of this Annual Report onForm 10-K.

Both business segments of the Company have manufacturing facilities in Canada and Europe, and both segments have sales in international markets. The Company has sales offices in Europe, Asia, and Latin America. During 2004,2005, approximately 49% of Belden CDT’s sales from continuing operations were for locations outside the United States. Our primary channels to international markets include both distributors and direct sales to end users and OEMs.

Changes in the relative value of currencies take place from time to time and their effects on the Company’s results of operations may be favorable or unfavorable. On rare occasions, we engage in foreign currency hedging transactions to mitigate these effects. Much of the material we sell in Europe is made in Europe, reducing our currency risk for that region. For more information about Belden CDT’s foreign currency exposure management, see Note  2,Summary of Significant Accounting Policies, to the Company’s Consolidated Financial Statements in Item 8 of this Annual Report onForm 10-K.

The past few years have been characterized by consolidation of manufacturing operations in our industry worldwide in response to both changes in demand and improvements in productivity. A risk associated with our European manufacturing operations is the relative expense and length of time required to reduce manufacturing employment in European countries (if needed), compared with operations in the United States..

The Company’s foreign operations are subject to economic and political risks inherent in maintaining operations abroad such as economic and political destabilization, international conflicts, restrictive actions by foreign governments, and adverse foreign tax laws.

Financial information for Belden CDT by geographic area is shown in Note 22,IndustryBusiness Segments and Geographic Information, to the Company’s Consolidated Financial Statements in Item 8 of this Annual Report onForm 10-K.

Belden CDT faces substantial competition in its major markets. The number and size of our competitors varies depending on the product line and business segment.

For both our business segments, the market can be generally categorized as highly competitive with many players. Some multinational competitors have greater financial, engineering, manufacturing and marketing resources than we have. Additionally, certain international competitors operate in lower cost regions of the world, which could result in a cost advantage. There are also many regional competitors that have more limited product offerings.

The principal competitive factors in all our product markets are product features, availability, price, customer support and distribution coverage. The relative importance of each of these factors varies depending on the specific product category.customer. Some products are manufactured to meet published industry specifications and cannot be differentiated

Although we believe that we have certain technological and other advantages over our competitors, realizing and maintaining such advantages will require continued investment in engineering, research and development, marketing and customer service and support. There can be no assurance that we will continue to make such investments or that we will be successful in maintaining such advantages.

Belden CDT engages in a continuing research and development program, including new and existing product development, testing and analysis, process and equipment development and testing, and compound materials development and testing. For information about the amount spent on research and development, see Note 2,Summary of Significant Accounting Policies, to the Company’s consolidated financial statementsConsolidated Financial Statements in Item 8 of this Annual Report onForm 10-K.

Belden CDT has a policy of seeking patents when appropriate on inventions concerning new products, product improvements and advances in equipment and processes as part of our ongoing research, development, and manufacturing activities. We own many patents and registered trademarks worldwide, with numerous others for which applications are pending. Although in the aggregate our patents and trademarks are of considerable importance to the manufacturing and marketing of many of our products, we do not consider any single patent or trademark or group of patents or trademarks to be material to the business as a whole, except for the Belden® trademark and the CDT (and design)Belden^{® trademarks.} trademark. Belden CDT’s patents and trademarks are used by both the Electronics and the Networking business segments.

The principal raw material used in many of our products, for both business segments, is copper. Other materials that we purchase in large quantities include Teflon®Teflon^® FEP PVC, and polyethylene.polyvinyl chloride(PVC). We also use polyethylene, color chips, insulating materials such as plastic and rubber, shielding tape, plywood and plastic reels, corrugated cartons, aluminum, steel and optical fiber. With respect to all major raw materials used by the Company, we generally have either alternative sources of supply or access to alternative materials. Supplies of these materials are generally adequate and are expected to remain so for the foreseeable future.

