UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 **Washington,
        D.C. 20549**
  **___________**
  FORM
        10-Q
 
 x
              **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 1-9078**
 
 **___________**
 
 THE
        ALPINE GROUP, INC.
 (Exact
        name of registrant as specified in its charter)
 
 **Delaware**
                (State
                  or other jurisdiction of
                incorporation
                  or organization)
              **22-1620387**
                (I.R.S.
                  Employer Identification No.)**One
                  Meadowlands Plaza**
                **East
                  Rutherford, New Jersey**
                (Address
                  of principal executive offices)
              **07073**
                (Zip
                  code)
 
 Registrant's
        telephone number, including area code **201-549-4400**
 
 **___________**
 
 Indicate
        by check mark whether the registrant (1) has filed all reports required
        to
        be filed by Section 13 or 15(d) of the Securities Exchange Act of
        1934
        during the preceding 12 months and (2) has been subject to
        such filing
        requirements for the past 90 days. Yes x No o
 
 Indicate
        by check mark whether the Registrant is an accelerated filer (as defined
        in
        Rule 12b-2 of the Exchange Act). Yes o No x
 
 Indicate
        by check mark whether the Registrant is shell company (as defined in Rule
        12b-2
        of the Exchange Act). Yes o No x
  *Indicate
        the number of shares outstanding of each of the issuer's classes of common
        stock, as of the latest practicable date.*
  **Class**
                **Outstanding
                    at October 31, 2005**Common
                    Stock, $.10 Par Value
                16,060,580
 
 
 
 
  **PART
        I. FINANCIAL INFORMATION**
 
 ITEM
        1.
        FINANCIAL STATEMENTS
 
 The
        accompanying unaudited consolidated financial statements have been prepared
        in
        accordance with the requirements of Section 13 or 15(d) of the Securities
        Exchange Act of 1934 and, therefore, do not include all information and
        footnotes required by accounting principles generally accepted in the United
        States of America. However, in the opinion of management, all adjustments
        necessary for a fair presentation of the results of operations for the relevant
        periods have been made. Results for the interim periods are not necessarily
        indicative of the results to be expected for the year. These financial
        statements should be read in conjunction with the summary of significant
        accounting policies and the notes to the consolidated financial statements
        included in the Company's Annual Report on Form 10-K for the year
        ended
        December 31, 2004.
 
  2
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEETS**
 **(in
        thousands, except share data)**
 **(unaudited)**
 **September
                  30,**
              
              **December
                  31,****2005**
              
              **2004****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              832
              
              $
              611Marketable
                  securities, at fair value
              
              
              22,356
              
              
              35,827Accounts
                  receivable
              
              
              912
              
              
              1,599Inventories,
                  (net of LIFO reserve of $233 and $44, as of September 30, 2005
                  and
                  December 31, 2004, respectively)
              
              
              147
              
              
              39Current
                  assets of discontinued operations (Note 2)
              
              
              83,621
              
              
              71,647Due
                  from related party (Note 1)
              
              
              1,773
              
              
              —Other
                  current assets
              
              
              3,405
              
              
              3,215Total
                  current assets
              
              
              113,046
              
              
              112,938Property,
                  plant and equipment, net
              
              
              1,240
              
              
              1,419Deferred
                  income taxes
              
              
              2,866
              
              
              2,654Assets
                  of discontinued operations (Note 2)
              
              
              17,382
              
              
              16,660Other
                  long-term assets
              
              
              1,913
              
              
              1,505Total
                  assets
              
              $
              136,447
              
              $
              135,176**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:Current
                  portion of long-term debt (Note 4)
              
              $
              —
              
              $
              386Accounts
                  payable
              
              
              275
              
              
              38Accrued
                  expenses
              
              
              2,585
              
              
              3,366Current
                  liabilities of discontinued operations (Note 2)
              
              
              76,746
              
              
              68,254Deferred
                  income taxes and income taxes payable
              
              
              2,066
              
              
              7,085Total
                  current liabilities
              
              
              81,672
              
              
              79,129Long-term
                  debt, less current portion (Note 4)
              
              
              3,215
              
              
              3,122Other
                  long-term liabilities
              
              
              18,381
              
              
              17,761Minority
                  interest in subsidiary
              
              
              4,080
              
              
              2,218Liabilities
                  of discontinued operations (Note 2)
              
              
              3,008
              
              
              3,406Mandatorily
                  redeemable series A cumulative preferred stock (18,264 shares issued;
                  14,058and
                  14,697 outstanding at September 30, 2005 and December 31, 2004,
                  respectively) (Note 5)
              
              
              5,302
              
              
              5,545Stockholders'
                  equity:9%
                  cumulative convertible preferred stock at liquidation
                  value
              
              
              177
              
              
              177Common
                  stock, $.10 par value; (50,000,000 authorized; and 25,160,833 and
                  24,670,054 sharesissued
                  at September 30, 2005 and December 31, 2004, respectively)
              
              
              2,516
              
              
              2,467Capital
                  in excess of par value
              
              
              169,131
              
              
              168,446Accumulated
                  other comprehensive income (loss)
              
              
              117
              
              
              (20
              )Accumulated
                  deficit
              
              
              (57,128
              )
              
              (52,955
              )Treasury
                  stock, at cost (10,896,914 and 10,929,985 shares at September 30,
                  2005 andDecember
                  31, 2004, respectively)
              
              
              (93,661
              )
              
              (93,705
              )Receivable
                  from stockholders
              
              
              (363
              )
              
              (415
              )Total
                  stockholders' equity
              
              
              20,789
              
              
              23,995Total
                  liabilities and stockholders' equity
              
              $
              136,447
              
              $
              135,176
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  3
  
 **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share data)**
 **(unaudited)**
 **Three
                      Months Ended**
                    **September
                      30,****2005**
                  
                  
                  **2004**Net
                      sales
                  
                  $
                  3,160
                  
                  $
                  3,403Cost
                      of goods sold
                  
                  
                  3,066
                  
                  
                  3,323Gross
                      profit
                  
                  
                  94
                  
                  
                  80Selling,
                      general and administrative expenses
                  
                  
                  997
                  
                  
                  2,368Restructuring
                      and other charges
                  
                  
                  —
                  
                  
                  314Operating
                      loss
                  
                  
                  (903
                  )
                  
                  (2,602
                  )Interest
                      expense
                  
                  
                  (211
                  )
                  
                  (183
                  )Other
                      income (expense), net
                  
                  
                  474
                  
                  
                  (213
                  )Loss
                      before income taxes, minority interest and discontinued
                      operations
                  
                  
                  (640
                  )
                  
                  (2,998
                  )Income
                      tax benefit
                  
                  
                  76
                  
                  
                  637Loss
                      before minority interest and discontinued operations
                  
                  
                  (564
                  )
                  
                  (2,361
                  )Minority
                      interest in (income) of subsidiary
                  
                  
                  (19
                  )
                  
                  (8
                  )Loss from continuing operations
                  
                  
                  (583
                  )
                  
                  (2,369
                  )Discontinued
                      operations (Note 2):Income
                      (loss) from discontinued operations, net of tax (provision)
                      benefit of
                      $(1,337) and $608 respectively and minority interest of $(257)
                      and $88,
                      respectively
                  
                  
                  1,369
                  
                  
                  (561
                  )Gain
                      on sale of DNE, net of taxes of $10,275
                  
                  
                  —
                  
                  
                  19,088Net
                      income
                  
                  
                  786
                  
                  
                  16,158Preferred
                      stock dividends
                  
                  
                  (111
                  )
                  
                  (1,641
                  )Net
                      income applicable to common stock
                  
                  $
                  675
                  
                  $
                  14,517Net
                      income (loss) per share of common stock:Basic and diluted:Loss
                      from continuing operations applicable to common stock
                  
                  $
                  (0.04
                  )
                  $
                  (0.30
                  )Gain
                      on sale of DNE
                  
                  
                  —
                  
                  
                  1.39Income
                      (loss) from discontinued operations
                  
                  
                  0.08
                  
                  
                  (0.04
                  )Net
                      income (loss) per basic and diluted share of common stock
                  
                  $
                  0.04
                  
                  $
                  1.05Weighted
                      average shares outstanding (basic and diluted)
                  
                  
                  15,961
                  
                  
                  13,745
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
  4
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share data)**
 **(unaudited)**
 **Nine
                          Months
                          Ended**
                        **September
                            30,****2005**
                      
                      
                      **2004**Net
                          sales
                      
                      $
                      9,465
                      
                      $
                      7,249Cost
                          of goods sold
                      
                      
                      9,111
                      
                      
                      7,058Gross
                          profit
                      
                      
                      354
                      
                      
                      191Selling,
                          general and administrative expenses
                      
                      
                      2,744
                      
                      
                      4,930Restructuring
                          and other charges
                      
                      
                      —
                      
                      
                      314Operating
                          loss
                      
                      
                      (2,390
                      )
                      
                      (5,053
                      )Interest
                          expense
                      
                      
                      (614
                      )
                      
                      (536
                      )Other
                          income (expense), net
                      
                      
                      9
                      
                      
                      (361
                      )Loss
                          before income taxes, minority interest and discontinued
                          operations
                      
                      
                      (2,995
                      )
                      
                      (5,950
                      )Income
                          tax benefit
                      
                      
                      255
                      
                      
                      1,743Loss
                          before minority interest and discontinued operations
                      
                      
                      (2,740
                      )
                      
                      (4,207
                      )Minority
                          interest in loss of subsidiary
                      
                      
                      100
                      
                      
                      151Loss
                          from continuing operations
                      
                      
                      (2,640
                      )
                      
                      (4,056
                      )Discontinued
                          operations (Note 2):Income
                          (loss) from discontinued operations, net of tax (provision)
                          benefit of
                          $939 and $(2,098), respectively and minority interest of
                          $225 and $(234),
                          respectively
                      
                      
                      (1,198
                      )
                      
                      2,748Gain
                          on sale of DNE, net of taxes of $10,275
                      
                      
                      —
                      
                      
                      19,088Net
                          income (loss)
                      
                      
                      (3,838
                      )
                      
                      17,780Preferred
                          stock dividends
                      
                      
                      (335
                      )
                      
                      (1,928
                      )Net
                          income (loss) applicable to common stock
                      
