10-Q 1 c80993e10vq.txt FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 Commission File Number 1-12280 BELDEN INC. (Exact Name of Registrant as Specified in its Charter) DELAWARE 76-0412617 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 7701 FORSYTH BOULEVARD, SUITE 800 ST. LOUIS, MISSOURI 63105 (Address of Principal Executive Offices and Zip Code) (314) 854-8000 (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 requirement for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] Number of shares outstanding of the issuer's Common Stock, par value $.01 per share, as of November 12, 2003: 25,448,538 shares ================================================================================ Exhibit Index on Page 35 Page 1 of 36 -1- PART I FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS

~~----------------------------------------------------------------------------------------------------------~~SEPTEMBER ~~JUNE~~ 30, December 31, 2003 2002 ---------------------------------------------------------------------------------------------------------------- (in thousands) (UNAUDITED) ASSETS Current assets Cash and cash equivalents $ 4862,~~439~~130 $ 19,409 Receivables ~~115~~112,~~262~~287 109,180 Inventories ~~144~~130,~~937~~169 159,817 Income taxes receivable 38,~~175~~117 2,428 Deferred income taxes 1519,~~961~~258 15,097 Other current assets 5,~~168~~694 7,818 --------------------------------------------------------------------------------------------------------------- Total current assets ~~332~~337,~~942~~655 313,749 Property, plant and equipment, less accumulated depreciation ~~333~~327,~~268~~176 337,196 Goodwill and other intangibles, less accumulated amortization 80,~~453~~639 79,588 Other long-lived assets 86,~~852~~262 13,006 --------------------------------------------------------------------------------------------------------------- $ ~~755~~751,~~515~~732 $ 743,539 ~~---------------------------------------------------------------------------------------------------------~~=============================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ ~~122~~110,~~121~~705 $ 124,968 ~~Income~~Current ~~taxes~~maturities ~~payable~~of long-term debt 66,921 - --------------------------------------------------------------------------------------------------------------- Total current liabilities ~~122~~177,~~121~~626 124,968 Long-term debt ~~202~~136,~~921~~000 203,242 Postretirement benefits other than pensions 10,~~560~~292 10,732 Deferred income taxes 7277,~~906~~958 71,470 Other long-term liabilities 32,~~211~~970 25,932 Stockholders' equity Preferred stock - - Common stock 262 262 Additional paid-in capital 39,~~547~~488 40,917 Retained earnings ~~297~~296,~~320~~881 302,900 Accumulated other comprehensive loss (76,~~550~~359) (17,859) Unearned deferred compensation (2,~~516~~097) (2,014) Treasury stock (1211,~~267~~289) (17,011) --------------------------------------------------------------------------------------------------------------- Total stockholders' equity ~~314~~316,~~796~~886 307,195 --------------------------------------------------------------------------------------------------------------- $ ~~755~~751,~~515~~732 $ 743,539 ===============================================================================================================

See accompanying notes. -2- CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

Three Months Ended Nine Months Ended September 30, September 30, ---------------------------------------------------------------------------------------------------------------------- ~~Three~~2003 ~~Months~~2002 ~~Ended~~2003 ~~Six~~2002 ~~Months Ended June 30, June 30,~~ ---------------------------------------------------------------------------------------------------------------------- (in thousands, except per share data) ~~2003 2002 2003 2002~~ Revenues $ ~~214~~207,~~052~~568 $ ~~207~~199,~~689~~514 $ ~~410~~617,~~361~~929 $ ~~414~~614,~~764~~278 Cost of sales ~~184~~177,~~335~~539 ~~171~~165,~~144~~545 ~~353~~531,~~612~~151 ~~345~~511,~~746~~291 ------------------------------------------------------------------- --------------------------------------------------- Gross profit 2930,~~717~~029 3633,~~545~~969 5686,~~749~~778 69102,~~018~~987 Selling, general and administrative expenses 2627,~~826~~736 26,~~162~~712 5481,~~024~~760 5379,~~054~~766 Other operating expense ~~352~~- - 352 - ---------------------------------------------------------------------------------------------------------------------- Operating earnings 2,~~539~~293 107,~~383~~257 24,~~373~~666 1523,~~964~~221 Interest expense 3,~~174~~046 3,~~374~~324 69,~~388~~434 710,~~210~~534 ---------------------------------------------------------------------------------------------------------------------- Income/(loss) before taxes (~~635~~753) 73,~~009~~933 (4,~~015~~768) 812,~~754~~687 Income tax expense/(benefit) ~~118~~(1,586) 21,~~313~~171 (~~964~~2,550) 24,~~889~~060 ---------------------------------------------------------------------------------------------------------------------- Net income/(loss) $ ~~(753)~~833 $ 42,~~696~~762 $ (32,~~051~~218) $ 58,~~865~~627 ~~------------------------------------------------------------------------------------------------------------~~====================================================================================================================== Basic average shares outstanding 25,~~078~~334 24,~~753~~764 25,~~035~~135 24,~~730~~742 Basic earnings/(loss) per share $ (.03) $ .1911 $ (.1209) $ .2435 ~~------------------------------------------------------------------------------------------------------------~~====================================================================================================================== Diluted average shares outstanding 25,~~078~~611 2524,~~007~~837 25,~~035~~135 24,~~957~~942 Diluted earnings/(loss) per share $ (.03) $ .1911 $ (.1209) $ .2435 ~~------------------------------------------------------------------------------------------------------------~~====================================================================================================================== Dividends declared per share $ .05 $ .05 $ .1015 $ .1015 ~~------------------------------------------------------------------------------------------------------------~~======================================================================================================================

See accompanying notes. -3- CONSOLIDATED CASH FLOW STATEMENTS (UNAUDITED)

~~---------------------------------------------------------------------------------------------------------------------~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 -----------------------------------------------------------------------------------------------------------------~~----~~ (in thousands) Cash flows from operating activities Net income/(loss) $ (32,~~051~~218) $ 58,~~865~~627 Adjustments to reconcile net income/(loss) to net cash provided by operating activities Depreciation and amortization 1826,~~115~~865 1929,~~539~~356 Asset impairment charges ~~375~~352 - Retirement savings plan contributions 12,~~909~~811 - Stock compensation ~~902~~1,253 ~~538~~767 Changes in operating assets and liabilities (1) Receivables 23,~~697~~564 (63,~~502~~175) Inventories 1936,~~861~~242 (27,~~804)~~599 Accounts payable and accrued liabilities (823,~~763~~104) 146,~~908~~144 Current and deferred income taxes, net (~~216~~3,485) 1517,~~160~~797 Other assets and liabilities, net 916,~~235~~654 (~~4,812~~661) -----------------------------------------------------------------------------------------------------------------~~----~~ Net cash provided by operating activities 4158,~~064~~934 4166,~~892~~454 Cash flows from investing activities Capital expenditures (1113,~~147~~994) (1526,~~661~~493) Proceeds from disposal of long-lived assets 86159 97167 -----------------------------------------------------------------------------------------------------------------~~----~~ Net cash used for investing activities (1113,~~061~~835) (1526,~~564~~326) Cash flows from financing activities Net payments under long-term credit facility and credit agreements - (2630,~~723~~717) Proceeds from employee stock purchase plan settlement 61 - Proceeds from exercise of stock options -85 1,~~271~~198 Cash dividends paid (23,~~529~~801) (23,~~496~~742) -----------------------------------------------------------------------------------------------------------------~~----~~ Net cash used for financing activities (23,~~468~~655) (2733,~~948~~261) Effect of exchange rate changes on cash and cash equivalents 1,~~495~~277 ~~242~~(52) -----------------------------------------------------------------------------------------------------------------~~----~~ Increase in cash and cash equivalents 2942,~~030~~721 (16,~~378)~~815 Cash and cash equivalents, beginning of period 19,409 2,799 -----------------------------------------------------------------------------------------------------------------~~----~~ Cash and cash equivalents, end of period $ 4862,~~439~~130 $ 19,~~421~~614 ~~---------------------------------------------------------------------------------------------------------------------~~================================================================================================================= Supplemental cash flow information Income tax refunds received $ 10,~~873~~574 $ 1516,~~225~~437 Income taxes paid (1011,~~126~~926) (2,~~306~~750) Interest paid, net of amount capitalized (714,~~350~~645) (714,~~390~~696) ~~---------------------------------------------------------------------------------------------------------------------~~=================================================================================================================

See accompanying notes. (1) Net of the effects of exchange rate changes and acquired businesses. -4- STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002 (UNAUDITED)

~~-----------------------------------------------------------------------------------------------------------------------------------~~ Accumulated Unearned Other Common Paid-In Retained Treasury Deferred Comprehensive Stock Capital Earnings Stock Compensation Loss Total --------------------------------------------------------------------------------------------------------------------------------~~---~~ (in thousands) Balance at December 31, 2001 $ 262 $43,773 $323,671 $(25,603) $ (1,233) $ (26,625) $314,245 Net income 58,~~865~~627 58,~~865~~627 Foreign currency translation adjustments 1312,~~975~~449 1312,~~975~~449 Unrealized loss on derivative instruments 245 245 -------- Comprehensive income 2021,~~085~~321 Issuance of treasury stock Exercise of stock options (~~509~~593) 1,~~780~~791 1,~~271~~198 Stock compensation (~~507~~426) 2,~~465~~464 (1,~~958~~885) -153 Employee stock purchase plan (4451) (8981) (~~133~~132) Amortization of unearned deferred compensation ~~538~~767 ~~538~~767 Cash dividends ($.05 per share) (23,~~496~~742) (23,~~496~~742) --------------------------------------------------------------------------------------------------------------------------------~~---~~ Balance at ~~June~~September 30, 2002 $ 262 $42,~~713~~703 $~~327~~328,~~040~~556 $(21,~~447~~429) $ (2,~~653~~351) $ (1213,~~405~~931) $333,~~510~~810 ~~-----------------------------------------------------------------------------------------------------------------------------------~~================================================================================================================================ Balance at December 31, 2002 $ 262 $40,917 $302,900 $(17,011) $ (2,014) $ (17,859) $307,195 Net loss (32,~~051~~218) (32,~~051~~218) Foreign currency translation adjustments 1011,~~373~~564 1011,~~373~~564 Minimum pension liability adjustments (64) (64) -------- Comprehensive income 79,~~258~~282 Issuance of treasury stock Exercise of stock options (1) 86 85 Stock compensation (560) 1,~~964~~896 (1,~~255~~234) ~~149~~102 Employee stock purchase plan (17) 78 61 Retirement savings plan contributions (~~793~~851) 23,~~702~~662 12,~~909~~811 Amortization of unearned deferred compensation ~~753~~1,151 ~~753~~1,151 Cash dividends ($.05 per share) (23,~~529~~801) (23,~~529~~801) --------------------------------------------------------------------------------------------------------------------------------~~---~~ Balance at ~~June~~September 30, 2003 $ 262 $39,~~547~~488 $~~297~~296,~~320~~881 $(1211,~~267~~289) $ (2,~~516~~097) $ (76,~~550~~359) $~~314~~316,~~796~~886 ~~-----------------------------------------------------------------------------------------------------------------------------------~~================================================================================================================================

