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

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 1997
or
[ ] 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 1-7418
------

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

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

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

Registrant's telephone number: (219) 461-4000

None
------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)

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

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

Number of Shares Outstanding
Common Stock As of March 31, 1997
-------------- ----------------------------
$.01 Par Value 100

ESSEX GROUP, INC.

FORM 10-Q INDEX

FOR QUARTERLY PERIOD ENDED MARCH 31, 1997

Page No.

Part I. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets . . . . . . . . . . . . . . . . 3

Consolidated Statements of Income . . . . . . . . . . . . . 5

Consolidated Statements of Cash Flows . . . . . . . . . . . 6

Notes to Consolidated Financial Statements . . . . . . . . 8

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 11

Part II. Other Information

Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 16

Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ESSEX GROUP, INC.

CONSOLIDATED BALANCE SHEETS

December 31, March 31,
1996 1997
In Thousands of Dollars (Unaudited)
--------------------------------------------------------------------------------------

ASSETS

Current assets:

Cash and cash equivalents . . . . . . . . . . . . . . $ 2,899 $ 196
Accounts receivable (net of allowance of
$5,239 and $5,434) . . . . . . . . . . . . . . . . . 189,717 217,529
Inventories . . . . . . . . . . . . . . . . . . . . . 217,643 242,954
Other current assets . . . . . . . . . . . . . . . . . 12,147 8,403
-------- --------

Total current assets . . . . . . . . . . . . . 422,406 469,082

Property, plant and equipment (net of accumulated
depreciation of $112,108 and $117,731) . . . . . . . 280,489 278,996
Excess of cost over net assets acquired (net of
accumulated amortization of $17,388 and $18,437) . . 126,619 126,099
Other intangible assets and deferred costs (net of
accumulated amortization of $4,501 and $4,934) . . . 7,417 6,954
Other assets . . . . . . . . . . . . . . . . . . . . . 4,294 5,604
-------- --------

$841,225 $886,735
======== ========

See Notes to Consolidated Financial Statements

ESSEX GROUP, INC.

CONSOLIDATED BALANCE SHEETS - Continued

December 31, March 31,
1996 1997
In Thousands of Dollars, Except Per Share Data (Unaudited)
--------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
Notes payable to bank . . . . . . . . . . . . . . . . $ 30,913 $ 7,130
Current portion of long-term debt . . . . . . . . . . 11,576 11,576
Accounts payable . . . . . . . . . . . . . . . . . . . 71,243 61,043
Accrued liabilities . . . . . . . . . . . . . . . . . 64,313 66,622

Deferred income taxes . . . . . . . . . . . . . . . . 15,151 14,257
Due to Holdings . . . . . . . . . . . . . . . . . . . 5,153 18,601
-------- --------

Total current liabilities . . . . . . . . . . . 198,349 179,229

Long-term debt . . . . . . . . . . . . . . . . . . . . 421,340 468,546

Deferred income taxes . . . . . . . . . . . . . . . . 58,043 54,895
Other long-term liabilities . . . . . . . . . . . . . 12,427 13,701

Stockholder's equity:
Common stock, par value $.01 per share; 1,000 shares
authorized; 100 shares issued and outstanding; plus
additional paid in capital . . . . . . . . . . . . . 104,036 104,036
Retained earnings . . . . . . . . . . . . . . . . . . 47,030 66,328
-------- --------

Total stockholder's equity . . . . . . . . . . 151,066 170,364
-------- --------

$841,225 $886,735
======== ========

See Notes to Consolidated Financial Statements

ESSEX GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Month Period
Ended March 31,
--------------------------
In Thousands of Dollars 1996 1997
----------------------------------------------------------------------

Net sales . . . . . . . . . . . . . . . . . $308,410 $410,778
Cost of goods sold . . . . . . . . . . . . 258,651 330,907

Selling and administrative expenses . . . . 28,119 36,906
Other expense (income), net . . . . . . . . 54 (60)
-------- --------

