UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


**Washington,
      D.C. 20549**





FORM
      10-K




**(Mark
                One)**x
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the fiscal year ended December 31, 2005****OR**o
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934****For
                the transition period from to**


**Commission
      file number 000-02249**





THE
      ALPINE GROUP, INC.


(Exact
      name of registrant as specified in its charter)





**Delaware**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **22-1620387**
              (I.R.S.
                Employer Identification No.)**One
                Meadowlands Plaza**
              **East
                Rutherford, New Jersey**
              (Address
                of principal executive offices)
            **07073**
              (Zip
                code)Registrant's
                telephone number, including area code**201-549-4400**









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





Securities
      registered pursuant to Section 12(g) of the Act:


Common
                Stock, par value $.10 per share[Title
                of class]




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
      such filing requirements for the past 90 days. Yes x No o





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 the 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. o





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Exchange Act Rule 12b-2) Yes o No x





At
      June
      30, 2005, the registrant had 15,934,514 shares of common stock, par value $.10
      per share outstanding. The aggregate market value of the outstanding shares
      of
      common stock held by non-affiliates of the registrant on such date was
      approximately $ 18.8 million based on the closing price of $1.67 per share
      of
      such common stock as of June 30, 2005.





At
      March
      28, 2006, the registrant had 16,871,833 shares
      of
      common stock, par value $.10 per share outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**


None.




1


**PART
      I**





**Item
      1.  Business**





The
      Alpine Group, Inc. (together with its subsidiaries, unless the context otherwise
      requires, "Alpine" or the "Company") is a holding company which over the past
      several years has owned controlling equity interests in industrial businesses
      that have been operated as subsidiaries, including PolyVision Corporation
      ("PolyVision"), Premier Refractories International Inc. ("Premier"), Superior
      TeleCom Inc. ("Superior") and DNE Systems, Inc. (“DNE Systems”). At December 31,
      2005, Alpine owned approximately 84% of Essex Electric Inc. ("Essex Electric"),
      which was engaged in the manufacture and sale of electrical wire and cable.
      On
      September 30, 2005, Essex Electric entered into an agreement to sell certain
      of
      the assets of Essex Electric comprising its building wire business (the “Essex
      Electric Sale”). In January 2006, Alpine acquired the 16% minority interest in
      Essex Electric. Essex Electric completed the sale to Southwire Company
      (“Southwire”) on January 31, 2006. At December 31, 2005, Alpine owned 46% of
      Superior Cables Ltd., the largest Israeli based producer of wire and cable
      products.




The
      agreement with Southwire provided for the sale by Essex Electric of all of
      its
      closing date building wire related inventory and prepaid assets, its Florence,
      Alabama manufacturing plant and equipment, and the assumption by Southwire
      of
      certain contracts and selected liabilities, related to the business. Essex
      Electric retained substantially all of its other liabilities, including the
      indebtedness under its revolving credit facility. Excluded from the sale were
      cash, cash equivalents and accounts receivable of Essex Electric, a copper
      scrap
      reclamation plant and operation based in Jonesboro, Indiana, a plastic resin
      compounding plant and operation based in Marion, Indiana, and three leased
      warehouse distribution centers. The purchase price payable to Essex Electric
      was
      the sum of (i) $27 million plus (ii) the closing date value of Essex Electric’s
      inventory and certain prepaid assets less certain liabilities.





After
      the
      close of the Essex Electric Sale, Essex Electric’s operations include the scrap
      reclamation plant in Jonesboro, Indiana and the plastic resin compounding plant
      in Marion, Indiana. Additionally, the Company has agreed to increase its
      investment in Superior Cables Ltd., the largest Israel based wire and cable
      manufacturer (see Note 23 to the consolidated financial statements) and will
      continue to explore and consider utilizing its available liquid assets for
      a
      range of investments and business acquisitions.





Alpine
      was incorporated in New Jersey on May 7, 1957 and reincorporated in Delaware
      on
      February 3, 1987.





Alpine's
      principal executive office is located at One Meadowlands Plaza, East Rutherford,
      New Jersey 07073, and its telephone number is (201) 549-4400.





Alpine's
      annual report on Form 10-K, quarterly reports on Form 10-Q and current reports
      on Form 8-K, and amendments to those reports filed or furnished pursuant to
      Section 13(a) or 15(d) of the Exchange Act, are made available free of charge.
      Requests should be directed to the Corporate Secretary at the principal
      executive office listed herein.





**The
      Alpine Group, Inc.**





The
      following information addresses the continuing operations of Alpine as of
      December 31, 2005 consisting of Essex Electric and an equity method investment
      in Superior Cables Ltd. As previously described, certain of the assets of Essex
      Electric comprising its building wire business were sold as of January 31,
      2006.





***Superior
      Cables Ltd.***





In
      December 2002, the Company, through its wholly owned subsidiaries, acquired
      a
      47% equity method investment in Superior Cables Ltd. As a result of the exercise
      of certain employee stock options since that time, the Company’s current
      interest in Superior Cables Ltd. is 46%. Superior Cables Ltd. is the largest
      Israeli wire and cable manufacturer and its shares are traded on the Tel Aviv
      Stock Exchange. See Note 23 - Subsequent Events to the Alpine consolidated
      financial statements for a description of the proposed Superior Cables Ltd.
      share purchase and certain related transactions.




***Essex
      Electric***





As
      of
      December 31, 2005, Essex Electric manufactured, sold and/or distributed a
      complete line of building wire products. Building wire products include a wide
      variety of thermoplastic and thermoset insulated wires for the commercial and
      industrial construction markets and service entrance cable, underground feeder
      wire and nonmetallic jacketed wire and cable for the residential construction
      market. These products are generally installed behind walls, in ceilings and
      underground.




2





Essex
      Electric sold its electrical wire and cable products through manufacturers'
      representatives, as well as a small internal sales group. Its customer base
      was
      large and diverse, consisting of consumer product retailers, hardware
      wholesalers and wholesale electrical and specialty distributors. One customer
      (Home Depot) accounted for 20% and 23% of Essex Electric's net sales in 2005
      and
      2004, respectively. Essex Electric served its customers through strategically
      located regional distribution centers ("RDCs"). These RDCs provided for
      centralized stocking of "off-the-shelf" building wire products. Essex Electric
      operated three leased RDCs located in Georgia, California and Indiana at
      December 31, 2005.





*Raw
      Materials*





The
      principal raw material used by Essex Electric in the manufacture of its wire
      products is copper rod and, to a lesser extent, plastics such as polyethylene
      and polyvinyl chloride. Essex Electric purchases copper rod from various copper
      producers and metal merchants. Copper is a commodity and is therefore subject
      to
      price volatility. Fluctuations in the cost of copper are generally passed along
      to the customer however depending upon the supply and demand dynamics in the
      building wire marketplace, such copper cost fluctuations may not always be
      matched in end product selling prices. Additionally, COMEX fixed price futures
      contracts are used, to a limited extent, to manage commodity price risk.





*Competition*





The
      market for electrical wire products is highly competitive. As of December 31,
      2005, four companies, including Essex Electric, manufactured approximately
      75%
      of the total domestic U.S. building wire production. Essex Electric was subject
      to strong competition in many markets on the basis of price, delivery time,
      customer service and ability to meet specialty needs.




*Backlog*





As
      of
      December 31, 2005, Essex Electric had no significant backlog, as finished goods
      are generally stocked to meet customer demand on a just-in-time basis.





*Research
      and Development*





Essex
      Electric conducted limited research and development activities. These activities
      were focused on the development of improved compounds that were used as
      insulation and jacketing materials. During 2005, total research and development
      expenses related to the electrical wire business were less than 1% of
      sales.





**Export
      Sales**





The
      Company had no export sales in 2005 or 2004 and $0.5 million in 2003.





**Employees**





As
      of
      December 31, 2005, the Company employed approximately 410 employees,
      substantially all of which were employees of Essex Electric. Approximately
      360
      employees were or will be terminated, some of which were rehired by Southwire,
      in connection with the Essex Electric Sale (see Note 22 to the Alpine
      consolidated financial statements). Approximately 30 persons employed by the
      Company at December 31, 2005 are represented by unions. Collective
      bargaining agreements expire in 2007. The Company considers relations with
      its
      employees to be satisfactory.




**Environmental
      Matters**





The
      manufacturing operations of the Company's subsidiaries are subject to extensive
      and evolving federal, state and local environmental laws and regulations
      relating to, among other things, the storage, handling, disposal, emission,
      transportation and discharge of hazardous substances, materials and waste
      products, as well as the imposition of stringent permitting requirements. The
      Company does not believe that compliance with environmental laws and regulations
      will have a material effect on the level of capital expenditures of Alpine
      or
      its business, financial condition, liquidity or results of operations. However,
      violation of, or non-compliance with, such laws, regulations or permit
      requirements, even if inadvertent, could result in an adverse impact on the
      operations, business, financial condition, liquidity or results of operations
      of
      Alpine. No material expenditures for environmental matters relating to Alpine's
      current businesses were made in 2005, 2004 and 2003.




3




**Item
      1A.  Risk Factors**





*Our
      success depends on key members of our management, the loss of whom could
      adversely affect our business.*





Our
      success depends largely on the efforts and abilities of key management
      employees, particularly our Chief Executive Officer. The loss of the services
      of
      key personnel or the inability to attract qualified employees could have a
      material adverse effect on our business and financial results.





*Unspecified
      Industry and Acquired Business; Unascertainable Risks*





As
      previously discussed, following the completion of the Essex Electric Sale on
      January 31, 2006, the continuing operations of our Company consist of a
      compounding operation in Marion, Indiana, and a copper scrap reclamation
      operation in Jonesboro, Indiana, and the equity investment in our 46% owned
      affiliate Superior Cables Ltd. During February 2006, our Company entered into
      agreements, which if completed, will result in our increasing our investment
      and
      ownership interest in Superior Cables Ltd. Additionally, we will continue to
      explore and consider utilizing our available liquid assets for a range of
      investment and business acquisitions. However, no specific investment or
      acquisition opportunities have been identified. Accordingly, our shareholders
      currently have no basis to evaluate the comparative risks and merits of
      investing in the industry or business in which our Company may invest or
      acquire. To the extent that our Company may acquire or invest in a business
      in a
      high-risk industry, our Company will become subject to those risks. Similarly,
      if our Company acquires or invests in a financially unstable business or a
      business that is in the early stages of development, our Company will become
      subject to the risks to which such businesses are subject. Although management
      intends to consider the risks inherent in any industry and business in which
      we
      may become involved, there can be no assurance that we will correctly assess
      such risks.




*The
      liquidity of our common stock may be adversely affected by completion of our
      tender offer.*





Our
      common stock is currently quoted on the OTC Bulletin Board and average daily
      trading volume for the six-month period between July 1, 2005 and December 31,
      2005 was approximately 48,000 shares. On March 1, 2006, we commenced a modified
      “Dutch Auction” tender offer, which will expire on April 3, 2006, unless
      extended, (see Note 23 to the consolidated financial statements). We agreed
      to
      purchase up to 6 million shares of our common stock tendered in response to
      the
      offer, representing approximately 36.3% of our outstanding common shares and,
      assuming conversion of all of our outstanding Series A Preferred stock, 22.3%
      of
      such common shares. The tender offer is subject to a number of terms and
      conditions described in the related offering materials. Completion of the
      purchase in accordance with the terms of our offer will significantly reduce
      our
      public float (the number of shares owned by non-affiliate stockholders and
      available for trading in the securities market) and could adversely affect
      the
      liquidity of our common stock.





*As
      a
      result of the change in our investment holdings, following completion of the
      Essex Electric Sale, we are relying on an exemption from the definition of
      “investment company” that will require us to take action with respect to our
      investments within one year. If we do not make the required changes to our
      investment holdings, we could be required to register as an investment company
      with significant restrictions on our business.*





The
      regulatory scope of the federal Investment Company Act, which was enacted
      principally for the purpose of regulating vehicles for pooled investments in
      securities, extends generally to companies engaged primarily in the business
      of
      investing, reinvesting, owning, holding or trading in securities. The Investment
      Company Act may, however, also be deemed to be applicable to companies that
      do
      not intend to be characterized as an investment company but which, nevertheless,
      may be deemed to be within the definitional scope of certain provisions of
      the
      Investment Company Act. In general, unless exclusion applies, a company is
      an
      investment company if it owns “investment securities” with a value exceeding 40%
      of the value of its total assets on an unconsolidated basis, excluding
      government securities and cash items. We do not intend and do not consider
      our
      company to be an investment company and our anticipated activities involve
      exploring the acquisition of one or more operating businesses. However, from
      the
      time of the sale of the building wire assets of Essex Electric and the
      collection of its retained accounts receivable, the composition of our
      investment portfolio has caused us to fall within the definition of an
      investment company. Therefore, we are now relying on a one-year temporary
      exclusion for companies that are in transition and that have a bona fide intent
      to be engaged primarily in a business other than investing in securities as
      soon
      as possible, but in any event within one year.





If
      by
      February 28, 2007, we are deemed to be an investment company, our activities
      would be restricted, including restrictions on the nature of our investments
      and
      the issuance or repurchase of securities. We would most likely be required
      to
      register under the Investment Company Act and file reports, and adopt corporate
      governance rules including significant reporting, record keeping, voting, proxy,
      disclosure and other rules and regulations. In the event we were deemed to
      be an
      investment company, our failure to satisfy such regulatory requirements could
      have a material adverse effect on us.




4





**Item
      1B.  Unresolved Staff Comments**





None





**Item
      2.  Properties**





The
      following table sets forth the properties utilized by Alpine as of
      December 31, 2005.




**OPERATION**
            **LOCATION**
            **SQUARE**
              **FOOTAGE**
            
            **LEASED/**
              **OWNED**Essex ElectricManufacturing
            Florence,
                Alabama*
              Florence,
                Alabama*
              Florence,
                Alabama*
              Florence,
                Alabama*
              Florence,
                Alabama*
              Jonesboro,
                Indiana
              Marion,
                Indiana
            263,000
              20,000
              30,500
              7,000
              7,000
              56,000
              50,000
            
            Owned
              Leased
                (expires 2006)
              Leased
                (expires 2006)
              Leased
                (monthly)
              Leased
                (monthly)
              Owned
              OwnedRegional
                  Distribution Centers
            Columbia
                City, Indiana*
              McDonough,
                Georgia*
              Ontario,
                California*
            228,800
              232,000
              99,430
            
            Leased
                (expires 2006)
              Leased
                (expires 2009)
              Leased
                (expires 2007)Offices
            Fort Wayne, Indiana
            15,000
            
            Leased
                (expires 2007)Alpine
            East
                Rutherford, New Jersey
            5,900
            
            Leased
                (expires 2014)





*These
      locations were either sold or otherwise reclassified to discontinued operations
      at the closing of the Essex Electric Sale on January 31, 2006.





The
      Company believes that as of December 31, 2005 its Essex Electric facilities
      were
      generally suitable and adequate for its business operations and administration
      and serving customers’ requirements. In 2005 and 2004 the utilization of the
      Company’s facilities was consistent with industry demand and, in the view of
      management, was satisfactory. During 2005, the primary manufacturing facilities
      were operated on a 24 hours per day schedule on either a five or seven day
      per
      week basis.





During
      2005, Essex Electric donated land and building at a former manufacturing site
      in
      Orleans, IN to the Business Reform Foundation.





**Item
      3.   Legal Proceedings**





The
      Company is engaged in certain litigations and administrative proceedings arising
      in the ordinary course of business, including those matters described below.
      While the outcome of these can never be predicted with certainty, the Company
      does not believe that any of the existing litigations, administrative
      proceedings or threatened proceedings either individually or in the aggregate,
      will have a material adverse effect upon its business, financial condition,
      liquidity or results of operations.





Alpine's
      operations are subject to environmental laws and regulations in each of the
      jurisdictions in which it owns or operates facilities or for which it has
      assumed or retained liabilities governing, among other things, emissions into
      the air, discharges to water, the use, handling and disposal of hazardous
      substances and the investigation and remediation of soil and groundwater
      contamination both on-site at past and current facilities and at off-site
      disposal locations. On-site contamination at certain of these facilities is
      the
      result of historic activities and past operations. Alpine has two sites and
      Essex Electric has one site which are currently involved in separate
      environmental investigations that will likely result in certain remedial
      activities being required under the oversight of two state environmental
      regulatory agencies. Off-site liabilities may include clean-up responsibilities
      and response costs incurred by others at various sites, under federal or state
      statutes, for which the Company may be liable to the United States Environmental
      Protection Agency, or to state environmental agencies, or others as a
      Potentially Responsible Party or the equivalent.




5





Alpine
      currently does not believe that any of the environmental proceedings in which
      it
      is involved, and for which it may be liable, will individually, or in the
      aggregate, have a material adverse effect upon its business, financial
      condition, liquidity or results of operations. There can be no assurance that
      future developments will not alter this conclusion.





**Item
      4.   Submission Of Matters To A Vote Of Security
      Holders**





None




6





**PART
      II**





**Item
      5.   Market For Registrant's Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities**




(a)
                Market
                    Price of and Dividends on the Registrant's Common Equity and
                    Related
                    Stockholder Matters




Alpine's
      common stock, $0.10 per share par value (the “Common Stock”) traded on the OTC
      Bulletin Board under the symbol ALPG during 2004. In conjunction with the
      reverse/forward split of the Common Stock (see note (d) below), as of January
      10, 2005 the NASDAQ assigned the Common Stock the new trading symbol of APNI.OB.
      The following table sets forth the range of high and low daily closing sales
      prices for the Common Stock for the years ended December 31, 2005 and 2004.





Year
                Ended December 31, 2005:First
                Quarter ended March 31, 2005
            $2.60
            $1.78Second
                Quarter ended June 30, 2005
            1.98
            1.45Third
                Quarter ended September 30, 2005
            2.91
            1.45Fourth
                Quarter ended December 31, 2005
            2.69
            1.95Year
                Ended December 31, 2004:First
                Quarter ended March 31, 2004
            $1.85
            $0.90Second
                Quarter ended June 30, 2004
            3.59
            1.80Third
                Quarter ended September 30, 2004
            3.15
            2.65Fourth
                Quarter ended December 31, 2004
            2.76
            2.00




(b)
              Holders
  At
        March
        28, 2006, there were 16,871,883****shares
        of
        Common Stock issued and outstanding, and approximately 340 record holders
        thereof (exclusive of beneficial owners of shares held in street name or
        other
        nominee form)




The
      Company's transfer agent is American Stock Transfer & Trust Company,
      59 Maiden Lane, New York, NY.




(c)
            Dividends





The
      Company paid dividends of $0.4 million and $0.5 million in 2005 and 2004,
      respectively on the Series A Preferred Stock. On August 24, 2004, Alpine
      declared a special dividend of up to $0.40 per share on the Common Stock and
      a
      special dividend of $103.65 per share on the Series A Preferred Stock to
      shareholders of record on September 14, 2004 (the “Record Date”). The amount of
      the special dividend in respect of the Common Stock was reduced to $0.36 per
      share, to adjust for additional shares of Common Stock issued by the Company
      between August 24, 2004 and the Record Date. This resulted in special dividend
      payments of $4.9 million in respect of the Common Stock and $1.5 million in
      respect of the Series A Preferred Stock. Any payment of future cash dividends
      and the amounts thereof will be dependent upon the Company's earnings, financial
      requirements and other factors.





(d)
            Common
                Stock Reverse/Forward Spit





On
      December 30, 2004 the Company effected a reverse 1-for-100 stock split followed
      immediately by a forward 100-for-1 stock split of the Common Stock. As permitted
      under the Delaware General Corporation Law, stockholders whose shares of Common
      Stock were converted into less than 1 share as a result of the reverse split
      had
      these shares canceled and received cash payments equal to the fair value of
      the
      shares cancelled.





(e)
            Increase
                in Authorized Common Stock





At
      a
      meeting of stockholders on December 15, 2004, the stockholders approved an
      amendment to the Company’s Certificate of Incorporation to increase the number
      of authorized shares of Common Stock from 25,000,000 to 50,000,000. Such
      amendment was filed with the State of Delaware on December 29,
      2004.




7





**Item
      6.   Selected Financial Data**





**HISTORICAL
      FINANCIAL DATA**





Set
      forth
      below are certain selected historical consolidated financial data of Alpine.
      This information should be read in conjunction with the consolidated financial
      statements of Alpine and related notes thereto appearing elsewhere herein and
      "Item 7. Management's Discussion and Analysis of Financial Condition and Results
      of Operations." The selected historical consolidated financial data for, and
      as
      of the end of, each of the years in the five-year period ended December 31,
      2005, are derived from the audited consolidated financial statements of Alpine.




