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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission File Number 333-124334
 
 COLEMAN CABLE, INC.
  
 Delaware
(State or other jurisdiction of incorporation or
organization)
    
    36-4410887
(I.R.S. Employer Identification No.)
 1530 Shields Drive, Waukegan, Illinois 60085   Registrants Telephone Number, including Area Code (847) 672-2300
 
 þ o
  o o þ
 o þ




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INDEX
 PagePART I. FINANCIAL INFORMATIONItem 1. Financial Statements.Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2005 and 2006
    
    
    1Condensed Consolidated Balance Sheets as December 31, 2005, June 30, 2005 and 2006
    
    
    2Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2005 and 2006
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit Index
    
    
    32302 Certification of Chief Executive Officer302 Certification of Chief Executive Officer906 Certification of CEO and CFO




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PART I.
 
 ITEM 1. Financial Statements
 COLEMAN CABLE, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands)
 (unaudited)
 Three months ended June 30,
    
    
    Six months ended June 30,2005
    
    
    2006
    
    
    2005
    
    
    2006NET SALES
    
    $
    82,865
    
    
    $
    114,414
    
    
    $
    157,626
    
    
    $
    205,212COST OF GOODS SOLD
    
    
    71,176
    
    
    
    89,786
    
    
    
    135,776
    
    
    
    164,015GROSS PROFIT
    
    
    11,689
    
    
    
    24,628
    
    
    
    21,850
    
    
    
    41,197SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    5,815
    
    
    
    7,149
    
    
    
    11,738
    
    
    
    13,891RESTRUCTURING CHARGES
    
    
    
    
    
    
    319
    
    
    
    
    
    
    
    319OPERATING INCOME
    
    
    5,874
    
    
    
    17,160
    
    
    
    10,112
    
    
    
    26,987INTEREST EXPENSE, NET
    
    
    3,840
    
    
    
    4,256
    
    
    
    7,497
    
    
    
    8,321OTHER INCOME, NET
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,259
    )
    
    
    (11
    )INCOME BEFORE INCOME TAXES
    
    
    3,298
    
    
    
    12,904
    
    
    
    3,874
    
    
    
    18,677INCOME TAX EXPENSE
    
    
    639
    
    
    
    109
    
    
    
    1,155
    
    
    
    774NET INCOME
    
    $
    2,659
    
    
    $
    12,795
    
    
    $
    2,719
    
    
    $
    17,903
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COLEMAN CABLE, INC. AND SUBSIDARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
 (unaudited)
 December 31,
    
    
    June 30,
    
    
    June 30,2005
    
    
    2005
    
    
    2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    58
    
    
    $
    55
    
    
    $
    51Accounts receivable, less allowance for uncollectible accounts of
$1,876, $1,722 and $2,085, respectively
    
    
    58,840
    
    
    
    53,004
    
    
    
    67,603Inventories
    
    
    67,889
    
    
    
    58,601
    
    
    
    78,330Deferred income taxes
    
    
    206
    
    
    
    
    
    
    
    157Prepaid expenses and other current assets
    
    
    2,890
    
    
    
    1,947
    
    
    
    3,070Total current assets
    
    
    129,883
    
    
    
    113,607
    
    
    
    149,211PROPERTY, PLANT AND EQUIPMENT:Land
    
    
    579
    
    
    
    579
    
    
    
    579Buildings and leasehold improvements
    
    
    7,732
    
    
    
    7,543
    
    
    
    7,793Machinery, fixtures and equipment
    
    
    44,894
    
    
    
    40,489
    
    
    
    43,70053,205
    
    
    
    48,611
    
    
    
    52,072Less accumulated depreciation and amortization
    
    
    (28,889
    )
    
    
    (26,485
    )
    
    
    (29,843
    )Construction in progress
    
    
    948
    
    
    
    2,385
    
    
    
    1,415Property, plant and equipment, net
    
    
    25,264
    
    
    
    24,511
    
    
    
    23,644GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,651
    
    
    
    60,657
    
    
    
    60,645DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER ASSETS
    
    
    5,590
    
    
    
    6,096
    
    
    
    5,060TOTAL ASSETS
    
    $
    221,388
    
    
    $
    204,871
    
    
    $
    238,560LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    874
    
    
    $
    3,386
    
    
    $
    905Accounts payable
    
    
    22,126
    
    
    
    25,180
    
    
    
    28,243Accrued liabilities
    
    
    16,776
    
    
    
    12,265
    
    
    
    14,237Deferred income taxes
    
    
    
    
    
    
    444
    
    
    
    Total current liabilities
    
    
    39,776
    
    
    
    41,275
    
    
    
    43,385LONG-TERM DEBT
    
    
    168,426
    
    
    
    158,546
    
    
    
    173,409DEFERRED INCOME TAXES
    
    
    115
    
    
    
    131
    
    
    
    87SHAREHOLDERS EQUITY:Common stock, par $.001; 100,000 shares authorized and 40,784
issued and outstanding
    
    
    
    
    
    
    
    
    
    
    Additional paid-in capital
    
    
    25,559
    
    
    
    25,559
    
    
    
    25,559Accumulated deficit
    
    
    (12,488
    )
    
    
    (20,640
    )
    
    
    (3,880
    )Total shareholders equity
    
    
    13,071
    
    
    
    4,919
    
    
    
    21,679TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    221,388
    
    
    $
    204,871
    
    
    $
    238,560
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COLEMAN
CABLE, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (unaudited)
 Six months ended June 30,2005
    
    
    2006CASH FLOW FROM OPERATING ACTIVITIES:Net income
    
    $
    2,719
    
    
    $
    17,903Adjustments to reconcile net income to net cash
flow from operating activities:Depreciation and amortization
    
    
    2,895
    
    
    
    3,299Noncash interest income
    
    
    (109
    )
    
    
    Deferred tax provision
    
    
    85
    
    
    
    21Loss on disposal of fixed assets  net
    
    
    5
    
    
    
    141Gain on sale
of investment  net
    
    
    (1,264
    )
    
    
    (11
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (4,391
    )
    
    
    (8,763
    )Inventories
    
    
    (8,467
    )
    
    
    (10,441
    )Prepaid expenses and other assets
    
    
    (505
    )
    
    
    (188
    )Accounts payable
    
    
    5,205
    
    
    
    6,283Accrued liabilities
    
    
    (2,399
    )
    
    
    (2,539
    )Net cash flow from operating activities
    
    
    (6,226
    )
    
    
    5,705CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (3,215
    )
    
    
    (1,553
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    40Proceeds from sale of investment
    
    
    4,379
    
    
    
    82Net cash flow from investing activities
    
    
    1,164
    
    
    
    (1,431
    )CASH FLOW FROM FINANCING ACTIVITIES:Net
borrowings under revolving loan facility
    
    
    8,380
    
    
    
    5,450Early retirement of debt
    
    
    (3,822
    )
    
    
    Repayment of long-term debt
    
    
    (475
    )
    
    
    (436
    )Dividends paid to shareholders
    
    
    
    
    
    
    (9,295
    )Net cash flow from financing activities
    
    
    4,083
    
    
    
    (4,281
    )DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (979
    )
    
    
    (7
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    1,034
    
    
    
    58CASH AND CASH EQUIVALENTS  End of period
    
    $
    55
    
    
    $
    51NONCASH ACTIVITYReduction in carrying value of Oswego fixed assets and capital lease obligation
    
    $
    1,878
    
    
    $
    Cash paid during the period for:Interest
    
    $
    7,193
    
    
    $
    7,897Taxes
    
    
    700
    
    
    
    244
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COLEMAN CABLE, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 (Dollars in thousands)
 1.
    