See accompanying notes. -5- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying Consolidated Financial Statements include Belden and all of its subsidiaries (the Company). All significant intercompany accounts and transactions are eliminated in consolidation. The financial information presented as of any date other than December 31, 2002 and December 31, 2001 has been prepared from the books and records without audit. The accompanying Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information or the Notes to Consolidated Financial Statements required by accounting principles generally accepted in the United States for complete statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such financial statements have been included. These Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2002. Use of Estimates in the Preparation of the Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the 2002 Consolidated Financial Statements in order to conform to the 2003 presentation. Acquisitions On October 31, 2002, the Company purchased certain assets and assumed certain liabilities of the NORCOM wire and cable business in Kingston, Ontario, Canada (NORCOM) from Cable Design Technologies Corporation for cash of $11.3 million. The purchase price is subject to adjustments for asset values as of the closing date, with additional contingency payments for up to three years which could total as much as $6.7 million depending mainly on the Company's achievement of future business levels. No goodwill was recorded with respect to this transaction. During 2003, the Company closed the Kingston facility and relocated production to other Company facilities. The Company recorded accrued severance and other plant closing costs incident to the purchase in 2002. The Company anticipates making substantially all payments against these accruals within one year of the acquisition date. NORCOM manufactured and marketed metallic cable products primarily for the Canadian and United States communications markets. Operating results for NORCOM have been included in the operating results for the Communications segment since the acquisition date and may affect comparability of the operating results between years. Stock-Based Compensation The Company has four stock compensation plans--the Belden Inc. 2003 Long-term Incentive Plan and the Belden Inc. 1994 Incentive Plan (together, the "Incentive Plans") as well as the Belden Inc. 2003 Employee Stock Purchase Plan and the Belden Inc. 1994 Employee Stock Purchase Plan (together, the "Stock Purchase Plans"). -6- Under the Incentive Plans, certain employees of the Company are eligible to receive awards in the form of stock options, stock appreciation rights, restricted stock grants and performance shares. The Company accounts for stock options using the intrinsic value method provided in Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employees. Accordingly, no compensation cost has been recognized for options granted under the Incentive Plans. The Company accounts for restricted stock grants under APB No. 25 as fixed-plan awards since both the aggregate number of awards issued and the aggregate amount to be paid by the participants for the common stock is known. Compensation related to the grants is measured as the difference between the market price of the Company's common stock at the grant date and the amount to be paid by the participants for the common stock. Under the Stock Purchase Plans, all full-time employees and part-time employees who work 20 or more hours per week in Canada, Germany, the Netherlands and the United States receive the right to purchase a specified amount of common stock at the lesser of 85% of the fair market value on the offering date or 85% of the fair market value on the exercise date. The Company accounts for these purchase rights using the intrinsic value method provided by APB No. 25. Accordingly, no compensation cost has been recognized for purchase rights granted under the Stock Purchase Plans. The Company adopted the disclosure rules under Statement of Financial Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation--Transition and Disclosure, effective December 2002. The effect on operating results of calculating the Company's stock-based employee compensation costs as if the fair value method had been applied to all stock awards is as follows:

~~-------------------------------------------------------------------------------------------------------------~~ Three Months Ended ~~Six~~Nine Months Ended ~~June~~September 30, ~~June~~September 30, ------------------------------------------------------------------------------------------------------------- 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------- (in thousands, except per share amounts) AS REPORTED Stock-based employee compensation cost, net of tax $ ~~343~~248 $ ~~156~~205 $ ~~573~~712 $ ~~311~~522 Net income/(loss) ~~(753)~~833 42,~~696~~762 (32,~~051~~218) 58,~~865~~627 Basic earnings/(loss) per share (.03) .1911 (.1209) .2435 Diluted earnings/(loss) per share (.03) .1911 (.1209) .2435 PRO FORMA Stock-based employee compensation cost, net of tax $ ~~616~~489 $ ~~711~~660 $ 1,~~425~~644 $ 12,~~391~~030 Net income/(loss) ~~(1,026)~~592 42,~~141~~307 (3,~~903~~150) 47,~~785~~119 Basic earning/(loss) per share (.~~04)~~02 .1709 (.1613) .1929 Diluted earnings/(loss) per share (.~~04)~~02 .1709 (.1613) .1929 ~~-------------------------------------------------------------------------------------------------------------~~=============================================================================================================

The fair value of common stock options outstanding under the Incentive Plans and the fair value of stock purchase rights outstanding under the Stock Purchase Plans were estimated at the date of grant using the Black-Scholes option-pricing model. -7- There were no stock options or stock purchase rights granted during the three-month periods ended September 30, 2003 and 2002. For the nine-month period ended September 30, 2003 and 2002, weighted average assumptions used to determine the fair values of the stock options and stock purchase rights granted during each period included the following:

~~-------------------------------------------------------------------------------------------------------------~~Nine ~~Three~~ Months Ended ~~Six~~September ~~Months Ended June~~ 30, ~~June 30,~~ --------------------------------------------------------------------------~~-----------------------------------~~ 2003 2002 ~~2003 2002~~ --------------------------------------------------------------------------~~-----------------------------------~~ Dividend yield ~~12.29% 5.87%~~ 10.71% 6.61% Expected volatility 41.~~71% 39.19% 41.~~86% 39.14% Expected life (in years) 7.00 7.00 ~~7.00 7.00~~ Risk free interest rate 3.~~55% 4.85% 3.~~40% 4.60% ~~-------------------------------------------------------------------------------------------------------------~~===========================================================================

For the nine-month periods ended September 30, 2003 and 2002, the weighted average per share fair value of options granted under the Incentive Plans and purchase rights granted under the Stock Purchase Plans during each period were as follows:

~~-------------------------------------------------------------------------------------------------------------~~Nine ~~Three~~ Months Ended ~~Six~~September ~~Months Ended June~~ 30, ~~June 30,~~ ------------------------------------------------------------------------~~-------------------------------------~~ 2003 2002 ~~2003 2002~~ ------------------------------------------------------------------------~~-------------------------------------~~ Incentive Plan $ ~~4.55 $~~ 5.~~66 $ 5.~~92 $ 4.46 Stock Purchase Plan - - ~~- - -------------------------------------------------------------------------------------------------------------~~========================================================================

The Black-Scholes option-pricing model was developed to estimate the fair value of market-traded options. Incentive stock options and stock purchase rights have certain characteristics, including vesting periods and non-transferability, which market-traded options do not possess. Due to the significant effect that changes in assumptions and differences in option and purchase right characteristics might have on the fair values of stock options and stock purchase rights, the models may not accurately reflect the fair values of the stock options and stock purchase rights. Shipping and Handling Costs In accordance with EITF 00-10, Accounting for Shipping and Handling Fees and Costs, the Company includes fees earned on the shipment of product to customers in revenues and includes costs incurred on the shipment of product to customers as cost of sales. Certain handling costs totaling $1.6 million and $2.0 million were included in selling, general and administrative expenses for the three-month periods ended September 30, 2003 and 2002, respectively. Certain handling costs totaling $4.8 million and $5.3 million were included in selling, general and administrative expenses for the nine-month periods ended September 30, 2003 and 2002, respectively. -8- NOTE 2: SHARE INFORMATION

~~--------------------------------------------------------------------------------------------~~ Common Stock Treasury Stock ------------------------------------------------------------------------------------------------ (number of shares in thousands) Balance at December 31, 2001 26,204 (1,443) Issuance/(return) of treasury stock Exercise of stock options - 69 Stock compensation - 9491 Employee stock purchase plan settlement - ~~(3)~~1 -------------------------------------------------------------------------------------------- Balance at ~~June~~September 30, 2002 26,204 (1,~~283~~282) ~~----------------------------------------------------------------------------------------~~============================================================================================ BALANCE AT DECEMBER 31, 2002 26,204 (1,091) ISSUANCE OF TREASURY STOCK EXERCISE OF STOCK OPTIONS - 5 STOCK COMPENSATION - ~~106~~103 EMPLOYEE STOCK PURCHASE PLAN SETTLEMENT - 4 RETIREMENT SAVINGS PLAN CONTRIBUTIONS - ~~148~~200 -------------------------------------------------------------------------------------------- BALANCE AT ~~JUNE~~SEPTEMBER 30, 2003 26,204 (~~833~~779) ~~----------------------------------------------------------------------------------------~~============================================================================================

NOTE 3: EARNINGS/(LOSS) PER SHARE

~~----------------------------------------------------------------------------------------------------------------------~~ Three Months Ended ~~Six~~Nine Months Ended ~~June~~September 30, ~~June~~September 30, ---------------------------------------------------------------------------------------------------------------~~-------~~ 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------------------~~-------~~ (in thousands, except per share amounts) Numerator Net income/(loss) $ ~~(753)~~833 $ 42,~~696~~762 $ (32,~~051~~218) $ 58,~~865~~627 ~~----------------------------------------------------------------------------------------------------------------------~~=============================================================================================================== Denominator Denominator for basic earnings/(loss) per share - adjusted weighted average shares 25,~~078~~334 24,~~753~~764 25,~~035~~135 24,~~730~~742 Effect of dilutive ~~employee~~common stock ~~options~~equivalents -277 ~~254~~73 - ~~227~~200 ---------------------------------------------------------------------------------------------------------------~~-------~~ Denominator for dilutive earnings/(loss) per share - adjusted weighted average shares 25,~~078~~611 2524,~~007~~837 25,~~035~~135 24,~~957~~942 ~~----------------------------------------------------------------------------------------------------------------------~~=============================================================================================================== Basic earnings/(loss) per share $ (.03) $ .1911 $ (.1209) $ .2435 ~~----------------------------------------------------------------------------------------------------------------------~~=============================================================================================================== Diluted earnings/(loss) per share $ (.03) $ .1911 $ (.1209) $ .2435 ~~----------------------------------------------------------------------------------------------------------------------~~===============================================================================================================

For the three-month periods ended September 30, 2003 and 2002, the Company did not include 1.3 million and 1.6 million outstanding common stock equivalents, respectively, because they were antidilutive. Due to the Company's net loss for the nine months ended September 30, 2003, it did not include any outstanding common stock equivalents in the fully diluted computation because they were antidilutive. For the nine months ended September 30, 2002, the Company did not include 0.9 million average outstanding common stock equivalents in the fully diluted computation because they were antidilutive. -9- NOTE 4: ACCUMULATED OTHER COMPREHENSIVE LOSS

~~--------------------------------------------------------------------------------------------------------------------~~ Foreign Unrealized Accumulated Currency Gain/(Loss) on Minimum ~~Pension~~ Other Translation Derivative ~~Liability~~Pension Comprehensive Adjustments Instruments Liability Loss ------------------------------------------------------------------------------------------------------~~--------------~~ (in thousands) Balance at December 31, 2001 $ (24,474) $ (245) $ (1,906) $ (26,625) Current Period Change 1312,~~975~~449 245 - ~~(14~~12,~~220)~~694 ----------- -----------------------------------------------------------------------------------------~~-------------~~ Balance at ~~June~~September 30, 2002 $ (1012,~~499~~025) $ - $ (1,906) $ (1213,~~405~~931) ----------- -----------------------------------------------------------------------------------------~~-------------~~ BALANCE AT DECEMBER 31, 2002 $ (3,117) $ - $ (14,742) $ (17,859) CURRENT PERIOD CHANGE 1011,~~373~~564 - (64) 1011,~~309~~500 ----------- -----------------------------------------------------------------------------------------~~-------------~~ BALANCE AT ~~JUNE~~SEPTEMBER 30, 2003 $ 78,~~256~~447 $ - $ (14,806) $ (76,~~550~~359) ====================================================================================================~~==============~~

Minimum pension liability at September 30, 2003 and 2002 is presented net of deferred taxes in the amount of $9.5 million and $1.2 million, respectively. NOTE 5: INVENTORIES

SEPTEMBER 30, December 31, 2003 2002 -------------------------------------------------------------------------------- ~~JUNE 30, December 31, 2003 2002~~ --------------------~~------------------------------------------------------------~~ (in thousands) Raw materials $ 21,~~359~~106 $ 22,988 Work-in-process 1817,~~262~~657 21,673 Finished goods ~~118~~107,~~994~~180 134,375 Perishable tooling and supplies 4,~~487~~254 4,887 -------------------------------------------------------------------------------------------------- Gross inventories ~~163~~150,~~102~~197 183,923 Excess of current standard costs over LIFO costs (56,~~626~~320) (5,596) Obsolescence and other reserves (1213,~~539~~708) (18,510) -------------------------------------------------------------------------------------------------- Net inventories $ ~~144~~130,~~937~~169 $ 159,817 ==================================================================================================

Inventories are stated at the lower of cost (last-in, first-out and first-in, first-out methods) or market. Costs include direct material, direct labor and applicable production overhead costs. NOTE 6: ACCRUED SEVERANCE AND OTHER RELATED BENEFITS Acquisition-Related Severance and Other Related Benefits On December 31, 2002, the Company accrued severance and other related benefits costs of $11.3 million associated with the announced manufacturing facility closing in Canada in connection with the NORCOM acquisition. These costs were recognized as a liability assumed in the purchase and included in the allocation of the cost to acquire NORCOM in accordance with Emerging Issues Task Force Abstract (EITF) No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination. 197 employees were eligible for severance payments. The Company anticipates making substantially all severance payments against this accrual within one year of the accrual date. -10- Facility Consolidation Severance and Other Related Benefits On December 31, 2002, the Company recorded severance and other related benefits costs in the amount of $8.3 million related to the announced manufacturing facility closings in Germany and Australia as operating expense ($5.9 million in cost of sales and $2.4 million in selling, general and administrative expenses) in accordance with EITF No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). During the second quarter of 2003, the Company recorded additional severance and other related benefits costs in the amount of $2.5 million related to the manufacturing facility closings in Germany and Australia as operating expense ($1.9 million in cost of sales and $0.6 million in selling, general and administrative expenses). 259 employees were eligible for severance payments, subject to finalization of negotiations under collective bargaining agreements. The Company anticipates making substantially all severance payments against these accruals within one year of each accrual date. Other Severance and Other Related Benefits In the third quarter of 2003, the Company recorded severance and other related benefits costs in the amount of $1.9 million related to involuntary personnel reductions within the Electronics segment in the United States, Canada and the Netherlands as operating expense ($0.9 million in cost of sales and $1.0 million in selling, general and administrative expenses) in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. 108 employees were notified, prior to September 30, 2003, of their pending termination as well as the amount of severance and other related benefits they should expect to receive. In the third quarter of 2003, the Company recorded severance and other related benefits costs in the amount of $0.5 million related to voluntary personnel reductions within the Electronics segment in the United States as operating expense ($0.1 million in cost of sales and $0.4 million in selling, general and administrative expenses) in accordance with SFAS No. 88, Employers' Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and for Termination Benefits. Eight employees were offered and accepted voluntary termination packages prior to September 30, 2003. The Company anticipates making substantially all severance payments against these accruals within one year of each accrual date. The following table sets forth termination activity that occurred during the three months ended September 30, 2003:

Acquisition- Total Number Related Facility Other Total of Employees Severance Consolidation Severance Severance Eligible for and Other Severance and and Other and Other Severance and Related Other Related Related Related Other Related Benefits Benefits Benefits Benefits Benefits -----------------------------------------------------------------------------------------------------------------------~~---~~ ~~Acquisition~~(in ~~Facility~~thousands, ~~Total~~except ~~Number~~number of ~~Related~~employees) ~~Consolidation~~Balance ~~Employees~~at ~~Eligible~~June ~~Severance~~30, ~~and~~2003 ~~Severance~~$ ~~and~~3,673 ~~Total~~$ ~~Severance~~8,136 ~~for~~$ ~~Serverance~~- ~~and~~$ ~~Other~~11,809 ~~Related~~229 ~~Other~~Cash ~~Related~~payments/terminations ~~and~~(2,256) ~~Other~~(3,680) ~~Other~~(135) ~~Related~~(6,071) ~~Benefits~~(94) ~~Benefits~~Foreign ~~Related~~currency ~~Benefits~~translation ~~Benefits~~(51) (26) 12 (65) - Charges/other adjustments - (60) 2,445 2,385 104 ------------------------------------------------------------------------------------------------------------------------- ~~(in thousands, except number of employees)~~ Balance at ~~March~~September 3130, 2003 $ 81,~~420~~366 $ 84,~~146~~370 $ ~~16,566 403 Cash payments/terminations (~~2,~~645)~~322 ~~(2,769)~~$ (58,~~414)~~058 ~~(181)~~239 ~~Foreign currency translation 625 307 932~~ - ~~Charges/other adjustments (2,727) 2,452 (275) 7~~ ----------------------------------------------------------------------------------------------------------------------~~----- Balance at June 30, 2003 $ 3,673 $ 8,136 $ 11,809 229 ===========================================================================================================================~~

-11- The following table sets forth termination activity that occurred during the nine months ended September 30, 2003:

Acquisition- Total Number Related Facility Other Total of Employees Severance Consolidation Severance Severance Eligible for and Other Severance and and Other and Other Severance and Related Other Related Related Related Other Related Benefits Benefits Benefits Benefits Benefits -----------------------------------------------------------------------------------------------------------------------~~---~~ ~~Acquisition~~(in ~~Facility~~thousands, ~~Total~~except ~~Number~~number of ~~Related~~employees) ~~Consolidation~~Balance ~~Employees~~at ~~Eligible~~December ~~Severance~~31, ~~and~~2002 ~~Severance~~$ ~~and~~11,317 ~~Total~~$ ~~Severance~~8,344 ~~for~~$ ~~Serverance~~- ~~and~~$ ~~Other~~19,661 ~~Related~~430 ~~Other~~Cash ~~Related~~payments/terminations ~~and~~(8,242) ~~Other~~(6,902) ~~Other~~(135) ~~Related~~(15,279) ~~Benefits~~(340) ~~Benefits~~Foreign ~~Related~~currency ~~Benefits~~translation ~~Benefits~~1,143 536 12 1,691 - Charges/other adjustments (2,852) 2,392 2,445 1,985 149 -----------------------------------------------------------------------------------------------------------------------~~---~~ ~~(in thousands, except number of employees)~~ Balance at ~~December~~September 3130, ~~2002~~2003 $ 111,~~317~~366 $ 84,~~344~~370 $ 192,~~661~~322 ~~430~~$ ~~Cash payments/terminations (5~~8,~~986)~~058 ~~(3,222)~~239 ~~(9,208) (246) Foreign currency translation 1,194 562 1,756~~ - ~~Charges/other adjustments (2,852) 2,452 (400) 45~~ ----------------------------------------------------------------------------------------------------------------------~~----- Balance at June 30, 2003 $ 3,673 $ 8,136 $ 11,809 229 ===========================================================================================================================~~

Charges/other adjustments for acquisition-related severance and other related benefits reflects the reduction of charges originally accrued as of the acquisition date due to unanticipated early retirements of identified employees. In accordance with SFAS No. 141, Business Combinations, the original purchase price allocation for the NORCOM acquisition was revised, resulting in a like reduction in property, plant and equipment. Charges/other adjustments for facility consolidation severance and other related benefits reflects additional charges recognized during the second quarter of 2003 related to the completed and planned manufacturing facility closures in Australia and Germany, respectively. Charges/other adjustments for other severance and other related benefits reflects charges recognized during the third quarter of 2003 related to Electronics segment personnel reductions in the United States, Canada and the Netherlands. NOTE 7: LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS Credit Agreement The Company entered into a credit agreement with a group of 6 banks on October 9, 2003 ("Credit Agreement"). The Credit Agreement provides for a secured, variable-rate and revolving credit facility not to exceed $75 million expiring in June 2006. In general, the Company's assets in the United States, other than real property, secure any borrowing under the Credit Agreement. The amount of any such borrowing is subject to a borrowing base comprised of the Company's receivables and inventories located in the United States. A fixed charge coverage ratio covenant becomes applicable if the Company's excess borrowing availability falls below $25.0 million. The Company's borrowing capacity under the Credit Agreement as of October 9, 2003 was $62.8 million. The Company does not anticipate a need during the year ending December 31, 2003 for funds available under the Credit Agreement to meet its capital expenditure, dividend and working capital requirements. Short-Term Borrowings At September 30, 2003, the Company had unsecured, uncommitted arrangements with 4 banks under which it could borrow up to $28.5 million at prevailing interest rates. There were no outstanding borrowings under these arrangements at September 30, 2003. -12- Interest Rate Management The Company manages its debt portfolio by using interest rate swap agreements to achieve an overall desired position of fixed and floating rates. At September 30, 2003, the Company was party to interest rate swap agreements relating to 7.60% medium-term notes that mature in 2004. The swaps convert a notional amount of $64.0 million from fixed rates to floating rates and mature in 2004. These arrangements have been designated and qualify as fair value hedges of the associated medium-term notes in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Based on current interest rates for similar transactions, the fair value of the Company's interest rate swap agreements at September 30, 2003 was $2.9 million. Credit and market risk exposures on these agreements are limited to the net interest differentials. Net interest differentials earned from the interest rate swaps of $0.5 million pretax, or $0.01 per diluted share, and $1.4 million pretax, or $0.03 per diluted share, were recorded as reductions to interest expense for the three- and nine-month periods ended September 30, 2003. Net interest differentials earned from the interest rate swaps reduced the Company's average interest rate on long-term debt by 0.72 and 0.80 percentage points for the three- and nine-month periods ended September 30, 2003. The Company is exposed to credit loss in the event of nonperformance by counterparties on the agreements, but does not anticipate nonperformance by any of the counterparties. NOTE 8: INCOME TAXES The net tax benefit of $2.6 million for the nine months ended September 30, 2003 resulted from a net loss before taxes of $4.8 million. Earnings from foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for United States federal and state income taxes has been made for these earnings. Upon distribution of foreign subsidiary earnings, the Company may be subject to United States income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. The difference between the effective rate reflected in the provision for income taxes on income before taxes and the amounts determined by applying the applicable statutory United States tax rate for the nine months ended September 30, 2003 are analyzed below:

~~-----------------------------------------------------------------------------~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 Amount Rate ---------------------------------------------------------------------------------------- (in thousands, except rate data) ~~Provision~~Benefit at statutory rate $ (1,~~405~~669) 35.0 % State income taxes (~~275~~346) 67.8 3% ~~Lower~~Higher foreign tax rates and other, ~~716~~net (~~17.8~~535) 11.2% ---------------------------------------------------------------------------------------- Total tax benefit $ (~~964~~2,550) 2453.0 5% ----------------------------------------------------------------------------------------

The Company's effective nine-month tax rate increased to 53.5% through the quarter ended September 30, 2003 from an effective annual tax rate of 32.0% through the quarter ended September 30, 2002. The net tax rate increase was due to a mix shift in pretax income toward taxing jurisdictions with comparatively higher tax rates and the relative benefit of permanent deductions to the nine-month pretax loss for 2003 as compared to the nine-month pretax income for 2002 partially offset by a valuation allowance of $1.2 million against foreign net operating loss carryforwards in 2003. NOTE 9: CONTINGENT LIABILITIES General Various claims are asserted against the Company in the ordinary course of business including those pertaining to income tax examinations and product liability, customer, vendor and patent matters. Based on facts currently available, management believes that the disposition of the claims that are pending or asserted will not have a materially adverse effect on the financial position of the Company. -13- Severance and Other Related Benefits The Company is currently negotiating the sale of part of its business in Germany to a management-led buyout group. If the buyout does not occur, the Company would recognize and pay severance and other related benefits costs of approximately $2.8 million for an additional group of German employees. Even if the buyout does occur, the Company will retain liability for severance and other related benefits in the event the buyout group terminates transferred employees within three years of the buyout date. The severance and other related benefits amounts are reduced based upon the duration of employment with the buyout group. Intercompany Guarantees An intercompany guarantee is a contingent commitment issued by either Belden Inc. or one of its subsidiaries to guarantee the performance of either Belden Inc. or one of its subsidiaries to a third party in a borrowing arrangement or similar transaction. The terms of these intercompany guarantees are equal to the terms of the related borrowing arrangements or similar transactions and range from 1 year to 12 years. The only intercompany guarantees outstanding at September 30, 2003 are the guarantees executed by Belden Wire & Cable Company and Belden Communications Company related to the $200.0 million indebtedness of Belden Inc. under various medium-term note purchase agreements and the guaranty executed by Belden Inc. related to $6.9 million of potential indebtedness under an overdraft line of credit between Belden Wire & Cable B.V. and its local cash management bank. The maximum potential amount of future payments Belden Inc. or its subsidiaries could be required to make under these intercompany guarantees at September 30, 2003 is $206.9 million. In accordance with the scope exceptions provided by FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, the Company has not measured and recorded the carrying values of these guarantees in its Consolidated Financial Statements. The Company also does not hold collateral to support these guarantees. NOTE 10: BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION The Company conducts its operations through two business segments -- the Electronics segment and the Communications segment. The Electronics segment designs, manufactures and markets metallic and fiber optic wire and cable products with industrial, networking, entertainment/OEM and communications applications. These products are sold primarily through distributors. The Communications segment designs, manufactures and markets metallic cable products primarily with communications and networking applications. These products are sold through distribution or to local exchange carriers (LECs) either directly or through value-added resellers designated by the LECs. The Company evaluates segment performance and allocates resources based on operating earnings before interest and income taxes. Operating earnings of the two principal segments include all the ongoing costs of operations. Allocations to or from these business segments are not significant. With the exception of certain unallocated tax assets, substantially all the business assets are utilized by the business segments. Amounts reflected in the column entitled "Other" in the tables below represent corporate headquarters operating, treasury and income tax expenses and the elimination of intersegment revenues and cost of sales. BUSINESS SEGMENT INFORMATION

THREE MONTHS ENDED SEPTEMBER 30, 2003 ELECTRONICS COMMUNICATIONS OTHER CONSOLIDATED --------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) EXTERNAL CUSTOMER REVENUES $ 137,527 $ 70,041 $ - ~~THREE~~$ ~~MONTHS~~207,568 ~~ENDED~~AFFILIATE ~~JUNE~~REVENUES 30135 802 (937) - OPERATING EARNINGS/(LOSS) 7,835 ~~2003~~(3,094) ~~ELECTRONICS~~(2,448) ~~COMMUNICATIONS~~2,293 ~~OTHER~~TOTAL ~~CONSOLIDATED~~ASSETS 383,588 307,239 60,905 751,732 ---------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) EXTERNAL CUSTOMER REVENUES $ 137,721 $ 76,331 $ - $214,052 AFFILIATE REVENUES 4,736 502 (5,238) - OPERATING EARNINGS/(LOSS) 7,121 (1,520) (3,062) 2,539 TOTAL ASSETS 424,895 290,467 40,153 755,515 =============================================================================================================