**Year
                Ended December 31,****2005**
            
            
            **2004(5)**
            
            
            **2003(5)**
            
            
            **2002(1)(5)**
            
            
            **2001****(in
                millions, except per share data)****Statement
                Of Operations Data:**Net
                sales
            
            $
            447.8
            
            $
            315.9
            
            $
            302.1
            
            $
            1,364.0
            
            $
            1,716.3Cost
                of goods sold
            
            
            406.6
            
            
            296.3
            
            
            286.9
            
            
            1,208.8
            
            
            1,454.2Gross
                profit
            
            
            41.2
            
            
            19.6
            
            
            15.2
            
            
            155.2
            
            
            262.1Selling,
                general and administrative expenses
            
            
            25.6
            
            
            25.0
            
            
            31.6
            
            
            132.9
            
            
            149.5Restructuring
                and other charges
            
            
            3.1
            
            
            3.9
            
            
            13.6
            
            
            36.5
            
            
            10.7(Gain)
                loss on asset sale and impairments
            
            
            (0.1
            )
            
            0.3
            
            
            0.6
            
            
            463.7
            
            
            —Amortization
                of goodwill (2)
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            21.2Operating
                income (loss)
            
            
            12.6
            
            
            (9.6
            )
            
            (30.6
            )
            
            (477.9
            )
            
            80.7Interest
                expense
            
            
            (4.3
            )
            
            (3.0
            )
            
            (3.7
            )
            
            (104.8
            )
            
            (119.2
            )Gain
                on cancellation of investment inSuperior
                (3)
            
            
            —
            
            
            —
            
            
            854.3
            
            
            —
            
            
            —Loss
                on investments in securities
            
            
            —
            
            
            —
            
            
            —
            
            
            (4.1
            )
            
            (33.8
            )Other
                income (expense) net (4)
            
            
            (0.9
            )
            
            (0.3
            )
            
            0.1
            
            
            0.6
            
            
            6.8Income
                (loss) from continuing operations before income taxes, distributions
                on
                preferred securities of subsidiary trust, minority interest, equity
                in
                earnings of affiliate, income from discontinued operations extraordinary
                item, and cumulative effect of accounting change
            
            
            7.4
            
            
            (12.9
            )
            
            820.1
            
            
            (586.2
            )
            
            (65.5
            )(Provision)
                benefit for income taxes (4)
            
            
            (1.7
            )
            
            5.3
            
            
            10.7
            
            
            95.3
            
            
            23.1Income
                (loss) from continuing operations before distributions on preferred
                securities of subsidiary trust, minority interest, equity in earnings
                of
                affiliate, income from discontinued operations, extraordinary item
                and
                cumulative effect of accounting change
            
            
            5.7
            
            
            (7.6
            )
            
            830.8
            
            
            (490.9
            )
            
            (42.4
            )Distributions
                on preferred securities of subsidiary trust
            
            
            —
            
            
            —
            
            
            —
            
            
            (15.2
            )
            
            (15.4
            )





(Continued)




8




**Year
                Ended December 31,****2005**
            
            **2004(5)**
            
            **2003(5)**
            
            **2002(1)(5)**
            
            **2001**Income
                (loss) from continuing operations before minority interest, equity
                in
                earnings of affiliate, income from discontinued operations, extraordinary
                item and cumulative effect of accounting change
            
            $
            5.7
            
            $
            (7.6
            )
            $
            830.8
            
            $
            (506.1
            )
            $
            (57.8
            )Minority
                interest in (income) losses of subsidiaries, net
            
            
            (1.1
            )
            
            0.4
            
            
            0.5
            
            
            3.5
            
            
            17.1Equity
                in (earnings) losses of affiliate
            
            
            —
            
            
            —
            
            
            (0.1
            )
            
            (0.1
            )
            
            1.3Income
                (loss) from continuing operations before extraordinary item and cumulative
                effect of accounting change
            
            
            4.6
            
            
            (7.2
            )
            
            831.2
            
            
            (502.7
            )
            
            (39.4
            )Gain
                on sale of DNE Systems, net of tax
            
            
            —
            
            
            19.1
            
            
            —
            
            
            —
            
            
            —Income
                from discontinued
              operations,
                net of tax
            
            
            —
            
            
            1.5
            
            
            3.6
            
            
            3.6
            
            
            8.4Income
                (loss) before extraordinary item and cumulative effect of accounting
                change
            
            
            4.6
            
            
            13.4
            
            
            834.8
            
            
            (499.1
            )
            
            (31.0
            )Extraordinary
                item
            
            
            —
            
            
            —
            
            
            —
            
            
            12.6
            
            
            —Cumulative
                effect of accounting change
            
            
            —
            
            
            —
            
            
            —
            
            
            (388.1
            )
            
            —Preferred
                stock dividends
            
            
            (0.5
            )
            
            (2.0
            )
            
            (0.2
            )
            
            —
            
            
            —Preferred
                stock dividends beneficial conversionfeature
            
            
            —
            
            
            (1.2
            )
            
            (2.6
            )
            
            —
            
            
            —Net
                income (loss) applicable to common stock
            
            $
            4.1
            
            $
            10.2
            
            $
            832.0
            
            $
            (874.6
            )
            
            ($31.0
            )Income
                (loss) per share of common stock:*Basic*Income
                (loss) from continuing operations before extraordinary item and cumulative
                effect of accounting change
            
            $
            0.29
            
            $
            (0.53
            )
            $
            60.33
            
            $
            (33.86
            )
            $
            (2.69
            )Income
                from discontinued operations
            
            
            —
            
            
            0.11
            
            
            0.26
            
            
            0.25
            
            
            0.57Gain
                on sale of DNE Systems, net of tax
            
            
            —
            
            
            1.42
            
            
            —
            
            
            —
            
            
            —Preferred
                stock dividends
            
            
            (0.03
            )
            
            (0.15
            )
            
            (0.01
            )
            
            —
            
            
            —Preferred
                stock dividends beneficial conversion feature
            
            
            —
            
            
            (0.09
            )
            
            (0.19
            )
            
            —
            
            
            —Extraordinary
                item
            
            
            —
            
            
            —
            
            
            —
            
            
            0.85
            
            
            —Cumulative
                effect of accounting change
            
            
            —
            
            
            —
            
            
            —
            
            
            (26.13
            )
            
            —Net
                income (loss) per share of common stock
            
            $
            0.26
            
            $
            0.76
            
            $
            60.39
            
            $
            (58.89
            )
            $
            (2.12
            )




9


**Year
                  Ended December 31,****2005**
              
              **2004(5)**
              
              **2003(5)**
              
              **2002(1)(5)**
              
              **2001***Diluted*Income
                  (loss) from continuing operations before extraordinary item and
                  cumulative
                  effect of accounting change
              
              $
              0.17
              
              $
              (0.53
              )
              $
              51.01
              
              $
              (33.86
              )
              $
              (2.69
              )Assumed
                  conversion of Essex Electric warrant
              
              
              (0.01
              )
              
              —
              
              
              —
              
              
              —
              
              
              —Income
                  (loss) from discontinued operations
              
              
              —
              
              
              0.11
              
              
              0.22
              
              
              0.25
              
              
              0.57Gain
                  on sale of DNE, net of tax
              
              
              —
              
              
              1.42
              
              
              —
              
              
              —
              
              
              —Preferred
                  stock dividends
              
              
              —
              
              
              (0.15
              )
              
              —
              
              
              —
              
              
              —Preferred
                  stock dividends beneficial conversion feature
              
              
              —
              
              
              (0.09
              )
              
              —
              
              
              —
              
              
              —Extraordinary
                  item
              
              
              —
              
              
              —
              
              
              —
              
              
              0.85
              
              
              —Cumulative
                  effect of accounting change
              
              
              —
              
              
              —
              
              
              —
              
              
              (26.13
              )
              
              —Net
                  income (loss) per share of common stock
              
              $
              0.16
              
              $
              0.76
              
              $
              51.23
              
              $
              (58.89
              )
              $
              (2.12
              )


**Balance
                Sheet Data (At End Of Period):**Working
                capital (6)
            
            $
            41.4
            
            $
            33.8
            
            $
            28.3
            
            $
            40.6
            
            $
            113.3Total
                assets
            
            
            140.5
            
            
            132.8
            
            
            107.8
            
            
            183.1
            
            
            1,952.2Total
                long-term debt (6)
            
            
            2.5
            
            
            3.1
            
            
            3.8
            
            
            0.9
            
            
            1,269.0Mandatorily
                redeemable preferred stock
            
            
            5.3
            
            
            5.5
            
            
            5.7
            
            
            —
            
            
            136.0Preferred
                stock
            
            
            0.2
            
            
            0.2
            
            
            0.4
            
            
            0.4
            
            
            0.4Total
                stockholders' equity (deficit)
            
            
            29.3
            
            
            24.0
            
            
            15.8
            
            
            (829.1
            )
            
            46.1Cash
                dividends - common stock
            
            
            —
            
            
            4.9
            
            
            —
            
            
            —
            
            
            —Cash
                dividends - preferred stock
            
            
            0.5
            
            
            2.0
            
            
            0.2
            
            
            —
            
            
            —


___________





(1)
            On
                December 11, 2002**,**Alpine acquired substantially all of the assets, subject to related
                accounts payable and accrued liabilities, of Superior's electrical
                wire
                business. Additionally, in connection with this acquisition certain
                changes were made with respect to Alpine's indirect voting interests
                in
                Superior such that Alpine no longer controlled Superior. Accordingly,
                effective for periods after December 11, 2002 Alpine's investment in
                Superior (which was previously consolidated) is accounted for using
                the
                equity method. (See Note 1 to Alpine's consolidated financial statements.)





(2)
            Effective
                January 1, 2002, the Company adopted SFAS No. 142*Goodwill
                and Other Intangible Assets*,
                which resulted in a change in the accounting treatment for goodwill,
                effectively eliminating any goodwill
                amortization.





(3)
            Alpine
                recognized a gain in 2003 as a result of eliminating its negative
                investment in Superior upon consummation of the Plan of Reorganization
                for
                Superior. (See Note 1 to Alpine's consolidated financial
                statements.)





(4)
            Includes
                reclassification of the historical gains (losses) on extinguishment
                of
                debt (and related tax effects) from extraordinary item to other income
                (expense).





(5)
            On
                July 29, 2004, the Company completed the disposition of DNE Systems,
                its
                wholly-owned subsidiary. The statement of operations data include
                DNE
                Systems as a discontinued operation. (See Note 4 to Alpine’s consolidated
                financial statements).





(6)
            Working
                capital is defined as total current assets less total current liabilities.
                Amounts included in total current liabilities with respect to the
                Revolving Credit Facility for 2005, 2004, 2003 and 2002 are $26.7,
                $40.2,
                $17.2 and $69.0 million, respectively.




10




**Item
      7.   Management's Discussion And Analysis Of Financial Condition And
      Results Of Operations**





**General**





Alpine
      is
      a holding company which over the past several years has owned controlling equity
      interests in industrial businesses that have been operated as subsidiaries.
      At
      December 31, 2005, Alpine owned approximately 84% of Essex Electric, which
      was
      engaged in the manufacture and sale of building wire and 46% of Superior Cables
      Ltd., the largest Israeli based producer of wire and cable
      products.





On
      September 30, 2005, Essex Electric entered into an agreement to sell certain
      of
      its assets comprising its building wire business to Southwire. The agreement
      provides for the sale by Essex Electric of all of its closing date building
      wire
      related inventory and prepaid assets, its Florence, Alabama manufacturing plant
      and equipment, and the assumption by Southwire of certain contracts and selected
      liabilities related to the business. Essex Electric will retain substantially
      all of its other liabilities, including the indebtedness under its revolving
      credit facility. Excluded from the sale are cash, cash equivalents and accounts
      receivable of Essex Electric, a copper scrap reclamation plant and operation
      based in Jonesboro, Indiana, a plastic resin compounding plant and operation
      based in Marion, Indiana, and three leased warehouse distribution centers.
      The
      purchase price was the sum of (i) $27 million plus (ii) the closing date value
      of Essex Electric’s inventory and certain prepaid assets less certain
      liabilities. The Essex Electric Sale closed on January 31, 2006.





In
      July
      2004, Alpine sold DNE Systems, its wholly-owned defense electronics subsidiary,
      to ULTRA Electronics Defense, Inc., a wholly-owned subsidiary of Ultra
      Electronics Holdings plc, a United Kingdom-based company that is listed on
      the
      London Stock Exchange (the “DNE Sale”). The purchase price was $40 million in
      cash at closing. The sale was consummated on July 29, 2004 and a pretax book
      gain of approximately $29.4 million, net of expenses, was recorded in the third
      quarter of 2004. The assets and liabilities of DNE Systems were reclassified
      to
      discontinued operations in the December 31, 2003 balance sheet. Likewise, DNE
      Systems results of operations for the one month period ended December 31, 2002
      and twelve month periods ended December 31, 2004 and 2003 were reclassified
      to
      income from discontinued operations.





11





**Results
      Of Continuing Operations** **—** **Twelve
      Months Ended December 31, 2005 ("2005") Compared To The Twelve Months Ended
      December 31, 2004 ("2004")**





Consolidated
      sales for 2005 were $447.8 million, an increase of 41.8% compared to sales
      of
      $315.9 million for 2004. The increase was due to both higher selling prices
      and
      higher sales volume. The higher selling prices were due to a significant
      increase (41.7%) in the cost of copper, Essex Electric’s principal product cost
      item, in 2005 versus 2004. In addition, sales improved due to an improved
      pricing environment for electrical products, particularly in the fourth quarter
      of 2005. Sales volume, as measured in copper pounds shipped, also increased
      14.4% from 2004 to 2005. The higher sales volume in 2005 was due to steady
      increases quarter to quarter throughout 2005 as a result of increasing demand
      supported by increased capacity at Essex Electric’s Florence, Alabama
      manufacturing facility.





Gross
      profit for 2005 was $41.2 million, an increase of $21.6 million as compared
      to
      the $19.6 gross profit for 2004. The gross profit margin in 2005 was 9.2%,
      which
      compares to gross profit margin of 6.2% for 2004. The improvement was the result
      of the aforementioned improved electrical wire pricing and significantly
      improved cost structure at the Florence, Alabama manufacturing facility
      primarily as a result of increased throughput without increased operating costs.
      Gross profit was significantly improved in the fourth quarter of 2005 due to
      some imbalance in the supply and demand dynamics in the building wire industry
      coupled with increasing copper prices. The Company uses the LIFO method of
      accounting for its inventories and since it reduced its inventories throughout
      the year, it recorded a total credit to cost of sales of approximately $6.4
      million throughout the year related to the decrement in such inventories.





The
      Company includes all direct and indirect costs at their manufacturing locations
      in cost of goods sold, including copper and other raw material costs, direct
      and
      indirect labor and overhead, inbound and outbound freight costs, purchasing
      and
      receiving costs and internal transfer costs. Costs associated with its three
      regional distribution centers are included in selling, general and
      administrative expenses and were $4.3 and $4.0 million, respectively for 2005
      and 2004. The Company’s gross profit may not be comparable to the gross profit
      of other companies who record warehousing expense in cost of goods sold.





Selling,
      general and administrative expense ("SG&A expense") for 2005 was $25.6
      million, an increase of approximately 2.4%, as compared to SG&A expense of
      $25.0 million for 2004. The increase was due primarily to significantly higher
      sales levels and related commission expense and approximately $1.1 million
      of
      expenses related to the Essex Electric Sale (see Note 22 to the accompanying
      consolidated financial statements). These cost increases were partially offset
      by reduced costs associated with deferred stock compensation related expenses
      ($1.6 million).





The
      2005
      restructuring and other charges incurred were $3.1 million, which were primarily
      associated with the closure of Essex Electric’s Anaheim manufacturing facility
      in the first half of 2005. These restructuring charges consisted of (i) facility
      exit costs ($1.8 million), (ii) severance ($0.8 million) and (iii) equipment
      and
      inventory relocation ($0.5 million). This compares to $3.9 million of
      restructuring and other charges recorded in 2004, which consisted of (i)
      equipment relocation ($2.0 million), (ii) inventory relocation ($0.9 million)
      and (iii) facility exit costs ($1.0 million).




The
      Company had operating income of $12.6 million for 2005 compared to an operating
      loss of $9.6 million for 2004. The $22.0 million improvement was due primarily
      to improved gross profits as a result of improved volumes and margins, along
      with reduced restructuring and other charges.





Interest
      expense for 2005 was $4.3 million, representing an increase of $1.3 million
      from
      2004. The increase was due primarily to higher debt levels throughout the year,
      which primarily were due to higher working capital requirements because of
      higher copper prices. The higher copper prices increased the cost of inventory
      and carrying value of accounts receivable. The higher interest expense was
      also
      due in part to higher interest rates which on average were approximately 1%
      higher in 2005 compared to 2004. The Company also recorded $0.2 million
      additional interest expense in 2005 related to the write off of unamortized
      discount as a result of the redemption of $1.1 million of 6% notes during the
      fourth quarter of 2005.





The
      effective tax rate for 2005 was 23.2% as compared to 41.1% for 2004. The
      decrease in the effective rate is due primarily to the effects of the charitable
      contribution of the Orleans, Indiana land and building during 2005 and the
      benefit received on certain state operating loss carryforwards.





**Discontinued
      Operations**





The
      Company sold its DNE operations effective July 29, 2004 and recorded an
      after-tax gain of approximately $19.1 million in the third quarter of 2004.
      The
      income from discontinued operations related to DNE was $1.5 million,
      representing seven months of operation during 2004.




12





**Results
      Of Continuing Operations** **—** **Twelve
      Months Ended December 31, 2004 ("2004") Compared To The Twelve Months Ended
      December 31, 2003 ("2003")**





Consolidated
      sales for 2004 were $315.9 million, an increase of 4.6% compared to sales of
      $302.1 million for 2003. The increase was due to the net effect of higher
      selling prices and lower sales volume. The higher selling prices were due
      primarily to a significant increase (54%) in the cost of copper, which was
      partially passed along to customers, in 2004 versus 2003. In addition, sales
      improved due to an improved pricing environment for electrical products,
      particularly in the first half of 2004. The increase in sales prices was offset
      by a decline in volume of copper pounds shipped of 27% from 2003 to 2004. The
      lower sales volume in 2004 was due to a decrease in shipments of electrical
      wire
      by Essex Electric resulting from consolidation of production facilities and
      reduction of manufacturing capacity to reposition itself to more cost
      effectively service its reduced customer base in certain geographic markets,
      distribution channels and product lines as part of its restructuring and
      repositioning initiatives.





Gross
      profit for 2004 was $19.6 million, an increase of $4.4 million as compared
      to
      the $15.2 gross profit for 2003. The gross profit margin in 2004 was 6.2%,
      which
      compares to gross profit margin of 5.0% for 2003. The improvement in gross
      profit was the net result of the aforementioned improved electrical wire
      pricing, partially offset by increased raw material costs that could not be
      fully passed-along to customers and some added manufacturing costs that the
      Florence plant incurred in the process of expanding its operation. Gross profit
      was negatively impacted in the fourth quarter of 2004 by the combined effect
      of
      lower selling margins, increased manufacturing costs because of reduced plant
      volumes due to reduced demand and escalating copper costs. Since the Company
      uses the LIFO method, it recorded higher cost of sales in the fourth quarter
      relating to the replenishment of copper inventories purchased at higher prices
      than earlier in the year when the inventories were depleted relative to December
      31, 2003.





The
      Company includes all direct and indirect costs at their manufacturing locations
      in cost of goods sold, including copper and other raw material costs, direct
      and
      indirect labor and overhead, inbound and outbound freight costs, purchasing
      and
      receiving costs and internal transfer costs. Costs associated with its three
      regional distribution centers are included in selling, general and
      administrative expenses and were $4.0 and $7.3 million, respectively for 2004
      and 2003. The Company’s gross profit may not be comparable to the gross profit
      of other companies who record warehousing expense in cost of goods sold.





Selling,
      general and administrative expense ("SG&A expense") for 2004 was $25.0
      million, a decrease of 20.8%, as compared to SG&A expense of $31.6 million
      for 2003. The decrease was due primarily to reduced costs at Essex Electric
      resulting from the implementation of its restructuring plan.





The
      2004
      restructuring and other charges incurred were $3.9 million, all of which were
      associated with the restructuring of Essex Electric. These restructuring charges
      consisted of (i) equipment relocation ($2.0 million), (ii) inventory relocation
      ($0.9 million) and (iii) facility exit costs ($1.0 million). This compares
      to
      $13.6 million of restructuring and other charges recorded in 2003, which
      consisted of (i) equipment relocation ($2.9 million), (ii) inventory relocation
      ($1.9 million), (iii) severance ($3.6 million), (iv) facility exit costs ($2.4
      million) and (v) other costs associated with restructuring of the business
      ($2.7
      million).




The
      Company incurred an operating loss of $9.6 million for 2004 compared to an
      operating loss of $30.6 million for 2003. The $21.0 million improvement was
      due
      to improved gross profits, reduced selling, general and administrative costs
      and
      reduced restructuring and other charges.





Interest
      expense for 2004 was $3.0 million, representing a decrease of $.7 million from
      2003. The decrease was due primarily to lower debt levels throughout the year,
      which resulted primarily from reductions in working capital at Essex Electric,
      and lower debt issue cost amortization.





Income
      from continuing operations for 2003 includes a gain of $854.3 million on the
      cancellation of investment in Superior due to the following facts and
      circumstances. Prior to December 11, 2002, Alpine's financial statements
      included the consolidated results of Superior as a result of Alpine’s then
      controlling interest in Superior. Effective for periods after December 11,
      2002
      certain changes were made with respect to Alpine's indirect voting interests
      in
      Superior’s equity such that Alpine no longer controlled Superior. Superior (for
      periods through November 10, 2003) was accounted for under the equity method
      and
      no longer consolidated with Alpine. As a result of the accumulated net losses
      incurred by Superior, Alpine's consolidated financial statements included a
      negative investment in Superior of $865.9 million at December 31, 2002. Under
      accounting principles generally accepted in the United States of America, this
      negative investment was required to be reflected in Alpine's consolidated
      balance sheet, notwithstanding the fact that Alpine was not obligated to fund
      any operating losses or deficits of Superior. Alpine eliminated its negative
      investment in Superior and recognized a corresponding gain of $865.9 million
      in
      the fourth quarter of 2003 as a result of the court’s confirmation of Superior’s
      bankruptcy petition. This gain was offset by the reversal of $11.6 million
      of
      other comprehensive loss related to Superior, resulting in a net gain of $854.3
      million.




13




The
      effective tax rate for 2004 was 41.1% as compared to negative 1.31% for 2003.
      The increase in the effective rate is due primarily to the permanent difference
      related to the investment in Superior in 2003. Excluding the aforementioned
      permanent item, the effective rate for 2003 was 35.3%.





**Discontinued
      Operations**





The
      Company sold its DNE Systems operations effective July 29, 2004 and recorded
      an
      after-tax gain of approximately $19.1 million in the third quarter of 2004.
      The
      income from discontinued operations related to DNE Systems was $1.5 million,
      representing seven months of operation during 2004, compared with $3.6 million
      of income for the full twelve months of 2003. The lower earnings are the result
      of the partial year in 2004 and slightly lower sales levels on a pro-rata basis
      in 2004 compared to 2003.





**Liquidity
      and Capital Resources**





In
      December 2002, Alpine, through its newly formed, wholly-owned subsidiary,
      Alpine Holdco, acquired the following assets and securities from Superior:
      (1) substantially all of the assets, subject to related accounts payable
      and accrued liabilities, of Superior's electrical wire business, which was
      thereafter owned and operated by Essex Electric, a newly formed, then
      wholly-owned subsidiary of Alpine Holdco; (2) all of the outstanding shares
      of capital stock of DNE Systems, and (3) approximately 47% of Superior Cables
      Ltd.. The acquisition was financed by approximately $10 million of Alpine's
      cash and cash equivalents and borrowings by Alpine Holdco under a Loan and
      Security Agreement (the "Revolving Credit Facility").





DNE
      Systems was sold (see Note 4) on July 29, 2004 and Essex Electric was sold
      on
      January 31, 2006 (see Note 22). The Revolving Credit Facility was repaid in
      full
      and terminated on January 31, 2006.





