UNITED
        STATES
 SECURITIES
        AND EXCHANGE COMMISSION
 **Washington,
        D.C. 20549**
 
 **___________**
 
 FORM
        10-Q/A
 Amendment
        No. 1
 
 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 a 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
 
 1
  **Explanatory
        Note**
 
 The
        Alpine Group, Inc. (the “Company”) is filing this Amendment No. 1 to its
        Quarterly Report on Form 10-Q/A for the quarter ended September 30, 2005
        for the
        purpose of amending and restating Item 1 of Part I, containing its unaudited
        condensed consolidated financial statements and related notes as of September
        30, 2005 and December 31, 2004 and for the three and nine month periods ended
        September 30, 2005 and 2004. The amendment and restatement reclassifies the
        electrical wire business conducted by the Company’s 84%-owned subsidiary, Essex
        Electric Inc. (“Essex Electric”), from discontinued operations to continuing
        operations. The classification of the electrical wire business as a discontinued
        operation was the result of the execution by the Company and Essex Electric
        on
        September 29, 2005 of a definitive agreement to sell the business, subject
        to
        approval by the Company’s shareholders at a meeting to be held for that purpose.
        Subsequently, the Company determined that based upon applicable accounting
        principles the business is required to be classified within continuing
        operations until stockholder approval is actually obtained. The Company expects
        to obtain stockholder approval during January 2006. The proposed sale and
        related matters are further discussed in Note 1 to the restated condensed
        consolidated financial statements included herein. The Company’s net income
        (loss), stockholder’s equity and cash flows are not affected by the restatement.
        See Note 10 to the restated condensed consolidated financial statements included
        herein.
 
 The
        Company has also updated Item 2 of Part I, Management’s Discussion and Analysis
        of Financial Condition and Results of Operations, to give effect to the
        restatement, and Item 4 of Part I, Controls and Procedures. In addition,
        the
        Company has amended Item 6 of Part II to reflect the filing of updated
        certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
        Section 906 of the Sarbanes-Oxley Act of 2002, and it has filed certifications
        pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act
        of
        1934. Other than the changes for the effects of the restatement, no other
        information in this Form 10-Q/A has been updated to reflect any subsequent
        information or events since the date of the original filing of the Company’s
        Quarterly Report on Form 10-Q on November 14, 2005. For the convenience of
        the
        reader, the Quarterly Report on Form 10-Q for the quarter ended September
        30,
        2005 has been reproduced in its entirety.
  2
  ITEM
        1.
        FINANCIAL STATEMENTS
 
 **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **(in
        thousands, except share data)**
 **(unaudited)**
  **September
                  30,**
              
              
              **December
                  31,****2005**
                  **(As
                    Restated,**
                  **See
                    Note 10)**
              
              
              **2004**
                **(As
                  Restated,**
                **See
                  Note 10**)******ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              832
              
              $
              611Marketable
                  securities, at fair value
              
              
              22,356
              
              
              35,827Accounts
                  receivable (less allowance for doubtful accounts of $171 and $387
                  at
                  September 30, 2005and
                  December 31, 2004, respectively)
              
              
              61,075
              
              
              41,091Inventories
                  (Note 2)
              
              
              22,875
              
              
              30,417Due
                  from related party (Note 1)
              
              
              1,773
              
              
              —Other
                  current assets
              
              
              4,135
              
              
              4,992Total
                  current assets
              
              
              113,046
              
              
              112,938Property,
                  plant and equipment, net
              
              
              17,746
              
              
              16,927Deferred
                  income taxes
              
              
              836
              
              
              264Other
                  long-term assets
              
              
              2,789
              
              
              2,658Total
                  assets
              
              $
              134,417
              
              $
              132,787**LIABILITIES
                  AND STOCKHOLDERS' EQUITY**Current
                  liabilities:
                Revolving
                  credit facility (Note 5)
              
              $
              44,472
              
              $
              40,250Current
                  portion of long-term debt (Note 6)
              
              
              —
              
              
              386Accounts
                  payable
              
              
              18,827
              
              
              14,010Accrued
                  expenses
              
              
              11,006
              
              
              11,054Deferred
                  income taxes and income taxes payable
              
              
              7,367
              
              
              13,429Total
                  current liabilities
              
              
              81,672
              
              
              79,129Long-term
                  debt, less current portion (Note 6)
              
              
              3,215
              
              
              3,122Other
                  long-term liabilities
              
              
              18,417
              
              
              17,842Warrant
              
              
              942
              
              
              936Minority
                  interest in subsidiary
              
              
              4,080
              
              
              2,218Mandatorily
                  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 7)
              
              
              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
              
              $
              134,417
              
              $
              132,787
 
 The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.
 