-14-

Three Months Ended September 30, 2002 Electronics Communications Other Consolidated --------------------------------------------------------------------------------------------------------------- ~~Three~~(in ~~Months~~thousands) ~~Ended~~External ~~June~~customer 30revenues $ 142,085 ~~2002~~$ ~~Electronics~~57,429 ~~Communications~~$ ~~Other~~- ~~Consolidated~~$ 199,514 Affiliate revenues 2,159 397 (2,556) - Operating earnings/(loss) 10,549 (606) (2,686) 7,257 Total assets 432,966 283,562 12,374 728,902 -------------------------------------------------------------------------------------------------------------- ~~(in thousands) External customer revenues $ 145,406 $ 62,283 $~~ - $207,689 Affiliate revenues 3,354 280 (3,634) - Operating earnings/(loss) 14,918 (1,773) (2,762) 10,383 Total assets 441,181 288,555 3,407 733,143 =============================================================================================================

~~---------------------------------------------------------------------------------------------------------------~~NINE ~~SIX~~ MONTHS ENDED ~~JUNE~~SEPTEMBER 30, ~~2002~~2003 ELECTRONICS COMMUNICATIONS OTHER CONSOLIDATED --------------------------------------------------------------------------------------------------------------- (IN THOUSANDS) EXTERNAL CUSTOMER REVENUES $ ~~274~~412,~~760~~287 $ ~~135~~205,~~601~~642 $ - $~~410~~ 617,~~361~~929 AFFILIATE REVENUES 6,~~860~~995 ~~981~~1,783 (78,~~841~~778) - OPERATING EARNINGS/(LOSS) 1421,~~097~~932 (58,~~849~~943) (58,~~875~~323) 24,~~373~~666 ---------------------------------------------------------------------------------------------------------------

~~---------------------------------------------------------------------------------------------------------------~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2002 Electronics Communications Other Consolidated --------------------------------------------------------------------------------------------------------------- (in thousands) External customer revenues $ ~~282,~~424,509 $ ~~132~~189,~~340~~769 $ - $~~414~~ 614,~~764~~278 Affiliate revenues 57,~~689~~848 ~~950~~1,347 (69,~~639~~195) - Operating earnings/(loss) 2132,~~736~~285 (~~102~~708) (58,~~670~~356) 1523,~~964~~221 ---------------------------------------------------------------------------------------------------------------

GEOGRAPHIC INFORMATION

~~--------------------------------------------------------------------------------------------------------------~~ Three Months Ended ~~June~~September 30, 2003 2002 ---------------------------------------------------------------------------------------------------------~~-----~~ PERCENT OF Percent of REVENUES REVENUES Revenues Revenues ---------------------------------------------------------------------------------------------------------~~-----~~ (in thousands, except % data) United States $~~128~~125,~~237~~690 60.5% $~~133~~129,~~722~~673 6465.0% Canada 2119,~~285~~142 109.2% 1113,~~347~~480 6.8% United Kingdom 1920,~~262~~627 9.9% 2119,~~731~~665 109.9% Continental Europe 2623,~~370~~979 1211.6% 2220,~~955~~115 1110.1% Rest of World 18,~~898~~130 98.8% 1716,~~934~~581 98.2% ---------------------------------------------------------------------------------------------------------- Total $~~214~~207,~~052~~568 100.0% $~~207~~199,~~689~~514 100.0% ----------------------------------------------------------------------------------------------------------

~~--------------------------------------------------------------------------------------------------------------~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 ---------------------------------------------------------------------------------------------------------~~-----~~ PERCENT OF Percent of REVENUES REVENUES Revenues Revenues ---------------------------------------------------------------------------------------------------------~~-----~~ (in thousands, except % data) United States $~~238~~363,~~102~~792 58.9% $~~264~~395,~~298~~361 64.4% Canada 4362,~~117~~259 1110.1% 2337,~~730~~210 6.1% United Kingdom 3859,~~847~~474 9.6% 4362,~~017~~683 10.2% Continental Europe 5377,~~440~~420 1312.5% 4766,~~078~~487 1110.8% Rest of World 3654,~~855~~984 8.9% 3652,~~641~~537 98.5% ---------------------------------------------------------------------------------------------------------- Total $~~410~~617,~~361~~929 100.0% $~~414~~614,~~764~~278 100.0% ----------------------------------------------------------------------------------------------------------

-15- ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis, as well as the accompanying Consolidated Financial Statements and related footnotes, will aid in the understanding of the Company's results of operations as well as its financial position, cash flows, indebtedness and other key financial information. Certain reclassifications have been made to the 2002 financial information in order to conform to the 2003 presentation. The following discussion may contain forward-looking statements. In connection therewith, please see the cautionary statements contained herein under the caption "Forward-Looking Statements", which identify important factors that could cause actual results to differ materially from those in forward-looking statements. CONSOLIDATED OPERATING RESULTS The following table sets forth information comparing consolidated operating results for the three- and nine-month periods ended September 30, 2003 with the three- and nine-month periods ended September 30, 2002.

~~---------------------------------------------------------------------------------------~~ Three Months Ended ~~Six~~Nine Months Ended ~~June~~September 30, ~~June~~September 30, -------------------------------------------------------------------------------------------- 2003 2002 2003 2002 -------------------------------------------------------------------------------------------- (In thousands) Revenues $ ~~214~~207,~~052~~568 $ ~~207~~199,~~689~~514 $ ~~410~~617,~~361~~929 $~~414~~ 614,~~764~~278 Gross profit 2930,~~717~~029 3633,~~545~~969 5686,~~749~~778 69102,~~018~~987 Operating earnings 2,~~539~~293 107,~~383~~257 24,~~373~~666 1523,~~964~~221 Interest expense 3,~~174~~046 3,~~374~~324 69,~~388~~434 710,~~210~~534 Income/(loss) before taxes (~~635~~753) 73,~~009~~933 (4,~~015~~768) 812,~~754~~687 Net income/(loss) ~~(753)~~833 42,~~696~~762 (32,~~051~~218) 58,~~865~~627 ~~=======================================================================================~~--------------------------------------------------------------------------------------------

BUSINESS SEGMENTS The Company conducts its operations through two business segments -- the Electronics segment and the Communications segment. The Electronics segment designs, manufactures and markets metallic and fiber optic wire and cable products with industrial, networking, entertainment/OEM and communications applications. These products are sold chiefly through distribution. The Communications segment designs, manufactures, and markets metallic cable products primarily with communications and networking applications. These products are sold through distribution or to local exchange carriers (LECs) either directly or through value-added resellers (VARs) designated by the LECs. The following table sets forth information comparing the Electronics segment operating results for the three- and nine-month periods ended September 30, 2003 with the three- and nine-month periods ended September 30, 2002.

~~-------------------------------------------------------------------------------------------------------~~ Three Months Ended ~~Six~~Nine Months Ended ~~June~~September 30, ~~June~~September 30, ---------------------------------------------------------------------------------------------------~~----~~ 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------~~----~~ (In thousands, except % data) External customer revenues $ 137,~~721~~527 $ ~~145~~142,~~406~~085 $ ~~274~~412,~~760~~287 $ ~~282,~~424,509 Affiliate revenues ~~4,736~~135 32,~~354~~159 6,~~860~~995 57,~~689~~848 Operating earnings 7,~~121~~835 1410,~~918~~549 1421,~~097~~932 2132,~~736~~285 As a percent of external customer revenues 5.27% 107.34% 5.13% 7.76% ~~=======================================================================================================~~---------------------------------------------------------------------------------------------------

-16- The following table sets forth information comparing the Communications segment operating results for the three- and nine-month periods ended September 30, 2003 with the three- and nine-month periods ended September 30, 2002.

~~---------------------------------------------------------------------------------------------------------------~~ Three Months Ended ~~Six~~Nine Months Ended ~~June~~September 30, ~~June~~September 30, ---------------------------------------------------------------------------------------------------~~------------~~ 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------~~------------~~ (In thousands, except % data) External customer revenues $ 7670,~~331~~041 $ 6257,~~283~~429 $ ~~135~~205,~~601~~642 $ ~~132~~189,~~340~~769 Affiliate revenues ~~502~~802 ~~280~~397 ~~981~~1,783 ~~950~~1,347 Operating ~~earnings/(~~loss) (13,~~520~~094) (~~1,773~~606) (58,~~849~~943) (~~102~~708) As a percent of external customer revenues (24.04)% (21.81)% (4.3)% (0.14)% ---------------------------------------------------------------------------------------------------~~------------~~

ACQUISITIONS On October 31, 2002, the Company purchased certain assets and assumed certain liabilities of the NORCOM wire and cable business in Kingston, Ontario, Canada (NORCOM) from Cable Design Technologies Corporation for cash of $11.3 million. The purchase price is subject to adjustments for asset values as of the closing date, with additional contingency payments for up to three years which could total as much as $6.7 million depending mainly on the Company's achievement of future business levels. No goodwill was recorded with respect to this transaction. During 2003, the Company closed the Kingston facility and relocated production to other Company facilities. The Company recorded accrued severance and other plant closing costs incident to the purchase in 2002. The Company anticipates making substantially all payments against these accruals within one year of the acquisition date. NORCOM manufactured and marketed metallic cable products primarily for the Canadian and United States communications markets. Operating results for NORCOM have been included in the operating results for the Communications segment since the acquisition date and may affect comparability of the operating results between years. RESULTS OF OPERATIONS -- THREE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2002 REVENUES Revenues increased 4.0% to $207.6 million in the three months ended September 30, 2003 from $199.5 million in the three months ended September 30, 2002 due to favorable currency translation on international revenues and the inclusion of revenues generated by NORCOM, acquired in the fourth quarter of 2002, partially offset by reduced sales volume and decreased selling prices. Favorable foreign currency translation on international revenues contributed 3.1 percentage points of revenue increase. The euro, British pound, Canadian dollar and Australian dollar appreciated in relation to the United States dollar from average exchange values of $0.98, $1.55, $0.64 and $0.55, respectively, in the third quarter of 2002 to $1.13, $1.61, $0.73 and $0.66, respectively, in the third quarter of 2003. Revenues generated by NORCOM during the third quarter of 2003 in the amount of $7.9 million contributed 3.9 percentage points of revenue increase. The Company acquired NORCOM in the fourth quarter of 2002. Decreased unit sales partially offset the positive impact that currency translation and NORCOM had on revenues by 2.8 percentage points. The Company experienced volume decreases in its sales of products with networking, industrial and entertainment/OEM applications due primarily to unfavorable economic conditions in the United States, Europe and parts of Asia. These decreases were partially offset by a volume increase in sales of products with communications applications. Decreased product pricing partially offset the positive impact that currency translation and NORCOM had on revenues by 0.2 percentage points. This decrease resulted primarily from sales price reductions implemented on certain products with communications and networking applications partially offset by sales price increases implemented on certain products with industrial and entertainment/OEM applications. -17- Revenues in the United States, representing 60.5% of the Company's total revenues generated during the three months ended September 30, 2003, declined by 3.1% compared with revenues generated during the same period in 2002. This decline was attributed to a shortfall in sales of Electronics segment products that was partially offset by improvement in Communications segment product sales. United States revenues generated from the sale of Electronics segment products during the third quarter of 2003 declined by 7.1% compared with revenues generated during the third quarter of 2002. Revenues generated in the United States from the sale of Communications segment products during the three months ended September 30, 2003 increased by 5.2% compared with the same period in 2002. Revenues in Canada represented 9.2% of the Company's total revenues for the quarter ended September 30, 2003. Canadian revenues for the third quarter of 2003 increased by 42.0% compared with revenues for the third quarter of 2002 due primarily to revenues generated by NORCOM and the impact of favorable currency translation partially offset by lower local currency revenues generated on the sale of products with industrial applications. Local currency revenues generated by NORCOM contributed 58.2 percentage points of revenue increase. The impact of favorable currency translation contributed 9.3 percentage points of revenue increase. Lower local currency revenues generated on the sale of products with industrial applications partially offset the positive impact that currency translation and NORCOM had on total Canadian revenues by 25.5 percentage points. Revenues in the United Kingdom, representing 9.9% of the Company's total revenues generated during the third quarter of 2003, increased by 4.9% compared with revenues generated during the same period in 2002. Absent the impact of favorable currency translation, revenues generated for the third quarter of 2003 increased by 1.4% compared with revenues generated for the same period in 2002. This increase occurred due to improved demand for Communications segment products partially offset by a shortfall in demand for Electronics segment products. Revenues in Continental Europe represented 11.6% of the Company's total revenues for the quarter ended September 30, 2003. Continental European revenues generated during the third quarter of 2003 increased by 19.2% compared with revenues generated during the same period in 2002. Absent the impact that favorable currency translation had on the revenue comparison, Continental European revenues generated during the third quarter of 2003 increased by 0.9% compared with revenues generated during the same period of 2002. Revenues from the rest of the world, representing 8.8% of the Company's total revenues generated during the three months ended September 30, 2003, increased by 9.3% from the same period in 2002. The increase represented favorable currency translation and stronger demand in the Asia/Pacific and Africa/Middle East markets partially offset by lower demand in Latin America. -18- COSTS, EXPENSES AND EARNINGS The following table sets forth information comparing the components of earnings/(loss) for the three months ended September 30, 2003 with the three months ended September 30, 2002.