On
      August
      4, 2003, the Company issued $4.3 million principal amount of 6% Junior
      Subordinated Notes (the "Subordinated Notes") in exchange for 3,479,656 shares
      of its Common Stock. The Subordinated Notes were initially recorded at an amount
      equal to the fair market value of the Common Stock exchanged resulting in an
      initial discount of $1.4 million. The discount is being accreted over the term
      of the Subordinated Notes using a level interest method. The Subordinated Notes
      accrue interest at 6% per annum payable in cash semiannually each
      December 31 and June 30. The Subordinated Notes are the Company's
      general unsecured obligations, subordinated and subject in right of payment
      to
      all of the Company's existing and future senior indebtedness, which excludes
      trade payables incurred in the ordinary course of business. The Company will
      be
      required to repay one-eighth  of
      the
      outstanding principal amount of the Subordinated Notes commencing on
      June 30, 2007 and semiannually thereafter, so that all of the Subordinated
      Notes will be repaid by December 31, 2010. The Company must offer to redeem
      all of the Subordinated Notes at the redemption price then in effect in the
      event of a change of control. The Subordinated Notes were issued under an
      indenture that does not subject the Company to any financial covenants. At
      December 31, 2005, $3.1 million of the Subordinated Notes were outstanding.
      During 2005 the Company retired $1.1 million of the Subordinated Notes and
      recorded approximately $0.2 million of additional interest expense related
      to
      the acceleration of the related unamortized discount.





During 2003,
      Alpine completed the sale of 18,264 shares of a new issue of Series A Cumulative
      Convertible Preferred Stock (the "Series A Preferred Stock") for a purchase
      price of $380 per share, or an aggregate of approximately $6.9 million. Holders
      of the Series A Preferred Stock are entitled to receive, when, as and if
      declared by the board of directors out of funds legally available for payment,
      cash dividends at an annual rate of $30.40 per share. The Series A
      Preferred Stock, originally was convertible into Common Stock, at the option
      of
      the holder, at the rate of 691 shares of Common Stock per share of Series A
      Preferred. As a result of a special dividend declared by the Company discussed
      below, the conversion rate increased to 743.01 shares of Common Stock per share
      of Series A Preferred Stock.





The
      Company may cause conversion of the Series A Preferred Stock into Common Stock
      if the Common Stock is then listed on the New York Stock Exchange (NYSE) or
      the
      American Stock Exchange or is traded on the Nasdaq National Market System and
      the average closing price per share of the Common Stock for any 20 consecutive
      trading days equals or exceeds 300% of the conversion price then in effect.
      The
      Series A Preferred Stock is subject to mandatory redemption by the Company
      ratably on the last day of each quarter during the three-year period commencing
      on December 31, 2009 at the liquidation value of $380 per share, plus accrued
      and unpaid dividends. Additionally, if the Company experiences a change in
      control it will, subject to certain limitations, offer to redeem the Series
      A
      Preferred Stock at a cash price of $380 per share plus (i) accrued and
      unpaid dividends and (ii) if the change of control occurs prior to
      December 31, 2007, all dividends that would be payable from the redemption
      date through December 31, 2007.





Holders
      of the Series A Preferred Stock are entitled to vote their shares on an
      as-converted basis together with the Company's common stockholders. In addition,
      the Company may not (a) enter into a merger, sale of all or substantially
      all of its assets or similar transaction without the approval of holders of
      at
      least a majority of the shares of Series A Preferred Stock, or
      (b) alter or change the powers, preferences or special rights (including,
      without limitation, those relating to dividends, redemption, conversion,
      liquidation preference or voting) of the shares of Series A Preferred Stock
      so as to affect them materially and adversely, or issue any senior stock,
      without the approval of holders of at least a majority of the shares of
      Series A Preferred Stock. In the event of any liquidation, dissolution or
      winding up of Alpine, after the payment of the liquidation preference in respect
      of any senior stock, holders of the Series A Preferred Stock will be
      entitled to receive the liquidation price of $380 per share plus an amount
      equal
      to (a) if the liquidation, dissolution or winding up occurs prior to
      December 31, 2007, all dividends that would be payable on a share of
      Series A Preferred Stock from the date of liquidation, dissolution or
      winding up through December 31, 2007 and (b) any accrued and unpaid
      dividends to the payment date, before any payment is made to the holders of
      common stock or any other junior securities, subject to certain exceptions.
      Proceeds from the sale of the Series A Preferred Stock were used to reduce
      existing indebtedness and for general corporate purposes.




14




In
      September 2004, Alpine paid a special dividend of $0.36 per share of Common
      Stock and a special dividend of $103.65 per share on its Series A Preferred
      Stock to shareholders of record on September 14, 2004 (the “Record Date”). This
      resulted in special dividend payments of $4.9 million in respect of the Common
      Stock and $1.5 million in respect of the Series A Preferred Stock. Under the
      respective terms of the stock based compensation plans of the Company, the
      Company is required to allocate a deemed dividend in respect of shares of
      restricted Common Stock granted and unvested and/or deposited and credited
      to
      participant accounts under the Alpine Deferred Stock Account Plan in an amount
      equal to any cash dividend paid in respect of the Common Stock. Accordingly,
      on
      September 30, 2004, the Company declared, but did not yet pay, a total deemed
      dividend of $0.9 million.





During
      2005 and 2004, 742 and 3,477 shares, respectively, of Series A Preferred Stock
      were converted into approximately 0.6 and 2.4 million shares of Common
      Stock.





During
      2001 and 2002, the Company entered into commercial transactions intended to
      offset the potential impact of interest rate changes on the Company’s
      investments, including the investment of the net cash proceeds from the sale
      of
      an equity investment and established a tax contingency reserve on its balance
      sheet corresponding to the realized tax benefits. At December 31, 2005, the
      Company has reserved $17.1 million of the related benefit and interest and
      the
      amount has been recorded under other long-term liabilities. The Company does
      not
      anticipate that any portion of the tax contingency reserve will become payable
      in the next twelve months.




Since
      1993, Alpine has been a party to a guaranty of obligations of former affiliate,
      Superior under a lease by Superior of a manufacturing facility in Brownwood,
      Texas. The lease currently provides for monthly payments of $56,000 subject
      to
      adjustments for changes in the consumer price index. The lease term expires
      in
      2018 but may be extended through 2033. As such, the maximum potential amount
      of
      future payments under the guaranty through 2018 would be approximately $9
      million. Any further extensions would amount to a guarantee of approximately
      $0.7 million per year. Since
      the
      guarantee was issued prior to and has not been modified after December 31,
      2002,
      a liability for the fair value of the obligation is not recorded in the
      consolidated financial statements. While
      Alpine's continuing obligations, if any, under the guaranty are not free from
      doubt, the Company believes the facility and underlying lease are valuable
      assets of Superior and expects that Superior will perform as tenant thereunder
      and continue to pay its obligations. In addition, Alpine would have a claim
      for
      indemnification and reimbursement from Superior in respect of any amounts paid
      by Alpine as guarantor.





Alpine
      has made short-term advances to the United States subsidiary of Superior Cables
      Ltd., Alpine’s 46% owned affiliate, secured by United States-based inventory and
      accounts receivable, at an interest rate of LIBOR plus 1.4% per annum, to
      augment funding of that affiliate’s growth and working capital, particularly in
      the United States. As of December 31, 2005, $1.4 million of advances were
      included as due from related party. Total advances will not exceed $2 million
      and all advances must be repaid on or prior to June 30, 2006. Otherwise, the
      operations of Superior Cables Ltd. are funded and financed separately, with
      recourse to Superior Cables Ltd. but otherwise on a non-recourse basis to
      Alpine.




As
      of
      December 31, 2005 Alpine had unrestricted cash, cash equivalents and marketable
      securities of approximately $23.6 million and $0.2 million of restricted cash.
      Alpine's current and anticipated sources of liquidity include existing cash
      and
      cash equivalents, the pre-tax proceeds of the Essex Electric Sale (approximately
      $56 million) and the collection of retained receivables of Essex Electric,
      (approximately $81 million).





As
      of
      February 28, 2006, Alpine had utilized approximately $56 million of the above
      mentioned cash and cash equivalent resources toward repayment of the Revolving
      Credit Facility ($25.4 million), payment of other liabilities and expenses
      associated with the Essex Electric Sale and its prior operations (approximately
      $32 million), purchase of the minority interest in Essex Electric ($8.5 million)
      and payment on account of income taxes for 2005 (approximately $5 million).
      Management believes Alpine has sufficient cash resources and liquidity to pay,
      and anticipates funding during 2006, the balance of the previously mentioned
      liabilities and expenses, the purchase price for shares tendered to Alpine
      under
      the tender offer ($18 - 21 million), (see Note 23 to the consolidated financial
      statements), Alpine’s proposed net additional investment in Superior Cables Ltd.
      ($9 million) and income taxes which may be payable as a result of the Essex
      Electric Sale. See below and Note 23 to the consolidated financial statements
      for a description of the Tender Offer and the proposed Superior Cables Ltd.
      investment. It is anticipated that earnings from cash, cash equivalents and
      investments will be sufficient to fund continuing operating expenses. A deficit,
      if any would be funded by available cash resources.




15




During
      February 2006, the Company entered into agreements, which if completed, will
      result in increasing its investment and ownership interest in Superior Cables
      Ltd. On March 1, 2006, Alpine announced that it would commence a modified "Dutch
      Auction" tender offer to purchase up to 6 million shares of its Common Stock
      at
      a price per share not less than $3.00 and not greater than $3.50. The tender
      offer commenced on March 1, 2006 and will expire on April 3, 2006, unless
      extended. Alpine agreed to purchase up to 6 million common shares tendered
      in
      response to the offer (representing approximately 36.3% of Alpine's outstanding
      common shares and 22.3% of Alpine's outstanding common shares assuming
      conversion of all of Alpine's outstanding Series A Preferred stock). The tender
      offer is not contingent upon any minimum number of shares being tendered. The
      tender offer is, however, subject to a number of other terms and conditions.
      (See Note 23 to the consolidated financial statements). Additionally, the
      Company will continue to explore and consider utilizing its available liquid
      assets for a range of investment and business acquisitions.





***Contractual
      Obligations***





Alpine
      has the following minimum commitments under contractual obligations, including
      purchase obligations, as defined by the U.S. Securities and Exchange Commission.
      A "purchase obligation" is defined as an agreement to purchase goods or services
      that is enforceable and legally binding and that specifies all significant
      terms. Operating leases are long-term obligations relating primarily to the
      Company’s leased facilities. The Revolving Credit Facility is classified as
      short-term in the balance sheet (See Note 7 to the consolidated financial
      statements) and included in this table based upon its liquidation during the
      first quarter of 2006 in conjunction with the Essex Electric Sale (see Note
      22).
      As of December 31, 2005, the Company’s contractual obligations were as follows
      (in thousands):




**2006**
            
            **2007-**
              **2008**
            
            **2009-**
              **2010**
            
            **2011
                and**
              **after**
            
            **Total**Revolving
                Credit Facility (a)
            
            $
            26,896
            
            $
            —
            
            $
            —
            
            $
            —
            
            $
            26,8966%
                Junior Subordinated Notes (b)
            
            
            185
            
            
            1,819
            
            
            1,634
            
            
            —
            
            
            3,638Series
                A Preferred Stock (c)
            
            
            —
            
            
            —
            
            
            2,193
            
            
            3,070
            
            
            5,263Operating
                leases
            
            
            2,100
            
            
            2,175
            
            
            538
            
            
            624
            
            
            5,437Purchase
                obligations (d)
            
            
            31,790
            
            
            —
            
            
            —
            
            
            —
            
            
            31,790Total
            
            $
            60,971
            
            $
            3,994
            
            $
            4,365
            
            $
            3,694
            
            $
            73,024




(a)
            The
                stated maturity of the Revolving Credit Facility is December 11,
                2007,however,
                since the Revolving Credit Facility was terminated in the first quarter
                of
                2006, in conjunction with the Essex Electric Sale (See Note 22 -
                Essex
                Electric Sale), the total outstanding balance at December 31, 2005
                plus
                one month’s interest expense is included in 2006.The
                interest was computed using the December 31, 2005 balance in the
                Revolving
                Credit Facility ($26,725) and the interest rate in effect as of December
                31, 2005 (7.68%).(b)
            The
                6% Junior Subordinated Notes are presented
                on a gross basis (before discount) plus interest expense. The $2,456
                included in the long term debt in the December 31, 2005 balance sheet
                and
                in Note 8 of the consolidated financial statements is net of a $626
                unamortized discount, which represents the difference between the
                exchange
                offer rate of $1.25 per share and the $0.85 per share closing price
                of the
                Common Stock upon consummation of the exchange offer on August 4,
                2003.
                The discount is being amortized through the date of maturity of the
                notes,
                including $0.4 million for the year ended December 31, 2005. These
                notes
                are payable in semi-annual installments of approximately $0.4 million
                beginning June 2007.(c)
            The
                Series A Preferred Stock is subject to mandatory redemption
                by
                the Company ratably on the last day of each quarter during the three-year
                period commencing on December 31, 2009 at the liquidation value of
                $380
                per share. The Series A Preferred Stock may be converted into Common
                Stock
                at the option of the holder any time or by the Company upon the occurrence
                of certain specified events.(d)
            AtDecember 31, 2005 the Company had committed approximately $31.8 million
                to
                outside vendors for the purchase of goods and services, of which
                approximately $0.1 million was related to certain capital projects.
                The
                remainder was primarily for inventory and other supply
                items.




***Off-Balance
      Sheet Arrangements***





The
      Company has no off-balance sheet arrangements or financing arrangements
      involving variable interest entities.





Since
      1993, Alpine has been a party to a guaranty of obligations of former affiliate,
      Superior under a lease by Superior of a manufacturing facility in Brownwood,
      Texas. The lease currently provides for monthly payments of $56,000 subject
      to
      adjustments for changes in the consumer price index. The lease term expires
      in
      2018 but may be extended through 2033. As such, the maximum potential amount
      of
      future payments under the guaranty through 2018 would be approximately $9
      million. Any further extensions would amount to a guarantee of approximately
      $0.7 million per year. Since
      the
      guarantee was issued prior to and has not been modified after December 31,
      2002,
      a liability for the fair value of the obligation is not recorded in the
      consolidated financial statements. While
      Alpine's continuing obligations, if any, under the guaranty are not free from
      doubt, the Company believes the facility and underlying lease are valuable
      assets of Superior and expects that Superior will perform as tenant thereunder
      and continue to pay its obligations. In addition, Alpine would have a claim
      for
      indemnification and reimbursement from Superior in respect of any amounts paid
      by Alpine as guarantor.




16




In
      connection with the Essex Electric Sale, the Company guaranteed that Essex
      Electric would maintain not less than $3.5 million in cash and cash equivalent
      assets through July 2007. The Company is not a party to any other guarantees.
      (See Note 1 to the consolidated financial statements for further
      discussion).





**Derivative
      Financial Instruments**





The
      market prices of copper, the Company's most significant raw material, experience
      marked fluctuations, thereby subjecting the Company to commodity price risk.
      The
      Company, to a limited extent, has used forward fixed price contracts to manage
      such commodity price risks. The Company does not hold or issue financial
      instruments for investment or trading purposes. The Company is exposed to credit
      risk in the event of nonperformance by counter parties; however, the Company
      does not anticipate such nonperformance.





**Critical
      Accounting Policies**





The
      Company's consolidated financial statements are prepared in conformity with
      accounting principles generally accepted in the United States of America. In
      the
      preparation of these financial statements, management makes judgments, estimates
      and assumptions that affect the reported amounts of assets and liabilities
      at
      the date of the financial statements and the reported consolidated amounts
      of
      revenues and expenses during the reporting period. The significant accounting
      policies followed in the preparation of the consolidated financial statements
      are detailed in Note 1 to the consolidated financial statements. Management
      believes that the application of policies regarding other than temporary
      impairment of investments, the establishment of allowances for discounts and
      sales incentives, reserves for inventories, potential impairment of long-lived
      assets, restructuring activities, valuation allowances for deferred tax assets,
      tax contingencies and certain accrued expenses involve significant levels of
      judgments, estimates and complexity.





Alpine
      reviews its investment portfolio to identify and evaluate investments that
      have
      indications of possible impairment. Factors considered in determining whether
      a
      loss is temporary include the length of time and extent to which fair value
      has
      been less than the cost basis, the financial condition and near-term prospects
      of the investee, credit quality and Alpine’s ability to hold the investment for
      a period of time sufficient to allow for any anticipated recovery in market
      value. In the event a loss was not deemed temporary, it would be recorded in
      the
      income statement in other income (expense).





Allowances
      for discounts and sales incentives are made at the time of sale based on
      incentive programs available to the customer. The cost of these programs is
      dependent on various factors including the timing of the sale and the volume
      of
      sales achieved by the customer. The Company monitors these factors and records
      estimated obligations based on current sales levels as a reduction of revenue
      over the periods earned.





The
      Company's allowances for surplus and obsolete inventory are based on estimates
      of future sales and production. Changes in demand and product design can have
      an
      impact on these estimates. The Company periodically evaluates and updates
      assumptions when assessing the adequacy of inventory allowances.





The
      Company reviews long-lived assets for impairment whenever events or
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. Recoverability of long-lived assets to be held and used is measured
      by a comparison of the carrying amount of the asset to the undiscounted future
      cash flows expected to be generated by the asset. If the carrying amount of
      an
      asset exceeds its estimated future cash flows an impairment charge is recognized
      in the amount by which the carrying amount exceeds the fair value of the asset.
      Assumptions and estimates with respect to estimated future cash flows used
      in
      the evaluation of long-lived asset are subject to a high degree of judgment
      and
      complexity.





The
      Company has undergone several restructuring activities during the past few
      years. Since January 1, 2003, costs associated with the restructuring are
      recorded in accordance with Statement of Financial Accounting Standards ("SFAS")
      No. 146 *Accounting
      for Cost Associated with Exit or Disposal Activities* ,
      whereby
      costs associated with an exit or disposal activity are recognized when the
      liability is incurred. The costs associated with such activities, to the extent
      that they are of a non-recurring nature due to the restructuring activity,
      are
      recorded in a separate line in the income statement labeled "Restructuring
      and
      other charges". This line is included in operating income.




17




Valuation
      allowances for deferred tax assets are established when it is estimated it
      is
      more likely than not that the tax assets will not be realized. These estimates
      are based on projections of future income in certain tax
      jurisdictions.





Significant
      judgment is required in determining consolidated income tax provision and
      evaluating the U.S. tax position. It is the Company’s policy to maintain tax
      contingency reserves for potential tax audit issues. The Company reviews the
      reserves as circumstances warrant and adjusts the reserves as events occur
      that
      affect its potential liability for additional taxes, such as lapsing of
      applicable statues of limitations, conclusion of tax audits, additional exposure
      based on current calculations, identification of new issues or rendering of
      court decisions affecting a particular tax issue. Tax reserve contingencies
      and
      changes to the reserves are evaluated and recorded in the Company’s tax
      provision in the period in which the above noted events occur.





The
      Company is involved in various legal proceedings and contingencies. Liabilities
      for these matters are recorded in accordance with Statement of Financial
      Accounting Standards (“SFAS”) No. 5, *Accounting
      for Contingencies* .
      SFAS 5
      requires a liability to be recorded based on management's estimate of the
      probable cost of the resolution of a contingency. The actual resolution of
      these
      contingencies may differ from such estimates. If a contingency is settled for
      an
      amount greater than the Company's estimate, a future charge to income would
      result. Likewise if a contingency is settled for an amount that is less than
      they Company's estimate, a future credit to income would result.





Due
      to
      the level of judgment, complexity and period of time over which many of these
      items are resolved, actual results could differ from those estimated at the
      time
      of preparation of the consolidated financial statements. Adjustments to these
      estimates would have an impact on the Company's financial position and future
      results of operations.





***New
      accounting standards***





During
      2003, the Emerging Issues Task Force (EITF) added to its agenda EITF
      Issue 03-01, *The
      Meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investments* ,
      to
      address the meaning of “other-than-temporary” impairment and its application to
      certain investments carried at cost. In November 2003, the Task Force developed
      new disclosure requirements concerning unrealized losses on available-for-sale
      debt and equity securities accounted for under SFAS 115, *Accounting
      for Certain Investments in Debt and Equity Securities* .
      In
      March 2004, the Task Force issued guidance regarding the measurement and
      recognition of an “other-than-temporary” impairment, which was subsequently
      delayed in September 2004. In June 2005, the Task Force decided not to provide
      additional guidance on the meaning of “other-than-temporary” impairment. The
      project was retitled FASB Staff Position (FSP) 115-1, *The
      Meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investments* ,
      which
      replaces the guidance found in EITF 03-01 and states that the assessment of
      whether impairment is “other-than-temporary” would be based upon existing
“other-than-temporary” impairment guidance and the effective date for the use of
      this guidance would be for reporting periods beginning after December 15,
      2005. The adoption of the provisions of this FSP is not expected to have a
      significant impact on our financial position or results of
      operations.





In
      November 2004, the FASB issued Statement 151, *Inventory
      Costs* .
      This
      statement amends ARB 43 to clarify that:





o
            abnormal
                amounts of idle facility expense, freight, handling costs and wasted
                material (spoilage) should be recognized as current-period charges;
                and


o
            requires
                the allocation of fixed production overhead to inventory based on
                the
                normal capacity of the production
                facilities.





The
      provisions of this statement are effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005. We do not expect the adoption of
      this statement will have any material impact on our results of operations or
      financial position.





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued
      Statement 123 (revised 2004), *Share-Based
      Payment* ,
      a
      revision of Statement 123, *Accounting
      for Stock Based Compensation* .
      Statement 123(R) supersedes APB opinion No. 25 and requires all entities to
      recognize compensation expense in an amount equal to the fair value of
      share-based payments (e.g. stock options and restricted stock awards) granted
      to
      employees. Statement 123(R) is effective for fiscal years beginning after June
      15, 2005. The Company intends to apply the standard on a modified prospective
      method. Under this method, all awards granted after the date of adoption must
      be
      accounted for under the provisions of Statement 123(R). In addition,
      compensation expense must be recognized for the unvested portion of previously
      granted awards and options that remain outstanding at the date of adoption.
      The
      Company will adopt Statement 123(R) effective January 1, 2006 and expects to
      recognize incremental non-cash compensation expense related to currently
      outstanding options and awards of approximately $0.1 million in
      2006.





In
      December 2004, the FASB issued Statement 153, *Exchanges
      of Nonmonetary Assets, an amendment of APB Opinion 29, Accounting for
      Nonmonetary Transactions* .
      This
      amendment eliminates the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. Under Statement 153,
      if a nonmonetary exchange of similar productive assets meets a
      commercial-substance test and fair value is determinable, the transaction must
      be accounted for at fair value resulting in the recognition of any gain or
      loss.
      This statement is effective for nonmonetary transactions in fiscal periods
      that
      begin after June 15, 2005. The adoption of this statement has not had a material
      impact on our results of operations or financial position.




