Coleman Cable 10Q 2007 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, 2007


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

For the transition period from to

Commission File Number 001-33337

COLEMAN CABLE, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware (State or other jurisdiction of incorporation or organization)		36-4410887 (I.R.S. Employer Identification No.)

1530 Shields Drive, Waukegan, Illinois 60085
(Address of Principal Executive Offices)

(847) 672-2300
(Registrant’s Telephone Number, including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (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. þYesoNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filero Accelerated Filero Non-Accelerated Filerþ

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

Common shares outstanding as of November 12, 2007: 16,786,895

INDEX


	Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)		1

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2006 and 2007		1

Condensed Consolidated Balance Sheets as of December 31, 2006 and September 30, 2006 and 2007		2

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2007		3

Notes to Condensed Consolidated Financial Statements		4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22

Item 3. Quantitative and Qualitative Disclosures about Market Risk		36

Item 4. Controls and Procedures		36

PART II. OTHER INFORMATION

Item 1. Legal Proceedings		37

Item 1A. Risk Factors		37

Item 5. Other Information		37

Signatures		38

Exhibit Index		39

Certification of Chief Executive Officer

Certification of Chief Financial Officer

Section 1350 Certification

PART I.

ITEM 1. Financial Statements

COLEMAN CABLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Thousands, except per share data)

(unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2006		2007		2006		2007
NET SALES	$	114,925	$	253,453	$	320,137	$	609,867
COST OF GOODS SOLD		90,697		224,287		254,712		535,837


GROSS PROFIT		24,228		29,166		65,425		74,030

SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES		9,158		11,753		23,049		31,238
INTANGIBLE AMORTIZATION EXPENSE		—		2,522		—		5,085
RESTRUCTURING CHARGES		891		53		1,210		580


OPERATING INCOME		14,179		14,838		41,166		37,127

INTEREST EXPENSE, NET		4,185		8,187		12,506		19,411
OTHER (INCOME) LOSS, NET		—		2		(11)		29


INCOME BEFORE INCOME TAXES		9,994		6,649		28,671		17,687

INCOME TAX EXPENSE		235		2,606		1,009		6,752


NET INCOME	$	9,759	$	4,043	$	27,662	$	10,935

EARNINGS PER COMMON SHARE DATA
NET INCOME PER SHARE
Basic	$	0.77	$	0.24	$	2.17	$	0.65
Diluted		0.77		0.24		2.17		0.65
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		12,753		16,787		12,751		16,787
Diluted		12,753		16,796		12,751		16,789
UNAUDITED PRO FORMA DATA
PRO FORMA NET INCOME
Income before income taxes	$	9,994			$	28,671
Pro forma income tax expense		4,024				11,483

Pro forma net income		5,970				17,188

PRO FORMA NET INCOME PER SHARE
Basic	$	0.47			$	1.35
Diluted		0.47				1.35

See notes to condensed consolidated financial statements.

COLEMAN CABLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Thousands, except per share data)

(unaudited)


	December 31,			September 30,			September 30,
	2006			2006			2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	14,734		$	52		$	5,920
Accounts receivable, less allowance for uncollectible accounts of $2,092, $2,262 and $3,711, respectively		62,318			73,672			149,860
Inventories		66,765			80,377			128,546
Deferred income taxes		2,136			104			2,313
Assets held for sale		—			—			661
Prepaid expenses and other current assets		2,739			4,133			5,237

Total current assets		148,692			158,338			292,537


PROPERTY, PLANT AND EQUIPMENT:
Land		579			579			2,809
Buildings and leasehold improvements		7,636			7,535			15,112
Machinery, fixtures and equipment		45,125			44,684			98,946

		53,340			52,798			116,867
Less accumulated depreciation and amortization		(31,762	)		(30,634	)		(39,137	)
Construction in progress		244			693			3,184

Property, plant and equipment, net		21,822			22,857			80,914

GOODWILL		60,628			60,642			103,398
INTANGIBLE ASSETS, NET		10			—			59,326
OTHER ASSETS, NET		4,593			4,826			9,857

TOTAL ASSETS	$	235,745		$	246,663		$	546,032


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	936		$	44,973		$	901
Accounts payable		13,091			36,589			53,952
Accrued liabilities		19,582			19,458			32,687

Total current liabilities		33,609			101,020			87,540


LONG-TERM DEBT		121,571			121,721			343,846
LONG-TERM LIABILITIES, NET		—			—			39
DEFERRED INCOME TAXES		2,724			160			23,161
SHAREHOLDERS’ EQUITY:
Common stock, par value $0.001; 31,260 authorized; and 12,787 issued and outstanding on September 30, 2006 and 16,787 on December 31, 2006 and September 30, 2007		17			13			17
Additional paid-in capital		80,421			26,077			83,091
Retained earnings (accumulated deficit)		(2,597	)		(2,328	)		8,338

Total shareholders’ equity		77,841			23,762			91,446

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	235,745		$	246,663		$	546,032

See notes to condensed consolidated financial statements.

COLEMAN CABLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands)

(unaudited)


	Nine months ended September 30,
	2006			2007
CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	27,662		$	10,935
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization		4,799			14,811
Stock-based compensation		531			3,121
Deferred tax provision (credit)		147			(3,924	)
(Gain) loss on disposal of fixed assets		313			(12	)
Gain on sale of investment		(11	)		—
Changes in operating assets and liabilities (net of acquisitions):
Accounts receivable		(14,832	)		(25,950	)
Inventories		(12,488	)		(20,180	)
Prepaid expenses and other assets		(1,251	)		(1,706	)
Accounts payable		14,583			7,891
Accrued liabilities		2,682			9,654

Net cash flow from operating activities		22,135			(5,360	)


CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures		(2,157	)		(4,929	)
Acquisition of business, net of cash acquired		—			(214,810	)
Proceeds from sale of fixed assets		42			18
Proceeds from sale of investment		82			59

Net cash flow from investing activities		(2,033	)		(219,662	)


CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving loan facilities, net of issuance costs		(1,950	)		98,196
Issuance of senior notes, net of issuance costs		—			119,380
Common stock issuance costs		—			(451	)
Repayment of long-term debt		(656	)		(917	)
Dividends paid to shareholders		(17,502	)		—

Net cash flow from financing activities		(20,108	)		216,208


DECREASE IN CASH AND CASH EQUIVALENTS		(6	)		(8,814	)

CASH AND CASH EQUIVALENTS — Beginning of period		58			14,734


CASH AND CASH EQUIVALENTS – End of period	$	52		$	5,920

NONCASH ACTIVITY
Unpaid capital expenditures		46			210
Capital lease obligation		—			16
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid		387			12,244
Cash interest paid		8,865			9,557

See notes to condensed consolidated financial statements.

COLEMAN CABLE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Thousands, except per share data)

(unaudited)

1. BASIS OF PRESENTATION

The condensed consolidated financial statements included herein are unaudited. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) have been condensed or omitted. The condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation in conformity with GAAP. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended December 31, 2006. The results of operations for the interim periods should not be considered indicative of results to be expected for the full year. The financial statements and footnotes for 2006 reflect retroactive presentation for the 312.6079 for 1 stock split that occurred on October 10, 2006.

Unaudited Pro Forma Data

The Company terminated its S corporation status and became a C corporation effective October 10, 2006. The unaudited pro forma data included in the interim condensed consolidated statements of operations gives retroactive presentation as if the Company had been a C corporation for the 2006 periods presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the Company had been a C corporation for the periods presented, or that may result in the future.

2. NEW ACCOUNTING PRONOUNCEMENTS

FIN No. 48

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48,Accounting for Uncertainty in Income Taxes,an interpretation of FASB Statement No. 109(“FIN No. 48”).FIN No. 48 establishes a “more-likely-than-not” recognition threshold that must be met before a tax benefit can be recognized in the financial statements. FIN No. 48 also offers guidelines to determine how much of a tax benefit to recognize in the financial statements. Under FIN No. 48, the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the taxing authority should be recognized. In addition, FIN No. 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company adopted FIN No. 48 as of January 1, 2007 with no cumulative effect adjustment required. As of the date of adoption, the Company had no unrecognized tax benefits.

The Company and its subsidiaries file income tax returns in the U.S. federal and various state jurisdictions. The Company’s uncertain tax positions are related to tax years that remain subject to examination. The Company remains subject to U.S. federal income tax examinations for tax years 2002 through 2006. The Internal Revenue Service (“IRS”) has audited the Company’s tax returns for the years 2002, 2003 and 2004, and proposed certain adjustments that are currently being disputed. The Company appealed the IRS’ findings. If the Company’s appeal of the IRS findings is unsuccessful, the Company is obligated to indemnify its shareholders on record as of the effective date of the Tax Matters Agreement (see Note 8). The Company remains subject to state and local income tax examinations for tax years 2003 through 2006 in jurisdictions for which tax returns have been filed.

The Company has no accrued interest and penalties related to the underpayment of income taxes at the date of adoption. The Company adopted the policy of recognizing interest related to the underpayment of income taxes in interest expense and related penalties in selling, engineering, general and administrative expenses in the consolidated statements of operations.

SFAS No. 157

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157,Fair Value Measurement(“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company does not anticipate the implementation of this Statement will materially impact its financial position, results of operations or cash flows.

SFAS No. 159

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities including an Amendment of FASB Statement No. 115(“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company does not believe that the adoption of the provisions of SFAS No. 159 will materially impact its financial position, results of operations or cash flows.

ACQUISITION OF COPPERFIELD, LLC

On April 2, 2007, the Company acquired 100% of the outstanding equity interests of Copperfield, LLC (“Copperfield”). The results of Copperfield’s operations have been included in the Company’s consolidated financial statements since that date. The Company believes that the Copperfield acquisition has presented a number of strategic benefits. In particular, the acquisition diversifies the Company’s end markets, expands its customer base, and strengthens its competitive position in the industry.

Copperfield’s financial results are reported as one segment (see Note 13).

The following transactions occurred on April 2, 2007 in connection with the Copperfield acquisition:

	•		The Company issued additional senior notes (the “2007 Notes”) in an aggregate principal amount of $120,000. See Note 7 for further discussion.

	•		The Company entered into an Amended and Restated Credit Facility (the “Revolving Credit Facility”) with Wachovia Bank, National Association, which amended and restated the existing revolving credit agreement in its entirety. See Note 7 for further discussion.

	•		All outstanding equity interests of Copperfield were acquired for $215,449, which includes (a) a reduction to the purchase price as a result of a working capital true-up adjustment of $467 and (b) acquisition related costs of $2,916.

This acquisition was accounted for under the purchase method of accounting in accordance with SFAS No. 141,Business Combinations. Accordingly, the purchase price was allocated to the net assets acquired based on their estimated fair values. The purchase price allocation is preliminary and subject to refinement based upon the finalization of income taxes and management’s plan for the integration of Copperfield’s operations. The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at acquisition.


Cash	$	639
Accounts receivable		61,592
Inventory		41,601
Other current assets		832
Property and equipment		63,445
Intangible assets		64,400
Goodwill		42,770
Other assets		607


Total assets acquired		275,886

Current liabilities		(36,211	)
Long-term liabilities, net		(42	)
Deferred income taxes		(24,184	)


Total liabilities assumed		(60,437	)


Net assets acquired	$	215,449

The estimated fair values assigned to intangible assets were based on an evaluation by management. Intangible assets, which are all amortizable, along with their respective weighted-average useful lives at the acquisition date are as follows:


	Weighted Average Life		Balance
Customer relationships		9	$	55,600
Trademarks and trade names		20		7,800
Non-competition agreements		3		1,000


Total intangible assets			$	64,400

Amortization expense for the three and nine months ended September 30, 2007 was $2,538 and $5,075, respectively. Amortization expense for the Company on all amortizable intangible assets during each of the next five calendar years is expected to be:


2007	$	7,612
2008		11,626
2009		10,178
2010		8,059
2011		6,457

Approximately 41% of the Copperfield acquisition related to the acquisition of partnership interests, which will result in a corresponding step up in basis for U.S. federal income tax purposes. As such, approximately $12,000 of the goodwill and $26,800 of the acquired intangible assets recorded will be deductible for U.S. federal income tax purposes, primarily over 15 years.