                      $
                      (4,173
                      )
                      $
                      15,852Net
                          income (loss) per share of common stock:Basic and diluted:Income
                          (loss) from continuing operations applicable to common
                          stock
                      
                      $
                      (0.19
                      )
                      $
                      (0.46
                      )Gain
                          on sale of DNE
                      
                      
                      —
                      
                      
                      1.48Income
                          (loss) from discontinued operations
                      
                      
                      (0.07
                      )
                      
                      0.21Net
                          income (loss) per basic and diluted share of common stock
                      
                      $
                      (0.26
                      )
                      $
                      1.23Weighted
                          average shares outstanding (basic and diluted)
                      
                      
                      15,790
                      
                      
                      12,893
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
  5
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENT OF STOCKHOLDERS' EQUITY**
 **(in
        thousands, except share data)**
 **(unaudited)**
 **Nine
                      Months Ended**
                    **September
                      30, 2005****Shares**
                  
                  **Amount**9%
                      cumulative convertible preferred stock:Balance
                      at beginning of period
                  
                  
                  177
                  
                  $
                  177Balance
                      at end of period
                  
                  
                  177
                  
                  
                  177Common
                      stock:Balance
                      at beginning of period
                  
                  
                  24,670,054
                  
                  
                  2,467Stock
                      options exercised
                  
                  
                  15,999
                  
                  
                  2Shares
                      issued pursuant to Series A Preferred Stock conversion
                  
                  
                  474,780
                  
                  
                  47Balance
                      at end of period
                  
                  
                  25,160,833
                  
                  
                  2,516Capital
                      in excess of par value:Balance
                      at beginning of period
                  
                  
                  
                  
                  
                  168,446Compensation
                      expense related to restricted stock and certain stock options,
                      less vested
                      sharesreleased
                      from Treasury
                  
                  
                  
                  
                  
                  479Shares
                      issued pursuant to Series A Preferred Stock conversion
                  
                  
                  
                  
                  
                  195Stock
                      options exercised
                  
                  
                  
                  
                  
                  11Balance
                      at end of period
                  
                  
                  
                  
                  
                  169,131Accumulated
                      other comprehensive loss:Balance
                      at beginning of period
                  
                  
                  
                  
                  
                  (20
                  )Change
                      in unrealized gains (losses) on securities, net of tax
                  
                  
                  
                  
                  
                  137Balance
                      at end of period
                  
                  
                  
                  
                  
                  117Accumulated
                      deficit:Balance
                      at beginning of period
                  
                  
                  
                  
                  
                  (52,955
                  )Net
                      loss
                  
                  
                  
                  
                  
                  (3,838
                  )Dividends
                      on preferred stock
                  
                  
                  
                  
                  
                  (335
                  )Balance
                      at end of period
                  
                  
                  
                  
                  
                  (57,128
                  )Treasury
                      stock:Balance
                      at beginning of period
                  
                  
                  (10,929,985
                  )
                  
                  (93,705
                  )Stock
                      options and grants
                  
                  
                  41,040
                  
                  
                  60Reverse
                      forward stock split
                  
                  
                  (7,969
                  )
                  
                  (16
                  )Balance
                      at end of period
                  
                  
                  (10,896,914
                  )
                  
                  (93,661
                  )Receivable
                      from stockholders:Balance
                      at beginning of period
                  
                  
                  
                  
                  
                  (415
                  )Forgiveness
                      of officer loans
                  
                  
                  
                  
                  
                  52Balance
                      at end of period
                  
                  
                  
                  
                  
                  (363
                  )Total
                      stockholders' equity
                  
                  
                  
                  
                  $
                  20,789
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
 
  6
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(in
        thousands)**
 **(unaudited)**
 **Nine
                  Months Ended**
                **September
                  30,****2005**
              
              **2004**Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              (3,838
              )
              $
              17,780Adjustments
                  to reconcile net income (loss) to cash used for operating
                  activities:Gain
                  on sale of DNE
              
              
              —
              
              
              (29,356
              )Depreciation
              
              
              964
              
              
              867Amortization
                  of deferred debt issuance costs and accretion of debt
                  discount
              
              
              375
              
              
              483Compensation
                  expense related to stock options and grants
              
              
              605
              
              
              1,488Gain
                  on sale of investments
              
              
              (337
              )
              
              (164
              )Gain
                  on sale of fixed assets
              
              
              (253
              )
              
              (316
              )Loss
                  on sale of subsidiary stock
              
              
              946
              
              
              —Minority
                  interest in income (loss) of subsidiary
              
              
              (325
              )
              
              83Increase
                  in fair value of warrant
              
              
              6
              
              
              250Change
                  in certain assets and liabilities:Accounts
                  receivable, net
              
              
              (19,984
              )
              
              (19,919
              )Inventories,
                  net
              
              
              7,542
              
              
              9,837Other
                  current and non-current assets
              
              
              655
              
              
              212Accounts
                  payable and accrued expenses
              
              
              4,769
              
              
              5,239Current
                  and deferred taxes
              
              
              (6,728
              )
              
              (296
              )Other,
                  net
              
              
              575
              
              
              (82
              )Cash
                  flows used for operating activities
              
              
              (15,028
              )
              
              (13,894
              )Cash
                  flows from investing activities:Capital
                  expenditures
              
              
              (2,297
              )
              
              (4,116
              )Proceeds
                  from sale of assets
              
              
              1,035
              
              
              680Proceeds
                  from sale of investments
              
              
              15,264
              
              
              9,776Purchase
                  of marketable securities
              
              
              (1,705
              )
              
              (38,287
              )Proceeds
                  from sale of DNE, net of transaction costs
              
              
              —
              
              
              38,150Loan
                  to affiliate (Note 1)
              
              
              (1,773
              )
              
              —Cash
                  flows provided by investing activities
              
              
              10,524
              
              
              6,203Cash
                  flows from financing activities:Borrowings
                  under revolving credit facilities, net
              
              
              4,222
              
              
              19,222Repayments
                  of long-term borrowings
              
              
              (387
              )
              
              (456
              )Proceeds
                  from sale of minority interest investment in subsidiary
              
              
              1,241
              
              
              —Reverse
                  - forward split
              
              
              (17
              )
              
              —Dividends-preferred
                  stock,
              
              
              (334
              )
              
              (1,928
              )Dividends
                  - common stock
              
              
              —
              
              
              (4,949
              )Other,
                  net
              
              
              —
              
              
              (289
              )Cash
                  flows provided by financing activities
              
              
              4,725
              
              
              11,600Net
                  increase in cash and cash equivalents
              
              
              221
              
              
              3,909Cash
                  and cash equivalents at beginning of period
              
              
              611
              
              
              465Cash
                  and cash equivalents at end of period
              
              $
              832
              
              $
              4,374Supplemental
                  disclosures:Cash
                  paid for interest
              
              $
              2,295
              
              $
              1,521Cash
                  paid for income taxes, net of refunds
              
              $
              4,988
              
              $
              1,501
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
 
  7
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(unaudited)**
 
 **1.
        General**
 
 ***Basis
        of presentation and description of business***
 
 The
        accompanying consolidated financial statements represent the accounts of
        The
        Alpine Group, Inc. and the consolidation of all of its majority-controlled
        subsidiaries (collectively "Alpine" or the "Company", unless the context
        otherwise requires). The Company accounts for all affiliate companies with
        ownership greater than 20%, but not majority-controlled, using the equity
        method
        of accounting.
 
 Alpine
        was incorporated in New Jersey in 1957 and reincorporated in Delaware in
        1987.
        Alpine is a holding company, which over the recent past has held major
        investments in industrial manufacturing companies. Currently, Alpine's principal
        operations consist of Essex Electric Inc. (“Essex Electric”), its 84% owned
        subsidiary engaged in the manufacture and sale of electrical wire and cable,
        and
        a 46% equity interest in Superior Cables Ltd. (“Superior Israel”), the largest
        Israeli based producer of wire and cable products.
 
 On
        December 11, 2002, Alpine, through Alpine Holdco Inc. ("Alpine
        Holdco") a newly formed, wholly-owned subsidiary of Alpine, acquired the
        following assets and securities from Superior TeleCom Inc., now known as
        Superior Essex Inc. (“Superior”): (1) substantially all of the assets,
        subject to related accounts payable and accrued liabilities, of Superior's
        electrical wire business, which is currently owned and operated by Essex
        Electric Inc. ("Essex Electric"), a newly formed, then wholly-owned
        subsidiary of Alpine Holdco; (2) all of the outstanding shares of
        capital
        stock of DNE Systems, Inc. ("DNE Systems") a manufacturer of multiplexers
        and other communications and electronic products; and (3) all of the
        outstanding shares of capital stock of Texas SUT Inc. and Superior
        Cable
        Holdings (1997) Ltd., which together owned approximately 47% (at that
        time)
        of Superior Israel, the largest Israeli-based producer of wire and cable
        products. This acquisition is referred to as the "Electrical Acquisition."
        The
        aggregate purchase price was approximately $87.4 million in cash (including
        $2.5 million of out-of-pocket costs) plus the issuance of a warrant
        (the
“Warrant”) to Superior to purchase 199 shares of the common stock of Essex
        Electric at the purchase price of $2,788.95 per share. As a result of the
        Essex
        Electric Sale discussed below, the Warrant is recorded as a long term liability
        of discontinued operations (see Note 2) in the consolidated balance sheet
        and is
        evaluated and adjusted to fair value on a quarterly basis. The Company recorded
        a $0.4 million expense in other income (expense) during the third quarter
        of
        2005, which offset $0.4 million of income recorded in the first quarter of
        2005.
        There was no adjustment to the Warrant during the third quarter of 2004 and
        there was a $0.3 million charge to expense to increase the Warrant for the
        nine
        month period ended September 30, 2004. The Warrant is exercisable during
        the
        30 day period prior to its expiration on December 11, 2007
        or upon the
        earlier occurrence of certain specified transactions generally involving
        a
        change in control of or a sale of the assets of Alpine Holdco or Essex Electric.
 
