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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 September 30, 2005
 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
    
    36-4410887(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)
 1530 Shields Drive, Waukegan, Illinois 60085   Registrants Telephone Number, including Area Code (847) 672-2300
 
 þ 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 nine months ended September 30, 2005 and 2004
    
    
    1Condensed Consolidated Balance Sheets as of September 30, 2005 and 2004 and December 31, 2004
    
    
    2Condensed Consolidated Statements of Cash Flows for the nine months ended September  30, 2005 and 2004
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk.
    
    
    31Item 4.
    
    Controls and Procedures.
    
    
    31PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings.
    
    
    32Item 6.
    
    Exhibits.
    
    
    32Exhibit Index
    
    
    32Signatures
    
    
    34LeaseThird Amendment to Credit Agreement302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certifications of CEO and CFO




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PART I.
 
 ITEM 1. Financial Statements
 COLEMAN CABLE, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 (Dollars in thousands)
 Three months ended September 30,
    
    
    Nine months ended September 30,2004
    
    
    2005
    
    
    2004
    
    
    2005NET SALES
    
    $
    75,804
    
    
    $
    93,625
    
    
    $
    206,134
    
    
    $
    251,251COST OF GOODS SOLD
    
    
    63,560
    
    
    
    80,287
    
    
    
    171,777
    
    
    
    216,063GROSS PROFIT
    
    
    12,244
    
    
    
    13,338
    
    
    
    34,357
    
    
    
    35,188SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    9,578
    
    
    
    6,487
    
    
    
    20,429
    
    
    
    18,230OPERATING INCOME
    
    
    2,666
    
    
    
    6,851
    
    
    
    13,928
    
    
    
    16,958INTEREST EXPENSE, NET
    
    
    2,449
    
    
    
    3,948
    
    
    
    7,567
    
    
    
    11,445LOSS ON EARLY EXTINGUISHMENT OF DEBT
    
    
    13,923
    
    
    
    
    
    
    
    13,923OTHER INCOME, NET
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,264
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (13,706
    )
    
    
    2,903
    
    
    
    (7,562
    )
    
    
    6,777INCOME TAX EXPENSE
    
    
    1,047
    
    
    
    816
    
    
    
    2,516
    
    
    
    1,971NET INCOME (LOSS)
    
    $
    (14,753
    )
    
    $
    2,087
    
    
    $
    (10,078
    )
    
    $
    4,806
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COLEMAN CABLE, INC. AND SUBSIDARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
 (Dollars in thousands)
 December 31,
    
    
    September 30,
    
    
    September 30,2004
    
    
    2004
    
    
    2005ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,034
    
    
    $
    1,655
    
    
    $
    69Accounts receivable, less allowance for uncollectible accounts of
$1,655, $1,722 and $1,905, respectively
    
    
    48,613
    
    
    
    50,153
    
    
    
    61,867Inventories, net
    
    
    50,134
    
    
    
    52,045
    
    
    
    68,161Prepaid expenses and other current assets
    
    
    1,402
    
    
    
    2,233
    
    
    
    2,879Total current assets
    
    
    101,183
    
    
    
    106,086
    
    
    
    132,976PROPERTY, PLANT AND EQUIPMENT:Land
    
    
    579
    
    
    
    579
    
    
    
    579Buildings and leasehold improvements
    
    
    8,024
    
    
    
    8,024
    
    
    
    7,733Machinery, fixtures and equipment
    
    
    41,440
    
    
    
    41,113
    
    
    
    43,85350,043
    
    
    
    49,716
    
    
    
    52,165Less accumulated depreciation and amortization
    
    
    (26,658
    )
    
    
    (25,451
    )
    
    
    (27,699
    )Construction in progress
    
    
    2,216
    
    
    
    1,313
    
    
    
    1,175Property, plant and equipment, net
    
    
    25,601
    
    
    
    25,578
    
    
    
    25,641GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,663
    
    
    
    60,667
    
    
    
    60,654DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER ASSETS
    
    
    9,609
    
    
    
    9,613
    
    
    
    5,824TOTAL ASSETS
    
    $
    197,056
    
    
    $
    201,944
    
    
    $
    225,095LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    3,430
    
    
    $
    5,940
    
    
    $
    3,364Accounts payable
    
    
    19,975
    
    
    
    33,336
    
    
    
    37,911Accrued liabilities
    
    
    14,664
    
    
    
    11,433
    
    
    
    16,886Deferred income taxes
    
    
    358
    
    
    
    508
    
    
    
    517Total current liabilities
    
    
    38,427
    
    
    
    51,217
    
    
    
    58,678LONG-TERM DEBT
    
    
    156,297
    
    
    
    149,538
    
    
    
    159,292DEFERRED INCOME TAXES
    
    
    132
    
    
    
    
    
    
    
    119SHAREHOLDERS 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
    
    
    (23,359
    )
    
    
    (24,370
    )
    
    
    (18,553
    )Total shareholders equity
    
    
    2,200
    
    
    
    1,189
    
    
    
    7,006TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    197,056
    
    
    $
    201,944
    
    
    $
    225,095
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COLEMAN CABLE, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 (Dollars in thousands)
 Nine months ended September 30,2004
    
    
    2005CASH FLOW FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (10,078
    )
    
    $
    4,806Adjustments to reconcile net income to net cash
flow from operating activities:Depreciation and amortization
    
    
    4,648
    
    
    
    4,346Noncash interest expense
    
    
    1,104
    
    
    
    Stock compensation
    
    
    1,648
    
    
    
    Loss on early extinguishment of debt
    
    
    13,923
    
    
    
    Noncash interest income
    
    
    (183
    )
    
    
    (110
    )Deferred tax provision
    
    
    
    
    
    
    146(Gain) loss on disposal of fixed assets  net
    
    
    (12
    )
    
    
    5Gain on sale of investment  net
    
    
    
    
    
    
    (1,264
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (12,849
    )
    
    
    (13,254
    )Inventories
    
    
    (15,892
    )
    
    
    (18,027
    )Prepaid expenses and other assets
    
    
    (1,337
    )
    
