<PAGE>   1
FORM 10-K/A
Amendment No. 1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 
     For the fiscal year ended December 31, 1996

                                       OR

[ ]  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 33-93970

                        INTERNATIONAL WIRE GROUP, INC.
                        -------------------------------
             (Exact name of registrant as specified in its charter)

                 DELAWARE                                    43-1705942
     -------------------------------                     -------------------
     (State or other jurisdiction of                      (I.R.S. Employer 
       incorporation or organization                     Identification No.)

101 SOUTH HANLEY ROAD, ST. LOUIS, MISSOURI                     63105
------------------------------------------                   ----------
 (Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code: (314) 719-1000
                                                    --------------

        Securities registered pursuant to Section 12(b) of the Act: NONE

        Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days.

                               X YES      No
                              ---      ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [x]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant. (The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.)

NO ESTABLISHED PUBLISHED PUBLIC TRADING MARKET EXISTS FOR THE COMMON STOCK, PAR
VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP, INC. ALL OF THE OUTSTANDING
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OF INTERNATIONAL WIRE GROUP,
INC. ARE HELD BY INTERNATIONAL WIRE HOLDING COMPANY.

Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date (applicable only to
corporate registrants).

                                                     OUTSTANDING AT
                  CLASS                              MARCH 12, 1997
                  -----                              --------------
               COMMON STOCK                              1,000


                    DOCUMENTS INCORPORATED BY REFERENCE NONE

<PAGE>   2
ITEM 6. SELECTED FINANCIAL DATA

THE COMPANY

The selected financial information below presents the financial information for
the year ended December 31, 1996 and for the seven months ended December 31,
1995, as derived from the audited consolidated financial statements of the
Company. The selected financial data should be read in conjunction with the
consolidated financial statements of the Company and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere herein.

<TABLE>
<CAPTION>
RESULTS OF OPERATIONS:                                            YEAR ENDED   SEVEN MONTHS ENDED
                                                             DECEMBER 31, 1996  DECEMBER 31, 1995
                                                             -----------------  -----------------
                                                                        (IN THOUSANDS)
<S>                                                               <C>             <C>     
   Net sales ...............................................      $ 546,981       $ 245,583
   Cost of goods sold ......................................        420,823         195,221
   Selling, general and administrative .....................         43,885          17,129
   Depreciation and amortization ...........................         31,341          11,020
   Impairment, unusual and plant closing charges ...........         84,250           1,750
   Inventory valuation adjustment ..........................          8,500              --
                                                                  ---------       ---------
   Operating income (loss) .................................        (41,818)         20,463
   Interest expense ........................................        (43,013)        (19,931)
   Amortization ............................................         (3,701)         (1,468)
   Other (expense) income ..................................            312            (158)
                                                                  ---------       ---------
   Loss before income tax provision ........................        (88,220)         (1,094)
   Income tax provision ....................................          1,262           2,197
                                                                  ---------       ---------
   Net loss ................................................      $ (89,482)      $  (3,291)
                                                                  =========       =========

OTHER DATA:

   EBITDA, as adjusted(1) ..................................      $  82,273       $  33,233
   Capital expenditures ....................................      $  15,849       $   5,751
   Total assets ............................................      $ 531,020       $ 427,920
   Long-term obligations (including current maturities) ....      $ 447,667       $ 338,677
</TABLE>

-----------------
(1)  As used herein, "EBITDA, as adjusted" is defined as operating income
     (loss) adjusted to exclude impairment, unusual and plant closing charges.
     EBITDA is presented because (i) it is a widely accepted indicator of a
     company's ability to incur and service debt and (ii) it is the basis on
     which the Company's compliance with certain financial covenants contained
     in the indenture, dated as of June 12, 1995 pursuant to which the Company
     issued the Senior Notes and the Amended and Restated Credit Agreement is
     principally determined. However, EBITDA, as adjusted, does not purport to
     represent cash provided by operating activities as reflected in the
     Company's consolidated statements of cash flow, is not a measure of
     financial performance under generally accepted accounting principles
     ("GAAP") and should not be considered in isolation or as a substitute for
     measures of performance prepared in accordance with GAAP. Also, the
     measure of EBITDA, as adjusted, may not be comparable to similar measures
     reported by other companies.
          
WIREKRAFT (A PREDECESSOR COMPANY)

The selected financial information presented below represents the financial
information of Wirekraft and its predecessor for the periods indicated. The
data for the year ended November 30, 1992 and for the period December 1, 1992
through December 21, 1992 are derived from the audited financial statements of
the Predecessor. The data for the period December 22, 1992 through November 30,
1993, the year ended November 30, 1994 and the six months ended May 31, 1995
are derived from the audited consolidated financial statements of Wirekraft. In
connection with the December 2, 1994 acquisition of ECM and certain assets of
GE (the "ECM Acquisition"), WB Holdings Inc. became a wholly-owned subsidiary
of Wirekraft, and, accordingly, references to Wirekraft shall include WB
Holdings Inc. The following information should be read in conjunction with the
audited consolidated financial statements of Wirekraft and the Predecessor and
the notes thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," included elsewhere herein.



                                      1
<PAGE>   3

<TABLE>
<CAPTION>
                                                    PREDECESSOR                                WIREKRAFT
                                            ----------------------------       --------------------------------------------
                                                             DECEMBER 1,       DECEMBER 22,
                                                            1992 THROUGH       1992 THROUGH    YEAR ENDED      SIX  MONTHS
                                            NOVEMBER  30,   DECEMBER 21,       NOVEMBER 30,    NOVEMBER 30,    ENDED MAY 31,
                                                1992            1992              1993(1)          1994            1995
                                            ------------    ------------       ------------    ------------    ------------
                                                                     (IN THOUSANDS)
<S>                                         <C>             <C>                <C>             <C>             <C>         
RESULTS OF OPERATIONS:
   Net sales ............................   $    174,684    $      9,714       $    181,188    $    240,972    $    168,053
   Cost of goods sold ...................        146,597           8,339            150,092         201,602         138,851
   Selling, general and
     administrative expenses ............         10,869             505             10,582          14,319          13,301
   Depreciation and amortization ........          5,141             218              4,496           6,435           6,474
   Compensation expense .................             --              --                 --              --             895(2)
   Expenses related to sale .............             --           6,929(3)              --              --             501(4)
   Expenses related to plant closings ...             --              --                 --              --           2,000(5)
                                            ------------    ------------       ------------    ------------    ------------
   Operating income (loss) ..............         12,077          (6,277)            16,018          18,616           6,031
   Interest expense .....................         (4,761)         (1,418)(6)         (8,645)        (10,565)         (8,020)
   Amortization of deferred financing
       costs ............................             --              --             (1,677)         (1,995)         (1,657)
                                            ------------    ------------       ------------    ------------    ------------
   Income (loss) before income taxes
      and extraordinary item ............          7,316          (7,695)             5,696           6,056          (3,646)
   Income tax provision (benefit) (7) ...             --              --              3,155           3,023          (2,114)
                                            ------------    ------------       ------------    ------------    ------------
   Income (loss) before extraordinary
      item ..............................             --              --              2,541           3,033          (1,532)
   Extraordinary item ...................             --              --                 --              --          (7,835)(8)
   Net income (loss) ....................   $      7,316    $     (7,695)      $      2,541    $      3,033    $     (9,367)
                                            ============    ============       ============    ============    ============


OTHER DATA:
   EBITDA, as adjusted (9)...............   $     17,218    $        870       $     20,514    $     25,051    $     15,901
   Capital expenditures .................          2,122             136              3,705           6,248           2,914
   Total assets .........................         81,074          80,421            146,671         178,488         241,277
   Long-term obligations
      (including current maturities)  ...         45,294          42,143             93,123         111,639         148,386
</TABLE>


---------------
(1)  On December 21, 1992, WB Holdings Inc., through a series of acquisitions
     and mergers (the "Original Wirekraft Acquisition"), acquired all of the
     issued and outstanding common stock of Bristol and Burcliff, the parent
     companies of the general partners of the Predecessor.
(2)  Represents payments to senior management of Wirekraft for the redemption
     of employee stock options in connection with the Acquisitions.
(3)  Represents non-recurring expenses associated with the Original Wirekraft
     Acquisition, which included exit bonuses, severance arrangements and
     brokerage and legal fees.
(4)  Represents expenses of Wirekraft associated with the Acquisitions.
(5)  Represents expenses related to the closing of certain domestic wire harness
     facilities.
(6)  Includes write-off of deferred financing fees of $1,211 associated with
     the Original Wirekraft Acquisition.
(7)  The results of operations for the years ended November 30, 1991 and 1992
     and the period from December 1, 1992 through December 21, 1992 did not
     include a provision for income taxes since the net income for the
     Predecessor is included in the income tax returns of its partners.
(8)  Extraordinary item in 1995 represents a $7,835 loss on early
     extinguishment of debt (net of income tax of $4,930).
(9)  As used herein, "EBITDA, as adjusted" is defined as operating income
     (loss) adjusted to exclude impairment, unusual and plant closing charges.
     EBITDA is presented because (i) it is a widely accepted indicator of a
     company's ability to incur and service debt and (ii) it is the basis on
     which the Company's compliance with certain financial covenants contained
     in the indenture, dated as of June 12, 1995 pursuant to which the Company
     issued the Senior Notes and the Amended and Restated Credit Agreement is
     principally determined. However, EBITDA, as adjusted, does not purport to
     represent cash provided by operating activities as reflected in the
     Company's consolidated statements of cash flow, is not a measure of
     financial performance under GAAP and should not be considered in isolation
     or as a substitute for measures of performance prepared in accordance with
     GAAP. Also, the measure of EBITDA, as adjusted, may not be comparable to 
     similar measures reported by other companies.



                                      2

<PAGE>   4
OMEGA (A PREDECESSOR COMPANY)

The selected financial information below presents the financial information of
Omega and its predecessor for the periods indicated. The data for the years
ended December 31, 1992, 1993 and 1994 and the three months ended March 31,
1995 are derived from the audited consolidated financial statements of
THL-Omega. The data for the two months ended May 31, 1995, are derived from the
audited consolidated financial statements of Omega. The following information
should be read in conjunction with the audited consolidated financial
statements of THL-Omega and Omega and the notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
included elsewhere herein.

<TABLE>
<CAPTION>
                                                                THL-OMEGA                               OMEGA
                                          ----------------------------------------------------       ----------
                                                                                      THREE             THREE
                                                                                      MONTHS            MONTHS
                                                       YEAR ENDED DECEMBER 31,         ENDED            ENDED
                                          --------------------------------------     MARCH 31,         MAY 31,
                                             1992          1993          1994          1995            1995(1)
                                          ----------    ----------    ----------    ----------       ----------
                                                                 (IN THOUSANDS)
<S>                                       <C>           <C>           <C>           <C>              <C>       
RESULTS OF OPERATIONS:
   Net sales ..........................   $  108,312    $  107,004    $  134,457    $   38,736       $   23,295
   Cost of goods sold .................       82,008        80,276        98,012        29,401           17,512
   Selling, general and
      administrative expenses .........        8,925        12,061        10,839         2,651            1,639
   Depreciation and
      amortization ....................        5,488         5,191         5,761         1,459            1,233
   Compensation expense ...............           --            --            --         9,715(2)            --
   Expenses related to sale ...........           --            --            --         1,689(3)            --
                                          ----------    ----------    ----------    ----------       ----------
   Operating income (loss)  ...........       11,891         9,476(4)     19,845        (6,179)           2,911
   Interest expense ...................       (6,526)       (6,026)       (5,932)       (1,478)          (1,797)
   Amortization of deferred
      financing costs .................         (285)         (289)         (262)          (50)            (238)
   Other income .......................        1,015           772           296            32               --
                                          ----------    ----------    ----------    ----------       ----------
   Income (loss) before
       income taxes and
       extraordinary item .............        6,095         3,933        13,947        (7,675)             876
   Income tax provision
       (benefit) ......................        2,550         1,892         5,787           484              171
                                          ----------    ----------    ----------    ----------       ----------
   Income (loss) before
      extraordinary item ..............        3,545         2,041         8,160        (8,159)             705
   Extraordinary item .................           --            --            --        (1,148)(5)       (4,044)(6)
                                          ----------    ----------    ----------    ----------       ----------
   Net income (loss) ..................   $    3,545    $    2,041    $    8,160    $   (9,307)      $   (3,339)
                                          ==========    ==========    ==========    ==========       ==========

OTHER DATA:
   EBITDA, as adjusted(7)..............   $   17,379    $   14,667(4) $   25,606    $    6,684       $    4,144
   Capital expenditures ...............        1,947         3,683         8,667         1,597              581
   Total assets .......................       87,342        85,868       101,675        97,657          176,659
   Long-term obligations
    (including current maturities) ....       64,554        58,174        56,093        54,615          128,116
</TABLE>

---------------
(1)  On March 31, 1995, Omega acquired all of the issued and outstanding common
     stock of THL-Omega.
(2)  Represents payments to senior management for the redemption of stock
     options and stock that was issued immediately prior to the acquisition of
     THL-Omega for consideration less than the fair value.
(3)  Represents expenses of the sellers associated with the acquisition of
     THL-Omega.
(4)  During 1993 a charge of approximately $3,100 was recorded related to
     certain one time bad debt write-offs. Excluding the effects of this charge,
     operating income and EBITDA, as adjusted, would have been $12,576 and 
     $17,767, respectively.
(5)  Extraordinary item in March 1995, represents a $1,148 loss on early
     extinguishment of debt (net of income taxes of $765).
(6)  Extraordinary item in May 1995, represents a $4,044 loss on early
     extinguishment of debt (net of income taxes of $2,082).
(7)  As used herein, "EBITDA, as adjusted" is defined as operating income
     (loss) adjusted to exclude impairment, unusual and plant closing charges.
     EBITDA is presented because (i) it is a widely accepted indicator of a
     company's ability to incur and service debt and (ii) it is the basis on
     which the Company's compliance with certain financial covenants contained
     in the indenture, dated as of June 12, 1995 pursuant to which the Company
     issued the Senior Notes and the Amended and Restated Credit Agreement is
     principally determined. However, EBITDA, as adjusted, does not purport to
     represent cash provided by operating activities as reflected in the
     Company's consolidated statements of cash flow, is not a measure of
     financial performance under GAAP and should not be considered in
     isolation or as a substitute for measures of performance prepared in
     accordance with GAAP. Also, the measure of EBITDA, as adjusted, may not be
     comparable to similar measures reported by other companies.


                                      3

<PAGE>   5

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

To facilitate a meaningful comparison, the following discussion and analysis
includes combined results of operations of the Company, Wirekraft, Omega and ECM
for periods prior to the Acquisitions. These combined results of operations have
not been prepared in accordance with GAAP, which does not allow for the
aggregation of financial data for entities that are not under common ownership.
Nevertheless, management believes that the aggregate financial information shown
below for the periods prior to the Acquisitions is helpful in understanding the
past operations of the companies combined in the Acquisitions. The Company in
June 1995, through a series of mergers and acquisitions, consummated the
Acquisitions. As a result of certain transactions, including the Acquisitions,
the acquisition of THL-Omega and the ECM Acquisition, the Company incurred
substantial indebtedness and recorded significant amounts of goodwill, which
resulted in interest and amortization expenses for the Company substantially
greater than the interest and amortization expenses incurred by the Company's
predecessors. Additionally, the accounting bases for the Company's predecessors
differ from the accounting bases of the Company. Therefore, the results of
operations data for the Company's predecessors are not directly comparable to
the results of operations data for the Company, and the Company cautions
investors against placing undue reliance on the comparative information
contained herein.
 
The Company conducts its operations through two segments: (i) wire products,
which includes both non-insulated and insulated wire, and (ii) wire harness
products. The table below sets forth the major components of the results of
operations on a historical combined basis for the fiscal year 1994 and the five
months ended May 31, 1995 and on a historical basis for the seven months ended
December 31, 1995 and the year ended December 31, 1996 and should be used in
reviewing the discussion and analysis of results of operations and liquidity and
capital resources.
 
Included in fiscal year 1994, and referred to as "Historical Combined Fiscal
Year Ended December 31, 1994," is the year ended November 30, 1994 of Wirekraft,
the year ended December 31, 1994 of THL-Omega, which was acquired by Omega in
March 1995, and the eleven month period ended November 30, 1994 of ECM. 
 
Included in fiscal year 1995, and referred to as "Historical Combined Fiscal
Year Ended December 31, 1995," is the five month period ended May 31, 1995 of
Wirekraft, the three month period ended March 31, 1995 of THL-Omega, the two
month period ended May 31, 1995 of Omega (collectively referred to as
"Historical Combined Five Months Ended May 31, 1995") and the seven month period
ended December 31, 1995 of the Company. 
 
Included in the year ended December 31, 1996 is the year ended December 31, 1996
of the Company, which includes the results of operations of Wire Technologies
from March 5, 1996, the date of the DWT Acquisition. 




                                      4
<PAGE>   6
 
                             RESULTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                 PREDECESSOR                    SUCCESSOR
                                          --------------------------   ---------------------------
                                                                                                  
                                          FISCAL YEAR    FIVE MONTHS   SEVEN MONTHS               
                                             ENDED          ENDED         ENDED        YEAR ENDED 
                                          DECEMBER 31,     MAY 31,     DECEMBER 31,   DECEMBER 31,
                                              1994         1995(1)         1995           1996    
                                          ------------   -----------   ------------   ------------
                                                                          (IN THOUSANDS)          
<S>                                       <C>            <C>           <C>            <C>         
STATEMENT OF OPERATIONS DATA:                                                                     
  Wire sales............................    $272,414      $131,831       $161,741       $385,627  
  Wire harness sales....................     174,716        77,279         83,842        161,354  
                                            --------      --------       --------       --------  
        Net sales.......................     447,130       209,110        245,583        546,981  
  Cost of goods sold....................     348,633       167,456        195,221        420,823  
  Selling, general and administrative                                                             
    expenses............................      39,746        15,714         17,129         43,885  
  Depreciation and amortization.........      13,310         8,313         11,020         31,341  
  Impairment, unusual and plant closing                                                           
    charges.............................          --         2,000          1,750         84,250  
  Inventory valuation adjustment........          --            --             --          8,500  
  Compensation expense..................          --        10,610             --             --  
  Expenses related to sale..............          --         2,190             --             --  
                                            --------      --------       --------       --------  
    Operating income (loss).............    $ 45,441      $  2,827       $ 20,463       $(41,818) 
                                            ========      ========       ========       ========  
</TABLE>
 
---------------
 
(1) The results of operations data related to Wirekraft for the five months
    ended May 31, 1995 excludes the one month period ended December 31, 1994.
    Loss from operations of Wirekraft for the one month period ended December
    31, 1994 was $64.
 