Belden CDT sources a minor percentage of its finished products from a network of manufacturers under private label agreements.

For information on price risk related to copper and certain petroleum-based commodities, see Note 2,Summary of Significant Accounting Policies, and Note 18,Unconditional Purchase Obligation, to the Company’s Consolidated Financial Statements in Item 8 of this Annual Report onForm 10-K.

Our business is characterized generally by short-term order and shipment schedules, and many orders are shipped from inventory. Accordingly, we do not consider backlog at any given date to be indicative of future sales.

The Company is subject to numerous federal, state, provincial, local and foreign laws and regulations relating to the storage, handling, emission and discharge of materials into the environment, including the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA(CERCLA)), the Clean Water Act, the Clean Air Act, the Emergency Planning and CommunityRight-To-Know Act and the Resource Conservation and Recovery Act. We believe that our existing environmental control procedures are adequate and we have no current plans for substantial capital expenditures in this area.

A former Belden CDT facility in Shrewsbury, Massachusetts was sold to a third party in 1992, subject to an indemnification in favor of the buyer for certain preexisting environmental liabilities, principally caused by a former owner. Contaminated soil has been removed, and groundwater remediation has been suspended. Site closure documents have been submitted to the state environmental agency for review and approval. The Company will close the groundwater system upon approval of the closure application by the state agency.

The Company’s facility in Venlo, The Netherlands was acquired in 1995 from Philips Electronics N.V. Soil and groundwater contamination was identified on the site as a result of material handling and past storage practices. Various soil and groundwater assessments are being performed, and the government authorities have advised that some form of remediation maywill be necessary. We have recorded a liability for the estimated costs. In addition, we may need to make capital expenditures to install groundwater treatment equipment. We do not expect the capital expenditures to materially affect our financial condition, operating results or cash flow.

We are named as a defendant in the City of Lodi, California’s federal lawsuit along with over 100 other defendants. The complaint, brought under federal, state and local statutory provisions, alleges that property previously owned by our predecessor contributed to groundwater pollution in Lodi. There has been no validation or investigation to demonstrate or deny the City’s claim that the property allegedly owned by our predecessor is a potential pollution site. An investigation in the area is currently being planned, with aA trial date is tentatively scheduled to begin by September 2006. Because this claim is in the early stages of assessment, we cannot predict at this time the extent of liability, and wefor January 2007. We have recorded a liability for the estimated costs related to resolution of thethis matter.

The Company has been identified as a potentially responsible party (PRP(PRP)) with respect to threetwo sites designated for cleanup under CERCLA or similar state laws, which impose liability for cleanup of certain waste sites and for related natural resource damages without regard to fault or the legality of waste generation or disposal. Persons liable for such costs and damages generally include the site owner or operator and persons

Belden CDT does not own or operate any of the threeeither waste sitessite with respect to which it has been identified as a PRP. In each case, Belden CDT is identified as a party that disposed of waste at the site. With respect to twoone of the sites, Belden CDT’s share of the waste volume is estimated to be less than 1%. At the thirdother site, Belden CDT contributed less than 10% of the waste. Although no estimates of cleanup costs have yet been completed for these sites, we believe, based on our preliminary review and other factors, including Belden CDT’s estimated share of the waste volume at the sites, that the costs relating to these sites will not have a material adverse effect on our results of operations, financial condition or financial condition.cash flow. We have an accruedrecorded a liability on the balance sheet to the extent such costs are known and estimable for such sites.

We do not currently anticipate any material adverse effect on our results of operations, financial condition, cash flow or competitive position as a result of compliance with federal, state, provincial, local or foreign environmental laws or regulations, or cleanup costs at the facilities and sites discussed above. However, some risk of environmental liability and other costs is inherent in the nature of our business, and there can be no assurance that material environmental costs will not arise. Moreover, it is possible that future developments, such as increasingly strict requirements of environmental laws and enforcement policies thereunder, could lead to material costs of environmental compliance and cleanup by the Company.