    
    (1,398
    )Accounts payable
    
    
    10,954
    
    
    
    17,936Accrued and other long-term liabilities
    
    
    1,465
    
    
    
    2,222Net cash flow from operating activities
    
    
    (6,609
    )
    
    
    (4,592
    )CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (3,476
    )
    
    
    (5,559
    )Proceeds from sale of fixed assets
    
    
    12
    
    
    
    Proceeds from sale of investment
    
    
    
    
    
    
    4,379Net cash flow from investing activities
    
    
    (3,464
    )
    
    
    (1,180
    )CASH FLOW FROM FINANCING ACTIVITIES:Net borrowings under revolving loan facilities
    
    
    43,325
    
    
    
    9,320Repayment of extinguished debt
    
    
    (124,601
    )
    
    
    (3,822
    )Issuance of senior notes, net of issuance costs
    
    
    113,562
    
    
    
    Repayment of long-term debt
    
    
    (3,451
    )
    
    
    (725
    )Borrowings of long-term debt
    
    
    644
    
    
    
    34Repurchase of warrants
    
    
    (3,000
    )
    
    
    Dividends paid to shareholders
    
    
    (14,800
    )
    
    
    Net cash flow from financing activities
    
    
    11,679
    
    
    
    4,807INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    1,606
    
    
    
    (965
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    49
    
    
    
    1,034CASH AND CASH EQUIVALENTS  End of period
    
    $
    1,655
    
    
    $
    69NONCASH ACTIVITYReduction in carrying value of Oswego fixed assets
    
    
    
    
    
    $
    1,878
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COLEMAN CABLE, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
 (Unaudited)
 1.
    
    BASIS OF PRESENTATIONThe Condensed Consolidated Balance Sheets for September 30, 2004 and September 30, 2005, the
Condensed Consolidated Statements of Operations for the three and nine months ended September
30, 2004 and 2005, and the Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 2004 and 2005 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 Registration Statement on Form S-4, as amended on
August 3, 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  net consisted of the following:
 December 31, 2004
    
    
    September 30, 2004
    
    
    September 30, 2005FIFO cost:Raw materials
    
    $
    13,158
    
    
    $
    12,622
    
    
    $
    17,189Work in progress
    
    
    3,468
    
    
    
    2,661
    
    
    
    4,609Finished products
    
    
    33,508
    
    
    
    36,762
    
    
    
    46,363Total
    
    $
    50,134
    
    
    $
    52,045
    
    
    $
    68,161
 3.
    
    ACCRUED LIABILITIESAccrued liabilities consisted of the following:
 December 31, 2004
    
    
    September 30, 2004
    
    
    September 30, 2005Salaries, wages and employee benefits
    
    $
    4,364
    
    
    $
    4,014
    
    
    $
    3,198Sales incentives
    
    
    4,604
    
    
    
    4,144
    
    
    
    5,470Interest
    
    
    3,186
    
    
    
    132
    
    
    
    6,076Other
    
    
    2,510
    
    
    
    3,143
    
    
    
    2,142Total
    
    $
    14,664
    
    
    $
    11,433
    
    
    $
    16,886
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4.
    
    DEBT
 December 31, 2004
    
    
    September 30, 2004
    
    
    September 30, 2005Revolving credit facility
    
    $
    29,820
    
    
    $
    25,338
    
    
    $
    39,140Senior notes
    
    
    120,000
    
    
    
    120,000
    
    
    
    120,000Capital lease obligations
    
    
    7,593
    
    
    
    7,698
    
    
    
    1,579Other long-term debt, annual interest
rates up to 11.3%, payable
through 2019
    
    
    2,314
    
    
    
    2,442
    
    
    
    1,937159,727
    
    
    
    155,478
    
    
    
    162,656Less current portion
    
    
    (3,430
    )
    
    
    (5,940
    )
    
    
    (3,364
    )Total long-term debt
    
    $
    156,297
    
    
    $
    149,538
    
    
    $
    159,292
 In the third quarter of 2004, the Company completed a comprehensive refinancing of its bank
debt. The refinancing included the following: (i) the private placement of 8-year senior
unsecured notes (the Notes) and (ii) a new senior secured revolving credit facility (the
Revolving Credit Facility). The Notes were issued in the amount of $120,000, bear interest
at a fixed rate of 9.875% and mature in 2012. In connection with the refinancing, the Company
incurred fees and expenses totaling $6,608, which are included in Deferred debt issuance
costs, net and other assets in the accompanying condensed consolidated balance sheets. The
applicable fees and expenses are amortized over the respective lives of the Revolving Credit
Facility and the Notes on a straight-line basis over 5 and 8 years, respectively.
Amortization was $234 and $701 for the three and nine months ended September 30, 2005,
respectively. Accumulated amortization was $935 as of September 30, 2005.The indenture governing the Companys 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 September 30, 2005, the Company was in compliance
with all of the covenants contained in the indenture.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 .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 at an average rate of 6.04% and 5.41%, and the Companys average
borrowed amount was $39,523 and $35,132, in the three and nine month periods ended September
30, 2005, respectively, none of which was against the limit for letters of credit. As of
September 30, 2005 the Company had $35,860 of additional borrowing capacity. The
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leverage ratio in the Revolving Credit Facility, however, would have effectively limited the
Companys additional borrowing capacity to $21,950.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 indebtedness, liens, investments, guarantees, mergers and acquisitions,
sales of assets, capital expenditures 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 September 30, 2005 with all continuing covenants.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 restricted so long as the Company qualifies as an S
corporation.The Companys former revolving credit facility had a weighted average interest rate on
borrowings of 3.99% and 4.06% and a weighted average borrowing amount of $45,823 and $42,346
for the three and nine months ended September 30, 2004, respectively.The Term A and Term B loans had a weighted average interest rate on borrowings of 4.24% and
4.31% and a weighted average borrowing amount of $30,248 and $31,267 for the three and nine
months ended September 30, 2004, respectively.In connection with 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. Interest is 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.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 $4,379 and made a cash payment of $3,822 to Copperweld, in exchange
for complete settlement of Oswegos obligations under the Amended and Restated Sale Agreement
and the conveyance by Copperweld to Oswego of all of Copperwelds right, 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 $1,264 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.
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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 September 30, 2004 and September 30, 2005
was $762 and $784, respectively. Rent expense for the nine months ended September 30, 2004 and
September 30, 2005 was $2,158 and $2,320, 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 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 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.
    