 On
        July
        29, 2004 the Company sold DNE Systems, its wholly-owned defense electronics
        subsidiary, to a wholly-owned subsidiary of Ultra Electronics Holdings plc,
        a
        United Kingdom-based company for a purchase price of $40 million in cash
        (the
“DNE Sale”). As a result of the DNE Sale a pretax book gain of approximately
        $29.4 million, net of expenses, was recorded in the third quarter of 2004
        and
        DNE Systems results of operations for the three and nine month periods ended
        September 30, 2004 are presented as discontinued operations.
 
 On
        September 30, 2005 Essex Electric executed an agreement to sell substantially
        all of the assets of its electrical wire business (the “Essex Electric Sale”) to
        the Southwire Company (“Southwire”). See Note 2 for further description of the
        Essex Electric Sale and its classification as discontinued operations in
        the
        financial statements herein.
 
 ***Reclassification***
 
 Certain
        prior period amounts have been reclassified to conform to the current period
        presentation.
 
 ***Marketable
        securities***
 
 Statement
        of Financial Accounting Standards (“SFAS”) No. 115, *Accounting
        for Certain Investments in Debt and Equity Securities* ,
        requires securities to be classified as held to maturity, available for sale
        or
        trading. Only those securities classified as held to maturity, which the
        Company
        intends and has the ability to hold until maturity, are reported at amortized
        cost. Available for sale and trading securities are reported at fair value
        with
        unrealized gains and losses included in shareholders’ equity or income (loss)
        net of related income taxes, respectively. All of the Company’s investment
        securities were classified as available for sale at December 31, 2004. During
        the quarter ended September 30, 2005, $0.5 million of securities were classified
        as held to maturity as the Company intends to hold these investments to
        maturity. Since such maturity date is beyond one year from the date of the
        consolidated balance sheet these securities are classified as long-term assets
        as of September 30, 2005. Since these securities were previously classified
        as
        available for sale, the Company had recorded a $60K unrealized loss to other
        comprehensive income that is being amortized over the life of the securities.
        All other securities held as of September 30, 2005 have been classified as
        available for sale.
   8
 
 The
        following table shows the unrealized gains (losses) and fair value of the
        Company’s investments, which are classified as available for sale, aggregated by
        investment category as of September 30, 2005:
 Description
                      of Securities
                  
                  Cost
                    Basis
                  
                  Unrealized
                    Gains
                  
                  Unrealized
                    Losses*
                  
                  Fair
                    ValueMarketable
                      equity securities
                  
                  $
                  5,482
                  
                  $
                  129
                  
                  $
                  (275
                  )
                  $
                  5,336Money
                      market funds
                  
                  
                  3,224
                  
                  
                  
                  
                  
                  
                  
                  
                  3,224Municipal
                      bonds and notes
                  
                  
                  5,900
                  
                  
                  
                  
                  
                  
                  
                  
                  5,900Mutual
                      funds
                  
                  
                  7,210
                  
                  
                  444
                  
                  
                  (8
                  )
                  
                  7,646Preferred
                      securities
                  
                  
                  250
                  
                  
                  
                  
                  
                  
                  
                  
                  250Total
                  
                  $
                  22,066
                  
                  $
                  573
                  
                  $
                  (283
                  )
                  $
                  22,356
  *
            None of
            the gross unrealized losses have been in that position in excess of 12
            months.
 
 The gross unrealized losses related to short-term investments are primarily
        due
        to a decrease in the fair value of equity securities due to fluctuations
        in the
        stock market. Alpine has reviewed its securities in a loss position and in
        management’s opinion the recorded gross unrealized losses on its short-term
        investments at September 30, 2005 are temporary in nature. Alpine reviews
        its
        investment portfolio quarterly, to identify and evaluate investments that
        have
        indications of possible impairment. Factors considered in determining whether
        or
        not a loss is temporary include the length of time and extent to which the
        fair
        value has been less than the cost basis, the financial condition, credit
        quality
        and near-term prospects of the investee, and Alpine’s ability to hold the
        investment for a period of time sufficient to allow for any anticipated recovery
        in market value.
 
 ***Due
        from related party***
 
 Alpine
        has made short-term advances to the United States subsidiary of Superior
        Cables
        Ltd., Alpine’s 46% owned affiliate, secured by United States-based inventory and
        accounts receivable, at an interest rate of LIBOR plus 1.4% per annum, to
        augment funding of that affiliate’s growth and working capital, particularly in
        the United States. As of September 30, 2005, $1.8 million of advances were
        included as due from related party. Total advances will not exceed $2 million
        and all advances must be repaid on or prior to June 30, 2006.
 
 ***Subsidiary
        stock transactions***
 
 The
        Company accounts for subsidiary stock transactions in accordance with Staff
        Accounting Bulletin No. 51, "Accounting for sales of stock by a subsidiary"
        and
        records all gains and losses related to subsidiary stock transactions through
        other income and expense.
  In
        January 2005, Alpine Holdco purchased 1,792 newly issued shares of Essex
        Electric common stock for a cash purchase price of $5.0 million. Superior
        exercised its rights under a securityholders agreement entered into at the
        time
        of the Electrical Acquisition and subscribed for and purchased 445 newly
        issued
        shares of Essex Electric common stock for a cash purchase price of $1.2 million.
        The foregoing resulted in Alpine Holdco and Superior owning 84.2% and 15.8%
        of
        Essex Electric, respectively. The Company accounted for the sale of stock
        of
        Essex Electric as a loss on sale of subsidiary stock of approximately $0.9
        million and decreased the value of the Warrant held by Superior to purchase
        199
        shares of Essex Electric common stock by $0.4 million due to the dilutive
        impact
        of the additional 2,237 shares issued.
 
 ***Stock-Based
        Compensation Plans***
 
 The
        Company applies the intrinsic-value based method of accounting prescribed
        by
        Accounting Principles Board (APB) Opinion No. 25, *Accounting
        for Stock Issued to Employees* ,
        and
        related interpretations including Financial Accounting Standards Board (FASB)
        Interpretation No. 44, *Accounting
        for Certain Transactions involving Stock Compensation, an interpretation
        of APB
        Opinion No. 25,* issued
        in March 2000, to account for its stock-based compensation plans. Under this
        method, compensation expense is recorded on the date of grant only if the
        current market price of the underlying stock exceeded the exercise price.
        Statement of Financial Accounting Standards (SFAS) No. 123, *Accounting
        for Stock-Based Compensation,* established
        accounting and disclosure requirements using a fair-value based method of
        accounting for stock-based employee compensation plans. As allowed by SFAS
        No. 123, the Company has elected to continue to apply the intrinsic-value
        based method of accounting described above, and has adopted only the disclosure
        requirements of SFAS No. 123. The following table illustrates the
        effect on
        net income (loss) if the fair value based method had been applied to all
        outstanding and unvested awards in each period.
  
 9
 **Three Months Ended**
                          **September
                            30,****2005**
                        
                        **2004****(in
                            thousands,
                            except**
                          **per
                              share amounts)**Net
                            income, as reported
                        
                        $
                        786
                        
                        $
                        16,158Add
                            stock-based employee compensation expense included in
                            reported net income
                            (loss),net
                            of tax
                        
                        
                        259
                        
                        
                        104Deduct
                            total stock-based employee compensation expense determined
                            under fair
                            valuebased
                            method for all awards, net of related tax effects
                        
                        
                        (293
                        )
                        
                        (137
                        )Pro
                            forma net income
                        
                        
                        752
                        
                        
                        16,125Preferred
                            stock dividends
                        
                        
                        (111
                        )
                        
                        (1,641
                        )Proforma
                            net income applicable to common stock
                        
                        $
                        641
                        
                        $
                        14,484Net
                            income per share:Basic
                            and diluted-as
                            reported
                        
                        $
                        0.04
                        
                        $
                        1.05Basic
                            and diluted-pro
                            forma
                        
                        $
                        0.04
                        
                        $
                        1.05
  **Nine Months Ended**
                            **September
                              30,****2005**
                          
                          **2004****(in
                              thousands,
                              except**
                            **per
                                share amounts)**
 Net
                                  income (loss), as reported
                              
                              $
                              (3,838
                              )
                              $
                              17,780Add
                                  stock-based employee compensation expense included
                                  in reported net income
                                  (loss),net
                                  of tax
                              
                              
                              351
                              
                              
                              933Deduct
                                  total stock-based employee compensation expense
                                  determined under fair
                                  valuebased
                                  method for all awards, net of related tax effects
                              
                              
                              (485
                              )
                              
                              (1,143
                              )Pro
                                  forma net income (loss)
                              
                              
                              (3,972
                              )
                              
                              17,570Preferred
                                  stock dividends
                              
                              
                              (335
                              )
                              
                              (1,928
                              )Proforma
                                  net income (loss) - applicable to common stock
                              
                              $
                              (4,307
                              )
                              $
                              15,642Net
                                  income (loss) per share:Basic
                                  and diluted-as
                                  reported
                              
                              $
                              (02.6
                              )
                              $
                              1.23Basic
                                  and diluted-pro
                                  forma
                              
                              $
                              (0.27
                              )
                              $
                              1.21
 The
        effects of applying SFAS No. 123 in the pro forma disclosure are not necessarily
        indicative of future amounts, since the estimated fair value of stock options
        is
        amortized to expense over the vesting period and additional options may be
        granted in future years. The fair value for these options was estimated at
        the
        date of grant using the Black-Scholes option-pricing model with the following
        weighted-average assumptions for the nine months ended September 30, 2005
        and
        2004, respectively: dividend yield of 0% for both periods; expected volatility
        of 166% and 126%, risk-free interest rate of 4.2% and 3.2%, and expected
        life of
        two years for both periods. The weighted average per share fair value of
        options
        granted (using the Black-Scholes option-pricing model) for the nine months
        ended
        September 30, 2005 and 2004 was $1.93 and $1.15, respectively. A total of
        63,966
        stock options were granted and 40,669 cancelled during the nine month period
        ended September 30, 2005.
 
 The
        Black-Scholes option-pricing model was developed for use in estimating the
        fair
        value of traded options, which have no vesting restrictions and are fully
        transferable. In addition, option valuation models require the input of highly
        subjective assumptions, including the expected stock price volatility. Because
        the Company's employee stock options have characteristics significantly
        different from those of traded options and because changes in the subjective
        input assumptions can materially affect the fair value estimates, in
        management's opinion, the existing models do not necessarily provide a reliable
        single measure of the fair value of its employee stock options.
  