 3
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share data)**
 **(unaudited)**
 
 **Three
                    Months Ended**
                  **September
                    30,****2005**
                  **(As
                    Restated,**
                  **See
                    Note 10)**
                
                **2004**
                  **(As
                    Restated,**
                  **See
                    Note 10)**Net
                    sales
                
                $
                113,021
                
                $
                80,354Cost
                    of goods sold
                
                
                103,476
                
                
                75,382Gross
                    profit
                
                
                9,545
                
                
                4,972Selling,
                    general and administrative expenses
                
                
                5,812
                
                
                7,432Restructuring
                    and other charges
                
                
                435
                
                
                875Operating
                    income (loss)
                
                
                3,298
                
                
                (3,335
                )Interest
                    expense
                
                
                (1,086
                )
                
                (770
                )Other
                    income (expense), net
                
                
                111
                
                
                3Income
                    (loss) before income taxes, minority interest and discontinued
                    operations
                
                
                2,323
                
                
                (4,102
                )Income
                    tax benefit (expense)
                
                
                (1,261
                )
                
                1,185Income
                    (loss) before minority interest and discontinued
                    operations
                
                
                1,062
                
                
                (2,917
                )Minority
                    interest in (income) loss of subsidiary
                
                
                (276
                )
                
                80Income
                    (loss) from continuing operations
                
                
                786
                
                
                (2,837
                )Discontinued
                    operations:Loss
                    from discontinued operations, net of taxes
                
                
                —
                
                
                (93
                )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:Income
                    (loss) from continuing operations applicable to common stock
                
                $
                0.04
                
                $
                (0.33
                )Loss
                    from discontinued operation, net of taxes
                
                
                —
                
                
                (0.01
                )Gain
                    on sale of DNE
                
                
                —
                
                
                1.39Net
                    income per basic share of common stock
                
                $
                0.04
                
                $
                1.05Weighted
                    average shares outstanding (basic)
                
                
                15,961
                
                
                13,745
 
 Diluted:Income
                  (loss) from continuing operations applicable to common stock
              
              $
              0.03
              
              $
              (0.33
              )Loss
                  from discontinued operations, net of taxes
              
              
              —
              
              
              (0.01
              )Gain
                  on sale of DNE
              
              
              —
              
              
              1.39Net
                  income per diluted share of common stock
              
              $
              0.03
              
              $
              1.05Weighted
                  average shares outstanding (diluted)
              
              
              27,593
              
              
              13,745
 
 The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.
 
 4
 
 
 **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share data)**
 **(unaudited)**
 **Nine
                      Months Ended**
                    **September
                      30,****2005**
                    **(As
                      Restated,**
                    **See
                      Note 10)**
                  
                  
                  **2004**
                    **(As
                        Restated,**
                      **See
                        Note 10)**Net
                      sales
                  
                  $
                  300,665
                  
                  $
                  238,373Cost
                      of goods sold
                  
                  
                  283,812
                  
                  
                  216,635Gross
                      profit
                  
                  
                  16,853
                  
                  
                  21,738Selling,
                      general and administrative expenses
                  
                  
                  16,904
                  
                  
                  19,536Restructuring
                      and other charges
                  
                  
                  2,323
                  
                  
                  3,781Operating
                      loss
                  
                  
                  (2,374
                  )
                  
                  (1,579
                  )Interest
                      expense
                  
                  
                  (3,007
                  )
                  
                  (2,056
                  )Other
                      income (expense), net
                  
                  
                  23
                  
                  
                  148Loss
                      before income taxes, minority interest and discontinued
                      operations
                  
                  
                  (5,358
                  )
                  
                  (3,487
                  )Income
                      tax benefit
                  
                  
                  1,195
                  
                  
                  760Loss
                      before minority interest and discontinued operations
                  
                  
                  (4,163
                  )
                  
                  (2,727
                  )Minority
                      interest in (income) loss of subsidiary
                  
                  
                  325
                  
                  
                  (83
                  )Loss
                      from continuing operations
                  
                  
                  (3,838
                  )
                  
                  (2,810
                  )Discontinued
                      operations:Income
                      from discontinued operations, net of taxes of $1,001
                  
                  
                  —
                  
                  
                  1,502Gain
                      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:Loss
                      from continuing operations applicable to common stock
                  
                  $
                  (0.26
                  )
                  $
                  (0.37
                  )Income
                      from discontinued operations, net of taxes
                  
                  
                  —
                  
                  
                  0.12Gain
                      on sale of DNE
                  
                  
                  —
                  
                  
                  1.48Net
                      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 condensed consolidated
        financial statements.
  5
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONDENSED
        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
                    stockBalance
                    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
                    shares
                  released
                    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 condensed consolidated
        financial statements.
 
 6
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **CONDENSED
        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 condensed consolidated
        financial statements.
 