    MANAGEMENT FEESTwo 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 September 30, 2005, and paid each eligible individual $37 and
$188 for nine months ended September 30, 2004 and September 30, 2005, respectively.7.
    
    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 or allocate
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.
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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 base 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 our business segments is as follows:
 Three months ended September 30,
    
    
    Nine months ended September 30,2004
    
    
    2005
    
    
    2004
    
    
    2005Net Sales:Electrical / Wire and Cable
Distributors
    
    $
    25,638
    
    
    $
    30,621
    
    
    $
    70,989
    
    
    $
    84,314Specialty Distributors and OEMs
    
    
    35,311
    
    
    
    46,757
    
    
    
    101,728
    
    
    
    129,078Consumer Outlets
    
    
    15,967
    
    
    
    17,335
    
    
    
    36,486
    
    
    
    41,259Intercompany eliminations
    
    
    (1,112
    )
    
    
    (1,088
    )
    
    
    (3,069
    )
    
    
    (3,400
    )Total
    
    $
    75,804
    
    
    $
    93,625
    
    
    $
    206,134
    
    
    $
    251,251Operating Income:Electrical / Wire and Cable
Distributors
    
    
    2,385
    
    
    
    3,448
    
    
    
    7,150
    
    
    
    8,955Specialty Distributors and OEMs
    
    
    3,175
    
    
    
    3,126
    
    
    
    10,444
    
    
    
    8,908Consumer Outlets
    
    
    1,118
    
    
    
    1,333
    
    
    
    1,834
    
    
    
    1,964Total
    
    
    6,678
    
    
    
    7,907
    
    
    
    19,428
    
    
    
    19,827Corporate
    
    
    (4,012
    )
    
    
    (1,056
    )
    
    
    (5,500
    )
    
    
    (2,869
    )Consolidated operating income
    
    $
    2,666
    
    
    $
    6,851
    
    
    $
    13,928
    
    
    $
    16,958
 8.
    
    RELATED PARTIESIn July of 2004, the Company entered into an operating lease for the corporate office located
at 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 months ended September 30,
2005 was $57.9.
    
    INVENTORY THEFTDuring the 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
 8




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##### Table of Contents



recorded and is included in Prepaid expenses and other current assets in the condensed consolidated balance sheet.10.
    
    SUPPLEMENTAL GUARANTOR INFORMATIONThe payment obligations of the Company under the Notes and the Revolving Credit Facility
(see Note 4) are guaranteed by the Companys wholly owned 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 material
guarantor subsidiaries  CCI Enterprises, Inc., Oswego Wire Incorporated and CCI International
(the Guarantor Subsidiaries).
 9




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNET SALES
    
    $
    70,542
    
    
    $
    12,696
    
    
    $
    (7,434
    )
    
    $
    75,804COST OF GOODS SOLD
    
    
    60,357
    
    
    
    3,203
    
    
    
    
    
    
    
    63,560GROSS PROFIT
    
    
    10,185
    
    
    
    9,493
    
    
    
    (7,434
    )
    
    
    12,244SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    10,701
    
    
    
    6,311
    
    
    
    (7,434
    )
    
    
    9,578OPERATING INCOME
    
    
    (516
    )
    
    
    3,182
    
    
    
    
    
    
    
    2,666INTEREST EXPENSE, NET
    
    
    2,380
    
    
    
    69
    
    
    
    
    
    
    
    2,449LOSS ON EARLY EXTINGUISHMENT OF DEBT
    
    
    13,923
    
    
    
    
    
    
    
    
    
    
    
    13,923INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (16,819
    )
    
    
    3,113
    
    
    
    
    
    
    
    (13,706
    )INCOME TAX EXPENSE
    
    
    (1
    )
    
    
    1,048
    
    
    
    
    
    
    
    1,047INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    2,065
    
    
    
    
    
    
    
    (2,065
    )
    
    
    NET INCOME (LOSS)
    
    $
    (14,753
    )
    
    $
    2,065
    
    
    $
    (2,065
    )
    
    $
    (14,753
    )
 COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2005
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNET SALES
    
    $
    87,376
    
    
    $
    9,049
    
    
    $
    (2,800
    )
    
    $
    93,625COST OF GOODS SOLD
    
    
    76,602
    
    
    
    3,685
    
    
    
    
    
    
    
    80,287GROSS PROFIT
    
    
    10,774
    
    
    
    5,364
    
    
    
    (2,800
    )
    
    
    13,338SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    6,023
    
    
    
    3,264
    
    
    
    (2,800
    )
    
    
    6,487OPERATING INCOME
    
    
    4,751
    
    
    
    2,100
    
    
    
    
    
    
    
    6,851INTEREST EXPENSE, NET
    
    
    3,832
    
    
    
    116
    
    
    
    
    
    
    
    3,948INCOME BEFORE INCOME TAXES
    
    
    919
    
    
    
    1,984
    
    
    
    
    
    
    
    2,903INCOME TAX EXPENSE
    
    
    65
    
    
    
    751
    
    
    
    
    
    
    
    816INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    1,233
    
    
    
    
    
    
    
    (1,233
    )
    
    
    NET INCOME
    
    $
    2,087
    
    
    $
    1,233
    
    
    $
    (1,233
    )
    
    $
    2,087
 10




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNET SALES
    
    $
    190,813
    
    
    $
    28,283
    
    
    $
    (12,962
    )
    
    $
    206,134COST OF GOODS SOLD
    
    
    162,420
    
    
    
    9,357
    
    
    
    
    
    
    
    171,777GROSS PROFIT
    
    
    28,393
    
    
    
    18,926
    
    
    
    (12,962
    )
    
    
    34,357SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    21,817
    
    
    