18





In
      June
      2005, the FASB issued Statement 154, *Accounting
      Changes and Error Corrections* ,
      which
      replaces APB Opinion 20 and FASB Statement 3. Statement 154 changes the
      requirements for the accounting and reporting of a change in accounting
      principle. Opinion 20 previously required that most voluntary changes in
      accounting principles be recognized by including the cumulative effect of the
      new accounting principle in net income of the period of the change. In the
      absence of explicit transition provisions provided for in new or existing
      accounting pronouncements, Statement 154 now requires retrospective application
      of changes in accounting principle to prior period financial statements, unless
      it is impracticable to do so. The Statement is effective for fiscal years
      beginning after December 15, 2005. The Company will begin applying provisions
      of
      this statement beginning January 1, 2006.





In
      February 2006, the FASB issued Statement 155 *Accounting
      for Certain Hybrid Financial Instruments - an amendment of FASB Statements
      No.
      133 and 140* which
      provides entities with relief from having to separately determine the fair
      value
      of an embedded derivative that would otherwise be required to be bifurcated
      from
      its host contract in accordance with Statement 133. Statement 155 allows an
      entity to make an irrevocable election to measure such a hybrid financial
      instrument at fair value in its entirety, with changes in fair value recognized
      in earnings. The election may be made on an instrument-by-instrument basis
      and
      can be made only when a hybrid financial instrument is initially recognized
      or
      when certain events occur that constitute a remeasurement (i.e., new basis)
      event for a previously recognized hybrid financial instrument. An entity must
      document its election to measure a hybrid financial instrument at fair value,
      either concurrently or via a preexisting policy for automatic election. Once
      the
      fair value election has been made, that hybrid financial instrument may not
      be
      designated as a hedging instrument pursuant to Statement 133. We do not expect
      the adoption of this statement will have any material impact on our results
      of
      operations or financial position.





**Item
      7a.  Quantitative And Qualitative Disclosures About Market
      Risk**





The
      Company's exposure to market risk primarily relates to interest rates payable
      in
      respect of indebtedness outstanding from time to time under the Revolving Credit
      Facility (see preceding table on Contractual Obligations) and copper futures
      used to minimize the price risk associated with copper prices (see Derivative
      Financial Instruments). A potential change in annual interest expense resulting
      from a hypothetical one percent change in interest rates would have had an
      impact on the Company’s results in 2005 of approximately $0.4 million. The cost
      of copper, the Company's most significant raw material has been subject to
      significant volatility over the past several years. In anticipation of a
      significant reduction in inventory levels in 2003, the Company entered into
      copper futures sales contracts to minimize the price risk associated with
      declining copper costs. These contracts were liquidated throughout 2003 in
      step
      with the decreases in inventory **.** In
      December 2004, the Company purchased approximately $9 million of copper
      inventory for use in the production process in the first quarter of 2005. In
      connection with these purchases, the Company entered into copper futures
      contracts to match the copper price to the consumption period. These contracts
      were marked to market at December 31, 2004, resulting in a charge to earnings
      of
      $0.4 million. These contracts were subsequently liquidated in the first quarter
      of 2005. Again,
      in
      December 2005, the Company purchased approximately $3 million of copper for
      use
      in the first quarter of 2006 and the Company entered into copper futures
      contracts to match the copper price to the consumption period. These contracts
      were recorded at cost at December 31, 2005, which approximated fair value and
      therefore no adjustment to cost of sales was required. These contracts were
      liquidated in the first quarter of 2006.




**Item
      8.    Financial Statements And Supplementary
      Data**





Alpine's
      consolidated financial statements as of December 31, 2005 and 2004 and
      financial statement schedules for each of the years in the three-year period
      ended December 31, 2005 and the report of the independent registered public
      accounting firm thereon required under Regulation S-X are submitted herein
      as a separate section following Item 15 of this report.




19





**Item
      9.    Changes In And Disagreements With Accountants On Accounting
      And Financial Disclosure**





Deloitte
      & Touche LLP (“Accountant”), the independent accountant currently engaged as
      the principal accountant to audit the 2005 consolidated financial statements
      of
      the Company communicated to the audit committee of the board of directors of
      the
      Company on February 28, 2006 that Accountant will decline to stand for
      reappointment after its completion of the current audit of the Company’s 2005
      consolidated financial statements. On March 6, 2006, the Company filed a current
      report on Form 8-K in connection therewith with the Securities and Exchange
      Commission.





**Item
      9A. Controls and Procedures**





*Evaluation
      of Controls and Procedures*





As
      of the
      end of the period covered by this Annual Report on Form 10-K, an evaluation
      of the effectiveness of the design and operation of the Company's disclosure
      controls and procedures was carried out by the Company under the supervision
      and
      with the participation of the Company's management, including the Chief
      Executive Officer and Chief Financial Officer. Based on that evaluation, the
      Chief Executive Officer and Chief Financial Officer concluded that the Company's
      disclosure controls and procedures were effective at a reasonable assurance
      level as of the end of the period covered by this Annual Report on form 10-K.
      A
      system of controls, no matter how well designed and operated, cannot provide
      absolute assurance that the objectives of the system of controls are met, and
      no
      evaluation of controls can provide absolute assurance that all control issues
      and instances of fraud, if any, within a company have been detected. As a result
      of implementing the additional procedures over interim financial reporting
      in
      the quarter ended December 31, 2005, as outlined in the paragraph below, in
      conjunction with the Company’s other internal control procedures over financial
      reporting, we have determined these controls were sufficient to conclude that
      the Company’s disclosure controls and procedures were effective at a reasonable
      assurance level as of the end of the period covered by this annual report on
      Form 10-K. .




During
      the fourth quarter ended December 31, 2005, the Company’s management determined
      that previously issued financial statements contained in our Quarterly Report
      on
      Form 10-Q for the three and nine months ended September 30, 2005 (the "September
      statements") should be amended and restated to effect the reclassification
      of
      Essex Electric from discontinued to continuing operations.  Subsequent to
      the filing of the September statements, management determined that the
      classification of Essex Electric’s building wire business as discontinued
      operations did not comply with accounting principles generally accepted in
      the
      United States of America, which required such business to continue to be
      classified within continuing operations until stockholder approval for the
      sale
      has been obtained, notwithstanding that a definitive written agreement for
      such
      sale had been executed on September 30, 2005.  The Company implemented
      additional procedures to assure appropriate classification of operations as
      discontinued or continuing, principally the use of written checklists containing
      action items to be completed and initialed by its Chief Financial Officer and
      general counsel involving the review of all conditions to the completion of
      any
      pending divestiture transactions and the effect of such conditions on
      appropriate classification as continued or discontinued operations.  There
      have been no other changes in the Company’s internal control over financial
      reporting that have materially affected, or are reasonably likely to materially
      affect, its internal control over financial reporting.




*Except
      for the historical information herein, the matters discussed in this annual
      report on form 10-K include forward-looking statements that may involve a
      number of risks and uncertainties. Actual results may vary significantly based
      on a number of factors, including, but not limited to, risks related to changing
      economic conditions, including changes in short term interest rates and other
      risk factors detailed in Item 1A of this annual report on form
      10-K.*




20




**PART
      III**





**Item
      10.  Directors And Executive Officers Of Registrant**





The
      information required by this item will be filed by amendment to this
      Form 10-K.





**Item
      11.  Executive Compensation**





The
      information required by this item will be filed by amendment to this
      Form 10-K.





**Item
      12.  Security Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters**






The
          information required by this item will be filed by amendment to this
          Form 10-K.





**Item
      13. Certain Relationships and Related Transactions**





The
      information required by this item will be filed by amendment to this
      Form 10-K.





**Item
      14. Principal Accounting Fees and Services**





The
      information required by this item will be filed by amendment to this
      Form 10-K.




21


**PART
      IV**





**Item
      15. Exhibits, Financial Statement Schedules, And Reports On
      Form 8-K**





(a)(1),
                (a)(2) See the separate section of this report following Item 15
                for a
                list of financial statements and schedules filed herewith.





(a)(3)
                Exhibits as required by Item 601 of Regulation S-K are listed in Item
                15(b) below.





(b)
                Exhibits





**Exhibit**
              **Number**
            **Description**2(a)
            Purchase
                Agreement, dated October 31, 2002, by and among Superior TeleCom
                Inc.,
                Superior Telecommunications Inc., Essex International Inc., Essex
                Group,
                Inc., The Alpine Group, Inc. and Alpine Holdco Inc. (incorporated
                herein
                by reference to Exhibit 10.3 to the Quarterly Report on Form 10-Q
                of
                Alpine for the quarter ended September 30, 2002).3(a)
            Certificate
                of Incorporation of Alpine (incorporated herein by reference to Exhibit
                3(a) to the Annual Report on Form 10-K of Alpine for the year ended
                April
                30, 1995 (the "1995 10-K")).3(b)
            Amendment
                to the Certificate of Incorporation of Alpine (incorporated herein
                by
                reference to Exhibit 3(aa) of Post-Effective Amendment No. 1 to the
                Registration Statement on Form S-3 (Registration No. 33-53434) of
                Alpine,
                as filed with the Commission on May 12, 1993).3(c)
            Certificate
                of the Powers, Designations, Preferences and Rights of the 9% Cumulative
                Convertible Preferred Stock of Alpine (incorporated herein by reference
                to
                Exhibit 1 to the Quarterly Report on Form 10-Q of Alpine for the
                quarter
                ended January 31, 1989).3(d)
            By-laws
                of Alpine (incorporated herein by reference to Exhibit 3(g) to the
                1995
                10-K).3(e)
            Certificate
                of the Powers, Designations, Preferences and Rights of the Series
                A
                Cumulative Convertible Preferred Stock of Alpine (incorporated herein
                by
                reference to Exhibit 3.1 to the Quarterly Report on Form 10Q of Alpine
                for
                the quarter ended June 30, 2003 (the "June 30, 2003 10-Q”))
              Certificate
                of Amendment of Certificate of Incorporation of Alpine dated December
                29,
                2004.3(f)
            Certificate
                of Amendment of Certificate of Incorporation dated December 29, 2004
                (incorporated herein by reference to Exhibit 3(f) to the Annual Report
                on
                Form 10-K of the Company for the year ended December 31,
                2004).4(a)
            Rights
                Agreement, dated as of February 17, 1999, between Alpine and American
                Stock Transfer & Trust Company, as Rights Agent (incorporated herein
                by reference to Exhibit 4.1 to the Form 8-A of Alpine, as filed with
                the
                Commission on February 18, 1999).4(b)
            Amendment
                No. 1, dated March 10, 2003, to the Rights Agreement, dated as of
                February
                17, 1999, between The Alpine Group, Inc. and American Stock Transfer
&
                Trust Company, as rights agent (incorporated herein by reference
                to
                Exhibit 4.1 to the Current Report on Form 8-K of Alpine filed on
                March 11,
                2003).4(c)
            Indenture
                dated as of August 4, 2003 between Alpine and American Stock Transfer
                & Trust Company, as Trustee, relating to Alpine 6% junior subordinated
                notes (incorporated herein by reference to Exhibit 4.1 to the June
                30,
                2003 10-Q).10(a)
            Amended
                and Restated 1984 Restricted Stock Plan of Alpine (incorporated herein
                by
                reference to Exhibit 10.5 to the Registration Statement on Form S-4
                (Registration No. 33-9978) of Alpine, as filed with the Commission
                on
                October 5, 1993 (the "S-4 Registration Statement")).10(b)
            Amended
                and Restated 1987 Long-Term Equity Incentive Plan of Alpine (incorporated
                herein by reference to Exhibit 10.4 to the S-4 Registration
                Statement).10(c)
            Employee
                Stock Purchase Plan of Alpine (incorporated herein by reference to
                Exhibit
                B to the proxy statement of Alpine dated August 22,
                1997).10(d)
            1997
                Stock Option Plan (incorporated herein by reference to Exhibit 10(tt)
                to
                the 1997 10-K).10(e)
            Stock
                Compensation Plan for Non-Employee Directors of Alpine (incorporated
                herein by reference to Exhibit 10.1 to the Quarterly Report on Form
                10-Q
                of Alpine for the quarter ended January 30, 1999).10(f)
            Lease
                Agreement by and between ALP(TX)QRS 11-28, Inc., and Superior TeleTec
                Transmission Products, Inc., dated as of December 16, 1993 (incorporated
                herein by reference to Exhibit (i) to the Quarterly Report on Form
                10-Q of
                Alpine for the quarter ended January 31, 1994).10(g)
            First
                Amendment to Lease Agreement, dated as of May 10, 1995, by and between
                ALP
                (TX)QRS 11-28, Inc. and Superior TeleTec Inc. (incorporated herein
                by
                reference to Exhibit 10(o) to the 1995 10-K).10(h)
            Second
                Amendment to Lease Agreement, dated as of July 21, 1995, by and between
                ALP(TX)QRS 11-28, Inc. and Superior Telecommunications Inc. (incorporated
                herein by reference to Exhibit 10(x) to the 1995
                10-K).




22





10(i)
            Third
                Amendment to Lease Agreement, dated as of October 2, 1996, by and
                between
                ALP(TX)QRS 11-28, Inc. and Superior Telecommunications Inc. (incorporated
                herein by reference to Exhibit 10.8 to the Registration Statement
                on Form
                S-1 (Registration No. 333-09933)of Superior TeleCom, as filed with
                the
                Commission on August 9, 1996, as amended (the "TeleCom
                S-1")).10(j)
            First
                Amendment to Guaranty and Surety Agreement, dated as of October 2,
                1996,
                among the Company, Superior TeleCom and ALP (TX)QRS 11-28, Inc.
                (incorporated herein by reference to Exhibit 10.12 to the TeleCom
                S-1).10(k)
            Employment
                Agreement, dated as of April 26, 1996, by and between Alpine and
                Steven S.
                Elbaum (incorporated herein by reference to Exhibit 10(q) Annual
                Report on
                Form 10-K of Alpine for the year ended April 30, 1996 (the "1996
                10-K").10(l)
            Second
                Amendment, dated May 14, 2003, to the Loan and Security Agreement
                by and
                among the lenders identified on the signature pages thereof (together
                with
                their respective successors and assigns), Congress Financial Corporation,
                as documentation agent, Foothill Capital Corporation, as arranger
                and
                administrative agent, Alpine Holdco Inc., DNE Manufacturing and Service
                Company, DNE Technologies, Inc., Essex Electric Inc. as borrowers,
                and DNE
                Systems, Inc. as a credit party (incorporated herein by reference
                to the
                Quarterly Report on Form 10-Q of Alpine for the quarter ended March
                31,
                2003).10(m)
            Third
                Amendment, dated May 31, 2003, to the Loan and Security Agreement
                by and
                among the lenders identified on the signature pages thereof (together
                with
                their respective successors and assigns), Congress Financial Corporation,
                as documentation agent, Foothill Capital Corporation, as arranger
                and
                administrative agent, Alpine Holdco Inc., DNE Manufacturing and Service
                Company, DNE Technologies, Inc., Essex Electric Inc. as borrowers,
                and DNE
                Systems, Inc. as a credit party (incorporated herein by reference
                to the
                June 30, 2003 10-Q).10(n)
            Amendment
                No. 1, dated as of March 15, 1999, to The Alpine Group, Inc. 1997
                Stock
                Option Plan (incorporated herein by reference to Exhibit 10(ll) to
                the
                1999 10-K).10(o)
            Amendment
                No. 2, dated as of April 1, 1999, to The Alpine Group, Inc. 1997
                Stock
                Option Plan (incorporated herein by reference to Exhibit 10(mm) to
                the
                1999 10-K).10(p)
            Amendment
                No. 3, dated as of May 14, 1999, to The Alpine Group, Inc. 1997 Stock
                Option Plan (incorporated herein by reference to Exhibit 10(nn) to
                the
                1999 10-K).10(q)
            Fourth
                Amendment to Lease Agreement, dated as of November 27, 1998, between
                ALP
                (TX)QRS 11-28, Inc. and Superior Telecommunications Inc. (incorporated
                herein by reference to Exhibit 10(x) to the Annual Report on Form
                10-K of
                Superior TeleCom Inc. for the year ended December 31, 1999 (the "Superior
                1999 10-K").10(r)
            Second
                Amendment to Guaranty and Suretyship Agreement, dated as of November
                27,
                1998, among ALP (TX)QRS 11-28, Inc., Superior TeleCom and Alpine
                (incorporated herein by reference to Exhibit 10(y)to the Superior
                1999
                10-K).10(s)
            The
                Alpine Group, Inc. Deferred Stock Account Plan (incorporated herein
                by
                reference to Exhibit 10(ss) to the Annual Report on Form 10-K of
                the
                Company for the year ended December 31, 2000 (the "2000
                10-K").10(t)
            Amendment
                Number One to The Alpine Group, Inc. Senior Executive Retirement
                Plan
                (Amended and Restated as of January 1, 2001) (incorporated herein
                by
                reference to Exhibit 10(ggg) to the Annual Report on Form 10-K of
                Alpine
                for the year ended December 31, 2001 (the "2001
                10-K")).10(u)
            Fifth
                Amendment to Lease Agreement and Waiver, dated as of December 27,
                2001,
                between ALP (TX) QRS 11-28, Inc. and Superior Telecommunications
                Inc.
                (incorporated herein by reference to Exhibit 10(yy) to the Annual
                Report
                on Form 10-K of Superior TeleCom Inc. for the year ended December
                31, 2001
                ("the Superior 2001 10-K")).10(v)
            Loan
                and Security Agreement, dated as of December 11, 2002, by and among
                the
                lenders identified on the signature pages thereof (together with
                their
                respective successors and assigns), Congress Financial Corporation
                (Southern), as documentation agent, Foothill Capital Corporation,
                as
                arranger and administrative agent, Alpine Holdco Inc., DNE Manufacturing
                and Service Company, DNE Technologies, Inc. and Essex Electric Inc.,
                as
                borrowers, and DNE Systems, Inc., as a credit party (incorporated
                herein
                by reference to Exhibit 10.1 to the Current Report on Form 8-K of
                Alpine
                filed on December 26, 2002).10(w)
            Amendment,
                dated January 3, 2003, to the Employment Agreement, dated as of April
                26,
                1996, by and between Alpine and Steven S. Elbaum (incorporated herein
                by
                reference to Exhibit 10(ll) to the Annual Report on Form 10-K of
                Alpine
                for the year ended December 31, 2002 (the "2002
                10-K")).10(x)
            Amended
                and Restated Employment Agreement, dated as of December 11, 2002,
                between Essex Electric Inc. and Harold M. Karp (incorporated herein
                by reference to Exhibit 10(mm) to the 2002 10-K).10(y)
            Management
                agreement dated December 11, 2002, between Alpine and Alpine Holdco
                Inc. (incorporated by reference to Exhibit 10(nn) to the 2002
                10-K).10(z)
            Consent,
                Amendment and Waiver to Lease Agreement, dated as of December 11,
                2002, between ST (TX) LP and Superior Telecommunications Inc.
                (incorporated herein by reference to Exhibit 10(oo) to the 2002
                10-K).




23




10(aa)
            Warrant
                dated December 11, 2002 from Essex Electric Inc. ("Essex") issued
                to
                Superior Telecom Inc. ("Superior") (incorporated by reference to
                Exhibit
                10(aa) to the Annual Report on Form 10-K of Alpine for the year ended
                December 31, 2003 (the “2003 10-K”)).10(bb)
            Securityholders
                Agreement dated as of December 11, 2002 by and among Essex, Alpine
                Holdco
                ("Holdco") and Superior (incorporated by reference to Exhibit 10(bb)
                of
                the 2003 10-K).10(cc)
            Amendment
                No. 1 to Securityholders Agreement dated September 23, 2002 by and
                among
                Essex, Holdco and Superior (incorporated by reference to Exhibit
                10(cc) of
                the 2003 10-K).10(dd)
            Employment
                Arrangement between The Alpine Group, Inc. and K. Mitchell Posner,
                dated
                March 24, 2003 (incorporated by reference to Exhibit 10(dd) of the
                2003
                10-K).10(ee)
            Employment
                Agreement between the Essex Electric Inc. and David A. Owen dated
                May 13,
                2003 (incorporated by reference to Exhibit 10(ee) of the 2003
                10-K).10(ff)
            Fourth
                Amendment, dated December 8, 2003, to Loan and Security Agreement
                by and
                among the lenders identified on the signature pages thereof (together
                with
                their respective successors and assigns), Wells Fargo Foothill, Inc.,
                as
                agent and Congress Financial Corporation, as documentation agent,
                Alpine
                Holdco Inc., DNE Manufacturing and Services Company, DNE Technologies,
                Inc. and Essex Electric Inc., as borrowers, and DNE Systems, Inc.,
                as
                credit party (incorporated herein by reference to Exhibit 10(ff)
                of the
                2003 10-K).10(gg)
            Employment
                Agreement, dated as of April 26, 1996, by and between Alpine and
                Bragi F.
                Schut (incorporated herein by reference to Exhibit 10(s) to the 1996
                10-K).10(hh)
            Employment
                Agreement, dated as of November 10, 1993, by and between Alpine and
                James
                R. Kanely (incorporated herein by reference to Exhibit 10(v) to the
                1995
                10-K).10(ii)
            Form
                of subscription agreement entered into on June 23, 2003 by certain
                officers and directors of Alpine in connection with the private placement
                of the Series A Preferred Stock (incorporated herein by reference
                to
                Exhibit 10(ii) of the 2003 10-K).10(jj)
            Stock
                Purchase Agreement between Alpine Holdco Inc. and Ultra Electronics
                Defense, Inc., dated as of June 18, 2004 (incorporated herein by
                reference
                to Exhibit 10(gg) to the Quarterly Report on Form 10-Q of Alpine
                for the
                period ended June 30, 2004).10(kk)
            Amendment
                Number One to The Alpine Group, Inc. Stock Compensation Plan for
                Non-Employee Directors, dated July 1, 2004 (incorporated herein by
                reference to Exhibit 10(jj) to the Quarterly Report on Form 10-Q
                of Alpine
                for the period ended September 30, 2004 (the “September 30, 2004
                10-Q”).10(ll)
            Amendment
                Number One to The Alpine Group, Inc. Deferred Stock Account Plan,
                dated
                July 30, 2004 (incorporated herein by reference to Exhibit 10(kk)
                to the
                September 30, 2004 10-Q).10(mm)
            Fifth
                Amendment to Loan and Security Agreement, dated November 10, 2004
                by and
                among Alpine Holdco Inc. and Essex Electric Inc. as borrowers and
                Wells
                Fargo, Foothill, Inc. as agent for the lenders and as a lender, Congress
                Financial Corporation (Central), and the lenders from time to time
                party
                thereto (incorporated by reference to Exhibit 10(ll) to the September
                30,
                2004 10-Q).10(nn)*
            Sixth
                Amendment to Loan and Security Agreement, dated February 28, 2005
                by and
                among Alpine Holdco Inc. and Essex Electric Inc. as borrower and
                Wells
                Fargo, Foothill, Inc. as agent for the lenders and as a lender, Congress
                Financial Corporation (Central), as documentation agent and as a
                lender,
                and the lenders from time to time party thereto.10(oo)
            Asset
                Purchase Agreement dated as of September 30, 2005 between Essex Electric
                Inc. and Southwire Company (incorporated herein by reference to Exhibit
                10.1 to the Current Report on Form 8-K of Alpine filed on October
                6,
                2005).10(pp)
            Guaranty,
                dated September 30, 2005 of The Alpine Group, Inc. (incorporated
                herein by
                reference to Exhibit 10.2 to the Current Report on Form on 8-K of
                Alpine
                filed on October 6, 2005).10(qq)*
            The
                Alpine Group, Inc. Deferred Cash Account Plan, dated December 30,
                2005.10(rr)*
            Non-Competition
                Agreement among The Alpine Group, Inc., Essex Electric Inc. and Southwire
                Company dated January 31, 2006.21*
            List
                of Subsidiaries23(a)*
            Consent
                of Deloitte & Touche LLP31.1*
            Certification
                of the Company's Chief Executive Officer pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                of
                2002.31.2*
            Certification
                of the Company's Chief Financial Officer pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                of
                2002.32*
            Certification
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                Sarbanes-Oxley Act of 2002


___________





*
            Filed
                herewith.