 10
  The
        Company amortizes the value of restricted stock grants evenly over the vesting
        periods, based upon the market value of the stock as of the date of the
        grant.
 
 ***Derivatives***
 
 All
        derivatives are recognized on the balance sheet at fair value. On the date
        the
        derivative contract is entered, the Company designates the derivative as
        either
        (i) a fair value hedge of a recognized asset or liability, (ii) a
        cash
        flow hedge of a forecasted transaction, (iii) a hedge of a net investment
        in a foreign operation, or (iv) a non-designated derivative instrument.
        The
        Company has in the past engaged in certain derivatives that are classified
        as
        fair value hedges, cash flow hedges and non-designated derivative instruments.
        Changes in the fair value of derivatives that are designated as fair value
        hedges and the underlying exposure being hedged are adjusted to fair value
        and
        are recorded in the consolidated statements of operations in the same line
        item.
        Changes in the fair value of non-designated derivative contracts are reported
        in
        current earnings.
 
 During
        March 2005, the Company entered into copper futures contracts with a market
        value of approximately $7 million to hedge 5 million pounds of future finished
        goods inventory purchases scheduled for delivery during the last three quarters
        of 2005 at a pre-established price. At September 30, 2005, approximately
        $1.5
        million of net copper futures contracts, representing 1.0 million pounds
        of
        copper, remained outstanding as non-designated derivative instruments to
        hedge
        1.0 million copper pounds of future finished goods inventory purchases that
        were
        scheduled for delivery during the last quarter of 2005. These contracts were
        recorded at fair value at September 30, 2005, which resulted in recording
        a net
        unrealized hedge loss of $0.3 million that was offset by a $0.3 million gain
        on
        the mark-to-market on the purchase commitment. The contracts were liquidated
        in
        October 2005 and the loss of $0.1 million realized on the hedge was offset
        by
        the gain on the purchase of physical goods.
 
 At
        December 31, 2004, the Company had approximately $9 million of copper futures
        contracts, representing 6 million copper pounds, outstanding as non-designated
        derivative instruments. These contracts were entered into to hedge 6 million
        copper pounds of copper rod inventory purchased in December 2004, for
        fabrication and sale in the first quarter of 2005. These contracts were recorded
        at fair value at December 31, 2004 with any price fluctuations reflected
        in
        current earnings in 2004 and were liquidated in the first quarter of 2005,
        when
        the underlying asset (i.e. inventory) was sold. The net loss recorded on
        the
        futures contracts when liquidated was near zero.
  The
        Company does not currently utilize any hedging instruments that would qualify
        for hedge accounting treatment. If such transactions were to arise, the Company
        would formally document all relationships between hedging instruments and
        hedged
        items, as well as the risk management objectives and strategy for undertaking
        various hedge transactions.
 
 **2.
        Discontinued Operations**
 
 On
        September 30, 2005 Essex Electric, the Company’s 84% owned subsidiary, executed
        an agreement to sell substantially all of the assets of its electrical wire
        business (the “Essex Electric Sale”) to the Southwire Company (“Southwire”). The
        agreement provides for the sale by Essex Electric of all of its closing date
        building wire related inventory and prepaid assets, its Florence, Alabama
        manufacturing plant and equipment, and the assumption by Southwire of certain
        contracts and selected current liabilities related to the business. Essex
        Electric will retain substantially all of its other liabilities including
        the
        indebtedness under its revolving credit facility. Excluded from the sale
        are
        cash and cash equivalents and accounts receivable of Essex Electric, a copper
        scrap reclamation plant and operation based in Jonesboro, Indiana, a plastic
        resin compounding plant and operation based in Marion, Indiana, and three
        leased
        warehouse distribution centers. The scrap reclamation operation services
        both
        Essex Electric’s internal requirements for scrap processing, as well as outside
        customers. The purchase price is the sum of (i) $27 million plus (ii) the
        closing date value of Essex Electric’s inventory and certain prepaid assets. The
        sale is subject to approval by shareholders of Alpine and is currently expected
        to close in early 2006. The assets and liabilities related to the business
        sold
        have been reclassified to discontinued operations in the September 30, 2005
        and
        December 31, 2004 balance sheets presented herein. Although accounts receivable,
        other current assets and other long-term assets are not included in the assets
        being purchased by Southwire, they are assets that are integral to the Essex
        Electric building wire business and are expected to be collected, converted
        to
        cash or (in the case of $0.9 million of unamortized debt issue costs related
        to
        the revolving credit facility) written off within a short period after the
        closing date. Therefore, these assets have been included in assets of
        discontinued operations. Similarly, the revolving credit facility, accounts
        payable, deferred taxes and most of the other accrued liabilities will not
        be
        assumed by Southwire, however most of these liabilities will be settled with
        the
        proceeds of the sale and/or from the collection of the aforementioned accounts
        receivable. Therefore, these liabilities have been included in liabilities
        of
        discontinued operations. The Warrant is included in discontinued operations
        because the Warrant is fully exercisable in the event of the consummation
        of the
        Essex Electric Sale and to the extent not exercised in connection therewith
        will
        terminate in accordance with its terms. Since the purchase price is expected
        to
        result in a gain, the assets as stated at cost are properly stated at the
        lower
        of cost or market. Essex Electric’s related results of operations for the three
        and nine month periods ended September 30, 2005 and 2004 have been reclassified
        to income (loss) from discontinued operations.
  
 11
  On
        July
        29, 2004 the Company sold DNE Systems, its wholly-owned defense electronics
        subsidiary, to a wholly-owned subsidiary of Ultra Electronics Holdings plc,
        a
        United Kingdom-based company for a purchase price of $40 million in cash
        (the
“DNE Sale”). As a result of the DNE Sale a pretax book gain of approximately
        $29.4 million, net of expenses, was recorded in the third quarter of 2004
        and
        DNE Systems results of operations for the three and nine month periods ended
        September 30, 2004 are presented as discontinued operations.
 
 The
        major
        components of Essex Electric’s and DNE assets and liabilities classified as
        discontinued operations in the September 30, 2005 and December 31, 2004 balance
        sheets herein are presented below.
 
 **September
                  30,**
                **2005**
              
              **December 31,**
                **2004****(in
                  thousands)**Accounts
                  receivable
              
              $
              59,250
              
              $
              39,023Inventories,
                  net (a)
              
              
              22,728
              
              
              30,378Other
                  current assets
              
              
              1,643
              
              
              2,246Total current assets
              
              
              83,621
              
              
              71,647Property,
                  plant and equipment, net
              
              
              16,506
              
              
              15,508Other
                  long-term assets
              
              
              876
              
              
              1,152Total assets
              
              $
              101,003
              
              $
              88,307Revolving
                  credit facility (b)
              
              $
              44,472
              
              $
              40,250Accounts
                  payable
              
              
              18,552
              
              
              13,972Accrued
                  expenses
              
              
              8,422
              
              
              7,688Deferred
                  income taxes and income taxes payable
              
              
              5,300
              
              
              6,344Total current liabilities
              
              
              76,746
              
              
              68,254Deferred
                  income taxes
              
              
              2,030
              
              
              2,390Other
                  long term liabilities
              
              
              36
              
              
              80Warrant
              
              
              942
              
              
              936Total
                  liabilities
              
              
              79,754
              
              
              71,660Total
                  net assets
              
              $
              21,249
              
              $
              16,647
 
 (a)
              Inventories,
                  as presented, are net of LIFO reserves of $22,453 and $22,165,
                  as of
                  September 30, 2005 and December 31, 2004, respectively. An actual
                  valuation of inventory under the LIFO method can be made only at
                  the end
                  of each year based on the inventory levels and cost as of that
                  time.
                  Accordingly, interim LIFO calculations must be based on management’s
                  estimates of expected year-end inventory levels and costs. Because
                  these
                  are subject to many factors beyond management’s control, interim results
                  are subject to the final year-end LIFO inventory valuation. During
                  the
                  three and nine months ended September 30, 2005, the Company recorded
                  an
                  estimated LIFO decrement of $1.6 and $6.0 million, respectively
                  to cost of
                  goods sold.
 
 (b)
              Revolving
                  Credit Facility - In connection with the Electrical Acquisition,
                  Alpine
                  Holdco entered into a Loan and Security Agreement (the "Loan Agreement"),
                  dated as of December 11, 2002, by and among Alpine Holdco,
                  Essex
                  Electric, DNE Manufacturing and Service Company ("DNE Manufacturing")
                  and
                  DNE Technologies, Inc. ("DNE Technologies") as borrowers,
                  DNE Systems
                  as Credit Party (such parties sometimes collectively are called
                  "Companies") and certain financial institutions party thereto as
                  lenders.
 
 Effectiveconcurrently
                    with the consummation of the DNE Sale on July 29, 2004, the lenders
                    released each of DNE Systems, DNE Technologies, and DNE Manufacturing
                    from
                    all of their obligations under the Revolving Credit Facility
                    (the "DNE
                    Parties"), released all property of the DNE Parties from the
                    liens granted
                    for the benefit of the lenders under the Revolving Credit Facility
                    and all
                    of the outstanding and issued capital stock of the DNE Parties
                    from the
                    pledge thereof delivered in connection with the Revolving Credit
                    Facility,
                    and the DNE Parties no longer are "Borrowers" or a "Credit Party",
                    as the
                    case may be, under the Revolving Credit Facility. Accordingly,
                    from and
                    after July 29, 2004, the DNE Parties are not included in the
                    term
                    "Companies".
 
 12
 The
                  terms of the Revolving Credit Facility provided for a maximum committed
                  amount of $100 million at its inception which, at the request
                  of the
                  Companies, was reduced to $70 million on December 8, 2003. Borrowing
                  availability is determined by reference to a borrowing base which
                  permits
                  advances to be made at various net valuation rates against various
                  assets
                  of the Companies. Interest is payable monthly in cash in arrears
                  and is
                  based on, at Alpine Holdco's option, LIBOR or prime rates plus
                  a fixed
                  margin. The weighted average interest rate at September 30, 2005
                  and
                  December 31, 2004 was 7.12% and 6.05%, respectively. Alpine
                  Holdco
                  was in compliance with all applicable covenants at September 30,
                  2005.
                  Outstanding obligations under the Revolving Credit Facility are
                  secured by
                  a lien on all of the Companies' tangible and intangible assets,
                  other than
                  the investment in Superior Cables Ltd. The Essex Electric sale
                  will
                  require consent by the credit parities to release the liens on
                  the assets
                  being sold. The obligations under the Revolving Credit Facility
                  are
                  without recourse to Alpine. Unless accelerated as a result of prepayment
                  or default, the Revolving Credit Facility matures in December 2007.
 