    11,574
    
    
    
    (12,962
    )
    
    
    20,429OPERATING INCOME
    
    
    6,576
    
    
    
    7,352
    
    
    
    
    
    
    
    13,928INTEREST EXPENSE, NET
    
    
    7,311
    
    
    
    256
    
    
    
    
    
    
    
    7,567LOSS ON EARLY EXTINGUISHMENT OF DEBT
    
    
    13,923
    
    
    
    
    
    
    
    
    
    
    
    13,923INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (14,658
    )
    
    
    7,096
    
    
    
    
    
    
    
    (7,562
    )INCOME TAX EXPENSE
    
    
    145
    
    
    
    2,371
    
    
    
    
    
    
    
    2,516INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    4,725
    
    
    
    
    
    
    
    (4,725
    )
    
    
    NET INCOME (LOSS)
    
    $
    (10,078
    )
    
    $
    4,725
    
    
    $
    (4,725
    )
    
    $
    (10,078
    )
 COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalNET SALES
    
    $
    233,422
    
    
    $
    25,505
    
    
    $
    (7,676
    )
    
    $
    251,251COST OF GOODS SOLD
    
    
    205,284
    
    
    
    10,779
    
    
    
    
    
    
    
    216,063GROSS PROFIT
    
    
    28,138
    
    
    
    14,726
    
    
    
    (7,676
    )
    
    
    35,188SELLING, ENGINEERING, GENERAL AND
ADMINISTRATIVE EXPENSES
    
    
    16,826
    
    
    
    9,080
    
    
    
    (7,676
    )
    
    
    18,230OPERATING INCOME
    
    
    11,312
    
    
    
    5,646
    
    
    
    
    
    
    
    16,958INTEREST EXPENSE, NET
    
    
    11,142
    
    
    
    303
    
    
    
    
    
    
    
    11,445OTHER INCOME, NET
    
    
    
    
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,264
    )INCOME BEFORE INCOME TAXES
    
    
    170
    
    
    
    6,607
    
    
    
    
    
    
    
    6,777INCOME TAX EXPENSE
    
    
    98
    
    
    
    1,873
    
    
    
    
    
    
    
    1,971INCOME FROM GUARANTOR SUBSIDIARIES
    
    
    4,734
    
    
    
    
    
    
    
    (4,734
    )
    
    
    NET INCOME
    
    $
    4,806
    
    
    $
    4,734
    
    
    $
    (4,734
    )
    
    $
    4,806
 11




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 2004
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,024
    
    
    $
    10
    
    
    $
    
    
    
    $
    1,034Accounts receivable  net of allowances
    
    
    
    
    
    
    48,613
    
    
    
    
    
    
    
    48,613Intercompany receivable
    
    
    34,389
    
    
    
    
    
    
    
    (34,389
    )
    
    
    Inventories, net
    
    
    47,203
    
    
    
    2,931
    
    
    
    
    
    
    
    50,134Prepaid expenses and other current assets
    
    
    3,005
    
    
    
    697
    
    
    
    (2,300
    )
    
    
    1,402Total current assets
    
    
    85,621
    
    
    
    52,251
    
    
    
    (36,689
    )
    
    
    101,183PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    16,785
    
    
    
    8,816
    
    
    
    
    
    
    
    25,601GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,522
    
    
    
    141
    
    
    
    
    
    
    
    60,663DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER
ASSETS
    
    
    6,601
    
    
    
    3,008
    
    
    
    
    
    
    
    9,609INVESTMENT IN SUBSIDIARIES
    
    
    15,226
    
    
    
    
    
    
    
    (15,226
    )
    
    
    TOTAL ASSETS
    
    $
    184,755
    
    
    $
    64,216
    
    
    $
    (51,915
    )
    
    $
    197,056LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    2,907
    
    
    $
    523
    
    
    $
    
    
    
    $
    3,430Accounts payable
    
    
    19,264
    
    
    
    711
    
    
    
    
    
    
    
    19,975Intercompany payable
    
    
    
    
    
    
    34,389
    
    
    
    (34,389
    )
    
    
    Accrued liabilities
    
    
    11,700
    
    
    
    5,264
    
    
    
    (2,300
    )
    
    
    14,664Deferred income taxes
    
    
    
    
    
    
    358
    
    
    
    
    
    
    
    358Total current liabilities
    
    $
    33,871
    
    
    $
    41,245
    
    
    $
    (36,689
    )
    
    $
    38,427LONG-TERM DEBT
    
    
    148,684
    
    
    
    7,613
    
    
    
    
    
    
    
    156,297DEFERRED INCOME TAXES
    
    
    
    
    
    
    132
    
    
    
    
    
    
    
    132SHAREHOLDERS EQUITY:Additional paid-in capital
    
    
    25,559
    
    
    
    1
    
    
    
    (1
    )
    
    
    25,559Retained earnings (accumulated deficit)
    
    
    (23,359
    )
    
    
    15,225
    
    
    
    (15,225
    )
    
    
    (23,359
    )Total shareholders equity
    
    
    2,200
    
    
    
    15,226
    
    
    
    (15,226
    )
    
    
    2,200TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    184,755
    
    
    $
    64,216
    
    
    $
    (51,915
    )
    
    $
    197,056
 12




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2004
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    1,645
    
    
    $
    10
    
    
    $
    
    
    
    $
    1,655Accounts receivable  net of allowances
    
    
    
    
    
    
    50,153
    
    
    
    
    
    
    
    50,153Intercompany receivable
    
    
    40,689
    
    
    
    1,088
    
    
    
    (41,777
    )
    
    
    Inventories, net
    
    
    50,374
    
    
    
    1,671
    
    
    
    
    
    
    
    52,045Prepaid expenses and other current assets
    
    
    907
    
    
    
    3,960
    
    
    
    (2,634
    )
    
    
    2,233Total current assets
    
    
    93,615
    
    
    
    56,882
    
    
    
    (44,411
    )
    
    
    106,086PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    16,512
    
    
    
    9,066
    
    
    
    
    
    
    
    25,578GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,526
    
    
    