24




**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.




THE
              ALPINE GROUP,
              INC.Dated: March
              31, 2006
            By:
            /s/ 
Steven
              S. ElbaumSteven
                S. Elbaum
              *Chairman
                  of the Board and*
                *Chief
                  Executive Officer*





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the registrant and in the
      capacities and on the dates indicated.




Name
            
            Title
            Date/s/
Steven
                S. Elbaum
            
            Chairman
              of the Board and Chief Executive Officer (principal
              executive officer)
            March
              31, 2006Steven
                S. Elbaum/s/
                David A. Owen
            
            Chief
              Financial Officer (principal financial and accounting
              officer)
            March
              31, 2006David
                A. Owen/s/
Kenneth
                G. Byers, Jr.
            
            Director
            March
              31, 2006Kenneth
                G. Byers, Jr./s/
Randolph
                Harrison
            
            Director
            March
              31, 2006Randolph
                Harrison/s/
John
                C. Jansing
            
            Director
            March
              31, 2006John
                C. Jansing/s/
James
                R. Kanely
            
            Director
            March
              31, 2006James
                R. Kanely/s/
Bragi
                F. Schut
            
            Director
            March
              31, 2006Bragi
                F. Schut





25




**INDEX
      TO FINANCIAL STATEMENTS**





**PAGE****AUDITED
                CONSOLIDATED FINANCIAL STATEMENTS:**Report
                of independent registered public accounting firm
            F-2Consolidated
                balance sheets at December 31, 2005 and 2004
            F-3Consolidated
                statements of operations for each of the years in the three-year
                period
                ended December 31, 2005
            F-4Consolidated
                statements of stockholders’ equity for each of the years in the three-year
                period ended December 31, 2005
            F-5Consolidated
                statements of cash flows for each of the years in the three-year
                period
                ended December 31, 2005
            F-7Notes
                to consolidated financial statements
            F-9**SCHEDULES:**Schedule
                I—Condensed
                financial information of registrant (Parent Company)
            F-39Schedule
                II—Valuation
                and qualifying accounts
            F-43




F-1





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**






To
      the
      Board of Directors and stockholders of


The
      Alpine Group, Inc.


East
      Rutherford, New Jersey




We
      have
      audited the accompanying consolidated balance sheets of The Alpine Group, Inc.
      and subsidiaries (the “Company”) as of December 31, 2005 and 2004, and the
      related consolidated statements of operations, stockholders’ equity, and of cash
      flows for each of the three years in the period ended December 31, 2005. Our
      audits also included the financial statement schedules listed in the Index
      at
      Item 15. These consolidated financial statements and financial statement
      schedules are the responsibility of the Company’s management. Our responsibility
      is to express an opinion on the consolidated financial statements and financial
      statement schedules based on our audits.




We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also 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 audits provide a
      reasonable basis for our opinion.




In
      our
      opinion, such consolidated financial statements present fairly, in all material
      respects, the financial position of The Alpine Group, Inc. and subsidiaries
      as
      of December 31, 2005 and 2004, and the results of their operations and
      their cash flows for the each of the three years in the period ended December
      31, 2005, in conformity with accounting principles generally accepted in the
      United States of America. Also in our opinion, such financial statement
      schedules, when considered in relation to the basic consolidated financial
      statements taken as a whole, present fairly in all material respects the
      information set forth therein.






/s/Deloitte
      & Touche LLP




Indianapolis,
      Indiana


March
      28,
      2006




F-2




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**


**(in
      thousands, except share data)**




**December
                31,**
            
            **December
                31,****ASSETS**
            
            **2005**
            
            **2004**Current
                assets:Cash
                and cash equivalents
            
            $
            792
            
            $
            611Marketable
                securities, at fair value (Note 1)
            
            
            22,976
            
            
            35,827Accounts
                receivable (less allowance for doubtful accounts of $213 and $387
                atDecember
                31, 2005 and 2004, respectively)
            
            
            69,199
            
            
            41,091Inventories,
                net (Note 2)
            
            
            21,424
            
            
            30,417Due
                from related party (Note 17)
            
            
            1,399
            
            
            —Other
                current assets
            
            
            3,844
            
            
            4,992Total
                current assets
            
            
            119,634
            
            
            112,938Property,
                plant and equipment, net (Note 3)
            
            
            17,728
            
            
            16,927Deferred
                income taxes (Note 13)
            
            
            313
            
            
            264Other
                assets
            
            
            2,852
            
            
            2,658Total
                assets
            
            $
            140,527
            
            $
            132,787**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Revolving
                credit facility (Note 7)
            
            $
            26,725
            
            $
            40,250Current
                portion of long-term debt (Note 8)
            
            
            —
            
            
            386Accounts
                payable
            
            
            25,402
            
            
            14,010Accrued
                expenses (Note 6)
            
            
            15,376
            
            
            11,054Accrued
                income taxes (Note 13)
            
            
            4,997
            
            
            5,247Deferred
                income taxes (Note 13)
            
            
            5,684
            
            
            8,182Total
                current liabilities
            
            
            78,184
            
            
            79,129Long-term
                debt, less current portion (Note 8)
            
            
            2,456
            
            
            3,122Other
                long-term liabilities (Note 9)
            
            
            18,530
            
            
            17,842Warrant
                (Note 1)
            
            
            1,311
            
            
            936Minority
                interest in subsidiary
            
            
            5,528
            
            
            2,218Mandatorily
                redeemable series A convertible preferred stock (18,264 shares issued
                and
                13,955and
                14,697 shares outstanding at December 31, 2005 and 2004, respectively)
                (Note 18)
            
            
            5,263
            
            
            5,545Commitments
                and contingencies (Notes 13 and 16)Stockholders’
                equity:9%
                cumulative convertible preferred stock at liquidation
                value
            
            
            177
            
            
            177Common
                stock, $.10 par value; (50,000,000 authorized; 25,239,696 and 24,670,054
                sharesissued
                at December 31, 2005 and 2004, respectively)
            
            
            2,524
            
            
            2,467Capital
                in excess of par value
            
            
            169,156
            
            
            168,446Accumulated
                other comprehensive income (loss)
            
            
            219
            
            
            (20
            )Accumulated
                deficit
            
            
            (48,827
            )
            
            (52,955
            )Treasury
                stock, at cost (10,873,427 and 10,929,985 shares at December 31,
                2005and
                2004, respectively)
            
            
            (93,648
            )
            
            (93,705
            )Receivable
                from stockholders
            
            
            (346
            )
            
            (415
            )Total
                stockholders’ equity
            
            
            29,255
            
            
            23,995Total
                liabilities and stockholders’ equity
            
            $
            140,527
            
            $
            132,787


The
      accompanying notes are an integral part of these consolidated financial
      statements.




F-3




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(in
      thousands, except per share data)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**Net
                sales
            
            $
            447,815
            
            $
            315,894
            
            $
            302,112Cost
                of goods sold
            
            
            406,646
            
            
            296,338
            
            
            286,947Gross
                profit
            
            
            41,169
            
            
            19,556
            
            
            15,165Selling,
                general and administrative expenses
            
            
            25,644
            
            
            24,945
            
            
            31,601Restructuring
                and other charges
            
            
            3,068
            
            
            3,896
            
            
            13,552(Gain)
                loss on asset sale and impairments (Notes 1 and 14)
            
            
            (153
            )
            
            335
            
            
            592Operating
                income (loss)
            
            
            12,610
            
            
            (9,620
            )
            
            (30,580
            )Interest
                expense
            
            
            (4,303
            )
            
            (3,039
            )
            
            (3,676
            )Gain
                on cancellation of equity investment in Superior (Note 1)
            
            
            —
            
            
            —
            
            
            854,262Other
                income (expense), net
            
            
            (886
            )
            
            (264
            )
            
            70Income
                (loss) from continuing operations before income taxes, minority interest
                and equity in net loss of affiliate
            
            
            7,421
            
            
            (12,923
            )
            
            820,076(Provision)
                benefit for income taxes
            
            
            (1,724
            )
            
            5,312
            
            
            10,709Income
                (loss) from continuing operations before minority interest and equity
                in
                earnings of affiliate
            
            
            5,697
            
            
            (7,611
            )
            
            830,785Minority
                interest in (earnings) loss of subsidiary
            
            
            (1,124
            )
            
            468
            
            
            526Equity
                in loss of affiliate
            
            
            —
            
            
            —
            
            
            (86
            )Income
                (loss) from continuing operations
            
            
            4,573
            
            
            (7,143
            )
            
            831,225Discontinued
                operations (Note 4):Income
                from discontinued operations net of taxes of $1,115 and $1,897,
                respectively
            
            
            —
            
            
            1,502
            
            
            3,551Gain
                on sale of DNE, net of taxes of $10,275
            
            
            —
            
            
            19,081
            
            
            —Net
                income
            
            
            4,573
            
            
            13,440
            
            
            834,776Preferred
                stock dividends
            
            
            (445
            )
            
            (2,044
            )
            
            (206
            )Preferred
                stock dividends beneficial conversion feature
            
            
            —
            
            
            (1,203
            )
            
            (2,550
            )Net
                income applicable to common stock
            
            $
            4,128
            
            $
            10,193
            
            $
            832,020Net
                income per share of common stock:Basic:Income
                (loss) attributable to common stock from continuing operations
            
            $
            0.26
            
            $
            (0.77
            )
            $
            60.13Income
                from discontinued operations
            
            
            —
            
            
            0.11
            
            
            0.26Gain
                on sale of DNE
            
            
            —
            
            
            1.42
            
            
            —Net
                income per basic share of common stock
            
            $
            0.26
            
            $
            0.76
            
            $
            60.39Diluted:Income
                (loss) from continuing operations
            
            $
            0.16
            
            $
            (0.77
            )
            $
            51.01Income
                from discontinued operations
            
            
            —
            
            
            0.11
            
            
            0.22Gain
                on sale of DNE
            
            
            —
            
            
            1.42
            
            
            —Net
                income per diluted share of common stock
            
            $
            0.16
            
            $
            0.76
            
            $
            51.23Weighted
                average shares outstanding:Basic
            
            
            15,861
            
            
            13,440
            
            
            13,778Diluted
            
            
            27,456
            
            
            13,440
            
            
            16,240





The
      accompanying notes are an integral part of these consolidated financial
      statements.




F-4




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY**


**(in
      thousands, except share data)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**Common
                stock:Balance
                at beginning of period
            
            
            24,670,054
            
            $
            2,467
            
            
            22,146,884
            
            $
            2,214
            
            
            22,084,694
            
            $
            2,208Shares
                issued pursuant to the Series A Preferred Stock conversion
            
            
            551,309
            
            
            55
            
            
            2,403,543
            
            
            241
            
            
            62,190
            
            
            6Exercise
                of stock options
            
            
            18,333
            
            
            2
            
            
            119,627
            
            
            12
            
            
            —
            
            
            —Balance
                at end of period
            
            
            25,239,696
            
            
            2,524
            
            
            24,670,054
            
            
            2,467
            
            
            22,146,884
            
            
            2,214Capital
                in excess of par value:Balance
                at beginning of period
            
            
            
            
            
            168,446
            
            
            
            
            
            165,706
            
            
            
            
            
            165,195Compensation
                expense related to restricted stock and certain stock options, less
                vested
                shares released from Treasury
            
            
            
            
            
            471
            
            
            
            
            
            1,580
            
            
            
            
            
            (3,270
            )Beneficial
                conversion feature on preferred stock recorded at issuance
            
            
            
            
            
            —
            
            
            
            
            
            —
            
            
            
            
            
            3,753Shares
                issued pursuant to the Series A Preferred Stock Conversion
            
            
            
            
            
            227
            
            
            
            
            
            1,081
            
            
            
            
            
            28Exercise
                of stock options
            
            
            
            
            
            12
            
            
            
            
            
            79
            
            
            
            
            
            —Balance
                at end of period
            
            
            
            
            
            169,156
            
            
            
            
            
            168,446
            
            
            
            
            
            165,7069%
                cumulative convertible preferred stock:Balance
                at beginning of period
            
            
            177
            
            
            177
            
            
            427
            
            
            427
            
            
            427
            
            
            427Redemption
                of 9% Preferred Stock
            
            
            —
            
            
            —
            
            
            (250
            )
            
            (250
            )
            
            —
            
            
            —Balance
                at end of period
            
            
            177
            
            
            177
            
            
            177
            
            
            177
            
            
            427
            
            
            427Accumulated
                other comprehensive income (loss):Balance
                at beginning of period
            
            
            
            
            
            (20
            )
            
            
            
            
            57
            
            
            
            
            
            (11,597
            )Reversal
                of other comprehensive loss associated with Superior (Note
                1)
            
            
            
            
            
            —
            
            
            
            
            
            —
            
            
            
            
            
            11,624





(Continued)


The
      accompanying notes are an integral part of these consolidated financial
      statements.




F-5


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ EQUITY**


**(in
      thousands, except share data)**




**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**Realized
                net losses in value of securities (net of tax benefit of $200 and
                $6 for
                2005 and 2004, respectively)
            
            
            
            
            $
            301
            
            
            
            
            $
            9
            
            
            
            
            $
            —Change
                in unrealized gains (losses) on securities, (net of tax benefit of
                $41,
                $35, and $32, respectively)
            
            
            
            
            
            (76
            )
            
            
            
            
            (62
            )
            
            
            
            
            30Change
                in minimum pension liability (net of tax benefitof
                $10 and $17, for 2005 and 2004, respectively)
            
            
            
            
            
            14
            
            
            
            
            
            (24
            )
            
            
            
            
            —Balance
                at end of period
            
            
            
            
            
            219
            
            
            
            
            
            (20
            )
            
            
            
            
            57Accumulated
                deficit:Balance
                at beginning of period
            
            
            
            
            
            (52,955
            )
            
            
            
            
            (58,201
            )
            
            
            
            
            (890,221
            )Net
                income
            
            
            
            
            
            4,573
            
            
            
            
            
            13,440
            
            
            
            
            
            834,776Dividends
                on preferred stock
            
            
            
            
            
            (445
            )
            
            
            
            
            (2,044
            )
            
            
            
            
            (206
            )Dividends
                on common stock
            
            
            
            
            
            —
            
            
            
            
            
            (4,947
            )
            
            
            
            
            —Preferred
                stock dividends, beneficial conversion feature
            
            
            
            
            
            —
            
            
            
            
            
            (1,203
            )
            
            
            
            
            (2,550
            )Balance
                at end of period
            
            
            
            
            
            (48,827
            )
            
            
            
            
            (52,955
            )
            
            
            
            
            (58,201
            )Treasury
                stock:Balance
                at beginning of period
            
            
            (10,929,985
            )
            
            (93,705
            )
            
            (11,109,872
            )
            
            (93,861
            )
            
            (7,963,203
            )
            
            (94,574
            )Conversion
                of common stock to junior subordinated notes
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (3,479,656
            )
            
            (2,959
            )Stock
                options and grants
            
            
            64,527
            
            
            73
            
            
            199,481
            
            
            196
            
            
            332,987
            
            
            3,672Reverse
                / forward split redemptions (Note 21)
            
            
            (7,969
            )
            
            (16
            )
            
            (19,594
            )
            
            (40
            )
            
            —
            
            
            —Balance
                at end of period
            
            
            (10,873,427
            )
            
            (93,648
            )
            
            (10,929,985
            )
            
            (93,705
            )
            
            (11,109,872
            )
            $
            (93,861
            )Receivable
                from stockholders:Balance
                at beginning of period
            
            
            
            
            
            (415
            )
            
            
            
            
            (484
            )
            
            
            
            
            (553
            )Forgiveness
                of Officers' loans
            
            
            
            
            
            69
            
            
            
            
            
            69
            
            
            
            
            
            69Balance
                at end of period
            
            
            
            
            
            (346
            )
            
            
            
            
            (415
            )
            
            
            
            
            (484
            )Total
                stockholders’ equity
            
            
            
            
            $
            29,255
            
            
            
            
            $
            23,995
            
            
            
            
            $
            15,858Comprehensive
                income
            
            
            
            
            $
            4,812
            
            
            
            
            $
            13,363
            
            
            
            
            $
            846,430





The
      accompanying notes are an integral part of these consolidated financial
      statements.




F-6




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(in
      thousands)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**Cash
                flows from operating activities:Net
                income
            
            $
            4,573
            
            $
            13,440
            
            $
            834,776Adjustments
                to reconcile net income to net cash (used for) provided by operating
                activities:Gain
                on sale of DNE
            
            
            —
            
            
            (29,356
            )
            
            —Depreciation
            
            
            1,328
            
            
            1,146
            
            
            1,105Loss
                on asset sales and subsidiary stock
            
            
            1,563
            
            
            496
            
            
            663Gain
                on cancellation of investment in Superior
            
            
            —
            
            
            —
            
            
            (854,262
            )Gains
                on investments in securities
            
            
            (501
            )
            
            (16
            )
            
            (106
            )Amortization
                of deferred debt issuance costs and accretion of debt
                discount
            
            
            804
            
            
            613
            
            
            1,294Compensation
                expense related to stock options and grants
            
            
            615
            
            
            1,632
            
            
            470Deferred
                income taxes
            
            
            (2,706
            )
            
            (1,117
            )
            
            (11,948
            )Minority
                interest in income (loss) of subsidiary
            
            
            1,124
            
            
            (468
            )
            
            (526
            )Increase
                (decrease) in fair value of warrants
            
            
            375
            
            
            (64
            )
            
            —Equity
                in loss of affiliate
            
            
            —
            
            
            —
            
            
            86Change
                in assets and liabilities:Accounts
                receivable
            
            
            (28,108
            )
            
            (9,629
            )
            
            28,304Inventories
            
            
            8,993
            
            
            6,332
            
            
            38,911Other
                current assets
            
            
            120
            
            
            (988
            )
            
            7,312Other
                assets
            
            
            (187
            )
            
            (201
            )
            
            5Accounts
                payable and accrued expenses
            
            
            15,459
            
            
            (1,330
            )
            
            (1,528
            )Other,
                net
            
            
            703
            
            
            219
            
            
            946Cash
                flows (used for) provided by operating activities
            
            
            4,155
            
            
            (19,291
            )
            
            45,502Cash
                flows from investing activities:Capital
                expenditures
            
            
            (2,643
            )
            
            (5,578
            )
            
            (8,561
            )Purchase
                of marketable securities
            
            
            (4,036
            )
            
            (39,344
            )
            
            (6,672
            )Proceeds
                from sale of assets
            
            
            1,035
            
            
            683
            
            
            7,978Proceeds
                from sale of investments
            
            
            17,283
            
            
            10,213
            
            
            1,296Proceeds
                from sale of DNE, net of transaction costs
            
            
            —
            
            
            38,150
            
            
            —Advances
                under loans to affiliate
            
            
            (1,750
            )
            
            —
            
            
            —Proceeds
                under loans of affiliate
            
            
            351
            
            
            —
            
            
            —Cash
                flows provided by (used for) investing activities
            
            
            10,240
            
            
            4,124
            
            
            (5,959
            )





(Continued)


The
      accompanying notes are an integral part of these consolidated financial
      statements.




F-7




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(in
      thousands)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**Cash
                flows from financing activities:Borrowings
                (repayments) under revolving credit facilities, net
            
            
            (13,525
            )
            
            23,061
            
            
            (51,782
            )6%
                Junior Subordinated Notes redemption
            
            
            (1,101
            )
            
            (161
            )
            
            —Repayments
                of long-term borrowings
            
            
            (382
            )
            
            (469
            )
            
            (2,247
            )Proceeds
                from sale of minority investment interest in subsidiary
            
            
            1,241
            
            
            —
            
            
            471Proceeds
                from exercise of stock options
            
            
            14
            
            
            236
            
            
            —Debt
                and equity issuance and amendment costs
            
            
            —
            
            
            —
            
            
            (389
            )Dividends
                on preferred stock
            
            
            (445
            )
            
            (2,044
            )
            
            (206
            )Dividends
                on common stock
            
            
            —
            
            
            (4,947
            )
            
            —Issuance
                of preferred stock, net
            
            
            —
            
            
            —
            
            
            6,940Preferred
                stock redemptions
            
            
            —
            
            
            (250
            )
            
            —Other
            
            
            (16
            )
            
            (113
            )
            
            (4
            )Cash
                flows provided by (used for) financing activities
            
            
            (14,214
            )
            
            15,313
            
            
            (47,217
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            181
            
            
            146
            
            
            (7,674
            )Cash
                and cash equivalents at beginning of year
            
            
            611
            
            
            465
            
            
            8,139Cash
                and cash equivalents at end of year
            
            $
            792
            
            $
            611
            
            $
            465Supplemental
                disclosures:Cash
                paid for interest
            
            $
            3,417
            
            $
            2,450
            
            $
            2,952Cash
                paid (refunded) for income taxes, net
            
            $
            3,965
            
            $
            1,758
            
            $
            (1,383
            )





The
      accompanying notes are an integral part of these consolidated financial
      statements.