As of December 31, 2004, Belden CDT2005, we had approximately 6,1005,200 employees andworldwide. We also utilized about 650900 workers under contract manufacturing arrangements in Mexico. Approximately 3,0002,100 employees are covered by collective bargaining agreements at various locations around the world. The Company believes that its relationship with its employees is good.

Many of the markets that Belden CDT serveswe serve are characterized by advances in information processing and communications capabilities, including advances driven by the expansion of digital technology, which require increased transmission speeds and greater bandwidth. These trends require ongoing improvements in the capabilities of cable and connectivity products, and present recurring opportunities for Belden CDTus and others to introduce more sophisticated products. We believe that our future success will depend in part upon our ability to enhance existing products and to develop and manufacture new products that meet or anticipate such changes.

Fiber optic technology presents a potential substitute for certain of the copper-based products that comprise the majority of Belden CDT’s sales. Fiber optic cables have significant advantages over copper-based cables in applications where large amounts of information must travel great distances. But due to the high relative cost required to interface electronic and light signals and the high cost of fiber termination and connection, we believe that copper cable is still the solution with the best combination of performance and cost for all but the trunk and riser portions of data networks and similar applications. We produce and market multimode fiber optic cables and many customers specify these products in combination with copper cables. Advances in copper cable technologies and data transmission equipment have increased the relative performance of copper solutions. The final stage of most networks remains almost exclusively copper-based and we expect that it will continue to be copper for the foreseeable future. However, if there were a significant and rapid decrease in the cost of fiber optic systems relative to the cost of copper-based systems, without a further significant increase in copper capabilities, such systems could become superior on a price/performance

To date, the development of wireless devices has required the development of new wired platforms and infrastructure. In the future, wireless communications technology may represent a threat to both copper and fiber optic-based systems. We believe that the insufficient signal security, susceptibility to interference and jamming, and relatively slow transmission speeds of current systems restrict the use of wireless technology in many data communications markets. However, there are no assurances that future advances in wireless technology will not have an adverse effect on our business.

Revenues generated in 2004 increased 54.8% to $966.2 million from revenues generated in 2003 of $624.1 million due to the Merger, increased selling prices, increased sales volume, increased selling prices, and favorable currency translation on international revenues.

Revenues generated through the addition of the CDT operations during 2004 totaled $247.0 million and contributed 39.6 percentage points of revenue increase.

Favorable foreign currency translation on international revenues contributed 4.1 percentage points of revenue increase during 2004.

Revenues generated on sales of product to customers in the United States, representing 51.1% of the Company’sour total revenues generated during 2004, increased by 57.0% compared with revenues generated during 2003. Absent the impact of both the Merger and favorable currency translation on product sold by the Company’sour international operations to customers in the United States, revenues generated for 2004 increased by 18.8% from revenues generated during 2003. This increase resulted primarily from improvement in general economic conditions in the United States, increased project activity requiring products with video/sound/security applications and industrial applications, increased distributor-restocking activity for products with industrial applications and the impact of sales price increases implemented in January 2004 and March 2004.

Revenues generated on sales of product to customers in Canada represented 8.4% of the Company’sour total revenues for 2004. Canadian revenues for 2004 increased by 57.2% compared with revenues for 2003. Absent the impact of the Merger and favorable currency translation on product sold by the Company’sour international operations to customers in Canada, revenues generated for the 2004 decreased by 3.5% compared with revenues generated for 2003. This decrease resulted primarily from lower sales volume due to the Company’sour decision not to reduce sales prices on certain of its lower-margin product offerings to meet the prices offered by its competitors and a decrease in demand for certain products with industrial applications and networking/communications applications.