                                      5
<PAGE>   7

 
YEAR ENDED DECEMBER 31, 1996 COMPARED TO HISTORICAL COMBINED FISCAL YEAR ENDED
DECEMBER 31, 1995
 
Net sales for the year ended December 31, 1996 were $547.0 million,
representing a $92.3 million, or 20.3%, increase over the Historical Combined
Fiscal Year Ended December 31, 1995. This increase occurred substantially within
the wire segment, where sales increased $92.1 million, or 31.3%, over the
Historical Combined Fiscal Year Ended December 31, 1995. This increase reflected
$139.7 million of net sales from Wire Technologies, as well as continued growth
in the Company's automotive, cable and control signal market accounts. These
increases were partially offset by a decline in copper prices. In general, the
Company prices its products based upon a spread over the cost of copper, which
results in a decreased dollar value of sales when copper prices decrease. The
average price of copper based upon the COMEX declined to $1.06 per pound over
the year ended December 31, 1996 from $1.35 per pound during the Historical
Combined Fiscal Year Ended December 31, 1995. Within the wire harness segment,
sales remained constant at $161.4 million during the year ended December 31,
1996. This constant level of sales represented strong sales from most major wire
harness customers other than Whirlpool. Sales to Whirlpool declined during the
year due to the expiration of a transition supply agreement in October 1995.
 
Cost of goods sold as a percent of sales decreased from 79.8% to 76.9% for
the year ended December 31, 1996. This decrease was due to the result of
negotiated price reductions for certain purchased materials and the elimination
of the majority of outside purchases of non-insulated wire subsequent to the
acquisition of THL-Omega in 1995. Wirekraft's purchases of non-insulated wire
from outside suppliers declined as Omega's non-insulated wire production for
Wirekraft increased. In addition, the change in cost of goods sold as a percent
of sales reflected cost reductions achieved within both the wire and wire
harness segments resulting from plant consolidation actions taken in 1995 and
1996, as well as the impact of declining copper prices. Because the Company's
products are typically priced at a spread over the cost of copper, a lower
copper price leads to a higher gross margin percentage but generally has no
impact on gross margin dollars.
 
YEAR ENDED DECEMBER 31, 1996 COMPARED TO SEVEN MONTHS ENDED DECEMBER 31, 1995
 
Net sales for the year ended December 31, 1996 were $547.0 million,
representing an increase of $301.4 million over the seven months ended December
31, 1995. This increase included wire segment sales of $223.9 million and wire
harness segment sales of $77.5 million. The increase was primarily the result of
the additional five months of operations of the Company in 1996, as compared to
1995 and the inclusion of $139.7 million of wire segment sales as the result of
the DWT Acquisition in March 1996. These increases were partially offset by a
decline in copper prices. Generally, the Company prices its products based upon
a spread over copper, which results in a decreased dollar value of sales when
copper prices decrease. The average price of copper based upon the COMEX
declined to $1.06 per pound over the year ended December 31, 1996 from $1.35 per
pound during the seven months ended December 31, 1995.
 
Cost of goods sold as a percentage of sales decreased from 79.5% for the
seven months ended December 31, 1995 to 76.9% for the year ended December 31,
1996. This decrease was due to the result of negotiated price reductions for
certain purchased materials and the elimination of the majority of outside
 



                                      6

<PAGE>   8
 
purchases of non-insulated wire. Wirekraft's purchases of non-insulated wire
from outside sources declined as Omega's non-insulated wire production for
Wirekraft increased. In addition, the change in cost of goods sold as a percent
of sales reflected cost reductions achieved within both the wire and wire
harness segments resulting from plant consolidation actions taken in 1995 and
1996, as well as the impact of declining copper prices. Because the Company's
products are typically priced at a spread over the cost of copper, a lower
copper price leads to a higher gross margin percentage but generally has no
impact on gross margin dollars.
 
Selling, general and administrative expenses were $43.9 million for the
year ended December 31, 1996 compared to $17.1 million during the seven months
ended December 31, 1995, an increase of $26.8 million. The increase was
primarily the result of the additional five months of operations of the Company
in 1996, as compared to 1995 and the inclusion of $5.7 million of expenses from
the DWT Acquisition. Expressed as a percentage of sales, selling, general and
administrative expenses increased from 7.0% during the seven months ended
December 31, 1995 to 8.0% during the year ended December 31, 1996. This
increase, as a percentage of sales, was partially attributable to the effect on
net sales of higher copper costs during the seven months ended December 31,
1995, as compared to the year ended December 31, 1996. Other cost increases
included volume related items and cost inflation.
 
Depreciation and amortization was $31.3 million for the year ended December 31,
1996 compared to $11.0 million for the seven months ended December 31, 1995.
This increase of $20.3 million was the result of the additional five months of
operations of the Company in 1996, as compared to 1995, as well as additional
depreciation of property, plant and equipment from 1996 additions and the
amortization of goodwill from the DWT Acquisition.
 
In the first quarter of 1996, the Company adopted a new business strategy
that had a major impact on its business units. The Company's strategy considered
reducing production costs, moving production to the South and Southwest,
improving customer service and lowering selling, general and administrative
expenses. The Company developed the new strategy and business plan in the first
quarter of 1996, which it finalized in connection with the DWT Acquisition.
 
The DWT Acquisition was instrumental in the evaluation and implementation
of the new business strategy, due to DWT's strategically sized and located
facilities. With the DWT Acquisition, additional goodwill of $105.0 million was
recorded. With the addition of significant goodwill, the Company believed it was
appropriate to perform a comprehensive review of the carrying value of goodwill.
 
In addition to the DWT Acquisition, factors that were examined during the
Company's review of the carrying value of goodwill included the changes in the
appliance and automotive industries. These changes include the movement of
appliance harness requirements to Mexican manufacturing facilities and the shift
in automotive harness requirements from large, long lead-time orders to more
frequent, small, short lead-time orders. As a result of these changes, the
Company closed certain of its facilities and undertook its new business
strategy.
 
Upon completion of its analysis, the Company determined that the carrying
value of goodwill exceeded fair value by approximately $78.2 million. A non-cash
impairment charge of $78.2 million was recorded upon completion of the analysis
in the fourth quarter of 1996.
 
A $6.0 million pre-tax charge to operations was recorded during the year
ended December 31, 1996, representing plant closing costs. The plant closing
costs relate to shutting down and consolidating six facilities. There was a
similar charge of $1.8 million for the seven months ended December 31, 1995. An
$8.5 million pre-tax inventory valuation charge was recorded during the year
ended December 31, 1996. This charge was the result of an adjustment to the LIFO
valuation of copper in inventory reflecting the decrease in the copper cost per
pound during fiscal 1996. There was no similar charge for the seven months ended
December 31, 1995.
 
HISTORICAL COMBINED FISCAL YEAR ENDED DECEMBER 31, 1995 COMPARED TO HISTORICAL
COMBINED FISCAL YEAR ENDED DECEMBER 31, 1994
 
Net sales for the Historical Combined Fiscal Year Ended December 31, 1995
were $454.7 million, representing a $7.6 million, or 1.7%, increase over the
Historical Combined Fiscal Year Ended December 31, 1994. This increase in net
sales was primarily attributable to an increase in sales of wire products which
grew
 


                                      7

<PAGE>   9

 
to $293.6 million in 1995 from $272.4 million in 1994, an increase of $21.2
million, or 7.8%. The increase was largely due to rising copper prices. In
general, the Company prices its products based upon a spread over the cost of
copper, which results in an increased dollar volume of sales when copper prices
increase. The average price of copper based on the COMEX rose to $1.35 per pound
during the Historical Combined Fiscal Year Ended December 31, 1995 from $1.07
per pound during the Historical Combined Fiscal Year Ended December 31, 1994.
The increase in wire sales was also bolstered by growth in specialty accounts
which primarily occurred in the security, alarm, data communications and fine
wire businesses. The increase in sales of wire products was offset somewhat by a
slowdown in the automotive industry as well as by several model related
changeovers at key automotive customers. Within the wire harness segment, sales
decreased $13.6 million, or 7.8%, for the Historical Combined Fiscal Year Ended
December 31, 1995 as compared to the Historical Combined Fiscal Year Ended
December 31, 1994. This decrease reflects a decline in sales to Whirlpool. This
decline was pursuant to an agreement effective October 1, 1994, whereby
Whirlpool began transitioning certain wire harness purchases to its own captive
operation in Mexico and other third party suppliers. The wire harness segment,
however, retained Whirlpool's dishwasher harness business.

Cost of goods sold as a percent of sales increased to 79.8% from 78.0% for the
Historical Combined Fiscal Year Ended December 31, 1995 compared to the
Historical Combined Fiscal Year Ended December 31, 1994. The change was
primarily due to the increase in the average price of copper. Because the
Company's products are typically priced at a spread over the cost of copper, a
higher copper price leads to a lower gross margin percentage but generally has
no impact on gross margin dollars. The increasing cost of materials used to
insulate wire, which include resins and plasticizers, and the impact of
producing to shorter average runs during the mid-year automotive slowdown and
customer inventory adjustment period also had dampening effects on margins.
 
HISTORICAL COMBINED FIVE MONTHS ENDED MAY 31, 1995 COMPARED TO HISTORICAL
COMBINED FISCAL YEAR ENDED DECEMBER 31, 1994
 
Net sales for the Historical Combined Five Months Ended May 31, 1995 were $209.1
million, representing a $238.0 million decrease from the Historical Combined
Fiscal Year Ended December 31, 1994. This decrease included wire segment sales
of $140.6 million and wire harness segment sales of $97.4 million. The decrease
was primarily the result of a full twelve months of operations for the 1994
period compared to only five months of operations included the 1995 period. This
decrease was partially offset by rising copper prices. In general, the Company
prices its products based upon a spread over the cost of copper, which results
in an increased dollar volume of sales when copper prices increase. The average
price of copper based on the COMEX rose to $1.35 per pound during the Historical
Combined Five Months Ended May 31, 1995 from $1.07 per pound during the
Historical Combined Fiscal Year Ended December 31, 1994.
 
Cost of sales as a percentage of sales increased to 80.1% for the Historical
Combined Five Months Ended May 31, 1995 from 78.0% for the Historical Combined
Fiscal Year Ended December 31, 1994. The change was primarily due to the
increase in the average price of copper. Because the Company's products are
typically priced at a spread over the cost of copper, a higher copper price
leads to a lower gross margin percentage but generally has no impact on gross
margin dollars.
 
Selling, general and administrative expenses were $15.7 million for the
Historical Combined Five Months Ended May 31, 1995 compared to $39.8 million for
the Historical Combined Fiscal Year Ended December 31, 1994, a decrease of $24.1
million. Expressed as a percentage of sales, selling, general and administrative
expenses decreased to 7.5% for the Historical Combined Five Months Ended May 31,
1995, from 8.9% for the Historical Combined Fiscal Year Ended December 31, 1994.
The decrease in the percentage of sales was primarily attributable to cost
containment efforts, movement away from commissioned sales representatives to a
captive sales force and consolidation in administrative positions.
 
Depreciation and amortization was $8.3 million for the Historical Combined Five
Months Ended May 31, 1995, compared to $13.3 million for the Historical Combined
Fiscal Year Ended December 31, 1994. This decrease of $5.0 million was primarily
the result of a full twelve months of operations for the 1994 period compared to
only five months of operations included the 1995 period. This decrease was
partially offset by 



                                      8
<PAGE>   10
 
depreciation of property, plant and equipment additions and the amortization of
goodwill from the ECM Acquisition and the acquisition of THL-Omega.
 
During the Historical Combined Five Months Ended May 31, 1995, the Company
recorded a $2.0 million charge to operations to provide for plant closing costs
including shut-down costs, commitment costs for leased equipment and key
personnel and severance related costs. There was no similar charge for the
Historical Combined Fiscal Year Ended December 31, 1994.
 
During the Historical Combined Five Months Ended May 31, 1995, the Company
recorded $10.6 million in compensation expense and $2.2 million for expenses
related to the Original Wirekraft Acquisition and the acquisition of THL-Omega.
There was no similar charge for the Historical Combined Fiscal Year Ended
December 31, 1994.





                                      9
<PAGE>   11


LIQUIDITY AND CAPITAL RESOURCES

Working Capital and Cash Flows

For the year ended December 31, 1996, the Company generated $32.0 million in
cash from operations and $13.0 million of net proceeds from the issuance of
equity securities and long-term debt obligations related to the DWT Acquisition.
During 1996, the Company made net repayments of $21.3 million under debt
obligations, spent $15.8 million on capital projects and used $7.8 million
related to financing fees.

For the Historical Combined Year Ended December 31, 1995, the Company generated
$25.2 million in cash from operations and $23.0 million of net proceeds from the
issuance of equity securities and long-term debt obligations related to
acquisitions. During 1995, the Company made net repayments of $17.6 million
under debt obligations ($12.5 million repaid by the predecessor companies in
connection with the Acquisitions), spent approximately $10.5 million on capital
projects and used $21.0 million to pay financing fees ($7.0 million of which
were incurred in connection with the acquisition of THL-Omega).

For the Historical Combined Year Ended December 31, 1994, the Company generated
$13.4 million in cash from operations and $3.8 million from the issuance of
certain notes. Cash was used in 1994 primarily to fund capital expenditures of
$14.9 million.

Financing Arrangements

In connection with the Camden Acquisition, Holding and the Company entered into
an Amended and Restated Credit Agreement dated as of February 12, 1997 with
certain financial institutions. The Amended and Restated Credit Agreement
provides senior secured financing of up to $428.5 million, consisting of an
$111.0 million, five year Term A loan, an $115.0 million, seven year Term B
loan, an $127.5 million, eight year Term C loan (collectively the "Term
Facility") and a $75.0 million revolving loan and letter of credit facility (the
"Revolver"). The Company is obligated to make principal payments in respect of
the Term Facility of $20.3 million in 1997, $23.1 million in 1998, $28.3 million
in 1999, $42.6 million in 2000, $56.6 million in 2001, $73.2 million in 2002 and
$92.4 million in 2003. The Revolver is available for working capital purposes
including letters of credit. The commitments terminate and all amounts under the
Revolver then outstanding mature in 2000. As of March 12, 1997, there was $336.2
million outstanding under the Term Facility and $67.4 million of unused
borrowing capacity under the Revolver.

The Company's obligations under the Amended and Restated Credit Agreement bear
interest at floating rates and require interest payments on varying dates
depending on the interest rate option selected by the Company. At March 12,
1997, weighted average interest rate on outstanding borrowings under the Amended
and Restated Credit Agreement was 8.69%.




                                      10
<PAGE>   12
Within 90 days of the date of the Amended and Restated Credit Agreement, the
Company is required to enter into interest rate agreements to assure the net
interest cost to the Company on at least 50% of the sums of the aggregate
principal amount of the Term Facility, the aggregate principal amount of the
Senior Notes, and the aggregate liquidation preference of the Senior Preferred
Stock (or the aggregate principal amount of the Senior Notes issued in exchange
for the Senior Preferred Stock pursuant to the terms thereof) for a period of
at least two years. As of March 12, 1997, the Company had entered into two such
agreements. These agreements provide ceilings of 7.0% on $55.5 million of
indebtedness through May 1997, 8.0% on $63.5 million of indebtedness through
May 1998, 7.0% on $32.5 million of indebtedness through March 1998 and 8.0% on
$32.5 million of indebtedness through March 1999.

In connection with the Acquisitions, Holding and the Company issued $150.0
million principal amount of Senior Notes due 2005 under an indenture (the
"Indenture"), dated June 12, 1995. The Senior Notes bear interest at the rate of
11.75% per annum, requiring semi-annual interest payments of $8.8 million on
each June 1 and December 1. The Senior Notes are not subject to any sinking fund
requirements.

Liquidity

The principal raw material used in the Company's products is copper. The market
price of copper is subject to significant fluctuations. Increased working
capital needs occur whenever the Company experiences a significant rise in
copper prices. A $0.10 per pound change in the price of copper changes the
Company's working capital by approximately $2.8 million. The Company enters
into contractual relationships with most of its customers to adjust it prices
based upon the prevailing market prices on the COMEX. This approach is
patterned after the Company's arrangement with its copper suppliers and is
designed to remove the risk associated with fluctuating copper prices.


As part of the impairment charge in 1996 as more fully described in Note 10 to
the Company's financial statements for the year ended December 31, 1996, the
Company has accrued $4.2 million for anticipated losses related to product
liability claims associated with the Original Wirekraft Acquisition. These
claims are for a non-wire product in the appliance industry that the Company has
not manufactured since 1992. The Company's policy is to record the probable and
reasonably estimable loss related to product liability claims. In 1996, the
claims significantly increased as a result of the receipt of claims accumulated
by insurance companies related to prior periods. Accordingly, the Company
revised its estimated liability outstanding on actual claims reported and its
estimate of claims incurred but not reported. In developing its estimated
liability outstanding on actual claims reported, the Company considered historic
settlement rates. The Company has estimated its liability outstanding on actual
claims reported to be $1.5 million. In determining its estimate of claims
incurred but not reported, the Company considered historical claim levels and
amounts relative to total product shipped. Additionally, the Company considered
historical settlement rates to develop its estimate of incurred but not reported
claims of $2.7 million. Due to the uncertainties associated with these product
claims, the future cost of final settlement of these claims may differ from the
liability currently accrued. However, in the Company's opinion, the impact of
final settlement of these claims on future operations, financial position and
liquidity will not be material.
 
The Company's primary source of liquidity are cash flows from operations and
borrowings under the Revolver, which are





                                      11
<PAGE>   13

subject to a borrowing base calculation. The major uses of cash in 1997 are
expected to be for debt service requirements and capital expenditures. In 1997,
debt service requirements are estimated at $68 million while capital
expenditures are estimated at $23 million. Management believes that cash from
operating activities, together with available borrowings under the Revolver, if
necessary, should be sufficient to permit the Company to meet these financial
obligations.

ITEM 8. FINANCIAL STATEMENTS

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
INTERNATIONAL WIRE GROUP, INC.                                                                        PAGE
                                                                                                      ----
<S>                                                                                                    <C>
     Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................   13
     Consolidated Balance Sheets as of December 31, 1996 and December 31, 1995 .....................   14
     Consolidated Statements of Operations for the year ended December 31, 1996 and
        seven months ended December 31, 1995 .......................................................   15
     Consolidated Statement of Stockholders' Equity for the year ended December 31, 1996 and
        seven months ended December 31, 1995 .......................................................   16
     Consolidated Statements of Cash Flows for the year ended December 31, 1996 and
        seven months ended December 31, 1995 .......................................................   17
     Notes to Consolidated Financial Statements ....................................................   18
     Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................   37
     Consolidated Financial Statement Schedule for the year ended December 31, 1996 and
        the seven months ended December 31, 1995: Schedule II - Valuation and Qualifying Accounts ..   38

WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.)

     Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................   39
     Consolidated Statements of Operations for the six months ended May 31, 1995 and the year
        ended November 30, 1994 ....................................................................   40
     Consolidated Statements of Stockholders' Equity for the six months ended May 31, 1995 and
        the year ended November 30, 1994 ...........................................................   41
     Consolidated Statements of Cash Flows for the six months ended May 31, 1995 and the year
        ended November 30, 1994 ....................................................................   42
     Notes to Consolidated Financial Statements ....................................................   43

OMEGA WIRE CORP.

     Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................   51
     Consolidated Statement of Operations for the two months ended May 31, 1995 ....................   52
     Consolidated Statement of Stockholders' Equity for the two months
        ended May 31, 1995 .........................................................................   53
     Consolidated Statement of Cash Flows for the two months ended May 31, 1995 ....................   54
     Notes to Consolidated Financial Statements ....................................................   55

THL-OMEGA HOLDING CORPORATION

     Report of Coopers & Lybrand L.L.P., Independent Public Accountants ............................   60
     Consolidated Statement of Operations and Retained Earnings for the three months
        ended March 31, 1995 .......................................................................   61
     Consolidated Statement of Cash Flows for the three months ended March 31, 1995 ................   62
     Notes to Consolidated Financial Statements ....................................................   63

     Report of Price Waterhouse L.L.P., Independent Public Accountants .............................   66
     Consolidated Statements of Operations and Retained Earnings for the year ended
        December 31, 1994 ..........................................................................   67
     Consolidated Statements of Cash Flows for the year ended December 31, 1994 ....................   68
     Notes to Consolidated Financial Statements ....................................................   69
</TABLE>


                                      12
<PAGE>   14



                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
International Wire Group, Inc.:

We have audited the accompanying consolidated balance sheets of International
Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31,
1995, and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the year ended December 31, 1996 and seven
months ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of International
Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31,
1995, and the consolidated results of their operations and their cash flows for
the year ended December 31, 1996 and the seven months ended December 31, 1995,
in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 28, 1997





                                      13
<PAGE>   15

                         INTERNATIONAL WIRE GROUP, INC.
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,    DECEMBER 31,
                                                                           1996            1995
                                                                       ------------    ------------
<S>                                                                    <C>             <C>         
Current assets:
     Accounts receivable, less allowance of $1,363 and $860 ........   $     71,181    $     47,180
     Inventories ...................................................         60,362          57,777
     Prepaid expenses and other ....................................          5,060           2,733
     Deferred income taxes .........................................          4,741             125
                                                                       ------------    ------------
        Total current assets .......................................        141,344         107,815
Property, plant and equipment, net .................................        118,551          82,259
Deferred financing costs, net ......................................         21,222          16,688
Intangible assets, net .............................................        244,655         215,400
Other assets .......................................................          5,248           5,758
                                                                       ------------    ------------
        Total assets ...............................................   $    531,020    $    427,920
                                                                       ============    ============


                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
     Current maturities of long-term obligations ...................   $     20,948    $     12,662
     Accounts payable ..............................................         45,832          37,627
     Accrued and other liabilities .................................         33,150          20,323
     Customers' deposits ...........................................          8,033           5,688
     Accrued interest ..............................................          4,648           2,516
                                                                       ------------    ------------
        Total current liabilities ..................................        112,611          78,816
Long-term obligations, less current maturities .....................        426,719         326,015
Deferred income taxes ..............................................         14,719           8,194
Other long-term liabilities ........................................         12,162           4,897
                                                                       ------------    ------------
        Total liabilities ..........................................        566,211         417,922
Stockholders' equity (deficit):
     Common stock, $.01 par value, 1,000 shares authorized,
        issued and outstanding .....................................              0               0
     Series A senior cumulative exchangeable redeemable
        preferred stock, $.01 par value, $25 liquidation
        value, 400,000 shares authorized, issued and outstanding ...              4              --
     Contributed capital ...........................................        125,340          81,051
     Carryover of predecessor basis ................................        (67,762)        (67,762)
     Accumulated deficit ...........................................        (92,773)         (3,291)
                                                                       ------------    ------------
        Total stockholders' equity (deficit) .......................        (35,191)          9,998
                                                                       ------------    ------------
        Total liabilities and stockholders' equity (deficit) .......   $    531,020    $    427,920
                                                                       ============    ============
</TABLE>



        See accompanying notes to the consolidated financial statements





                                      14
<PAGE>   16

                         INTERNATIONAL WIRE GROUP, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          YEAR ENDED      SEVEN MONTHS ENDED
                                                       DECEMBER 31, 1996  DECEMBER 31, 1995
                                                       -----------------  -----------------
<S>                                                       <C>                 <C>       
Net sales ..........................................      $  546,981          $  245,583
Operating expenses:
   Cost of goods sold ..............................         420,823             195,221
   Selling, general and administrative .............          43,885              17,129
   Depreciation and amortization ...................          31,341              11,020
   Impairment, unusual and plant closing charges ...          84,250               1,750
   Inventory valuation adjustment ..................           8,500                  --
                                                          ----------          ----------
Operating income (loss) ............................         (41,818)             20,463
Other income (expense):
   Interest expense ................................         (43,013)            (19,931)
   Amortization of deferred financing costs ........          (3,701)             (1,468)
   Other, net ......................................             312                (158)
                                                          ----------          ----------
Loss before income tax provision ...................         (88,220)             (1,094)
Income tax provision ...............................           1,262               2,197
                                                          ----------          ----------
Net loss ...........................................      $  (89,482)         $   (3,291)
                                                          ==========          ==========
</TABLE>


        See accompanying notes to the consolidated financial statements





                                      15
<PAGE>   17

                         INTERNATIONAL WIRE GROUP, INC.
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                  FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE
                      SEVEN MONTHS ENDED DECEMBER 31, 1995

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                               CARRYOVER OF
                                     COMMON       PREFERRED      CONTRIBUTED    PREDECESSOR     ACCUMULATED
                                     STOCK          STOCK          CAPITAL         BASIS          DEFICIT           TOTAL
                                  ------------   ------------   ------------    ------------    ------------    ------------
<S>                               <C>            <C>            <C>             <C>             <C>             <C>         
Capital contributed ...........   $          0   $         --   $     81,951    $         --    $         --    $     81,951

Issuance costs ................             --             --           (900)             --              --            (900)

Carryover of predecessor
   basis ......................             --             --             --         (67,762)             --         (67,762)

Net loss ......................             --             --             --              --          (3,291)         (3,291)
                                  ------------   ------------   ------------    ------------    ------------    ------------

Balance December 31, 1995 .....              0             --         81,051         (67,762)         (3,291)          9,998

Capital contributed ...........             --             --         35,493              --              --          35,493

Issuance of preferred stock ...             --              4          9,996              --              --          10,000

Issuance costs ................             --             --         (1,200)             --              --          (1,200)

Net loss ......................             --             --             --              --         (89,482)        (89,482)
                                  ------------   ------------   ------------    ------------    ------------    ------------

Balance December 31, 1996 .....   $          0   $          4   $    125,340    $    (67,762)   $    (92,773)   $    (35,191)
                                  ============   ============   ============    ============    ============    ============
</TABLE>


        See accompanying notes to the consolidated financial statements





                                      16

<PAGE>   18

                         INTERNATIONAL WIRE GROUP, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   YEAR ENDED        SEVEN MONTHS ENDED
                                                                DECEMBER 31, 1996    DECEMBER 31, 1995
                                                                -----------------    ------------------
<S>                                                                <C>                  <C>        
 Cash flows provided by (used in) operating activities:
   Net loss .................................................      $  (89,482)          $   (3,291)
   Adjustment to reconcile net loss to net cash provided
      by (used in) operating activities:
   Depreciation and amortization ............................          31,341               11,020
   Impairment and unusual charge ............................          78,250                   --
   Amortization of deferred financing costs .................           3,701                1,468
   Inventory valuation adjustment ...........................           8,500                   --
   Deferred income taxes ....................................           3,184                  274
   Change in assets and liabilities, net of acquisitions:
     Accounts receivable ....................................          (1,878)              12,094
     Inventories ............................................          (3,645)              (9,590)
     Prepaid expenses and other .............................          (4,829)                (846)
     Accounts payable .......................................           1,216                1,232
     Accrued and other liabilities ..........................           2,299               (2,084)
     Accrued interest .......................................           2,132                2,516
     Income taxes payable/refundable ........................           1,914                  778
     Other long-term liabilities ............................            (723)                (237)
                                                                   ----------           ----------
Net cash from operating activities ..........................          31,980               13,334
                                                                   ----------           ----------
Cash flows provided by (used in) investing activities:
   Acquisitions, net of cash ................................        (160,259)            (341,046)
   Capital expenditures, net ................................         (15,849)              (5,751)
                                                                   ----------           ----------
Net cash used in investing activities .......................        (176,108)            (346,797)
                                                                   ----------           ----------
Cash flows provided by (used in) financing activities:
   Equity proceeds ..........................................          45,039               15,048
   Proceeds from issuance of long-term obligations ..........         128,200              337,500
   Repayment of long-term obligations .......................         (21,311)              (5,085)
   Financing fees and other .................................          (7,800)             (14,000)
                                                                   ----------           ----------
Net cash from financing activities ..........................         144,128              333,463
                                                                   ----------           ----------
Net change in cash and cash equivalents .....................              --                   --
Cash and cash equivalents at beginning of the period ........              --                   --
                                                                   ----------           ----------
Cash and cash equivalents at end of the period ..............      $       --           $       --
                                                                   ==========           ==========
</TABLE>


        See accompanying notes to the consolidated financial statements





                                      17
<PAGE>   19

                         INTERNATIONAL WIRE GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        YEAR ENDED DECEMBER 31, 1996 AND
                      SEVEN MONTHS ENDED DECEMBER 31, 1995
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

1.   THE COMPANY

     International Wire Group, Inc. ("Group" or the "Company"), a Delaware
     corporation, was formed to participate in the transactions contemplated by
     the Acquisitions (as described below). On June 12, 1995, Wirekraft
     Holdings Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International
     Wire Holding Company ("Holding"), the sole common stockholder of Group,
     Wirekraft Acquisition Company and certain shareholders of Wirekraft and
     Omega entered into a series of acquisitions and mergers (the
     "Acquisitions") pursuant to which Group acquired all of the common equity
     securities (and all securities convertible into such securities) of
     Wirekraft and all of the common equity securities of Omega. The Company
     has designated June 1, 1995, as the effective date of the Acquisitions for
     financial reporting purposes. The Company through its two segments, the
     Wire segment and the Harness segment, is engaged in the design,
     manufacture and marketing of non-insulated and insulated copper wire and
     wire harnesses. The Company's products are used by a wide variety of
     customers primarily in the appliance, computer and data communications,
     automotive and industrial equipment industries.

     The total purchase price of the Acquisitions was approximately $420,591,
     which included the redemption of certain equity securities, the retirement
     of existing indebtedness of Wirekraft and Omega and the payment of related
     fees and costs, is summarized as follows:

<TABLE>
<S>                                                                     <C>     
Redemption of common stock, equity rights, warrants
   and options .....................................................    $104,810
Repayment of existing indebtedness .................................     275,460
Redemption of preferred stock ......................................      26,321
Fees and costs .....................................................      14,000
                                                                        --------
                                                                        $420,591
                                                                        ========
</TABLE>

     In accordance with EITF 88-16, "Basis in Leveraged Buy Out Transactions,"
     the Acquisitions have been accounted for at "predecessor basis". The total
     acquisition costs have been allocated to the acquired net assets as
     follows:


<TABLE>
<S>                                                                   <C>      
Current assets ....................................................   $ 117,504
Property, plant and equipment .....................................      83,253
Goodwill ..........................................................     209,818
Fees and costs ....................................................      19,000
Other assets ......................................................       3,749
Current liabilities ...............................................     (58,707)
Other liabilities .................................................     (21,788)
Carryover predecessor basis .......................................      67,762
                                                                      ---------
                                                                      $ 420,591
                                                                      =========
</TABLE>





                                      18
<PAGE>   20

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Unaudited pro forma data, which present condensed results of operations
     for the twelve months ended December 31, 1995 as though the Acquisitions
     and related financing had occurred at the beginning of the period, is as
     follows:

<TABLE>
<S>                                                                     <C>     
Net sales ...........................................................   $454,693
Net income (loss) ...................................................   $  3,406
</TABLE>

2.   DWT ACQUISITION

     On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a
     wholly-owned subsidiary of the Company, acquired the businesses of Hoosier
     Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones,
     Inc., a group of affiliated companies operating together under the trade
     name Dekko Wire Technology Group (the "DWT Acquisition"). The total
     consideration of $173,239 paid in connection with the DWT Acquisition
     including fees, expenses and certain adjustments consisted of (i) cash and
     (ii) warrants for the purchase of 2,000,000 shares of Common Stock, par
     value $.01 per share, of Holding. The DWT Acquisition and the related
     transaction fees and expenses were funded with (i) $128,200 of senior debt
     under the Amended Credit Agreement, (ii) $35,000 from the issuance of
     35,000,000 shares of Common Stock, par value $.01 per share, of Holding,
     (iii) $39 from the issuance of 3,888,889 shares of Class A Common Stock,
     par value $.01 per share, of Holding, and (iv) $10,000 from the issuance
     of 400,000 shares of Series A Senior Cumulative Exchangeable Redeemable
     Preferred Stock, par value $.01 per share, of the Company (sold in units
     together with warrants for the purchase of shares of Common Stock, par
     value $.01 per share, of Holding).

     The DWT Acquisition was accounted for using the purchase method of
     accounting whereby the total acquisition cost has been allocated to the
     consolidated assets and liabilities based upon their estimated respective
     fair values. The total acquisition cost is allocated to the acquired net
     assets as follows:

<TABLE>
<S>                                                                   <C>      
Current assets ....................................................   $  37,669
Property, plant and equipment .....................................      36,020
Goodwill ..........................................................     105,041
Other, non-current ................................................       3,515
Fees and costs ....................................................       7,800
Current liabilities ...............................................     (15,306)
Other liabilities .................................................      (1,500)
                                                                      ---------
                                                                      $ 173,239
                                                                      =========
</TABLE>

     Unaudited pro forma results of operations of the Company for the years
     ended December 31, 1996 and December 31, 1995, are included below. Such
     pro forma presentation has been prepared assuming that the DWT Acquisition
     and related financing had occurred as of January 1, 1996 and January 1,
     1995, respectively, and that the Acquisitions (as described in Note 1) had
     occurred as of January 1, 1995.

<TABLE>
<CAPTION>
                                                             1996         1995
                                                           --------     --------
<S>                                                        <C>          <C>     
Net sales .............................................    $574,827     $601,709
Net income (loss) .....................................    $(88,994)    $ (2,613)
</TABLE>





                                      19
<PAGE>   21

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3.   SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

     The consolidated financial statements include the accounts of Group and
     its wholly-owned subsidiaries. All material intercompany balances and
     transactions have been eliminated in consolidation.

     Revenue Recognition

     Sales and related cost of goods sold are included in income when goods are
     shipped to customers.

     Inventories

     Inventories are valued at the lower of cost or market. Cost is determined
     using the last-in, first-out ("LIFO") method.

     Property, Plant and Equipment

     Property, plant and equipment is stated at cost. Depreciation is
     calculated using the straight-line method. The average estimated lives
     utilized in calculating depreciation are as follows: building - 25 to 40
     years; building improvements - 15 years; machinery and equipment - 3 to 11
     years; and furniture and fixtures - 5 years. Leasehold improvements are
     amortized over the shorter of the term of the respective lease or the life
     of the respective improvement. In fiscal 1996, the Company adopted the
     provisions of Statement of Financial Accounting Standards ("SFAS") No.
     121, "Accounting for the Impairment of Long-Lived Assets and for
     Long-Lived Assets to Be Disposed Of". SFAS No. 121 requires impairment
     losses to be recorded on long-lived assets used in operations when
     indications of impairment are present and the undiscounted cash flows
     estimated to be generated by those assets are less than the assets'
     carrying amount.

     Intangible Assets

     Intangible assets consist principally of goodwill arising from the excess
     of cost over the value of net assets acquired which is amortized using the
     straight-line method over forty years. In fiscal 1996, the Company
     completed a review of the carrying value of goodwill, which resulted in an
     impairment (see Note 10). Accumulated amortization aggregated $18,182 and
     $8,783 at December 31, 1996 and December 31, 1995, respectively.

     The Company periodically evaluates goodwill to assess recoverability. The
     Company considers various factors in determining if goodwill may be
     impaired. These factors include reductions in estimated future cash flows,
     significant events impacting the Company's business and changes in the
     business environment. The Company further assesses the recoverability of
     goodwill by comparing the value of goodwill as indicated by a discounted
     cash flow analysis to the carrying value of goodwill. The discounted cash
     flow analysis consists of discounted free cash flows for a projection
     period plus a terminal value, which is calculated by dividing estimated
     annual unlevered net income by the weighted average cost of capital less an
     assumed growth rate. Upon consideration of these factors, if the Company
     determines that an impairment has occurred, the Company determines the
     impairment charge by comparing the carrying value of goodwill to the
     adjusted fair value of the Company, as calculated through a discounted
     cash flow analysis. In fiscal 1996, the Company completed a review of the
     carrying value of goodwill, which resulted in an impairment charge (see
     Note 10).  
        



                                      20
<PAGE>   22

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred Financing Costs

     Deferred financing costs, consisting of fees and other expenses associated
     with the debt financing are amortized over the term of the related debt
     using the effective interest method and the straight-line method which
     approximates the effective interest method. Accumulated amortization
     aggregated $5,169 and $1,468 at December 31, 1996 and December 31, 1995,
     respectively.

     Foreign Currency

     For operations in Mexico, the Company's functional currency is the U.S.
     dollar. Gains and losses from translation and transactions are determined
     using a combination of current and historical rates and are included in net
     income.
        
     Interest Rate Hedging Arrangement

     In 1996, the Company entered into an interest rate hedging arrangement for
     the purpose of hedging against rising interest rates. The company paid a
     fee of approximately $200 for the arrangement. This fee is included in
     deferred financing fees and amortized on a straight-line basis over the
     life of the arrangement, through May 1998. The interest rate hedging
     arrangement provides a ceiling interest rate of 7.0% on $55,000 of
     indebtedness through May 1997 and a ceiling interest rate of 8.0% on
     $63,500 of indebtedness thereafter through May 1998. The Company estimates
     that fair value approximates carrying value of the interest rate hedging
     arrangement, due to the short life of the arrangement and the relative
     stability of interest rates in 1996.
        
     Fair Value of Financial Instruments

     The Company's financial instruments, excluding the Senior Notes (as
     hereinafter defined) are carried at fair value or amounts that approximate
     fair value. The Company has estimated the fair value of the Senior Notes
     using current market data. At December 31, 1996, the estimated fair market
     value of the Senior Notes was $162,000.

     Estimates and Assumptions

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period. Actual results could differ from those
     estimates.

     Statement of Cash Flows

     For purposes of the consolidated statement of cash flows, the Company
     considers all highly liquid investments purchased with maturities of three
     months or less to be cash equivalents. Interest paid for the year ended
     December 31, 1996 and seven months ended December 31, 1995 was $40,881 and
     $17,415, respectively. Taxes refunded, net of payments for the year ended
     December 31, 1996 and taxes paid for the seven months ended December 31,
     1995 were $4,073 and $1,145, respectively.

     During the year ended December 31, 1996 and seven months ended December
     31, 1995, the Company entered into certain non-cash investing and
     financing activities. In connection with the Acquisitions, certain shares
     of Omega and Wirekraft common stock and Class A common stock were
     exchanged for shares of Holding common stock. The total amount of shares
     exchanged was $66,903. In fiscal 1996 and 1995, the Company recorded
     capital lease obligations of $2,348 and $680 respectively, for property,
     plant and equipment.

     Significant Customer

     A significant portion of the Company's sales were to a major customer
     within the Harness segment. Sales to this customer represented 18% and 19%
     of net sales for the year ended December 31, 1996 and the seven months
     ended December 31, 1995, respectively.





                                      21
<PAGE>   23

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4.   INVENTORIES

     The composition of inventories is as follows:

<TABLE>
<CAPTION>
                                                     December 31,   December 31,
                                                         1996           1995
                                                     ------------   ------------
<S>                                                  <C>            <C>         
Raw materials ....................................   $     26,191   $     19,451
Work-in-process ..................................         14,908         15,916
Finished goods ...................................         19,263         22,410
                                                     ------------   ------------
     Total inventories ...........................   $     60,362   $     57,777
                                                     ============   ============
</TABLE>

     The current cost of inventories is approximately $57,267 and $56,035 at
     December 31, 1996 and December 31, 1995.