  7
  **THE
        ALPINE GROUP, INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **SEPTEMBER
        30, 2005**
 **(unaudited)**
 
 **1.
        General**
 
 The
        accompanying unaudited condensed 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
        which
        are normal, recurring and 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.
  ***Basis
        of presentation and description of business***
 
 The
        accompanying condensed 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 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. The Warrant is recorded
        as a long term liability in the condensed consolidated balance sheet and
        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 entered into 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
        net assets to be disposed of do not meet all of the requirements of Statement
        of
        Financial Accounting Standards No. 144, *Accounting
        for the Impairment or Disposal of Long-Lived Assets,* for
        assets to be classified as held for sale or discontinued operations due to
        the
        requirement that the stockholders must approve the Essex Electric
        Sale.
 
 8
 ***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
        condensed 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.
  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.
 
 9
 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.
 **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
                      value
                    based
                      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 -as
                      reported
                  
                  $
                  0.04
                  
                  $
                  1.05Basic -pro
                      forma
                  
                  $
                  0.04
                  
                  $
                  1.05Diluted
                      - as reported
                  
                  $
                  0.03
                  
                  $
                  1.05Diluted
                      - pro forma
                  
                  $
                  0.03
                  
                  $
                  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
                        value
                      based
                        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
                    
                    $
                    (0.26
                    )
                    $
                    1.23Basic
                        and diluted-pro
                        forma
                    
                    $
                    (0.27
                    )
                    $
                    1.21
   10
  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.
 
 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 condensed 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.
 
 ***Recent
            accounting standards***
 
 In
            December 2004, the FASB issued FASB No. 123R, *Share-Based Payment* (“SFAS
            123R”), that requires companies to expense the value of employee stock options
            and similar awards. SFAS 123R is effective for public companies in interim
            and
            annual periods beginning after June 15, 2005, and applies to all outstanding
            and
            unvested share-based payment awards at the adoption date. The Company
            is in the
            process of evaluating the impact that adoption of FAS 123R will have
            to its
            financial position and results of operations and cash flows.
  11
 **2.
            Inventories**
 
 At
            September 30, 2005 and December 31, 2004, the components of inventories
            were as
            follows:
 
 **September
                      30,**
                    **2005**
                  
                  **December 31,**
                    **2004****(in
                      thousands)**Raw
                      materials
                  
                  $
                  5,506
                  
                  $
                  15,169Work
                      in process
                  
                  
                  5,130
                  
                  
                  5,476Finished
                      goods
                  
                  
                  34,925
                  
                  
                  31,98145,561
                  
                  
                  52,626LIFO
                      reserve
                  
                  
                  (22,686
                  )
                  
                  (22,209
                  )$
                  22,875
                  
                  $
                  30,417
 
 The
            inventories shown above are all valued using the LIFO method. An actual
            valuation of inventory under the LIFO method can be made only at the
            end of each
            year based on the inventory levels and costs at the same 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.
 
 **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**
                    
                    **2005****(in
                        thousands)**Net
                        income
                    
                    $
                    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**
                          
                          **2005****(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
 
 **4.
            Restructuring and other charges**
 
 During
            the three and nine month periods ended September 30, 2005 and 2004, the
            Company
            recorded $0.4 and $2.3 million for 2005 and $0.9 and $3.8 million for
            2004,
            respectively, of restructuring and other charges. The 2005 charges included
            $0.8
            million of employee related costs from the announced closing of Essex
            Electric’s
            Anaheim, CA operation. Additional costs associated with the
 Anaheim
            closure, such as facility exit and transition costs, will be expensed
            as
            incurred during the remainder of 2005. The remaining restructuring charges
            incurred during 2005 were $1.5 million, consisting of cost related to
            the wind
            down of other Essex Electric facilities previously closed, idled warehouse
            space
            within existing distribution warehouses resulting from restructuring
            the
            business, and other miscellaneous expense related to the Company’s
            restructuring.
  12
 
 The
            following table illustrates the restructuring reserve and the 2005 related
            activities:
  **December 31,**
                      **2004**
                    
                    **Charges**
                    
                    **Payments**
                    
                    **September
                        30,**
                      **2005****(in
                        thousands)**Employee
                        related costs
                    
                    $
                    —
                    
                    $
                    800
                    
                    $
                    589
                    
                    $
                    211Facility
                        exit costs
                    
                    
                    —
                    
                    
                    392
                    
                    
                    392
                    
                    
                    —Equipment
                        and inventory relocation costs and other costs
                    
                    
                    —
                    
                    
                    1,131
                    
                    
                    1,131
                    
                    
                    —$
                    —
                    
                    $
                    2,323
                    
                    $
                    2,112
                    
                    $
                    211
  **5.** **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 and DNE Systems as Credit party (such parties
            sometimes collectively are called "Companies") certain financial institutions
            party thereto as lenders, Congress Financial Corporation, as documentation
            agent, and Foothill Capital Corporation, as arranger and administrative
            agent.
            The Revolving Credit Facility was last amended on February 28, 2005 to
            revise
            certain covenants for 2005.
 