F-8


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**1. 
      Summary of significant accounting policies**





***Basis
      of presentation and description of business***





The
      accompanying consolidated financial statements represent the accounts of The
      Alpine Group, Inc. and the consolidation of all of its majority-controlled
      subsidiaries (collectively "Alpine" or the "Company", unless the context
      otherwise requires). The Company accounts for all affiliate companies with
      ownership greater than 20%, but not majority-controlled, using the equity method
      of accounting.





Alpine
      was incorporated in New Jersey in 1957 and reincorporated in Delaware in 1987.
      Alpine is a holding company which over the recent past has held major
      investments in industrial manufacturing companies. At December 31, 2005,
      Alpine's principal operations consisted of its approximately 84% interest in
      Essex Electric Inc. (“Essex Electric”), engaged in the manufacture and sale of
      electrical wire and cable, and a 46% equity interest in Superior Cables Ltd.,
      the largest Israeli based producer of wire and cable products. In January 2006,
      Alpine acquired the entire outstanding minority interest in Essex Electric.
      Thereafter, also in January 2006, Essex Electric completed the previously
      announced sale of its building wire business.





On
      December 11, 2002, Alpine's wholly-owned subsidiary, Alpine Holdco Inc. (“Alpine
      Holdco”), acquired from Superior TeleCom Inc. (“Superior”): (1) substantially
      all of the assets, subject to related accounts payable and accrued liabilities,
      of Superior's electrical wire business, which were thereafter owned and operated
      by Essex Electric, a newly formed, then wholly-owned, subsidiary of Alpine
      Holdco, (2) all of the outstanding shares of capital stock of DNE Systems,
      Inc.
      (“DNE Systems”); and (3) all of the outstanding shares of capital stock of Texas
      SUT Inc. and Superior Cable Holdings (1997) Ltd. (“SCH”), which together owned
      approximately 47% of Superior Cables Ltd. At times herein we refer to the
      foregoing acquisition of the electrical wire business of Superior, DNE Systems
      and the minority equity interest in Superior Cables Ltd. as the Electrical
      Acquisition. The aggregate purchase price was approximately $85 million in
      cash
      plus the issuance of a warrant (the "Warrant") to Superior to purchase 199
      shares representing 19.9% of the Essex Electric common stock on a fully diluted
      basis. The Warrant is recorded as a liability in the consolidated balance sheet
      at its fair value at December 31, 2005 of $1.3 million. The change in the value
      of the Warrant is recorded in other income (expense). A net charge of $0.4
      million was recorded in 2005, reflecting an increase in the estimated value
      of
      the Warrant. On January 25, 2006, Alpine purchased from Superior for a purchase
      price of $8.5 million (which was approximately the carrying value) the Warrant
      and Superior’s 614 shares of Essex Electric common stock, resulting in Alpine
      owning 100% of the total outstanding capital stock of Essex
      Electric.




Prior
      to
      December 11, 2002, Alpine's financial statements included the consolidated
      results of its then majority-controlled subsidiary Superior and Superior's
      then
      majority-owned subsidiary Superior Cables Ltd.. As a result of the vesting
      of certain Superior restricted stock arrangements in 2002, Alpine's common
      equity ownership in Superior declined from 50.2% at December 31, 2001 to
      48.9%. Notwithstanding the decline in Alpine's direct equity ownership in
      Superior through December 11, 2002, Alpine had a controlling interest in
      Superior based on its additional indirect equity ownership position (including
      certain common share voting interests deemed to be controlled by Alpine). In
      connection with Alpine's acquisition of Superior's electrical wire business
      and
      DNE Systems certain changes were made with respect to Alpine's indirect voting
      interests in Superior’s equity such that Alpine no longer controlled Superior.
      Additionally, Alpine acquired approximately 47% of Superior Cables Ltd. from
      Superior as part of the Electrical Acquisition. Accordingly, effective for
      periods after December 11, 2002, Superior and Superior Cables Ltd. are
      accounted for under the equity method and are no longer consolidated with
      Alpine. During 2003, Alpine’s equity in the losses of Superior Cables Ltd.
      reduced its investment to zero and, accordingly, Alpine will not record its
      equity in any future losses of Superior Cables Ltd. unless income results in
      a
      positive investment. Except for a secured revolving credit facility in the
      maximum principal amount of $2.0 million between Alpine as lender and Superior
      Cables (USA) Ltd., as borrower (see Note 17) and as contemplated under a pending
      transaction, entered into in February 2006 among Alpine, Superior Cables, Ltd.
      and a third party (see Note 23), Alpine has no funding obligations in respect
      of
      Superior Cables Ltd.. Based on closing prices on the Tel Aviv Stock Exchange,
      the market value of Alpine's investment in Superior Cables Ltd. was $2.3 million
      at December 31, 2005.





On
      March 3, 2003, Superior and its U.S. subsidiaries filed voluntary petitions
      for relief under Chapter 11 of the United States Bankruptcy Code. On October
      22,
      2003, Superior’s Joint Plan of Reorganization, as amended and related disclosure
      statement was confirmed by order of the United States Bankruptcy Court for
      the
      District of Delaware and became effective on November 10, 2003 (the "Plan of
      Reorganization"). The Plan of Reorganization provided for the cancellation
      of
      all equity and debt interests held in Superior by the Company.




F-9




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**





**1. 
      Summary of significant accounting policies (continued)**





As
      a
      result of the accumulated net losses incurred by Superior, Alpine had recorded
      losses in excess of its investment in Superior of $865.9 million at
      December 11, 2002. This negative investment was required under accounting
      principles generally accepted in the United States of America to be reflected
      in
      Alpine's consolidated balance sheet, notwithstanding the fact that Alpine was
      not obligated to fund any operating losses or deficits of Superior. Upon
      implementation of the Plan of Reorganization, Alpine eliminated its negative
      investment in Superior and recognized a corresponding gain of $865.9 million
      in
      the fourth quarter of 2003. This gain was partially offset by the reversal
      of
      $11.6 million of accumulated other comprehensive loss related to Superior
      resulting in a net gain of $854.3 million.





On
      July
      29, 2004 the Company sold DNE Systems, its wholly-owned defense electronics
      subsidiary, to a wholly-owned subsidiary of Ultra Electronics Holdings plc,
      a
      United Kingdom-based company, for a purchase price of $40 million in cash (the
      “DNE Sale”). As a result of the DNE Sale a pretax book gain of approximately
      $29.4 million, net of expenses, was recorded in the third quarter of 2004.
      The
      results of operations of DNE Systems for the twelve month periods ended December
      31, 2004 and 2003 have been presented as discontinued operations.





On
      September 30, 2005, Essex Electric entered into an asset purchase agreement,
      (the “Essex Electric Sale Agreement”), with the Southwire Company (“Southwire”)
      to sell certain of the assets comprising its electrical building wire business
      (the “Essex Electric Sale”). The Essex Electric Sale Agreement provided for the
      sale by Essex Electric of all of its closing date building wire related
      inventory and prepaid assets, its Florence, Alabama manufacturing plant and
      equipment, and the assumption by Southwire of certain contracts and selected
      liabilities related to the business. Essex Electric retained substantially
      all
      of its other liabilities including the indebtedness under its revolving credit
      facility. Excluded from the sale were cash and cash equivalents and accounts
      receivable of Essex Electric, a copper scrap reclamation plant and operation
      based in Jonesboro, Indiana, a plastic resin compounding plant and operation
      based in Marion, Indiana, and three leased warehouse distribution centers.
      The
      scrap reclamation operation serviced Essex Electric’s internal requirements for
      scrap processing, as well as outside customers. Such sale constituted the sale
      of substantially all of the assets of Essex Electric under Delaware law and
      in
      turn constituted a sale of substantially all of the assets of Alpine, requiring
      prior approval of Alpine stockholders. The purchase price payable by Southwire
      to Essex Electric under the Essex Electric Sale Agreement is the sum of (i)
      $27
      million plus (ii) the closing date value of Essex Electric’s inventory and
      certain prepaid assets less certain liabilities. As of December 31, 2005, the
      net assets and related operations to be disposed of pursuant to the Essex
      Electric Sale did not meet all the requirements of SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ,
      in
      order to be classified as assets held for sale or discontinued operations in
      2005, since completion of the sale required Alpine stockholder approval.
      Approval was obtained at a special meeting of stockholders of Alpine on January
      26, 2006. The Essex Electric Sale closed on January 31, 2006 (Note
      22).





After
      the
      close of the Essex Electric Sale, Essex Electric’s operations include the scrap
      reclamation plant in Jonesboro, Indiana and the plastic resin compounding plant
      in Marion, Indiana. Additionally, the Company has agreed to increase its
      investment in Superior Cables Ltd., the largest Israel based wire and cable
      manufacturer (see Note 23 to the consolidated financial statements) and will
      continue to explore and consider utilizing its available liquid assets for
      a
      range of investments and business acquisitions.




***Segment
      Information***





The
      Company operates in one segment - building wire and cable. One customer (Home
      Depot) accounted for 20% and 23% of net sales for the years ended
      December 31, 2005 and 2004, respectively. All of the Company’s consolidated
      net sales and long-lived assets for the years ended December 31, 2005, 2004
      and
      2003 were based in the United States.





***Cash
      and cash equivalents***





All
      highly liquid investments purchased with a maturity at acquisition of
      90 days or less are considered to be cash equivalents. Cash and cash
      equivalents includes restricted cash of approximately $0.2 million as of both
      December 31, 2005 and 2004.





F-10




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**





**1.
       Summary of significant accounting policies
      (continued)**





***Marketable
      securities***





Statement
      of Financial Accounting Standards (“SFAS”) No. 115, *Accounting
      for Certain Investments in Debt and Equity Securities* ,
      requires securities to be classified as held to maturity, available for sale
      or
      trading. Only those securities classified as held to maturity, which the
      Corporation intends and has the ability to hold until maturity, are reported
      at
      amortized cost. Available for sale and trading securities are reported at fair
      value with unrealized gains and losses included in shareholders’ equity or
      income net of related income taxes, respectively. All of the Company’s
      investment securities were classified as available for sale at December 31,
      2004. For the year ended December 31, 2005, $0.5 million of securities were
      classified as held to maturity as the Company intends to hold these investments
      to maturity. Since such maturity date is beyond one year from the date of the
      consolidated balance sheet these securities are classified as long-term assets
      as of December 31, 2005. Since these securities were previously classified
      as
      available for sale, the Company is amortizing to income the $60 thousand
      unrealized loss over the life of the securities. All other securities held
      as of
      December 31, 2005 have been classified as available for sale.





The
      following table shows the unrealized gains (losses) and fair value of the
      Company’s investments aggregated by investment category as of December 31,
      2005:




Description
                of Securities
            
            Cost
              Basis
            
            Unrealized
              Gains
            
            Unrealized
              Losses*
            
            Fair
              ValueMoney
                funds/sweep options
            
            $
            1,117
            
            
            
            
            
            
            
            $
            1,117Marketable
                equity securities
            
            
            4,836
            
            $
            88
            
            $
            (174
            )
            
            4,750Municipal
                bonds and notes
            
            
            10,100
            
            
            
            
            
            
            
            
            10,100Mutual
                funds
            
            
            6,244
            
            
            534
            
            
            (19
            )
            
            6,759Preferred
                securities
            
            
            250
            
            
            
            
            
            
            
            
            250Total
            
            $
            22,547
            
            $
            622
            
            $
            (193
            )
            $
            22,976





*
      none of
      the gross unrealized losses have exceeded 12 months.





The
      gross
      unrealized losses related to short-term investments are primarily due to a
      decrease in the fair value of debt securities as a result of an increase in
      interest rates during fiscal 2005 and a decrease in the fair value of equity
      securities due to fluctuations in the stock market. Alpine has determined that
      the gross unrealized losses on its short-term investments at December 31, 2005
      are temporary in nature. Alpine reviews its investment portfolio to identify
      and
      evaluate investments that have indications of possible impairment. Factors
      considered in determining whether a loss is temporary include the length of
      time
      and extent to which fair value has been less than the cost basis, the financial
      condition and near-term prospects of the investee, credit quality and Alpine’s
      ability to hold the investment for a period of time sufficient to allow for
      any
      anticipated recovery in market value.





***Due
      from related party***





Alpine
      has made short-term advances to the United States subsidiary of Superior Cables
      Ltd., Alpine’s 46% owned affiliate, secured by United States-based inventory and
      accounts receivable, at an interest rate of LIBOR plus 1.4% per annum, to
      augment funding of that affiliate’s growth and working capital, particularly in
      the United States. As of December 31, 2005, $1.4 million of advances were
      included as due from related party. Total advances will not exceed $2 million
      and all advances must be repaid on or prior to June 30, 2006.





***Inventories***





Inventories
      are stated at the lower of cost or market. At December 31, 2005 and 2004,
      cost for the Essex Electric inventory is determined using the last-in, first-out
      ("LIFO") method. The Company determines whether a lower of cost or market
      provision is required on a quarterly basis by analyzing whether inventory on
      hand can be sold at a profit based upon current selling prices less variable
      selling costs. No provision was required in 2005 or 2004. Inventories include
      costs of materials, labor and manufacturing overhead. See Note 2.





F-11





**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)**





**1. 
      Summary of significant accounting policies (continued)**





***Property,
      plant and equipment***





Property,
      plant and equipment are stated at cost, less accumulated depreciation and
      amortization. Leasehold improvements are amortized over the lesser of the
      estimated useful lives of the assets or the lease term. Depreciation and
      amortization are provided over the estimated useful lives of the assets using
      the straight-line method. The estimated lives are as follows:





Buildings
                and improvements
            5
                to 40 yearsMachinery
                and equipment
            3
                to 15 years





Maintenance
      and repairs are charged to expense as incurred. Long-term improvements are
      capitalized as additions to property, plant and equipment. Upon retirement
      or
      other disposal, the asset cost and related accumulated depreciation are removed
      from the accounts and the net amount, less any proceeds, is charged or credited
      to income. Interest is capitalized during the active construction period of
      major capital projects.





***Deferred
      financing costs***





Origination
      costs incurred in connection with outstanding debt financings are included
      in
      the consolidated balance sheet in long-term investments and other assets. These
      deferred financing costs are being amortized over the lives of the related
      debt
      on an effective interest rate basis and are charged to operations as additional
      interest expense. During the fourth quarter of 2003 the Company amended the
      Revolving Credit Facility to reduce the maximum amount of lender commitments
      available thereunder by 30% and therefore 30% ($0.6 million) of remaining
      deferred financing costs were written off. Total net deferred financing fees
      at
      December 31, 2005 and 2004 were approximately $0.8 million and
      $1.2 million, respectively. The remaining balance of $0.8 million was
      written off in January 2006, in connection with the repayment of the Revolving
      Credit Facility.




***Amounts
      due customers***





Included
      in accrued expenses at December 31, 2005 and 2004 are certain amounts due
      customers totaling $6.9 million and $4.3 million, respectively,
      representing cash discount liabilities to customers who meet certain contractual
      sales volume criteria. Such discounts are paid periodically to those qualifying
      customers. These liabilities are recorded as reductions to revenue, as customers
      purchase toward required volume levels.





***Income
      taxes***





The
      Company accounts for income taxes under an asset and liability approach that
      requires the recognition of deferred tax assets and liabilities for both the
      expected future tax impact of temporary differences arising from assets and
      liabilities whose tax bases are different from financial statement amounts
      and
      for the expected future tax benefit to be derived from tax loss carryforwards.
      A
      valuation allowance is established if it is more likely than not that all or
      a
      portion of deferred tax assets will not be realized. Realization of the future
      tax benefits of deferred tax assets (including tax loss carryforwards) is
      dependent on Alpine's ability to generate taxable income within the carryforward
      period and the periods in which net temporary differences reverse.





Although
      no assurance can be given that sufficient taxable income will be generated
      for
      utilization of certain of the Company's consolidated net operating loss
      carryforwards or for reversal of certain temporary differences, the Company
      believes it is more likely than not that all of the deferred tax assets, after
      valuation allowance, will be realized.





Significant
      judgment is required in determining our consolidated income tax provision and
      evaluating our U.S. tax position. It is our policy to maintain tax contingency
      reserves for potential tax audit issues and uncertain tax positions. The Company
      reviews the reserves as circumstances warrant and adjusts the reserves as events
      occur that affect our potential liability for additional taxes, such as lapsing
      of applicable statutes of limitations, conclusion of tax audits, additional
      exposure based on current calculations, identification of new issues or
      rendering of court decisions affecting a particular tax issue. Tax reserve
      contingencies and changes to the reserves are evaluated and recorded in our
      tax
      provision in the period in which the above noted events occur.





F-12


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**1.
       Summary of significant accounting policies
      (Continued)**





***Derivative
      financial instruments***





The
      Company applies SFAS No. 133 *Accounting
      for Derivative Instruments and Hedging Activities* as
      amended by SFAS No. 137 and SFAS No. 138 for its derivative financial
      instruments. These statements establish accounting and reporting standards
      for
      derivative instruments and require recognition of all derivatives as either
      assets or liabilities in the statements of financial position and measurement
      of
      those instruments at fair value.





All
      derivatives are recognized on the balance sheet at fair value. On the date
      the
      derivative contract is entered, the Company designates the derivative as either
      (i) a fair value hedge of a recognized asset or liability, (ii) a cash
      flow hedge of a


forecasted
      transaction, (iii) a hedge of a net investment in a foreign operation, or
      (iv) a non-designated derivative instrument. The Company has in the past
      engaged in certain derivatives that are classified as fair value hedges, cash
      flow hedges and non-designated derivative instruments. Changes in the fair
      value
      of derivatives that are designated as fair value hedges and the underlying
      exposure being hedged are adjusted to fair value and are recorded in the
      consolidated statements of operations in the same line item. Changes in the
      fair
      value of cash flow hedges are recorded in accumulated other comprehensive income
      with any ineffective portion immediately recognized in earnings. Changes in
      the
      fair value of non-designated derivative contracts are reported in current
      earnings. At December 31, 2005, the Company had approximately $2.7 million
      of copper futures contracts representing 1.3 million copper pounds


outstanding
      as non-designated derivative instruments. These contracts were recorded at
      fair
      value at December 31, 2005. There were $8 million of copper futures contracts
      representing 6 million copper pounds outstanding at December 31,
      2004.





The
      Company does not currently utilize any hedging instruments that would qualify
      for hedge accounting treatment. If such transactions were to arise, the Company
      would formally document all relationships between hedging instruments and hedged
      items, as well as the risk management objectives and strategy for undertaking
      various hedge transactions. Derivative financial instruments and derivative
      transactions reflected in the consolidated financial statements are discussed
      in
      Note 15.





***Revenue
      recognition***





Revenue
      is recognized when the product is shipped to the customer, which is when title
      and risk of loss pass. The Company’s price to the buyer is fixed and
      determinable based upon the price set forth in a written order from the
      customer. Allowances for discounts and sales incentives are made at the time
      of
      sale based on incentive programs available to the customer. The cost of these
      programs is dependent on various factors including the timing of the sale and
      the volume of sales achieved by the customer. The Company monitors these factors
      and records estimated obligations based on current sales levels as a reduction
      of revenue over the periods earned.





***Subsidiary
      stock transactions***





The
      Company's ownership percentage in subsidiary stock is impacted by the Company's
      purchase of additional subsidiary stock, as well as subsidiary stock
      transactions, including the subsidiary's purchase of its own stock and the
      subsidiary's issuance of its own stock. The Company accounts for subsidiary
      stock transactions in accordance with Staff Accounting Bulletin No. 51, *Accounting
      for sales of stock by a subsidiary* and
      records all gains and losses related to subsidiary stock transactions through
      other income and expense. In September 2003, Alpine Holdco subscribed for and
      purchased 681 newly issued shares of Essex Electric common stock. In October
      2003, Superior exercised its rights under a securityholders agreement and
      subscribed for and purchased 169 newly issued shares of Essex Electric common
      stock. This securityholders agreement was executed at the time of and in
      conjunction with the Electrical Acquisition. As a result of the sales and
      issuance of common stock by Essex Electric, Alpine Holdco and Superior owned
      approximately 90% and 10%, respectively, of the total outstanding stock of
      Essex
      Electric as of December 31, 2004. In accordance with Staff Accounting Bulletin
      No. 51, the reduction in Alpine Holdco's ownership of Essex Electric from 100%
      to 90% was accounted for by the Company as a non-cash loss of $2.7 million,
      and
      recorded in the 2003 consolidated statement of operations as other income
      (expense).





In
      January 2005, Holdco purchased 1,792 shares of Essex Electric common stock
      for a
      cash purchase price of $5.0 million and Superior purchased 445 shares of Essex
      Electric common stock for an aggregate cash purchase price of $1.2 million.
      Following the aforementioned investments and as of December 31, 2005, Holdco
      and
      Superior owned 84.2% and 15.8% of Essex Electric, respectively. The Company
      recorded a loss on sale of subsidiary stock of approximately $0.9 million in
      January 2005 related to this transaction. On January 25, 2006, Alpine purchased
      from Superior for a purchase price of $8.5 million (which approximated the




F-13




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**1. 
      Summary of significant accounting policies (Continued)**





book
      value at the time), the Warrant and Superior’s 614 shares of Essex Electric
      common stock, resulting in Alpine owning 100% of the total outstanding capital
      stock of Essex Electric.





***Stock-Based
      Compensation Plans***




The
      Company applies the intrinsic-value based method of accounting prescribed by
      Accounting Principles Board (APB) Opinion No. 25, *Accounting
      for Stock Issued to Employees* ,
      and
      related interpretations including FASB Interpretation No. 44, *Accounting
      for Certain Transactions involving Stock Compensation, an interpretation of
      APB
      Opinion No. 25* ,
      issued
      in March 2000, to account for its stock-based compensation plans. Under
      this method, compensation expense is recorded on the date of grant only if **** the
      current market price of the underlying stock exceeded the exercise price. SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* ,
      established accounting and disclosure requirements using a fair-value based
      method of accounting for stock-based employee compensation plans. As allowed
      by
      SFAS No. 123, the Company has elected to continue to apply the
      intrinsic-value based method of accounting described above, and has adopted
      only
      the disclosure requirements of SFAS No. 123. The following table
      illustrates the effect on net income if the fair value based method had been
      applied to all outstanding and unvested awards in each period.