     In connection with the decline in the average price of copper during
     fiscal 1996 the Company recorded an $8,500 pre-tax inventory valuation
     charge to reduce the LIFO valuation of copper in inventory.

5.   PROPERTY, PLANT AND EQUIPMENT

     The composition of property, plant and equipment is as follows:

<TABLE>
<CAPTION>
                                                   December 31,    December 31,
                                                       1996            1995
                                                   ------------    ------------
<S>                                                <C>             <C>         
Land ...........................................   $      2,797    $      2,061
Buildings and improvements .....................         31,546          20,848
Machinery and equipment ........................        121,013          76,668
                                                   ------------    ------------
                                                        155,356          99,577

Less: accumulated depreciation .................        (36,805)        (17,318)
                                                   ------------    ------------
                                                   $    118,551    $     82,259
                                                   ============    ============
</TABLE>

6.   FINANCING COSTS AND RELATED PARTY TRANSACTIONS

     In connection with the Acquisitions, the Company incurred aggregate fees
     and costs of $14,000. Costs of $13,100 related to the Senior Notes and
     Credit Agreement (see Note 7) are included in deferred financing costs and
     are being amortized over the terms of the related borrowings. Costs of
     $900 related to the issuance of Holding's common stock have been deducted
     from the proceeds to reduce the carrying value of the common stock. In
     connection with the DWT Acquisition, the Company incurred aggregate fees
     and costs of $7,800. Costs of $6,600 related to the Amended Credit
     Agreement (as hereinafter defined) are included in deferred financing
     costs and are being amortized over the terms of the related borrowings.
     Costs of $1,200 related to the issuance of Holding's common stock and the
     Preferred Stock (as defined in Note 8) have been deducted from the
     proceeds to reduce the carrying value of the common and preferred stock.

     In connection with the Acquisitions and the related financing, the Company
     entered into a Monitoring and Oversight Agreement ("Agreement") with
     Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the
     Company) pursuant to which the Company paid Hicks, Muse a cash fee of
     $3,725 as compensation for financial advisory services. Pursuant to the
     Agreement, the Company paid Hicks, Muse a cash fee of $2,500 as
     compensation for financial advisory services received in connection with
     the DWT Acquisition. The fees have been allocated based upon the issuance
     proceeds to the debt and equity securities issued in connection with the
     Acquisitions and the DWT





                                      22
<PAGE>   24

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Acquisition as deferred financing costs or as a deduction from the cash
     proceeds received from the sale of the common stock of Holding. The
     Agreement further provides that the Company shall pay Hicks, Muse an
     annual fee of $500, for ten years for monitoring and oversight services
     adjusted annually at the end of each fiscal year to an amount equal to .1%
     of the consolidated net sales of the Company, but in no event less than
     $500 annually. The obligation under the Agreement and the related deferred
     financing costs have been recorded in the consolidated balance sheets.

7.   LONG-TERM OBLIGATIONS

     The composition of long-term obligations is as follows:

<TABLE>
<CAPTION>
                                                   December 31,    December 31,
                                                       1996            1995
                                                   ------------    ------------
<S>                                                <C>             <C>         
Credit Agreement:
   Revolver ....................................   $     18,990    $     19,000
   Term Facility ...............................        271,404         163,813
Senior Subordinated Notes ......................        150,000         150,000
Capital lease and other obligations ............          7,273           5,864
                                                   ------------    ------------
                                                        447,667         338,677
Less, current maturities .......................        (20,948)        (12,662)
                                                   ------------    ------------
                                                   $    426,719    $    326,015
                                                   ============    ============
</TABLE>

     The schedule of principal payments for long-term obligations at December
     31, 1996 is as follows:

<TABLE>
<S>                                                                     <C>     
1997 ................................................................   $ 20,948
1998 ................................................................     23,782
1999 ................................................................     29,123
2000 ................................................................     58,568
2001 ................................................................     41,457
Thereafter ..........................................................    273,789
                                                                        --------
   Total ............................................................   $447,667
                                                                        ========
</TABLE>

     Credit Agreement

     In connection with the DWT Acquisition, Group and Holding entered into an
     Amended Credit Agreement (the "Amended Credit Agreement") dated as of
     March 5,1996 with certain financial institutions. Borrowings under the
     Amended Credit Agreement are collateralized by first priority mortgages
     and liens on all of the assets of Group. In addition, borrowings under the
     Amended Credit Agreement are guaranteed by Holding.

     The Amended Credit Agreement consists of an $111,000 term loan (the "Term
     A Loan"), an $82,500 term loan (the "Term B Loan"), a $95,000 term loan
     (the "Term C Loan", collectively, the "Term Facility") and a $75,000
     revolving credit facility (the "Revolver"). The Revolver provides that up
     to $10,000 of such facilities may be used for the issuance of letters of
     credit. At December 31, 1996, Group had $930 in outstanding letters of
     credit and $55,966 of unused borrowing capacity under the Amended Credit
     Agreement. A commitment fee on the unused portion of the Revolver of .5%
     is payable quarterly. The Amended Credit Agreement contains several
     financial covenants which, among other things, require Group to maintain
     certain financial ratios and restrict Group's ability to incur





                                      23
<PAGE>   25

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     indebtedness, make capital expenditures and pay dividends.

     Mandatory principal payments of the Term Facility are due in quarterly
     installments. The final installment on the Term A Loan is due on September
     30, 2000 at which time the Revolver is also due. The final installment on
     the Term B Loan is due on September 30, 2002, and the final installment on
     the Term C Loan is due on September 30, 2003. The Amended Credit Agreement
     requires annual prepayments of the Term Facility based on "Excess Cash
     Flow" (as defined in the Amended Credit Agreement).

     Borrowings under the Term A Loan and Revolver bear interest, at the option
     of Group, at a rate per annum equal to (a) the Alternate Base Rate (as
     defined in the Amended Credit Agreement) plus 1.5% or (b) the Eurodollar
     Rate (as defined in the Amended Credit Agreement) plus 2.5%. Borrowings
     under the Term B Loan bear interest, at the option of Group, at a rate per
     annum equal to (a) the Alternate Base Rate (as defined in the Amended
     Credit Agreement) plus 2.0% or (b) the Eurodollar Rate (as defined in the
     Amended Credit Agreement) plus 3.0%. Borrowings under the Term C Loan bear
     interest, at the option of Group, at a rate per annum equal to (a) the
     Alternate Base Rate (as defined in the Amended Credit Agreement plus 2.5%
     or (b) the Eurodollar Rate (as defined in the Amended Credit Agreement)
     plus 3.5%. The Alternate Base Rate and Eurodollar Rate margins are
     established quarterly based on a formula as defined in the Amended Credit
     Agreement. Interest payment dates vary depending on the interest rate
     option to which the Term Facility and the Revolver are tied, but generally
     interest is payable quarterly. The weighted average interest rate on
     outstanding borrowings was 8.75% and 8.59% at December 31, 1996 and
     December 31, 1995, respectively.


     Senior Subordinated Notes

     The Senior Subordinated Notes due 2005 ("the Senior Notes") were issued
     under an indenture, dated June 12, 1995 (the "Indenture") in connection
     with the Acquisitions. The Senior Notes represent unsecured general
     obligations of Group and are subordinated to all Senior Debt (as defined
     in the Indenture) of Group. The Senior Notes, which were originally sold
     pursuant to an exemption from the registration requirements of the
     Securities Act of 1933, as amended, were exchanged for identical notes
     registered under such Act in November, 1995.

     The Senior Notes are fully and unconditionally (as well as jointly and
     severally) guaranteed on an unsecured, senior subordinated basis by each
     subsidiary of the Company (the "Guarantor Subsidiaries") other than
     Electro Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de
     Mexico, S.A. de C.V. (The "Non-Guarantor Subsidiaries"). Each of the
     Guarantor Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by
     the Company. (see Note 14). 

     The Senior Notes mature on June 1, 2005. Interest on the Senior Notes is
     payable semi-annually on each June 1 and December 1. The Senior Notes bear
     interest at the rate of 11.75% per annum. The Senior Notes may not be
     redeemed prior to June 1, 2000, except in the event of a Change of Control
     (as defined) or Initial Public Offering (as defined)





                                      24
<PAGE>   26

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     and at such applicable premium (as defined). The Senior Notes are
     redeemable, at the Company's option, at the redemption prices of 105.875%
     at June 1, 2000, and at decreasing prices to 100% at June 1, 2003, and
     thereafter, with accrued interest. In addition, prior to June 1, 1998, the
     Company may redeem, within guidelines specified in the Indenture, up to
     $50,000 of the Senior Notes with the proceeds of one or more Equity
     Offerings (as defined) by the Company or Holding at a redemption price of
     110%, with accrued interest.

     The Senior Notes restrict, among other things, the incurrence of
     additional indebtedness by the Company, the payment of dividends and other
     distributions in respect of the Company's capital stock, the payment of
     dividends and other distributions by the Company's subsidiaries, the
     creating of liens on the properties and the assets of the Company to
     secure certain subordinated debt and certain mergers, sales of assets and
     transactions with affiliates.

8.   PREFERRED STOCK

     In connection with the DWT Acquisition, the Company issued 400,000 shares
     of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock (the
     "Preferred Stock"). In accordance with the Certificate of Designation of
     the Preferred Stock (the "Certificate of Designation"), cumulative
     dividends are payable quarterly at the rate of 14% per annum. Dividend
     rates could increase upon the occurrence of any Event of Non-Compliance
     (as defined in the Certificate of Designation). At December 31, 1996,
     dividends in arrears were $1,200 or $2.99 per share. The Preferred Stock
     has a liquidation preference of $25.00 per share and a par value of $.01
     per share. The Preferred Stock is exchangeable, at the option of the
     Company, for 14.0% Senior Subordinated Exchange Notes due June 1, 2005
     (the "Exchange Notes") (see Note 15). The Preferred Stock ranks with
     respect to the payment of dividends and the distribution of assets upon
     dissolution, liquidation, or winding up of the Company, prior to all other
     capital stock of the Company.

     The Company may redeem the Preferred Stock, in whole or in part, at any
     time. If such redemption occurs prior to December 31, 1997, the redemption
     price shall equal the Makewhole Price (as defined in the Certificate of
     Designation). If such redemption occurs on or after December 31, 1997, the
     redemption price shall equal the product of the liquidation preference
     plus all accrued and unpaid dividends, multiplied by the applicable
     Redemption Percentage (as defined in the Certificate of Designation).





                                      25
<PAGE>   27

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9.   INCOME TAXES

     The Company accounts for income taxes in accordance with the provisions of
     SFAS No. 109. The provision (benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
                                                       Year        Seven Months
                                                      Ended           Ended
                                                   December 31,    December 31,
                                                       1996            1995
                                                   ------------    ------------
<S>                                                <C>             <C>         
Current:
  State ........................................   $        935    $      1,262
  Foreign ......................................            264             661
                                                   ------------    ------------
                                                          1,199           1,923

Deferred:

  Federal ......................................            (64)           (530)
  State ........................................            127             804
                                                   ------------    ------------
                                                             63             274
                                                   ------------    ------------
    Total ......................................   $      1,262    $      2,197
                                                   ============    ============
</TABLE>

     Reconciliation between the statutory income tax rate and effective tax
     rate is summarized below:

<TABLE>
<S>                                                <C>             <C>          
U.S. Federal statutory rate ....................   $    (30,877)   $       (372)
State taxes, net of federal effect .............            690           1,364
Foreign taxes ..................................           (430)            789
Nondeductible expenses .........................         31,814             397
Other ..........................................             65              19
                                                   ------------    ------------
                                                   $      1,262    $      2,197
                                                   ============    ============
</TABLE>

     The tax effects of significant temporary differences representing deferred
     tax assets and liabilities are as follows:

<TABLE>
<S>                                                  <C>            <C>         
Deferred tax assets:
  Accounts receivable reserves ...................   $        477   $        298
  Accrued liabilities not yet deductible .........          3,497          2,540
  Inventories ....................................          3,381             --
  Net operating loss carry forward ...............             --          3,544
  Other ..........................................            227             87
                                                     ------------   ------------
                                                            7,582          6,469
                                                     ------------   ------------

Deferred tax liabilities:
  Depreciation and amortization ..................         14,684         11,809
  Inventories ....................................          2,176          2,523
  Other ..........................................            700            206
                                                     ------------   ------------
                                                           17,560         14,538
                                                     ------------   ------------
  Net deferred tax liability .....................   $      9,978   $      8,069
                                                     ============   ============
</TABLE>





                                      26
<PAGE>   28

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)


10.  IMPAIRMENT, UNUSUAL AND PLANT CLOSING CHARGES

     Commencing in the first quarter of 1996, the Company began a comprehensive
     review of the strategic position of its individual business units. The
     original goodwill related to the original Wirekraft acquisition recognized
     long-term customer relationships and plant locations that were
     strategically sized, located and customer focused. Due to intense
     competition in the appliance and automotive markets and the loss of the
     portion of the business from a major appliance customer in 1995, the
     Company developed and executed new business strategies in 1996, including
     the DWT Acquisition, to maintain customer volume levels, meet competitive
     pressures and address key changes within the marketplace. As a result, the
     Company embarked on a major plant consolidation program including the
     utilization of facilities purchased in the DWT Acquisition and
     transitioning of business from the Midwest to the Southwest and Mexico. To
     this end, six plants were closed in 1995 and another six plants were
     closed in 1996. 


     The Company recorded a pre-tax charge to operations of $6,000 in 1996 and
     $1,750 in 1995 to provide for plant closing costs. The plant closing costs
     include provisions for shut-down costs from the period of the plant
     closure to the date of disposal, commitment costs for leased property and
     key personnel and severance related costs.  During 1996 and 1995, plant
     closing actions resulted in the reduction of approximately 45 and 55 
     employees, respectively. Plant closing costs accrued at December 31, 1996
     and December 31, 1995 were $2,462 and $700, respectively. There have been
     no adjustments to amounts charged to expense. Following is a summary of
     activity in the accounts related to the plant closing costs accrued:

<TABLE>
<CAPTION>
                                                                             SEVEN MONTHS
                                                              YEAR ENDED        ENDED
                                                             DECEMBER 31,    DECEMBER 31,
                                                                 1996            1995
                                                             ------------    ------------
<S>                                                          <C>             <C>
Balance, beginning of period...............................    $   700          $   --
Charges to operations:
  Facility shut-down costs.................................      3,872             731
  Lease commitments........................................        773              67
  Key personnel and severance costs........................      1,355             952
                                                               -------          ------
                                                                 6,000           1,750
Costs incurred:
  Facility shut-down costs.................................     (3,017)           (339)
  Lease commitments........................................       (134)            (67)
  Key personnel and severance costs........................     (1,087)           (644)
                                                               -------          ------
                                                                (4,238)         (1,050)
                                                               -------          ------
Balance, end of period.....................................    $ 2,462          $  700
                                                               =======          ======
</TABLE>
 



                                      27
<PAGE>   29

     In December 1996, the Company completed its review of the carrying value
     of goodwill, resulting in an impairment charge of $78,250. In determining
     the goodwill impairment charge, the Company completed financial
     projections through the year 2000. These projections reflect the Company's
     business strategies and were based on current industry trends, forecasts
     and expected developments. A discounted cash flow analysis of the
     consolidated entity was used to calculate the fair market value of the
     Company and was based upon the Company's acquisition strategy which
     focuses on the identification and realization of certain synergies
     existing between the acquired businesses. The calculated fair value of the
     Company is determined as the sum of discounted free cash flows through the
     year 2000 plus a terminal value, which is calculated using a discounted
     cash flow terminal value approach, determined by capitalizing unlevered
     net income in the last year of the projection by dividing unlevered net
     income by the weighted average cost of capital, less an assumed future
     growth rate. The calculated fair market value was compared to net tangible
     assets (net working capital and net property, plant and equipment). The
     difference between net tangible assets and the fair market value was
     compared to net goodwill to determine the goodwill impairment charge.   
 
     In connection with this review and impairment charge, the Company has
     provided for anticipated losses of $4,201 related to product liability
     claims associated with the period preceding the original acquisition of
     Wirekraft in 1992. These claims are for a non-wire product in the
     appliance industry that the Company has not manufactured since 1992. The
     Company's policy is to record the probable and reasonably estimable loss
     related to product liability claims. In 1996, the claims significantly
     increased as a result of the receipt of claims accumulated by insurance
     companies related to prior periods. Accordingly, the Company revised its
     estimated liability outstanding on actual claims reported and its estimate
     of claims incurred but not reported. In developing its estimated liability
     outstanding on actual claims reported, the Company considered historical
     settlement rates. The Company has estimated its liability outstanding on
     actual claims reported to be $1,500. In determining its estimate of claims
     incurred but not reported, the Company considered historical claim levels
     and amounts relative to total product shipped. Additionally, the Company
     considered historical settlement rates to develop its estimate for
     incurred but not reported claims of $2,701. Due to the uncertainties
     associated with these product claims, the future cost of final settlement
     of these claims may differ from the liability currently accrued. However,
     in the Company's opinion, the impact of final settlement of these claims
     on future operations, financial position and cash flows will not be 
     material.
        
11.  RETIREMENT BENEFITS AND STOCK OPTION PLANS
 
     The Company sponsors a number of defined contribution retirement plans
     which provide retirement benefits for eligible employees. Company
     contribution expense related to these retirement plans for the year ended
     December 31, 1996 and seven months ended December 31, 1995 amounted to
     approximately $1,208 and $902, respectively.
        
     Holding's Qualified and Non-qualified Stock Option Plan (the "Option
     Plan") provides for the granting of up to 4,795,322 shares of common stock
     to officers and key employees of Holding and the Company. Under the plan,
     options granted approximate market value of the common stock at the date
     of grant. Such options vest ratably over





                                      28
<PAGE>   30

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     a five year period commencing on the first anniversary date after the date
     of grant, and vested options are exercisable at the discretion of the
     committee appointed to administer the Option Plan. Generally, an option
     may be exercised only if the holder is an officer or employee of Holding
     or the Company at the time of exercise. Options granted under the Option
     Plan are not transferable, except by will and the laws of descent and
     distribution.

     Holding and the Company have also granted Performance Options ("the
     Performance Options") to certain key executives. The Performance Options
     are excercisable only on the occurrence of certain events. The exercise
     price for the Performance Options is initially equal to $1.00 per share
     and, effective each anniversary of the grant date, the per share exercise
     price for the Performance Options is equal to the per share exercise price
     for the prior year multiplied by 1.09. The Performance Options terminate
     on the tenth anniversary date of the date of grant.