 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". The Revolving
            Credit Facility was amended on November 10, 2004 to reflect modifications
            agreed
            to by the parties as a result of the DNE Sale and to establish revised
            financial
            and other covenant provisions.
 
 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. 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 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 December 2007. 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 termination fee equal to 0.75% of
            the
            maximum committed amount. 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
            $40.3 million, respectively. At September 30, 2005 the Companies
            had $23.5
            million of borrowing availability. No dividends may be paid by Alpine
            Holdco
            without prior consent of the lenders.
  13
 **6.** **Long-term
            debt**
 
 At
            September 30, 2005 and December 31, 2004, long-term debt consists of
            the
            following:
  **September
                        30,**
                      **2005**
                    
                    **December 31,**
                      **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.
 
 **7.
            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.
 
 **8.
            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
                        earnings (loss) per share**Income
                        (loss) from continuing operations
                    
                    $
                    786
                    
                    
                    15,961
                    
                    $
                    0.05
                    
                    $
                    (2,837
                    )
                    
                    13,745
                    
                    $
                    (0.21
                    )Adjustments:Preferred
                        stock dividends
                    
                    
                    (111
                    )
                    
                    15,961
                    
                    
                    (0.01
                    )
                    
                    (1,641
                    )
                    
                    13,745
                    
                    
                    (0.12
                    )Income
                        (loss )attributable to common stock from continuing
                        operations
                    
                    $
                    675
                    
                    
                    15,961
                    
                    $
                    0.04
                    
                    $
                    (4,478
                    )
                    
                    13,745
                    
                    $
                    (0.33
                    )Gain
                        on sale of DNE, net of tax
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    19,088
                    
                    
                    13,745
                    
                    
                    1.39Income
                        (loss) from discontinued operations
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (93
                    )
                    
                    13,745
                    
                    
                    (0.01
                    )Net
                        income applicable to common stock per basic common share
                    
                    $
                    675
                    
                    
                    15,961
                    
                    $
                    0.04
                    
                    $
                    14,517
                    
                    
                    13,745
                    
                    $
                    1.05
 
  **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**
 **Diluted
                          earnings (loss) per share**Basic
                          shares outstanding
                      
                      
                      
                      15,961Effect
                          of dilutive securitiesRestricted
                          stock plans
                      
                      
                      
                      422Stock
                          option plans
                      
                      
                      
                      716Convertible
                          preferred stock
                      
                      
                      
                      10,494
 
 Income
                              (loss )attributable to common stock from continuing
                              operations
                          
                          $
                          786
                          
                          
                          27,593
                          
                          $
                          0.03
                          
                          $
                          (4,478
                          )
                          
                          13,745
                          
                          $
                          (0.33
                          )Gain
                              on sale of DNE, net of tax
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          19,088
                          
                          
                          13,745
                          
                          
                          1.39Income
                              (loss) from discontinued operations
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (93
                          )
                          
                          13,745
                          
                          
                          (0.01
                          )Net
                              income applicable to common stock per diluted common
                              share
                          
                          $
                          786
                          
                          
                          27,593
                          
                          $
                          0.03
                          
                          $
                          14,517
                          
                          
                          13,745
                          
                          $
                          1.05
 
 
 15
 
  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**
                          **(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
                    
                    $
                    (3,838
                    )
                    
                    15,790
                    
                    $
                    (0.24
                    )
                    $
                    (2,810
                    )
                    
                    12,893
                    
                    $
                    (0.22
                    )Adjustments:Preferred
                        stock dividends
                    
                    
                    (335
                    )
                    
                    15,790
                    
                    
                    (0.02
                    )
                    
                    (1,928
                    )
                    
                    12,893
                    
                    
                    (0.15
                    )Loss
                        attributable to common stock from continuing operations
                    
                    $
                    (4,173
                    )
                    
                    15,790
                    
                    $
                    (0.26
                    )
                    $
                    (4,738
                    )
                    
                    12,893
                    
                    $
                    (0.37
                    )Gain
                        on sale of DNE, net of tax
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    19,088
                    
                    
                    12,893
                    
                    
                    1.48Income
                        (loss) from discontinued operations
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,502
                    
                    
                    12,893
                    
                    
                    0.12Net
                        income (loss) applicable to common stock per basic common
                        share
                    
                    $
                    (4,173
                    )
                    
                    15,790
                    
                    $
                    (0.26
                    )
                    $
                    15,852
                    
                    
                    12,893
                    
                    $
                    1.23
 
 Diluted
            earnings per share for the three month period ended September 30, 2005
            excludes
            the effect of 0.1 million stock options that may be exercised in the
            future,
            because such effect would have been antidilutive. The Company has excluded
            the
            assumed conversion of all stock options (1.5 million), restricted stock
            grants
            (0.8 million) and convertible preferred stock (14,277 preferred shares
            convertible into 10.5 million common shares) from the Company’s earnings per
            share calculation for the 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 10.9 million 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 immaterial
            or
            anti-dilutive.
 