Income from operations . . . . . . . . . . 21,586 43,025
Interest expense . . . . . . . . . . . . . 10,167 11,127
-------- --------

Income before income taxes . . . . . . . . 11,419 31,898

Provision for income taxes . . . . . . . . 5,000 12,600
-------- --------

Net income . . . . . . . . . . . . . . . . $ 6,419 $ 19,298
======== ========

See Notes to Consolidated Financial Statements

ESSEX GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Month Period
Ended March 31,
------------------------
In Thousands of Dollars 1996 1997
-------------------------------------------------------------------------------
OPERATING ACTIVITIES

Net income . . . . . . . . . . . . . . . . . . . . . $ 6,419 $ 19,298
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . 8,431 8,313
Non cash interest expense . . . . . . . . . . . . . 751 381
Non cash pension expense . . . . . . . . . . . . . 613 902
Provision for losses on accounts receivable . . . . 330 235
Benefit for deferred income taxes . . . . . . . . . (1,032) (4,042)
Loss on disposal of property, plant
and equipment . . . . . . . . . . . . . . . . . 145 172
Changes in operating assets and liabilities:
Increase in accounts receivable . . . . . . . . . (11,599) (28,047)
Increase in inventories . . . . . . . . . . . . . (15,961) (25,312)
Decrease in accounts payable and
accrued liabilities . . . . . . . . . . . . . . (4,656) (7,905)
Net (increase) decrease in other assets
and liabilities . . . . . . . . . . . . . . . . (4,430) 1,931
Increase in due to Holdings . . . . . . . . . . . 4,858 13,448
-------- --------

NET CASH USED FOR (16,131) (20,626)
OPERATING ACTIVITIES . . . . . . . . . . . . . . -------- --------

INVESTING ACTIVITIES
Additions to property, plant and equipment . . . . . (4,448) (5,752)
Proceeds from disposal of property, plant
and equipment . . . . . . . . . . . . . . . . . . . 16 252
Acquisitions . . . . . . . . . . . . . . . . . . . . (6,682) -
Other investments . . . . . . . . . . . . . . . . . - -
-------- ---------

NET CASH USED FOR INVESTING ACTIVITIES . . . . . . . (11,114) (5,500)
-------- --------

See Notes to Consolidated Financial Statements

ESSEX GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)

Three Month Period
Ended March 31,
------------------------
In Thousands of Dollars 1996 1997
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt . . . . . . . . . . . . 70,200 237,500
Repayment of long-term debt . . . . . . . . . . . . (49,252) (190,294)
Proceeds from notes payable to banks . . . . . . . . 117,115 115,158
Repayment of notes payable to banks . . . . . . . . (113,975) (138,941)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . 24,088 23,423
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . (3,157) (2,703)

Cash and cash equivalents at beginning of period . . 3,157 2,899
-------- --------

Cash and cash equivalents at end of period . . . . . $ - $ 196
======== ========

See Notes to Consolidated Financial Statements

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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

NOTE 1 ORGANIZATION AND RECENT DEVELOPMENT

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

On April 17, 1997, Essex International completed an Initial Public
Offering (the "Offering") of 5,750,000 shares of common stock, including
2,750,000 shares sold by existing shareholders. The net proceeds to Essex
International, after underwriting commissions and other associated
expenses, were $46,440 of which $29,497 was used to repay the senior
unsecured note agreement and the remaining proceeds were applied to the
revolving credit facility. In connection with the Offering, BCP/Essex
Holdings Inc.'s name was changed to Essex International Inc.

NOTE 2 BASIS OF PRESENTATION

The unaudited interim consolidated financial statements contain all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of the management of the Company, necessary to present fairly the
consolidated financial position of the Company as of March 31, 1997, and
the consolidated results of operations and cash flows of the Company for
the three month periods ended March 31, 1996 and 1997, respectively.
Results of operations for the periods presented are not necessarily
indicative of the results for the full fiscal year. These financial
statements should be read in conjunction with the audited consolidated
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for
the year ended December 31, 1996.