    BASIS OF PRESENTATIONThe condensed consolidated financial statements included herein are unaudited. In addition,
certain information and footnote disclosures normally included in financial statements
prepared in accordance with United States generally accepted accounting principles (GAAP)
have been condensed or omitted. The interim condensed consolidated financial statements
reflect all adjustments (consisting only of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation in conformity with GAAP. The interim
condensed consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Companys Annual Report on
Form 10-K for the fiscal year ended December 31, 2005. The results of operations for the
interim periods should not be considered indicative of results to be expected for the full
year.2.
    
    INVENTORIESInventories consisted of the following:
 December 31, 2005
    
    
    June 30, 2005
    
    
    June 30, 2006FIFO cost:Raw materials
    
    $
    16,295
    
    
    $
    14,749
    
    
    $
    18,099Work in progress
    
    
    3,537
    
    
    
    5,371
    
    
    
    3,048Finished products
    
    
    48,057
    
    
    
    38,481
    
    
    
    57,183Total
    
    $
    67,889
    
    
    $
    58,601
    
    
    $
    78,330
 3.
    
    ACCRUED LIABILITIESAccrued liabilities consisted of the following:
 December 31, 2005
    
    
    June 30, 2005
    
    
    June 30, 2006Salaries, wages and employee benefits
    
    $
    4,814
    
    
    $
    3,113
    
    
    $
    3,586Sales incentives
    
    
    6,093
    
    
    
    3,864
    
    
    
    5,068Income taxes
    
    
    24
    
    
    
    67
    
    
    
    10Interest
    
    
    3,121
    
    
    
    3,088
    
    
    
    3,070Other
    
    
    2,724
    
    
    
    2,133
    
    
    
    2,503Total
    
    $
    16,776
    
    
    $
    12,265
    
    
    $
    14,237
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4.
    
    DEBT
 December 31,2005
    
    
    June 30, 2005
    
    
    June 30, 2006Revolving credit facility
    
    $
    46,000
    
    
    $
    38,200
    
    
    $
    51,450Senior notes
    
    
    120,000
    
    
    
    120,000
    
    
    
    120,000Capital lease obligations
    
    
    1,489
    
    
    
    1,671
    
    
    
    1,311Other long-term debt, annual interest
rates up to 6.25%, payable through 2019
    
    
    1,811
    
    
    
    2,061
    
    
    
    1,553169,300
    
    
    
    161,932
    
    
    
    174,314Less current portion
    
    
    (874
    )
    
    
    (3,386
    )
    
    
    (905
    )Total long-term debt
    
    $
    168,426
    
    
    $
    158,546
    
    
    $
    173,409
 The indenture governing the Companys 8-year 9.875% unsecured notes (the Notes) contains
covenants that, among other things, limit the Companys ability and the ability of certain of
its subsidiaries to: incur additional indebtedness; make restricted payments; create liens;
pay dividends; consolidate, merge or sell substantially all of its assets; enter into sale and
leaseback transactions; and enter into transactions with affiliates. As of June 30, 2006, the
Company was in compliance with all of the covenants contained in the indenture.The Companys senior secured revolving credit facility (the Revolving Credit Facility) will
mature on September 28, 2009 and is an asset-based lending agreement whereby the Company can
receive advances based on the lesser of $75,000 or the sum of 85% of eligible accounts
receivable and 55% of inventories. The Revolving Credit Facility contains a $5,000 limit for
letters of credit, with outstanding letters of credit reducing the total amount available for
borrowing under the Revolving Credit Facility. The Revolving Credit Facility is secured by
substantially all of the Companys assets, including accounts receivable, inventory and any
other tangible and intangible assets. Interest is payable at the banks prime rate plus a
range of 0.25% to 1.25%, or at the option of the Company, LIBOR plus 1.75% to 2.75%. The
Company classifies the portion of the Revolving Credit Facility that is expected to be repaid
within the next year as a current liability. The Revolving Credit Facility accrued interest
in the three and six months ended June 30, 2006 at an average rate of 7.0% and 7.05%, and the
Companys average borrowed amount was $51,757 and $46,443, none of which was against the limit
for letters of credit. As of June 30, 2006, the Company had $23,550 of additional borrowing
capacity.The Revolving Credit Facility contains more restrictive covenants than the indenture governing
the Notes, which consist of certain financial covenants, including, but not limited to, a
fixed charge coverage ratio and a leverage ratio. In addition, the Revolving Credit Facility
contains other customary affirmative and negative covenants relating to limitations on
dividends and other restricted payments, indebtedness, liens, investments, guarantees, mergers and acquisitions,
sales of assets, affiliate transactions, maintaining excess cash,
issuing capital stock, sale and lease back transactions and leases. On November 2, 2005, the Company entered
into an amendment to the Revolving Credit Facility with the lenders that removed the capital
expenditures restriction originally contained in the Revolving Credit Facility since capital
expenditures are effectively limited by the fixed charge coverage ratio. The Company was in
compliance at June 30, 2006 with all covenants in the Revolving Credit Facility.The Notes and the Revolving Credit Facility both have restrictions on dividend distributions
to shareholders, including but not limited to, a percentage of net income (less distributions
for tax purposes). The distributions for tax purposes are computed at the shareholder
applicable tax rate, net of any aggregated tax benefit received for prior periods.
Distributions for tax purposes are not
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restricted so long as the Company qualifies as an S corporation. The Company paid $4,645 of
tax distributions in the six months ended June 30, 2006 of which $3,641 were paid in the
second quarter. The tax distributions paid in the second quarter were applicable to both the
first and second quarters of 2006. The Company paid $4,650 of discretionary dividends to
shareholders in the six months ended June 30, 2006.In connection with the purchase of the Oswego Wire Incorporated facility (Oswego) and
certain related equipment Oswego acquired the rights and assumed the capital lease obligation
of Copperweld Corporation (Copperweld) under a certain Amended and Restated Sale Agreement
(Sale Agreement) between Copperweld and the County of Oswego Industrial Development Agency
(IDA). Terms of the Sale Agreement specified payment of $5,700 on July 1, 2012 with
interest to be paid quarterly through that date on the outstanding balance at a rate of 55% of
prime. In order to secure payment of the loan, in 1987, the Company purchased and placed in a
dedicated fund $675 of 8.7% zero coupon bonds issued by the Municipal Authority of
Westmoreland County, Pennsylvania, redeemable in the amount of $5,700 on July 1, 2012. Upon
maturity, the proceeds of the investment in the zero coupon bonds were to be used to fulfill
the obligation under the Sale Agreement. The market value of the bond at December 31, 2004
was $4,325. The bonds were expected to be held to maturity, and were carried at their
original cost of $675 plus accumulated interest of $2,330 and were included in other assets in
the accompanying consolidated balance sheet at December 31, 2004. Copperweld had a security
interest in certain property and equipment with a net book value of $599 at December 31, 2004.On May 16, 2005, Oswego and Copperweld reached a definitive agreement regarding the
accelerated payment of the $5,700 lease obligation due under the Sale Agreement. Oswego sold
the zero coupon bonds for $4,382 and made a cash payment of $3,822 to Copperweld, in exchange
for complete settlement of Oswegos obligations under the Sale Agreement
and the conveyance by Copperweld to Oswego of all of Copperwelds rights, title and interest
in and to the Oswego facility, free and clear of any liens and encumbrances held by Oswego
County. The Company recognized a gain of $1,267 related to the sale of the zero coupon bonds,
which is included in Other income and reduced the carrying value of the Oswego fixed assets
by $1,878, the amount by which the lease obligation exceeded the amount paid to settle the
obligation.5.
    