The following unaudited pro forma financial information summarizes the estimated combined results of operations of the Company and Copperfield assuming that the Copperfield acquisition had taken place on January 1, 2006. The unaudited pro forma combined results of operations prior to April 2, 2007 were prepared on the basis of information provided to the Company by the former management of Copperfield and no representation is made by the Company with respect to the accuracy of such information. The pro forma combined results of operations reflect adjustments for interest expense, additional depreciation based on the fair value of Copperfield’s property, plant and equipment, amortization of Copperfield’s identifiable intangible assets and income tax expense.

The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, or that may result in the future.


	Three months ended September 30,				Nine months ended September 30,
	2006		2007		2006		2007
Net sales	$	248,496	$	253,453	$	697,039	$	731,193
Net income	$	4,306	$	3,954	$	14,028	$	10,336
Earnings per share:
Basic	$	0.34	$	0.24	$	1.10	$	0.62
Diluted	$	0.34	$	0.24	$	1.10	$	0.62

4. RESTRUCTURING CHARGES

On April 14, 2006, the Company announced the closing of its leased manufacturing and distribution facility located in Miami Lakes, Florida. The Company determined that the efficient utilization of its manufacturing assets would be enhanced by partial relocation of production to the Company’s plant in Waukegan, Illinois and additional international sourcing.

On November 16, 2006, the Company announced the closure of its Siler City, North Carolina facility. As of September 30, 2007 the Company had incurred $699 to close the Siler City facility, which includes approximately $111 for severance costs, $365 for equipment relocation costs, and $223 for other costs related to the closure. The Company estimates spending an additional $33 by the end of March 2008 to complete the plant closure. The Company has recorded $661 of assets held for sale for the building and property located in Siler City, North Carolina in the accompanying condensed consolidated balance sheet.

The following table summarizes the restructuring activity for January 1, 2006 through September 30, 2007:


	Employee			Lease			Equipment			Other
	Severance			Termination			Relocation			Closing
	Costs			Costs			Costs			Costs			Total

Balance December 31, 2005	$	—		$	—		$	—		$	—		$	—
Provision		147			662			262			325			1,396
Uses		(77	)		(662	)		(262	)		(325	)		(1,326	)

Balance-December 31, 2006	$	70		$	—		$	—		$	—		$	70
Provision		41			—			320			219			580
Uses		(111	)		—			(320	)		(219	)		(650	)

Balance September 30, 2007	$	—		$	—		$	—		$	—		$	—

5. INVENTORIES

Inventories consisted of the following:


	December 31, 2006		September 30, 2006		September 30, 2007
FIFO cost:
Raw materials	$	11,975	$	15,789	$	39,920
Work in progress		3,293		3,803		6,163
Finished products		51,497		60,785		82,463

Total	$	66,765	$	80,377	$	128,546

6. ACCRUED LIABILITIES

Accrued liabilities consisted of the following:


	December 31, 2006		September 30, 2006		September 30, 2007
Salaries, wages and employee benefits	$	5,117	$	3,821	$	7,276
Sales incentives		7,359		6,793		7,337
Income taxes		568		—		484
Interest		3,023		6,051		12,343
Other		3,515		2,793		5,247


Total	$	19,582	$	19,458	$	32,687

7. DEBT


	December 31, 2006			September 30, 2006			September 30, 2007
Revolving credit facility	$	—		$	44,050		$	100,004
Senior notes		120,000			120,000			243,136
Capital lease obligations		1,129			1,222			851
Other long-term debt, annual interest rates up to 6.25%, payable through 2019		1,378			1,422			756

		122,507			166,694			344,747
Less current portion		(936	)		(44,973	)		(901	)

Long-term debt	$	121,571		$	121,721		$	343,846

In connection with the Company’s acquisition of Copperfield, on April 2, 2007, the Company issued the 2007 Notes in aggregate principal amount of $120,000 bearing interest at a fixed rate of 9.875% and maturing in 2012, and having the same terms and conditions as the Company’s senior notes issued in 2004 (the “2004 Notes”). The 2007 Notes are governed under the same indenture (the “Indenture”) as the 2004 Notes. The Company sold the 2007 Notes at a premium to par value of 2.875%, resulting in proceeds of $123,450. The Company amortizes the premium to the par value over the remaining life of the 2007 Notes. The premium was reduced by amortization of $157 and $314 for the three and nine months ended September 30, 2007, respectively. As a result, the Company now has senior notes (the “Notes”) outstanding having an aggregate principal amount of $240,000. The Company also entered into the Revolving Credit Facility, which amended and restated the previously existing revolving credit agreement in its entirety.

In connection with the refinancing in September 2004, the Company incurred fees and expenses totaling $6,608. In connection with the issuance of the 2007 Notes and the Revolving Credit Facility, the Company incurred fees and expenses totaling $5,878, for total combined fees and expenses of $12,486. The applicable fees and expenses are amortized over approximately 5 years for the Revolving Credit Facility and the 2007 Notes and over 8 years for the 2004 Notes.

Amortization of debt issue costs was $237 and $711 for the three and nine months ended September 30, 2006, respectively, and $483 and $1,179 for the three and nine months ended September 30, 2007,

respectively. Accumulated amortization was $2,104, $1,870 and $3,283 as of December 31, 2006 and September 30, 2006 and 2007, respectively.

The Revolving Credit Facility is an asset-based revolving credit facility with aggregate advances not to exceed the lesser of (i) $200,000 or (ii) the sum of 85% of eligible accounts receivable, 55% of eligible inventory and an advance rate to be determined of certain appraised fixed assets, with a $10,000 sublimit for letters of credit. The Revolving Credit Facility matures on April 2, 2012. Interest is payable, at the Company’s option, at the agent’s prime rate plus a range of 0.0% to 0.5% or the Eurodollar rate plus a range of 1.25% to 1.75%, in each case based on quarterly average excess availability under the Revolving Credit Facility. The Revolving Credit Facility combined with the previously existing Revolving Credit Facility accrued interest at an average rate of 7.04% and average borrowings of $95,476 for the six months ended September 30, 2007. The Company had no borrowings for the three months ended March 31, 2007. As of September 30, 2007, the Company had $84,340 of additional borrowing capacity, none of which was against the limit for letters of credit. The Company classifies the portion of the Revolving Credit Facility that is expected to be paid within the next year as a current liability.

On November 1, 2007, the Company amended the Revolving Credit Agreement. The amendment permits the Company to acquire substantially all of the assets of Woods Industries, Inc. (“Woods U.S.”), and all of the capital stock of Woods Industries (Canada) Inc. (“Woods Canada”), upon the satisfaction of certain conditions. The amendment also permits future investments by the Company in its Canadian subsidiaries in an aggregate amount, together with any investment made to consummate the acquisition of Woods Canada, not to exceed $25,000.

The Revolving Credit Facility is guaranteed by its domestic subsidiaries on a joint and several basis, either as a co-borrower of the Company or a guarantor, and is secured by substantially all of its assets and the assets of its domestic subsidiaries, including accounts receivable, inventory and any other tangible and intangible assets (including real estate, machinery and equipment and intellectual property), as well as by a pledge of all of the capital stock of each of its domestic subsidiaries and 65% of the capital stock of its foreign subsidiaries, if any.

The Revolving Credit Facility contains financial covenants requiring the Company to maintain a minimum fixed charge coverage ratio and to maintain minimum excess availability under the credit facility. In addition, the Revolving Credit Facility contains affirmative and negative covenants, including restrictions on the payment of dividends and distributions, indebtedness, liens, investments, guarantees, mergers, and consolidations, sales of assets, affiliate transactions, sale and leaseback transaction and leases. The Company is also prohibited by the Revolving Credit Facility from making prepayments on the Notes, except for scheduled payments required pursuant to the terms of such senior notes. The financial covenants in the Revolving Credit Facility require the Company to maintain a fixed charge coverage ratio of not less than 1.1 to 1.0 for any month during which excess availability under the Revolving Credit Facility falls below $30,000 and require the Company to maintain excess availability of not less than $10,000. The Company maintained greater than $30,000 of monthly excess availability in the six months ended September 30, 2007.

The Notes and the Revolving Credit Facility both have restrictions on dividend distributions to shareholders, including but not limited to, a percentage of net income (less distributions for tax purposes). The distributions for tax purposes are computed at the shareholder applicable tax rate. Distributions for tax purposes are not restricted so long as the Company qualifies as an S corporation; however, on October 10, 2006 the Company terminated its S corporation status. The Company paid $12,852 of tax distributions in the nine months ended September 30, 2006 of which $8,207 were paid in the third quarter. The Company paid $4,650 of discretionary dividends to shareholders in the nine months ended September 30, 2006.

The Company’s Indenture governing the Notes and Revolving Credit Facility contain covenants that limit the Company’s ability to pay dividends. Under these covenants the Company could not declare excess cash flow dividends for the three and nine months ended September 30, 2007. The Company does not anticipate paying any dividends on its common stock in the foreseeable future.

8. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases certain of its buildings, machinery and equipment under operating lease agreements that expire at various dates over the next ten years. Rent expense for all operating leases for the three months ended September 30, 2006 and 2007 was $1,105 and $1,180, respectively. Rent expense for all operating leases for the nine months ended September 30, 2006 and 2007 was $2,615 and $2,939, respectively.

Capital Leases

The Company leases various manufacturing, office and warehouse properties and office equipment under capital leases that expire at various dates through 2009. The assets are amortized/depreciated over the shorter of their related lease terms or their estimated productive lives.

Obligations under capital leases are included with debt in the accompanying condensed consolidated balance sheets. The gross amount of assets recorded under capital leases as of December 31, 2006 and September 30, 2006 and 2007 were $1,842, $1,842 and $1,858, respectively.

Employee Benefits

The Company provides defined contribution savings plans for management and other employees. The plans provide for fixed matching contributions based on the terms of such plans to the accounts of plan participants. Additionally, the Company, with the approval of its Board of Directors, may make discretionary contributions. The Company expensed $145 and $222 related to these savings plans for the three months ended September 30, 2006 and September 30, 2007, respectively, and $559 and $756 related to these savings plans for the nine months ended September 30, 2006 and September 30, 2007, respectively.

Legal Matters

The Company is party to one environmental claim. The Leonard Chemical Company Superfund site consists of approximately 7.1 acres of land in an industrial area located near Catawba, York County, South Carolina. The Leonard Chemical Company operated this site until the early 1980’s for recycling of waste solvents. These operations resulted in the contamination of soils and groundwaters at the site with hazardous substances. In 1984, the U.S. Environmental Protection Agency listed this site on the National Priorities List. Riblet Products Corporation, with which the Company merged in 2000, was identified through due diligence as a company that sent solvents to the site for recycling and was one of the companies receiving a special notice letter from the Environmental Protection Agency identifying it as a party potentially liable under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) for cleanup of the site.

In 2004, the Company along with other “potentially responsible parties” (“PRPs”) entered into a Consent Decree with the Environmental Protection Agency requiring the performance of a remedial design and remedial action (“RD/RA”) for this site. The Company has entered into a Site Participation Agreement with the other PRPs for fulfillment of the requirements of the Consent Decree. Under the Site Participation Agreement, the Company is responsible for a 9.2% share of the costs for the RD/RA. The Company recorded a $415 accrual for this liability.

The Company is a party to various claims and lawsuits that have arisen in the ordinary course of business. Estimates of related costs and losses have been accrued in the financial statements. In determining these accruals, the Company does not discount environmental or legal accruals and does not reduce them by anticipated insurance recoveries. The Company believes that its accruals related to environmental, litigation and other claims are sufficient and that, based on the information currently available, these items and the Company’s rights to available insurance and indemnity will be resolved without material adverse effect on the Company’s consolidated financial position, cash flow or results of operations. There can be no assurance, however, that this will be the case.

Self-Insurance

Prior to July 1, 2007 the Company was self-insured for health costs for covered individuals in six of its facilities; effective July 1, 2007, the Company became self-insured for health costs for covered individuals in all but one of its facilities. The accrual for self-insurance liability is determined by management and is based on claims filed and an estimate of claims incurred but not yet reported. The Company’s self-insurance expenses were $342 and $1,870 for the three months ended September 30, 2006 and 2007, respectively, and $785 and $3,017 for the nine months ended September 30, 2006 and 2007, respectively.