Revenues generated on sales of product to customers in the United Kingdom, representing 13.6% of the Company’s total revenues generated during 2004, increased by 59.6% compared with revenues generated during 2003. Absent the impact of the Merger and favorable currency translation on product sold by the Company’sour international operations to customers in the United Kingdom, revenues generated for 2004 increased by 34.7% compared with revenues generated for 2003. This increase resulted primarily from increased unit purchasing of products with networking/communications applications by a large telecommunications customer in the United Kingdom and increased contractual copper pass-through pricing on most products.

Revenues generated on sales of product to customers in Continental Europe represented 17.5% of the Company’sour total revenues for 2004. Continental European revenues generated during 2004 increased by 64.8% compared with revenues generated during 2003. Absent the impact of the Merger and favorable currency translation on product sold by the Company’sour international operations to customers in Continental Europe, revenues generated during 2004 decreased by 5.6% compared with revenues generated during 2003. The majority of this decrease resulted from the Company’sour decision to cease, in the second quarter of 2003, the production of certain products with industrial applications and video/sound/security applications. The negative impact of this decision on revenue comparisons was partially offset by increased project activity requiring products with video/sound/security applications.

Revenues generated on sales of product to customers in the rest of the world, representing 9.4% of the Company’s total revenues generated during 2004, increased by 24.1% from revenues generated during 2003. Absent the impact of the Merger and favorable currency translation on product sold by the Company’sour international operations to customers in the rest of the world, revenues generated during 2004 increased by 3.6% compared with revenues generated during 2003. The increase represented higher demand in the Asia, Latin America and Africa/Middle East markets partially offset by lower demand and the impact of the Company’sour decision to cease, in the second quarter of 2003, the production of certain products with networking/communications applications in the Australia market.

The following table sets forth information comparing the 2004 components of earnings with 2003.

Gross profit increased 67.7% to $200.1 million in 2004 from $119.3 million in 2003 due primarily to the Merger, higher sales volume, an increase in product sales prices, and the favorable impact of currency translation on gross profit. Also contributing to the favorable gross profit comparison were the current-period impact of material, labor and overhead cost reduction initiatives, increased unabsorbed production costs recognized during 2003 resulting from actions taken by the Company to reduce inventory levels, severance and related benefits costs of $1.9$3.6 million recognized in 2003 related to manufacturing facility closures in Australia and Germany and severance and related benefits costs of $1.2 million and $0.5 million recognized in 2003 resulting fromother personnel reductions within the Electronics segment and the Networking segment, respectively.reductions. These positive factors were partially offset by higher product costs resulting from increased purchase prices for copper Teflon® FEP and commodities derived from both petroleum and natural gas.petrochemical feedstocks. Also partially offsetting the favorable comparisons were severance and other benefits costs of $10.3$11.4 million recognized in 2004 related to personnel reductions in North America and Europe severance and other benefits coststhe planned 2005 closure of $1.1 million recognized in 2004 related to a planned manufacturing facility closure in the United States, the impact of thestep-up in the carrying values of CDT inventories that resulted from the Merger, the impact of production outsourcing in Europe, increased transportation costs (especially in Europe) and the impact of production capacity rationalization in Europe initiated during 2003 that resulted in lower output, higher scrap and increased maintenance costs in 2004. Gross profit as a percent of revenues increased 1.6 percentage points from the prior year due to the previously mentioned items.

Operating earningsincome increased 57.0% to $42.8 million for 2004 from $27.2 million for 2003 due primarily to higher gross profit, the current-period impact of selling, general and administrative (SG&A) cost reduction initiatives, severance and asset impairment costs totaling $1.1 million recognized during 2003 related to manufacturing facility closures in Australia and Germany, severance and other related benefits costs of $2.4 million recognized in 2003 related to personnel reductions within the Electronics segment and bad debt expense of $0.6 million recognized in 2003 related to the failure of a distribution customer in Asia. Partially offsetting these positive factors was an increase in SG&A expenses to $151.4 million in 2004 from $94.7 million for 2003. This increase was due primarily to the addition of the CDT operations, the unfavorable impact of currency translation on international expenses, severance and other benefits costs of $1.8 million