 **9.
            Business segments**
 
 The
            Company's reportable segments prior to second quarter 2004 consisted
            of
            electrical wire (Alpine's 84% owned subsidiary, Essex Electric) and
            communications and electronic products (DNE). During the second quarter
            2004,
            the Company classified the communications and electronic products segment
            as
            discontinued operations and the business was sold during the third quarter
            of
            2004. See Note 1 for additional information about the Company’s discontinued
            operations. Subsequent to the DNE Sale the Company has only one business
            segment.
  16
 
 **10.
            Restatement Due to Reclassification**
 
 Subsequent
            to the issuance of the Company’s condensed consolidated financial statements for
            the three and nine month periods ended September 30, 2005, the Company
            determined that the electrical wire business, previously presented as
            discontinued operations, should have been classified as continuing operations
            due to the pending stockholder approval required to authorize the sale
            of the
            assets of the business. As a result, the accompanying condensed consolidated
            financial statements have been restated from amounts previously reported.
            The
            Company’s net income (loss), stockholders’ equity and cash flows are not
            affected by the restatement. A summary of the significant effects of
            the
            restatement is as follows:
  **September
                        30, 2005**
                    
                    **December
                        31, 2004****As**
                      **Previously**
                      **Reported**
                    
                    **As**
                      **Restated**
                    
                    **As**
                      **Previously**
                      **Reported**
                    
                    **As**
                      **Restated****As
                        of:**Accounts
                        receivable
                    
                    $
                    912
                    
                    $
                    61,075
                    
                    $
                    1,599
                    
                    $
                    41,091Inventories
                    
                    
                    147
                    
                    
                    22,875
                    
                    
                    39
                    
                    
                    30,417Current
                        assets of discontinued operations
                    
                    
                    83,621
                    
                    
                    —
                    
                    
                    71,647
                    
                    
                    —Other
                        current assets
                    
                    
                    3,405
                    
                    
                    4,135
                    
                    
                    3,215
                    
                    
                    4,992Property,
                        plant and equipment, net
                    
                    
                    1,240
                    
                    
                    17,746
                    
                    
                    1,419
                    
                    
                    16,927Deferred
                        income taxes
                    
                    
                    2,866
                    
                    
                    836
                    
                    
                    2,654
                    
                    
                    264Assets
                        of discontinued operations
                    
                    
                    17,382
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —Other
                        long term assets
                    
                    
                    1,913
                    
                    
                    2,789
                    
                    
                    1,505
                    
                    
                    2,658Revolving
                        credit facility
                    
                    
                    —
                    
                    
                    44,472
                    
                    
                    —
                    
                    
                    40,250Accounts
                        payable
                    
                    
                    275
                    
                    
                    18,827
                    
                    
                    38
                    
                    
                    14,010Accrued
                        expenses
                    
                    
                    2,585
                    
                    
                    11,006
                    
                    
                    3,366
                    
                    
                    11,054Current
                        liabilities of discontinued operations
                    
                    
                    76,746
                    
                    
                    —
                    
                    
                    68,254
                    
                    
                    —Deferred
                        income taxes and income taxes payable
                    
                    
                    2,066
                    
                    
                    7,367
                    
                    
                    7,085
                    
                    
                    13,429Other
                        long term liabilities
                    
                    
                    18,381
                    
                    
                    18,417
                    
                    
                    17,761
                    
                    
                    17,842Liabilities
                        of discontinued operations
                    
                    
                    3,008
                    
                    
                    —
                    
                    
                    3,406
                    
                    
                    —
 
  **September
                      30, 2005**
                  
                  
                  **September
                      30, 2004****As**
                    **Previously**
                    **Reported**
                  
                  
                  **As**
                    **Restated**
                  
                  
                  **As**
                    **Previously**
                    **Reported**
                  
                  
                  **As**
                    **Restated****For
                      the three months ended:**Net
                      sales
                  
                  $
                  3,160
                  
                  $
                  113,021
                  
                  $
                  3,403
                  
                  $
                  80,354Cost
                      of goods sold
                  
                  
                  3,066
                  
                  
                  103,476
                  
                  
                  3,323
                  
                  
                  75,382Gross
                      profit
                  
                  
                  94
                  
                  
                  9,545
                  
                  
                  80
                  
                  
                  4,972Selling,
                      general and administrative expenses
                  
                  
                  997
                  
                  
                  5,812
                  
                  
                  2,368
                  
                  
                  7,432Restructuring
                      and other charges
                  
                  
                  —
                  
                  
                  435
                  
                  
                  314
                  
                  
                  875Operating
                      income (loss)
                  