Tax Matters Agreement

The Internal Revenue Service is currently examining the Company’s 2002, 2003 and 2004 federal income tax returns. During those years the Company was a Subchapter S corporation. In October 2006, the Company entered into a Tax Matters Agreement with the then existing shareholders that provided for, among other things, the indemnification of these shareholders for any increase in their tax liability, including interest and penalties, and reimbursement of their expenses (including attorneys’ fees) related to the period prior to the Company’s conversion to a C corporation, including as a result of the ongoing IRS examination. The Company has appealed the IRS findings. If the Company’s appeal of the IRS findings is unsuccessful, the Company is obligated to indemnify the shareholders pursuant to the Tax Matters Agreement. The Company recorded expense of $508 in December 2006. The Company recorded additional expense of $4 and $31 in the three and nine months ended September 30, 2007, respectively, for accrued interest which is included in other loss in the accompanying condensed consolidated statements of operations.

9. EARNINGS PER SHARE

As of September 2006 and 2007, the dilutive effect of stock options outstanding on weighted average shares outstanding was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2007		2006		2007
Basic weighted average shares outstanding		12,753		16,787		12,751		16,787
Dilutive effect of stock options		—		9		—		2

Diluted weighted average share outstanding		12,753		16,796		12,751		16,789

Options with respect to 58 Common Shares were not included in the computation of diluted earnings per share for the three and nine months ended September 30, 2007 because they were antidilutive. There were no options outstanding during the three and nine months ended September 30, 2006.

10. STOCK BASED COMPENSATION

As of September 30, 2007, the Company had one stock-based compensation plan for executives and certain key employees which authorizes the grant of stock options. The number of shares authorized for issuance under the Company’s plan as of September 30, 2007 totaled 1,650 shares of which 767 were available for future issuance at September 30, 2007.

In May 2007, 55 shares were granted to key Copperfield employees with an exercise price of $23.62. Stock options granted under this plan are non-qualified and are granted with an exercise price equal to the

average market price on NASDAQ at the date of grant. The options issued become exercisable in three equal installments, beginning one year from the date of grant and expire 10 years from the date of grant.

The Company, as director compensation, granted to independent directors options to acquire stock. Three shares were granted as of March 22, 2007 with an exercise price of $18.27. Three additional shares were granted on May 11, 2007 at an exercise price of $23.62. The exercise price is equal to the average market price on NASDAQ on the date of grant. One-third of the options vest on the first, second and third anniversary of the grant date. The options expire on the tenth anniversary of the grant date.

The Company recorded $1,099 and $3,121 in stock compensation expense for the three and nine months ended September 30, 2007, respectively. Adjusting for expected forfeitures, the Company estimates total remaining expense relating to stock options already issued will be $3,114. The Company expects to expense $3,737 in fiscal 2007, $1,810 in fiscal 2008, $661 in fiscal 2009, and $27 in fiscal 2010.

Changes in stock options are as follows:


					Weighted-
					Average
			Weighted-Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
	Shares		Price		Terms		Value
Outstanding January 1, 2007		825	$	15.00		9.03
Granted		60		23.40		9.61
Exercised		—		—
Forfeited or expired		2		23.62

Outstanding September 30, 2007		883		15.57		9.07		—
Vested or expected to vest		851		15.57		9.07		—
Exercisable		—		—		—

Intrinsic value for stock options is defined as the difference between the current market value of the Company’s common stock and the exercise price of the stock option. When the current market value is less than the exercise price, there is no aggregate intrinsic value.

The fair value of options outstanding as of September 30, 2007 was $8.35 per option.

11. RELATED PARTIES

The Company leases its corporate office facility (the “Corporate Office”) from HQ2 Properties, LLC (“HQ2”). HQ2 is owned by certain members of the Company’s Board of Directors. Rent expense paid to HQ2 for the three months ended September 30, 2006 and 2007 was $90 and $93, respectively. Rent expense paid to HQ2 for the nine months ended September 30, 2006 and 2007 was $268 and $275, respectively.

Two of the Company’s shareholders have consulting arrangements with the Company whereby, in addition to their service as directors of the Company, they provide advice and counsel on business planning and strategy, including advice on potential acquisitions. Under these consulting arrangements each eligible individual will receive $175 as annual compensation for their services. Pursuant to these arrangements, and for their service as directors, the Company paid each eligible individual $63 and $44 for the three months ended September 30, 2006 and 2007, respectively, and $188 and $131 for the nine months ended September 30, 2006 and 2007, respectively. As of October 2006, in addition to these consulting services, each will receive $75 as annual compensation for their services as co-chairmen of the board of directors. For the three and nine months ended September 30, 2007, $19 and $56, respectively, was expensed for each individual’s services as co-chairmen.

David Bistricer is a member of the Company’s Board of Directors and owns Morgan Capital LLC (“Morgan Capital”), a company with 15 employees engaged in the real estate business. Prior to July 1, 2007, Morgan Capital’s employees purchased health insurance for themselves and their dependents from the Company’s insurance carrier at the same rates paid by the Company for its employees. This arrangement resulted in no additional cost to the Company. On July 1, 2007, the Company revised its health insurance arrangements so that it would self-insure its employees’ health coverage subject to an insurance policy providing catastrophic health coverage in the event the claims of any employee exceeded $40 in any year. The employees of Morgan Capital became part of the self insurance arrangement. Morgan Capital is now attempting to obtain separate insurance arrangements for its employees and expects that these arrangements will be in place by December 31, 2007, if not sooner. Morgan Capital has agreed to indemnify the Company for any payments it makes for any Morgan Capital participants in excess of premiums Morgan Capital pays to the Company, as well as for any administrative expenses relating to the participation of the Morgan Capital participants, which are not expected to be significant.

12. INVENTORY THEFT

During the third quarter ended September 30, 2005, the Company experienced a theft of inventory as a result of break-ins at the manufacturing facility located in Miami Lakes, Florida. The Company believes it will

recover the amount of the loss, net of deductibles, under its insurance policy. As a result of the loss, the cost of inventory was reduced by $1,280 and an insurance receivable was recorded and is included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

13. BUSINESS SEGMENT INFORMATION

The Company has four reportable business segments: Electrical/Wire and Cable Distributors, Specialty Distributors and OEMs, Consumer Outlets, and Copperfield. These segment classifications are based on an aggregation of customer groupings and distribution channels because this is the way our chief operating decision maker evaluates the results of each operating segment.

The Company has aggregated its operating segments into four reportable business segments in accordance with the criteria defined in SFAS No. 131,Disclosure about Segments of an Enterprise and Related Information.The Company’s operating segments have common production processes and manufacturing capacity. Accordingly, the Company does not identify all of its net assets to its operating segments. Depreciation expense is not allocated to segments but is included in manufacturing overhead cost pools and is absorbed into product cost (and inventory) as each product passes through the Company’s numerous manufacturing work centers. Accordingly, as products are sold across multiple segments, it is impracticable to determine the amount of depreciation expense included in the operating results of each operating segment.

Revenues by business segment represent sales to unaffiliated customers and no one customer or group of customers under common control accounted for more than 6.0% of consolidated net sales. Export sales are not material.

Segment operating income represents income from continuing operations before interest income or expense, other income and income taxes. Corporate consists of items not charged or allocated to a particular segment, including costs for employee relocation, discretionary bonuses, professional fees, restructuring, management fees and intangible amortization.

Financial data for the Company’s business segments is as follows:


	Three months ended September 30,						Nine months ended September 30,
	2006			2007			2006			2007
Net Sales:
Electrical/Wire and Cable Distributors	$	40,540		$	38,737		$	111,447		$	111,059
Specialty Distributors and OEMs		58,325			55,553			170,430			173,066
Consumer Outlets		16,060			17,593			38,260			53,349
Copperfield		—			141,570			—			272,393

Total	$	114,925		$	253,453		$	320,137		$	609,867


Operating Income:
Electrical/Wire and Cable Distributors	$	7,238		$	3,394		$	20,058		$	10,166
Specialty Distributors and OEMs		8,829			5,697			24,227			16,818
Consumer Outlets		1,542			1,437			2,424			5,183
Copperfield		—			6,083			—			9,599

Total		17,609			16,611			46,709			41,766
Corporate		(3,430	)		(1,773	)		(5,543	)		(4,639	)

Consolidated operating income	$	14,179		$	14,838		$	41,166		$	37,127

14. SUPPLEMENTAL GUARANTOR INFORMATION

The payment obligations of the Company under the Notes and the Revolving Credit Facility (see Note 7) are guaranteed by certain of the Company’s 100% owned subsidiaries (“Guarantor Subsidiaries”). Such

guarantees are full, unconditional and joint and several. The following unaudited supplemental financial information sets forth, on a combined basis, balance sheets, statements of operations and statements of cash flows for Coleman Cable, Inc. (the “Parent”) and the Guarantor Subsidiaries – CCI Enterprises, Inc., Oswego Wire Incorporated, CCI International, Copperfield, LLC, and Spell Capital Corporation.

On April 2, 2007, Copperfield became a guarantor of the Notes and of the Revolving Credit Facility (see Note 3).

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006


			Guarantor
	Parent		Subsidiaries		Eliminations			Total

NET SALES	$	95,604	$	23,225	$	(3,904	)	$	114,925
COST OF GOODS SOLD		71,777		18,920		—			90,697


GROSS PROFIT		23,827		4,305		(3,904	)		24,228

SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES		9,704		3,358		(3,904	)		9,158
RESTRUCTURING CHARGES		891		—		—			891


OPERATING INCOME		13,232		947		—			14,179

INTEREST EXPENSE, NET		3,960		225		—			4,185


INCOME BEFORE INCOME TAXES		9,272		722		—			9,994

INCOME TAX EXPENSE		177		58		—			235
INCOME FROM GUARANTOR SUBSIDIARIES		664		—		(664	)		—


NET INCOME	$	9,759	$	664	$	(664	)	$	9,759

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007


			Guarantor
	Parent		Subsidiaries		Eliminations			Total

NET SALES	$	107,690	$	150,976	$	(5,213	)	$	253,453
COST OF GOODS SOLD		89,791		134,496		—			224,287


GROSS PROFIT		17,899		16,480		(5,213	)		29,166

SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES		10,082		6,884		(5,213	)		11,753
INTANGIBLE AMORTIZATION EXPENSE		3		2,519		—			2,522
RESTRUCTURING CHARGES		53		—		—			53


OPERATING INCOME		7,761		7,077		—			14,838

INTEREST EXPENSE, NET		5,208		2,979		—			8,187

OTHER LOSS		2		—		—			2


INCOME BEFORE INCOME TAXES		2,551		4,098		—			6,649

INCOME TAX EXPENSE		2,289		317		—			2,606
INCOME FROM GUARANTOR SUBSIDIARIES		3,781		—		(3,781	)		—


NET INCOME	$	4,043	$	3,781	$	(3,781	)	$	4,043

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006


				Guarantor
	Parent			Subsidiaries		Eliminations			Total

NET SALES	$	262,162		$	69,532	$	(11,557	)	$	320,137
COST OF GOODS SOLD		198,633			56,079		—			254,712


GROSS PROFIT		63,529			13,453		(11,557	)		65,425

SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES		24,696			9,910		(11,557	)		23,049
RESTRUCTURING CHARGES		1,210			—		—			1,210


OPERATING INCOME		37,623			3,543		—			41,166

INTEREST EXPENSE, NET		11,875			631		—			12,506

OTHER INCOME		(11	)		—		—			(11	)


INCOME BEFORE INCOME TAXES		25,759			2,912		—			28,671

INCOME TAX EXPENSE		435			574		—			1,009
INCOME FROM GUARANTOR SUBSIDIARIES		2,338			—		(2,338	)		—


NET INCOME	$	27,662		$	2,338	$	(2,338	)	$	27,662

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007


			Guarantor
	Parent		Subsidiaries		Eliminations			Total

NET SALES	$	324,270	$	298,745	$	(13,148	)	$	609,867
COST OF GOODS SOLD		270,709		265,128		—			535,837


GROSS PROFIT		53,561		33,617		(13,148	)		74,030

SELLING, ENGINEERING, GENERAL AND ADMINISTRATIVE EXPENSES		27,716		16,670		(13,148	)		31,238
INTANGIBLE AMORTIZATION EXPENSE		10		5,075		—			5,085
RESTRUCTURING CHARGES		580		—		—			580