~~--------------------------------------------------------------------------------------------------~~ Percent Decrease 2003 Compared Three Months Ended ~~June~~September 30, 2003 2002 With 2002 -------------------------------------------------------------------------------------------------- (in thousands, except % data) Gross profit $ 2930,~~717~~029 $ 3633,~~545~~969 (1811.76)% As a percent of revenues 1314.95% 17.60% Operating earnings $ 2,~~539~~293 $ 107,~~383~~257 (7568.54)% As a percent of revenues 1.21% 53.06% Income/(loss) before taxes $ (~~635~~753) $ 73,~~009~~933 (~~109~~119.1)% As a percent of revenues (0.34)% 32.40% Net income~~/(loss)~~ $ ~~(753)~~833 $ 42,~~696~~762 (~~116~~69.08)% As a percent of revenues (0.4)% 21.34% -------------------------------------------------------------------------------------------------

Gross profit decreased 11.6% to $30.0 million in the three months ended September 30, 2003 from $34.0 million in the three months ended September 30, 2002 due primarily to lower sales volume, higher product costs resulting from rising copper and petroleum-based commodities prices, the impact of sales price reductions taken on certain products with communications applications, severance and other benefits costs of $1.0 million recognized in the current quarter related to personnel reductions within the Electronics segment and a $0.5 million favorable settlement from class action litigation regarding the pricing of copper futures recognized in the third quarter of 2002. Also contributing to the unfavorable gross profit comparison was the impact of the Company's inventory reduction initiative. By limiting production to reduce inventory levels, the Company absorbed less of its fixed costs; thus, unabsorbed costs, or unfavorable production variances, had a negative impact on gross profit. These negative factors were partially offset by the current-quarter impact of material, labor and overhead cost reduction initiatives and severance and other benefits costs of $0.6 million recognized in the third quarter of 2002 related to personnel reductions within the Electronics segment. Gross profit as a percent of revenues declined by 2.5 percentage points from the prior year due to the previously mentioned items and the Company's unfavorable leveraging of fixed costs over a lower revenue base. Operating earnings decreased 68.4% to $2.3 million for the three months ended September 30, 2003 from $7.3 million for the three months ended September 30, 2002 due primarily to lower gross profit. Also contributing to the negative operating earnings comparison was an increase in selling, general and administrative expenses to $27.7 million in the third quarter of 2003 from $26.7 million for the third quarter of 2002 due primarily to the NORCOM acquisition in the fourth quarter of 2002, the unfavorable impact of currency translation, severance and other benefits costs of $1.4 million recognized in the current quarter related to personnel reductions within the Electronics segment and bad debt expense of $0.6 million recognized in the current quarter related to the failure of a distribution customer in Asia. These negative factors were partially offset by bad debt expense of $1.3 million and severance and other benefits costs of $0.1 million recognized in the third quarter of 2002. Selling, general and administrative expenses as a percentage of revenues were unchanged at 13.4% in both the third quarter of 2003 and the third quarter of 2002. Operating earnings as a percent of revenues declined by 2.5 percentage points from the prior year due to the previously mentioned items and the Company's unfavorable leveraging of fixed costs over a lower revenue base. -19- Income/(loss) before taxes decreased 119.1% to a loss before taxes of $0.8 million in the three months ended September 30, 2003 from income before taxes of $3.9 million in the three months ended September 30, 2002 due mainly to lower operating earnings. The lower operating earnings were partially offset by decreased interest expense. Interest expense decreased 8.4% to $3.0 million in the third quarter of 2003 from $3.3 million in the third quarter of 2002 due to lower average borrowings and marginally lower interest rates. Average debt outstanding during the third quarters of 2003 and 2002 was $200.0 million and $205.0 million, respectively. The Company's average interest rate was 6.56% in the third quarter of 2003 and 6.64% in the third quarter of 2002. The Company's effective nine-month tax rate increased to 53.5% through the quarter ended September 30, 2003 from an effective annual tax rate of 32.0% through the quarter ended September 30, 2002. The net tax rate increase was due to a mix shift in pretax income toward taxing jurisdictions with comparatively higher tax rates and the relative benefit of permanent deductions to the nine-month pretax loss for 2003 as compared to the nine-month pretax income for 2002 partially offset by a valuation allowance of $1.2 million against foreign net operating loss carryforwards in 2003. Net income decreased 69.8% to $0.8 million in the three months ended September 30, 2003 from $2.8 million in the three months ended September 30, 2002 due mainly to lower income/(loss) before taxes partially offset by the tax benefit recognized during the current quarter. Electronics Segment Revenues generated from sales to external customers decreased 3.2% to $137.5 million for the quarter ended September 30, 2003 from $142.1 million for the quarter ended September 30, 2002. The segment experienced lower sales volume on products with networking, industrial, entertainment/OEM and communications applications due to the unfavorable manufacturing economies in the United States, Europe and parts of Asia. The impact of price increases taken on certain products with industrial and entertainment/OEM applications partially offset the negative impact that volume had on the revenue comparison. The impact of these price increases was partially offset by price reductions taken on certain products with communications and networking applications. Favorable currency translation on international revenues also partially offset the negative impact that volume had on the revenue comparison. Operating earnings decreased 25.7% to $7.8 million for the quarter ended September 30, 2003 from $10.5 million for the quarter ended September 30, 2002 due mainly to lower sales volumes, the impact of sales price reductions taken on certain products with communications and networking applications, increased unabsorbed production costs resulting from actions taken by the segment to reduce inventory levels, severance and other benefits costs of $2.4 million recognized in the current quarter related to personnel reductions within the segment, bad debt expense of $0.6 million recognized in the current quarter related to the failure of a distribution customer in Asia and a $0.3 million favorable settlement from class action litigation regarding the pricing of copper futures recognized in the third quarter of 2002. The negative effect these factors had on operating earnings was partially offset by the current-quarter impact of cost reduction initiatives related to certain material, labor, manufacturing overhead and selling, general and administrative expenditures, the impact of sales price increases taken on certain products with industrial and entertainment/OEM applications, severance and other benefits costs of $0.7 million recognized during the third quarter of 2002, bad debt expense of $1.0 million recognized during the third quarter of 2002 and $1.6 million in unabsorbed production costs recognized during the third quarter of 2002 of the Company's Ft. Mill, South Carolina manufacturing facility which was transferred from this segment to the Communications segment effective July 1, 2003. As a percent of revenues from external customers, operating earnings decreased to 5.7% in the third quarter of 2003 from 7.4% in the third quarter of 2002 due to the previously mentioned items. -20- Communications Segment The Communications segment recorded revenues generated on sales to external customers of $70.0 million for the quarter ended September 30, 2003, a 22.0% increase from revenues of $57.4 million for the quarter ended September 30, 2002. The revenue increase was due principally to improved distribution sales, favorable currency translation on international revenues and the inclusion of revenues in the amount of $7.9 million generated by NORCOM during the third quarter of 2003. The Company acquired NORCOM in the fourth quarter of 2002. The positive impact that improved distribution sales, currency translation and NORCOM had on the revenue comparison was partially offset by capital spending reductions by the major communications companies and the impact of price reductions taken on certain products with communications applications. Operating loss increased to $3.1 million for the quarter ended September 30, 2003 from $0.6 million for the quarter ended September 30, 2002 due primarily to the impact of price reductions take on certain products with communications applications, increased unabsorbed production costs resulting from actions taken by the segment to reduce inventory levels, higher product costs resulting from rising copper and petroleum-based commodities prices, a $0.2 million favorable settlement from class action litigation regarding the pricing of copper futures recognized in the third quarter of 2002 and increased production, selling, general and administrative costs and expenses due to the acquisition of NORCOM in the fourth quarter of 2002 and the transfer of the Company's Ft. Mill, South Carolina manufacturing facility from the Electronics segment to this segment effective July 1, 2003. The negative impact these factors had on the operating loss comparison was partially offset by increased revenues, the current-quarter impact of cost reduction initiatives related to certain material, labor, manufacturing overhead and selling, general and administrative expenditures and bad debt expense of $0.1 million recognized in the third quarter of 2002. Operating loss as a percent of revenues from external customers increased to (4.4)% in the quarter ended September 30, 2003 from (1.1)% in the same period of 2002 due to the previously mentioned items as well as a shift in demand toward less profitable, lower pair-count cable and a greater percentage of distribution business which is currently less profitable. The Communications segment also incurred manufacturing inefficiencies due to the large swing in customer demand. RESULTS OF OPERATIONS -- NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2002 REVENUES Revenues increased 0.6% to $617.9 million in the nine months ended September 30, 2003 from $614.3 million in the nine months ended September 30, 2002 due to favorable currency translation on international revenues and the inclusion of revenues generated by NORCOM, acquired in the fourth quarter of 2002, partially offset by reduced sales volume and decreased selling prices. Favorable foreign currency translation on international revenues contributed 4.1 percentage points of revenue increase. The euro, British pound, Canadian dollar and Australian dollar appreciated in relation to the United States dollar from average exchange values of $0.93, $1.48, $0.64 and $0.54, respectively, in the first nine months of 2002 to $1.11, $1.61, $0.70 and $0.63, respectively, in the first nine months of 2003. The inclusion of revenues in the amount of $24.7 million generated by NORCOM also contributed 4.1 percentage points of revenue increase. Decreased unit sales partially offset the positive impact that currency translation and NORCOM had on revenues by 7.0 percentage points. The Company experienced volume decreases in its sales of products with communications, networking, industrial and entertainment/OEM applications due primarily to unfavorable economic conditions in the United States, Europe and parts of Asia as well as capital spending reductions by the major communications companies. Decreased product pricing partially offset the positive impact that currency translation and NORCOM had on revenues by 0.6 percentage points. This decrease resulted primarily from sales price reductions implemented on certain products with communications and networking applications partially offset by sales price increases implemented on certain products with industrial and entertainment/OEM applications. -21- Revenues in the United States, representing 58.9% of the Company's total revenues generated during the nine months ended September 30, 2003, declined by 8.0% compared with revenues generated during the same period in 2002. This decline was attributed to a shortfall in sales of both Electronics segment and Communications segment products. United States revenues generated from the sale of Electronics segment products during the first nine months of 2003 declined by 9.1% compared with revenues generated during the first nine months of 2002. Revenues generated in the United States from the sale of Communications segment products during the nine months ended September 30, 2003 declined by 6.7% compared with the same period in 2002. Revenues in Canada represented 10.1% of the Company's total revenues for the nine-month period ended September 30, 2003. Canadian revenues for the first nine months of 2003 increased by 67.3% compared with revenues for the first nine months of 2002 due primarily to revenues generated by NORCOM and the impact of favorable currency translation partially offset by decreased demand for products with industrial applications. Local currency revenues generated by NORCOM contributed 64.7 percentage points to the revenue increase. The impact of favorable currency translation contributed 8.3 percentage points of the revenue increase. Decreased local currency revenues generated on sales of products with industrial applications partially offset the favorable impact that NORCOM and currency translation had on the revenue comparison by 5.7 percentage points. Revenues in the United Kingdom, representing 9.6% of the Company's total revenues generated during the first nine months of 2003, decreased by 5.1% compared with revenues generated during the same period in 2002. Absent the impact of favorable currency translation, revenues generated for the first nine months of 2003 declined by 11.5% compared with revenues generated for the same period in 2002. This decline occurred due to a shortfall in revenues generated on the sale of Electronics segment products partially offset by increased revenues generated on the sale of Communications segment products. Revenues in Continental Europe represented 12.5% of the Company's total revenues for the nine-month period ended September 30, 2003. Continental European revenues generated during the first nine months of 2003 increased by 16.4% compared with revenues generated during the same period in 2002. Absent the impact that favorable currency translation had on the revenue comparison, Continental European revenues generated during the first nine months of 2003 decreased by 6.8% compared with revenues generated during the same period of 2002. This decline occurred primarily due to a shortfall in demand for Electronics segment products. Revenues from the rest of the world, representing 8.9% of the Company's total revenues generated during the nine months ended September 30, 2003, increased by 4.7% from the same period in 2002. The increase represented favorable currency translation and stronger demand in the Africa/Middle East markets partially offset by lower demand in both Latin America and the Asia/Pacific markets. -22- COSTS, EXPENSES AND EARNINGS The following table sets forth information comparing the components of earnings/(loss) for the nine months ended September 30, 2003 with the nine months ended September 30, 2002.