 The
                  Companies may terminate the Revolving Credit Facility at any time
                  upon
                  45 days' prior written notice and payment of all outstanding
                  borrowings, together with unpaid interest, and a termination fee
                  equal to
                  an annual rate of 0.75% of the original maximum committed amount
                  for the
                  remaining term of the Revolving Credit Facility. At September 30,
                  2005 and
                  December 31, 2004, outstanding borrowings under the Revolving
                  Credit
                  Facility were $44.5 million and $40.3 million, respectively.
                  At
                  September 30, 2005 the Companies had $23.5 million of borrowing
                  availability.
 
 The
            net
            sales and income (loss) before taxes and minority interest of Essex Electric
            (and DNE for the 2004 periods) that are classified as discontinued operations
            for the three and nine month periods ended September 30, 2005 and 2004
            are
            presented below:
 
 **Three
                        months ended**
                      **September
                        30,**
                    
                    **Nine
                        Months ended**
                      **September
                        30,****2005**
                    
                    **2004**
                    
                    **2005**
                    
                    **2004****(in
                        thousands)**Net
                        sales
                    
                    $
                    109,861
                    
                    $
                    78,542
                    
                    $
                    291,200
                    
                    $
                    246,419Income
                      (loss) before taxes and minority interest
                    
                    $
                    2,963
                    
                    $
                    (1,257
                    )
                    $
                    (2,362
                    )
                    $
                    5,080
 
 
 **3.
        Comprehensive income (loss)**
 
 The
        components of comprehensive income (loss) for the three and nine months ended
        September 30, 2005 and 2004 were as follows:
  **Three
                    Months Ended**
                  **September
                      30,****2005**
                
                
                **2004****(in
                    thousands)**Net
                    income (loss)
                
                $
                786
                
                $
                16,158Change
                    in unrealized losses on securities, net of tax
                
                
                (46
                )
                
                (155
                )Comprehensive
                    income (loss)
                
                $
                740
                
                $
                16,003
 **Nine
                      months
                      Ended****September
                      30,****2005**
                  
                  **2004****(in
                      thousands)**Net
                      income (loss)
                  
                  $
                  (3,838
                  )
                  $
                  17,780Change
                      in unrealized losses on securities, net of tax
                  
                  
                  137
                  
                  
                  (249
                  )Comprehensive
                      income (loss)
                  
                  $
                  (3,701
                  )
                  $
                  17,531
 
  13
  **4.** **Long-term
        debt**
 
 At
        September 30, 2005 and December 31, 2004, long-term debt consists of the
        following:
 **September
                    30,**
                
                **December
                  31,****2005**
                
                **2004****(in****thousands****)**6%
                    Junior Subordinated Notes, net of $1.0 and $1.1 million discount,
                    respectively
                
                $
                3,215
                
                $
                3,122Other
                
                
                —
                
                
                3863,215
                
                
                3,508Less
                    current portion of long-term debt
                
                
                —
                
                
                386$
                3,215
                
                $
                3,122
 On
        August
        4, 2003, the Company completed an exchange offer whereby holders of its common
        stock (par value $.10 per share, the “Common Stock”) exchanged
        3,479,656 shares for $4.3 million principal amount of 6% Junior
        Subordinated Notes (the "Subordinated Notes") issued by the Company plus
        a
        nominal amount of cash in lieu of fractional notes. The Subordinated Notes
        were
        initially recorded at an amount equal to the fair value of the Common Stock
        exchanged resulting in an initial discount of $1.4 million. The discount
        is
        being accreted over the term of the Subordinated Notes using the effective
        interest rate method. The Subordinated Notes accrue interest at 6% per annum
        payable in cash semiannually each December 31 and September 30. The
        Subordinated Notes are the Company's general unsecured obligations subordinated
        and subject in right of payment to all of the Company's existing and future
        senior indebtedness, which excludes trade payables incurred in the ordinary
        course of business. The Company will be required to repay one-eighth of the
        outstanding principal amount of the Subordinated Notes commencing on
        June 30, 2007 and semiannually thereafter, so that all of the Subordinated
        Notes will be repaid by December 31, 2010. The Subordinated Notes
        are
        redeemable, at the Company's option, in whole at any time or in part from
        time
        to time, at the principal amount to be redeemed plus accrued and unpaid interest
        thereon to the redemption date, together with a premium if the Subordinated
        Notes are redeemed prior to 2007. In addition, the Company must offer to
        redeem
        all of the Subordinated Notes at the redemption price then in effect in the
        event of a change of control. The Subordinated Notes were issued under an
        indenture that does not subject the Company to any financial
        covenants.
 
 The
        "Other" debt caption represents a loan established in 1999 with Raytheon
        Aircraft Credit Corporation to finance the purchase of a 12.5% interest in
        an
        aircraft. The interest in this aircraft was sold during March 2005 and the
        associated loan was repaid.
 
 **5.
        Series A Cumulative Convertible Preferred Stock**
 
 On
        June
        23, 2003, Alpine completed a private placement of 8,287 shares of a new issue
        of
        Series A Cumulative Convertible Preferred Stock (the "Series A Preferred
        Stock")
        to its directors and certain officers for a purchase price of $380 per share,
        or
        an aggregate of approximately $3.1 million. Holders of the Series A
        Preferred Stock are entitled to receive, when, as and if declared by the
        board
        of directors out of funds legally available for payment, cash dividends at
        an
        annual rate of $30.40 per share. The Series A Preferred Stock originally
        was convertible into shares of Alpine Common Stock, at the option of the
        holder,
        at the conversion rate of 691 shares of Common Stock per share of Series
        A
        Preferred. As a result of a special dividend declared by the Company on August
        24, 2004, the conversion rate increased to 743.01. Since the market price
        of the
        Common Stock on the subscription date (June 23, 2003) was $0.76 per share
        and
        the original conversion price was $0.55 per share, a beneficial conversion
        feature of $1.2 million was recorded as a reduction to the mandatorily
        redeemable series A cumulative preferred stock line of the balance sheet
        with
        the offset to capital in excess of par. The beneficial conversion feature
        was
        recorded as a dividend as of December 29, 2004 when the privately placed
        Series
        A Preferred Stock became convertible following the increase in authorized
        but
        unissued shares of Common Stock from 25 million to 50 million shares.
 
 On
        November 10, 2003, the Company completed the sale of 9,977 shares of Series
        A
        Preferred Stock pursuant to a rights offering to holders of the Common Stock.
        Common stockholders were offered a right to purchase one share of Series
        A
        Preferred Stock at a price of $380 per share for each 500 shares of Common
        Stock
        held on September 29, 2003. The terms of the Series A Preferred Stock are
        the
        same as that purchased by the officers and directors in the private placement
        discussed above. Total proceeds received from the sale were $3.8 million.
        The
        recording of dividends, if any, on the Series A Preferred Stock will reduce
        the
        Company's earnings per share in the period recorded. Since the market price
        of
        the Common Stock on the date of issuance (November 10, 2003) was $0.92 per
        share
        and the original conversion price was $0.55 per share, a beneficial conversion
        feature of $2.6 million was recorded. This was recorded as a dividend, since
        the
        shares were immediately convertible, offset with a credit to capital in excess
        of par. The Company may cause conversion
        of the Series A Preferred Stock into Common Stock if the Common Stock is
        then
        listed on the New York Stock Exchange or the American Stock Exchange or is
        traded on the Nasdaq National Market System and the average closing price
        of a
        share of the Common Stock for any 20 consecutive trading days equals or exceeds
        300% of the conversion price then in effect. The Series A Preferred Stock
        is subject
        to mandatory redemption by the Company ratably on the last day of each quarter
        during the three year period commencing on December 31, 2009 at the
        liquidation value of $380 per share, plus accrued and unpaid dividends.
        Additionally, if the Company experiences a change in control it will, subject
        to
        certain limitations, offer to redeem the Series A Preferred Stock at a cash
        price of $380 per share plus (i) accrued and unpaid dividends and
        (ii) if the change of control occurs prior to December 31,
        2007, all
        dividends that would be payable from the redemption date through
        December 31, 2007.
   14
 
 There
        were 49 and 639 Series A Preferred Stock shares converted into 36,407 and
        474,780 shares of Common Stock for the three and nine month periods ended
        September 30, 2005, respectively.
 