OPERATING INCOME		25,255		11,872		—			37,127

INTEREST EXPENSE, NET		13,840		5,571		—			19,411

OTHER LOSS		29		—		—			29


INCOME BEFORE INCOME TAXES		11,386		6,301		—			17,687

INCOME TAX EXPENSE		6,285		467		—			6,752
INCOME FROM GUARANTOR SUBSIDIARIES		5,834		—		(5,834	)		—


NET INCOME	$	10,935	$	5,834	$	(5,834	)	$	10,935

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2006


				Guarantor
	Parent			Subsidiaries		Eliminations			Total

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	14,719		$	15	$	—		$	14,734
Accounts receivable—net of allowances		60,789			1,529		—			62,318
Intercompany receivable		—			16,168		(16,168	)		—
Inventories		60,007			6,758		—			66,765
Deferred income taxes		1,931			205		—			2,136
Prepaid expenses and other current assets		2,268			1,838		(1,367	)		2,739

Total current assets		139,714			26,513		(17,535	)		148,692

PROPERTY, PLANT AND EQUIPMENT, NET		16,197			5,625		—			21,822
GOODWILL		60,487			141		—			60,628
INTANGIBLE ASSETS, NET		10			—		—			10
OTHER ASSETS, NET		4,590			3		—			4,593
INVESTMENT IN SUBSIDIARIES		22,480			—		(22,480	)		—

TOTAL ASSETS	$	243,478		$	32,282	$	(40,015	)	$	235,745


LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt	$	356		$	580	$	—		$	936
Accounts payable		12,245			846		—			13,091
Intercompany payable		12,676			3,492		(16,168	)		—
Accrued liabilities		17,049			3,900		(1,367	)		19,582

Total current liabilities	$	42,326		$	8,818	$	(17,535	)	$	33,609


LONG-TERM DEBT		120,686			885		—			121,571
DEFERRED INCOME TAXES		2,625			99		—			2,724

SHAREHOLDERS’ EQUITY:
Common stock		17			—		—			17
Additional paid-in capital		80,421			1		(1	)		80,421
Retained earnings (accumulated deficit)		(2,597	)		22,479		(22,479	)		(2,597	)

Total shareholders’ equity		77,841			22,480		(22,480	)		77,841

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	243,478		$	32,282	$	(40,015	)	$	235,745

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2006


				Guarantor
	Parent			Subsidiaries		Eliminations			Total

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	33		$	19	$	—		$	52
Accounts receivable—net of allowances		71,387			2,285		—			73,672
Intercompany receivable		—			15,950		(15,950	)		—
Inventories		72,087			8,290		—			80,377
Deferred income taxes		—			104		—			104
Prepaid expenses and other current assets		3,325			2,484		(1,676	)		4,133

Total current assets		146,832			29,132		(17,626	)		158,338


PROPERTY, PLANT AND EQUIPMENT, NET		16,893			5,964		—			22,857
GOODWILL		60,501			141		—			60,642
INTANGIBLE ASSETS, NET		—			—		—			—
OTHER ASSETS, NET		4,823			3		—			4,826
INVESTMENT IN SUBSIDIARIES		23,066			—		(23,066	)		—

TOTAL ASSETS	$	252,115		$	35,240	$	(40,692	)	$	246,663


LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt	$	44,395		$	578	$	—		$	44,973
Accounts payable		35,342			1,247		—			36,589
Intercompany payable		10,465			5,485		(15,950	)		—
Accrued liabilities		17,370			3,764		(1,676	)		19,458

Total current liabilities	$	107,572		$	11,074	$	(17,626	)	$	101,020


LONG-TERM DEBT		120,781			940		—			121,721
DEFERRED INCOME TAXES		—			160		—			160

SHAREHOLDERS’ EQUITY:
Common stock		13			—		—			13
Additional paid-in capital		26,077			1		(1	)		26,077
Retained earnings (accumulated deficit)		(2,328	)		23,065		(23,065	)		(2,328	)

Total shareholders’ equity		23,762			23,066		(23,066	)		23,762
\|	\| \| \|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	252,115		$	35,240	$	(40,692	)	$	246,663

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2007


			Guarantor
	Parent		Subsidiaries		Eliminations			Total

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	5,905	$	15	$	—		$	5,920
Accounts receivable—net of allowances		70,522		79,338		—			149,860
Intercompany receivable		39,730		15,634		(55,364	)		—
Inventories, net		69,749		58,797		—			128,546
Deferred income taxes		1,858		455		—			2,313
Assets held for sale		661		—		—			661
Prepaid expenses and other current assets		3,722		3,939		(2,424	)		5,237

Total current assets		192,147		158,178		(57,788	)		292,537

PROPERTY, PLANT AND EQUIPMENT, NET		14,694		66,220		—			80,914
GOODWILL		60,541		42,857		—			103,398
INTANGIBLE ASSETS, NET		1		59,325		—			59,326
OTHER ASSETS, NET		9,289		568		—			9,857
INVESTMENT IN SUBSIDIARIES		243,709		—		(243,709	)		—

TOTAL ASSETS	$	520,381	$	327,148	$	(301,497	)	$	546,032


LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	285	$	616	$	—		$	901
Accounts payable		21,310		32,642		—			53,952
Intercompany payable		15,634		39,730		(55,364	)		—
Accrued liabilities		25,192		9,919		(2,424	)		32,687

Total current liabilities		62,421		82,907		(57,788	)		87,540


LONG-TERM DEBT		343,415		431		—			343,846
LONG-TERM LIABILITIES, NET		—		39		—			39
DEFERRED INCOME TAXES		23,099		62		—			23,161

SHAREHOLDERS’ EQUITY:
Common Stock		17		—		—			17
Additional paid-in capital		83,091		215,396		(215,396	)		83,091
Retained earnings		8,338		28,313		(28,313	)		8,338

Total shareholders’ equity		91,446		243,709		(243,709	)		91,446

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	520,381	$	327,148	$	(301,497	)	$	546,032

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006


				Guarantor
	Parent			Subsidiaries			Eliminations			Total

CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	27,662		$	2,338		$	(2,338	)	$	27,662
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization		4,151			648			—			4,799
Stock-based compensation		531			—			—			531
Deferred tax provision		—			147			—			147
Loss on disposal of fixed assets		313			—			—			313
Gain on sale of investment		(11	)		—			—			(11	)
Equity in consolidated subsidiaries		(2,338	)		—			2,338			—
Changes in operating assets and liabilities:
Accounts receivable		(13,985	)		(847	)		—			(14,832	)
Inventories		(10,805	)		(1,683	)		—			(12,488	)
Prepaid expenses and other assets		(1,308	)		(1,619	)		1,676			(1,251	)
Accounts payable		14,306			277			—			14,583
Intercompany accounts		(1,851	)		1,851			—			—
Accrued liabilities		4,751			(393	)		(1,676	)		2,682


Net cash flow from operating activities		21,416			719			—			22,135


CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures		(1,855	)		(302	)		—			(2,157	)
Proceeds from sale of fixed assets		42			—			—			42
Proceeds from sale of investment		82			—			—			82


Net cash flow from investing activities		(1,731	)		(302	)		—			(2,033	)


CASH FLOW FROM FINANCING ACTIVITIES:
Net repayment under revolving loan facilities		(1,950	)		—			—			(1,950	)
Repayment of long-term debt		(238	)		(418	)		—			(656	)
Dividends paid to shareholders		(17,502	)		—			—			(17,502	)


Net cash flow from financing activities		(19,690	)		(418	)		—			(20,108	)


DECREASE IN CASH AND CASH EQUIVALENTS		(5	)		(1	)		—			(6	)

CASH AND CASH EQUIVALENTS — Beginning of period		38			20			—			58


CASH AND CASH EQUIVALENTS — End of period	$	33		$	19		$	—		$	52


NONCASH ACTIVITY
Unpaid capital expenditures		46			—			—			46
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid		—			387			—			387
Cash Interest paid		8,779			86			—			8,865

COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007


				Guarantor
	Parent			Subsidiaries			Eliminations			Total

CASH FLOW FROM OPERATING ACTIVITIES:
Net income	$	10,935		$	5,834		$	(5,834	)	$	10,935
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization		3,431			11,380			—			14,811
Stock-based compensation		2,974			147			—			3,121
Deferred tax provision		20,547			(24,471	)		—			(3,924	)
(Gain) loss on disposal of fixed assets		(12	)		—			—			(12	)
Equity in consolidated subsidiaries		(5,834	)		—			5,834			—
Changes in operating assets and liabilities:
Accounts receivable		(9,733	)		(16,217	)		—			(25,950	)
Inventories		(9,742	)		(10,438	)		—			(20,180	)
Prepaid expenses and other assets		(1,513	)		(1,250	)		1,057			(1,706	)
Accounts payable		8,855			(964	)		—			7,891
Intercompany accounts		(36,718	)		36,718			—			—
Accrued liabilities		8,236			2,475			(1,057	)		9,654

Net cash flow from operating activities		(8,574	)		3,214			—			(5,360	)


CASH FLOW FROM INVESTING ACTIVITIES:
Capital expenditures		(1,510	)		(3,419	)		—			(4,929	)
Acquisition of business, net of cash acquired		(215,449	)		639			—			(214,810	)
Proceeds from sale of fixed assets		18			—			—			18
Proceeds from sale of investment		59			—			—			59

Net cash flow from investing activities		(216,882	)		(2,780	)		—			(219,662	)


CASH FLOW FROM FINANCING ACTIVITIES:
Net borrowings under revolving loan facilities, net of issuance costs		98,196			—			—			98,196
Issuance of senior notes, net of issuance costs		119,380			—			—			119,380
Common stock issuance costs		(451	)		—			—			(451	)
Repayment of long-term debt		(483	)		(434	)		—			(917	)


Net cash flow from financing activities		216,642			(434	)		—			216,208


DECREASE IN CASH AND CASH EQUIVALENTS		(8,814	)		—			—			(8,814	)

CASH AND CASH EQUIVALENTS — Beginning of period		14,719			15			—			14,734


CASH AND CASH EQUIVALENTS — End of period	$	5,905		$	15		$	—			5,920


NONCASH ACTIVITY
Unpaid capital expenditures		210			—			—			210
Capital lease obligations		—			16			—			16
SUPPLEMENTAL CASH FLOW INFORMATION
Income taxes paid		12,209			35			—			12,244
Cash Interest paid		9,497			60			—			9,557

15. SUBSEQUENT EVENTS

The Company announced on November 1, 2007 that it has entered into a definitive agreement to acquire the electrical products business of Katy Industries, Inc. (“Katy”), which operates in the United States as Woods Industries, Inc. (“Woods U.S.”) and in Canada as Woods Industries (Canada) Inc. (“Woods Canada”). The principal business of Woods U.S. and Woods Canada is the design and distribution of consumer electrical corded products, which are sold principally to national home improvement, mass merchant, hardware and other retailers.

The Company will purchase certain assets of the U.S. subsidiary and all the stock of the Canadian subsidiary for a total cash purchase price of $45,000. Included in the acquisition is net working capital in excess of $41,000, which does not include the effect of post-closing working capital adjustments. The Company will utilize its current Revolving Credit Facility to fund the purchase price. The closing of the transaction is subject to customary closing conditions and is expected to be completed on November 30, 2007.

On November 8, 2007, the Company’s board approved the planned Copperfield integration strategy of streamlined manufacturing operations and cost reductions that were considered in their Copperfield acquisition. This plan involves the consolidation and closure of Copperfield manufacturing and distribution facilities located in Avilla, Indiana; Nogales, Arizona; and El Paso, Texas, into operations at one modern facility in El Paso, Texas along with realignments of existing Copperfield facilities. The Company expects that these measures will result in a combination of restructuring charges and purchase accounting adjustments of approximately $300 to $600 in the fourth quarter of 2007 for severance costs and approximately $3,500 to $4,500 in 2008 for other restructuring costs. The Company estimates that these measures will result in net cash expenditures of approximately $2,000 to $3,000 in 2007 and 2008 depending on various factors including the timing of the sale of two of their owned facilities and the amount of proceeds received.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in this report under “Cautionary Note Regarding Forward-Looking Statements” and under “Item 1A.Risk Factors” in our Annual Report on Form 10-K, for the fiscal year ended December 31, 2006. We assume no obligation to update any of these forward-looking statements. You should read the following discussion in conjunction with our condensed consolidated financial statements and the notes thereto included in this report.