                  
                  (903
                  )
                  
                  3,298
                  
                  
                  (2,602
                  )
                  
                  (3,335
                  )Interest
                      expense
                  
                  
                  (211
                  )
                  
                  (1,086
                  )
                  
                  (183
                  )
                  
                  (770
                  )Other
                      income (expense), net
                  
                  
                  474
                  
                  
                  111
                  
                  
                  (213
                  )
                  
                  3Income
                      (loss) before income taxes, minority interest and discontinued
                      operations
                  
                  
                  (640
                  )
                  
                  2,323
                  
                  
                  (2,998
                  )
                  
                  (4,102
                  )Income
                      tax benefit (expense)
                  
                  
                  76
                  
                  
                  (1,261
                  )
                  
                  637
                  
                  
                  1,185Income
                      (loss) before minority interest and discontinued
                      operations
                  
                  
                  (564
                  )
                  
                  1,062
                  
                  
                  (2,361
                  )
                  
                  (2,917
                  )Minority
                      interest in (income) loss of subsidiary
                  
                  
                  (19
                  )
                  
                  (276
                  )
                  
                  (8
                  )
                  
                  80Loss
                      from continuing operations
                  
                  
                  (583
                  )
                  
                  786
                  
                  
                  (2,369
                  )
                  
                  (2,837
                  )Income
                      (loss) from discontinued operations, net of taxes
                  
                  
                  1,369
                  
                  
                  —
                  
                  
                  (561
                  )
                  
                  (93
                  )Net
                      income (loss) per share:Continuing
                      operations
                  
                  $
                  (0.04
                  )
                  $
                  0.03
                  
                  $
                  (0.30
                  )
                  $
                  (0.33
                  )Discontinued
                      operations
                  
                  $
                  0.08
                  
                  
                  —
                  
                  $
                  (0.04
                  )
                  $
                  (0.01
                  )
   17
  **September
                            30, 2005**
                        
                        
                        **September
                            30, 2004****As**
                          **Previously**
                          **Reported**
                        
                        
                        **As**
                          **Restated**
                        
                        
                        **As**
                          **Previously**
                          **Reported**
                        
                        
                        **As**
                          **Restated**
 **For
                            the nine months ended:**Net
                            sales
                        
                        $
                        9,465
                        
                        $
                        300,665
                        
                        $
                        7,249
                        
                        $
                        238,373Cost
                            of goods sold
                        
                        
                        9,111
                        
                        
                        283,812
                        
                        
                        7,058
                        
                        
                        216,635Gross
                            profit
                        
                        
                        354
                        
                        
                        16,853
                        
                        
                        191
                        
                        
                        21,738Selling,
                            general and administrative expenses
                        
                        
                        2,744
                        
                        
                        16,904
                        
                        
                        4,930
                        
                        
                        19,536Restructuring
                            and other charges
                        
                        
                        —
                        
                        
                        2,323
                        
                        
                        314
                        
                        
                        3,781Operating
                            loss
                        
                        
                        (2,390
                        )
                        
                        (2,374
                        )
                        
                        (5,053
                        )
                        
                        (1,579
                        )Interest
                            expense
                        
                        
                        (614
                        )
                        
                        (3,007
                        )
                        
                        (536
                        )
                        
                        (2,056
                        )Other
                            income (expense), net
                        
                        
                        9
                        
                        
                        23
                        
                        
                        (361
                        )
                        
                        148Loss
                            before income taxes, minority interest and discontinued
                            operations
                        
                        
                        (2,995
                        )
                        
                        (5,358
                        )
                        
                        (5,950
                        )
                        
                        (3,487
                        )Income
                            tax benefit (expense)
                        
                        
                        255
                        
                        
                        1,195
                        
                        
                        1,743
                        
                        
                        760Loss
                            before minority interest and discontinued operations
                        
                        
                        (2,740
                        )
                        
                        (4,163
                        )
                        
                        (4,207
                        )
                        
                        (2,727
                        )Minority
                            interest in (income) loss of subsidiary
                        
                        
                        100
                        
                        
                        325
                        
                        
                        151
                        
                        
                        (83
                        )Loss
                            from continuing operations
                        
                        
                        (2,640
                        )
                        
                        (3,838
                        )
                        
                        (4,056
                        )
                        
                        (2,810
                        )Income
                            (loss) from discontinued operations, net of taxes
                        
                        
                        (1,198
                        )
                        
                        —
                        
                        
                        2,748
                        
                        
                        1,502Net
                            income (loss) per share:Continuing
                            operations
                        
                        $
                        (0.19
                        )
                        $
                        (0.26
                        )
                        $
                        (0.46
                        )
                        $
                        (0.37
                        )Discontinued
                            operations
                        
                        $
                        (0.07
                        )
                        
                        —
                        
                        $
                        0.21
                        
                        $
                        0.12
 
  18
  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. 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 entered into 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
 
 ***Impact
            of Copper Price Fluctuations on Operating Results***
 
 Copper
            is
            one of the principal raw materials used by Essex Electric. 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.
 