~~--------------------------------------------------------------------------------------------------~~ Percent Decrease 2003 Compared ~~Six~~Nine Months Ended ~~June~~September 30, 2003 2002 With 2002 -------------------------------------------------------------------------------------------------- (in thousands, except % data) Gross profit $ 5686,~~749~~778 $ 69102,~~018~~987 (1715.87)% As a percent of revenues 1314.80% 16.68% Operating earnings $ 24,~~373~~666 $ 1523,~~964~~221 (8579.19)% As a percent of revenues 0.68% 3.8% Income/(loss) before taxes $ (4,~~015~~768) $ 812,~~754~~687 (~~145~~137.96)% As a percent of revenues (1.0.8)% 2.1% Net income/(loss) $ (32,~~051~~218) $ 58,~~865~~627 (~~152~~125.07)% As a percent of revenues (0.74)% 1.4% -------------------------------------------------------------------------------------------------

Gross profit decreased 15.7% to $86.8 million in the nine months ended September 30, 2003 from $103.0 million in the nine months ended September 30, 2002 due primarily to lower sales volume, higher product costs resulting from rising copper and petroleum-based commodities prices, the impact of sales price reductions taken on certain products with communications and networking applications, severance and related benefits costs of $2.2 million recognized in the second quarter of 2003 related to the manufacturing facility closings in Australia and Germany, severance and related benefits costs of $1.0 million recognized in the third quarter of 2003 resulting from personnel reductions within the Electronics segment and an aggregate nonrecurring $2.0 million favorable settlement from class action litigation regarding the pricing of copper futures recognized in the first and third quarters of 2002. Also contributing to the unfavorable gross profit comparison was the impact of the Company's inventory reduction initiative. By limiting production to reduce inventory levels, the Company absorbed less of its fixed costs; thus, unabsorbed costs, or unfavorable production variances, had a negative impact on gross profit. These negative factors were partially offset by the current-year impact of material, labor and overhead cost reduction initiatives as well as severance costs totaling $2.7 million related to personnel reductions within the Electronics segment recognized in the first and third quarters of 2002. Gross profit as a percent of revenues declined by 2.8 percentage points from the prior year due to the previously mentioned items. -23- Operating earnings decreased 79.9% to $4.7 million for the nine months ended September 30, 2003 from $23.2 million for the nine months ended September 30, 2002 due primarily to lower gross profit and additional asset impairment costs of $0.4 million recognized in the second quarter of 2003 related to the planned manufacturing facility closing in Germany. Also contributing to the negative operating earnings comparison was an increase in selling, general and administrative expenses to $81.8 million for the first nine months of 2003 from $79.8 million for the first nine months of 2002 due primarily to the NORCOM acquisition in the fourth quarter of 2002, the unfavorable impact of currency translation, severance and other related benefits costs of $0.3 million recognized in the second quarter of 2003 related to the manufacturing facility closings in Australia and Germany, severance and other related benefits costs of $1.4 million recognized in the third quarter of 2003 related to personnel reductions within the Electronics segment and bad debt expense of $0.6 million recognized in the third quarter of 2003 related to the failure of a distribution customer in Asia. This unfavorable performance was somewhat mitigated by severance costs totaling $1.3 million recognized in the first and third quarters of 2002 related to personnel reductions within the Electronics segment and bad debt expense totaling $1.9 recognized in the second and third quarters of 2002. Selling, general and administrative expenses increased to 13.2% of revenues in the first nine months of 2003 from 13.0% of revenues in the first nine months of 2002. Operating earnings as a percent of revenues declined by 3.0 percentage points from the prior year due to the previously mentioned items. Income/(loss) before taxes decreased 137.6% to a loss before taxes of $4.8 million in the nine months ended September 30, 2003 from income before taxes of $12.7 million in the nine months ended September 30, 2002 due mainly to lower operating earnings. The lower operating earnings were partially offset by decreased interest expense. Interest expense decreased 10.4% to $9.4 million in the first nine months of 2003 from $10.5 million in the first nine months of 2002 due to lower average borrowings and marginally lower interest rates. Average debt outstanding during the first nine months of 2003 and 2002 was $200.1 million and $216.0 million, respectively. The Company's average interest rate was 6.66% in the first nine months of 2003 and 6.75% in the first nine months of 2002. The Company's effective nine-month tax rate increased to 53.5% through the quarter ended September 30, 2003 from an effective annual tax rate of 32.0% through the quarter ended September 30, 2002. The net tax rate increase was due to a mix shift in pretax income toward taxing jurisdictions with comparatively higher tax rates and the relative benefit of permanent deductions to the nine-month pretax loss for 2003 as compared to the nine-month pretax income for 2002 partially offset by a valuation allowance of $1.2 million against foreign net operating loss carryforwards in 2003. Net income/(loss) decreased 125.7% to a net loss of $2.2 million in the nine months ended September 30, 2003 from net income of $8.6 million in the nine months ended September 30, 2002 due mainly to lower income/(loss) before taxes partially offset by the tax benefit recognized during the first nine months of 2003. Electronics Segment Revenues generated from sales to external customers decreased 2.9% to $412.3 million for the nine-month period ended September 30, 2003 from $424.5 million for the nine-month period ended September 30, 2002. The segment experienced lower sales volume on products with networking, industrial, entertainment/OEM and communications applications due to the unfavorable manufacturing economies in the United States, Europe and parts of Asia. The impact of price reductions taken on certain products with networking and communications applications also had a negative impact on the revenue comparison. The impact of these price reductions was partially offset by price increases taken on certain products with industrial and entertainment/OEM applications. Favorable currency translation on international revenues partially offset the negative impact that volume and pricing had on the revenue comparison. -24- Operating earnings decreased 32.1% to $21.9 million for the nine months ended September 30, 2003 from $32.3 million for the same period in 2002 due mainly to lower sales volumes, the impact of sales price reductions taken on certain products, increased unabsorbed production costs resulting from actions taken by the segment to reduce inventory levels, severance and other related benefit costs of $2.5 million and additional asset impairment costs of $0.4 million recognized in the second quarter of 2003 related to the manufacturing facility closings in Australia and Germany, severance and other related benefit costs of $2.4 million recognized in the third quarter of 2003 related to personnel reductions within the segment, bad debt expense of $0.6 million recognized in the third quarter of 2003 related to the failure of a distribution customer in Asia and an aggregate nonrecurring $0.7 million favorable settlement from class action litigation regarding the pricing of copper futures recognized during the first and third quarters of 2002. These negative factors were partially offset by the current-year impact of cost reduction initiatives related to certain material, labor, manufacturing overhead and selling, general and administrative expenditures, severance and other benefits costs totaling $4.0 million related to personnel reductions recognized during the first and third quarters of 2002 and bad debt expense totaling $1.3 million recognized during the second and third quarters of 2002 and $1.6 million in unabsorbed production costs recognized during the nine months ended September 30, 2002 of the Company's Ft. Mill, South Carolina manufacturing facility which was transferred from this segment to the Communications segment effective July 1, 2003. As a percent of revenues from external customers, operating earnings decreased to 5.3% in the first nine months of 2003 from 7.6% in the first nine months of 2002 due to the previously mentioned items and the segment's inability to leverage its fixed costs over a lower revenue base. Communications Segment The Communications segment recorded revenues generated on sales to external customers of $205.6 million for the nine months ended September 30, 2003, an 8.4% increase from revenues of $189.8 million generated for the nine months ended September 30, 2002. The revenue increase was due principally to favorable currency translation on international revenues, the inclusion of revenues in the amount of $24.7 million generated by NORCOM during the first nine months of 2003 and increased sales of products with communications applications to distribution customers. The positive impact of currency translation, NORCOM and increased distribution sales had on the revenue comparison was partially offset by capital spending reductions by the major communications companies. Operating loss increased to $8.9 million for the nine months ended September 30, 2003 from $0.7 million for the nine-month period ended September 30, 2002 due primarily to lower sales volume, higher product costs resulting from rising copper and petroleum-based commodities prices, increased unabsorbed production costs resulting from actions taken to reduce inventory levels, an aggregate nonrecurring $1.3 million favorable settlement from class action litigation regarding the pricing of copper futures recognized in the first and third quarters of 2002 and increased production, selling, general and administrative costs and expenses due to the acquisition of NORCOM in the fourth quarter of 2002 and the transfer of the Company's Ft. Mill, South Carolina manufacturing facility from the Electronics segment to this segment effective July 1, 2003. These negative factors were partially offset by the current-year impact of cost reduction initiatives related to certain material, labor, manufacturing overhead and selling, general and administrative expenditures and bad debt expense totaling $0.5 million recognized in the second and third quarters of 2002. Operating loss as a percent of revenues from external customers increased to (4.3)% in the nine months ended September 30, 2003 from (0.4)% in the same period of 2002 due to the previously mentioned items as well as a shift in demand toward less profitable, lower pair-count cable and a greater percentage of distribution business which is currently less profitable. The Communications segment also incurred manufacturing inefficiencies due to the large swing in customer demand. FINANCIAL CONDITION Liquidity and Capital Resources The Company's sources of cash liquidity include cash and cash equivalents, cash from operations and amounts available under uncommitted borrowing arrangements. The Company believes that these sources are sufficient to fund the current requirements for working capital, capital expenditures, dividends, and other financial commitments. -25- The following table summarizes the Company's cash flows from operating, investing and financing activities as reflected in the Consolidated Cash Flow Statements. SUMMARIZED CASH FLOW STATEMENTS

~~==================================================================================================~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 ---------------------------------------------------------------------------------------------~~-----~~ (in thousands) Net cash provided by (used in) Operating activities $ 4158,~~064~~934 $ 4166,~~892~~454 Investing activities (1113,~~061~~835) (1526,~~564~~326) Financing activities (23,~~468~~655) (2733,~~948~~261) Effect of exchange rate changes on cash and cash equivalents 1,~~495~~277 ~~242~~(52) ---------------------------------------------------------------------------------------------~~-----~~ Increase ~~(decrease)~~ in cash and cash equivalents $ 2942,~~030~~721 $ (16,~~378)~~815 ---------------------------------------------------------------------------------------------~~-----~~

NET CASH PROVIDED BY OPERATING ACTIVITIES

~~==================================================================================================~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 ---------------------------------------------------------------------------------------------~~-----~~ (in thousands) Net income/(loss) $ (32,~~051~~218) $ 58,~~865~~627 Depreciation and amortization 1826,~~115~~865 1929,~~539~~356 Asset impairment charges ~~375~~352 - Retirement ~~plan~~ savings plan contributions 12,~~909~~811 - Stock compensation ~~902~~1,253 ~~538~~767 Decrease/(increase) in current and deferred income taxes, net (3,485) 17,797 Decrease in other operating assets and liabilities, net 2233,~~814~~356 159,~~950~~907 ---------------------------------------------------------------------------------------------~~-----~~ Net cash provided by operating activities $ 4158,~~064~~934 $ 4166,~~892~~454 ~~==================================================================================================~~---------------------------------------------------------------------------------------------

Net cash provided by operating activities in the first nine months of 2003 totaled $58.9 million and included a $29.9 million net decrease in operating assets and liabilities. This net decrease in operating assets and liabilities resulted primarily from decreased inventories, receivables and other net operating assets and liabilities partially offset by decreased accounts payable and accrued liabilities and increased income taxes receivable. In 2003, the Company elected to fund certain contributions to one of its savings plans with common stock held in treasury rather than with cash. Net cash provided by operating activities in the first nine months of 2002 totaled $66.5 million and included a $27.7 million net decrease in operating assets and liabilities. This net decrease in operating assets and liabilities resulted from increased accounts payable and accrued liabilities, decreased inventories and receipt of income tax refunds partially offset by increased receivables. NET CASH USED IN INVESTING ACTIVITIES