Overview

General

We are a leading designer, developer, manufacturer and supplier of electrical wire and cable products in the United States. We supply a broad line of wire and cable products, which enables us to offer our customers a single source of supply for many of their wire and cable product requirements. We manufacture bare copper wire, some of which we use to produce our products and some of which we sell to other producers. We sell our products to a variety of customers, including a wide range of specialty distributors, retailers and original equipment manufacturers (OEMs). We develop our products for sale into multiple end markets, including electrical distribution, wire and cable distribution, OEM/government, heating, ventilation, air conditioning and refrigeration (HVAC/R), irrigation, industrial/contractor, recreation/transportation, copper fabrication, retail and automotive. We manufacture our products in ten domestic manufacturing facilities and

supplement our domestic production with international and domestic sourcing. Virtually all of our products are sold to customers located in the United States and Canada.

Our net sales, to some extent, follow general business cycles. The diversity of our end markets and customer bases, however, tends to protect our financial results from downturns in any particular industry or geographic area. We also have experienced, and expect to continue to experience, certain seasonal trends in net sales and cash flow.

The price of copper is particularly volatile and can affect our net sales and profitability. The daily selling price of copper cathode on the COMEX averaged $3.48 and $3.22 per pound during the three and nine months ended September 30, 2007, respectively, down 1.7% and up 5.1% from the three and nine months ended September 30, 2006, respectively. The average copper price on the COMEX was $3.59 per pound for October 2007 and has averaged $3.27 per pound from November 1 to November 9^th 2007. We purchase copper at the prevailing market price. Through multiple pricing strategies, we generally attempt to pass along to our customers changes in the prices of copper and other raw materials. Our ability to pass along price increases is greater when copper prices increase quickly and significantly. Gradual price increases may be more difficult to pass on to our customers and may affect our short-term profitability. Conversely, the prices of our products tend to fall more quickly in the event the price of copper drops significantly over a relatively short period of time and more slowly in the event of more gradual decreases in the price of copper. Inflationary cost pressures from higher material and fuel costs could impact our profitability and strategies in setting prices. Other factors affecting product pricing include the type of product involved, competitive conditions, including underutilized manufacturing capacity in our industry, and particular customer arrangements.

We typically experience softness in the fourth quarter as many of our end markets reduce their inventory stocking levels in conjunction with the year-end holidays. Not withstanding, we started the fourth quarter with strong results in October. While we continue to experience inflationary cost pressures from higher material and fuel costs, we have been successful in offsetting some of these pressures by the implementation of our cost reduction initiatives. However, the recent, significant downturn in copper prices and fluctuating market demands could potentially have a negative impact on our fourth quarter revenues and profitability.

On November 8, 2007, our board approved the planned Copperfield integration strategy of streamlined manufacturing operations and cost reductions that were considered in our Copperfield acquisition. This plan involves the consolidation and closure of Copperfield manufacturing and distribution facilities located in Avilla, Indiana; Nogales, Arizona; and El Paso, Texas, into operations at one modern facility in El Paso, Texas along with realignments of existing Copperfield facilities. We expect that these measures will result in a combination of restructuring charges and purchase accounting adjustments of approximately $0.3 to $0.6 million in the fourth quarter of 2007 for severance costs and approximately $3.5 to $4.5 million in 2008 for other restructuring costs. We estimate that these measures will result in net cash expenditures of approximately $2.0 to $3.0 million in 2007 and 2008 depending on various factors including the timing of the sale of two of our owned facilities and the amount of proceeds received. We expect that these measures will result in cash savings of approximately $3.0 million in 2009 and subsequent years. We may not be able to achieve the planned cash flows and savings estimates if we are unable to accomplish these integration activities in a timely basis, are unable to achieve expected efficiencies in our manufacturing and logistics consolidations, or unforeseen developments or expenses arise.

On November 1, 2007, we entered into a definitive agreement to acquire the electrical products business of Katy Industries, Inc. (“Katy”), which operates in the United States as Woods Industries, Inc. (“Woods U.S.”) and in Canada as Woods Industries (Canada) Inc. (“Woods Canada”). The principal business of Woods U.S. and Woods Canada is the design and distribution of consumer electrical corded products, which are sold principally to national home improvement, mass merchant, hardware and other retailers. We believe this acquisition is an opportunity to broaden our product and customer diversification with an expanded engineering and sourcing platform in Asia, enhanced market presence in Canada, and an expanded customer base in the U.S.

We will purchase certain assets of the U.S. subsidiary and all the stock of the Canadian subsidiary for a total cash purchase price of $45.0 million. Included in the acquisition is net working capital in excess of $41.0 million, which does not include the effect of post-closing working capital adjustments. We will utilize our current Revolving Credit Facility to fund the purchase price. We plan a permanent reduction of working capital of approximately $12.0 to $15.0 million within three months of the closing, thereby enabling us to reduce the acquisition debt by a like amount. The closing of the transaction is subject to customary closing conditions and is expected to be completed on November 30, 2007. We discussed the letter of intent for this acquisition in our Report for Form 10-Q for the three month period ended June 30, 2007.

From time to time, we consider acquisition opportunities that could materially increase the size of our business operations.

Acquisition of Copperfield, LLC

On April 2, 2007 we acquired all of the equity interests of Copperfield, LLC (“Copperfield”) for a total purchase price of $215.4 million, which includes a reduction to the purchase price as a result of a working capital true-up adjustment of $0.5 million and acquisition related costs of $2.9 million. We financed the acquisition with the proceeds from the sale on April 2, 2007 of $120.0 million aggregate principal amount of 9 7/8% Senior Notes due 2012, (the “2007 Notes”) along with cash on hand and borrowings under an amended and restated credit agreement (the “Revolving Credit Agreement”). The Revolving Credit Agreement, which

was put in place on April 2, 2007, consists of a five year $200.0 million revolving credit facility and replaced our existing credit facility.

The results of Copperfield have been included in our consolidated results since the date of acquisition.

Business Segment Information

We have four business segments: (i) electrical/wire and cable distributors; (ii) specialty distributors and OEMs; (iii) consumer outlets; and (iv) Copperfield. These segment classifications are based on an aggregation of customer groupings and distribution channels because this is how we manage and evaluate our business. We sell substantially all of our products through each of our four segments, except that our fabricated bare wire products are sold only by our specialty distributors, OEM and Copperfield segments. For the three months ended September 30, 2007, the electrical/wire and cable distributors segment, the specialty distributors and OEMs segment, the consumer outlets segment, and Copperfield represented approximately 15.3%, 21.9%, 6.9% and 55.9% of our net sales on a consolidated basis, respectively. Our segment information presented below includes a separate line for corporate adjustments, which consist of items not allocated to a particular business segment, including costs for employee relocation, discretionary bonuses, professional fees, restructuring expenses, management fees and intangible amortization. The period-to-period comparisons set forth in this section include information about our four segments.

Consolidated Results of Operations

The following table sets forth, for the periods indicated, the consolidated statements of operations data in thousands of dollars and as a percentage of net sales.


	Three Months Ended September 30,										Nine Months Ended September 30,
	2006					2007					2006						2007
	Amount		%			Amount		%			Amount			%			Amount		%
	(In thousands)
Net sales	$	114,925		100.0	%	$	253,453		100.0	%	$	320,137			100.0	%	$	609,867		100.0	%
Gross profit		24,228		21.1			29,166		11.5			65,425			20.4			74,030		12.1
Selling, engineering, general and administrative expenses		9,158		8.0			11,753		4.6			23,049			7.2			31,238		5.1
Intangible amortization expense		—		0.0			2,522		1.0			—			0.0			5,085		0.8
Restructuring charges		891		0.8			53		0.0			1,210			0.4			580		0.1

Operating income		14,179		12.3			14,838		5.9			41,166			12.9			37,127		6.1
Interest expense, net		4,185		3.6			8,187		3.2			12,506			3.9			19,411		3.2
Other (income) expense, net		—		0.0			2		0.0			(11	)		0.0			29		0.0

Income before income taxes		9,994		8.7			6,649		2.6			28,671			9.0			17,687		2.9
Income tax expense		235		0.2			2,713		1.0			1,009			0.3			6,752		1.1

Net income	$	9,759		8.5		$	3,936		1.6		$	27,662			8.6		$	10,935		1.8


Capital expenditures	$	604				$	1,884				$	2,157					$	4,929
Depreciation and amortization expense	$	1,264				$	6,422				$	4,089						13,945
EBITDA (1)	$	15,443				$	21,258				$	45,266					$	51,043


(1)		EBITDA represents net income (loss) before interest expense, income tax expense and depreciation and amortization expense. EBITDA is a performance measure and liquidity measure used by our management, and we believe it is commonly reported and widely used by investors and other interested parties as a measure of a company’s operating performance and ability to incur and service debt. Our management believes that EBITDA is useful to investors in evaluating our operating performance because it provides a means to evaluate the operating performance of our business on an ongoing basis using criteria that are used by our internal decision-makers for evaluation and planning purposes, including the preparation of annual operating budgets and the determination of levels of operating and capital investments. In particular, our management believes that EBITDA is a meaningful measure because it allows management to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance. For example, our management believes that the inclusion of items such as taxes, interest expense, and interest income can make it more difficult to identify and assess operating trends affecting our business and industry. Furthermore,


		our management believes that EBITDA is a performance measure that provides investors, securities analysts and other interested parties with a measure of operating results unaffected by differences in capital structures, capital investment cycles and ages of related assets among otherwise comparable companies in our industry. Finally, EBITDA also closely tracks Consolidated EBITDA, a liquidity measurement that is used in calculating financial covenants in both our credit facility and the indenture for our senior notes.

		EBITDA’s usefulness as a performance measure is limited by the fact that it excludes the impact of interest expense, depreciation and amortization expense and taxes. We borrow money in order to finance our operations; therefore, interest expense is a necessary element of our costs and ability to generate revenue. Similarly, our use of capital assets makes depreciation and amortization expense a necessary element of our costs and ability to generate income. Since we, effective as of October 10, 2006, in addition to our C corporation subsidiary, are subject to state and federal income taxes, any measure that excludes tax expense has material limitations.

		Due to these limitations, we do not, and you should not, use EBITDA as the only measure of our performance and liquidity.

		We also use, and recommend that you consider, net income in accordance with GAAP as a measure of our performance or cash flows from operating activities in accordance with GAAP as a measure of our liquidity. The following is a reconciliation of net income (loss), as determined in accordance with GAAP, to EBITDA.

		2006 EBITDA includes restructuring charges of $0.9 and $1.2 million in the three and nine months ended September 30, respectively, and $0.5 million of stock-based compensation to one of our board members in connection with the exploration and development of strategic alternatives and certain other matters in the three and nine months ended September 30, 2006.

		2007 EBITDA includes $0.1 and $0.6 million of restructuring charges and $1.1 million and $3.1 million for stock-based compensation expense in the three months and nine months ended September 30, respectively, and $2.7 million of inventory fair valuation due to the Copperfield acquisition in the nine months ended September 30, 2007.