NOTE 3 INVENTORIES

The components of inventories are as follows:

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

Finished goods . . . . . . . . . . . . . $171,213 $197,287
Raw materials and work in process . . . . 56,840 65,223
-------- --------
228,053 262,510
LIFO reserve . . . . . . . . . . . . . . (10,410) (19,556)
-------- --------
$217,643 $242,954
======== ========

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

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

The Company values a major portion of its inventories at the lower of
cost or market based on a last-in, first-out ("LIFO") method. Principal
elements of cost included in the Company's inventories are copper,
purchased materials, direct labor and manufacturing overhead. Inventories
valued using the LIFO method amounted to $210,454 and $233,619 at December
31, 1996 and March 31, 1997, respectively.

An actual valuation of inventory under the LIFO method can be made only
at the end of each year based on the inventory levels and costs at that
time. Accordingly, interim LIFO calculations must necessarily be based on
management's estimates of expected year-end inventory levels and costs.
Because these are subject to many forces beyond management's control,
interim results are subject to the final year-end LIFO inventory
valuation.

NOTE 4 LONG-TERM DEBT

Long-term debt consists of the following:

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

10% Senior notes . . . . . . . . . . . $200,000 $200,000
Revolving loan . . . . . . . . . . . . 179,900 230,000
Term loan . . . . . . . . . . . . . . . 31,766 29,497
Lease obligation . . . . . . . . . . . 21,250 20,625
-------- --------
432,916 480,122
Less current portion . . . . . . . 11,576 11,576
-------- --------
$421,340 $468,546
======== ========

In connection with the Offering, the Company's revolving credit facility
was amended and restated. It continues to provide up to $370,000 in
revolving loans and maintains existing terms and conditions except that
revolving loans will bear floating rates of interest, at the Company's
option, at bank prime plus 0.50% or a reserve adjusted Eurodollar rate
("LIBOR") plus 1.50%. The prime based and LIBOR rates can be reduced by
.375% to .50% and .375% to 1.125%, respectively, if certain specified
financial conditions are achieved. In addition, the average commitment
fees during the revolving loan period have been reduced to 0.125% to
0.375% of the average unused portion of the available credit based upon
certain financial ratios.

ESSEX GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)

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

Through March 31, 1997, the Company fully complied with all of the
financial ratios and covenants under the agreements governing its
outstanding indebtedness.

NOTE 5 CONTINGENT LIABILITIES

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

Since approximately 1990, the Company has been named as a defendant in a
number of product liability lawsuits brought by electricians and other
skilled tradesmen claiming injury from exposure to asbestos found in
electrical wire products produced a number of years ago. At March 31,
1997, the number of cases filed against the Company was 95 involving
approximately 400 claims. The Company's strategy is to defend these cases
vigorously. The Company believes that its liability, if any, in these
matters and the related defense costs will not have a material adverse
effect either individually or in the aggregate upon its business or
financial condition, cash flows or results of operations. There can be no
assurance, however, that future developments will not alter this
conclusion.

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

Introduction

In October 1992, Essex International was acquired (the "Acquisition") by
Bessemer Holdings, L.P. ("BHLP") (an affiliate and successor in interest
to Bessemer Capital Partners, L.P.), affiliates of Goldman, Sachs, & Co.
(collectively "Goldman Sachs"), affiliates of Donaldson, Lufkin & Jenrette
Securities Corporation (collectively "DLJ"), Chase Equity Associates
("CEA"), and certain present and former employees of the Company.

On April 17, 1997, Essex International completed an Initial Public
Offering (the "Offering") of 5,750,000 shares of common stock, including
2,750,000 shares sold by existing shareholders. The net proceeds to
Essex International, after underwriting commissions and other associated
expenses, were $46.4 million of which $29.5 million was used to repay the
senior unsecured note agreement and the remaining proceeds were applied to
the revolving credit facility. In connection with the Offering, BCP/Essex
Holdings Inc.'s name was changed to Essex International Inc.