~~=========================================================================~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 --------------------------------------------------------------------------------------------- (in thousands) Capital expenditures $(1113,~~147~~994) $(1526,~~661~~493) Proceeds from disposal of long-lived assets 86159 97167 --------------------------------------------------------------------------------------------- Net cash used in investing activities $(1113,~~061~~835) $(1526,~~564~~326) ~~=========================================================================~~---------------------------------------------------------------------------------------------

-26- CAPITAL EXPENDITURES

~~=========================================================================~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 --------------------------------------------------------------------------------------------- (in thousands) Capacity modernization and enhancement $ 911,~~461~~889 $ 1120,~~545~~057 Capacity expansion ~~241~~332 12,~~520~~064 Other 1,~~445~~773 24,~~596~~372 --------------------------------------------------------------------------------------------- $ 1113,~~147~~994 $ 1526,~~661~~493 ~~=========================================================================~~---------------------------------------------------------------------------------------------

Capital expenditures during the nine months ended September 30, 2003 and 2002 represented 2.3% and 4.3%, respectively, of revenues for the same periods. Investment during both the first nine months of 2003 and 2002 was utilized principally for maintaining and enhancing existing production capabilities. NET CASH USED IN FINANCING ACTIVITIES

~~=========================================================================================~~Nine ~~Six~~ Months Ended ~~June~~September 30, 2003 2002 --------------------------------------------------------------------------------------------- (in thousands) Net payments under long-term credit facility and credit agreements $ - $(2630,~~723~~717) Proceeds from the exercise of stock options -85 1,~~271~~198 Proceeds from employee stock purchase plan settlement 61 - Cash dividends paid (23,~~529~~801) (23,~~496~~742) --------------------------------------------------------------------------------------------- Net cash used in financing activities $ (23,~~468~~655) $(2733,~~948~~261) ~~=========================================================================================~~---------------------------------------------------------------------------------------------

During the nine months ended September 30, 2003, dividends of $0.15 per share were paid to shareholders. During the nine months ended September 30, 2002, the Company repaid $30.7 million of debt. The repayments were funded primarily by cash flow from operations, which included $13.0 million from federal income tax refunds. Dividends of $0.15 per share were paid to shareholders for the same period. Working Capital The following table summarizes the Company's working capital position at September 30, 2003 and December 31, 2002.

~~=======================================================================================~~SEPTEMBER ~~JUNE~~ 30, December 31, 2003 2002 ------------------------------------------------------------------------------------------------------ (in thousands, except current ratio) Current assets Cash and cash equivalents $ 4862,~~439~~130 $ 19,409 Receivables ~~115~~112,~~262~~287 109,180 Inventories ~~144~~130,~~937~~169 159,817 Income taxes receivable 38,~~175~~117 2,428 Deferred income taxes 1519,~~961~~258 15,097 Other current assets 5,~~168~~694 7,818 ------------------------------------------------------------------------------------------------------ Total current assets $~~332~~ 337,~~942~~655 $ 313,749 ------------------------------------------------------------------------------------------------------ Total current assets less cash and cash equivalents $~~284~~ 275,~~503~~525 $ 294,340 Current liabilities Accounts payable and accrued liabilities $~~122~~ 110,~~121~~705 $ 124,968 ~~Income~~Current ~~taxes~~maturities ~~payable~~of long-term debt 66,921 - ------------------------------------------------------------------------------------------------------ Total current liabilities $~~122~~ 177,~~121~~626 $ 124,968 ------------------------------------------------------------------------------------------------------ Working capital(1) $~~162~~ 97,~~382~~899 $ 169,372 Current ratio(2) 21.3355 2.36 ~~=======================================================================================~~------------------------------------------------------------------------------------------------------

(1) Total current assets less cash and cash equivalents and total current liabilities (2) Total current assets less cash and cash equivalents divided by total current liabilities -27- \ Current assets less cash and cash equivalents decreased $18.8 million, or 6.4%, from $294.3 million at December 31, 2002 to $275.5 million at September 30, 2003. Receivables increased $3.1 million during the nine months ended September 30, 2003, despite the receipt of $12.5 million in minimum requirements contract compensation in January 2003, due to the impact of currency translation on receivables denominated in currencies other than the United States dollar and the payment of annual sales incentive rebates to customers during the first quarter of 2003 that were originally reported as an allowance against receivables. Inventories decreased $29.6 million due to the impact of focused inventory reduction initiatives in both segments partially offset by the impact of currency translation. Income taxes receivable increased $5.7 million due to the Company's loss before income taxes for the nine months ended September 30, 2003. Other current assets decreased $2.1 million due to the amortization of prepaid insurance and other prepaid costs and the sale of employee houses previously purchased by the Company as part of its employee relocation program partially offset by the impact of currency translation and the transfer of the fair value of interest rate swap contracts that mature within one year from long-lived assets. Current liabilities increased $52.7 million, or 42.1%, from $125.0 million at December 31, 2002 to $177.6 million at September 30, 2003. Accounts payable and accrued liabilities decreased due primarily to severance payments totaling $15.3 million during the first nine months of 2003 partially offset by the impact of currency translation on accounts payable and accrued liabilities denominated in currencies other than the United States dollar. In regard to the severance payments, please refer to Note 6 of the Financial Statements. Current maturities of long-term debt increased $66.9 million reflecting the payment due on September 1, 2004 of the Senior Notes, Series 1999-A. Long-lived Assets The following table summarizes the Company long-lived assets at September 30, 2003 and December 31, 2002.

~~============================================================~~SEPTEMBER ~~JUNE~~ 30, December 31, 2003 2002 ------------------------------------------------------------------------------------------------------ (in thousands) Property, plant and equipment $~~333~~ 327,~~268~~176 $ 337,196 Goodwill and other intangibles 80,~~453~~639 79,588 Other long-lived assets 86,~~852~~262 13,006 ------------------------------------------------------------------------------------------------------ $~~422~~ 414,~~573~~077 $ 429,790 ~~============================================================~~------------------------------------------------------------------------------------------------------

Long-lived assets decreased $15.7 million, or 3.7%, from $429.8 million at December 31, 2002 to $414.1 million at September 30, 2003. Property, plant and equipment includes the acquisition cost less accumulated depreciation of the Company's land and land improvements, buildings and leasehold improvements and machinery and equipment. Property, plant and equipment decreased $10.0 million during the first nine months of 2003 due mainly to depreciation and the additional impairment related to the planned manufacturing facility closing in Germany. Goodwill and other intangibles includes goodwill, defined as the unamortized difference between the aggregate purchase price of acquired businesses taken as a whole and the fair market value of the identifiable net assets of those acquired businesses, and the preliminary fair value of a major customer relationship acquired in the NORCOM acquisition. Goodwill and other intangibles increased $1.1 million during the first nine months of 2003 due primarily to the positive effect that currency exchange rates had on goodwill denominated in currencies other than the United States dollar. This positive effect more than offset amortization of the customer relationship intangible. Included in other long-lived assets are unamortized prepaid service fees associated with the Company's borrowing arrangements, long-lived pension fund prepayments and the carrying value of steel reels used to store and transport communications cable. Other long-lived assets decreased $6.7 million during the first nine months of 2003 due to the write-off of unamortized prepaid service fees associated with the Company's terminated credit agreement and a reduction in long-lived pension fund prepayments to recognize pension costs in accordance with Statement of Financial Accounting Standards (SFAS) No. 87, Employers' Accounting for Pensions and the transfer of the fair value of interest rate swap contracts that mature within one year to current assets. -28- Capital Structure

SEPTEMBER 30, 2003 December 31, 2002 -------------------------------------------------------------------------------------------------- ~~JUNE~~AMOUNT ~~30,~~PERCENT ~~2003~~Amount ~~December~~Percent ~~31, 2002~~ -------------------------------------------------------------------------------------------------- ~~AMOUNT~~(in ~~PERCENT~~thousands, ~~Amount~~except ~~Percent~~% data) Current maturities of long-term debt $ 66,921 12.8% $ - -% Long-term debt 136,000 26.2% 203,242 39.8% ------------------------------------------------------------------------------ ~~(in thousands, except % data) Long~~-~~term~~------------------- Total debt $202,921 39.20% $203,~~242~~342 39.8% Stockholders' equity ~~314~~316,~~796~~886 6061.80% 307,195 60.2% -------------------------------------------------------------------------------------------------- $~~517~~519,~~717~~807 100.0% $510,437 100.0% --------------------------------------------------------------------------------------------------

The Company's capital structure consists primarily of current maturities of long-term debt, long-term debt and stockholders' equity. The capital structure increased $9.4 million due to an increase in stockholders' equity that was partially offset by a marginal reduction in long-term debt. The Company had privately-placed debt of $200.0 million outstanding at September 30, 2003. Details regarding maturities and interest rates are shown below.

~~========================================================================================~~ Principal ~~Maturity~~ Effective Balance Maturity Date Interest Rate ----------------------------------------------------------------------------~~------------~~ (in thousands, except % data) Senior Notes, Series 1997-A(1) $ 75,000 08/11/2009~~(1)~~ 6.92% Senior Notes, Series 1999-A(2) 64,000(2) 09/01/2004 7.60% Senior Notes, Series 1999-B 44,000 09/01/2006 7.75% Senior Notes, Series 1999-C 17,000 09/01/2009 8.06% ~~========================================================================================~~----------------------------------------------------------------------------

(1) The Senior Notes, Series 1997-A include an amortizing maturity feature. The Company is required to repay $15 million in principal per annum beginning August 11, 2005. (2) The Senior Notes, Series 1999-A, mature within one year of the balance sheet date. Accordingly, they have been reclassified as current maturities of long-term debt in the financial records as of September 1, 2003. These notes also serve as the notional principal on certain outstanding interest rate swap agreements. Therefore, they were recorded in the financial records in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activity, at a fair market value as of September 30, 2003 of $66.9 million. The agreements for these private placements contain affirmative and negative covenants including maintenance of minimum net worth and maintenance of a maximum ratio of debt to total capitalization. The Company entered into a credit agreement with a group of 6 banks on October 9, 2003 ("Credit Agreement"). The Credit Agreement provides for a secured, variable-rate and revolving credit facility not to exceed $75 million expiring in June 2006. In general, the Company's assets in the United States, other than real property, secure any borrowing under the Credit Agreement. The amount of any such borrowing is subject to a borrowing base comprised of the Company's receivables and inventories located in the United States. A fixed charge coverage ratio covenant becomes applicable if the Company's excess borrowing availability falls below $25.0 million. The Company's borrowing capacity under the Credit Agreement as of October 9, 2003 was $62.8 million. The Company does not anticipate a need during the year ending December 31, 2003 for funds available under the Credit Agreement to meet its capital expenditure, dividend and working capital requirements. At September 30, 2003, the Company had unsecured, uncommitted arrangements with 4 banks under which it could borrow up to $28.5 million at prevailing interest rates. There were no outstanding borrowings under these arrangements at September 30, 2003. -29- The Company manages its debt portfolio by using interest rate swap agreements to achieve an overall desired position of fixed and floating rates. At September 30, 2003, the Company was party to interest rate swap agreements relating to 7.60% medium-term notes that mature in 2004. The swaps convert a notional amount of $64.0 million from fixed rates to floating rates and mature in 2004. These arrangements have been designated and qualify as fair value hedges of the associated medium-term notes in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Based on current interest rates for similar transactions, the fair value of the Company's interest rate swap agreements at September 30, 2003 was $2.9 million. Credit and market risk exposures on these agreements are limited to the net interest differentials. Net interest differentials earned from the interest rate swaps of $0.5 million pretax, or $0.01 per diluted share, and $1.4 million pretax, or $0.03 per diluted share, were recorded as reductions to interest expense for the three- and nine-month periods ended September 30, 2003. Net interest differentials earned from the interest rate swaps reduced the Company's average interest rate on long-term debt by 0.72 and 0.80 percentage points for the three- and nine-month periods ended September 30, 2003. The Company is exposed to credit loss in the event of nonperformance by counterparties on the agreements, but does not anticipate nonperformance by any of the counterparties. Borrowings have the following scheduled maturities.