**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****(in
                thousands, except per share amounts)**Net
                income, as reported
            
            $
            4,573
            
            $
            13,440
            
            $
            834,776Add
                stock-based employee compensation expense included in reported net
                income,
                net of tax effects of $190, $577 and $138, respectively
            
            
            354
            
            
            1,055
            
            
            255Deduct
                total stock-based employee compensation expense determined under
                fair
                value based method for all awards, net of related tax
                effects
            
            
            (521
            )
            
            (1,315
            )
            
            (494
            )Pro
                forma net income
            
            $
            4,406
            
            $
            13,180
            
            $
            834,537Preferred
                stock dividends
            
            
            (445
            )
            
            (2,044
            )
            
            (206
            )Dividend
                on beneficial conversion feature of preferred stock rights
                offering
            
            
            
            
            
            (1,203
            )
            
            (2,550
            )Proforma
                net income - applicable to common stock
            
            $
            3,961
            
            $
            9,933
            
            $
            831,781Net
                income per share:Basic—as
                reported
            
            $
            0.26
            
            $
            0.76
            
            $
            60.39Basic—pro
                forma
            
            $
            0.25
            
            $
            0.74
            
            $
            60.37Diluted—as
                reported
            
            $
            0.16
            
            $
            0.76
            
            $
            51.23Diluted—pro
                forma
            
            $
            0.15
            
            $
            0.74
            
            $
            51.22





The
      effects of applying SFAS No. 123 in the pro forma disclosure are not
      necessarily indicative of future amounts, since the estimated fair value of
      stock options is amortized to expense over the vesting period and additional
      options may be granted in future years and outstanding options may be exercised
      or cancelled. The weighted average per share fair value of options granted
      (using the Black-Scholes option-pricing model) for the years ended
      December 31, 2005, 2004 and 2003, was $1.99, $0.91 and $0.52, respectively.
      The fair value for these options was estimated at the date of grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions for the years ended December 31, 2005, 2004 and 2003,
      respectively: dividend yield of 0% for each year; expected volatility of 160%,
      191% and 99%; risk-free interest rate of 4.35%, 3.53% and 2.99%; and expected
      life of two years for all periods.





The
      Black-Scholes option-pricing model was developed for use in estimating the
      fair
      value of traded options which have no vesting restrictions and are fully
      transferable. In addition, option valuation models require the input of highly
      subjective assumptions, including the expected stock price volatility. Because
      the Company's employee options have characteristics significantly different
      from
      those of traded options and because changes in the subjective input assumptions
      can materially affect the fair value estimates, in management's opinion, the
      existing models may not necessarily provide a reliable single measure of the
      fair value of its employee stock options.




F-14




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**1. 
      Summary of significant accounting policies (Continued)**





The
      Company amortizes the value of the restricted stock grants evenly over the
      vesting periods, based upon the market value of the stock as of the date of
      the
      grant.





***Research
      and development costs***





Research
      and development costs are expensed as incurred, however with the divestiture
      of
      the DNE operations, research and development costs for continuing operations
      were less than $0.1 million for the years 2005, 2004 and 2003.





***Advertising
      costs***





Advertising
      costs are expensed as incurred. Advertising costs during the years ended
      December 31, 2005, 2004 and 2003 were approximately $0.2, $0.2 and
      $0.3 million, respectively.





***Shipping
      and handling***





All
      shipping and handling costs are included in costs of sales and all billings
      associated with these costs are included in revenues.





***Earnings
      per share***





Basic
      earnings per common share is computed by dividing net income applicable to
      common stock by the weighted average number of shares of common stock
      outstanding for the period. Diluted earnings per common share is determined
      assuming (i) the conversion of outstanding stock options, warrants and
      grants under the treasury stock method, (ii) the conversion of convertible
      preferred stock and (iii) the dilution in subsidiary earnings resulting
      from the assumed conversion of subsidiary stock options and grants, if dilutive.





***Comprehensive
      income***





Comprehensive
      income includes all changes in equity from non-owner sources such as net income,
      foreign currency translation adjustments, unrealized gains and losses on
      available-for-sale securities, changes in the fair value of derivatives and
      minimum pension liability adjustments. Accumulated other comprehensive income
      (loss) net of tax was approximately $0.2 million as of December 31, 2005 and
      less than ($0.1 million) as of December 31, 2004.





***Concentration
      of risk and allowance for doubtful accounts***





The
      Company determines the allowance based on its historical write-off experience
      and a review of certain specific accounts. Account balances are charged off
      against the allowance after all means of collection have been exhausted and
      the
      potential for recovery is considered remote. See Segment Information above.





***Impairment
      of Long-Lived Assets***





In
      accordance with SFAS No. 144, *Accounting
      for the Impairment for Disposal of Long-lived Assets,* long-lived assets, such as property, plant, and equipment, and purchased
      intangibles subject to amortization, are reviewed for impairment whenever events
      or changes in circumstances indicate that the carrying amount of an asset group
      may not be recoverable. Recoverability of assets to be held and used is measured
      by a comparison of the carrying amount of an asset group to estimated
      undiscounted future cash flows expected to be generated by the asset group.
      If
      the carrying amount of an asset exceeds its estimated future cash flows, an
      impairment charge is recognized by the amount by which the carrying amount
      of
      the asset exceeds the fair value of the asset group. Assets to be disposed
      of
      are included in other current assets and reported at the lower of the carrying
      amount or fair value less costs to sell, and are no longer depreciated. The
      assets and liabilities of a disposal group classified as held for sale are
      presented separately in the appropriate asset and liability sections of the
      balance sheet. The gain (loss) on asset sales and impairment (net of recoveries)
      for 2005, 2004 and 2003 were $(0.6), $(0.5) and $2.1 million, respectively.
      See
      Note 14 for details.




F-15





**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**1. 
      Summary of significant accounting policies (Continued)**





***Contingencies***





The
      Company is involved in various legal proceedings and contingencies. Liabilities
      for these matters are recorded in accordance with SFAS No. 5, *Accounting
      for Contingencies* .
      SFAS 5
      requires a liability to be recorded based on management's estimate of the
      probable cost of the resolution of a contingency. The actual resolution of
      these
      contingencies may differ from such estimates. If a contingency is settled for
      an
      amount greater than the Company's estimate, a future charge to income would
      result. Likewise, if a contingency is settled for an amount that is less than
      they Company's estimate, a future credit to income would result.





***Use
      of estimates***





The
      Company's consolidated financial statements are prepared in accordance with
      accounting principles generally accepted in the United States of America, which
      require management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the dates of the financial statements and the reported amounts
      of
      revenues and expenses during the reporting periods. Significant items subject
      to
      such estimates and assumptions include the carrying amount of property, plant
      and equipment and intangible assets; valuation allowances for receivables,
      inventories, and deferred income tax assets; liabilities for income tax and
      other tax contingencies; self-insurance reserves; valuation of derivative
      instruments; and obligations related to employee benefits. Actual results could
      differ from those estimates.





***Restructuring
      costs***





The
      Company adopted SFAS No. 146, *Accounting
      for Costs Associated with Exit or Disposal Activities* effective January 1, 2003. SFAS No. 146 addresses financial accounting and
      reporting for costs associated with exit or disposal activities and nullifies
      Emerging Issues Task Force (EITF) Issue 94-3, *Liability
      Recognition for Certain Employee Termination Benefits and Other Costs to Exit
      an
      Activity* .
      The
      restructuring costs incurred during the years ended December 31, 2005, 2004
      and 2003 have been accounted for in accordance with SFAS No. 146.





***Guarantees***





The
      Company adopted FASB Interpretation No. 45, *Guarantor's
      Accounting and Disclosure Requirements for Guarantees, Including Indirect
      Guarantees of Indebtedness to Others* , *an
      interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB
      Interpretation No. 34* effective January 1, 2003. This Interpretation elaborates on the
      disclosures to be made by a guarantor in its interim and annual financial
      statements about its obligations under guarantees issued. The Interpretation
      also clarifies that a guarantor is required to recognize, at inception of a
      guarantee, a liability for the fair value of the obligation undertaken. The
      initial recognition and measurement provisions of the Interpretation are
      applicable to guarantees issued or modified after December 31, 2002. Since
      1993,
      Alpine has been a party to a guaranty of obligations of former affiliate,
      Superior under a lease by Superior of a manufacturing facility in Brownwood,
      Texas. The lease currently provides for monthly payments of $56,000 subject
      to
      adjustments for changes in the consumer price index. The lease term expires
      in
      2018 but may be extended through 2033. As such, the maximum potential amount
      of
      future payments under the guaranty through 2018 would be approximately $9
      million. Any further extensions would amount to a guarantee of approximately
      $0.7 million per year. While Alpine's continuing obligations, if any, under
      the
      guaranty are not free from doubt, the Company believes the facility and
      underlying lease are valuable assets of Superior and expects that Superior
      will
      perform as tenant thereunder and continue to pay its obligations. In addition,
      Alpine would have a claim for indemnification and reimbursement from Superior
      in
      respect of any amounts paid by Alpine as guarantor.





In
      connection with the Essex Electric Sale in January 2006, the Company guaranteed
      that Essex Electric would maintain not less than $3.5 million in cash and cash
      equivalent assets through July 2007. The Company is not a party to any other
      guarantees and implementation of FASB Interpretation No. 45 did not have a
      material effect on the Company's financial statements.




F-16





**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**1. 
      Summary of significant accounting policies (Continued)**





***Recent
      accounting standards***





During
      2003, the Emerging Issues Task Force (EITF) added to its agenda EITF
      Issue 03-01, *The
      Meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investments* ,
      to
      address the meaning of “other-than-temporary” impairment and its application to
      certain investments carried at cost. In November 2003, the Task Force developed
      new disclosure requirements concerning unrealized losses on available-for-sale
      debt and equity securities accounted for under SFAS 115, *Accounting
      for Certain Investments in Debt and Equity Securities.* .
      In
      March 2004, the Task Force issued guidance regarding the measurement and
      recognition of an “other-than-temporary” impairment, which was subsequently
      delayed in September 2004. In June 2005, the Task Force decided not to provide
      additional guidance on the meaning of “other-than-temporary” impairment. The
      project was retitled FASB Staff Position (FSP) 115-1, *The
      Meaning of Other-Than-Temporary Impairment and Its Application to Certain
      Investments* ,
      which
      replaces the guidance found in EITF 03-01 and states that the assessment of
      whether impairment is “other-than-temporary” would be based upon existing
“other-than-temporary” impairment guidance and the effective date for the use of
      this guidance would be for reporting periods beginning after December 15,
      2005. The adoption of the provisions of this FSP is not expected to have a
      significant impact on the Company’s financial position or results of operations.





In
      November 2004, the FASB issued Statement 151, *Inventory
      Costs* .
      This
      statement amends Accounting Research Bulletin No. 43 to clarify
      that:





o
            abnormal
                amounts of idle facility expense, freight, handling costs and wasted
                material (spoilage) should be recognized as current-period charges;
                and


o
            requires
                the allocation of fixed production overhead to inventory based on
                the
                normal capacity of the production
                facilities.





The
      provisions of this statement are effective for inventory costs incurred during
      fiscal years beginning after June 15, 2005. We do not expect the adoption of
      this statement will have any material impact on our results of operations or
      financial position.




In
      December 2004, the FASB issued Statement 123 (revised 2004), *Share-Based
      Payment* ,
      a
      revision of Statement 123, *Accounting
      for Stock Based Compensation* .
      Statement 123(R) supersedes APB opinion No. 25 and requires all entities to
      recognize compensation expense in an amount equal to the fair value of
      share-based payments (e.g. stock options and restricted stock awards) granted
      to
      employees. SFAS 123(R) is effective for fiscal years beginning after June 15,
      2005. The Company intends to apply the standard on a modified prospective
      method. Under this method, all awards granted after the date of adoption must
      be
      accounted for under the provisions of Statement 123(R). In addition,
      compensation expense must be recognized for the unvested portion of previously
      granted awards and options that remain outstanding at the date of adoption.
      The
      Company will adopt Statement 123(R) effective January 1, 2006 and expects to
      recognize incremental non-cash compensation expense related to currently
      outstanding options and awards of approximately $0.1 million in
      2006.





In
      December 2004, the FASB issued Statement 153, *Exchanges
      of Nonmonetary Assets, an amendment of APB Opinion 29, Accounting for
      Nonmonetary Transactions* .
      This
      amendment eliminates the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. Under Statement 153,
      if a nonmonetary exchange of similar productive assets meets a
      commercial-substance test and fair value is determinable, the transaction must
      be accounted for at fair value resulting in the recognition of any gain or
      loss.
      This statement is effective for nonmonetary transactions in fiscal periods
      that
      begin after June 15, 2005. We do not expect the adoption of this statement
      will
      have any material impact on our results of operations or financial
      position.





In
      June
      2005, the FASB issued Statement 154, Accounting *Changes and Error Corrections, which replaces APB Opinion 20 and FASB Statement
      3* .
      Statement 154 changes the requirements for the accounting and reporting of
      a
      change in accounting principle. Opinion 20 previously required that most
      voluntary changes in accounting principles be recognized by including the
      cumulative effect of the new accounting principle in net income of the period
      of
      the change. In the absence of explicit transition provisions provided for in
      new
      or existing accounting pronouncements, Statement 154 now requires retrospective
      application of changes in accounting principle to prior period financial
      statements, unless it is impracticable to do so. **** The
      Statement is effective for fiscal years beginning after December 15, 2005.
      The
      Company will begin applying provisions of this statement beginning January
      1,
      2006.





F-17




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**1. 
      Summary of significant accounting policies (Continued)**





In
      February 2006, the FASB issued Statement 155 *Accounting
      for Certain Hybrid Financial Instruments - an amendment of FASB Statements
      No.
      133 and 140* which
      provides entities with relief from having to separately determine the fair
      value
      of an embedded derivative that would otherwise be required to be bifurcated
      from
      its host contract in accordance with Statement 133. Statement 155 allows an
      entity to make an irrevocable election to measure such a hybrid financial
      instrument at fair value in its entirety, with changes in fair value recognized
      in earnings. The election may be made on an instrument-by-instrument basis
      and
      can be made only when a hybrid financial instrument is initially recognized
      or
      when certain events occur that constitute a remeasurement (i.e., new basis)
      event for a previously recognized hybrid financial instrument. An entity must
      document its election to measure a hybrid financial instrument at fair value,
      either concurrently or via a preexisting policy for automatic election. Once
      the
      fair value election has been made, that hybrid financial instrument may not
      be
      designated as a hedging instrument pursuant to Statement 133. We do not expect
      the adoption of this statement will have any material impact on our results
      of
      operations or financial position.





**2. 
      Inventories**





At
      December 31, 2005 and 2004, the components of inventories are as follows:





**December
                31,**
            
            **December
                31,****2005**
            
            **2004****(in
                thousands)**Raw
                materials
            
            $
            9,551
            
            $
            15,169Work
                in process
            
            
            7,038
            
            
            5,476Finished
                goods
            
            
            34,953
            
            
            31,98151,542
            
            
            52,626LIFO
                reserve
            
            
            (30,118
            )
            
            (22,209
            )$
            21,424
            
            $
            30,417




All
      inventories at December 31, 2005 and 2004, are valued using the LIFO method
      of accounting. Effective December 11, 2002, in connection with the Electrical
      Acquisition, the Company established two LIFO pools for the Essex Electric
      inventory consisting, respectively, of copper and all other inventory
      components. During 2005 and 2004, the Company recorded a decrement of $6.4
      million and $2.1, respectively, on its LIFO reserve as reduction in cost of
      goods sold.




**3. 
      Property, plant and equipment**





At
      December 31, 2005 and 2004, property, plant and equipment consisted of the
      following:





**December
                31,**
            
            **December
                31,****2005**
            
            **2004****(in****thousands****)**Land
            
            $
            160
            
            $
            160Buildings
                and improvements
            
            
            4,250
            
            
            4,033Machinery
                and equipment
            
            
            15,704
            
            
            12,270Construction
                in progress
            
            
            216
            
            
            1,91420,330
            
            
            18,377Less
                accumulated depreciation
            
            
            (2,602
            )
            
            (1,450
            )$
            17,728
            
            $
            16,927




F-18




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**3. 
      Property, plant and equipment (Continued)**




Depreciation
      expense for the years ended December 31, 2005, 2004 and 2003, was $1.3
      million, $0.9 million and $0.7 million, respectively.





Assets
      held for sale of $1.4 million as of December 31, 2004, are classified as other
      current assets.





During
      2005, Essex Electric donated land and building at a former manufacturing site
      in
      Orleans, IN to the Business Reform Foundation and in accordance with SFAS 116, *Accounting
      for Contributions Received and Contributions Made,* the
      Company recorded a $0.8 million loss for the book value. The Company recorded
      a
      tax benefit of $1.3 million for the tax effect of the deduction for the
      donation. During 2004 the Company recorded a $0.6 million loss for the book
      value of land and building which was donated to the City of Sikeston and a
      tax
      benefit of $1.0 million was recorded.





**4. 
      Discontinued operations**





On
      June
      21, 2004 the Company entered into an agreement to sell DNE Systems, its
      wholly-owned defense electronics subsidiary, to ULTRA Electronics Defense,
      Inc.,
      a wholly-owned subsidiary of Ultra Electronics Holdings plc, a United
      Kingdom-based company that is listed on the London Stock Exchange (the “DNE
      Sale”). The purchase price was $40 million in cash at closing. The sale was
      consummated on July 29, 2004 and a pretax book gain of approximately $29.4
      million, net of expenses, was recorded in the third quarter of 2004. DNE Systems
      results of operations for the seven months ended July 31, 2004 and the year
      ended December 31, 2003 have been reflected as discontinued operations.





The
      revenue and income before taxes of DNE that is classified in discontinued
      operations for the twelve month periods ended December 31, 2004 and 2003 are
      presented below:




**Twelve
                Months ended**
              **December
                31,****2004**
            
            **2003**Revenues
            
            $
            15,295
            
            $
            28,372Income
                before taxes
            
            $
            2,616
            
            $
            5,449




**5.
      Comprehensive income**





The
      components of comprehensive income for the twelve months ended December 31,
      2005, 2004 and 2003 were as follows:





**Twelve
                Months Ended**
              **December
                31,****2005**
            
            **2004**
            
            **2003****(in
                thousands)**Net
                income
            
            $
            4,573
            
            $
            13,440
            
            $
            834,776Change
                in unrealized losses on securities, net of tax
            
            
            225
            
            
            (53
            )
            
            30Change
                in minimum pension liability, net of tax
            
            
            14
            
            
            (24
            )
            
            —Reversal
                of other comprehensive loss associated with Superior
            
            
            —
            
            
            —
            
            
            11,624Comprehensive
                income
            
            $
            4,812
            
            $
            13,363
            
            $
            846,430





F-19


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**




**6. 
      Accrued expenses**





At
      December 31, 2005 and 2004, accrued expenses consist of the following:


**December
                31,**
            
            **December
                31,****2005**
            
            **2004********(in
                thousands)**Accrued
                wages, salaries and employee benefits
            
            $
            3,120
            
            $
            2,270Allowance
                for restructuring activities
            
            
            33
            
            
            —Accrued
                customer discounts
            
            
            6,910
            
            
            4,326Other
                accrued expenses
            
            
            5,313
            
            
            4,458$
            15,376
            
            $
            11,054




**7. 
      Revolving Credit Facility**





In
      connection with the Electrical Acquisition, Alpine Holdco entered into a Loan
      and Security Agreement (the "Loan Agreement"), dated as of December 11,
      2002, by and among Alpine Holdco, Essex Electric, DNE Manufacturing and Service
      Company ("DNE Manufacturing") and DNE Technologies, Inc. ("DNE
      Technologies") as borrowers and DNE Systems as Credit party (such parties
      sometimes collectively are called "Companies") certain financial institutions
      party thereto as lenders, Congress Financial Corporation, as documentation
      agent, and Foothill Capital Corporation, as arranger and administrative agent.





The
      terms
      of the Revolving Credit Facility provided for a maximum committed amount of
      $100 million at its inception which, at the request of the Companies, was
      reduced to $70 million on December 8, 2003. Borrowing availability is determined
      by reference to a borrowing base that permits advances to be made at various
      net
      valuation rates against various assets of the Companies. Interest is payable
      monthly in cash in arrears and is based on, at Alpine Holdco's option, LIBOR
      or
      prime rates plus a fixed margin. The weighted average interest rate at
      December 31, 2005 and 2004 was 7.68% and 6.05%, respectively. The Revolving
      Credit Facility also provides for maintenance of financial covenants and ratios
      relating to minimum EBITDA and tangible net worth, and includes restrictions
      on
      capital expenditures, payment of cash dividends and incurrence of indebtedness.
      Alpine Holdco was in compliance with all applicable covenants at December 31,
      2005. All Revolving Credit Facility obligations are secured by a lien on all
      of
      the Companies' tangible and intangible assets, other than the investment in
      Superior Cables Ltd. The obligations under the Revolving Credit Facility are
      without recourse to Alpine. At December 31, 2005 the Companies had $29.8 million
      of borrowing availability.





Unless
      previously accelerated as a result of default, the Revolving Credit Facility
      matures in December 2007. However, in accordance with Emerging Issues Task
      Force
      Issue 95-22, *Balance
      Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements
      That Include Both a Subjective Acceleration Clause and a Lock-Box Arrangement,* borrowings
      under the Revolving Credit Facility have been classified as a current liability.





During
      the third quarter of 2004, Alpine Holdco distributed to Alpine the proceeds
      from
      the DNE Sale, net of expenses, of approximately $38 million in accordance with
      a
      consent from the lenders under the Revolving Credit Facility.





Effective
      concurrently with the consummation of the DNE Sale (see note 4) on July 29,
      2004, the lenders released each of DNE Systems, DNE Technologies, and DNE
      Manufacturing from all of their obligations under the Revolving Credit Facility
      (the "DNE Parties"), released all property of the DNE Parties from the liens
      granted for the benefit of the lenders under the Revolving Credit Facility
      and
      all of the outstanding and issued capital stock of the DNE Parties from the
      pledge thereof delivered in connection with the Revolving Credit Facility,
      and
      the DNE Parties no longer are "Borrowers" or a "Credit Party", as the case
      may
      be, under the Revolving Credit Facility. Accordingly, from and after July 29,
      2004, the DNE Parties are not included in the term "Companies". The Revolving
      Credit Facility was amended on November 10, 2004 to reflect modifications agreed
      to by the parties as a result of the DNE Sale.





Effective
      concurrently with the closing of the Essex Electric Sale on January 31, 2006
      (see Note 22), the Revolving Credit Facility was repaid, all remaining borrower
      Companies and Credit Parties and their respective assets were released from
      all
      liens, pledges and obligations thereunder and such facility was
      terminated.