     In accordance with SFAS No. 123, "Accounting for Stock-Based
     Compensation", the Company applies APB Opinion No. 25, "Accounting for
     Stock Issued to Employees", and related Interpretations in accounting for
     the Option Plan. Accordingly, no compensation cost has been recognized for
     the Option Plan and the Performance Options. There may be compensation
     expense in future periods when the Performance Options became exercisable
     to the extent that the fair value of the stock exceeds the exercise price
     of the Performance Options. Had compensation cost for the Option Plan and
     the Performance Options been determined based upon the fair value at the
     grant date for awards under these plans consistent with the methodology
     prescribed under SFAS No. 123, the Company's net loss would approximate
     the following:
        
 
<TABLE>
<CAPTION>
                                                                            SEVEN MONTHS
                                                        YEAR ENDED              ENDED
                                                     DECEMBER 31, 1996    DECEMBER 31, 1995
                                                     -----------------    -----------------
<S>                                                  <C>                  <C>
As reported........................................      $(89,482)             $(3,291)
Pro forma..........................................      $(89,759)             $(3,329)
</TABLE>
 
     The minimum value of each option grant is estimated on the date of grant
     with the following assumptions in 1996 and 1995, respectively: (i)
     risk-free interest rates of 5.9% in 1995 and ranging from 5.9% to 6.5% in
     1996 and (ii) expected life of 10 years.

     The effects of applying SFAS No. 123 in this pro forma disclosure are not
     indicative of future amounts. Additional awards in future years are
     anticipated.

     Changes in the status of the Option Plan are summarized below:

<TABLE>
<CAPTION>
                                        Weighted
                                         Average
                                      Exercise Price    Options         Options
                                        Per Share       Granted         Vested
                                      --------------   ----------     ----------
<S>                                       <C>           <C>              <C>    
June 1,  1995 ........................       --                --             --
   Granted ...........................    $1.00         3,400,000             --
   Vested ............................       --                --             --
                                          -----        ----------     ----------
December 31, 1995 ....................    $1.00         3,400,000             --
   Granted ...........................    $1.02         1,865,249
   Vested ............................    $1.00                --        495,249
   Forfeiture ........................    $1.00        (1,250,000)            --
                                          -----        ----------     ----------
December 31, 1996 ....................    $1.01         4,015,249        495,249
                                          =====        ==========     ==========
</TABLE>

     Changes in the status of the Performance Options are summarized below:

<TABLE>
<S>                                       <C>           <C>           <C>
June 1, 1995 .........................       --                --             --
   Granted ...........................    $1.00         2,966,178             --
                                          -----        ----------     ----------
December 31, 1995 ....................    $1.00         2,966,178             --
   Granted ...........................    $1.00         1,236,566             --
                                          -----        ----------     ----------
December 31, 1996 ....................    $1.06         4,202,744             --
                                          =====        ==========     ==========
</TABLE>

     The weighted average grant-date fair value of options granted during 1996
     and 1995 was $0.48 and $0.44 per share, respectively. Of the options
     outstanding under the Option Plan at December 31, 1996, 4,350,000 and
     65,249 have exercise prices of $1.00 and $1.625 respectively, and have
     weighted average remaining contractual lives of between 9 and 10 years.
     The weighted average exercise price of options vested at December 31, 1996
     is $1.00 per share.
        




                                      29
<PAGE>   31

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Of the Performance Options outstanding at December 31, 1996, 2,966,178 and
     1,235,566 have exercise prices of $1.09 and $1.00 respectively, and have
     weighted average remaining contractual lives of between 9 and 10 years.

12.  COMMITMENTS AND CONTINGENCIES

     The Company leases certain property, transportation vehicles and other
     equipment. Total rental expense under operating leases was $2,237 and
     $1,420 for the year ended December 31, 1996 and seven months ended
     December 31, 1995. Future minimum lease payments under capital and
     operating leases for years ending are:

<TABLE>
<CAPTION>
                                                              Capital   Operating
                                                              -------   ---------
<S>                                                           <C>        <C>    
1997 ......................................................   $ 1,416    $ 2,706
1998 ......................................................     1,416      2,401
1999 ......................................................     1,416      1,453
2000 ......................................................     1,376      1,128
2001 ......................................................       970        927
Thereafter ................................................     3,010        437
                                                              -------    -------
  Total minimum lease payments ............................     9,604    $ 9,052
                                                                         =======
  Less amount representing interest .......................    (2,705)
                                                              -------
  Present value of net minimum lease payments .............   $ 6,899
                                                              =======
</TABLE>

     The Company is subject to legal proceedings and claims which arise in the
     normal course of business. In the opinion of management, the ultimate
     liabilities with respect to these actions will not have a material adverse
     effect on the Company's financial condition, results of operations or
     cash flows.

     The Company has agreed in principal to participate in an international
     expansion project with one of the Wire segment's largest customers. The
     Company estimates its financial commitment for property, plant and
     equipment to be approximately $13,000.

13.  BUSINESS SEGMENT INFORMATION

     Certain information concerning the Company's operating segments for the
     year ended December 31, 1996 and the seven months ended December 31, 1995
     is presented below. Total revenue by segment includes both sales to
     customers and intersegment sales, which are accounted for at prices
     charged to customers and eliminated in consolidation.

<TABLE>
<CAPTION>
Year Ended December 31, 1996                   Wire        Harness   Consolidated
----------------------------                ---------    ---------   ------------
<S>                                         <C>          <C>          <C>      
Total revenue ...........................   $ 406,026    $ 161,354
Intersegment sales ......................      20,399           --
                                            ---------    ---------
Sales to customers ......................   $ 385,627    $ 161,354    $ 546,981
Operating loss ..........................   $ (29,443)   $ (12,375)   $ (41,818)
Identifiable assets .....................   $ 437,524    $  93,496    $ 531,020
Depreciation and amortization ...........   $  24,880    $   6,461    $  31,341
Capital expenditures, net ...............   $  13,060    $   2,789    $  15,849
</TABLE>





                                      30
<PAGE>   32

                         INTERNATIONAL WIRE GROUP, INC.
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
Seven Months Ended December 31, 1995             Wire       Harness  Consolidated
------------------------------------           ---------   --------- ------------
<S>                                            <C>         <C>         <C>      
Total revenue ..............................   $ 167,082   $  84,288
Intersegment sales .........................       5,341         446
                                               ---------   ---------
Sales to customers .........................   $ 161,741   $  83,842   $ 245,583
Operating income ...........................   $  10,937   $   9,526   $  20,463
Identifiable assets ........................   $ 295,671   $ 132,249   $ 427,920
Depreciation and amortization ..............   $   7,442   $   3,578   $  11,020
Capital expenditures, net ..................   $   4,991   $     760   $   5,751
</TABLE>

14. GUARANTOR SUBSIDIARIES
 
     The Senior Notes are fully and unconditionally (as well as jointly and
     severally) guaranteed on an unsecured, senior subordinated basis by each
     subsidiary of the Company (the "Guarantor Subsidiaries") other that Electro
     Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico,
     S.A. de C.V. (the "Non-Guarantor Subsidiaries"). Each of the Guarantor 
     Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by the Company.

     The following condensed, consolidating financial statements of the Company
     include the accounts of the Company, the combined accounts of the Guarantor
     Subsidiaries and the combined accounts of the Non-Guarantor Subsidiaries.
     Given the size of the Non-Guarantor Subsidiaries relative to the Company 
     on a consolidated basis, separate financial statements of the respective 
     Guarantor Subsidiaries are not presented because management has determined
     that such information is not material in assessing the Guarantor 
     Subsidiaries.
 




                                      31
<PAGE>   33
 
                         INTERNATIONAL WIRE GROUP, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                 TOTAL          TOTAL
                                    COMPANY    GUARANTOR    NON-GUARANTOR    ELIMINATIONS     TOTAL
                                   ---------   ---------    -------------    ------------   ---------
<S>                                <C>         <C>          <C>              <C>            <C>
BALANCE SHEET
  As of December 31, 1996:
ASSETS
  Cash...........................  $      --   $    (138)      $   138        $      --     $      --
  Accounts receivable............         --      70,010         1,902             (731)       71,181
  Inventory......................         --      59,648           714               --        60,362
  Other assets...................      5,375       4,314           112               --         9,801
                                   ---------   ---------       -------        ---------     ---------
          Total current assets...      5,375     133,834         2,866             (731)      141,344
  Property plant and equipment,
     net.........................         --     109,774         8,777               --       118,551
  Intangible assets, net.........     19,722     246,155            --               --       265,877
  Investment in subsidiaries.....    534,857          --            --         (534,857)           --
  Other assets...................         --       4,368           880               --         5,248
                                   ---------   ---------       -------        ---------     ---------
          Total assets...........  $ 559,954   $ 494,131       $12,523        $(535,588)    $ 531,020
                                   =========   =========       =======        =========     =========
 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  Current liabilities............  $  24,620   $  85,866       $ 2,856        $    (731)    $ 112,611
  Long term obligations, less
     current maturities..........    420,422       6,297            --               --       426,719
  Other long-term liabilities....      6,081      20,790            10               --        26,881
  Intercompany (receivable)
     payable.....................     76,260     (85,366)        9,106               --            --
                                   ---------   ---------       -------        ---------     ---------
          Total liabilities......    527,383      27,587        11,972             (731)      566,211
  Stockholders' equity
     Common stock................         --          --            --               --            --
     Preferred stock.............          4          --            --               --             4
     Contributed capital.........    125,340     572,012            18         (572,030)      125,340
     Predecessor carryover.......         --     (67,762)           --               --       (67,762)
     Retained earnings...........    (92,773)    (37,706)          533           37,173       (92,773)
                                   ---------   ---------       -------        ---------     ---------
          Total stockholders'
            equity (deficit).....     32,571     466,544           551         (534,857)      (35,191)
                                   ---------   ---------       -------        ---------     ---------
          Total liabilities and
            stockholders' equity
            (deficit)............  $ 559,954   $ 494,131       $12,523        $(535,588)    $ 531,020
                                   =========   =========       =======        =========     =========
</TABLE>
 

                                      32
<PAGE>   34
 
                         INTERNATIONAL WIRE GROUP, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
                                                 TOTAL          TOTAL
                                    COMPANY    GUARANTOR    NON-GUARANTOR    ELIMINATIONS     TOTAL
                                   ---------   ---------    -------------    ------------   ---------
<S>                                <C>         <C>          <C>              <C>            <C>
STATEMENT OF OPERATIONS
  For the year ended December 31,
  1996:
Net sales........................  $      --   $ 546,981       $34,757        $ (34,757)    $ 546,981
Operating expenses
  Cost of goods sold.............         --     435,164        20,416          (34,757)      420,823
  Selling, general and
     administration..............         --      33,384        10,501               --        43,885
  Depreciation and
     amortization................         --      29,688         1,653               --        31,341
  Impairment, unusual and plant
     closing charges.............         --      84,250            --               --        84,250
  Inventory valuation
     adjustment..................         --       8,500            --               --         8,500
                                   ---------   ---------       -------        ---------     ---------
Operating income (loss)..........         --     (44,005)        2,187               --       (41,818)
Other income (expense)
  Interest expense...............    (41,187)     (1,410)         (416)              --       (43,013)
  Amortization of deferred
     financing fees..............     (3,701)         --            --               --        (3,701)
  Equity in net loss of
     subsidiaries................    (46,794)         --            --           46,794            --
  Other..........................         --         243            69               --           312
                                   ---------   ---------       -------        ---------     ---------
Income (loss) before income tax
  provision......................    (91,682)    (45,172)        1,840           46,794       (88,220)
Income tax provision.............     (2,200)      3,197           265               --         1,262
                                   ---------   ---------       -------        ---------     ---------
Net income (loss)................  $ (89,482)  $ (48,369)      $ 1,575        $  46,794     $ (89,482)
                                   =========   =========       =======        =========     =========
STATEMENT OF CASH FLOWS
  For the year ended December 31,
  1996:
Net cash from operating
  activities.....................  $  16,189   $  12,881       $ 2,910        $      --     $  31,980
                                   ---------   ---------       -------        ---------     ---------
Cash flows provided by (used in)
  investing activities:
  Acquisition, net of cash.......   (160,259)         --            --               --      (160,259)
  Capital expenditures, net......         --     (13,048)       (2,801)              --       (15,849)
                                   ---------   ---------       -------        ---------     ---------
Net cash used in investing
  activities.....................   (160,259)    (13,048)       (2,801)              --      (176,108)
                                   ---------   ---------       -------        ---------     ---------
Cash flows provided by (used in)
  financing activities:
  Equity proceeds................     44,289         750            --               --        45,039
  Proceeds from issuance of
     long-term obligations.......    128,200          --            --               --       128,200
  Repayment of long-term
     obligations.................    (20,619)       (692)           --               --       (21,311)
  Financing fees and other.......     (7,800)         --            --               --        (7,800)
                                   ---------   ---------       -------        ---------     ---------
Net cash from financing
  activities.....................    144,070          58            --               --       144,128
                                   ---------   ---------       -------        ---------     ---------
Net change in cash...............  $      --   $    (109)      $   109        $      --     $      --
                                   =========   =========       =======        =========     =========
</TABLE>
 


                                      33
<PAGE>   35
 
                         INTERNATIONAL WIRE GROUP, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
<TABLE>
<CAPTION>
                                                  TOTAL          TOTAL
                                     COMPANY    GUARANTOR    NON-GUARANTOR    ELIMINATIONS     TOTAL
                                    ---------   ---------    -------------    ------------   ---------
<S>                                 <C>         <C>          <C>              <C>            <C>
BALANCE SHEET
  As of December 31, 1995:
ASSETS
  Cash............................  $      --   $    (29)       $    29        $      --     $      --
  Accounts receivable.............         --     46,945          1,012             (777)       47,180
  Inventory.......................         --     57,777             --               --        57,777
  Other assets....................         --      2,858             --               --         2,858
                                    ---------   --------        -------        ---------     ---------
          Total current assets....         --    107,551          1,041             (777)      107,815
  Property plant and equipment,
     net..........................         --     74,630          7,629               --        82,259
  Intangible assets, net..........     16,688    215,400             --               --       232,088
  Investment in subsidiaries......    416,212         --             --         (416,212)           --
  Other assets....................         --      5,565            193               --         5,758
                                    ---------   --------        -------        ---------     ---------
          Total assets............  $ 432,900   $403,146        $ 8,863        $(416,989)    $ 427,920
                                    =========   ========        =======        =========     =========
 
LIABILITIES AND STOCKHOLDER'S EQUITY
  Current liabilities.............  $  15,815   $ 62,537        $ 1,241        $    (777)    $  78,816
  Long term obligations, less
     current maturities...........    321,001      5,014             --               --       326,015
  Other long-term liabilities.....     (3,615)    16,706             --               --        13,091
  Intercompany (receivable)
     payable......................     21,939    (30,585)         8,646               --            --
                                    ---------   --------        -------        ---------     ---------
          Total liabilities.......    355,140     53,672          9,887             (777)      417,922
  Stockholder's equity
     Common stock.................         --         --             --               --            --
     Contributed capital..........     81,051    406,573             18         (406,591)       81,051
     Predecessor carryover........         --    (67,762)            --               --       (67,762)
     Retained earnings............     (3,291)    10,663         (1,042)          (9,621)       (3,291)
                                    ---------   --------        -------        ---------     ---------
          Total stockholder's
            equity................     77,760    349,474         (1,024)        (416,212)        9,998
                                    ---------   --------        -------        ---------     ---------
          Total liabilities and
            stockholder's
            equity................  $ 432,900   $403,146        $ 8,863        $(416,989)    $ 427,920
                                    =========   ========        =======        =========     =========
</TABLE>
 



                                      34
<PAGE>   36
 
                         INTERNATIONAL WIRE GROUP, INC.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
                                                  TOTAL          TOTAL
                                     COMPANY    GUARANTOR    NON-GUARANTOR    ELIMINATIONS     TOTAL
                                    ---------   ---------    -------------    ------------   ---------
<S>                                 <C>         <C>          <C>              <C>            <C>
STATEMENT OF OPERATIONS
  For the seven months ended
  December 31, 1995:
Net sales.........................  $      --   $245,583        $ 8,240        $  (8,240)    $ 245,583
Operating expenses
  Cost of goods sold..............         --    198,958          4,503           (8,240)      195,221
  Selling, general and
     administration...............         --     13,259          3,870               --        17,129
  Depreciation and amortization...         --     10,927             93               --        11,020
  Impairment, unusual and plant
     closing charges..............         --      1,750             --               --         1,750
  Inventory valuation
     adjustment...................         --         --             --               --            --
                                    ---------   --------        -------        ---------     ---------
Operating income (loss)...........         --     20,689           (226)              --        20,463
Other income (expense)
  Interest expense................    (18,960)      (815)          (156)              --       (19,931)
  Amortization of deferred
     financing fees...............     (1,468)        --             --               --        (1,468)
  Equity in net loss of
     subsidiaries.................      9,621         --             --           (9,621)           --
  Other...........................         --       (158)            --               --          (158)
                                    ---------   --------        -------        ---------     ---------
Income (loss) before income tax
  provision.......................    (10,807)    19,716           (382)          (9,621)       (1,094)
Income tax provision..............     (7,516)     9,053            660               --         2,197
                                    ---------   --------        -------        ---------     ---------
Net income (loss).................  $  (3,291)  $ 10,663        $(1,042)       $  (9,621)    $  (3,291)
                                    =========   ========        =======        =========     =========
STATEMENT OF CASH FLOWS
  For the seven months ended
  December 31, 1995:
Net cash from operating
  activities......................  $     108   $  7,945        $ 5,281        $      --     $  13,334
                                    ---------   --------        -------        ---------     ---------
Cash flows provided by (used in)
  investing activities:
  Acquisition, net of cash........   (341,046)        --             --               --      (341,046)
  Capital expenditures, net.......         --     (5,482)          (269)              --        (5,751)
                                    ---------   --------        -------        ---------     ---------
Net cash used in investing
  activities......................   (341,046)    (5,482)          (269)              --      (346,797)
                                    ---------   --------        -------        ---------     ---------
Cash flows provided (used in)
  financing activities:
  Equity proceeds                      15,048         --             --               --        15,048
  Proceeds from issuance of
     long-term obligations........    337,500         --             --               --       337,500
  Repayment of long-term
     obligations..................         --       (450)        (4,635)              --        (5,085)
  Financing fees and other........    (14,000)        --             --               --       (14,000)
                                    ---------   --------        -------        ---------     ---------
Net cash from financing
  activities......................    338,548       (450)        (4,635)              --       333,463
                                    ---------   --------        -------        ---------     ---------
Net change in cash................  $  (2,390)  $  2,013        $   377        $      --     $      --
                                    =========   ========        =======        =========     =========
</TABLE>
 


                                      35
<PAGE>   37
15.  SUBSEQUENT EVENTS FOOTNOTE

     On February 4, 1997, the Board of Directors approved the exchange of the
     Preferred Stock for Exchange Notes, and voted to pay all dividends in
     arrears related to the Preferred Stock.

     On February 12, 1997, the Company completed the purchase of the stock and
     business activities of Camden Wire Co. for approximately $65,000,
     including fees and expenses, subject to certain purchase price adjustments
     (the "Camden Acquisition"). The Camden Acquisition and related transaction
     fees and expenses were funded with $65,000 of senior debt under the
     Amended Credit Agreement pursuant to an amendment dated February 12, 1997
     (the "Amended and Restated Credit Agreement").




                                      36
<PAGE>   38

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
International Wire Group, Inc.:

Our report on the consolidated financial statements of International Wire
Group, Inc. and subsidiaries is included on page 19 of this Form 10-K. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page 17 of this
Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.

COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 28, 1997





                                      37
<PAGE>   39

                         INTERNATIONAL WIRE GROUP, INC.
                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
 ALLOWANCE FOR DOUBTFUL                                         COLLECTION OF
ACCOUNTS - DEDUCTED FROM       BALANCE AT                        PREVIOUSLY                 BALANCE AT
FROM RECEIVABLES IN THE        BEGINNING                         WRITTEN OFF                  END OF
    BALANCE SHEET              OF PERIOD  PROVISION   WRITEOFFS   ACCOUNTS   ACQUISITIONS     PERIOD
------------------------       ---------  ---------   ---------   --------   ------------     ------
<S>                               <C>        <C>         <C>        <C>         <C>           <C>   
Seven months ended
December 31, 1995 .......         $845       $ 33        $(53)      $35         $ --          $  860

Year ended
December 31, 1996 .......         $860       $337        $(71)      $12         $225          $1,363
</TABLE>





                                      38


<PAGE>   40

                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors of
Wirekraft Holdings Corp.:
 
     We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Wirekraft Holdings Corp. and
subsidiaries (formerly WB Holdings, Inc.) for the six months ended May 31, 1995
and the year ended November 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Wirekraft Holdings Corp. and subsidiaries for the six months ended May 31,
1995 and the year ended November 30, 1994, in conformity with generally accepted
accounting principles.
 
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
January 27, 1996
 
                                      39



<PAGE>   41

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED       YEAR ENDED
                                                                MAY 31, 1995      NOVEMBER 30, 1994
                                                              ----------------    -----------------
<S>                                                           <C>                 <C>
Net sales...................................................      $168,053            $240,972
Operating expenses:
  Cost of goods sold........................................       138,851             201,602
  Selling, general and administrative.......................        13,301              14,319
  Depreciation and amortization.............................         6,474               6,435
  Compensation expense......................................           895                  --
  Expenses related to sale..................................           501                  --
  Expenses related to plant closings........................         2,000                  --
                                                                  --------            --------
Operating income............................................         6,031              18,616
Other income (expense):
  Interest expense..........................................        (8,020)            (10,565)
  Amortization of deferred financing costs..................        (1,657)             (1,995)
                                                                  --------            --------
Income (loss) before income tax provision and extraordinary
  item......................................................        (3,646)              6,056
Income tax provision (benefit)..............................        (2,114)              3,023
                                                                  --------            --------
Income (loss) before extraordinary item.....................        (1,532)              3,033
Extraordinary item -- loss due to early extinguishment of
  debt, net of income tax of $4,930.........................        (7,835)                 --
                                                                  --------            --------
Net income (loss)...........................................      $ (9,367)           $  3,033
                                                                  ========            ========
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                      40



<PAGE>   42

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE SIX MONTHS ENDED MAY 31, 1995 AND
                        THE YEAR ENDED NOVEMBER 30, 1994
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                         CLASS A    ADDITIONAL    RETAINED
                                  PREFERRED    COMMON    COMMON      PAID-IN      EARNINGS
                                    STOCK      STOCK      STOCK      CAPITAL      (DEFICIT)     TOTAL
                                  ---------    ------    -------    ----------    ---------    -------
<S>                               <C>          <C>       <C>        <C>           <C>          <C>
Balance November 30, 1993.......     $--        $200       $24       $22,576       $ 2,541     $25,341
Net income......................      --          --        --            --         3,033       3,033
                                     ---        ----       ---       -------       -------     -------
Balance November 30, 1994.......      --         200        24        22,576         5,574      28,374
Issuance of preferred stock.....      10          --        --        24,990            --      25,000
Issuance of common stock........      --           3        --           747            --         750
Issuance costs..................      --          --        --          (300)           --        (300)
Net loss........................      --          --        --            --        (9,367)     (9,367)
                                     ---        ----       ---       -------       -------     -------
Balance May 31, 1995............     $10        $203       $24       $48,013       $(3,793)    $44,457
                                     ===        ====       ===       =======       =======     =======
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                      41



<PAGE>   43

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED       YEAR ENDED
                                                                MAY 31, 1995      NOVEMBER 30, 1994
                                                              ----------------    -----------------
<S>                                                           <C>                 <C>
Cash flows provided by (used in) operating activities:
  Net income (loss).........................................      $ (9,367)           $  3,033
  Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
Extraordinary item..........................................        12,765                  --
Depreciation and amortization...............................         6,474               6,435
Amortization of deferred financing costs....................         1,493               1,667
Accretion of debt discount..................................           164                 328
Deferred income taxes.......................................        (4,282)               (325)
Change in assets and liabilities, net of acquisitions:
  Accounts receivable.......................................        (9,863)             (7,928)
  Inventories...............................................          (824)             (6,622)
  Prepaid expenses and other................................          (166)             (2,951)
  Accounts payable..........................................          (617)              8,231
  Accrued and other liabilities.............................         2,628                (281)
  Accrued interest..........................................         1,276              (1,217)
  Income taxes payable/refundable...........................        (3,366)              2,443
  Other long-term liabilities...............................          (236)               (495)
                                                                  --------            --------
          Net cash from operating activities................        (3,921)              2,318
                                                                  --------            --------
Cash flows provided by (used in) financing activities:
  Acquisitions, net of cash.................................       (44,973)            (11,754)
  Capital expenditures, net.................................        (2,914)             (6,248)
                                                                  --------            --------
          Net cash from investing activities................       (47,887)            (18,002)
                                                                  --------            --------
Cash flows provided by (used in) financing activities:
  Proceeds from issuance of long-term obligations...........        24,000              12,674
  Equity proceeds...........................................        25,750                  --
  Borrowings of long-term obligations.......................        19,639              22,995
  Repayment of long-term obligations........................       (14,226)            (17,481)
  Financing fees and other..................................        (3,500)               (691)
                                                                  --------            --------
          Net cash from financing activities................        51,663              17,497
                                                                  --------            --------
Net change in cash and cash equivalents.....................          (145)              1,813
Cash and cash equivalents at beginning of the period........         2,053                 240
                                                                  --------            --------
Cash and cash equivalents at end of the period..............      $  1,908            $  2,053
                                                                  ========            ========
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                      42



<PAGE>   44

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE SIX MONTHS ENDED MAY 31, 1995, AND
                        THE YEAR ENDED NOVEMBER 30, 1994
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
1. THE COMPANY
 
     WB Holdings Inc. ("Holdings"), a Delaware corporation, was formed to
participate in the December 21, 1992 Acquisition (defined below). Holdings had
no operations prior to December 21, 1992.
 
     On December 2, 1994, Holdings, through a series of mergers, became a
wholly-owned subsidiary of Wirekraft Holdings Corp. ("New Holdings" together
with Holdings, the "Company"). Pursuant to the mergers, the existing
stockholders of Holdings exchanged their Holdings securities for New Holdings
securities that have terms identical to the exchanged Holdings securities. New
Holdings, a Delaware corporation, was formed to participate in the acquisition
of Electro Componentes de Mexico S.A. de C.V. ("ECM") as discussed in Note 2.
New Holdings had no operations prior to December 2, 1994. Holdings and New
Holdings have a fiscal year-end of November 30.
 
     On December 21, 1992, Holdings, through a series of acquisitions and
mergers, acquired all of the issued and outstanding common stock of Bristol
Holding Corporation and Burcliff Holdings Corporation, the parent companies of
the general partners of Kirtland Indiana, Limited Partnership for a total
consideration of $116,997 (the "Acquisition"). Through a related series of
mergers after the Acquisition, Bristol Holding Corporation became the surviving
entity. Bristol Holding Corporation was later renamed Wirekraft Industries, Inc.
("Wirekraft") (together with Holdings, the "Company"). Wirekraft through its two
segments, the Wire segment and the Harness segment, is engaged in the
manufacture, design and distribution of insulated wire and wire harnesses used
primarily in the appliance and automobile markets. The Company markets and
distributes its products through a combination of internal sales representatives
and independent sales representatives, selling primarily to original equipment
manufacturers.
 
     The total cost of the Acquisition consisted of $57,967 for issued and
outstanding common stock, $42,877 for the retirement of existing indebtedness,
$1,175 for outstanding warrants and $14,978 for fees and expenses. The
Acquisition was accounted for using the purchase method of accounting whereby
the total acquisition cost was allocated to the acquired net assets based on
their respective fair values.
 
     The total acquisition cost was allocated to the acquired net assets as
follows:
 
<TABLE>
<S>                                                         <C>
Current assets............................................  $ 29,461
Property, plant and equipment.............................    19,980
Goodwill..................................................    80,319
Fees and costs............................................     9,580
Other non-current assets..................................       386
Current liabilities.......................................   (16,365)
Other liabilities.........................................    (6,364)
                                                            --------
                                                            $116,997
                                                            ========
</TABLE>
 
2. ECM ACQUISITION
 
     On December 2, 1994, through a series of acquisitions and transfers from
New Holdings, Wirekraft acquired the stock of ECM and certain assets from
General Electric Company. The purchase price, including fees and expenses, was
approximately $49,550. The purchase price consisted of $20,000 in cash,
1,000,000 shares of Series A Senior Preferred Stock, par value $.01 per share,
$25 liquidation preference and 275,758 shares of common stock on New Holdings.
 
                                       43



<PAGE>   45

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     The acquisition of ECM was accounted for using the purchase method of
accounting whereby the total acquisition cost was allocated to the acquired net
assets based on their respective fair values. The total acquisition cost was
allocated to the acquired net assets as follows:
 
<TABLE>
<S>                                                          <C>
Current assets.............................................  $ 8,211
Property, plant and equipment..............................    8,288
Intangibles................................................   37,958
Fees and costs.............................................    3,500
Current liabilities and other reserves.....................   (8,407)
                                                             -------
                                                             $49,550
                                                             =======
</TABLE>
 
     Unaudited pro forma data, which show condensed results of operations for
the year ended November 30, 1994 as though the acquisition and related financing
of ECM had occurred at the beginning of the period is as follows:
 
<TABLE>
<S>                                                         <C>
Net sales.................................................  $319,486
Net income................................................  $  5,758
</TABLE>
 
3. SIGNIFICANT ACCOUNTING POLICIES
 
  Principles of Consolidation
 
     The consolidated financial statements for the year ended November 30, 1994
include the accounts of Holdings and its wholly-owned subsidiary, Wirekraft. The
consolidated financial statements for the six months ended May 31, 1995 include
the accounts of New Holdings and its wholly-owned subsidiary, Holdings. All
material intercompany balances and transactions have been eliminated in
consolidation.
 
  Revenue Recognition
 
     Sales and related costs of goods sold are included in income when goods are
shipped to customers.
 
  Inventories
 
     Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
 
  Property, Plant and Equipment
 
     Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: building and improvements -- 25 years;
machinery and equipment -- 7 years; and furniture and fixtures -- 5 years.
Leasehold improvements are amortized over the shorter of the term of the
respective lease or life of the respective improvement.
 
  Intangible Assets
 
     Intangible assets, which consist principally of goodwill arising from the
excess of cost over the value of net assets acquired, are amortized using the
straight-line method over forty years. Accumulated amortization aggregated
$4,040 at November 30, 1994.
 
                                       44



<PAGE>   46

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Deferred Financing Costs
 
     Deferred financing costs, which consists of fees and other expenses
associated with the debt financing, are amortized over the term of the related
debt using the effective interest method and the straight-line method which
approximates the effective interest method.
 
  Income Taxes
 
     Deferred income taxes are determined using the liability method.
 
  Statement of Cash Flows
 
     For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the six months ended
May 31, 1995 and the year ended November 30, 1994 was approximately $6,744 and
$11,803, respectively. Taxes paid for the six months ended May 31, 1995 and the
year ended November 30, 1994 were approximately $604 and $905, respectively. In
connection with the Acquisition, the Company assumed liabilities aggregating
$22,729, which is a non-cash investing activity.
 
     During the six months ended May 31, 1995, the Company entered into a
capital lease obligation of $4,714 for new equipment.
 
  Fair Value of Financial Instruments
 
     The fair market values of the financial instruments included in the
consolidated financial statements approximate the carrying values of the
financial instruments.
 
  Concentration of Credit Risk
 
     Accounts receivable from companies located throughout the United States in
the appliance and automotive industries amounted to approximately $12,397 and
$15,684, respectively at November 30, 1994. Sales to the Company's five largest
customers represented 61% of net sales for the six months ended May 31, 1995 and
51% and 56% of net sales in 1994 and 1993, respectively. A significant portion
of the Company's sales are to three major customers within the Harness Segment.
Sales to one of these customers represented 25% of net sales for the six months
ended May 31, 1995. The Company has entered into a supply contract with this
customer expiring in 2002. Sales to the Company's two other major customers
represented 12% and 7% of net sales for the six months ended May 31, 1995, 17%
and 11% of net sales in 1994. In 1995, a supply contract with one of the above
mentioned customers expired. A supply contract was subsequently renegotiated
through December, 1998.
 
4. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
 
     In connection with the Acquisition and ECM acquisition, the Company
incurred aggregate fees and costs of $11,900. Costs of $11,100 related to the
12% Senior Subordinated Notes due 2003 and Credit Agreement are included in
deferred financing costs and are amortized over the term of the related
borrowings. Costs of $800 related to the issuance of Holding's common stock have
been deducted from the proceeds to reduce the carrying value of the common
stock.
 
     In connection with the Acquisition and the related financing, Holdings and
Wirekraft entered into a Monitoring and Oversight Agreement ("Agreement") with
Hicks, Muse & Co., Incorporated ("Hicks, Muse") (an affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a financial advisory fee of
$1,725. The fees, which also include $200 paid in connection with the
acquisition of Ristance and $750
 
                                       45



<PAGE>   47

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
paid in connection with the acquisition of ECM, have been allocated to the
Company's debt and equity securities as deferred financing costs or as a
deduction from the cash proceeds received from the sale of stock. The Agreement
further provides that the Company shall pay Hicks, Muse an annual fee of $115
(subject to adjustment), for ten years, for monitoring and oversight services.
Such Agreement was amended and restated in connection with the acquisition of
ECM to increase the annual fee for financial advisory services to $200 (subject
to adjustment). The obligation under the Agreement, as amended, and the related
deferred financing costs have been recorded in the consolidated balance sheet.
 
5. STOCKHOLDERS' EQUITY
 
     The authorized capital stock of the Company at May 31, 1995 consists of
50,000,000 shares of common stock, 3,000,000 shares of Class A common stock, and
10,000,000 shares of preferred stock. In connection with the financing of the
Acquisition, the Company issued 20,000,000 shares of common stock, 2,402,402
shares of Class A common stock and 1,621,622 warrants to purchase common stock.
Each warrant represents the right to purchase one share of the Company's common
stock for $1.00 per warrant. The warrants expire on December 31, 2002. As of May
31, 1995, no warrants had been exercised. On December 2, 1994, in connection
with the acquisition of ECM, the Company issued 1,000,000 shares of Series A
Senior Preferred Stock and 275,758 shares of common stock.
 
     The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, shares of the Class A common
stock (i) may be converted into common stock at the option of the Company
effective immediately prior to the occurrence of a Triggering Event (as defined
in the Company's Certificate of Incorporation) or (ii) shall automatically be
converted on December 31, 2002. Such conversions are based on a formula set
forth in the Company's Certificate of Incorporation.
 
     Dividends are payable to holders of the common stock and Class A common
stock in amounts as and when declared by the Company's board of directors,
subject to legally available funds and certain agreements governing the
Company's indebtedness. In the event of any liquidation, dissolution or winding
up of the Company, before any payment or distribution of the assets of the
Company shall be made to the holders of the Class A common stock, each share of
common stock shall be entitled to a liquidation preference based on a formula
set forth in the Company's Certificate of Incorporation. The common stock and
the Class A common stock are entitled to one vote per share on all matters
submitted to a vote of stockholders.
 
     The Company has adopted a qualified and non-qualified incentive stock
option plan (the "Option Plan") for officers and key employees of Holdings. A
total of 1,471,000 shares of the Company's common stock has been reserved for
issuance under the Option Plan. Under the Option Plan, eligible participants may
receive qualified and non-qualified options to purchase shares of the Company's
common stock.
 
     Options are exercisable at such time and on such terms as the committee
appointed to administer the Option Plan (the "Committee") determines. The
exercise price for the options granted under the Option Plan may not be less
than the fair market value of the underlying share, as determined by the
Committee on the date of grant. Generally, an option may be exercised only if
the holder is an officer or employee of the Company at the time of exercise.
Options granted under the Option Plan are not transferable, except by will and
the laws of descent and distribution. During the year ended November 30, 1994,
the Company granted options to purchase 75,000 shares of common stock at $2.74
per share and canceled 235,200 options. No options were exercised during the
year. During the six months ended May 31, 1995, the Company granted options to
purchase 100,000 shares of common stock at $2.74 per share, canceled 188,800
shares and 20,000 options were exercised. At May 31, 1995, there were 764,000
options available for issuance under the Option Plan.
 
                                       46



<PAGE>   48

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6. INCOME TAXES
 
     The provision (benefit) for income taxes consists of the following:
 
<TABLE>
<CAPTION>
                                                      SIX MONTHS ENDED       YEAR ENDED
                                                        MAY 31, 1995      NOVEMBER 30, 1994
                                                      ----------------    -----------------
<S>                                                   <C>                 <C>
Current:
  Federal...........................................      $ 1,022              $2,741
  State.............................................          892                 607
  Foreign...........................................          254                  --
                                                          -------             -------
                                                            2,168               3,348
                                                          -------             -------
Deferred:
  Federal...........................................       (3,159)               (124)
  State.............................................       (1,123)               (201)
                                                          -------             -------
                                                           (4,282)               (325)
                                                          -------             -------
          Total.....................................      $(2,114)             $3,023
                                                          =======             =======
</TABLE>
 
     Reconciliation between the Federal statutory income tax rate and the
effective tax rate is summarized below:
 
<TABLE>
<CAPTION>
                                                      SIX MONTHS ENDED       YEAR ENDED
                                                        MAY 31, 1995      NOVEMBER 30, 1994
                                                      ----------------    -----------------
<S>                                                   <C>                 <C>
Federal taxes at statutory rate (34%)...............      $(1,240)             $2,059
State taxes, net of federal effect..................          210                 268
Foreign.............................................       (1,468)                 --
Nondeductible assets................................          340                 680
Other...............................................           44                  16
                                                          -------             -------
Provision (benefit) for income taxes................      $(2,114)             $3,023
                                                          =======             =======
</TABLE>
 
7. PLANT CLOSING EXPENSE
 
     In May 1995, the Company recorded a pre-tax charge to operations of $2,000
to provide for plant closing costs. The Company's decision to shut-down certain
harness segment plants was the result of a customer transitioning certain wire
harness purchases to its own captive operations in Mexico and other third party
suppliers. The plant closing costs include provisions for shut-down costs from
the period of the plant closure to the date of disposal, commitment costs for
leased equipment and severance related costs.
 
8. RETIREMENT BENEFITS
 
     Employees of Wire division, who are eligible under Section 414(q) of the
Internal Revenue Code, may participate in the profit sharing plan sponsored by
the Company. The plan qualifies under the Internal Revenue Code section 401(k),
and the Company may at its discretion make contributions on a matching or
non-matching basis. Employees of the Wire Division with approximately one year
of service may also participate in a money purchase pension plan sponsored by
the Company. The Company is required to make contributions to the money purchase
pension plan equal to 3% of an employee's eligible compensation as defined in
the plan document. Expense under these two plans amounted to approximately $363
and $451 for the six months ended May 31, 1995 and the year ended November 30,
1994, respectively.
 