The Company, founded in 1930, is a leading developer, manufacturer and
marketer of electrical wire and cable products. Among the Company's
products are magnet wire for electromechanical devices such as motors,
transformers and electrical controls; building wire for residential and
commercial applications; copper voice and data communication wire;
automotive wire and specialty wiring assemblies for automobiles and trucks
and industrial wire for applications in appliances, construction and
recreational vehicles.

Results of Operations

Product Lines

The following table sets forth for the three month periods ended March
31, 1996 and 1997, respectively, the dollar amounts of sales for each of
the Company's major product lines:

Sales
---------------------------

1996 1997
------------- ------------
(In millions)

Building wire . . . . . . . . . . . . . . $ 92.2 $182.4
Magnet wire . . . . . . . . . . . . . . . 99.1 107.3
Communication wire . . . . . . . . . . . 44.2 38.6
Automotive wire . . . . . . . . . . . . . 23.7 21.8
Industrial wire . . . . . . . . . . . . . 15.1 30.0

Other (a) . . . . . . . . . . . . . . . . 34.1 30.7
-------- --------
Total . . . . . . . . . . . . . . . . . . $308.4 $410.8
======== ========

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

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

Three Month Period Ended March 31, 1997

Net sales for the first quarter 1997 were $410.8 million or 33.2% higher
than the comparable period in 1996, resulting primarily from improved
sales volumes, partially attributable to the October 1996 acquisition of
Triangle Wire and Cable, Inc. ("Triangle"), and improved product pricing,
partially offset by lower copper prices, the Company's principal raw
material. During the first quarter 1997, the average price of copper on
the New York Commodity Exchange, Inc. ("COMEX") was $1.11 versus $1.18 for
the comparable period in 1996, a 5.9% decline. Copper costs are generally
passed onto customers through product pricing. First quarter 1997 sales
volumes were at record levels and exceeded the first quarter 1996 by
35.4%. The Company's operating margin improved significantly during the
first quarter 1997 to 10.4% from the first quarter 1996 operating margin
of 7.0%. This improvement was due primarily to a marked improvement in
building wire product pricing.

Building wire sales for the first quarter 1997 increased as compared to
the first quarter 1996 due primarily to an increase in sales volumes,
product pricing (without regard to copper costs) and incremental sales
attributable to the Triangle acquisition, partially offset by a decline in
copper prices. Building wire market demand exhibited continued growth
during the first quarter 1997 on the strength of new non-residential
construction and sustained expansion of the replacement and upgrade
segment of the market; new housing starts were comparable to the first
quarter 1996. Building wire operating margins during the first quarter
1997 improved significantly over the comparable period in 1996 to the
above-mentioned strength of product demand.

Sales of magnet wire during the first quarter 1997 improved from the
comparable 1996 period due to improved sales volumes partially offset by
declining copper prices. Sales volume improvements were attributable to
increased demand for magnet wire in the transformer and electric motor
markets due, in part, to greater use of magnet wire for increased energy
efficiency and growth in the domestic economy. The additional sales
volume coupled with lower production costs, resulting from greater
manufacturing utilization, provided improved magnet wire operating margins
during the first quarter 1997 as compared to the first quarter 1996.

Communication wire sales for the first quarter 1997 were below the
comparable period in 1996 due to lower outside plant ("OSP") sales and
reduced copper prices, partially offset by increased sales of premise wire
products. First quarter 1997 premise wire sales were up 3.5% with volume
up 16.3% as compared to the same period in 1996, reflecting continued
growth in this segment of the communication wire market. Domestic OSP
sales were 17.3% lower than in 1996, reflecting, in part, the completion
in 1996 of supply contracts with certain regional Bell telephone cable
suppliers which were not repeated in 1997 and reduced copper prices.
First quarter 1997 communication wire operating margins declined from the
first quarter 1996 due to the completion of the above-noted OSP supply
contracts and competitive pricing pressures on high end premise wire.

Automotive wire sales in the first quarter 1997 were below those in the
comparable period in 1996 due primarily to reduced copper prices.
Automotive operating margins improved due to the reduction of overhead
expenses. The Company believes North American automotive and light truck
production for 1997 is expected to approximate 1996 levels.