    COMMITMENTS AND CONTINGENCIESOperating LeasesThe Company leases certain of its buildings, machinery and equipment under
operating lease agreements that expire at various dates over the next ten years. Rent expense
for all operating leases for the three months ended June 30, 2005 and June 30, 2006 was $866
and $706, respectively. Rent expense for all operating leases for the six months ended June
30, 2005 and June 30, 2006 was $1,536 and $1,510, respectively.Capital LeasesThe Company leases various manufacturing, office and warehouse properties and
office equipment under capital leases that expire at various dates through 2009. The assets
are amortized/depreciated over the shorter of their related lease terms or their estimated
productive lives.Obligations under capital leases are included with debt in the accompanying consolidated
balance sheets.Legal ProceedingsThe Company is a party to various environmental and other claims and
lawsuits that have arisen in the ordinary course of business. Estimates of related costs and
losses have been accrued in the financial statements. In determining these accruals, the
Company does not discount environmental or legal accruals and does not reduce them by
anticipated insurance recoveries. The Company believes that its accruals related to
environmental, litigation and other
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claims are sufficient and that, based on the information currently available, these items and
the Companys rights to available insurance and indemnity will be resolved without material
adverse effect on the Companys consolidated financial position, cash flow or results of
operations. There can be no assurance, however, that this will be the case.6.
    
    BUSINESS SEGMENT INFORMATIONThe Company has three reportable business segments: Electrical/Wire and Cable Distributors,
Specialty Distributors and OEMs, and Consumer Outlets. These segment classifications are based
on an aggregation of customer groupings and distribution channels because this is the way our
chief operating decision maker evaluates the results of each operating segment.The Company has aggregated operating segments into three reportable business segments in
accordance with the criteria defined in SFAS No. 131, Disclosure about Segments of an
Enterprise and Related Information.The Companys operating segments have common production
processes and manufacturing capacity. Accordingly, the Company does not identify all of its
net assets to its operating segments. Depreciation expense is not allocated to segments but is
included in manufacturing overhead cost pools and is absorbed into product cost (and
inventory) as each product passes through the Companys numerous manufacturing work centers.
Accordingly, as products are sold across multiple segments, it is impracticable to determine
the amount of depreciation expense included in the operating results of each operating
segment.No one customer or group of customers under common control accounted for more than 10% of
consolidated net sales. Export sales are not material. Intercompany sales among segments
represent primarily the sale of fabricated bare wire products by Oswego Wire, which is
included in the Companys Specialty Distributors and OEMs segment, to other segments and are
eliminated in consolidation.Segment operating income represents income from continuing operations before interest income
or expense, other income and income taxes. Corporate consists of items not charged or
allocated to a particular segment, including costs for employee relocation, discretionary
bonuses, professional fees, restructuring, management fees and intangible amortization.Financial data for the Companys business segments is as follows:
 Three months ended June 30,
    
    
    Six months ended June 30,2005
    
    
    2006
    
    
    2005
    
    
    2006Net Sales:Electrical/Wire and Cable Distributors
    
    $
    27,393
    
    
    $
    38,894
    
    
    $
    53,693
    
    
    $
    70,907Specialty Distributors and OEMs
    
    
    44,011
    
    
    
    79,684
    
    
    
    82,321
    
    
    
    142,212Consumer Outlets
    
    
    12,599
    
    
    
    12,259
    
    
    
    23,924
    
    
    
    22,200Intercompany eliminations
    
    
    (1,138
    )
    
    
    (16,423
    )
    
    
    (2,312
    )
    
    
    (30,107
    )Total
    
    $
    82,865
    
    
    $
    114,414
    
    
    $
    157,626
    
    
    $
    205,212Operating Income:Electrical/Wire and Cable Distributors
    
    $
    3,035
    
    
    $
    7,861
    
    
    $
    5,511
    
    
    $
    12,821Specialty Distributors and OEMs
    
    
    3,074
    
    
    
    9,690
    
    
    
    5,783
    
    
    
    15,400Consumer Outlets
    
    
    595
    
    
    
    776
    
    
    
    630
    
    
    
    883Total
    
    
    6,704
    
    
    
    18,327
    
    
    
    11,924
    
    
    
    29,104Corporate
    
    
    (830
    )
    
    
    (1,167
    )
    
    
    (1,812
    )
    
    
    (2,117
    )Consolidated operating income
    
    $
    5,874
    
    
    $
    17,160
    
    
    $
    10,112
    
    
    $
    26,987
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7.
    
    RELATED PARTIESIn July 2004, the Company entered into an operating lease for the corporate office located in
Waukegan, Illinois (the Corporate Office) with a third-party lessor. The lease was
negotiated at the then-prevailing market terms. In 2005, substantially all of the
shareholders of the Company contributed cash equity to form HQ2 Properties, LLC (HQ2),
which then purchased the Corporate Office in August 2005. HQ2 assumed the existing lease on
the same terms from the previous lessor, with the exception of the lease term, which was
extended from 2014 to 2015. Rent expense paid to HQ2 for the three and six months ended June
30, 2006 was $89 and $179, respectively.Two of the Companys shareholders have consulting arrangements with the Company whereby, in
addition to their service as directors of the Company, they provide advice and counsel on
business planning and strategy, including advice on potential acquisitions. Pursuant to these
arrangements, and for their service as directors, the Company paid each eligible individual
$63 for the three months ended June 30, 2005 and June 30, 2006, respectively, and paid each
eligible individual $125 for the six months ended June 30, 2005 and June 30, 2006,
respectively.8.
    