    141
    
    
    
    
    
    
    
    60,667DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER
ASSETS
    
    
    6,666
    
    
    
    2,947
    
    
    
    
    
    
    
    9,613INVESTMENT IN SUBSIDIARIES
    
    
    13,979
    
    
    
    
    
    
    
    (13,979
    )
    
    
    TOTAL ASSETS
    
    $
    191,298
    
    
    $
    69,036
    
    
    $
    (58,390
    )
    
    $
    201,944LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    5,416
    
    
    $
    524
    
    
    $
    
    
    
    $
    5,940Accounts payable
    
    
    32,433
    
    
    
    903
    
    
    
    
    
    
    
    33,336Intercompany payable
    
    
    
    
    
    
    41,777
    
    
    
    (41,777
    )
    
    
    Accrued liabilities
    
    
    10,467
    
    
    
    3,600
    
    
    
    (2,634
    )
    
    
    11,433Deferred income taxes
    
    
    
    
    
    
    508
    
    
    
    
    
    
    
    508Total current liabilities
    
    $
    48,316
    
    
    $
    47,312
    
    
    $
    (44,411
    )
    
    $
    51,217LONG-TERM DEBT
    
    
    141,793
    
    
    
    7,745
    
    
    
    
    
    
    
    149,538DEFERRED INCOME TAXES
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    SHAREHOLDERS EQUITY:Additional paid-in capital
    
    
    25,559
    
    
    
    1
    
    
    
    (1
    )
    
    
    25,559Retained earnings (accumulated deficit)
    
    
    (24,370
    )
    
    
    13,978
    
    
    
    (13,978
    )
    
    
    (24,370
    )Total shareholders equity
    
    
    1,189
    
    
    
    13,979
    
    
    
    (13,979
    )
    
    
    1,189TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    191,298
    
    
    $
    69,036
    
    
    $
    (58,390
    )
    
    $
    201,944
 13




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##### Table of Contents



COLEMAN
CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEET AS OF SEPTEMBER 30, 2005
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    39
    
    
    $
    30
    
    
    $
    
    
    
    $
    69Accounts receivable  net of allowances
    
    
    
    
    
    
    61,867
    
    
    
    
    
    
    
    61,867Intercompany receivable
    
    
    41,923
    
    
    
    1,245
    
    
    
    (43,168
    )
    
    
    Inventories, net
    
    
    66,152
    
    
    
    2,009
    
    
    
    
    
    
    
    68,161Prepaid expenses and other current assets
    
    
    5,471
    
    
    
    708
    
    
    
    (3,300
    )
    
    
    2,879Total current assets
    
    
    113,585
    
    
    
    65,859
    
    
    
    (46,468
    )
    
    
    132,976PROPERTY, PLANT AND EQUIPMENT, NET
    
    
    19,162
    
    
    
    6,479
    
    
    
    
    
    
    
    25,641GOODWILL AND INTELLECTUAL PROPERTY, NET
    
    
    60,513
    
    
    
    141
    
    
    
    
    
    
    
    60,654DEFERRED DEBT ISSUANCE COSTS, NET AND OTHER
ASSETS
    
    
    5,821
    
    
    
    3
    
    
    
    
    
    
    
    5,824INVESTMENT IN SUBSIDIARIES
    
    
    19,960
    
    
    
    
    
    
    
    (19,960
    )
    
    
    TOTAL ASSETS
    
    $
    219,041
    
    
    $
    72,482
    
    
    $
    (66,428
    )
    
    $
    225,095LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIES:Current portion of long-term debt
    
    $
    2,821
    
    
    $
    543
    
    
    $
    
    
    
    $
    3,364Accounts payable
    
    
    36,883
    
    
    
    1,028
    
    
    
    
    
    
    
    37,911Intercompany payable
    
    
    
    
    
    
    43,168
    
    
    
    (43,168
    )
    
    
    Accrued liabilities
    
    
    14,567
    
    
    
    5,619
    
    
    
    (3,300
    )
    
    
    16,886Deferred income taxes
    
    
    
    
    
    
    517
    
    
    
    
    
    
    
    517Total current liabilities
    
    
    54,271
    
    
    
    50,875
    
    
    
    (46,468
    )
    
    
    58,678LONG-TERM DEBT
    
    
    157,764
    
    
    
    1,528
    
    
    
    
    
    
    
    159,292DEFERRED INCOME TAXES
    
    
    
    
    
    
    119
    
    
    
    
    
    
    
    119SHAREHOLDERS EQUITY:Additional paid-in capital
    
    
    25,559
    
    
    
    1
    
    
    
    (1
    )
    
    
    25,559Retained earnings (accumulated deficit)
    
    
    (18,553
    )
    
    
    19,959
    
    
    
    (19,959
    )
    
    
    (18,553
    )Total shareholders equity
    
    
    7,006
    
    
    
    19,960
    
    
    
    (19,960
    )
    
    
    7,006TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    219,041
    
    
    $
    72,482
    
    
    $
    (66,428
    )
    
    $
    225,095
 14




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCASH FLOW FROM OPERATING ACTIVITIES:Net income
(loss)
    
    $
    (10,078
    )
    
    $
    4,725
    
    
    $
    (4,725
    )
    
    $
    (10,078
    )Adjustments to reconcile net income to net cash
flow from operating activities:Depreciation and amortization
    
    
    4,023
    
    
    
    625
    
    
    
    
    
    
    
    4,648Noncash interest expense
    
    
    1,104
    
    
    
    
    
    
    
    
    
    
    
    1,104Stock compensation
    
    
    1,648
    
    
    
    
    
    
    
    
    
    
    
    1,648Loss on early extinguishment of debt
    
    
    13,923
    
    
    
    
    
    
    
    
    
    
    
    13,923Noncash interest income
    
    
    
    
    
    
    (183
    )
    
    
    
    
    
    
    (183
    )Gain on disposal of fixed assets-net
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )Equity in consolidated subsidiaries
    
    
    (4,725
    )
    
    
    
    
    
    
    4,725
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (12,849
    )
    
    
    
    
    