 19
  **Results
            of Operations** **—** **Three
            Month Period Ended September 30, 2005 as Compared to the Three Month
            period
            Ended September 30, 2004**
 
 Consolidated
            sales for the three month period ended September 30, 2005 were $113.0
            million,
            an increase of 40.5% compared to sales of $80.4 million for the three
            month
            period ended September 30, 2004. The comparative sales increase was due
            to an
            11% increase in shipments of electrical wire by Essex Electric at significantly
            increased average selling prices. The increase in selling prices was
            driven by a
            32% increase in average copper prices between the two periods (copper
            costs
            currently represent over 75% of the Company’s cost of goods sold) and improved
            price margins because of strengthening demand in the third quarter of
            2005.
 Gross
            profit for the three month period ended September 30, 2005 was $9.5 million
            (a gross margin of 8.4% of sales), an increase of $4.5 million
            as compared
            to gross profit of $5.0 million (a gross margin of 6.2% of sales) for
            the three
            month period ended September 30, 2004. The increased margin was due primarily
            to
            the aforementioned improvement in selling prices in excess of the increase
            in
            copper costs, primarily because of the improved building wire market
            environment. Margins were also favorably impacted by manufacturing cost,
            productivity and efficiency improvements. The Company also recorded an
            estimated
            LIFO decrement credit to cost of goods sold of $1.6 million during the
            three
            months ended September 30, 2005 compared to a $0.7 million decrement
            for the
            comparable period in 2004.
 
 Selling,
            general and administrative expense for the three month period ended September
            30, 2005 was $5.8 million, (a decrease of 21.6%), as compared
            to $7.4
            million for the three months ended September 30, 2004. The decrease is
            due
            primarily to reduced operating costs, commission expense and amortization
            of
            deferred stock compensation.
 
 Restructuring
            and other charges at Essex Electric of $0.4 million for the three month
            period
            ended September 30, 2005 consisted primarily of costs associated with
            the wind
            down of operations and the relocation of equipment and inventory related
            to the
            closure of Essex Electric’s Anaheim, California manufacturing facility that was
            announced in the first quarter of 2005.
 
 The
            Company's operating income for the three month period ended September
            30, 2005
            was $3.3 million, compared to an operating loss of $3.3 million
            for the
            comparable 2004 period, due primarily to the aforementioned margin improvement
            and reduced selling general and administrative expenses.
 
 Interest
            expense for the three month period ended September 30, 2005 was
            $1.1 million, an increase of $0.3 million from the same
            prior year
            period. Average borrowings increased $9.7 million in the third quarter
            of 2005
            compared to the third quarter of 2004, due primarily to the impact of
            higher
            copper prices on working capital.
 
 The
            effective tax rate for the third quarter of 2005 was 54.3% compared to
            28.9% for
            the third quarter of 2004. The increase 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 pre-tax income position for the third quarter
            of 2005
            versus the effect of similar items on the pre-tax loss position for the
            third
            quarter of 2004.
 
 **Results
            of Operations** **—
            Nine** **Month Period Ended September 30, 2005 as Compared to the Nine Month period
            Ended
            September 30, 2004**
 
 Consolidated
            sales for the nine month period ended September 30, 2005 were $300.7
            million, an
            increase of 26.1% compared to sales of $238.4 million for the nine month
            period
            ended September 30, 2004. The comparative sales increase was due to increased
            shipments of electrical wire by Essex Electric at higher average selling
            prices.
            The increase in selling prices was driven by a 26% increase in average
            copper
            prices between the two periods. Although average selling prices increased
            approximately 13% in the nine month period of 2005 compared to the nine
            month
            period of 2004, average copper prices increased 25% for the comparable
            time
            periods. The higher copper prices were not fully recoverable because
            of
            competitive pressures in the building wire markets in the first half
            of 2005
            compared with the first half of 2004, however some of this shortfall
            was
            recovered with improved pricing in the third quarter of 2005 compared
            with the
            same period in 2004.
 