		Changes in operating assets and liabilities exclude amortization of debt issuance costs, which is included in interest expense.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2007		2006		2007
			(In thousands)
Net income	$	9,759	$	4,043	$	27,662	$	10,935
Interest expense, net		4,185		8,187		12,506		19,411
Income tax expense		235		2,606		1,009		6,752
Depreciation and amortization expense		1,264		6,422		4,089		13,945

EBITDA	$	15,443	$	21,258	$	45,266	$	51,043

The following is a reconciliation of cash flow from operating activities, as determined in accordance with GAAP, to EBITDA.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2007			2006			2007
	(In thousands)
Net cash flow from operating activities	$	16,430		$	8,616		$	22,135		$	(5,360	)
Interest expense, net		4,185			8,187			12,506			19,411
Income tax expense		235			2,606			1,009			6,752
Deferred tax provisions		(126	)		1,977			(147	)		3,924
Gain (loss) on sale of fixed assets		(172	)		11			(313	)		12
Gain on sale of investment-net		—			—			11			—
Stock-based compensation		(531	)		(1,099	)		(531	)		(3,121	)
Changes in operating assets and liabilities		(4,578	)		960			10,596			29,425

EBITDA	$	15,443		$	21,258		$	45,266		$	51,043

Three Months Ended September 30, 2007 Compared with Three Months Ended September 30, 2006

Net sales— Net sales for the three months ended September 30, 2007 were $253.5 million compared to $114.9 million for the three months ended September 30, 2006, an increase of $138.6 million or 120.6%. This increase in net sales was primarily due to the acquisition of Copperfield, which accounted for 123.2% of the increase and, together with increased demand in the consumer segment, more than offset net sales declines in the other segments due to volume declines net of price increases. There was a 118.5% increase in volume in the three months ended September 30, 2007 compared to the prior period primarily due to the acquisition of Copperfield, which accounted for 122.1% of the increase and, in addition to increased demand from existing customers in our consumer outlets segment, offset a decline in demand from existing customers in our other

segments. Volume changes between comparative periods are measured in total pounds shipped. Except for the addition of Copperfield products, product mix in units for this time period was relatively consistent.

Gross profit— Gross profit margin for the three months ended September 30, 2007 was 11.5% compared to 21.1% for the three months ended September 30, 2006. The decrease as a percentage of gross profit margin was primarily due to the Copperfield acquisition. Copperfield prices its products to earn a fixed dollar margin per pound of goods sold, which causes Copperfield’s margin to compress in higher copper price environments. Also contributing to the margin erosion were pricing pressures due to contracting market conditions in a number of our segments and factory variances due to labor inefficiencies.

Selling, engineering, general and administrative (“SEG&A”)— SEG&A expense for the three months ended September 30, 2007 was $11.8 million compared to $9.2 million for the three months ended September 30, 2006. The increase between the two periods resulted primarily from the acquisition of Copperfield and an increase in stock compensation expense.

Intangible amortization expense— Intangible amortization expense for the three months ended September 30, 2007 was $2.5 million due to the Copperfield acquisition.

Restructuring charges— Restructuring charges for the three months ended September 30, 2007 were $0.1 million. These expenses were the result of the planned closure of our Siler City, North Carolina facility. Restructuring charges for the three months ended September 30, 2006 were $0.9 million. These expenses were the result of the planned closure of our Miami Lakes, Florida facility.

Interest expense, net —Interest expense, net, for the three months ended September 30, 2007 was $8.2 million compared to $4.2 million for the three months ended September 30, 2006. The increase in interest expense, net, was due primarily to additional expense related to the 2007 Notes and increased borrowings under our revolving line of credit, both due to the Copperfield acquisition.

Income tax expense — Income tax expense was $2.6 million for the three months ended September 30, 2007 compared to $0.2 million for the three months ended September 30, 2006. Income tax expense increased because of a change in our status as a taxable entity from an S corporation to C corporation in October 2006, resulting in increased tax expense.

Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006

Net sales— Net sales for the nine months ended September 30, 2007 were $609.9 million compared to $320.1 million for the nine months ended September 30, 2006, an increase of $289.8 million or 90.5%. This increase in net sales was primarily due to the acquisition of Copperfield, which accounted for 85.1% of the increase and, together with increased demand in the consumer segment, more than offset net sales declines in the other segments due to volume declines net of price increases. There was a 74.1% increase in volume in the nine months ended September 30, 2007 compared to the prior period primarily due to the acquisition of Copperfield, which accounted for 76.4% of the increase and, in addition to increased demand from existing customers in our consumer outlets segment, offset a decline in demand from existing customers in our other segments. Volume changes between comparative periods are measured in total pounds shipped. With the exception of Copperfield products, product mix in units for this time period was relatively consistent.

Gross profit— Gross profit margin for the nine months ended September 30, 2007 was 12.1% compared to 20.4% for the nine months ended September 30, 2006. The decrease as a percentage of gross profit margin was primarily due to the Copperfield acquisition. Copperfield prices its products to earn a fixed dollar margin per pound of goods sold, which effectively mitigates the effect of copper price volatility, but in higher priced copper markets, compresses the gross profit percentage. Other contributing factors to the decrease in the gross profit margin were the rapid drop in copper prices during the end of 2006 and the beginning of 2007, which resulted in compressed margins across most business segments due to the lag in

working through our inventory layers in the beginning of the year, pricing pressures due to contracting market conditions in a number of our segments, and factory variances due to labor inefficiencies.

Selling, engineering, general and administrative (“SEG&A”)— SEG&A expense for the nine months ended September 30, 2007 was $31.2 million compared to $23.0 million for the nine months ended September 30, 2006. The increase between the two periods resulted primarily from the acquisition of Copperfield, an increase in stock compensation expense, and an increase in advertising expense due to new customer setups and promotions.

Intangible amortization expense— Intangible amortization expense for the nine months ended September 30, 2007 was $5.1 million due to the Copperfield acquisition.

Restructuring charges— Restructuring charges for the nine months ended September 30, 2007 were $0.6 million. These expenses were the result of the planned closure of our Siler City, North Carolina facility. Restructuring charges for the nine months ended September 30, 2006 were $1.2 million. These expenses were the result of the planned closure of our Miami Lakes facility.

Interest expense, net —Interest expense, net, for the nine months ended September 30, 2007 was $19.4 million compared to $12.5 million for the nine months ended September 30, 2006. The increase in interest expense, net, was due primarily to additional interest payable for the 2007 Notes and borrowings under our revolving line of credit both due to the acquisition of Copperfield.

Income tax expense — Income tax expense was $6.8 million for the nine months ended September 30, 2007 compared to $1.0 million for the nine months ended September 30, 2006. Income tax expense increased because of a change from S corporation status to C corporation status in October 2006, resulting in increased tax expense.

Segment Results

The following table sets forth, for the periods indicated, statements of operations data by segment in thousands of dollars, segment net sales as a percentage of total net sales and segment operating income as a percentage of segment net sales.


	Three Months Ended September 30,												Nine Months Ended September 30,
	2006						2007						2006						2007
	Amount			%			Amount			%			Amount			%			Amount			%
							(In thousands)
Net Sales:
Electrical / Wire and Cable Distributors	$	40,540			35.3	%	$	38,737			15.3	%	$	111,447			34.8	%	$	111,059			18.2	%
Specialty Distributors and OEMs		58,325			50.7			55,553			21.9			170,430			53.2			173,066			28.4
Consumer Outlets		16,060			14.0			17,593			6.9			38,260			12.0			53,349			8.7
Copperfield		—			0.0			141,570			55.9			—			0.0			272,393			44.7

Total	$	114,925			100.0	%	$	253,453			100.0	%	$	320,137			100.0	%	$	609,867			100.0	%


Operating Income:
Electrical / Wire and Cable Distributors	$	7,238			17.9	%	$	3,394			8.8	%	$	20,058			18.0	%	$	10,166			9.2	%
Specialty Distributors and OEMs		8,829			15.1			5,697			10.3			24,227			14.2			16,818			9.7
Consumer Outlets		1,542			9.6			1,437			8.2			2,424			6.3			5,183			9.7
Copperfield		—			0.0			6,083			4.3			—			0.0			9,599			3.5

Total		17,609						16,611						46,709						41,766
Corporate		(3,430	)					(1,773	)					(5,543	)					(4,639	)

Consolidated operating income	$	14,179			12.3	%	$	14,838			5.9	%	$	41,166			12.9	%	$	37,127			6.1	%

Three Months Ended September 30, 2007 Compared with Three Months Ended September 30, 2006

Electrical/Wire and Cable Distributors

Net sales for our electrical/wire and cable distributors segment for the three months ended September 31, 2007 were $38.7 million compared to $40.5 million for the three months ended September 30, 2006, a decrease of $1.8 million or 4.4%. This decrease was due primarily to a decline in demand from existing customers and pricing pressures due to contracting market conditions. There was a decrease in volume of 0.7% primarily due to weaknesses in the residential construction markets. This decline was somewhat offset by strength in the MRO, industrial and commercial construction markets.

Operating income for our electrical/wire and cable distributors segment for the three months ended September 30, 2007 was $3.4 million compared to $7.2 million for the three months ended September 30, 2006, a decrease of $3.8 million, or 52.8%. This decrease resulted from lower market demand and related pricing pressures, the costs of plant realignments and stock compensation expense.

Specialty Distributors and OEMs

Net sales for our specialty distributors and OEMs segment for the three months ended September 30, 2007 were $55.6 million compared to $58.3 million for the three months ended September 30, 2006, a decrease of $2.7 million, or 4.6%. There was a decrease in volume of 7.9% due to declines in demand from our existing customers and pricing pressures due to contracting market conditions, offset by growth and market share gains in our OEM/government and industrial channels.

Operating income for our specialty distributors and OEMs segment for the three months ended September 30, 2007 was $5.7 million compared with $8.8 million for the three months ended September 30, 2006, a decrease of $3.1 million or 35.2%. This decrease was primarily due to the decline across most business channels due to pricing pressures and contracting market conditions, the costs of plant realignments, and stock compensation expense.

Consumer Outlets

Net sales for our consumer outlets segment for the three months ended September 30, 2007 were $17.6 million compared to $16.1 million for the three months ended September 30, 2006, an increase of $1.5 million or 9.3%. This increase was due primarily to a volume increase of 3.4%. The volume increase was primarily due to market share gains with key target customers in 2007.

Operating income for our consumer outlets segment for the three months ended September 30, 2007 was $1.4 million compared to $1.5 million for the three months ended September 30, 2006. The operating income earned was consistent largely due to volume increases, the ability to spread fixed costs across a larger revenue base, and improved operational efficiencies due to plant realignments in 2006. This was offset by increased advertising due to new customer promotions, stock compensation expense and the accrual of management bonuses due to increased profitability.

Copperfield

No comparison is presented for Copperfield because it was not included in our financial results in 2006.

Operating income for Copperfield is reduced by an increase in depreciation expense of $1.0 million and the amortization of intangible assets of $2.5 million due to purchase price allocations.

Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006

Electrical/Wire and Cable Distributors

Net sales for our electrical/wire and cable distributors segment for the nine months ended September 30, 2007 were $111.1 million compared to $111.4 million for the nine months ended September 30, 2006, a decrease of $0.3 million or 0.3%. This decrease was due primarily to a decline in demand from existing customers and pricing pressures due to contracting market conditions. There was a decrease in volume of 3.1% primarily due to weaknesses in the residential construction markets. This decline was somewhat offset by strength in the MRO, industrial and commercial construction markets.

Operating income for our electrical/wire and cable distributors segment for the nine months ended September 30, 2007 was $10.2 million compared to $20.1 million for the nine months ended September 30, 2006, a decrease of $9.9 million, or 49.3%. This decrease was attributed to the rapid drop in copper during the end of 2006 and beginning of 2007, which resulted in compressed margins due to the lag in working through our inventory layers, as well as pricing pressures due to lower market demand, the costs of plant realignments, the decrease in volume, and stock compensation expense.

Specialty Distributors and OEMs

Net sales for our specialty distributors and OEMs segment for the nine months ended September 30, 2007 were $173.1 million compared to $170.4 million for the nine months ended September 30, 2006, an increase of $2.7 million, or 1.6%. There was a decrease in volume of 8.2% due to declines in demand from our existing customers, offset by growth and market share gains in our OEM/government and industrial channels.

Operating income for our specialty distributors and OEMs segment for the nine months ended September 30, 2007 was $16.8 million compared with $24.2 million for the nine months ended September 30, 2006, a decrease of $7.4 million or 30.6%. This decrease was primarily due to the rapid drop in copper prices during the end of 2006 and beginning of 2007 which resulted in compressed margins across most business channels due to the lag in working through our inventory layers, as well as the costs of plant realignments and stock compensation expense due to options issued, somewhat offset by the ability to spread fixed costs across a larger revenue base.