 **6.
        Income (loss) per share**
 
 The
        computation of basic and diluted income (loss) per share for the three months
        ended September 30, 2005 and 2004 is as follows:
 Three
                    Months Ended September 30,**2005**
                
                **2004****Net
                    Income**
                  **(loss)**
                
                **Weighted**
                  **Average**
                  **Shares**
                ****
                **Per
                    Share**
                  **Amount**
                ****
                **Net
                    Income**
                  **(loss)**
                ****
                **Weighted**
                  **Average**
                  **Shares**
                ****
                **Per
                    Share**
                  **Amount****Basic
                    and diluted earnings (loss) per share**Loss
                    from continuing operations
                
                $
                (583
                )
                
                15,961
                
                $
                (0.03
                )
                $
                (2,369
                )
                
                13,745
                
                $
                (0.18
                )Adjustments:Preferred
                    stock dividends
                
                
                (111
                )
                
                15,961
                
                
                (0.01
                )
                
                (1,641
                )
                
                13,745
                
                
                (0.12
                )Loss
                    attributable to common stock from continuing operations
                
                $
                (694
                )
                
                15,961
                
                $
                (0.04
                )
                $
                (4,010
                )
                
                13,745
                
                $
                (0.30
                )Gain
                    on sale of DNE, net of tax
                
                
                
                
                
                
                
                
                
                
                
                19,088
                
                
                13,745
                
                
                1.39Income
                    (loss) from discontinued operations
                
                
                1,369
                
                
                15,961
                
                
                0.08
                
                
                (561
                )
                
                13,745
                
                
                (0.04
                )Net
                    income applicable to common stock per basic common share
                
                $
                675
                
                
                15,961
                
                $
                0.04
                
                $
                14,517
                
                
                13,745
                
                $
                1.05
 
 The
        computation of basic and diluted income (loss) per share for the nine months
        ended September 30, 2005 and 2004 is as follows:
 **Nine
                        months Ended September 30,**2005
                    
                    2004**Net
                        Income**
                      **(loss)**
                    
                    **Weighted**
                      **Average**
                      **Shares**
                    
                    **Per
                        Share**
                      **Amount**
                    
                    **Net
                        Income**
                      **(loss)**
                    
                    Weighted
                      Average
                      Shares
                    
                    Per
                        Share
                      Amount**Basic
                        and diluted earnings (loss) per share**Loss
                        from continuing operations
                    
                    $
                    (2,640
                    )
                    
                    15,790
                    
                    $
                    (0.17
                    )
                    $
                    (4,056
                    )
                    
                    12,893
                    
                    $
                    (0.31
                    )Adjustments:Preferred
                        stock dividends
                    
                    
                    (335
                    )
                    
                    15,790
                    
                    
                    (0.02
                    )
                    
                    (1,928
                    )
                    
                    12,893
                    
                    
                    (0.15
                    )Loss
                        attributable to common stock from continuing operations
                    
                    $
                    (2,975
                    )
                    
                    15,790
                    
                    $
                    (0.19
                    )
                    $
                    (5,984
                    )
                    
                    12,893
                    
                    $
                    (0.46
                    )Gain
                        on sale of DNE, net of tax
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    19,088
                    
                    
                    12,893
                    
                    
                    1.48Income
                        (loss) from discontinued operations
                    
                    
                    (1,198
                    )
                    
                    15,790
                    
                    
                    (0.07
                    )
                    
                    2,748
                    
                    
                    12,893
                    
                    
                    0.21Net
                        income (loss) applicable to common stock per basic common
                        share
                    
                    $
                    (4,173
                    )
                    
                    15,790
                    
                    $
                    (0.26
                    )
                    $
                    15,852
                    
                    
                    12,893
                    
                    $
                    1.23
 
  15
  The
        Company has excluded the assumed conversion of all stock options (1.5 million),
        restricted stock grants (0.8 million) and convertible preferred stock (14,058
        preferred shares convertible into 10,445,235 common shares) from the Company’s
        earnings per share calculation for the three and nine month periods ended
        September 30, 2005 and the assumed conversion of all stock options (1.5
        million), restricted stock grants (0.9 million) and convertible preferred
        stock
        (14,711 preferred shares convertible into 10,930,420 common shares) from
        the
        Company’s earnings per share calculation for the three and nine month periods
        ended September 30, 2004, as the impact would be anti-dilutive due to the
        loss
        from continuing operations for those periods. The Warrant issued in connection
        with the Electrical Acquisition has not been included in the computation
        of
        diluted income (loss) per share for all periods presented, as the impact
        would
        be anti-dilutive.
 
 **7.
        Business segments**
 
 The
        Company's reportable segments in the recent past consisted of electrical
        wire
        (Alpine's 84% owned subsidiary, Essex Electric) and communications and
        electronic products (DNE Systems). In September 2005 the Company announced
        the
        Essex Electric Sale, therefore the operations related to the Essex Electric
        Sale
        have been classified as discontinued operations for all periods presented.
        In
        July 2004 the Company announced the sale of DNE and the sale closed on July
        29,
        2004, therefore the results of operations for DNE for the three and nine
        month
        periods ended September 30, 2004 are also included in discontinued operations.
        See Note 2 for additional information about the Company’s discontinued
        operations. The remaining operating segment of the Company is the scrap
        reclamation operation.
 16
  ITEM
        2.  MANAGEMENT'S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 **General**
 
 The
        Alpine Group, Inc. (together with its majority owned subsidiaries "Alpine"
        or
        the “Company” unless the context otherwise requires) is a holding company, which
        over the recent past has held major investments in industrial manufacturing
        companies. Currently, Alpine's principal operations consist of Essex Electric
        Inc. (“Essex Electric”), its 84% owned subsidiary engaged in the manufacture and
        sale of electrical wire and cable, and a 46% equity interest in Superior
        Cables
        Ltd., the largest Israeli - based producer of wire and cable products.
 
 On
        December 11, 2002, Alpine's wholly-owned subsidiary, Alpine Holdco Inc. ("Alpine
        Holdco") acquired the electrical wire business assets now operated as Essex
        Electric, and DNE Systems, Inc. ("DNE Systems") from Superior TeleCom Inc.,
        now
        known as Superior Essex Inc. ("Superior") as well as all of the outstanding
        shares of capital stock of Texas SUT Inc. and Superior Cable Holdings (1997)
        Ltd., which together owned approximately 47% (at that time) of Superior Cables
        Ltd., which we sometimes refer to as "Superior Israel". The purchase included
        the issuance of a warrant (the "Warrant") to Superior to purchase 199 shares
        of
        the common stock of Essex Electric. We sometimes refer to this acquisition
        as
        the "Electrical Acquisition". In September 2003, Alpine Holdco subscribed
        for
        and purchased 681 newly issued shares of common stock of Essex Electric.
        In
        October 2003, Superior exercised its rights under a securityholders agreement
        to
        subscribe for and purchase 169 shares of newly issued common stock of Essex
        Electric. In January 2005, Alpine Holdco purchased an additional 1,792 newly
        issued shares of Essex Electric common stock for $5.0 million and Superior
        purchased 445 newly issued shares of Essex Electric common stock for an
        aggregate purchase price of $1.2 million. Following the aforementioned
        investments, Alpine Holdco and Superior owned 84.2% and 15.8% of Essex Electric,
        respectively. The Company recorded a loss on sale of subsidiary stock of
        approximately $0.9 million in January 2005 related to the investment by
        Superior. In addition, the Company decreased the value of the Warrant by
        $0.4
        million due to the dilution of the additional 2,237 shares issued during
        January
        2005. Superior’s Warrant to purchase 199 shares of the capital stock of Essex
        Electric together with Superior’s current ownership of 614 shares of common
        stock of Essex Electric represent 19.9% of fully diluted capital stock of
        Essex
        Electric. As a result of the Essex Electric Sale discussed below, the Warrant
        is
        recorded as a long term liability of discontinued operations in the consolidated
        balance sheet. On July 29, 2004,
        Alpine sold DNE Systems. Accordingly, DNE Systems has been accounted for
        and
        classified as a discontinued operation in the 2004 Consolidated Statements
        of
        Operations filed herein.
 
 On
        September 30, 2005 Essex Electric, the Company’s 84% owned subsidiary, executed
        an agreement to sell substantially all of the assets of its electrical wire
        business (the “Essex Electric Sale”) to the Southwire Company. The agreement
        provides for the sale by Essex Electric of all of its closing date building
        wire
        related inventory and prepaid assets, its Florence, Alabama manufacturing
        plant
        and equipment, and the assumption by Southwire of certain contracts and selected
        current liabilities related to the business. Essex Electric will retain
        substantially all of its other liabilities including the indebtedness under
        its
        revolving credit facility. Excluded from the sale are cash and cash equivalents
        and accounts receivable of Essex Electric, a copper scrap reclamation plant
        and
        operation based in Jonesboro, Indiana, a plastic resin compounding plant
        and
        operation based in Marion, Indiana, and three leased warehouse distribution
        centers. The scrap reclamation operation services both Essex Electric’s internal
        requirements for scrap processing, as well as outside customers. The purchase
        price is the sum of (i) $27 million plus (ii) the closing date value of Essex
        Electric’s inventory and certain prepaid assets. The sale is subject to approval
        by shareholders of Alpine and is currently expected to close in early 2006.
        The
        assets and liabilities related to the business sold have been reclassified
        to
        discontinued operations in the September 30, 2005 and December 31, 2004 balance
        sheets presented herein. Although accounts receivable, other current assets
        and
        other long-term assets are not included in the assets being purchased by
        Southwire, they are assets that are integral to the Essex Electric building
        wire
        business and are expected to be collected, converted to cash or (in the case
        of
        $0.9 million of unamortized debt issue costs related to the revolving credit
        facility) written off within a short period after the closing date. Therefore,
        these assets have been included in assets of discontinued operations. Similarly,
        the revolving credit facility, accounts payable, deferred taxes and most
        of the
        other accrued liabilities will not be assumed by Southwire, however most
        of
        these liabilities will be settled with the proceeds of the sale and/or from
        the
        collection of the aforementioned accounts receivable. Therefore, theses
        liabilities have been included in liabilities of discontinued operations.
        The
        Warrant is included in discontinued operations because the Warrant is fully
        exercisable in the event of the consummation of the Essex Electric Sale and
        to
        the extent not exercised in connection therewith will terminate in accordance
        with its terms. Since the purchase price for the Electrical Sale is expected
        to
        result in a gain, the assets as stated at cost are properly stated at the
        lower
        of cost or market. Essex Electric’s related results of operations for the three
        and nine month periods ended September 30, 2005 and 2004 have been reclassified
        to income (loss) from discontinued operations. Assuming Superior exercises
        the
        Warrant in conjunction with the Essex Sale, Superior’s ownership of Essex
        Electric would be 19.9%. The Company increased the value of the Warrant by
        $0.4
        million during the three month period ended September 30, 2005, with the
        expense
        charged to other income (expense).
 
 ***Impact
        of Copper Price Fluctuations on Operating Results***
 
 Copper
        is
        one of the principal raw materials used by Essex Electric, which is now
        classified as discontinued operation (see above). Fluctuations in the price
        of
        copper affect per unit product pricing and related revenues. Historically,
        the
        cost of copper has not had a material impact on profitability as the Company,
        in
        most cases, had the ability to adjust prices billed for its products to properly
        match the copper cost component of its inventory shipped. However, during
        most
        of the first half of 2005 because of a more competitive pricing environment
        in
        the building wire market, reduced demand, uncertainty accompanying the
        volatility of market copper prices and increased raw material costs for
        non-copper products, average unit selling prices did not increase sufficiently
        to offset the higher copper prices and non-copper raw material costs. Since
        the
        selling price to the customer is one all-inclusive price and copper is not
        priced separately, it is not possible to separately quantify the impact of
        copper and other non-copper raw material price fluctuations on selling prices
        relative to the overall selling price of the product. Building wire market
        pricing did improve during the latter portion of the third quarter of 2005
        relative to the second quarter of 2005 and continued to improve into the
        fourth
        quarter.
 