    INVENTORY THEFTDuring the third quarter ended September 30, 2005, the Company experienced a theft of
inventory as a result of break-ins at the manufacturing facility located in Miami Lakes,
Florida. The Company believes it will recover the amount of the loss, net of deductibles,
under its insurance policy. As a result of the loss, the value of inventory was reduced by
$1,280 and an insurance receivable was recorded and is included in prepaid expenses and other
current assets in the condensed consolidated balance sheet.9.
    
    RESTRUCTURING CHARGESOn April 14, 2006, the Company announced the closing of the leased assembled manufacturing and
distribution facility located in Miami Lakes, Florida based on an evaluation of this facility
in the long term operation of its business. The Company determined that the efficient
utilization of its manufacturing assets would be enhanced by partial relocation of production
to the Companys plant in Waukegan, Illinois supplemented by additional international
sourcing. These activities are expected to conclude in the third quarter 2006.The following table summarizes the restructuring activity from April 1, 2006 through June
30, 2006.
 LeaseEmployee severance
    
    termination
    
    Other closingcosts
    
    costs
    
    costs
    
    TotalBalance-3/31/2006
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Additions
    
    
    77
    
    
    
    7
    
    
    
    235
    
    
    
    319Uses
    
    
    (58
    )
    
    
    (7
    )
    
    
    (235
    )
    
    
    (300
    )Balance-6/30/2006
    
    $
    19
    
    
    $
    
    
    
    $
    
    
    
    $
    19
 As of June 30, 2006, the Company has spent $319 to close
the Miami Lakes facility. The charges consist of $77 of employee
severance, $7 of lease termination and $235 for other closing costs.
The Company estimates spending an additional $1,079 consisting of $20
of employee severance costs, $617 of lease termination costs and $442
for other costs relating to the closure.
 8




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##### Table of Contents



10.
    
    SUPPLEMENTAL GUARANTOR INFORMATIONThe payment obligations of the Company under the Notes and the Revolving Credit Facility
(see Note 4) are guaranteed by certain of the Companys wholly owned subsidiaries (Guarantor
Subsidiaries). Such guarantees are full, unconditional and joint and several. The following
unaudited supplemental financial information sets forth, on a combined basis, balance sheets,
statements of operations and statements of cash flows for Coleman Cable, Inc. (the Parent)
and the Companys Guarantor Subsidiaries  CCI Enterprises, Inc., Oswego Wire Incorporated and
CCI International.
 9




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2005
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalNET SALES
    
    $
    77,142
    
    
    $
    8,299
    
    
    $
    (2,576
    )
    
    $
    82,865COST OF GOODS SOLD
    
    
    67,686
    
    
    
    3,490
    
    
    
    
    
    
    
    71,176GROSS PROFIT
    
    
    9,456
    
    
    
    4,809
    
    
    
    (2,576
    )
    
    
    11,689SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    5,435
    
    
    
    2,956
    
    
    
    (2,576
    )
    
    
    5,815OPERATING INCOME
    
    
    4,021
    
    
    
    1,853
    
    
    
    
    
    
    
    5,874INTEREST EXPENSE, NET
    
    
    3,760
    
    
    
    80
    
    
    
    
    
    
    
    3,840OTHER INCOME, NET
    
    
    
    
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,264
    )INCOME BEFORE INCOME TAXES
    
    
    261
    
    
    
    3,037
    
    
    
    
    
    
    
    3,298INCOME TAX EXPENSE
    
    
    26
    
    
    
    613
    
    
    
    
    
    
    
    639INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    2,424
    
    
    
    
    
    
    
    (2,424
    )
    
    
    NET INCOME
    
    $
    2,659
    
    
    $
    2,424
    
    
    $
    (2,424
    )
    
    $
    2,659
 COLEMAN CABLE, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2006
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalNET SALES
    
    $
    93,453
    
    
    $
    24,133
    
    
    $
    (3,172
    )
    
    $
    114,414COST OF GOODS SOLD
    
    
    69,668
    
    
    
    20,118
    
    
    
    
    
    
    
    89,786GROSS PROFIT
    
    
    23,785
    
    
    
    4,015
    
    
    
    (3,172
    )
    
    
    24,628SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    7,188
    
    
    
    3,133
    
    
    
    (3,172
    )
    
    
    7,149RESTRUCTURING CHARGES
    
    
    319
    
    
    
    
    
    
    
    
    
    
    
    319OPERATING INCOME
    
    
    16,278
    
    
    
    882
    
    
    
    
    
    
    
    17,160INTEREST EXPENSE, NET
    
    
    4,081
    
    
    
    175
    
    
    
    
    
    
    
    4,256INCOME BEFORE INCOME TAXES
    
    
    12,197
    
    
    
    707
    
    
    
    
    
    
    
    12,904INCOME TAX EXPENSE
    
    
    29
    
    
    
    80
    
    
    
    
    
    
    
    109INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    627
    
    
    
    
    
    
    
    (627
    )
    
    
    NET INCOME
    
    $
    12,795
    
    
    $
    627
    
    
    $
    (627
    )
    
    $
    12,795
 10




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE SIX MONTHS
ENDED JUNE 30, 2005
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalNET SALES
    
    $
    146,046
    
    
    $
    16,456
    
    
    $
    (4,876
    )
    
    $
    157,626COST OF GOODS SOLD
    
    
    128,682
    
    
    
    7,094
    
    
    
    
    
    
    
    135,776GROSS PROFIT
    
    
    17,364
    
    
    
    9,362
    
    
    
    (4,876
    )
    
    
    21,850SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    10,798
    
    
    
    5,816
    
    
    
    (4,876
    )
    
    
    11,738OPERATING INCOME
    
    
    6,566
    
    
    
    3,546
    
    
    
    
    
    
    
    10,112INTEREST EXPENSE, NET
    
    
    7,310
    
    
    
    187
    
    
    
    
    
    
    
    7,497OTHER (INCOME) EXPENSE, NET
    
    
    5
    
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,259
    )INCOME (LOSS ) BEFORE INCOME TAXES
    
    
    (749
    )
    
    
    4,623
    
    
    
    
    
    
    
    3,874INCOME TAX EXPENSE
    
    
    33
    
    
    
    1,122
    
    
    
    
    
    
    
    1,155INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    3,501
    
    
    
    
    
    
    
    (3,501
    )
    