    
    (12,849
    )Inventories
    
    
    (16,287
    )
    
    
    395
    
    
    
    
    
    
    
    (15,892
    )Prepaid expenses and other assets
    
    
    1,716
    
    
    
    (3,487
    )
    
    
    434
    
    
    
    (1,337
    )Accounts payable
    
    
    10,696
    
    
    
    258
    
    
    
    
    
    
    
    10,954Intercompany accounts
    
    
    (13,064
    )
    
    
    13,064
    
    
    
    
    
    
    
    Accrued and other long-term liabilities
    
    
    3,440
    
    
    
    (1,541
    )
    
    
    (434
    )
    
    
    1,465Net cash flow from operating activities
    
    
    (7,616
    )
    
    
    1,007
    
    
    
    
    
    
    
    (6,609
    )CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (2,373
    )
    
    
    (1,103
    )
    
    
    
    
    
    
    (3,476
    )Proceeds from the sale of fixed assets
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Net cash flow from investing activities
    
    
    (2,361
    )
    
    
    (1,103
    )
    
    
    
    
    
    
    (3,464
    )CASH FLOW FROM FINANCING ACTIVITIES:Net borrowings under revolving loan facility
    
    
    43,325
    
    
    
    
    
    
    
    
    
    
    
    43,325Repayment of extinguished debt
    
    
    (124,601
    )
    
    
    
    
    
    
    
    
    
    
    (124,601
    )Issuance of senior notes, net of issuance costs
    
    
    113,562
    
    
    
    
    
    
    
    
    
    
    
    113,562Repayment of long-term debt
    
    
    (2,903
    )
    
    
    (548
    )
    
    
    
    
    
    
    (3,451
    )Borrowings of long-term debt
    
    
    
    
    
    
    644
    
    
    
    
    
    
    
    644Repurchase of warrants
    
    
    (3,000
    )
    
    
    
    
    
    
    
    
    
    
    (3,000
    )Dividends paid to shareholders
    
    
    (14,800
    )
    
    
    
    
    
    
    
    
    
    
    (14,800
    )Net cash flow from financing activities
    
    
    11,583
    
    
    
    96
    
    
    
    
    
    
    
    11,679INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    1,606
    
    
    
    
    
    
    
    
    
    
    
    1,606CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    39
    
    
    
    10
    
    
    
    
    
    
    
    49CASH AND CASH EQUIVALENTS  End of period
    
    $
    1,645
    
    
    $
    10
    
    
    $
    
    
    
    $
    1,655
 15




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##### Table of Contents



COLEMAN CABLE, INC. AND SUBSIDARIES
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
 GuarantorParent
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    TotalCASH FLOW FROM OPERATING ACTIVITIES:Net income
    
    $
    4,806
    
    
    $
    4,734
    
    
    $
    (4,734
    )
    
    $
    4,806Adjustments to reconcile net income to net cash
flow from operating activities:Depreciation and amortization
    
    
    3,636
    
    
    
    710
    
    
    
    
    
    
    
    4,346Noncash interest income
    
    
    
    
    
    
    (110
    )
    
    
    
    
    
    
    (110
    )Deferred tax provision
    
    
    
    
    
    
    146
    
    
    
    
    
    
    
    146Loss on disposal of fixed assets -net
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Gain on sale of investment  net
    
    
    
    
    
    
    (1,264
    )
    
    
    
    
    
    
    (1,264
    )Equity in consolidated subsidiaries
    
    
    (4,734
    )
    
    
    
    
    
    
    4,734
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (13,254
    )
    
    
    
    
    
    
    (13,254
    )Inventories
    
    
    (18,949
    )
    
    
    922
    
    
    
    
    
    
    
    (18,027
    )Prepaid expenses and other assets
    
    
    (2,388
    )
    
    
    (10
    )
    
    
    1,000
    
    
    
    (1,398
    )Accounts payable
    
    
    17,619
    
    
    
    317
    
    
    
    
    
    
    
    17,936Intercompany accounts
    
    
    (7,534
    )
    
    
    7,534
    
    
    
    
    
    
    
    Accrued and other long-term liabilities
    
    
    2,867
    
    
    
    355
    
    
    
    (1,000
    )
    
    
    2,222Net cash flow from operating activities
    
    
    (4,672
    )
    
    
    80
    
    
    
    
    
    
    
    (4,592
    )CASH FLOW FROM INVESTING ACTIVITIES:Capital expenditures
    
    
    (5,308
    )
    
    
    (251
    )
    
    
    
    
    
    
    (5,559
    )Proceeds from sale of investment
    
    
    
    
    
    
    4,379
    
    
    
    
    
    
    
    4,379Net cash flow from investing activities
    
    
    (5,308
    )
    
    
    4,128
    
    
    
    
    
    
    
    (1,180
    )CASH FLOW FROM FINANCING ACTIVITIES:Net borrowings under revolving loan facility
    
    
    9,320
    
    
    
    
    
    
    
    
    
    
    
    9,320Repayment of extinguished debt
    
    
    
    
    
    
    (3,822
    )
    
    
    
    
    
    
    (3,822
    )Repayment of long-term debt
    
    
    (325
    )
    
    
    (400
    )
    
    
    
    
    
    
    (725
    )Borrowings of long-term debt
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    34Net cash flow from financing activities
    
    
    8,995
    
    
    
    (4,188
    )
    
    
    
    
    
    
    4,807DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (985
    )
    
    
    20
    
    
    
    
    
    
    
    (965
    )CASH AND CASH EQUIVALENTS  Beginning of period
    
    
    1,024
    
    
    
    10
    
    
    
    
    
    
    
    1,034CASH AND CASH EQUIVALENTS  End of period
    
    $
    39
    
    
    $
    30
    
    
    $
    
    
    
    $
    69NONCASH ACTIVITYReduction in carrying value of Oswego fixed assets
    
    
    
    
    
    
    1,878
    
    
    
    
    
    
    
    1,878
 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
Risk Factors in our Registration Statement on  Form S-4 , as amended on August 3, 2005, a copy of
which is available from us upon request. We assume no obligation to update any of these
forward-looking statements. You should read the following discussion in conjunction with our
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 September 30,
    