Income from continuing operations before taxes increased 113.3% to $31.2 million in 2004 from $14.7 million in 2003 due to higher operating earnings,income, nonoperating income of $1.7 million recognized in the second quarter of 2004 on the Company’sour sale of certain fully impaired equipment and technology which was used for the production of deflection coils partially offset by the minority interest in certain CDT operations and higher net interest expense. Net interest expense increased 2.5% to $12.9 million in 2004 from $12.6 million in 2003 due to higher average debt outstanding, albeit at

Our effective annual tax rate on income from continuing operations was 50.9% and 30.7% in 2004 and 2003, respectively. Absent the impact of an additional deferred tax asset valuation allowance, the Company’sour effective tax rate was 20.8% for 2004. The tax rate increase was due primarily to a deferred tax asset valuation allowance of $9.4 million recorded against foreign net operating loss (NOL) carryforwards in 2004 partially offset by the 2004 resolution of a $2.4 million prior period tax contingency.

Income from continuing operations increased 51.2% to $15.4 million in 2004 from $10.2 million in 2003 due mainly to higher income from continuing operations before taxes partially offset by higher income tax expense.

Revenues generated from sales to external customers increased 41.2% to $604.4 million for 2004 from $428.1 million for 2003 due to the Merger, increased selling prices, higher sales volume and favorable currency translation on international revenues.

Revenues generated through the addition of the CDT operations totaled $122.2 million and contributed 28.5 percentage points of the revenue increase.

The impact of increased product pricing contributed 6.6 percentage points of revenue increase during 2004. This price improvement resulted from the impact of sales price increases implemented by the Company’s North America operationsCompany across all products lines beginning in January 2004 and by the Company’s Europe operations across all product lines in May 2004 in response to copper cost escalation and increasing costs for other raw materials.commodities derived from petrochemical feedstocks.

Increased unit sales generated during 2004 contributed 3.0 percentage points of revenue increase. The segment experienced volume increases in its sales of products with industrial applications and networking/communications, applications. Higher unit sales of products with industrialand transportation/defense applications and networking/communications applications contributed 3.1 and 2.3 percentage points of revenue increase, respectively. These volume increases were partially offset by a volume decrease in sales of products with video/sound/security applications. Lower unit sales of products with video/sound/security applications offset the gross revenue increase by 2.4 percentage points. Unit sales of products with video/sound/security applications were lower due to the Company’s decision to cease during the second quarter of 2003 the production of certain products with video/sound/security applications in Europe. Unit sales of products with video/sound/security applications that the Company continues to produce improved from 2003. Positive factors contributing to the volume increase and negative factors partially mitigating the volume increase are listed underContinuing Operations Consolidated Revenuesbeginning on Page 18 of this Annual Report on Form 10-K. Each of the factors listed, with the exception of those specifically addressing the United Kingdom, Australia or Asia, applies to the Electronics segment.

Favorable foreign currency translation on international revenues contributed 3.1 percentage points of revenue increase.

Operating earningsincome increased 59.6%82.4% to $47.3$54.1 million for 2004 from $29.7$30.0 million for 2003 due mainly to the Merger, higher sales volumes, increased product sales prices, the favorable impact of currency translation on the operating income of international operations, and the current-year impact of both manufacturing and SG&A cost reduction initiatives. Also contributing to the favorable operating earningsincome comparison were increased unabsorbed production costs recognized in 2003 resulting from actions taken by the segment to reduce inventory levels, severance and asset impairment costs of $0.9 million and $0.4 million, respectively, recognized in 2003 related to a manufacturing facility closure in Germany, severance costs of $3.6 million recognized in 2003 related to personnel reductions, within the segment, and the realignment of the Ft. Mill, South Carolina manufacturing facility(Ft. MillMill)) from this segment to the Networking segment effective July 1, 2003.