    
    NET INCOME
    
    $
    2,719
    
    
    $
    3,501
    
    
    $
    (3,501
    )
    
    $
    2,719
 COLEMAN CABLE, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2006
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalNET SALES
    
    $
    166,558
    
    
    $
    46,307
    
    
    $
    (7,653
    )
    
    $
    205,212COST OF GOODS SOLD
    
    
    126,856
    
    
    
    37,159
    
    
    
    
    
    
    
    164,015GROSS PROFIT
    
    
    39,702
    
    
    
    9,148
    
    
    
    (7,653
    )
    
    
    41,197SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    14,992
    
    
    
    6,552
    
    
    
    (7,653
    )
    
    
    13,891RESTRUCTURING CHARGES
    
    
    319
    
    
    
    
    
    
    
    
    
    
    
    319OPERATING INCOME
    
    
    24,391
    
    
    
    2,596
    
    
    
    
    
    
    
    26,987INTEREST EXPENSE, NET
    
    
    7,915
    
    
    
    406
    
    
    
    
    
    
    
    8,321OTHER INCOME, NET
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    (11
    )INCOME BEFORE INCOME TAXES
    
    
    16,487
    
    
    
    2,190
    
    
    
    
    
    
    
    18,677INCOME TAX EXPENSE
    
    
    258
    
    
    
    516
    
    
    
    
    
    
    
    774INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    1,674
    
    
    
    
    
    
    
    (1,674
    )
    
    
    NET INCOME
    
    $
    17,903
    
    
    $
    1,674
    
    
    $
    (1,674
    )
    
    $
    17,903
 11




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES  CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2005
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    38
    
    
    $
    20
    
    
    $
    
    
    
    $
    58Accounts receivablenet of allowances
    
    
    57,402
    
    
    
    1,438
    
    
    
    
    
    
    
    58,840Intercompany receivable
    
    
    
    
    
    
    16,449
    
    
    
    (16,449
    )
    
    
    Inventories, net
    
    
    61,282
    
    
    
    6,607
    
    
    
    
    
    
    
    67,889Deferred income taxes
    
    
    
    
    
    
    206
    
    
    
    
    
    
    
    206Prepaid expenses and other current assets
    
    
    2,025
    
    
    
    865
    
    
    
    
    
    
    
    2,890Total current assets
    
    
    120,747
    
    
    
    25,585
    
    
    
    (16,449
    )
    
    
    129,883PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    18,954
    
    
    
    6,310
    
    
    
    
    
    
    
    25,264GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,510
    
    
    
    141
    
    
    
    
    
    
    
    60,651DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER
ASSETS
    
    
    5,587
    
    
    
    3
    
    
    
    
    
    
    
    5,590INVESTMENT IN SUBSIDIARIES
    
    
    20,728
    
    
    
    
    
    
    
    (20,728
    )
    
    
    TOTAL ASSETS
    
    $
    226,526
    
    
    $
    32,039
    
    
    $
    (37,177
    )
    
    $
    221,388LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    322
    
    
    $
    552
    
    
    $
    
    
    
    $
    874Accounts payable
    
    
    21,156
    
    
    
    970
    
    
    
    
    
    
    
    22,126Intercompany payable
    
    
    12,316
    
    
    
    4,133
    
    
    
    (16,449
    )
    
    
    Accrued liabilities
    
    
    12,619
    
    
    
    4,157
    
    
    
    
    
    
    
    16,776Total current liabilities
    
    
    46,413
    
    
    
    9,812
    
    
    
    (16,449
    )
    
    
    39,776LONG-TERM DEBT
    
    
    167,042
    
    
    
    1,384
    
    
    
    
    
    
    
    168,426DEFERRED INCOME TAXES
    
    
    
    
    
    
    115
    
    
    
    
    
    
    
    115SHAREHOLDERS EQUITY:Additional paid-in capital
    
    
    25,559
    
    
    
    1
    
    
    
    (1
    )
    
    
    25,559Retained earnings (accumulated deficit)
    
    
    (12,488
    )
    
    
    20,727
    
    
    
    (20,727
    )
    
    
    (12,488
    )Total shareholders equity
    
    
    13,071
    
    
    
    20,728
    
    
    
    (20,728
    )
    
    
    13,071TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    226,526
    
    
    $
    32,039
    
    
    $
    (37,177
    )
    
    $
    221,388
 12




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDIARIES  CONSOLIDATING BALANCE SHEET AS OF JUNE 30, 2005
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    45
    
    
    $
    10
    
    
    $
    
    
    
    $
    55Accounts
receivable  net of allowances
    
    
    
    
    
    
    53,004
    
    
    
    
    
    
    
    53,004Intercompany receivable
    
    
    34,889
    
    
    
    1,463
    
    
    
    (36,352
    )
    
    
    Inventories
 net
    
    
    57,083
    
    
    
    1,518
    
    
    
    
    
    
    
    58,601Prepaid expenses and other current assets
    
    
    4,169
    
    
    
    578
    
    
    
    (2,800
    )
    
    
    1,947Total current assets
    
    
    96,186
    
    
    
    56,573
    
    
    
    (39,152
    )
    
    
    113,607PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    17,877
    
    
    
    6,634
    
    
    
    
    
    
    
    24,511GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,516
    
    
    
    141
    
    
    
    
    
    
    
    60,657DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER
ASSETS
    
    
    6,093
    
    
    
    3
    
    
    
    
    
    
    
    6,096INVESTMENT IN SUBSIDIARIES
    
    
    18,727
    
    
    
    
    
    
    
    (18,727
    )
    
    
    TOTAL ASSETS
    
    $
    199,399
    
    
    $
    63,351
    
    
    $
    (57,879
    )
    
    $
    204,871LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    2,859
    
    
    $
    527
    
    
    $
    
    
    
    $
    3,386Accounts payable
    
    
    24,690
    
    
    
    490
    
    
    
    
    
    
    
    25,180Intercompany payable
    
    
    
    
    
    
    36,352
    
    
    
    (36,352
    )
    
    
    Accrued liabilities
    
    
    10,026
    
    
    
    5,039
    
    
    
    (2,800
    )
    
    
    12,265Deferred income taxes
    
    
    
    
    
    
    444
    
    
    
    
    
    
    
    444Total current liabilities
    
    
    37,575
    
    
    
    42,852
    
    
    
    (39,152
    )
    
    
    41,275LONG-TERM DEBT
    
    
    156,905
    
    
    
    1,641
    
    
    
    
    
    
    
    158,546DEFERRED INCOME TAXES
    
    
    
    
    
    
    131
    
    
    
    
    
    
    
    131SHAREHOLDERS EQUITY:Additional paid-in capital
    
    
    25,559
    
    
    
    1
    
    
    
    (1
    )
    
    
    25,559Retained earnings (accumulated deficit)
    
    
    (20,640
    )
    