Industrial wire sales in the first quarter 1997 were above those in the
comparable period in 1996 by nearly 195% due to an increase in sales
volume partially offset by the decline in copper prices. The increase in
sales volume was primarily due to incremental sales attributable to the
Triangle acquisition. Industrial wire operating margins for the first
quarter 1997 deteriorated from the comparable period in 1996 due to the
addition of certain Triangle selling and administrative costs which have
yet to be fully integrated within the combined operations.

Other sales in the first quarter 1997 decreased from the comparable
period in 1996. Distribution business unit sales of third party
manufactured products within the motor repair segment decreased primarily
due to weather conditions as the unusually mild winter of 1996
necessitated fewer repairs for motors, transformers and pumps in 1997.

Cost of goods sold for the first quarter 1997 was 27.9% higher than the
same period in 1996 due primarily to higher sales volumes partially offset
by lower copper prices. The Company's cost of goods sold as a percentage
of net sales was 83.9% and 80.6% in the first quarter 1996 and 1997,
respectively. The cost of goods sold percentage decrease resulted
primarily from the impact of improved building wire product pricing as
well as lower manufacturing costs attributable to continued capital
investments and higher manufacturing volumes.

Selling and administrative expenses for the first quarter 1997 were 31.2%
above the comparable 1996 period, due primarily to increased commission,
selling and warehouse expenses associated with the Triangle acquisition.
Selling and administrative expenses, as a percentage of sales, were 9.0%
in the first quarter of 1997, compared to 9.1% in the same period in 1996.

Interest expense in the first quarter 1997 was 9.4% higher than the same
period in 1996 due primarily to incremental borrowings under the Company's
revolving credit facility to finance the Triangle acquisition, partially
offset by reduced interest rates.

Income tax expense was 39.5% of pretax income in the first quarter 1997
compared with 43.8% for the same period in 1996 due to the increase in
pretax income lessening the impact of the amortization of excess cost over
net assets acquired which is not deductible for income tax purposes.

Liquidity, Capital Resources and Financial Condition

General

The Company's aggregate notes payable to banks and long-term debt at
March 31, 1997 was $487.3 million, and its stockholder's equity was $170.4
million. The resulting ratio of debt to stockholder's equity improved to
2.9 to 1 from 3.1 to 1 at December 31, 1996. As of March 31, 1997, the
Company was in compliance with all covenants under the agreements
governing its outstanding indebtedness. Liquidity and capital resources
continue to be adequate.

Credit Facilities and Lines of Credit

The Company maintains the following credit facilities: (i) a $370.0
million revolving credit agreement dated as of October 31, 1996, by and
among the Company, Essex International, the Lenders named therein, and The
Chase Manhattan Bank, as administrative agent (the "Revolving Credit

Agreement") which was amended and restated effective April 23, 1997 (the
"Restated Credit Agreement"); (ii) a $25.0 million agreement and lease,
dated as of April 12, 1995, by and between the Company and Mellon
Financial Services Corporation #3 (the "Sale and Leaseback Agreement");
(iii) a $12.0 million (Canadian dollar) credit agreement by and between a
subsidiary of the Company and the Bank of Montreal (the "Canadian Credit
Agreement"); and (iv) bank lines of credit with various lending banks
which provide for unsecured borrowings for working capital of up to $35.0
million.