  17
   **Results
        of Operations** **—** **Three
        Month Period Ended September 30, 2005 as Compared to the Three Month period
        Ended September 30, 2004**
 
 Consolidated
        net sales from continuing operations for the three month period ended September
        30, 2005 were $3.2 million consisting of sales of reclaimed copper scrap
        for
        external customers. Sales cost of sales and gross profits for the three-months
        ended September 30, 2005 were comparable to the same period during
        2004.
 
 Selling,
        general and administrative expenses from continuing operations for the three
        month period ended September 30, 2005 were $1.0 million, a decrease of $1.4
        million from the comparable period in 2004. The decrease was due primarily
        to
        the non-recurrence of certain expenses incurred in the third quarter of 2004.
        The Company’s operating loss of $0.9 million for the three month period ended
        September 30, 2005 compared with a $2.6 million loss for the comparable period
        in 2004, was due primarily to the aforementioned decrease in selling, general
        and administrative expenses.
 
 Other
        income (expense) was $0.5 million income for the three month period ended
        September 30, 2005 compared with a $0.2 million loss for the comparable period
        in 2004, was due primarily to earnings on investments in marketable securities.
  The
        effective tax rate on continuing operations for the third quarter of 2005
        was
        12% compared to 21% for the third quarter of 2004. The change in the effective
        rate was due primarily to the impact of certain permanent tax expense items
        and
        the interest accrued on the tax contingency on the relatively low pre-tax
        loss
        for the third quarter of 2005 versus the effect of similar items on the larger
        pre-tax loss position for the third quarter of 2004.
 
 Income
        from discontinued operations of $1.4 million for the third quarter of 2005
        improved $2.0 million from a loss of $0.6 million for the third quarter of
        2004
        due primarily to increased sales volume and margins in Essex Electric, as
        well
        as reduced manufacturing and administrative costs. Building wire pricing
        improved throughout the second half of the third quarter and continued to
        improve into the fourth quarter. The third quarter 2005 results included
        an
        estimated LIFO decrement credited to cost of sales of $1.6 million compared
        with
        a $0.7 million decrement for the third quarter of 2004. The income from
        discontinued operations for the third quarter of 2005 included a provision
        for
        income taxes of $1.3 million, whereas the loss from discontinued operations
        for
        the third quarter of 2004 included a tax benefit of $0.6 million.
 
 **Results
        of Operations** **—
        Nine** **Month Period Ended September 30, 2005 as Compared to the Nine Month period
        Ended
        September 30, 2004**
 
 Consolidated
        net sales from continuing operations for the nine month period ended September
        30, 2005 were $9.5 million, consisting of sales of reclaimed copper scrap
        for
        external customers. Sales increased 31% compared to the same period in 2004,
        due
        primarily to the increased solicitation of outside business for the Jonesboro
        operation during 2005 and a 25% increase in copper prices. Gross profit improved
        85% due to the additional volume and improved plant utilization.
 
 Selling,
        general and administrative expenses from continuing operations for the nine
        month period ended September 30, 2005 were $2.7 million, a decrease of $2.2
        million from the comparable period in 2004. The decrease was due primarily
        to
        the non-recurrence of certain expenses incurred in the third quarter of 2004.
        The decrease in the Company’s operating loss of $2.4 million for the nine month
        period ended September 30, 2005 compared with a $5.1 million loss for the
        comparable period in 2004, was due primarily to the aforementioned decrease
        in
        selling, general and administrative expenses.
 
 Other
        income (expense) was near zero for the nine month period ended September
        30,
        2005 as compared with a $0.4 million loss for the comparable period in 2004.
        This was due primarily to the net effect of a $0.5 million improvement in
        earnings on investments in marketable securities in 2005, elimination of
        $0.6
        million in costs related to two lawsuits settled in the first half of 2004,
        and
        the elimination of $0.2 million of loss on sale of fixed assets during the
        nine
        month period ended September 30, 2004, offset somewhat by a $1.0 million
        loss on
        sale of Essex Electric stock to Superior during the first quarter of
        2005.
 
 The
        effective tax rate on continuing operations for the nine month period ended
        September 30, 2005 was 9% compared to 29% for the same period in 2004. The
        change in the effective rate was due primarily to the impact of certain
        permanent tax expense items and the interest accrued on the tax contingency
        on
        the relatively low pre-tax loss for the nine month period of 2005 versus
        the
        effect of similar items on the larger pre-tax loss position for the same
        period
        of 2004.
 
 The
        loss
        from discontinued operations (net of taxes and minority interest) for the
        nine
        month period ended September 30, 2005 was $1.2 million compared to $2.7 million
        of income for the same period in 2004. The decrease was due primarily to
        lower
        margins at Essex Electric in the first half of 2005 compared with the first
        half
        of 2004 due to a more competitive pricing environment, reduced demand and
        increased copper costs without commensurate price increases in building wire
        copper products. As previously mentioned, building wire pricing did improve
        throughout the second half of the third quarter of 2005 and has continued
        to
        improve into the fourth quarter. The results for the nine months ended September
        30, 2005 included an estimated LIFO decrement credited to cost of sales of
        $6.0
        million compared with a $1.5 million decrement for the nine months ended
        September 30, 2004. The loss from discontinued operations for the nine months
        ended September 30, 2005 included an income tax benefit of $0.9 million,
        whereas
        the income from discontinued operations for the nine months ended September
        30,
        2004 included a provision for income taxes of $2.1 million.
  18
 
 **Liquidity
        and Capital Resources**
  ***Alpine
        Holdco***
 
 As
        previously discussed, in December 2002, Alpine, through its newly
        formed,
        wholly-owned subsidiary, Alpine Holdco, acquired the following assets and
        securities from Superior: (1) substantially all of the assets, subject
        to
        related accounts payable and accrued liabilities, of Superior's electrical
        wire
        business, which is currently owned and operated by Essex Electric, a newly
        formed, then wholly-owned subsidiary of Alpine Holdco; (2) all of
        the
        outstanding shares of capital stock of DNE Systems, and (3) approximately
        47%
        (at that time) of Superior Cables Ltd. for a total purchase price of
        approximately $85 million in cash and the issuance of a warrant to
        Superior
        to purchase 199 shares of common stock of Essex Electric.
 
 The
        acquisition was financed by approximately $10 million of Alpine's
        cash and
        cash equivalents and borrowings by Alpine Holdco under a Loan and Security
        Agreement (the "Revolving Credit Facility"), dated as of December 11,
        2002,
        by and among Alpine Holdco, Essex Electric, DNE Manufacturing and DNE
        Technologies as borrowers and DNE Systems as credit party (such parties
        sometimes collectively are called the "Companies"), certain financial
        institutions party thereto as lenders, Congress Financial Corporation, as
        documentation agent, and Foothill Capital Corporation, as arranger and
        administrative agent. Upon consummation of the acquisition, approximately
        $78 million was outstanding under the Revolving Credit Facility. The
        Revolving Credit Facility was last amended on February 28, 2005 to revise
        certain covenants for 2005. The Company was in compliance with all covenants
        as
        of September 30, 2005.
 
 The
        terms
        of the Revolving Credit Facility provided for a maximum committed amount
        of
        $100 million at its inception which, at the request of the Companies,
        was
        reduced to $70 million on December 8, 2003. Borrowing availability is determined
        by reference to a borrowing base, which permits advances to be made at various
        net valuation rates against various assets of the Companies. Interest is
        payable
        monthly in cash in arrears and is based on, at Alpine Holdco's option, LIBOR
        or
        prime rates plus a fixed margin. The weighted average interest rate at September
        30, 2005 and December 31, 2004 was 7.12% and 6.05%, respectively.
        The
        Revolving Credit Facility also provides for maintenance of financial covenants
        and ratios relating to minimum EBITDA and tangible net worth, and includes
        restrictions on capital expenditures, payment of cash dividends and incurrence
        of indebtedness. Outstanding obligations under the Revolving Credit Facility
        are
        secured by a lien on all of the Companies' tangible and intangible assets,
        other
        than the investment in Superior Cables Ltd. The obligations under the Revolving
        Credit Facility are without recourse to Alpine. Unless previously accelerated
        as
        a result of default, the Revolving Credit Facility matures in five years.
        However, in accordance with Emerging Issues Task Force Issue 95-22, *Balance
        Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements
        That Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement,* borrowings
        under the Revolving Credit Facility have been classified as a current liability.
        The Companies may terminate the Revolving Credit Facility at any time upon
        45 days' prior written notice and payment of all outstanding borrowings,
        together with unpaid interest, and a prepayment premium equal to an annual
        rate
        of 0.75% of the original maximum committed amount for the remaining term
        of such
        facility. The Companies may, upon 30 days' prior written notice,
        permanently reduce the maximum committed amount without penalty or premium.
        At
        September 30, 2005 and December 31, 2004, outstanding borrowings under
        the
        Revolving Credit Facility were $44.5 million and $40.2 million, respectively.
        At
        September 30, 2005, the Companies had $23.6 million of borrowing availability.
        No dividends may be paid by Alpine Holdco without prior consent of the lenders.
 
 Effective
        concurrently with the consummation of the DNE Sale (see note 1) on July 29,
        2004, the lenders, released each of DNE Systems, DNE Technologies, and DNE
        Manufacturing from all of their obligations under the Revolving Credit Facility
        (the "DNE Parties"), released all property of the DNE Parties from the liens
        granted for the benefit of the lenders under the Revolving Credit Facility
        and
        all of the outstanding and issued capital stock of the DNE Parties from the
        pledge thereof delivered in connection with the Revolving Credit Facility,
        and
        the DNE Parties no longer are "Borrowers" or a "Credit Party", as the case
        may
        be, under the Revolving Credit Facility. Accordingly, from and after July
        29,
        2004, the DNE Parties are not included in the term "Companies".
  Effective
        with the consummation of the Essex Electric sale, the Revolving Credit facility
        will either be terminated or significantly amended to reflect the impact
        of the
        transaction and therefore has been included in discontinued operations in
        the
        financial statements.
 