    
    Nine Months Ended September 30,2004
    
    
    2005
    
    
    2004
    
    
    2005Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Net sales
    
    $
    75,804
    
    
    
    100.0
    %
    
    $
    93,625
    
    
    
    100.0
    %
    
    $
    206,134
    
    
    
    100.0
    %
    
    $
    251,251
    
    
    
    100.0
    %Gross profit
    
    
    12,244
    
    
    
    16.2
    
    
    
    13,338
    
    
    
    14.2
    
    
    
    34,357
    
    
    
    16.7
    
    
    
    35,188
    
    
    
    14.0Selling, engineering, general
and administrative expenses
    
    
    9,578
    
    
    
    12.6
    
    
    
    6,487
    
    
    
    6.9
    
    
    
    20,429
    
    
    
    9.9
    
    
    
    18,230
    
    
    
    7.3Operating income
    
    
    2,666
    
    
    
    3.5
    
    
    
    6,851
    
    
    
    7.3
    
    
    
    13,928
    
    
    
    6.8
    
    
    
    16,958
    
    
    
    6.7Interest expense, net
    
    
    2,449
    
    
    
    3.2
    
    
    
    3,948
    
    
    
    4.2
    
    
    
    7,567
    
    
    
    3.7
    
    
    
    11,445
    
    
    
    4.6Loss on early extinguishment
of debt
    
    
    13,923
    
    
    
    18.4
    
    
    
    
    
    
    
    0.0
    
    
    
    13,923
    
    
    
    6.8
    
    
    
    
    
    
    
    0.0Other income, net
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0
    
    
    
    (1,264
    )
    
    
    (0.5
    )Income (loss) before income
taxes
    
    
    (13,706
    )
    
    
    (18.1
    )
    
    
    2,903
    
    
    
    3.1
    
    
    
    (7,562
    )
    
    
    (3.7
    )
    
    
    6,777
    
    
    
    2.7Income tax expense
    
    
    1,047
    
    
    
    1.4
    
    
    
    816
    
    
    
    0.9
    
    
    
    2,516
    
    
    
    1.2
    
    
    
    1,971
    
    
    
    0.8Net income (loss)
    
    $
    (14,753
    )
    
    
    (19.5
    )
    
    $
    2,087
    
    
    
    2.2
    
    
    $
    (10,078
    )
    
    
    (4.9
    )
    
    $
    4,806
    
    
    
    1.9Capital expenditures
    
    $
    2,099
    
    
    
    
    
    
    $
    2,344
    
    
    
    
    
    
    $
    3,476
    
    
    
    
    
    
    $
    5,559Depreciation and amortization
expense
    
    
    1,379
    
    
    
    
    
    
    
    1,450
    
    
    
    
    
    
    
    4,648
    
    
    
    
    
    
    
    4,346
 18




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##### Table of Contents



Three Months Ended September 30, 2005 Compared with Three Months Ended September 30, 2004
 Net sales
 Gross profit margin
 Selling, engineering, general and administrative (SEG&A)
 Interest expense, net 
 Income tax expense 
 19




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##### Table of Contents



Nine Months Ended September 30, 2005 Compared with Nine Months Ended September 30, 2004
 Net sales
 Gross profit margin
 Selling, engineering, general and administrative (SEG&A)
 Interest
expense, net and loss on early extinguishment of debt
 Other
income, net
 Income tax expense 
 20




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##### Table of Contents



Segment Results
  Three months ended September 30,
    
    
    Nine months ended September 30,2004
    
    
    2005
    
    
    2004
    
    
    2005Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %
    
    
    Amount
    
    
    %Net Sales:Electrical / Wire and Cable Distributors
    
    $
    25,638
    
    
    
    33.8
    %
    
    $
    30,621
    
    
    
    32.7
    %
    
    $
    70,989
    
    
    
    34.4
    %
    
    $
    84,314
    
    
    
    33.6
    %Specialty Distributors and OEMs
    
    
    35,311
    
    
    
    46.6
    
    
    
    46,757
    
    
    
    49.9
    
    
    
    101,728
    
    
    
    49.4
    
    
    
    129,078
    
    
    
    51.4Consumer Outlets
    
    
    15,967
    
    
    
    21.1
    
    
    
    17,335
    
    
    
    18.5
    
    
    
    36,486
    
    
    
    17.7
    
    
    
    41,259
    
    
    
    16.4Intercompany eliminations
    
    
    (1,112
    )
    
    
    (1.5
    )
    
    
    (1,088
    )
    
    
    (1.1
    )
    
    
    (3,069
    )
    
    
    (1.5
    )
    
    
    (3,400
    )
    
    
    (1.4
    )Total
    
    $
    75,804
    
    
    
    100.0
    %
    
    $
    93,625
    
    
    
    100.0
    %
    
    $
    206,134
    
    
    
    100.0
    %
    
    $
    251,251
    
    
    
    100.0
    %Operating Income:Electrical / Wire and Cable Distributors
    
    $
    2,385
    
    
    
    9.3
    %
    
    $
    3,448
    
    
    
    11.3
    %
    
    $
    7,150
    
    
    
    10.1
    %
    
    $
    8,955
    
    
    
    10.6
    %Specialty Distributors and OEMs
    
    
    3,175
    
    
    
    9.0
    
    
    
    3,126
    
    
    
    6.7
    
    
    
    10,444
    
    
    
    10.3
    
    
    
    8,908
    
    
    
    6.9Consumer Outlets
    
    
    1,118
    
    
    
    7.0
    
    
    
    1,333
    
    
    
    7.7
    
    
    
    1,834
    
    
    
    5.0
    
    
    
    1,964
    
    
    
    4.8Total
    
    
    6,678
    
    
    
    
    
    
    
    7,907
    
    
    
    
    
    
    
    19,428
    
    
    
    
    
    
    
    19,827Corporate
    
    
    (4,012
    )
    
    
    
    
    
    
    (1,056
    )
    
    
    
    
    
    
    (5,500
    )
    