    
    18,726
    
    
    
    (18,726
    )
    
    
    (20,640
    )Total shareholders equity
    
    
    4,919
    
    
    
    18,727
    
    
    
    (18,727
    )
    
    
    4,919TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    199,399
    
    
    $
    63,351
    
    
    $
    (57,879
    )
    
    $
    204,871
 13




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES  CONSOLIDATING BALANCE SHEET AS OF JUNE 30, 2006
 
 GuarantorParent
    
    Subsidiaries
    
    Eliminations
    
    TotalASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    37
    
    
    $
    14
    
    
    $
    
    
    
    $
    51Accounts receivablenet of allowances
    
    
    65,357
    
    
    
    2,246
    
    
    
    
    
    
    
    67,603Intercompany receivable
    
    
    
    
    
    
    15,349
    
    
    
    (15,349
    )
    
    
    Inventories
    
    
    70,144
    
    
    
    8,186
    
    
    
    
    
    
    
    78,330Deferred income taxes
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    157Prepaid expenses and other current assets
    
    
    2,630
    
    
    
    1,619
    
    
    
    (1,179
    )
    
    
    3,070Total current assets
    
    
    138,168
    
    
    
    27,571
    
    
    
    (16,528
    )
    
    
    149,211PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    17,554
    
    
    
    6,090
    
    
    
    
    
    
    
    23,644GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,504
    
    
    
    141
    
    
    
    
    
    
    
    60,645DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER
ASSETS
    
    
    5,057
    
    
    
    3
    
    
    
    
    
    
    
    5,060INVESTMENT IN SUBSIDIARIES
    
    
    22,402
    
    
    
    
    
    
    
    (22,402
    )
    
    
    TOTAL ASSETS
    
    $
    243,685
    
    
    $
    33,805
    
    
    $
    (38,930
    )
    
    $
    238,560LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    336
    
    
    $
    569
    
    
    $
    
    
    
    $
    905Accounts payable
    
    
    27,197
    
    
    
    1,046
    
    
    
    
    
    
    
    28,243Intercompany payable
    
    
    9,921
    
    
    
    5,428
    
    
    
    (15,349
    )
    
    
    Accrued liabilities
    
    
    12,233
    
    
    
    3,183
    
    
    
    (1,179
    )
    
    
    14,237Total current liabilities
    
    
    49,687
    
    
    
    10,226
    
    
    
    (16,528
    )
    
    
    43,385LONG-TERM DEBT
    
    
    172,319
    
    
    
    1,090
    
    
    
    
    
    
    
    173,409DEFERRED INCOME TAXES
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    87SHAREHOLDERS EQUITY:Additional paid-in capital
    
    
    25,559
    
    
    
    1
    
    
    
    (1
    )
    
    
    25,559Retained earnings (accumulated deficit)
    
    
    (3,880
    )
    
    
    22,401
    
    
    
    (22,401
    )
    
    
    (3,880
    )Total shareholders equity
    
    
    21,679
    
    
    
    22,402
    
    
    
    (22,402
    )
    
    
    21,679TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    243,685
    
    
    $
    33,805
    
    
    $
    (38,930
    )
    
    $
    238,560
 14




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2005
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCASH FLOW FROM OPERATING ACTIVITIES:Net income
    
    $
    2,719
    
    
    $
    3,501
    
    
    $
    (3,501
    )
    
    $
    2,719Adjustments to reconcile net income to net cash
flow from operating activities:Depreciation and amortization
    
    
    2,397
    
    
    
    498
    
    
    
    
    
    
    
    2,895Noncash interest income
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    (109
    )Deferred tax provision
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    85Loss on disposal of fixed assets  net
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Gain on sale
of investment  net
    
    
    
    
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,264
    )Equity in consolidated subsidiaries
    
    
    (3,501
    )
    
    
    
    
    
    
    3,501
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (4,391
    )
    
    
    
    
    
    
    (4,391
    )Inventories
    
    
    (9,880
    )
    
    
    1,413
    
    
    
    
    
    
    
    (8,467
    )Prepaid expenses and other assets
    
    
    (1,124
    )
    
    
    119
    
    
    
    500
    
    
    
    (505
    )Accounts payable
    
    
    5,425
    
    
    
    (220
    )
    
    
    
    
    
    
    5,205Intercompany accounts
    
    
    (500
    )
    
    
    500
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    (1,671
    )
    
    
    (228
    )
    
    
    (500
    )
    
    
    (2,399
    )Net cash flow from operating activities
    
    
    (6,130
    )
    
    
    (96
    )
    
    
    
    
    
    
    (6,226
    )CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (3,022
    )
    
    
    (193
    )
    
    
    
    
    
    
    (3,215
    )Proceeds from the sale of investment
    
    
    
    
    
    
    4,379
    
    
    
    
    
    
    
    4,379Net cash flow from investing activities
    
    
    (3,022
    )
    
    
    4,186
    
    
    
    
    
    
    
    1,164CASH FLOW FROM FINANCING ACTIVITIES:Net
borrowings under revolving loan facility
    
    
    8,380
    
    
    
    
    
    
    
    
    
    
    
    8,380Early retirement of debt
    
    
    
    
    
    
    (3,822
    )
    
    
    
    
    
    
    (3,822
    )Repayment of long-term debt
    
    
    (207
    )
    
    
    (268
    )
    
    
    
    
    
    
    (475
    )Net cash flow from financing activities
    
    
    8,173
    
    
    
    (4,090
    )
    
    
    
    
    
    
    4,083DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (979
    )
    
    
    
    
    
    
    
    
    
    
    (979
    )CASH AND
CASH EQUIVALENTS  Beginning of period
    
    
    1,024
    
    
    
    10
    
    
    
    
    
    
    
    1,034CASH AND CASH EQUIVALENTS  End of period
    
    $
    45
    
    
    $
    10
    
    
    $
    
    
    
    $
    55Reduction in carrying value of Oswego fixed assets
and capital lease
obligation
    
    $
    
    
    
    $
    1,878
    
    
    $
    
    
    
    $
    1,878Cash paid during the period for:Interest
    
    $
    7,080
    
    
    $
    113
    
    
    $
    
    
    
    $
    7,193Taxes
    
    
    
    
    
    
    700
    
    
    
    
    
    
    
    700
 15




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2006
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCASH FLOW FROM OPERATING ACTIVITIES:Net income
    
    $
    17,903
    
    
    $
    1,674
    
    
    $
    (1,674
    )
    
    $
    17,903Adjustments to reconcile net income to net cash
flow from operating activities:Depreciation and amortization
    
    
    2,867
    
    
    
    432
    
    
    
    
    
    
    
    3,299Deferred tax provision
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    21Loss on
disposal of fixed assets  net
    
    
    141
    
    
    
    
    
    
    
    
    