Consumer Outlets

Net sales for our consumer outlets segment for the nine months ended September 30, 2007 were $53.3 million compared to $38.3 million for the nine months ended September 30, 2006, an increase of $15.0 million or 39.2%. This increase was due primarily to a volume increase of 21.9% and price increases associated with raw material cost increases. The volume increase was primarily due to an increase of automotive product sales due to improved market conditions compared to 2006 and to initial stocking orders for product line expansions with existing customers in 2007.

Operating income for our consumer outlets segment for the nine months ended September 30, 2007 was $5.2 million compared to $2.4 million for the nine months ended September 30, 2006, an increase of approximately $2.8 million, or 116.7%. This increase was largely due to strength in demand in our automotive channel, expanded product placement with existing customers, the ability to spread fixed costs across a larger revenue base, improved operational efficiencies due to plant realignments in 2006 and the ability to secure price increases. This was offset by increased advertising expense due to new customer promotions, increased commission expense due to higher revenues, stock compensation expense and the accrual of management bonuses due to increased profitability.

Copperfield

No comparison is presented for Copperfield because it was not included in our financial results in 2006.

Operating income for Copperfield is reduced by an increase in depreciation expense of $2.0 million, an increase in inventories of $2.7 million, and the amortization of intangible assets of $5.1 million due to purchase price allocations.

Liquidity and Capital Resources

Debt

As of September 30, 2007, we had the following long-term debt (including capital lease obligations) outstanding in thousands of dollars:


	As of
	September 30, 2007
Revolving credit facility	$	100,004
Senior notes		243,136
Capital lease obligations		851
Other long-term debt		756

Total long-term debt	$	344,747

Senior Secured Revolving Credit Facility

On April 2, 2007, in connection with our acquisition of Copperfield, we entered into an Amended and Restated Credit Agreement with Wachovia Bank, National Association, as administrative agent (“agent”), which amends and restates the previously existing agreement in its entirety, and provides for an asset-based revolving credit facility with aggregate advances not to exceed the lesser of (i) $200.0 million or (ii) the sum of 85% of eligible accounts receivable, 55% of eligible inventory and an advance rate to be determined of certain appraised fixed assets, with a $10.0 million sublimit for letters of credit. The Revolving Credit Facility (the “Revolving Credit Facility”) matures on April 2, 2012. Interest is payable, at our option, at the agent’s prime rate plus a range of 0.0% to 0.5% or the Libor rate plus a range of 1.25 % to 1.75%, in each case based on quarterly average excess availability under the revolving credit facility.

The Revolving Credit Facility accrued interest at an average rate of 7.04%, and our average borrowed amount was $95.5 million for the six month period ended September 30, 2007. We had no borrowings for the three months ended March 31, 2007.

Our Revolving Credit Facility under the Revolving Credit Agreement is guaranteed by our domestic subsidiaries on a joint and several basis, either as a co-borrower or a guarantor, and is secured by substantially all of our assets and the assets of our domestic subsidiaries, including accounts receivable, inventory and any other tangible and intangible assets (including real estate, machinery and equipment and intellectual property), as well as by a pledge of all the capital stock of each of our domestic subsidiaries and 65% of the capital stock of our foreign subsidiaries, if any.

The Revolving Credit Agreement contains financial covenants requiring us to maintain a minimum fixed charge coverage ratio and to maintain minimum excess availability under the credit facility. In addition, the Revolving Credit Agreement contains affirmative and negative covenants, including restrictions on the payment of dividends and distributions, indebtedness, liens, investments, guarantees, mergers and consolidations, sales of assets, affiliate transactions, sale and leaseback transactions and leases. We are also prohibited by the Revolving Credit Agreement from making prepayments on our senior notes, except for scheduled payments required pursuant to the terms of such senior notes. The financial covenants in the Revolving Credit Agreement:

•

require us to maintain a fixed charge coverage ratio of not less than 1.1 to 1.0 for any month during which excess availability under the credit facility falls below $30.0 million, and

•

require us to maintain excess availability under the credit facility of not less than $10.0 million.

On November 1, 2007, we amended the Revolving Credit Agreement. The amendment permits us to acquire substantially all of the assets of Woods U.S., and all of the capital stock of Woods Canada, upon the satisfaction of the following conditions: (i) the agent shall have received a review of the financial condition of Woods U.S. and Woods Canada conducted by a firm of independent certified public accountants of nationally recognized standing reasonably acceptable to the administrative agent (the ”Financial Review”); (ii) the agent shall have completed a field examination with respect to the working capital assets of Woods U.S. to be included in the borrowing base; (iii) if, either immediately before or after consummation of the acquisition, excess availability under the Revolving Credit Agreement is less than $30.0 million, we shall have delivered to the agent a certificate demonstrating compliance with all financial covenants on a pro forma basis; (iv) no default or event of default shall exist immediately prior to or after the consummation of the acquisition; and (v) the agent shall have received copies of all material acquisition documents which are reasonably satisfactory to the agent. The agent has reviewed the purchase agreement and the Financial Review and has informed us that such documents are satisfactory. The amendment also permits us future investments in our Canadian subsidiaries in an aggregate amount, together with any investment made to consummate the acquisition of Woods Canada, not to exceed $25.0 million.

Senior Notes

On September 28, 2004, we issued senior notes in an aggregate principal amount of $120.0 million, bearing interest at a fixed rate of 9.875% and maturing in 2012. The notes are guaranteed by our domestic restricted subsidiaries.

On April 2, 2007, in connection with our acquisition of Copperfield, we issued the 2007 Notes in an aggregate principal amount of $120.0 million, bearing interest at a fixed rate of 9.875% and maturing in 2012, and having the same terms and conditions as our senior notes issued in 2004, which were issued under the same indenture. We sold these notes at a premium to par value of 2.875%, resulting in proceeds to us of $123.5 million. Because of the issuance of these notes, our outstanding notes have an aggregate principal amount of $240.0 million.

The indenture includes a covenant that prohibits us from incurring additional indebtedness (other than certain permitted indebtedness, including but not limited to the maximum availability under our credit facility), unless our consolidated fixed charge coverage ratio is greater than 2.0 to 1.0. As of September 30, 2007, our consolidated fixed charge coverage ratio was 3.0 to 1.0. Upon the occurrence of a change of control, we must offer to repurchase the notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest to the date of repurchase. The indenture also contains covenants that, among other things, limit our ability and the ability of certain of our subsidiaries to: make restricted payments; create liens; pay dividends; consolidate, merge or sell substantially all of our assets; enter into sale and leaseback transactions; and enter into transactions with affiliates.

As of September 30, 2007, we were in compliance with all of the covenants contained in the indenture.

We may redeem some or all of the notes at any time on or after October 1, 2008, at redemption prices set forth in the indenture. In addition, before October 1, 2007, we may redeem up to 35% of the original aggregate principal amount of the notes at a redemption price equal to 109.875% of their aggregate principal amount, plus accrued interest, with the cash proceeds from certain kinds of equity offerings.

Current and Future Liquidity

In general, we require cash for working capital, capital expenditures, debt repayment and interest. Our working capital requirements increase when we experience strong incremental demand for products or significant copper price increases.

Our management assesses the future cash needs of our business by considering a number of factors, including:

	•		our historical earnings and cash flow performance;

	•		management’s assessment of our future working capital needs;

	•		our current and projected debt service expenses;

	•		management’s planned capital expenditures; and

	•		our ability to borrow additional funds under the terms of our credit facility and our senior notes.

Based on the foregoing, we believe that cash flow from operations and borrowings under our Revolving Credit Agreement will be sufficient to fund our operations, debt service and capital expenditures for the foreseeable future.

On April 2, 2007, we issued $120.0 million in senior notes, and entered into the Revolving Credit Agreement, which was amended on November 1, 2007. We financed the Copperfield acquisition and related transaction expenses with the proceeds from the sale of 2007 Notes of $123.5 million, borrowings under our Revolving Credit Agreement of $73.6 million, and cash on hand of $22.9 million.

On November 1, 2007, we entered into a purchase agreement to acquire, for $45.0 million, the stock of Woods Canada and certain assets of Woods U.S., including certain working capital items. We expect that our borrowings under our Revolving Credit Agreement will increase by approximately $45.0 million on or about November 30, 2007 in connection with the closing of this acquisition. We also expect that, after the Woods closing, our borrowings will decrease as a result of the sale of inventory included in the Woods acquisition.

If we experience a deficiency in earnings with respect to our fixed charges in the future, we would need to fund the fixed charges through a combination of cash flows from operations and borrowings under the credit facility. If cash flows generated from our operations, together with borrowings under our credit facility, are not sufficient to fund our operations, debt service and capital expenditures and we need to seek additional sources of capital, the limitations contained in the credit facility and the indenture relating to our senior notes on our ability to incur debt could prevent us from securing additional capital through the issuance of debt. In that case, we would need to secure additional capital through other means, such as the issuance of equity. In addition, we may not be able to obtain additional debt or equity financing on terms acceptable to us, or at all. If we were not able to secure additional capital, we could be required to delay or forego capital spending or other corporate initiatives, such as the development of products, or acquisition opportunities.

Net cash used by operating activities for the nine months ended September 30, 2007 was $5.4 million compared to net cash provided by operating activities of $22.1 million for the nine months ended September 30, 2006. The primary factors contributing to the increase in cash used by operating activities for the nine months ended September 30, 2007 compared to 2006 were: (i) a $16.7 million decrease in net income; (ii) a $11.1 million increase in cash used by accounts receivable due to increases in selling prices and timing of collections; (iii) a $7.7 increase in cash used by inventories due to higher raw material costs and increased quantities; and (iv) a $6.7 million decrease in accounts payable due to timing of payments. These factors were offset by: (i) a $2.6 million increase in stock-based compensation; (ii) a $7.0 million increase in accrued liabilities; (iii) a $10.0 million increase in depreciation and amortization primarily due to additional debt acquisition costs and intangibles acquired in the purchase of Copperfield.

Net cash used in investing activities for the nine months ended September 30, 2007 was $219.7 million due to $4.9 million of capital expenditures and $214.8 million for the acquisition of Copperfield.

Net cash provided by financing activities for the nine months ended September 30, 2007 was $216.2 million, due to net borrowings under our revolving loan facilities of $98.2 million and the issuance of additional senior notes of $119.4 million including premiums, net of fees and expenses. This was off set by the payment of long-term debt of $0.9 million and $0.5 million of common stock issuance costs related to the private equity offering.

At September 30, 2007, we had $5.9 million of cash on hand due to a favorable LIBOR interest rate agreement which we chose to take advantage of in lieu of paying down our Revolving Credit Facility.

During the third quarter ended September 30, 2005, we experienced a theft of inventory as a result of break-ins at our manufacturing facility located in Miami Lakes, Florida. We believe we will recover the amount of the loss, net of deductibles, under our insurance policy. As a result of the loss, we reduced the cost of inventory by $1.3 million and recorded an insurance receivable, which is included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

On November 14, 2006, we approved a plan to close our manufacturing facility and sell the building and property located in Siler City, North Carolina. We determined that the efficient utilization of our manufacturing assets would be enhanced by partial relocation of production to our plants in Hayesville, North Carolina and Waukegan, Illinois supplemented by additional international sourcing.

We estimate the total remaining cost of the closure and realignment to be approximately $0.03 million of other costs related to the closure. We expect that the closure will be complete by the end of the first quarter of 2008.

On November 8, 2007, our board approved the planned Copperfield integration strategy of streamlined manufacturing operations and cost reductions that were considered in our Copperfield acquisition. This plan involves the closure and consolidation of Copperfield manufacturing and distribution facilities located in Avilla, Indiana; Nogales, Arizona; and El Paso, Texas, into operations at one modern facility in El Paso, Texas along with realignments of existing Copperfield facilities. We expect that these measures will result in a combination of restructuring charges and purchase accounting adjustments of approximately $0.3 to $0.6 million in the fourth quarter of 2007 for severance costs and approximately $3.5 to $4.5 million in 2008 for other restructuring costs. We estimate that these measures will result in net cash expenditures of approximately $2.0 to $3.0 million in 2007 and 2008 depending on various factors including the timing of the sale of two of our owned facilities and the amount of proceeds received.