~~=====================================================================================================~~ Payments Due by Period ------------------------------------------------------------------------------------------------------------------ Less than 1-2 3-4 After ~~June~~September 30, 2003 Total 1 year years years 4 years ------------------------------------------------------------------------------------------------------------------ (in thousands) Long-term debt (1) $200,000 $ -64,000 $6415,000 $74,000 $5247,000 ~~=====================================================================================================~~------------------------------------------------------------------------------------------------------------------

(1) The Senior Notes, Series 1999-A, mature within one year of the balance sheet date. Accordingly, they have been reclassified as current maturities of long-term debt in the financial records as of September 1, 2003. These notes also serve as the notional principal on certain outstanding interest rate swap agreements. Therefore, they were recorded in the financial records in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activity, at a fair market value as of September 30, 2003 of $66.9 million. Other Commercial Commitments

~~======================================================================================================================~~ Amount of Commitment Expiration Per Period ------------------------------------------------------------------------------------------------------------------~~----~~ Less than 1-3 4-5 After ~~June~~September 30, 2003 Total 1 year years years 5 years ------------------------------------------------------------------------------------------------------------------~~----~~ (in thousands) Lines of credit(1) $ - $ - $ - $ - $ - Standby letters of credit 134,~~049~~020 134,~~049~~020 - - - Guarantees ~~5,284~~495 ~~5,284~~495 - - - Standby repurchase obligations - - - - - Other commercial commitments - - - - - ------------------------------------------------------------------------------------------------------------------~~----~~ Total commercial commitments $18 4,~~333~~515 $18 4,~~333~~515 $ - $ - $ - ~~======================================================================================================================~~------------------------------------------------------------------------------------------------------------------

(1) The Company entered into a credit agreement with a group of 6 banks on October 9, 2003 ("Credit Agreement"). The Credit Agreement provides for a secured, variable-rate and revolving credit facility not to exceed $75 million expiring in June 2006. The amount of any borrowing under the Credit Agreement is subject to a borrowing base comprised of the Company's receivables and inventories located in the United States. The Company's borrowing capacity under the Credit Agreement as of October 9, 2003 was $62.8 million. Stockholders' equity increased by $9.7 million, or 3.2%, during the first nine months of 2003 due primarily to a $5.7 million reduction of common stock held in treasury as a result of stock compensation plans settlement activity and employer contributions to the Company's retirement savings plan and an $11.5 million reduction of accumulated other comprehensive loss resulting from the positive effect of currency exchange rates on financial statement translation during the first nine months of 2003. These positive factors were partially offset by the net loss for the nine months ended September 30, 2003 of $2.2 million, dividends of $3.8 million, a decrease of $1.4 million in additional paid-in capital resulting from the use of common stock held in treasury for stock compensation plans settlement activity and retirement savings plan employer contributions and an increase of $0.1 million in unearned deferred compensation due to restricted shares awarded in the first quarter of 2003. -30- OFF-BALANCE SHEET ARRANGEMENTS The Company was not a party to any of the following types of off-balance sheet arrangements at September 30, 2003: - Guarantee contracts or indemnification agreements that contingently require the Company to make payments to the guaranteed or indemnified party based on changes in an underlying asset, liability or equity security of the guaranteed or indemnified party; - Guarantee contracts that contingently require the Company to make payments to the guaranteed party based on another entity's failure to perform under an obligating agreement; - Indirect guarantees under agreements that contingently require the Company to transfer funds to the guaranteed party upon the occurrence of specified events under conditions whereby the funds become legally available to creditors of the guaranteed party and those creditors may enforce the guaranteed party's claims against the Company under the agreement; - Retained or contingent interests in assets transferred to an unconsolidated entity or similar arrangements that serve as credit, liquidity or market risk support to that entity for such assets; - Derivative instruments that are indexed to the Company's common or preferred stock and classified as stockholders' equity under accounting principles generally accepted in the United States; and - Material variable interests held by the Company in unconsolidated entities that provide financing, liquidity, market risk or credit risk support to the Company, or engage in leasing, hedging or research and development services with the Company. CRITICAL ACCOUNTING POLICIES During the three- and nine-month periods ended September 30, 2003: - The Company did not change any of its existing critical accounting policies and did not adopt any new critical accounting policies; - No existing accounting policies became critical accounting policies due to an increase in the materiality of associated transactions or changes in the circumstances to which associated judgments and estimates relate; and - There were no significant changes in the manner in which critical accounting policies were applied or in which related judgments and estimates were developed. OUTLOOK The Company anticipates that market conditions for its Communications segment will include excess production capacity, pricing pressure on products with communications applications and continued utilization of thinly capitalized value-added resellers for product distribution for the remaining months in 2003 and throughout 2004. In addition, the Communications segment operations in Europe are largely dependent on one customer in the United Kingdom. The Company successfully renewed its supply agreement with that major communications customer in the United Kingdom during the third quarter of 2003. Management anticipates that revenues generated by the Company's Communications segment in the fourth quarter of 2003 will be sequentially lower than current quarter revenues. However, management also believes, given the positive impact of three months of revenues generated by NORCOM in the fourth quarter of 2003 as compared to only two months of revenues generated by NORCOM in the fourth quarter of 2002, slightly improved orders from the segment's major communications customers and additional distribution revenues, that revenues generated by the Communications segment in the fourth quarter of 2003 should be higher than revenues generated in the fourth quarter of 2002. Market conditions for the Company's Electronics segment are expected to remain constrained during the remaining months in 2003 and will also include excess production capacity. Management anticipates that revenues generated by the Electronics segment in the fourth quarter of 2003 will decrease slightly from revenues generated in the fourth quarter of 2002. However, based on modestly stronger order data early in the fourth quarter of 2003, management anticipates a small sequential increase in revenues generated by the Electronics segment from the current quarter. -31- Consolidated revenues generated by the Company in the fourth quarter of 2003 are expected to increase slightly over consolidated revenues generated in the fourth quarter of 2002. They are, however, expected to decrease slightly from consolidated revenues generated during the third quarter of 2003. For both segments, the cost-saving initiatives taken during 2002, coupled with continued cost reduction efforts such as personnel reductions, product line curtailment and manufacturing facility consolidation in 2003, reflect the Company's efforts to adjust its cost structure to market demand. The Company will no longer receive "take-or-pay" compensation from the major private-label customer as the applicable minimum requirements contract terminated in 2002. The Company will continue to receive "sales incentive" compensation through 2005 from this same customer under the second minimum requirements contract should the customer fail to meet purchasing targets. However, purchase requirements after 2002 are approximately 20% of targets in the first contract. Under the second contract, the customer is required to pay up to $3.0 million per annum to the Company through 2005. This amount could be reduced to the extent of gross margin generated from the customer's purchases of certain products from the Company during each year through 2005. The Company estimates it will recognize $2.7 million of "sales incentive" compensation under the contract during the fourth quarter of 2003. The Company recognized $19.7 million in severance and other benefits costs in the fourth quarter of 2002 and $2.5 million in severance and other benefits costs in the second quarter of 2003 related to product line curtailment and planned manufacturing facility consolidation during 2003. The Company anticipates paying these costs in 2003 ($15.1 million of which the Company had paid as of September 30, 2003). Annual savings of at least $10.0 million are anticipated as a result of the product line curtailment and planned manufacturing facility consolidation. Most of the savings will be achieved after completion of the manufacturing facility consolidations late in 2003. The Company recognized $2.4 million of severance and other benefits costs in the third quarter of 2003 related to personnel reductions within its Electronics segment. These costs had a negative effect on operating results in 2003 and will have a negative effect on cash flow in both 2003 and 2004. The Company will recognize additional costs in the fourth quarter of 2003 associated with on-going restructuring activities. The Company is currently negotiating the sale of part of its business in Germany to a management-led buyout group. If the buyout does not occur, the Company would recognize severance and other related benefits costs of approximately $2.8 million for an additional group of German employees. Even if the buyout does occur, the Company will retain liability for severance and other related benefits in the event the buyout group terminates transferred employees within three years of the buyout date. The severance and other related benefits amounts are reduced based upon the duration of employment with the buyout group. The Company sold certain fully-impaired equipment and technology used for the production of deflection coils during the second quarter of 2003 and received a cash payment of $1.3 million. The Company cannot recognize a gain on the sale of the equipment until certain technical conditions of the sale are fulfilled. If the technical conditions of the sale are fulfilled, the sale would have a positive effect on operating results in the period the technical conditions are fulfilled. If the technical conditions of the sale are not fulfilled, the Company will return the cash to the buyer and, in turn, accept return delivery of the equipment and technology. The Company anticipates contributing cash of $7.6 million during 2003 ($4.7 million of which the Company had contributed as of September 30, 2003) and $15.0 million during 2004 to its defined benefit pension plans. The Company's supply agreements with two major communications customers -- one in the United States and one in Canada -- are up for renewal in 2003. The Company anticipates maintaining its relationship with each customer; however, there can be no assurance this will occur. Should the Company lose the supply agreement with the Canadian customer, it would likely not be required to pay certain contingent acquisition price liabilities currently recorded in the financial statements. -32- The Company anticipates economic softness will continue throughout 2003 for some, perhaps most, geographic and market segments. Increases in revenues and operating income will be largely dependent on the level of investment by the technology and communications industries and on the timing of any general economic recovery. Because the Company is now experiencing some savings from its many restructuring actions, management expects the trend in the underlying, or recurring, earnings will continue to improve. FORWARD-LOOKING STATEMENTS The statements set forth in this Quarterly Report on Form 10-Q other than historical facts, including those noted in the "Outlook" section, are forward-looking statements made in reliance upon the safe harbor of the Private Securities Litigation Reform Act of 1995. As such, they are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates, general economic conditions, and management's beliefs and assumptions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. As a result, the Company's actual results may differ materially from what is expected or forecasted in such forward-looking statements. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, and disclaims any obligation to do so. The Company's actual results may differ materially from such forward-looking statements for the following reasons: unfavorable economic conditions in the United States, Europe and parts of Asia (and the impact such conditions may have on the Company's sales); increasing price, product and service competition from United States and international competitors (including new entrants); the credit worthiness of the Company's customers (including the collectibility of receivables resulting from sales by the Communications segment to VARs); the Company's continued ability to introduce, manufacture and deploy competitive new products and services on a timely, cost-effective basis; the ability to successfully integrate the operations and businesses of acquired companies (including NORCOM and, in particular, the Company's ability to retain NORCOM's primary customers); the ability to transfer production to new or existing facilities; developments in technology; the threat of displacement from competing technologies (including wireless and fiber optic technologies); demand and acceptance of the Company's products by customers and end users; changes in raw material costs and availability; changes in foreign currency exchange rates; the pricing of the Company's products; changes in regulation affecting the business of communications companies and other customers; the success of implementing cost-saving programs and initiatives; reliance on large customers (particularly, the reliance of the Communications segment on sales to a limited number of large LECs in the United States and sales to two major international communications companies -- one in the United Kingdom, the other in Canada); the Company's ability to successfully renew supply agreements with major communications customers in the United States and Canada; the Company's ability to complete current product curtailment and manufacturing facility consolidation programs at anticipated costs; the Company's ability to successfully negotiate collective bargaining agreement renewals with organized personnel; the threat of war and terrorist activities; general industry and market conditions and growth rates; and other factors noted in the Company's Annual Report on Form 10-K for 2002 and other Securities Exchange Act of 1934 filings. -33- ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS Market risks relating to the Company's operations result primarily from interest rates, foreign exchange rates, certain commodity prices and concentrations of credit. The Company manages its exposure to these and other market risks through regular operating and financing activities, and on a limited basis, through the use of derivative financial instruments. The Company intends to use such derivative financial instruments as risk management tools and not for speculative investment purposes. Quantitative and Qualitative Disclosures About Market Risks in the Company's Annual Report on Form 10-K for 2002 provides more information as to the types of practices and instruments used to manage risk. The following provides a discussion of material changes to the Company's exposure to market risk since December 31, 2002. Interest Rate Risk There have been no material changes to the Company's exposure to interest rate risk since December 31, 2002. Foreign Exchange Rate Risk There have been no material changes to the Company's exposure to foreign exchange rate risk since December 31, 2002. Commodity Price Risk There have been no material changes to the Company's exposure to commodity price risk since December 31, 2002. Credit Risk There have been no material changes to the Company's exposure to credit risk since December 31, 2002. ITEM 4: DISCLOSURE CONTROLS AND PROCEDURES As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the principal executive officer and principal financial officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report. There was no change in the Company's internal control over financial reporting during the Company's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. -34- PART II OTHER INFORMATION ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K Exhibits Exhibit 31.1 Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32.1 Certificate of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 32.2 Certificate of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Reports on Form 8-K On July 24, 2003, the Company furnished a Current Report on Form 8-K relating to the announcement of the Company's financial results for the three-month period ended June 30, 2003. -35- 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. BELDEN INC. Date: November 12, 2003 By: /s/ C. Baker Cunningham ----------------------------------- C. Baker Cunningham Chairman of the Board, President and Chief Executive Officer Date: November 12, 2003 By: /s/ Richard K. Reece ----------------------------------- Richard K. Reece Vice President, Finance and Chief Financial Officer -36-

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