 Alpine
        believes that existing cash and cash equivalents, cash provided by and/or
        used
        for operations and working capital management of its Essex Electric subsidiary,
        together with borrowings available under the Revolving Credit Facility will
        be
        sufficient to meet the capital needs of the Companies through 2005 and /
        or
        through closing of the Essex Electric Sale.
 
 19
  ***Alpine
        Corporate***
  On
        August
        24, 2004, Alpine declared a special dividend of up to $0.40 per share its
        common
        stock, $0.10 par value per share (the “Common Stock”) and a special dividend of
        $103.65 per share on its Series A Cumulative Convertible Preferred Stock
        (the
“Series A Preferred Stock”) to shareholders of record on September 14, 2004 (the
“Record Date”). The amount of the special dividend in respect of the Common
        Stock was reduced to $0.36 per share, to adjust for additional shares of
        Common
        Stock issued by the Company between August 24, 2004 and the Record Date.
        This
        resulted in special dividend payments of $4.9 million in respect of the Common
        Stock and $1.5 million in respect of the Series A Preferred Stock. Under
        the
        respective terms of the stock based compensation plans of the Company, the
        Company is required to allocate a deemed dividend in respect of shares of
        restricted Common Stock granted and unvested and/or deposited and credited
        to
        participant accounts under the Alpine Deferred Stock Account Plan in an amount
        equal to any cash dividend paid in respect of the Common Stock. Accordingly,
        on
        September 30, 2004, the Company established, but did not yet pay, a total
        deemed
        dividend of $0.9 million, $0.6 million of which was recorded to compensation
        expense during 2004 and $0.08 million in 2005. The remainder will be amortized
        over the vesting period of such unvested or deferred shares of Common Stock.
        Any
        payment of future cash dividends and the amounts thereof will be dependent
        upon
        the Company's earnings, financial requirements and other factors, including
        contractual obligations.
 
 During
        the three and nine month periods ended September 30, 2005, 49 and 639 shares,
        respectively of Series A Preferred Stock were converted into 36,407 and 474,780
        shares of Common Stock, respectively.
 
 As
        of
        September 30, 2005, Alpine had unrestricted cash, cash equivalents and
        marketable securities available for sale of approximately $23.2 million.
        Alpine's current and anticipated sources of liquidity include existing cash
        and
        cash equivalents, and management fees from Alpine Holdco. Pursuant to a
        management agreement with Alpine Holdco dated December 11, 2002, so long
        as no
        event of default exists or is created by such payment under the Revolving
        Credit
        Facility, Alpine is entitled to receive from Alpine Holdco an annual management
        fee (together with any unpaid management fees from prior years), which
        (effective January 1, 2004) was increased from $1.0 million to $1.8 million,
        and
        is reimbursed for all direct costs incurred by it related to the business
        of
        Alpine Holdco. Alpine's ability to receive distributions from Alpine Holdco
        is
        restricted under the terms of the Revolving Credit Facility to a maximum
        of
        $1.8 million of the aforementioned management fee, amounts representing
        Alpine's tax liability in respect of the operations of Alpine Holdco plus
        $250,000 per year. Alpine is also entitled to be reimbursed for all direct
        costs
        incurred by it related to the business of Holdco.
 
 During
        2001 and 2002, the Company entered into commercial transactions intended
        to
        offset the potential impact of interest rate changes on the Company’s
        investments, including the investment of the net cash proceeds from the sale
        of
        an equity investment and established a tax contingency reserve on its balance
        sheet corresponding to the realized benefits. At September 30, 2005, the
        Company
        has reserved $16.9 million of the related benefit and interest and the amount
        has been recorded under other long-term liabilities. The Company does not
        anticipate that any portion of the tax contingency reserve will become payable
        in the next twelve months.
  Since
        1993, Alpine has been a party to a guaranty of Superior's lease obligations
        relating to Superior's manufacturing facility in Brownwood, Texas. The lease
        currently provides for monthly payments of $56,000 subject to adjustments
        for
        changes in the consumer price index. The lease term expires in 2018 but may
        be
        extended through 2033. As such, the maximum potential amount of future payments
        under the guaranty through 2018 would be approximately $9 million. Any further
        extensions would amount to a guarantee of approximately $0.7 million per
        year.
        While Alpine's continuing obligations, if any, under the guaranty are not
        free
        from doubt, the Company believes the facility and underlying lease are valuable
        assets of Superior and expects that Superior will perform as tenant thereunder
        and continue to pay its obligations. In addition, Alpine would have a claim
        for
        indemnification and reimbursement from Superior in respect of any amounts
        paid
        by Alpine as guarantor.
 
 Alpine
        has made short-term advances to the United States subsidiary of Superior
        Cables
        Ltd., Alpine’s 46% owned affiliate, secured by United States-based inventory and
        accounts receivable, at an interest rate of LIBOR plus 1.4% per annum, to
        augment funding of that affiliate’s growth and working capital, particularly in
        the United States. As of September 30, 2005, $1.8 million was advanced, total
        advances will not exceed $2 million and all advances must be repaid on or
        prior
        to June 30, 2006.
  20
  
 ITEM
        3.
        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 The
        Company's exposure to market risk primarily relates to interest rates and
        copper
        futures used to minimize the price risk associated with copper prices related
        to
        the Essex Electric business which has been classified as a discontinued
        operation in the consolidated financial statements. The cost of copper, Essex
        Electric’s most significant raw material, has been subject to significant
        volatility over the past several years.
 
 At
        September 30, 2005 the Company had approximately $1.5 million of copper futures
        contracts representing 1.0 million pounds, outstanding as non-designated
        derivative investments. These contracts were entered into to hedge future
        finished goods inventory purchases, scheduled for delivery during the fourth
        quarter of 2005 at a pre-established price and to hedge sales orders booked
        in
        September but shipped in October. These contracts were recorded at fair value
        at
        September 30, 2005 with any price fluctuations reflected in current earnings
        in
        the period ended September 30, 2005, which fluctuations resulted in recording
        an
        unrealized loss of $0.3 million. The contracts were liquidated in October
        2005
        and the loss realized on the hedge was offset by the gain on the purchase
        of
        physical goods.
 
 At
        December 31, 2004, the Company had approximately $9 million of copper futures
        contracts, representing 6 million copper pounds, outstanding as non-designated
        derivative instruments. These contracts were entered into to hedge 6 million
        pounds of copper rod inventory purchased in December 2004, for fabrication
        and
        sale in the first quarter of 2005. These contracts were recorded at fair
        value
        at December 31, 2004 with any price fluctuations reflected in current earnings
        in 2004, and were liquidated in the first quarter of 2005, when the underlying
        asset (i.e. inventory) was sold.
 
 Besides
        copper, other major raw materials used in Essex Electric’s manufacture of
        electrical wire include plastics such as polyethylene and polyvinyl chloride
        (PVC), as well as nylon. These products, while not traded as commodities
        themselves, are often times influenced by fluctuations in oil prices, as
        they
        are oil-based. Historically, these costs have been largely recovered in pricing
        to customers, since others in the industry are subject to similar price
        fluctuations. However, since these costs are not priced separately to the
        customer there can be no assurance that increases in such costs can be fully
        recovered in pricing to the customer. The Company has not entered into any
        futures trading or other hedge activities in an attempt to hedge such cost
        fluctuations.
 
 The
        Company has not entered into any interest rate swaps, caps or other arrangements
        to hedge interest rate exposures. At current borrowing levels a 1% change
        in
        interest rates has approximately a $0.4 million annual pre-tax
        effect.
 
 ITEM
        4.
        CONTROLS AND PROCEDURES
 
 *Evaluation
        of Controls and Procedures*
 
 As
        of the
        end of the period covered by this Quarterly Report on Form 10-Q, an
        evaluation of the effectiveness of the design and operation of the Company's
        disclosure controls and procedures was carried out by the Company under the
        supervision and with the participation of the Company's management, including
        the Chief Executive Officer and Chief Financial Officer. Based on that
        evaluation, the Chief Executive Officer and Chief Financial Officer concluded
        that the Company's disclosure controls and procedures were effective at a
        reasonable assurance level as of the end of the period covered by this Quarterly
        Report on form 10-Q. A system of controls, no matter how well designed and
        operated, cannot provide absolute assurance that the objectives of the system
        of
        controls are met, and no evaluation of controls can provide absolute assurance
        that all control issues and instances of fraud, if any, within a company
        have
        been detected. There have been no changes in the Company's internal control
        over
        financial reporting that occurred during the most recent fiscal quarter that
        have materially affected, or are reasonably likely to materially affect,
        the
        Company's internal control over financial reporting.
 
 *Except
        for the historical information herein, the matters discussed in this quarterly
        report on form 10-Q include forward-looking statements that may involve
        a
        number of risks and uncertainties. Actual results may vary significantly
        based
        on a number of factors, including, but not limited to, risks in product and
        technology development, market acceptance of new products and continuing
        product
        demand, prediction and timing of customer orders, the impact of competitive
        products and pricing, changing economic conditions, including changes in
        short
        term interest rates and other risk factors detailed in the Company's most
        recent
        filings with the Securities and Exchange Commission.*
  21
  
 
 **PART
        II. OTHER INFORMATION**
 
 ITEM
        6.
        EXHIBITS
 
 **(a)**
              **Exhibits**
 31.1*
              Certification
                  of the Company's Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302
                  of the
                  Sarbanes-Oxley Act of 2002.31.2*
              Certification
                  of the Company's Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302
                  of the
                  Sarbanes-Oxley Act of 2002.32*
              Certification
                  of the Company's Chief Executive Officer and Chief Financial Officer
                  pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                  906 of
                  the Sarbanes-Oxley Act of 2002.
  ___________
 
 *
              Filed
                  herewith
  22
  
 **SIGNATURES**
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
  THE
                    ALPINE GROUP, INC.Date:  
                  November
                  14, 2005
                By:
                /s/ 
                  David
                  A. OwenDavid
                  A. Owen*Chief
                    Financial Officer*
                  (duly
                    authorized officer and principal financial and accounting
                    officer)
 
 23