The Restated Credit Agreement provides for up to $370.0 million in
revolving loans, subject to specified percentages of eligible assets and
reduced by outstanding borrowings under the Canadian Credit Agreement and
unsecured bank lines of credit ($5.4 million and $1.7 million, at March
31, 1997, respectively). The Restated Credit Agreement also provides a
$25.0 million letter of credit subfacility and terminates October 31,
2001. Outstanding borrowings bear floating rates of interest, at the
Company's option, at bank prime plus 0.50% or a reserve adjusted
Eurodollar rate ("LIBOR") plus 1.50%. The prime based and LIBOR rates can
be reduced by .375% to .50% and .375% to 1.125%, respectively, if certain
specified financial conditions are achieved. The average commitment fees
during the revolving loan period are between 0.125% to 0.375% of the
average daily unused portion of the available credit based upon certain
financial ratios. The average interest rate on borrowings under the
Revolving Credit Agreement during the first quarter of 1997 was 6.58%.
Indebtedness under the Restated Credit Agreement is guaranteed by Essex
International and all of the Company's subsidiaries, and is secured by a
pledge of the capital stock of the Company and its subsidiaries and by a
first lien on substantially all assets. The Company's ability to borrow
under the Restated Credit Agreement is restricted by the financial
covenants contained therein as well as certain debt limitation covenants
contained in the indenture under which the 10% Senior Notes due 2003 (the
"Senior Notes") were issued (the "Senior Note Indenture"). As of March
31, 1997, the Company had $82.0 million of undrawn capacity based upon the
borrowing base at the time of $319.1 million, reduced by outstanding
borrowings under: (i) the Revolving Credit Agreement ($230.0 million),
(ii) unsecured bank lines of credit ($1.7 million) and (iii) the Canadian
Credit Agreement ($5.4 million).

The Sale and Leaseback Agreement provided $25.0 million for the sale and
leaseback of certain of the Company's fixed assets. The lease obligation
has a seven-year term expiring in May 2002. The principal component of
the rental is paid quarterly, with the amount of each of the first 27
payments equal to 2.5% of lessor's cost of the equipment, and the balance
due at the final payment. The interest component is paid on the unpaid
principal balance and is calculated by lessor at LIBOR plus 2.5%. The
effective interest rate can be reduced by 0.25% to 1.125% if certain
specified financial conditions are achieved.

As of March 31, 1997, $5.4 million (U.S. dollars) was outstanding under
the Canadian Credit Agreement and denoted as notes payable to banks in the
Company's Consolidated Balance Sheets. Borrowings are restricted to
meeting the working capital requirements of the subsidiary and are secured
by the subsidiary's accounts receivable. The Canadian Credit Agreement
bears interest at rates similar to the Restated Credit Agreement and
terminates on May 30, 1997, although it may be extended for successive
one-year periods upon the mutual consent of the subsidiary and the lending
bank.

The Company had $1.7 million outstanding of unsecured bank lines of
credit as of March 31, 1997. Such amount is denoted in notes payable to
banks in the Company's Consolidated Balance Sheets. These lines of credit
bear interest at rates subject to agreement between the Company and the
lending banks. At March 31, 1997, such rates of interest averaged 7.3%.

The $29.5 million outstanding under the senior unsecured note agreement
as of April 23, 1997 was repaid in full with proceeds from the Offering.

Cash Flow and Working Capital

In general, the Company requires liquidity for working capital, capital
expenditures, debt repayments, interest and taxes. Of particular
significance to the Company are its working capital requirements which
increase whenever it experiences strong incremental demand in its business
or a significant rise in copper prices. Historically, the Company has
satisfied its liquidity requirements through a combination of funds
generated from operating activities together with funds available under
its credit facilities. Based upon historical experience and the
availability of funds under its credit facilities, the Company expects
that its usual sources of liquidity will be sufficient to enable it to
meet its cash requirements for working capital, capital expenditures, debt
repayments, interest and taxes for the reminder of 1997.

Operating Activities. Net cash used for operating activities in the
first quarter 1997 was $20.6 million, compared to $16.1 million in 1996.
The increase in cash requirements was primarily the result of higher
accounts receivable and inventory associated with the Company's growth in
building wire and magnet wire sales, partially offset by higher net
income.

Investing Activities. Capital expenditures of $5.8 million in the first
quarter 1997 were $1.3 million more than the comparable period in 1996.
Capital expenditures in 1997 are expected to be approximately 40% above
1996 and will be used for modernization projects to enhance efficiency, to
support the newly acquired Triangle facilities and equipment and to expand
capacity. At March 31, 1997, approximately $10.6 million was committed to
outside vendors for capital expenditures. The Restated Credit Agreement
imposes limitations on capital expenditures, business acquisitions and
investments.