    
    
    
    
    
    (2,869
    )Consolidated operating income
    
    $
    2,666
    
    
    
    3.5
    %
    
    $
    6,851
    
    
    
    7.3
    %
    
    $
    13,928
    
    
    
    6.8
    %
    
    $
    16,958
    
    
    
    6.7
    %
 Three Months Ended September 30, 2005 Compared with Three Months Ended September 30, 2004
 Electrical/Wire and Cable Distributors
   Specialty Distributors and OEMs
  21




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Consumer Outlets
   Nine Months Ended September 30, 2005 Compared with Nine Months Ended September 30, 2004
 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 ofSeptember 30, 2005Revolving credit facility
    
    $
    39,140Senior notes
    
    
    120,000Capital lease obligations
    
    
    1,579Other long-term debt
    
    
    1,937Total long-term debt
    
    $
    162,656
  Senior Secured Revolving Credit Facility
  23




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##### Table of Contents




 
    
 
 
 24




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##### Table of Contents




 
 
   
 
 
 Senior Notes
  Capital Lease Obligation
   25




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##### Table of Contents



Other
   Current and Future Liquidity
    
 
 
 
 
   26




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##### Table of Contents



Seasonality
  Contractual Obligations
  27




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##### Table of Contents



Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(dollars in thousands)Current and long-term debt obligations (including interest)
    
    $
    205,153
    
    
    $
    12,456
    
    
    $
    36,962
    
    
    $
    23,741
    
    
    $
    131,994Capital lease obligations (including interest)
    
    
    1,968
    
    
    
    522
    
    
    
    1,437
    
    
    
    9
    
    
    
    Operating lease obligations
    
    
    11,243
    
    
    
    2,604
    
    
    
    3,561
    
    
    
    1,939
    
    
    
    3,139Purchase obligations
    
    
    17,769
    
    
    
    17,769
    
    
    
    
    
    
    
    
    
    
    
    
    Off-Balance Sheet Assets and Obligations
  Critical Accounting Policies
  Revenue Recognition
  Allowance for Doubtful Accounts
  28




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##### Table of Contents



Inventories
  Plant and Equipment
 Accounting for the Impairment of Disposal of Long-Lived Assets
 Goodwill
 Goodwill and Other Intangible Assets
 Income Taxes
 Accounting for Income
Taxes
 29




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##### Table of Contents



New Accounting Pronouncements
 Shared-Based Payment
 Inventory Costs  An Amendment of ARB No. 43,
Chapter 4 Inventory Pricing
 Exchanges of Nonmonetary Assets  An Amendment
of APB Opinion No. 29, Accounting for Nonmonetary Transactions
 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;
 30




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##### Table of Contents




    
    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; and
    
    other risks and uncertainties, including those described under Risk Factors in our
Registration Statement on Form S-4.
  
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  Commodity Risk.
 Interest Rate Risk.
 
 ITEM 4. Controls and Procedures
   31




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##### Table of Contents



PART II OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  ITEM 5. Other Information
    
 ITEM 6. Exhibits
 See Index to Exhibits
 32




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SIGNATURES
  COLEMAN CABLE, INC.(Registrant)Date:
    
    November 14, 2005
    
    By/s/ G. Gary YetmanChief Executive Officer and PresidentDate:
    
    November 14, 2005
    
    By/s/ Richard N. BurgerChief Financial Officer, Executive VicePresident, Secretary and Treasurer
 33




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description1.1
    
    Purchase Agreement dated September 21, 2004 between Coleman Cable, Inc. and Wachovia
Capital Markets, LLC, incorporated herein by reference to our Form S-4/A filed on August 3,
2005.3.1
    
    Certificate of Incorporation of Coleman Cable, Inc., incorporated herein by reference to our
Form S-4/A filed on August 3, 2005.3.2
    
    By-Laws of Coleman Cable, Inc., incorporated herein by reference to our Form S-4/A filed on
August 3, 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/A filed on August 3, 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/A filed on August 3, 2005.10.1
    
    Credit Agreement dated as of September 28, 2004 among Coleman Cable, Inc. and certain of its
U.S. Subsidiaries, as Borrowers, the Lenders named therein, Wachovia Bank, National
Association, as Administrative Agent, ING Capital LLC and National City Business Credit, Inc.,
as Syndication Agents, and PNC Bank, National Association and Associated Bank, National
Association, as Documentation Agents, incorporated herein by reference to our Form S-4/A filed
on August 3, 2005.10.2
    
    First Amendment and Waiver to Credit Agreement dated as of September 30, 2004 among Coleman
Cable, Inc. and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and
Wachovia Bank, National Association, as administrative agent, incorporated herein by reference
to our Form S-4/A filed on August 3, 2005.10.3
    
    Second Amendment to Credit Agreement dated as of September 30, 2004 among Coleman Cable, Inc.
and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia
Bank, National Association, as administrative agent, incorporated herein by reference to our
Form S-4/A filed on August 3, 2005.10.4
    
    Consulting Agreement dated as of October 1, 2004 by and between Coleman Cable, Inc. and David
Bistricer, incorporated herein by reference to our Form S-4/A filed on August 3, 2005.10.5
    
    Consulting Agreement dated as of October 1, 2004 by and between Coleman Cable, Inc. and
Nachum Stein, incorporated herein by reference to our Form S-4/A filed on August 3, 2005.10.6
    
    Lease dated as of September 11, 2003, by and between Panattoni Development Company, LLC and
Coleman Cable, Inc., as subsequently assumed by HQ2 Properties, LLC pursuant to an Assignment
and Assumption of Lease, dated as of August 15, 2005,
 34




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##### Table of Contents



Exhibit No.
    
    Descriptionamended by First Amendment to Lease,
dated as of August 15, 2005, by and between HQ2 Properties, LLC and Coleman Cable, Inc.10.7
    
    Third Amendment to Credit Agreement dated as of November 2, 2005 among Coleman Cable, Inc.
and certain of its U.S. Subsidiaries, as Borrowers, the Lenders named therein, and Wachovia
Bank, National Association, as administrative agent.31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 35