    
    
    141Gain on sale
of investment  net
    
    
    (11
    )
    
    
    
    
    
    
    
    
    
    
    (11
    )Equity in consolidated subsidiaries
    
    
    (1,674
    )
    
    
    
    
    
    
    1,674
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (7,955
    )
    
    
    (808
    )
    
    
    
    
    
    
    (8,763
    )Inventories
    
    
    (8,862
    )
    
    
    (1,579
    )
    
    
    
    
    
    
    (10,441
    )Prepaid expenses and other assets
    
    
    (613
    )
    
    
    (754
    )
    
    
    1,179
    
    
    
    (188
    )Accounts payable
    
    
    6,207
    
    
    
    76
    
    
    
    
    
    
    
    6,283Intercompany accounts
    
    
    (2,395
    )
    
    
    2,395
    
    
    
    
    
    
    
    Accrued liabilities
    
    
    (386
    )
    
    
    (974
    )
    
    
    (1,179
    )
    
    
    (2,539
    )Net cash flow from operating activities
    
    
    5,222
    
    
    
    483
    
    
    
    
    
    
    
    5,705CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (1,341
    )
    
    
    (212
    )
    
    
    
    
    
    
    (1,553
    )Proceeds from the sale of fixed assets
    
    
    40
    
    
    
    
    
    
    
    
    
    
    
    40Proceeds from sale of investment
    
    
    82
    
    
    
    
    
    
    
    
    
    
    
    82Net cash flow from investing activities
    
    
    (1,219
    )
    
    
    (212
    )
    
    
    
    
    
    
    (1,431
    )CASH FLOW FROM FINANCING ACTIVITIES:Net borrowings under revolving loan facility
    
    
    5,450
    
    
    
    
    
    
    
    
    
    
    
    5,450Repayment of long-term debt
    
    
    (159
    )
    
    
    (277
    )
    
    
    
    
    
    
    (436
    )Dividends paid to shareholders
    
    
    (9,295
    )
    
    
    
    
    
    
    
    
    
    
    (9,295
    )Net cash flow from financing activities
    
    
    (4,004
    )
    
    
    (277
    )
    
    
    
    
    
    
    (4,281
    )DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1
    )
    
    
    (6
    )
    
    
    
    
    
    
    (7
    )CASH AND
CASH EQUIVALENTS  Beginning of period
    
    
    38
    
    
    
    20
    
    
    
    
    
    
    
    58CASH AND CASH EQUIVALENTS  End of period
    
    $
    37
    
    
    $
    14
    
    
    $
    
    
    
    $
    51Cash paid during the period for:Interest
    
    $
    7,837
    
    
    $
    60
    
    
    $
    
    
    
    $
    7,897Taxes
    
    
    
    
    
    
    244
    
    
    
    
    
    
    
    244
 16




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated in these
forward-looking statements as a result of a variety of risks and uncertainties, including those
described in this report under Cautionary Note Regarding Forward-Looking Statements and under
Item 1A. Risk Factors in our Annual Report on Form 10-K , for the fiscal year ended December 31,
2005. We assume no obligation to update any of these forward-looking statements. You should read
the following discussion in conjunction with our condensed consolidated financial statements and
the notes thereto included in this report.
 Overview
     17




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##### Table of Contents



Business Segment Information
  Consolidated Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2005
    
    
    2006
    
    
    2005
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Net sales
    
    $
    82,865
    
    
    
    100.0
    %
    
    $
    114,414
    
    
    
    100.0
    %
    
    $
    157,626
    
    
    
    100.0
    %
    
    $
    205,212
    
    
    
    100.0
    %Gross profit
    
    
    11,689
    
    
    
    14.1
    
    
    
    24,628
    
    
    
    21.5
    
    
    
    21,850
    
    
    
    13.8
    
    
    
    41,197
    
    
    
    20.1Selling, engineering, general and administrative expenses
    
    
    5,815
    
    
    
    7.0
    
    
    
    7,149
    
    
    
    6.2
    
    
    
    11,738
    
    
    
    7.4
    
    
    
    13,891
    
    
    
    6.7Restructuring charges
    
    
    
    
    
    
    0.0
    
    
    
    319
    
    
    
    0.3
    
    
    
    
    
    
    
    0.0
    
    
    
    319
    
    
    
    0.2Operating income
    
    
    5,874
    
    
    
    7.1
    
    
    
    17,160
    
    
    
    15.0
    
    
    
    10,112
    
    
    
    6.4
    
    
    
    26,987
    
    
    
    13.2Interest expense, net
    
    
    3,840
    
    
    
    4.6
    
    
    
    4,256
    
    
    
    3.7
    
    
    
    7,497
    
    
    
    4.8
    
    
    
    8,321
    
    
    
    4.1Other income, net
    
    
    (1,264
    )
    
    
    (1.5
    )
    
    
    
    
    
    
    0.0
    
    
    
    (1,259
    )
    
    
    (0.8
    )
    
    
    (11
    )
    
    
    0.0Income before income taxes
    
    
    3,298
    
    
    
    (4.0
    )
    
    
    12,904
    
    
    
    11.3
    
    
    
    3,874
    
    
    
    2.4
    
    
    
    18,677
    
    
    
    9.1Income tax expense
    
    
    639
    
    
    
    0.8
    
    
    
    109
    
    
    
    0.0
    
    
    
    1,155
    
    
    
    0.7
    
    
    
    774
    
    
    
    0.4Net income
    
    $
    2,659
    
    
    
    3.2
    
    
    $
    12,795
    
    
    
    11.2
    
    
    $
    2,719
    
    
    
    1.7
    
    
    $
    17,903
    
    
    
    8.7Capital expenditures
    
    $
    2,025
    
    
    
    
    
    
    $
    645
    
    
    
    
    
    
    $
    3,215
    
    
    
    
    
    
    $
    1,553Depreciation and amortization
expense
    
    $
    1,441
    
    
    
    
    
    
    $
    1,558
    
    
    
    
    
    
    $
    2,895
    
    
    
    
    
    
    $
    3,299
 18




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##### Table of Contents



Three Months Ended June 30, 2006 Compared with Three Months Ended June 30, 2005
 Net sales
 Gross profit margin
 Selling, engineering, general and administrative (SEG&A)
 Restructuring Charges
 Interest expense, net 
 Other income,net 
 Income tax expense 
 19




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##### Table of Contents



Six Months Ended June 30, 2006 Compared with Six Months Ended June 30, 2005
 Net sales
 Gross profit margin
 Selling, engineering, general and administrative (SEG&A)
 Restructuring Charges
 Interest expense, net 
 Other income, net 
 Income tax expense 
 20




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##### Table of Contents



Segment Results
  Three months ended June 30,
    
    
    Six months ended June 30,2005
    
    
    2006
    
    
    2005
    
    
    2006Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Net Sales:Electrical / Wire and Cable Distributors
    