                                       47



<PAGE>   49

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9. LEASES
 
     The Company leases certain of its manufacturing facilities and equipment
under long-term lease agreements with lease terms expiring through February
2004. Rent expense applicable to the noncancelable operating leases aggregated
$505, $436 and $431 for the six months ended May 31, 1995 and for the year ended
November 30, 1994.
 
     The schedule of future minimum lease payments by calendar year under
operating leases at November 30, 1994 is as follows:
 
<TABLE>
<S>                                                           <C>
1995........................................................  $1,645
1996........................................................   1,607
1997........................................................   1,567
1998........................................................   1,324
1999........................................................   1,234
Thereafter..................................................   1,723
</TABLE>
 
10. CONTINGENCIES
 
     The Company is subject to various lawsuits and claims with respect to such
matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of management,
the ultimate liabilities resulting from such lawsuits and claims will not have a
material adverse effect on the Company's consolidated financial conditions and
results of operations.
 
11. OTHER ACQUISITIONS
 
     On December 10, 1993, Wirekraft acquired certain assets and related
liabilities of the wire business of the Ristance division of Echlin Corporation
("Ristance"). The purchase price, including fees and expenses, paid in cash, was
approximately $11,800 which was funded through additional borrowings under the
Credit Agreement. The acquisition of Ristance was accounted for using the
purchase method of accounting and, accordingly, the purchase price was allocated
to assets and liabilities acquired based upon their fair value at the date of
the acquisition.
 
                                       48



<PAGE>   50

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12. BUSINESS SEGMENT INFORMATION
 
     Certain information concerning the Company's operating segments for the six
months ended May 31, 1995 and the year ended November 30, 1994 is presented
below. Total revenue by segment includes both sales to customers and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation.
 
<TABLE>
<CAPTION>
                                                              WIRE      HARNESS     CONSOLIDATED
                                                            --------    --------    ------------
<S>                                                         <C>         <C>         <C>
Six Months Ended May 31, 1995
  Total revenue...........................................  $ 88,488    $ 88,620
  Intersegment sales......................................     7,807       1,248
                                                            --------    --------
  Sales to customers......................................  $ 80,681    $ 87,372      $168,053
                                                            ========    ========
  Operating income........................................     1,320       4,711         6,031
  Depreciation and amortization...........................     2,534       3,940         6,474
  Capital expenditures, net...............................     1,636       1,278         2,914
Year Ended November 30, 1994
  Total revenue...........................................  $153,014    $101,167
  Intersegment sales......................................    13,209          --
                                                            --------    --------
  Sales to customers......................................  $139,805    $101,167      $240,972
                                                            ========    ========
  Operating income........................................     9,433       9,183        18,616
  Depreciation and amortization...........................     4,451       1,984         6,435
  Capital expenditures, net...............................     5,819         429         6,248
</TABLE>
 
13. SUBSEQUENT EVENT
 
     On June 12, 1995, International Wire Holding Company, through a series of
mergers and acquisitions acquired all of the outstanding common stock of New
Holdings (the "Transaction"). The Company has designated June 1, 1995, as the
effective date of the Transaction for financial reporting purposes. In
connection with the Transaction, the majority of the Company's long-term debt
was repaid, the common stock of New Holdings was redeemed at $51,751, the Series
A Senior Preferred Stock issued as part of the ECM acquisition (see Note 2) was
redeemed at a liquidation value of $26,250 plus accrued dividends of $71 and the
warrants and equity rights were retired at $10,133. As a result of the early
repayment of certain long-term debt, $7,909 of deferred financing costs and
$2,456 of OID were charged off and included as an extraordinary item in the
accompanying Statements of Operations for the six months ended May 31, 1995. In
addition, the Company paid a prepayment penalty of $2,400 to holders of
subordinated notes. This amount has also been included in the accompanying
statements of operations as an extraordinary item. The stock options granted
pursuant to the Company's stock option plan were canceled for payment to the
option holders who received cash. This amount totaled approximately $895 and has
been included in the Statements of Operations as compensation expense for the
six months ended May 31, 1995. In connection with the sale, the Company incurred
expenses of $501 which has been recorded in the Statements of Operations as
expenses related to sale.
 
14. RESTATEMENT OF FINANCIAL INFORMATION
 
     The Company has restated its previously issued financial statements for the
six months ended May 31, 1995 to reflect certain adjustments. These adjustments
relate primarily to corrections of certain depreciation and interest expenses
and recognition of certain costs associated with plant closings. Additionally,
adjustments were made to correct for the effective tax rate and tax benefit
obtained as a result of the extraordinary item.
 
                                       49



<PAGE>   51

 
                            WIREKRAFT HOLDINGS CORP.
                          (FORMERLY WB HOLDINGS INC.)
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
The impact of these adjustments on the Company's financial results as originally
reported is summarized below:
 
<TABLE>
<CAPTION>
                                                       FOR THE SIX MONTHS ENDING
                                                              MAY 31, 1995
                                                      ----------------------------
                                                      AS REPORTED      AS RESTATED
                                                      -----------      -----------
                                                         (AMOUNTS IN THOUSANDS)
<S>                                                   <C>              <C>
Income (loss) before income taxes and extraordinary
  item..............................................   $ (1,099)         $(3,646)
Net income (loss)...................................   $(14,491)         $(9,367)
Retained earnings (deficit).........................   $ (8,917)         $(3,793)
</TABLE>
 
     These adjustments are reflected in the Company's accompanying consolidated
statements of operations.
 
                                       50



<PAGE>   52

 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors of
Omega Wire Corp.:
 
     We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Omega Wire Corp. and subsidiaries for
the two months ended May 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
 
     We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of Omega Wire Corp. and subsidiaries for the two months ended May 31, 1995, in
conformity with generally accepted accounting principles.
 
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
January 27, 1996
 
                                       51



<PAGE>   53

 
                                OMEGA WIRE CORP.
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
                         TWO MONTHS ENDED MAY 31, 1995
                                 (IN THOUSANDS)
 
<TABLE>
<S>                                                           <C>
Net sales...................................................  $23,295
Operating expenses:
  Cost of goods sold........................................   17,512
  Selling, general and administrative.......................    1,639
  Depreciation and amortization.............................    1,233
                                                              -------
Operating income............................................    2,911
Other income (expense):
  Interest expense..........................................   (1,797)
  Amortization of deferred financing costs..................     (238)
                                                              -------
Income before income tax provision and extraordinary item...      876
Income tax provision........................................      171
                                                              -------
Income before extraordinary item............................      705
Extraordinary item -- loss due to early extinguishment of
  debt net of income tax of $2,082..........................   (4,044)
                                                              -------
Net loss....................................................  $(3,339)
                                                              =======
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                      52



<PAGE>   54

 
                                OMEGA WIRE CORP.
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                         TWO MONTHS ENDED MAY 31, 1995
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                       CLASS A               CARRYOVER OF
                             COMMON    COMMON     PAID-IN    PREDECESSOR     ACCUMULATED
                             STOCK      STOCK     CAPITAL       BASIS          DEFICIT       TOTAL
                             ------    -------    -------    ------------    -----------    --------
<S>                          <C>       <C>        <C>        <C>             <C>            <C>
Issuance of common stock...   $420       $--      $41,580      $     --        $    --      $ 42,000
Issuance of Class A common
  stock....................     --        63           --            --             --            63
Issuance costs.............     --        --         (675)           --             --          (675)
Carryover of predecessor
  basis....................     --        --           --       (20,000)            --       (20,000)
Net loss...................     --        --           --            --         (3,339)       (3,339)
                              ----       ---      -------      --------        -------      --------
Balance May 31, 1995.......   $420       $63      $40,905      $(20,000)       $(3,339)     $ 18,049
                              ====       ===      =======      ========        =======      ========
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                       53



<PAGE>   55

 
                                OMEGA WIRE CORP.
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                         TWO MONTHS ENDED MAY 31, 1995
                                 (IN THOUSANDS)
 
<TABLE>
<S>                                                           <C>
Cash flows provided by (used in) operating activities:
  Net loss..................................................  $  (3,339)
  Adjustment to reconcile net loss to net cash provided by
     (used in) operating activities:
  Extraordinary item........................................      6,126
  Depreciation and amortization.............................      1,233
  Amortization of deferred financing costs..................        238
  Deferred income taxes.....................................        120
  Change in assets and liabilities, net of acquisitions:
     Accounts receivable....................................      1,528
     Inventories............................................       (510)
     Prepaid expenses and other.............................       (231)
     Accounts payable.......................................        919
     Accrued and other liabilities..........................         10
     Accrued interest.......................................        952
     Income taxes payable/refundable........................     (2,033)
     Other long-term liabilities............................        (26)
                                                              ---------
          Net cash from operating activities................      4,987
                                                              ---------
Cash flows provided by (used in) investing activities:
  Acquisition, net of cash..................................   (159,080)
  Capital expenditures, net.................................       (581)
                                                              ---------
          Net cash from investing activities................   (159,661)
                                                              ---------
Cash flows provided by (used in) financing activities:
  Proceeds from issuance of long-term obligations...........    135,000
  Contributed capital.......................................     34,653
  Repayment of long-term obligations........................     (7,979)
  Financing fees and other..................................     (7,000)
                                                              ---------
          Net cash from financing activities................    154,674
                                                              ---------
Net change in cash..........................................         --
Cash at beginning of the period.............................         --
                                                              ---------
Cash at end of the period...................................  $      --
                                                              =========
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                       54



<PAGE>   56

 
                                OMEGA WIRE CORP.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                         TWO MONTHS ENDED MAY 31, 1995
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
1. THE COMPANY
 
     Omega Wire Corp. ("Omega" or the "Company"), a Delaware corporation, was
formed to participate in the Acquisition (defined below). Omega had no
operations prior to the Acquisition.
 
     On March 31, 1995, Omega acquired all of the issued and outstanding common
stock of THL-Omega Holding Corporation ("THL-Omega") for a total consideration
$167,300 (the "Acquisition"). Omega, through its subsidiaries, is engaged in the
manufacturing and marketing of non-insulated copper wire and cable products. The
Company's products are used by a wide variety of customers primarily in the
automotive and computer and data communications industries. Omega has a fiscal
year-end of December 31.
 
     The total purchase price of the Acquisition of approximately $174,300,
which included the retirement of existing indebtedness and related fees and
costs, is summarized as follows:
 
<TABLE>
<S>                                                         <C>
Cash paid for all issued and outstanding common stock.....  $102,762
Cash paid to retire existing indebtedness.................    55,439
Common stock of Omega issued..............................     7,410
Fees and costs............................................     8,689
                                                            --------
                                                            $174,300
                                                            ========
</TABLE>
 
     The Acquisition was accounted for using the purchase method of accounting
whereby the total acquisition cost has been preliminarily allocated to the
consolidated assets and liabilities based on their estimated respective fair
values. In accordance with EITF 88-16, "Basis in Leveraged Buyout Transactions",
a portion of the Acquisition has been accounted for at "predecessor basis". The
application of predecessor basis reduced stockholders' equity and goodwill by
$20,000. The purchase price allocations are still in process. It is not expected
that the final allocation of the purchase cost will result in a materially
different allocation than is presented herein.
 
     The total acquisition costs have been preliminarily allocated to the
acquired net assets as follows:
 
<TABLE>
<S>                                                         <C>
Current assets............................................  $ 40,802
Property, plant and equipment.............................    38,974
Goodwill..................................................    96,701
Fees and costs............................................     9,000
Other assets..............................................        54
Current liabilities.......................................   (21,906)
Other liabilities.........................................    (9,325)
Carryover of predecessor basis............................    20,000
                                                            --------
                                                            $174,300
                                                            ========
</TABLE>
 
2. SIGNIFICANT ACCOUNTING POLICIES
 
  Principles of Consolidation
 
     The consolidated financial statements include the accounts of Omega and its
wholly-owned subsidiaries. All material intercompany balances and transactions
have been eliminated in consolidation.
 
  Revenue Recognition
 
     Sales and related cost of goods sold are included in income when goods are
shipped to customers.
 
                                       55



<PAGE>   57

 
                                OMEGA WIRE CORP.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Inventories
 
     Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
 
  Property, Plant and Equipment
 
     Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: buildings -- 25 to 40 years; building
improvements 15 years; machinery and equipment -- 3 to 11 years; and furniture
and fixtures -- 5 years. Leasehold improvements are amortized over the shorter
of the term of the respective lease or the life of the respective improvement.
 
  Intangible Assets
 
     Intangible assets consist principally of goodwill arising from the excess
of cost over the value of net assets acquired, which is being amortized using
the straight-line method over forty years. Amortization of intangible assets
amounted to $384 for the two months ended May 31, 1995.
 
  Deferred Financing Costs
 
     Deferred financing costs, consisting of fees and other expenses associated
with the debt financing are amortized over the term of the related debt using
the effective interest method and the straight-line method which approximates
the effective interest method.
 
  Statement of Cash Flows
 
     For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest and taxes paid for the two
months ended May 31, 1995 were $845 and $2, respectively.
 
     In connection with the Acquisition, certain shares of common stock of
THL-Omega were exchanged for common stock of Omega. The total amount of shares
exchanged were $7,410, which was a non-cash investing and financing activity.
 
3. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
 
     In connection with the Acquisition, the Company incurred aggregate fees and
costs of $7,000. Costs of $6,325 related to the debt financing are being
amortized over the terms of the related borrowings. Costs of $675 related to the
issuance of Omega's common stock have been deducted from the proceeds to reduce
the carrying value of the common stock.
 
     In connection with the Acquisition and obtaining the related financing,
Omega entered into a Monitoring and Oversight Agreement ("Agreement") with
Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a cash fee of $2,525 as
compensation for financial advisory services. The fees have been allocated to
the debt and equity securities issued in connection with the Acquisition as
deferred financing costs or as a deduction from the cash proceeds received from
the sale of the common stock of Omega. The agreement further provides that the
Company shall pay Hicks, Muse an annual fee of $200, for ten years for
monitoring and oversight services adjusted annually at the end of each fiscal
year to an amount equal to .1% of the consolidated net sales of the Company, but
in no event less than $200 annually.
 
                                       56



<PAGE>   58

 
                                OMEGA WIRE CORP.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4. STOCKHOLDERS' EQUITY
 
     The authorized capital stock of the Company consists of 100,000,000 shares
of common stock, 6,333,333 shares of Class A common stock, and 10,000,000 shares
of preferred stock. In connection with the financing of the Acquisition, the
Company issued 42,000,000 shares of common stock and 6,333,333 shares of Class A
common stock.
 
     The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, shares of the Class A common
stock (i) may be converted into common stock at the option of the Company
effective immediately prior to the occurrence of a Triggering Event (as defined
in the Company's Certificate of Incorporation) or (ii) shall automatically be
converted on March 31, 2005. Such conversions are based on a formula set forth
in the Company's Certificate of Incorporation.
 
     Dividends are payable to holders of the common stock and Class A common
stock in amounts as and when declared by the Company's board of directors,
subject to legally available funds and certain agreements governing the
Company's indebtedness. In the event of any liquidation, dissolution or winding
up of the Company, before any payment or distribution of the assets of the
Company shall be made to the holders of the Class A common stock, each share of
common stock shall be entitled to a liquidation preference based on a formula
set forth in the Company's Certificate of Incorporation. The common stock and
the Class A common stock are entitled to one vote per share on all matters
submitted to a vote of stockholders.
 
5. INCOME TAXES
 
     The Company accounts for income taxes in accordance with provisions of SFAS
No. 109. The provision for income taxes for the two months ended May 31, 1995 is
as follows:
 
<TABLE>
<S>                                                           <C>
Current:
  Federal...................................................  $ 51
                                                              ----
Deferred:
  Federal...................................................    55
  State.....................................................    65
                                                              ----
                                                               120
                                                              ----
                                                              $171
                                                              ====
</TABLE>
 
     Reconciliation between the federal statutory income tax rate and the
effective tax rate is summarized below:
 
<TABLE>
<S>                                                           <C>
Federal taxes at statutory rate (34%).......................  $ 297
State taxes, net of federal effect..........................     43
Other.......................................................   (169)
                                                              -----
Provision for income taxes..................................  $ 171
                                                              =====
</TABLE>
 
6. RETIREMENT PLANS
 
     The Company has a profit sharing plan covering substantially all employees
of Omega Wire Corp. Contributions are made to a trusteed fund to accumulate as a
retirement benefit for employees. The profit sharing expense amounted to $113
for the two months ended May 31, 1995.
 
     Effective January 1, 1995, the Company implemented a savings plan
permitting substantially all employees to contribute up to 15% of their salary
on a pre-tax basis to any of the six investment options available. There are no
required Company contributions to the plan.
 
                                       57



<PAGE>   59

 
                                OMEGA WIRE CORP.
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7. COMMITMENTS
 
     The Company leases certain property, transportation vehicles and other
equipment under operating leases. Total lease expense for the two months ended
May 31, 1995 was approximately $290.
 
     Under the terms of the agreements in effect at May 31, 1995, the Company
has future minimum lease commitments as follows:
 
<TABLE>
<S>                                                          <C>
1995.......................................................  $   979
1996.......................................................    1,262
1997.......................................................    1,202
1998.......................................................    1,159
1999.......................................................    1,108
Later years................................................    9,198
                                                             -------
Total minimum lease commitments............................  $14,908
                                                             =======
</TABLE>
 
8. CONTINGENCIES
 
     The Company is subject to various lawsuits and claims with respect to such
matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of management,
the ultimate liabilities resulting from such lawsuits and claims will not have a
material adverse effect on the Company's consolidated financial conditions and
results of operations.
 
9. SUBSEQUENT EVENT
 
     On June 12, 1995, International Wire Holding Company ("Holdings"), through
a series of mergers and acquisitions acquired all of the outstanding common
stock of the Company in exchange for certain of its common equity securities
(the "Transaction"). In connection with the Transaction the Company has been
renamed "International Wire Group, Inc." The Company has designated June 1,
1995, as the effective date of the Transaction for financial reporting purposes.
In connection with the Transaction the Company's long-term debt was repaid. As a
result of the early repayment of long-term debt, approximately $6,126 of
deferred financing costs were charged off and included as an extraordinary item
in the accompanying Statement of Operations.
 
10. RESTATEMENT OF FINANCIAL INFORMATION
 
     The Company has restated its previously issued financial statements for the
two months ended May 31, 1995 to reflect adjustments principally related to
correct for the effective tax rate and tax benefit obtained as a result of the
extraordinary items. The impact of these adjustments on the Company's financial
results as originally reported is summarized below:
 
<TABLE>
<CAPTION>
                                                        FOR THE TWO MONTHS ENDING
                                                               MAY 31, 1995
                                                       ----------------------------
                                                       AS REPORTED      AS RESTATED
                                                       -----------      -----------
                                                          (AMOUNTS IN THOUSANDS)
<S>                                                    <C>              <C>
Income (loss) before income taxes and extraordinary
  item...............................................    $   876          $   876
Net income (loss)....................................    $(5,750)         $(3,339)
Retained earnings (deficit)..........................    $(5,750)         $(3,339)
</TABLE>
 
     These adjustments are reflected in the Company's accompanying consolidated
statements of operations.
 