 Gross
            profit for the nine month period ended September 30, 2005 was $16.9 million
            (a gross margin of 5.6% of sales), a decrease of $4.9 million
            as compared
            to gross profit of $21.7 million (a gross margin of 9.1% of sales) for
            the nine
            month period ended September 30, 2004. The decreased margin was due primarily
            to
            a more competitive pricing environment in the first half of 2005 compared
            to the
            first half of 2004. In addition, polyvinyl chloride (PVC) resin and nylon
            costs
            increased approximately 16% and 36%, respectively, in the nine month
            period of
            2005 compared with the nine month period of 2004 due primarily to higher
            oil
            prices. These increased costs were not fully passed on by way of higher
            selling
            prices, due to the aforementioned competitive pricing pressures in the
            first
            half of 2005 and were only partially offset by cost, productivity and
            efficiency
            improvements. The Company also recorded an estimated LIFO decrement credit
            to
            cost of goods sold of $6.0 million during the nine months ended September
            30,
            2005, compared to a $1.5 million decrement for the comparable period
            in
            2004.
  20
  Selling,
            general and administrative expense for the nine month period ended September
            30,
            2005 was $16.9 million, (a decrease of 13.5%), as compared to
            $19.5 million for the nine months ended September 30, 2004. The
            decrease is
            due primarily to reduced operating costs and commission expense and reduced
            amortization of deferred stock compensation and variable stock option
            expense.
 
 Restructuring
            and other charges at Essex Electric of $2.3 million for the nine month
            period
            ended September 30, 2005 consisted primarily of severance and other costs
            associated with the closure of Essex Electric’s Anaheim, California
            manufacturing facility ($1.5 million) that was announced in the first
            quarter of
            2005. These charges were $1.5 million lower than the same period of 2004.
            The
            2004 charges consisted primarily of $1.6 million related to the relocation
            and
            installation of certain equipment from closed facilities into the Florence,
            Alabama manufacturing location, $1.0 million for costs associated with
            starting
            up the new manufacturing processes at Florence and freight to relocate
            displaced
            products and $0.8 million in facility costs related to idled warehousing
            space.
 
 The
            Company's operating loss for the nine month period ended September 30,
            2005 was
            $2.4 million compared to an operating loss of $1.6 million for
            the
            comparable 2004 period due primarily to the comparative decline in relative
            market prices and increased non-copper raw material costs partially offset
            by
            lower selling, general and administrative costs and lower restructuring
            and
            other charges.
 
 Interest
            expense for the nine month period ended September 30, 2005 was
            $3.0 million, an increase of $1.0 million from the same
            prior year
            period. Average borrowings increased $12.9 million in the nine month
            period of
            2005 compared to the nine month period of 2004, due primarily to the
            impact of
            higher copper prices on working capital.
 
 The
            effective tax rate for the nine months of 2005 was 22.3% compared to
            21.8% for
            the nine months of 2004. The relatively low effective rates for both
            periods was
            due primarily to the impact of permanent tax differences and interest
            on the tax
            contingency.
 
 **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.
  21
  Effective
            concurrently with the consummation of the DNE Sale (see Note 1 to the
            condensed
            consolidated financial statements) 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".
 
 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. Assuming that
            the
            Company’s shareholders approve the Essex Electric Sale, it is expected that a
            portion of the proceeds from such sale, once consummated, will be used
            to
            liquidate or substantially reduce the Revolving Credit Facility, at which
            time
            the Revolving Credit Facility would be terminated or significantly
            amended.
 
 ***Alpine
            Corporate***
 On
            August
            24, 2004, Alpine declared a special dividend of up to $0.40 per share
            on 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.
 
 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.
  22
  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.
 
 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 condensed 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,
            or
            (except as set forth below) subsequent to September 30, 2005 through
            the date
            hereof, that have materially affected, or are reasonably likely to materially
            affect, the Company's internal control over financial reporting.
 
 As
            described in the Explanatory Note hereto, subsequent to the period covered
            by
            this report, management of the Company determined that the previously
            issued
            financial statements contained in the Company’s Quarterly Report on Form 10-Q
            for the three and nine months ended September 30, 2005 should be amended
            and
            restated to effect the reclassification to discontinued operations described
            in
            Note 10 to the accompanying unaudited condensed financial statements
            of the
            Company. The Company has implemented additional procedures to assure
            appropriate
            classification of operations as discontinued or continuing, principally
            the use
            of written checklists containing action items to be completed and initialed
            by
            the Company’s Chief Financial Officer and general counsel involving the review
            of all conditions to the future completion of pending divestiture transactions
            and the effect of such conditions on appropriate classification as continued
            or
            discontinued operations.
  23
  *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.*
 
 24
 
 **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
  
 25
 **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:
                      December 6, 2005
                  By:
                  /s/
                      David A. Owen
                    David
                      A. Owen
                    *Chief
                      Financial Officer*
                    (duly
                      authorized officer and principal financial and accounting
                      officer)
 
 
 26