    $
    27,393
    
    
    
    33.1
    %
    
    $
    38,894
    
    
    
    34.0
    %
    
    $
    53,693
    
    
    
    34.1
    %
    
    $
    70,907
    
    
    
    34.6
    %Specialty Distributors and OEMs
    
    
    44,011
    
    
    
    53.1
    
    
    
    79,684
    
    
    
    69.6
    
    
    
    82,321
    
    
    
    52.2
    
    
    
    142,212
    
    
    
    69.3Consumer Outlets
    
    
    12,599
    
    
    
    15.2
    
    
    
    12,259
    
    
    
    10.7
    
    
    
    23,924
    
    
    
    15.2
    
    
    
    22,200
    
    
    
    10.8Intercompany eliminations
    
    
    (1,138
    )
    
    
    (1.4
    )
    
    
    (16,423
    )
    
    
    (14.3
    )
    
    
    (2,312
    )
    
    
    (1.5
    )
    
    
    (30,107
    )
    
    
    (14.7
    )Total
    
    $
    82,865
    
    
    
    100.0
    %
    
    $
    114,414
    
    
    
    100.0
    %
    
    $
    157,626
    
    
    
    100.0
    %
    
    $
    205,212
    
    
    
    100.0
    %Operating Income:Electrical / Wire and Cable Distributors
    
    $
    3,035
    
    
    
    11.1
    %
    
    $
    7,861
    
    
    
    20.2
    %
    
    $
    5,511
    
    
    
    10.3
    %
    
    $
    12,821
    
    
    
    18.1
    %Specialty Distributors and OEMs
    
    
    3,074
    
    
    
    7.0
    
    
    
    9,690
    
    
    
    12.2
    
    
    
    5,783
    
    
    
    7.0
    
    
    
    15,400
    
    
    
    10.8Consumer Outlets
    
    
    595
    
    
    
    4.7
    
    
    
    776
    
    
    
    6.4
    
    
    
    630
    
    
    
    2.6
    
    
    
    883
    
    
    
    4.0Total
    
    
    6,704
    
    
    
    
    
    
    
    18,327
    
    
    
    
    
    
    
    11,924
    
    
    
    
    
    
    
    29,104Corporate
    
    
    (830
    )
    
    
    
    
    
    
    (1,167
    )
    
    
    
    
    
    
    (1,812
    )
    
    
    
    
    
    
    (2,117
    )Consolidated operating income
    
    $
    5,874
    
    
    
    7.1
    %
    
    $
    17,160
    
    
    
    15.0
    %
    
    $
    10,112
    
    
    
    6.4
    %
    
    $
    26,987
    
    
    
    13.2
    %
 Three Months Ended June 30, 2006 Compared with Three Months Ended June 30, 2005
 Electrical/Wire and Cable Distributors
   Specialty Distributors and OEMs
  21




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Consumer Outlets
   Six Months Ended June 30, 2006 Compared with Six Months Ended June 30, 2005
 Electrical/Wire and Cable Distributors
   Specialty Distributors and OEMs
  22




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##### Table of Contents



Consumer Outlets
   Liquidity and Capital Resources
 Debt
  As ofJune 30, 2006Revolving credit facility
    
    $
    51,450Senior notes
    
    
    120,000Capital lease obligations
    
    
    1,311Other long-term debt
    
    
    1,553Total long-term debt
    
    $
    174,314
 Senior Secured Revolving Credit Facility
  23




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##### Table of Contents




 
    
 
 
 
 24




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##### Table of Contents




 
   
 
 
 
 Senior Notes
  Other
   Current and Future Liquidity
   25




---



##### Table of Contents




 
 
 
 
       26




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##### Table of Contents



Seasonality
  Contractual Obligations
  Payments Due by PeriodLessthan
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(dollars in thousands)Current and long-term debt obligations
(including interest)
    
    
    195,803
    
    
    
    12,456
    
    
    
    36,519
    
    
    
    82,254
    
    
    
    64,574Capital lease obligations (including interest)
    
    
    1,573
    
    
    
    509
    
    
    
    1,064
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    11,787
    
    
    
    2,495
    
    
    
    4,420
    
    
    
    2,478
    
    
    
    2,394Purchase obligations
    
    
    36,356
    
    
    
    36,356
    
    
    
    
    
    
    
    
    
    
    
    
  27




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##### Table of Contents



Off-Balance Sheet Assets and Obligations
  New Accounting Pronouncements
 Inventory Costs  An Amendment of ARB No. 43,
Chapter 4 Inventory Pricing
 Cautionary Note Regarding Forward-Looking Statements
    
    
    fluctuations in the supply or price of copper and other raw materials;
    
    increased competition from other wire and cable manufacturers, including foreign
manufacturers;
    
    pricing pressures causing margins to decrease;
    
    general economic conditions and changes in the demand for our products by key customers;
    
    failure to identify, finance or integrate acquisitions;
    
    our level of indebtedness; and
 28




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##### Table of Contents




  
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  Commodity Risk.
 Interest Rate Risk.
 
 ITEM 4. Controls and Procedures
   29




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##### Table of Contents



PART II OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM
1A. Risk Factors
  
 ITEM 6. Exhibits
 See Index to Exhibits
 30




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##### Table of Contents



SIGNATURES
  COLEMAN CABLE, INC.(Registrant)Date:
August 9, 2006
    
    By
    
    /s/ G. Gary YetmanChief Executive Officer and PresidentDate:
August 9, 2006
    
    By
    
    /s/ Richard N. BurgerChief Financial Officer, ExecutiveVice President, Secretary and
Treasurer
 31




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitNo.
    
    
    
    Description3.1
    
    
    
    Certificate of Incorporation of Coleman Cable,
Inc., incorporated herein by reference to our Form
S-4 filed on April 26, 2005.3.2
    
    
    
    By-Laws of Coleman Cable, Inc., incorporated
herein by reference to our Form S-4 filed on April
26, 2005.4.1
    
    
    
    Registration Rights Agreement dated September 28,
2004 between Coleman Cable, Inc. and Wachovia
Capital Markets, LLC, as Initial Purchaser under
the Purchase Agreement, incorporated herein by
reference to our Form S-4 filed on April 26, 2005.4.2
    
    
    
    Indenture dated as of September 28, 2004 among
Coleman Cable, Inc., the Note Guarantors from time
to time party thereto and Deutsche Bank Trust
Company Americas, as Trustee, incorporated herein
by reference to our Form S-4 filed on April 26,
2005.
 32




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##### Table of Contents



ExhibitNo.
    
    
    
    Description31.1
    
    
    
    Certification of Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    Certification of Chief Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    Certification of Chief Executive Officer and Chief
Financial Officer pursuant to 18 U.S.C. Section
1350, adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 33