Seasonality

We have experienced, and expect to continue to experience, certain seasonal trends in net sales and cash flow. Larger amounts of cash are generally required during the second and third quarters of the year to build inventories in anticipation of higher demand during the late fall and early winter months. In general, receivables related to higher sales activities during the late fall and early winter months are collected during the late fourth and early first quarter of the year.

Contractual Obligations

The following table sets forth information about our contractual obligations and commercial commitments as of September 30, 2007:


	Payments Due by Period
			Less
			than						After
Contractual Obligations	Total		1 Year		2-3 Years		4-5 Years		5 Years
	(in thousands)
Current and long-term debt obligations (including interest)	$	368,411	$	24,830	$	48,846	$	48,689	$	246,046

Capital lease obligations (including interest)		953		519		434		—		—

Operating lease obligations		20,055		4,246		6,412		4,832		4,565

Purchase obligations		64,999		64,999		—		—		—

Other Obligations

Purchase obligations primarily consist of purchase orders and other contractual arrangements for inventory and raw materials.

We will be required to make future cash contributions to our defined contribution savings plans. The estimate for these contributions is approximately $1.0 million during 2007. Estimates of cash contributions to be made after 2007 are difficult to determine due to the number of variable factors that impact the calculation of defined contribution savings plans.

We anticipate being able to meet our obligations as they come due.

Off-Balance Sheet Assets and Obligations

We do not have any off-balance sheet arrangements.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurement(“SFAS No. 157”).SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We do not anticipate the implementation of this statement will materially impact our financial position, results of operations, or cash flows.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities including an Amendment of FASB Statement No. 115(“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We do not believe that the adoption of the provisions of SFAS No. 159 will materially impact our consolidated financial position, results of operations, or cash flows.

Cautionary Note Regarding Forward-Looking Statements

Various statements contained in this report, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. These statements may be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “should,” or the negative thereof or other variations thereon or comparable terminology. In particular, statements about our expectations, beliefs, plans, objectives, assumptions or future events or performance contained in this report, including certain statements contained in “Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed under “Item 1A. Risk Factors,” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (available at www.sec.gov), may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements.

Some of the key factors that could cause actual results to differ from our expectations include:

	•		fluctuations in the supply or price of copper and other raw materials;

	•		increased competition from other wire and cable manufacturers, including foreign manufacturers;

	•		pricing pressures causing margins to decrease;

	•		general economic conditions and changes in the demand for our products by key customers;

	•		the consummation of acquisitions, including Woods;

	•		failure to identify, finance or integrate acquisitions;

	•		failure to accomplish integration activities on a timely basis;

	•		failure to achieve expected efficiencies in our manufacturing and integration consolidations;

	•		changes in the cost of labor or raw materials, including PVC and fuel costs;

	•		inaccuracies in purchase agreements relating to acquisitions;

	•		failure of customers to make expected purchases, including customers of acquired companies;

	•		unforeseen developments or expenses with respect to our acquisition, integration and consolidation efforts; and

	•		other risks and uncertainties, including those described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change and, therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Our principal market risks are exposure to changes in commodity prices, primarily copper prices, and interest rates on borrowings.

Commodity Risk.We generally do not enter into arrangements to hedge price fluctuations for copper or other commodities used to manufacture our products, although we have done so from time to time, primarily in our consumer outlets segment. The terms of these hedging arrangements generally are less than one year. We had no outstanding commodity hedging arrangements at September 30, 2007.

Interest Rate Risk.We have exposure to changes in interest rates on a portion of our debt obligations. The interest rate on our credit facility is based on either the lenders’ prime rate or LIBOR. Based on an assumed $100.4 million of borrowings outstanding under our credit facility, a one percentage point change in LIBOR would change our annual interest expense by approximately $1.0 million.

ITEM 4. Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of September 30, 2007. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There were no changes in our internal controls over financial reporting (as defined in Exchange Act Rule 13a-15(d) and 15d-15(f)) during the quarter ended September 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. However, in connection with the acquisition of Copperfield and the incorporation of Copperfield’s condensed consolidated financial statements into our consolidation process, we have adopted Copperfield’s internal controls with respect to Copperfield.

PART II —OTHER INFORMATION

ITEM 1. Legal Proceedings

We are involved in legal proceedings and litigation arising in the ordinary course of business. In those cases where we are the defendant, plaintiffs may seek to recover large and sometimes unspecified amounts or other types of relief and some matters may remain unresolved for several years. We believe that none of the routine litigation that we now face, individually or in the aggregate, will have a material effect on our consolidated financial position, cash flow or results of operations. We maintain insurance coverage for litigation that arises in the ordinary course of our business and believe such coverage is adequate.

ITEM 1A. Risk Factors

Information regarding risk factors is contained in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2006. Except for the item shown below, there have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

We may have difficulty integrating the operations of Copperfield and Woods. Should we fail to integrate their operations, our results of operations and profitability could be negatively impacted.

We might not be successful in integrating the operations of Copperfield, Woods U.S., and Woods Canada with those of Coleman Cable, and, we might not perform as we expect. Some of the integration challenges we face include differences in corporate culture and management styles, additional or conflicting governmental regulations, disparate company policies and practices, customer relationship issues and retention of key officers and personnel. In addition, management may be required to devote a considerable amount of time to the integration process, which could decrease the amount of time they have to manage Coleman Cable. We cannot make assurances that we will successfully or cost-effectively integrate operations. The failure to do so could have a negative effect on results of operations. The process of integrating operations could cause some interruption of, or the loss of momentum in, the activities of one or more of our businesses.

ITEM 5. Other Information

Election of New Directors

On November 9, 2007, the Board of Directors of Coleman Cable elected Issac M. Neuberger and Harmon S. Spolan to become directors effective as of the close of business on November 16, 2007.

Mr. Neuberger is a founding principal of the law firm of Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., located in Baltimore, Maryland. He also serves as a member of the Board of Directors of AmTrust Financial Services, Inc. (NASDAQ: AFSI).

Mr. Spolan is of Counsel to the law firm of Cozen O’Connor P.C. in Philadelphia, Pennsylvania. Prior to joining Cozen in 1999, he served as president of Jefferson Bank for 22 years. Mr. Spolan is also a member of the Board of Directors of Atlas America Inc. (NASDAQ: ATLS) and TRM Corp. (NASDAQ: TRMM).

Messrs. Neuberger or Spolan have not yet been named to any committee of the Board.

There are no related persons transactions under Item 404(a) of Regulations S-K between us and Mr. Neuberger or between us and Mr. Spolan. Further, there are no arrangements or understandings between Mr. Neuberger and us, or Mr. Spolan and us, and any other person pursuant to which either of them was or is selected as a director.

Each of Mr. Neuberger and Mr. Spolan will receive the same compensation received by our other non-employee directors.

SIGNATURES

Pursuant to the requirements 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.


	COLEMAN CABLE, INC.
	(Registrant)

Date: November 13, 2007	By	/s/ G. Gary Yetman Chief Executive Officer and President

Date: November 13, 2007	By	/s/ Richard N. Burger Chief Financial Officer, Executive
		Vice President, Secretary and
		Treasurer

INDEX TO EXHIBITS


Item No.		Description

2.0	—	Equity Interest Purchase Agreement dated as of March 11, 2007, among Coleman Cable, Inc., the Copperfield Sellers defined therein and, solely with respect to Section 10.10 thereof, the additional signatures thereto; incorporated herein by reference to our quarterly report on Form 10-Q for the quarter ended March 31, 2007.

2.1	—	Purchase Agreement, dated as of November 1, 2007, by and among Coleman Cable, Inc., Woods Industries, Inc., Woods Industries (Canada) Inc. and Katy Industries, Inc., incorporated by reference herein to our Current Report on Form 8-K filed on November 2, 2007.

3.1	—	Certificate of Incorporation of Coleman Cable, Inc., as filed with the Delaware Secretary of State on October 10, 2006, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

3.2	—	Amended and Restated By-Laws of Coleman Cable, Inc., effective as of October 11, 2006, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

4.1	—	Registration Rights Agreement dated September 28, 2004 between Coleman Cable, Inc. and Wachovia Capital Markets, LLC, as Initial Purchaser under the Purchase Agreement, incorporated herein by reference to our Form S-4 filed on April 26, 2005.

4.2	—	Indenture dated as of September 28, 2004 among Coleman Cable, Inc., the Note Guarantors from time to time party thereto and Deutsche Bank Trust Company Americas, as Trustee, incorporated herein by reference to our Form S-4 filed on April 26, 2005.

4.3	—	Registration Rights Agreement, dated October 11, 2006 between Coleman Cable, Inc. and Friedman, Billings, Ramsey & Co., Inc., incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

4.4	—	Shareholders Agreement, dated October 11, 2006 between Coleman Cable, Inc. and its Existing Holders, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

4.5	—	Registration Rights Agreement dated April 2, 2007 between Coleman Cable, Inc. and Wachovia Capital Markets, LLC, as Initial Purchaser under the Purchase Agreement, incorporated herein by reference to our Form S-4 filed on July 13, 2007.

10.1	—	Credit Agreement dated as of September 28, 2004 among Coleman Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, Wachovia Bank, National Association, as Administrative Agent, ING Capital LLC and National City Business Credit, Inc., as Syndication Agents, and PNC Bank, National Association and Associated Bank, National Association, as Documentation Agents, incorporated herein by reference to our Form S-4 filed on April 26, 2005.

10.2	—	First Amendment and Waiver to Credit Agreement dated as of September 30, 2004 among Coleman Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia Bank, National Association, as administrative agent, incorporated herein by reference to our Form S-4 filed on April 26, 2005.


Item No.		Description
10.3	—	Second Amendment to Credit Agreement dated as of September 30, 2004 among Coleman Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia Bank, National Association, as administrative agent, incorporated herein by reference to our Form S-4 filed on April 26, 2005.

10.4	—	Lease dated as of September 11, 2003, by and between Panattoni Development Company, LLC and Coleman Cable, Inc., as subsequently assumed by HQ2 Properties, LLC pursuant to an Assignment and Assumption of Lease, dated as of August 15, 2005, amended by First Amendment to Lease, dated as of August 15, 2005, by and between HQ2 Properties, LLC and Coleman Cable, Inc., incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

10.5	—	Third Amendment to Credit Agreement dated as of November 2, 2005 among Coleman Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia Bank, National Association, as administrative agent, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005.

10.6	—	Fourth Amendment to Credit Agreement dated as of August 14, 2006, among Coleman Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia Bank, National Association, as administrative agent, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

10.7	—	Amended and Restated Credit Agreement dated as of April 2, 2007, among Coleman Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia Bank, National Association, as administrative agent, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.

10.8	—	Amended and Restated Employment Agreement, dated as of September 1, 2006 by and between Coleman Cable, Inc. and G. Gary Yetman, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

*10.9	—	Amended and Restated Employment Agreement, dated as of September 1, 2006 by and between Coleman Cable, Inc. and Richard N. Burger, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

*10.10	—	Amended and Restated Employment Agreement, dated as of September 1, 2006 by and between Coleman Cable, Inc. and Jeffrey D. Johnston, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

10.11	—	Consulting Agreement dated as of October 11, 2006 by and between Coleman Cable, Inc. and David Bistricer, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

10.12	—	Consulting Agreement dated as of October 11, 2006 by and between Coleman Cable, Inc. and Nachum Stein, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

10.13	—	2006 Long-Term Incentive Plan, incorporated herein by reference to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.


Item No.		Description
10.14	—	Form of Non-Qualified Stock Option Agreement Under the 2006 Long-Term Incentive Plan, incorporated herein by reference to our Form- S-1 filed on November 16, 2006.

10.15	—	First Amendment to Amended and Restated Credit Agreement, dated as of November 1, 2007, by and among Coleman Cable, Inc., the Subsidiaries that are signatories thereto, and the lenders that are signatories thereto, incorporated by reference herein to our Current Report on Form 8-K on November 2, 2007.

10.16	—	Indemnification Agreement dated as of November 13, 2007 by and between Coleman Cable Inc. and Morgan Capital LLC.

31.1	—	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	—	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	—	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Denotes management contract or compensatory plan or arrangement.

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Legalese
Litigous
Readability	8th grade Avg

Coleman Cable Inactive 10-Q2007 Q3 Quarterly report

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