                                       58



<PAGE>   60

 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Stockholders of
THL-Omega Holding Corporation:
 
     We have audited the accompanying consolidated statements of operations and
retained earnings and cash flows of THL-Omega Holding Corporation and its
subsidiaries for the three months ended March 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
 
     We conducted our audit of these statements in accordance with generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
of THL-Omega Holding Corporation and subsidiaries for the three months ended
March 31, 1995, in conformity with generally accepted accounting principles.
 
COOPERS & LYBRAND, L.L.P.
St. Louis, Missouri
January 27, 1996
 
                                       59



<PAGE>   61

 
                         THL-OMEGA HOLDING CORPORATION
 
           CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
                       THREE MONTHS ENDED MARCH 31, 1995
                                 (IN THOUSANDS)
 
<TABLE>
<S>                                                           <C>
Net sales...................................................  $38,736
Costs and expenses:
  Cost of products sold.....................................   30,638
  Selling expenses..........................................    1,430
  General and administrative expenses.......................    1,493
  Compensation expense......................................    9,715
  Expenses related to sale of Company.......................    1,689
                                                              -------
Loss from operations........................................   (6,229)
Interest expense............................................   (1,478)
Other income................................................       32
                                                              -------
Loss before income taxes and extraordinary item.............   (7,675)
Provision for income taxes..................................      484
                                                              -------
Loss before extraordinary item..............................   (8,159)
Extraordinary item -- loss due to early extinguishment of
  debt net of income tax of $765............................   (1,148)
                                                              -------
Net loss....................................................   (9,307)
Retained earnings -- beginning of the year..................   13,284
                                                              -------
Retained earnings -- March 31, 1995.........................  $ 3,977
                                                              =======
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                       60



<PAGE>   62

 
                         THL-OMEGA HOLDING CORPORATION
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                       THREE MONTHS ENDED MARCH 31, 1995
                                 (IN THOUSANDS)
 
<TABLE>
<S>                                                           <C>
Cash flows provided by (used in) operating activities:
  Net loss..................................................  $(9,307)
  Adjustment to reconcile net loss to net cash provided by
     (used in) operating activities:
     Extraordinary item.....................................    1,913
     Compensation expense...................................    9,715
     Depreciation and amortization..........................    1,509
     Change in assets and liabilities:
       Accounts receivable..................................    1,222
       Inventories..........................................    2,826
       Prepaid and other current assets.....................     (485)
       Accounts payable.....................................   (3,714)
       Accrued expenses.....................................      (90)
       Income taxes payable.................................       (5)
       Deferred compensation................................       20
                                                              -------
Net cash from operating activities..........................    3,604
                                                              -------
Cash flows provided by (used) investing activities:
  Capital expenditures, net.................................   (1,597)
                                                              -------
Net cash from investing activities..........................   (1,597)
                                                              -------
Cash flows provided by (used in) financing activities:
  Repayment of long-term debt...............................   (1,500)
  Net borrowing (repayment) under revolving credit
     facility...............................................     (656)
  Issuance of notes payable, net............................      678
  Redemption of common stock................................      (58)
                                                              -------
Net cash from financing activities..........................   (1,536)
                                                              -------
Net increase in cash........................................      471
Cash at beginning of period.................................      339
                                                              -------
Cash at end of period.......................................  $   810
                                                              =======
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                       61



<PAGE>   63

 
                         THL-OMEGA HOLDING CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE THREE MONTHS ENDED MARCH 31, 1995
                                 (IN THOUSANDS)
 
1. THE COMPANY
 
     THL-Omega Holding Corporation and its subsidiaries ("THL-Omega" or the
"Company") are engaged in the manufacturing and marketing of non-insulated
copper wire and cable products. The Company's products are used by a wide
variety of customers primarily in the automotive and computer and data
communications industries. THL-Omega has a fiscal year-end of December 31.
 
2. SIGNIFICANT ACCOUNTING POLICIES:
 
  Principles of Consolidation
 
     The consolidated financial statements include the accounts of THL-Omega and
its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
 
  Revenue Recognition
 
     Sales and related cost of goods sold are included in income when goods are
shipped to customers.
 
  Inventories
 
     Inventories are valued at the lower of cost or market. Cost is determined
primarily using the last-in, first-out ("LIFO") method.
 
  Property, Plant and Equipment
 
     Property, plant and equipment is stated at cost. Depreciation is calculated
using the straight-line method. The average estimated lives utilized in
calculating depreciation are as follows: buildings -- 25 to 40 years; building
improvements -- 15 years; machinery and equipment -- 3 to 11 years; and
furniture and fixtures -- 5 years. Leasehold improvements are amortized over the
shorter of the term of the respective lease or the life of the respective
improvement.
 
  Intangible Assets
 
     Intangible assets consist principally of goodwill arising from the excess
of cost over the value of net assets acquired, which is being amortized using
the straight-line method over forty years.
 
  Deferred Financing Costs
 
     Deferred financing costs, consisting of fees and other expenses associated
with the debt financing are amortized over the term of the related debt using
the effective interest method and the straight-line method which approximates
the effective interest method.
 
  Statement of Cash Flows
 
     For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest and taxes paid for the three
months ended March 31, 1995 were $1,548 and $33, respectively.
 
                                       62



<PAGE>   64

 
                         THL-OMEGA HOLDING CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
3. INCOME TAXES
 
     The Company accounts for income taxes in accordance with the provisions of
SFAS No. 109. The provision for income taxes for the three months ended March
31, 1995 is as follows:
 
<TABLE>
<S>                                                           <C>
Current:
  Federal...................................................  $384
  State.....................................................   100
                                                              ----
                                                              $484
                                                              ====
</TABLE>
 
     Reconciliation between the statutory income tax rate and effective tax rate
for the three months ended March 31, 1995 is summarized below:
 
<TABLE>
<S>                                                          <C>
Statutory U.S. federal tax rate............................  $(2,610)
State taxes, net of federal benefit........................       66
Amortization on non-deductible goodwill and non-deductible
  expenses.................................................    3,028
                                                             -------
                                                             $   484
                                                             =======
</TABLE>
 
4. RETIREMENT PLANS
 
     The Company has a profit sharing plan covering substantially all employees
of THL-Omega. Contributions are made to a trusteed fund to accumulate as a
retirement benefit for employees. The profit sharing expense amounted to $249
for the three months ended March 31, 1995.
 
5. COMMITMENTS AND CONTINGENCIES
 
     The Company leases certain property, transportation vehicles and other
equipment under operating leases. Rent expense for these operating leases for
the three months ended March 31, 1995 was approximately $433.
 
     Under the terms of the agreements in effect at March 31, 1995, the Company
has future minimum lease commitments as follows:
 
<TABLE>
<S>                                                          <C>
1995.......................................................  $   979
1996.......................................................    1,262
1997.......................................................    1,202
1998.......................................................    1,159
1999.......................................................    1,108
Later years................................................    9,198
                                                             -------
  Total minimum lease commitments..........................  $14,908
                                                             =======
</TABLE>
 
     The Company is subject to legal proceedings and claims which arise in the
normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition or results of operations.
 
6. ACQUISITION
 
     On March 31, 1995, ownership of the Company transferred pursuant to the
terms of a Stock Purchase Agreement. Substantially all of the Company's
long-term debt has been repaid. As a result of the early repayment of certain
long-term debt, $1,013 of deferred financing costs was charged off and included
as an
 
                                       63



<PAGE>   65

 
                         THL-OMEGA HOLDING CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
extraordinary item in the accompanying Statement of Operations and Retained
Earnings for the three months ended March 31, 1995. In addition, the Company
paid a prepayment penalty of $900 to holders of the subordinated notes. This
amount also has been included in the accompanying Statement of Operations and
Retained Earnings as an extraordinary item. Immediately prior to the sale of the
Company, the Company sold common stock and granted stock options to certain
officers and shareholders for consideration less than the fair value of the
common stock. The difference between the fair value and the amount paid by the
officers and shareholders has been included in the Statement of Operations and
Retained Earnings as compensation expense for the three months ended March 31,
1995. In connection with the sale, the Company incurred expenses of $1,689 which
has been included in the Statement of Operations and Retained Earnings as
expenses related to the sale of the Company.
 
7. RESTATEMENT OF FINANCIAL INFORMATION
 
     The Company has restated its previously issued financial statements for the
three months ended March 31, 1995 to reflect adjustments principally related to
correct for the effective tax rate and tax benefit obtained as a result of the
extraordinary item. The impact of these adjustments on the Company's financial
results as originally reported is summarized below:
 
<TABLE>
<CAPTION>
                                                      FOR THE THREE MONTHS ENDING
                                                            MARCH 31, 1995
                                                     -----------------------------
                                                     AS REPORTED       AS RESTATED
                                                     -----------       -----------
                                                        (AMOUNTS IN THOUSANDS)
<S>                                                  <C>               <C>
Income (loss) before income taxes and extraordinary
  item.............................................    $(7,675)          $(7,675)
Net income (loss)..................................    $(7,307)          $(9,307)
Retained earnings..................................    $ 5,977           $ 3,977
</TABLE>
 
     These adjustments are reflected in the Company's accompanying consolidated
statements of operations.
 
                                       64



<PAGE>   66

 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Stockholders of
THL-Omega Holding Corporation:
 
     In our opinion, the accompanying consolidated statements of operations and
retained earnings and of cash flows for the year ended December 31, 1994 present
fairly, in all material respects, the results of operations and cash flows of
THL-Omega Holding Corporation and its subsidiaries for the year ended December
31, 1994, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above. We have not audited the financial statements of THL-Omega Holding
Corporation for any period subsequent to December 31, 1994.
 
PRICE WATERHOUSE LLP
Syracuse, New York
February 10, 1995
 
                                       65



<PAGE>   67

 
                         THL-OMEGA HOLDING CORPORATION
 
           CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
                      FOR THE YEAR ENDED DECEMBER 31, 1994
                                 (IN THOUSANDS)
 
<TABLE>
<S>                                                           <C>
Net sales...................................................  $134,457
Costs and expenses:
  Cost of products sold.....................................   103,100
  Selling expenses..........................................     5,938
  General and administrative expenses.......................     5,836
                                                              --------
Income from operations......................................    19,583
Interest expense............................................    (5,932)
Other income (expense)......................................       296
                                                              --------
Income before income taxes..................................    13,947
Provision for income taxes..................................    (5,787)
                                                              --------
Net income..................................................     8,160
Retained earnings -- beginning of year......................     5,124
                                                              --------
Retained earnings -- end of year............................  $ 13,284
                                                              ========
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                       66



<PAGE>   68

 
                         THL-OMEGA HOLDING CORPORATION
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1994
                                 (IN THOUSANDS)
 
<TABLE>
<S>                                                           <C>
Cash flows from operating activities:
  Net income................................................  $ 8,160
Adjustments to reconcile net income (loss) to net cash from
  operating activities:
  Depreciation and amortization.............................    6,023
  Deferred income taxes.....................................    2,258
  Deferred compensation.....................................       81
  Effect of changes in current assets and liabilities (Note
     1).....................................................   (5,458)
                                                              -------
Net cash provided by (used in) operating activities.........   11,064
                                                              -------
Cash flows from investing activities:
  Additions to property, plant and equipment, net...........   (8,667)
                                                              -------
Net cash provided by (used in) investing activities.........   (8,667)
                                                              -------
Cash flows from financing activities:
  Repayment of long-term debt...............................   (6,042)
  Net borrowing (repayment) under revolving credit
     facility...............................................      206
  Issuance of notes payable, net............................    3,755
                                                              -------
Net cash provided by (used in) financing activities.........   (2,081)
                                                              -------
Net increase in cash........................................      316
Cash at beginning of period.................................       23
                                                              -------
Cash at end of period.......................................  $   339
                                                              =======
</TABLE>
 
        See accompanying notes to the consolidated financial statements
 
                                       67



<PAGE>   69

 
                         THL-OMEGA HOLDING CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 1994
                                 (IN THOUSANDS)
 
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
     THL-Omega Holding Corporation and its subsidiaries (the "Company") are
engaged in the manufacturing and marketing on non-insulated copper wire and
cable products.
 
  Consolidation
 
     The consolidated financial statements of THL-Omega Holding Corporation
include the accounts of Omega Wire, Inc. and its wholly-owned subsidiaries,
Auburn Wire Division, Inc., Auburn Wire, Inc., Continental Cordage Corporation
and OWI Corporation. All significant intercompany transactions have been
eliminated.
 
  Inventories
 
     Inventories are carried at the lower of cost or market, cost being
determined using the last-in, first-out method, except for Continental Cordage
Corporation which uses the first-in, first-out method. Continental Cordage
Corporation's cost of products sold represents less than 10% of the Company's
aggregate cost of products sold.
 
     In 1994, OWI Corporation changed its method of accounting for inventory
from the first-in, first-out method of inventory valuation to the last-in,
first-out method of inventory valuation. The Company believes the last-in,
first-out method will produce a better matching of current costs and current
revenues due to the volatility of copper prices. The effect of this change in
1994 was to decrease inventories and to increase cost of products sold by $349.
The retroactive adjustment of prior year statements is insignificant for
restatement.
 
     During 1994, the Company entered into a futures contract providing for the
sale of 10,000 pounds of copper in March 1995 at a fixed price. This future
contract is accounted for as a hedge of the Company's current inventories. At
December 31, 1994, the Company had incurred an approximate $1,052 unrealized
loss on this contract, which served to increase inventory.
 
  Property, Plant and Equipment
 
     Property, plant and equipment are carried at cost, net of accumulated
depreciation. Maintenance and repair costs are charged to expense as incurred.
Depreciation expense is computed using the straight-line method for financial
reporting and accelerated methods for tax purposes. Property, plant and
equipment is depreciated over the following estimated useful lives for financial
reporting purposes.
 
<TABLE>
<S>                                                           <C>
Buildings...................................................  25 to 40 years
Building improvements.......................................  15 years
Machinery and equipment.....................................  3 to 11 years
</TABLE>
 
  Goodwill and Debt Issue Costs
 
     Goodwill is being amortized on a straight-line basis over 40 years.
Amortization expense was $673 for the year ended December 31, 1994. Cost related
to the issuance of debt amounting to $2,257 at December 31, 1994 has been
deferred and amortized on a straight-line basis over the term of the debt.
Amortization expense was $262 for the year ended December 31, 1994.
 
  Income Tax Accounting
 
     The Company accounts for income taxes in accordance with provision of
Statement of Financial Accounting Standards No. 109 (FAS 109), Accounting for
Income Taxes.
 
                                       68



<PAGE>   70

 
                         THL-OMEGA HOLDING CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
  Cash Flow Information
 
     For purposes of reporting cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents. The effect on cash flow of changes in current assets and
liabilities is as follows for the year ended December 31, 1994:
 
<TABLE>
<CAPTION>
                                                                1994
                                                               -------
<S>                                                            <C>
Accounts receivable.........................................   $(7,183)
Inventories.................................................    (6,450)
Prepaid and other current assets............................       454
Accounts payable............................................     5,577
Accrued expenses............................................     1,639
Income taxes payable........................................      (281)
Customers' deposits on spools and reels.....................       786
                                                               -------
                                                               $(5,458)
                                                               =======
</TABLE>
 
     Cash payments for income taxes were $3,808 for the year ended December 31,
1994. Interest paid was $5,873 for the year ended December 31, 1994.
 
2. INCOME TAXES
 
     The components of the provision for income taxes are as follows for the
year ended December 31, 1994.
 
<TABLE>
<S>                                                            <C>
Current:
Federal.....................................................   $2,979
State.......................................................      550
                                                               ------
                                                                3,529
Deferred....................................................    2,258
                                                               ------
          Total.............................................   $5,787
                                                               ======
</TABLE>
 
     The total income tax provision differed from total tax expense as computed
by applying the statutory federal income tax rate to income before taxes. The
reasons were:
 
<TABLE>
<S>                                                           <C>
Statutory U.S. federal tax rate.............................  34.0%
State taxes, net of federal benefit.........................   2.7
Amortization of non-deductible goodwill.....................   1.5
Other.......................................................   3.3
                                                              ----
                                                              41.5%
                                                              ====
</TABLE>
 
3. RETIREMENT PLANS
 
     The Company has a profit sharing plan covering substantially all employees
of THL-Omega Holding Corporation. Contributions are made to a trusteed fund to
accumulate as a retirement benefit for employees. The profit sharing expense
amounted to $996 for the year ended December 31, 1994.
 
     Effective January 1, 1995, the Company implemented a savings plan
permitting substantially all employees to contribute up to 15% of their salary
on a pretax basis to any of the six investment options available. There are no
required Company contributions to the plan.
 
                                       69



<PAGE>   71

 
                         THL-OMEGA HOLDING CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4. STOCKHOLDERS' EQUITY
 
     A leveraged buy out transaction occurred effective January 1, 1989 that
resulted in the application of "predecessor basis" accounting as prescribed by
the Emerging Issues Task Force (EITF) of the Financial Accounting Standards
Board. The application of predecessor basis reduced stockholders' equity and
goodwill by $5,850.
 
5. COMMITMENTS AND CONTINGENCIES
 
  Operating Lease Agreements
 
     The Company leases certain property, transportation vehicles and other
equipment under operating leases. Total lease expense for the year ended
December 31, 1994 was approximately $1,481.
 
     Under the terms of the agreements in effect at December 31, 1994, the
Company has future minimum lease commitments as follows:
 
<TABLE>
<S>                                                          <C>
1995.......................................................  $ 1,305
1996.......................................................    1,262
1997.......................................................    1,202
1998.......................................................    1,159
1999.......................................................    1,108
Later years................................................    9,198
                                                             -------
Total minimum lease commitments............................  $15,234
                                                             =======
</TABLE>
 
  Employment Agreements
 
     The Company has consulting and non-competition agreements with two of its
former employees which expire in 1995 and 1997, respectively. Compensation under
the agreements is payable at annual rates of $65 and $95, respectively.
 
  Management Fee
 
     Management fees not exceeding $200 are payable to Thomas H. Lee Company
annually. Payments were $120 for the year ended December 31, 1994.
 
  Joint Venture
 
     During 1992, the Company acquired a 20% interest in Changzhou Omega Copper
Wire Co., Ltd. (the joint venture), a newly-formed joint venture based in the
People's Republic of China, in exchange for certain equipment and technology.
Given the uncertainties surrounding the recoverability of this investment, the
Company's investment in the joint venture was recorded at no value.
 
     During the initial fifteen-year term of the joint venture, the Company has
the exclusive authority to sell the products manufactured by the joint venture
within its sales territory and has agreed to purchase a specified quantity of
product from the joint venture each year. The Company has the option of renewing
these purchase provisions for an additional fifteen-year term upon the
expiration of the initial term. The Company's purchases from the joint venture
amounted to $3,300 in 1994. There were no such purchases in 1993.
 
6. SUBSEQUENT EVENT
 
     In March 1995, ownership of the Company transferred pursuant to the terms
of a Stock Purchase Agreement. The majority of the Company's long-term debt,
consisting of the Credit Agreement, Subordinated Notes and Term Loans have
subsequently been repaid.
 
                                       70



<PAGE>   72


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                     INTERNATIONAL WIRE GROUP, INC.

Date:  November 7, 1997                By      /s/ DAVID M. SINDELAR
                                       ----------------------------------------
                                       David M. Sindelar, Senior Vice President







                                      71