Considerations Relating to Holding's Cash Obligations

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

Essex International expects that it may receive certain cash payments
from the Company from time to time to the extent cash is available and to
the extent it is permitted under the terms of the Restated Credit
Agreement and the Senior Note Indenture. Such payments may include (i) an
amount necessary under the tax sharing agreement between Essex
International and the Company to enable Essex International to pay the
Company's taxes as if computed on an unconsolidated basis; (ii) an annual
management fee to an affiliate of BHLP of up to $1.0 million;
(iii) amounts necessary to repurchase management stockholders' shares of
common stock under certain specified conditions; and (iv) certain other
amounts to meet ongoing expenses of Essex International (such amounts are
considered to be immaterial both individually and in the aggregate,
however, because Essex International has no operations, other than those
conducted through the Company, or employees thereof). To the extent Essex
International makes any such payments, it will do so out of operating cash
flow, borrowings under the Restated Credit Agreement or other sources of
funds it may obtain in the future subject to the terms of the Restated
Credit Agreement and the Senior Note Indenture.

Long-Term Liquidity Considerations

The Senior Notes mature in 2003 and are expected to be replaced by
similar financing at that time. The terms of the Sale and Leaseback
Agreement include a balloon payment of $8.1 million in 2002. The Company
expects that its traditional sources of liquidity will enable it to meet
its long-term cash requirements for working capital, capital expenditures,
interest and taxes, as well as its debt repayment obligations under the
Sale and Leaseback Agreement.

The Company's operations involve the use, disposal and cleanup of certain
substances regulated under environmental protection laws. The Company has
accrued $0.9 million for environmental remediation and restoration costs.
The accrual is based upon management's estimate of the Company's exposure
in light of relevant available information including the allocations and
remedies set forth in applicable consent decrees, third-party estimates of
remediation costs, the estimated ability of other potentially responsible
parties to pay their proportionate share of remediation costs, the nature
of each site and the number of participating parties. Subject to the
difficulty in estimating future environmental costs, the Company expects
that any sum it may have to pay in connection with environmental matters
in excess of the amounts recorded or disclosed, if any, will not have a
material adverse effect on its financial position, results of operations
or cash flows.

General Economic Conditions and Inflation

Although net sales are heavily influenced by the price of copper, the
Company's major raw material, the Company's profitability is generally not
significantly affected by changes in copper prices because the Company
generally has been able to pass on its cost of copper to its customers and
the Company attempts to match its copper purchases with its production
requirements, thereby minimizing copper cathode and rod inventories. In
the short term, however, pronounced changes in the price of copper may
tend to affect gross profits within the building wire product line because
such changes affect cost of goods sold more quickly than those changes can
be reflected in the pricing of building wire products.

The Company believes that it is only affected by inflation to the extent
that the economy in general is affected. Should inflationary pressures
drive costs higher, the Company believes that general industry price
increases would sustain operating results, although there can be no
assurance that this will be the case. In addition, the Company believes
that its sensitivity to downturns in its primary markets is less
significant than it might otherwise be due to its diverse customer base,
broad product line and its strategy of attempting to match its copper
purchases with its needs.

Information Regarding Forward Looking Statements

This report contains various forward-looking statements and information
that are based on management's belief as well as assumptions made by and
information currently available to management. Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations
will prove to have been correct. Such statements are subject to certain
risks, uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those expected. Among
the key factors that may have a direct bearing on the Company's operating
results are fluctuations in the economy, demand for the Company's
products, the impact of price competition and fluctuations in the price of
copper.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

27.1 Financial Data Schedule.

(b) Reports on Form 8-K:

No Reports on Form 8-K were filed by the Company during
the quarter ended March 31, 1997.

SIGNATURE

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.

ESSEX GROUP, INC.
(Registrant)

May 12, 1997 /s/ David A. Owen
---------------------------------
David A. Owen
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)