F-20




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**8. 
      Long-term debt**





At
      December 31, 2005 and 2004, long-term debt consists of the
      following:





**December
                31,**
            
            **December
                31,****2005**
            
            **2004****(in********thousands****)**6%
                Junior Subordinated Notes, net of $0.6 and $1.1 million discount,
                respectively
            
            $
            2,456
            
            $
            3,122Other
            
            
            —
            
            
            3862,456
            
            
            3,508Less
                current portion of long-term debt
            
            
            —
            
            
            386$
            2,456
            
            $
            3,122





On
      August
      4, 2003, the Company completed an exchange offer whereby holders of its common
      stock exchanged 3,479,656 shares for $4.3 million principal amount of
      6% Junior Subordinated Notes (the "Subordinated Notes") issued by the Company
      plus a nominal amount of cash in lieu of fractional notes. The Subordinated
      Notes were initially recorded at an amount equal to the fair value of the common
      stock exchanged resulting in an initial discount of $1.4 million. The discount
      is being accreted over the term of the Subordinated Notes using the effective
      interest rate method. The Subordinated Notes accrue interest at 6% per annum
      payable in cash semiannually each December 31 and June 30. The
      Subordinated Notes are the Company's general unsecured obligations subordinated
      and subject in right of payment to all of the Company's existing and future
      senior indebtedness, which excludes trade payables incurred in the ordinary
      course of business. The Company will be required to repay one-eighth of the
      outstanding principal amount of the Subordinated Notes commencing on
      June 30, 2007 and semiannually thereafter, so that all of the Subordinated
      Notes will be repaid by December 31, 2010. The Subordinated Notes are
      redeemable, at the Company's option, in whole at any time or in part from time
      to time, at the principal amount to be redeemed plus accrued and unpaid interest
      thereon to the redemption date, together with a premium if the Subordinated
      Notes are redeemed prior to 2007. In addition, the Company must offer to redeem
      all of the Subordinated Notes at the redemption price then in effect in the
      event of a change of control. The Subordinated Notes were issued under an
      indenture which does not subject the Company to any financial covenants. During
      2005 and 2004, the Company retired $1.1 and $0.2 million of the Subordinated
      Notes and in 2005 recorded approximately $0.2 million of additional interest
      expense related to the acceleration of the related unamortized
      discount.





The
      “Other” debt caption represents a loan with Raytheon Aircraft Credit Corporation
      to finance the purchase of 12.5% interest in an aircraft. An agreement was
      signed in December 2004 to sell the interest in the aircraft and the sale was
      consummated in March 2005. Therefore, the debt was classified as current as
      of
      December 31, 2004 and repaid in March 2005.





At
      December 31, 2005 and 2004, the fair value of the Company's debt
      approximates carrying value.





The
      aggregate principal maturities of long-term debt subsequent to December 31,
      2005, were as follows:





**Year
              Ending**
            
            **(in
                thousands)**2006
            
            $
            02007
            
            
            7712008
            
            
            7712009
            
            
            7712010
            
            
            770





F-21


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**9. 
      Other long-term liabilities**





At
      December 31, 2005 and 2004, other long-term liabilities consist of the
      following:





**December
                31,**
              **2005**
            
            **December
                31,**
              **2004****(in
                thousands)**Tax
                contingency reserve (see Note 13)
            
            $
            17,106
            
            $
            16,364Other
                long-term liabilities
            
            
            1,424
            
            
            1,478$
            18,530
            
            $
            17,842





**10. 
      Earnings (loss) per share**





The
      computation of basic and diluted earnings (loss) per share for the years ended
      December 31, 2005, 2004 and 2003, is as follows:




**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****Net**
                **Income**
            
            **Weighted
                Average Shares**
            
            **Per
                Share**
              **Amount**
            
            **Net**
              **Income**
            
            **Weighted
                Average Shares**
            
            **Per
                Share**
              **Amount**
            
            **Net**
              **Income**
            
            **Weighted
                Average**
              **Shares**
            
            **Per
                Share**
              **Amount****(in
                thousands, except per share amounts)**Basic
                earnings (loss) per shareIncome
                (loss) from continuing operations
            
            $
            4,573
            
            
            
            
            
            
            
            $
            (7,143
            )
            
            
            
            
            
            
            $
            831,225Adjustments:Preferred
                stock dividends
            
            
            (445
            )
            
            
            
            
            
            
            
            (2,044
            )
            
            
            
            
            
            
            
            (206
            )Preferred
                stock dividendson
                beneficial conversion feature
            
            
            
            
            
            
            
            
            
            
            
            (1,203
            )
            
            
            
            
            
            
            
            (2,550
            )Income
                attributable to common stock from continuing operations
            
            $
            4,128
            
            
            15,861
            
            
            0.26
            
            $
            (10,390
            )
            
            13,440
            
            $
            (0.77
            )
            $
            828,469
            
            
            13,778
            
            $
            60.13Income
                from discontinued operations
            
            
            
            
            
            
            
            
            
            
            
            1,502
            
            
            13,440
            
            
            0.11
            
            
            3,551
            
            
            13,778
            
            
            0.26Gain
                on sale of DNE
            
            
            
            
            
            
            
            
            
            
            
            19,081
            
            
            13,440
            
            
            1.42Net
                income applicable to common stock
            
            $
            4,128
            
            
            15,861
            
            $
            0.26
            
            $
            10,193
            
            
            13,440
            
            $
            0.76
            
            $
            832,020
            
            
            13,778
            
            $
            60.39





F-22


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**10. 
      Earnings (loss) per share (Continued)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****Net**
              **Income**
            
            **Weighted
                Average Shares**
            
            **Per
                Share**
              **Amount**
            
            **Net**
              **Income
                (loss)**
            
            **Weighted
                Average Shares**
            
            **Per
                Share**
              **Amount**
            
            **Net**
              **Income**
            
            **Weighted
                Average**
              **Shares**
            
            **Per
                Share**
              **Amount****(in
                thousands, except per share amounts)**Diluted
                earnings (loss) per shareBasic
                income (loss) from continuing operations
            
            $
            4,128
            
            
            15,861
            
            $
            0.26
            
            $
            (10,390
            )
            
            13,440
            
            $
            (0.77
            )
            $
            828,469
            
            
            13,778
            
            $
            60.13Effect
                of dilutive securitiesRestricted
                stock plans
            
            
            
            
            
            397
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            39Stock
                option plans
            
            
            
            
            
            661
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            38Convertible
                preferred stock
            
            
            445
            
            
            10,537
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2,385Essex
                Electric warrant
            
            
            (286
            )
            
            —Income
                (loss) attributable to common stock from continuing operations and
                assumed
                conversions
            
            $
            4,287
            
            
            27,456
            
            $
            0.16
            
            $
            (10,390
            )
            
            13,440
            
            $
            (0.77
            )
            $
            828,469
            
            
            16,240
            
            $
            51.01Income
                from discontinued operations
            
            
            
            
            
            
            
            
            
            
            
            1,502
            
            
            13,440
            
            
            0.11
            
            
            3,551
            
            
            16,240
            
            
            0.22Gain
                on sale of DNE
            
            
            
            
            
            
            
            
            
            
            
            19,081
            
            
            13,440
            
            
            1.42
            
            
            —Net
                income applicable to common stock
            
            $
            4,287
            
            
            27,456
            
            $
            0.16
            
            $
            10,193
            
            
            13,440
            
            $
            0.76
            
            $
            832,020
            
            
            16,240
            
            $
            51.23





Diluted
      earnings per share for the year ended December 31, 2005 excludes the effect
      of
      an average of 0.1 million stock options and 0.1 million restricted stock shares
      that may be exercised in the future, because such effect would be anti-dilutive.
      The Company has excluded the assumed conversion of all stock options (1.5
      million) and restricted stock grants (0.9 million) from the Company's earnings
      per share calculation for the year ended December 31, 2004, as the impact would
      be anti-dilutive due to the loss from continuing operations for that year.
      Diluted earnings per share for the year end December 31, 2003 excludes the
      effect of 0.9 million stock options and 0.4 million restricted stock grants
      that
      may be exercised in the future, because such effect would be antidilutive.
      The
      warrant issued in connection with the Electrical Acquisition has not been
      included in the computation of diluted income (loss) per share for the years
      ended December 31, 2004 and 2003 as the impact would be anti-dilutive.




**11. 
      Stock based compensation plans**





Alpine
      has two long-term equity incentive plans: the 1987 Long-Term Equity Incentive
      Plan (the "1987 Plan") and the 1997 Stock Option Plan (the "1997 Plan"). No
      further options may be granted under the 1987 Plan. The 1997 Plan has 1,500,000
      shares of common stock reserved for issuance. There were 19,436 shares of common
      stock available under the 1997 Plan at December 31, 2005. Participation in
      the 1997 Plan is generally limited to key employees and consultants of Alpine
      and its subsidiaries. The 1997 Plan provides for the granting of incentive
      and
      non-qualified stock options and stock appreciation rights. The options granted
      under the 1997 Plan vest in equal annual installments over the three year period
      commencing on the first anniversary date of the grant or, if earlier, upon
      the
      occurrence of a change in control of the Company and options cannot be exercised
      after ten years from the date of grant. During the year ended December 31,
      2005 and pursuant to the 1997 Plan, the Executive Compensation and Organization
      Committee of the Board of Directors of the Company (the “Compensation
      Committee”) granted incentive stock options to purchase 30,000 shares of the
      Company's common stock under individual option agreements to certain management
      employees. The exercise price of all such options was at the fair market value
      of the common stock on the date of grant. Any shares issued upon exercise of
      these options may be either authorized and unissued common stock or common
      stock
      held in or acquired for the treasury of the Company.





F-23


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**11. 
      Stock based compensation plans (Continued)**





The
      Company adopted the Stock Compensation Plan for Non-Employee Directors (the
      "Stock Plan") in January 1999. Under the Stock Plan, each non-employee
      director of the Company automatically receives 50% of the annual retainer in
      either restricted common stock or non-qualified stock options, as elected by
      the
      director. In addition, each non-employee director may also elect to receive
      all
      or a portion of the remaining amount of the annual retainer and any meeting
      fees
      in the form of restricted stock or stock options in lieu of cash payment. In
      2005, 42,675 non-qualified stock options and 25,327 shares of restricted stock
      were granted to non-employee directors at the fair market value of the Common
      Stock at the date of the grant. Each stock option granted under the Stock Plan
      expires on the tenth anniversary of the date of the grant. Awards of restricted
      stock and stock options under the stock plan vest upon the earliest of the
      following to occur: (i) the third anniversary of the date of the grant; (ii)
      a
      non-employee director’s death; and (iii) a change of control of the Company. Any
      shares issued pursuant to the Stock Plan will be issued from the Company's
      treasury stock.





Alpine
      also sponsors a 1984 Restricted Stock Plan under which a maximum of 600,000
      shares of Common Stock have been reserved for issuance. At December 31,
      2005, there are 25,895 shares available for issuance. During the year ended
      December 31, 2005, the Compensation Committee granted 17,500 shares of the
      Company’s Common Stock pursuant to such plan to management employees at the fair
      market value of the Common Stock at the date of the grant. Shares of restricted
      Common Stock under this grant vest in equal installments over a three year
      period commencing with the first anniversary of grant.





In
      addition to the above described grant under the 1984 Restricted Stock Plan,
      in
      2004 the Compensation Committee also granted 40,000 shares of the restricted
      Common Stock to a certain executive from its treasury shares at the fair market
      value of the Common Stock on the date of the grant. The restricted Common Stock
      vests in equal installments on each of the first three anniversaries of the
      date
      of grant, subject to acceleration in the event a change in control of the
      Company. On March 25, 2004, this executive elected to defer the receipt of
      all
      shares of the restricted Common Stock for a period of five years pursuant to
      the
      Company’s Deferred Stock Account Plan.





Alpine
      sponsors The Alpine Group, Inc. Deferred Stock Account Plan, an unfunded
      deferred stock compensation plan whereby certain key management employee
      participants are permitted to (i) defer the receipt of all, or a portion of,
      their non-cash salary or bonus and shares issued upon stock option exercises,
      as
      defined by the plan and (ii) reinvest deemed cash dividends allocable to Common
      Stock credited to a participant’s account under the plan into additional
      deferred Common Stock. The plan also provides for matching contributions by
      the
      Company in various percentages applied to shares of Common Stock deferred
      therein. The compensation expense associated with the matching contribution
      is
      amortized over the vesting period of the deferral. Shares deferred into the
      deferred stock plan are held in irrevocable grantor trusts. At December 31,
      2005, 1,853,092 shares of the Common Stock have been deferred and are included
      in the grantor trusts. These shares and the corresponding liability are
      classified as components of treasury stock and additional paid-in capital,
      respectively, in the consolidated balance sheets. On December 16, 2005 and
      August 10, 2004, 105,294 and 112,000 shares of Common Stock, respectively,
      were
      credited to one executive’s deferred stock account upon his stock option
      exercise. The total unamortized deferred compensation was $0.5 and $0.6 million
      as of December 31, 2005 and 2004, respectively. In 2003, Alpine recognized
      income of $0.9 million as a result of the reversal of amounts previously accrued
      for matching contribution of deferred Common Stock held by employees who were
      either terminated or retired prior to the deferral period expiration date.





Total
      compensation expense related to all stock based compensation plans for the
      years
      ended December 31, 2005, 2004 and 2003, was $0.5 million, $1.6 million
      and $0.4 million, respectively.




F-24





**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**11. 
      Stock based compensation plans (Continued)**





The
      following table summarizes stock option activity for the years ended
      December 31, 2003, 2004 and 2005.





**Shares**
              **Outstanding**
            
            **Weighted-**
              **Average
                Exercise**
              **Price**Outstanding
                at December 31, 2002
            
            
            2,723,208
            
            $
            10.72Exercised
            
            
            —
            
            
            —Canceled
            
            
            (2,402,584
            )
            
            11.81Granted
            
            
            1,527,371
            
            
            0.76Outstanding
                at December 31, 2003
            
            
            1,847,995
            
            $
            1.07Exercised
            
            
            (425,061
            )
            
            0.82Canceled
            
            
            (132,507
            )
            
            0.76Granted
            
            
            165,743
            
            
            1.22Outstanding
                at December 31, 2004
            
            
            1,456,170
            
            $
            1.19Exercised
            
            
            (168,333
            )
            
            0.76Canceled
            
            
            (64,719
            )
            
            3.68Granted
            
            
            72,675
            
            
            1.99Outstanding
                at December 31, 2005
            
            
            1,295,793
            
            $
            1.17





Information
      with respect to stock-based compensation plan stock options outstanding and
      exercisable at December 31, 2005 is as follows:





**Options
                Outstanding**
            
            
            **Options
                Exercisable****Range
                Of****Exercise
                Prices**
            
            **Number**
              **Of
                Options**
              **Outstanding**
            
            **Weighted**
              **Average**
              **Remaining**
              **Contractual**
              **Life
                (Years)**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**
            
            
            **Number**
              **Of
                Options**
              **Exercisable**
            
            **Weighted**
              **Average**
              **Exercise**
              **Price**$0.4500-$0.6500
            
            
            203,527
            
            
            7.15
            
            $
            0.5996
            
            
            
            71,656
            
            $
            0.5312$0.76
            
            
            598,199
            
            
            7.47
            
            
            0.7600
            
            
            
            238,191
            
            
            0.7600$0.8750—$3.1000
            
            
            447,778
            
            
            7.64
            
            
            1.3680
            
            
            
            217,526
            
            
            1.2892$3.4380—$9.8130
            
            
            35,083
            
            
            2.56
            
            
            4.9231
            
            
            
            35,083
            
            
            4.9231$10.4380—$17.9380
            
            
            11,206
            
            
            3.55
            
            
            13.3286
            
            
            
            11,206
            
            
            13.32861,295,793
            
            
            7.32
            
            $
            1.1663
            
            
            
            573,662
            
            $
            1.4322




**12. 
      Employee benefits**





In
      conjunction with the sale of DNE Systems, the Company entered into an agreement
      with a certain former employee that entitles the former employee to a benefit
      accrued under the former supplemental executive retirement plan (“SERP”),
      payable at normal retirement age (65). The employee does not accrue any
      additional benefits, except for interest, under the SERP and the Company has
      the
      right to pay the actuarial equivalent lump sum value of the SERP to the former
      employee at its election with 30 days prior notice to the employee. The Company
      has recorded the present value of the SERP liability of $0.4 million as an
      other
      long-term liability as of December 31, 2005 and 2004.





Essex
      Electric established a defined benefit pension plan for hourly union employees
      effective January 1, 2003. The change in the projected benefit obligation,
      the
      change in plan assets and the funded status of the defined benefit pension
      plan
      for the years ended December 31, 2005 and 2004, are presented below, along
      with amounts recognized in the respective consolidated balance sheets.




F-25





**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**12. 
      Employee benefits (Continued)**





Prior
      to
      2002, Alpine sponsored an unfunded SERP. During 2001, the Company terminated
      or
      froze SERP benefits for certain employees resulting in a curtailment loss of
      $2.5 million and a settlement loss of $2.5 million. The benefits were paid
      out
      in 2002 or deposited in Rabbi Trust accounts, effectively terminating Alpine’s
      SERP. The amount remaining in the Rabbi Trust accounts, all of which is related
      to two current employees and included in other current assets, as of December
      31, 2005, was $0.8 million. There is an equal and offsetting liability included
      in accrued expenses as of December 31, 2005.





The
      Company currently does not provide for any postretirement health care benefits.





**Defined
                Benefit**
              **Pension
                Plan****December
                31,**
            
            **December
                31,****2005**
            
            **2004****Change
                in benefit obligation:**Benefit
                obligation at beginning of year
            
            $
            267
            
            $
            131Service
                cost
            
            
            —
            
            
            117Interest
                cost
            
            
            16
            
            
            8Actuarial
                loss
            
            
            98
            
            
            24Benefits
                paid
            
            
            (340
            )
            
            (13
            )Benefit
                obligation at end of year
            
            $
            41
            
            $
            267**Change
                in plan assets:**Fair
                value of plan assets at beginning of year
            
            $
            144
            
            $
            10Actual
                return on plan assets
            
            
            (5
            )
            
            (2
            )Employer
                contribution
            
            
            255
            
            
            149Benefits
                paid
            
            
            (340
            )
            
            (13
            )Fair
                value of plan assets at end of year
            
            $
            54
            
            $
            144Funded
                status
            
            $
            13
            
            $
            (124
            )Unrecognized
                net (gain) loss
            
            
            17
            
            
            41Net
                amount recognized
            
            $
            30
            
            $
            (83
            )




**Amounts
                recognized in the consolidated balance sheets consist
                of:**Accrued
                benefit liability
            
            $
            13
            
            $
            (124
            )Accumulated
                other comprehensive income
            
            
            17
            
            
            41Net
                amount recognized
            
            $
            30
            
            $
            (83
            )





F-26


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**12. 
      Employee benefits (Continued)**




The
      components of net periodic benefit cost of the defined benefit pension plan
      during the years ended December 31, 2005, 2004 and 2003 are presented
      below:





**Defined
                Benefit Pension Plan****Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****Components
                of net periodic benefit cost:**Service
                cost
            
            $
            —
            
            $
            117
            
            $
            139Interest
                cost
            
            
            16
            
            
            8
            
            
            2Expected
                return on plan assets
            
            
            (14
            )
            
            (4
            )
            
            —Amortization
                of prior service cost
            
            
            2
            
            
            —
            
            
            —Curtailment
                (gain) loss
            
            
            139
            
            
            —
            
            
            (20
            )Net
                periodic benefit cost
            
            $
            143
            
            $
            121
            
            $
            121





The
      actuarial present value of the projected pension benefit obligation at
      December 31, 2005, 2004 and 2003 were determined based upon the following
      assumptions:




**Defined
                Benefit Pension Plan****Year
                Ended December 31,****2005**
            **2004**
            **2003**Discount
                rate
            5.75%
            5.75%
            6.25%Expected
                return on plan assets
            8.0%
            8.0%
            8.0%Increase
                in future compensation
            n/a
            n/a
            n/a




Following
      the Electrical Acquisition, Essex Electric established a defined contribution
      plan covering substantially all employees of Essex Electric and Alpine. The
      plan
      provides for limited matching of employee contributions. Company contributions
      to these plans for the years ended December 31, 2005 and 2004 were approximately
      $0.5 for both periods.





The
      Company elected not to adopt the disclosure requirements of SFAS No. 132R, *Employers’
      Disclosures about Pensions and Other Postretirement Benefits* ,
      due to
      the immateriality of its pension plan.





In
      December 2005, the Compensation Committee approved the adoption of The Alpine
      Group, Inc. Deferred Cash Account Plan (the “Plan”), which provides senior
      executives of the Company and its subsidiaries designated by the Compensation
      Committee with the opportunity to defer receipt of and taxation upon all or
      a
      portion of such executives’ cash compensation for a range of deferral or
      redeferral periods elected by each executive as set out in the Plan. Amounts
      deferred under the Plan remain assets of the Company subject to claims of its
      creditors and any investment gains or losses upon such deferred amounts are
      exclusively for the respective accounts of participating executives. There
      are
      no provisions in the Plan for any Company match or contribution to the
      Plan.




F-27






**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**13.
      Income taxes**





The
      provision (benefit) for income taxes for the years ended December 31, 2005,
      2004 and 2003, is comprised of the following:





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****(in
                thousands)**Current:Federal
            
            $
            3,842
            
            $
            (4,547
            )
            $
            663State
            
            
            588
            
            
            337
            
            
            (325
            )Total
                current from continuing operations
            
            
            4,430
            
            
            (4,210
            )
            
            338Deferred:Federal
            
            
            (1,322
            )
            
            (831
            )
            
            (9,352
            )State
            
            
            (1,384
            )
            
            (271
            )
            
            (1,695
            )Total
                deferred from continuing operations
            
            
            (2,706
            )
            
            (1,102
            )
            
            (11,047
            )Income
                taxes from continuing operations
            
            
            —
            
            
            (5,312
            )
            
            (10,709
            )Income
                taxes from discontinued operations
            
            
            —
            
            
            1,115
            
            
            1,897Provision
                for taxes on gain on sale of DNE
            
            
            —
            
            
            10,275
            
            
            —Total
                income tax (benefit) provision
            
            $
            1,724
            
            $
            6,078
            
            $
            (8,812
            )




The
      provision (benefit) for income taxes differs from the amount computed by
      applying the U.S. federal income tax rate of 35% for the years ended
      December 31, 2005, 2004 and, 2003, because of the effect of the following
      items:





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****(in
                thousands)**Continuing
                operations:Expected
                income tax expense (benefit) at U.S. federal statutory tax
                rate
            
            $
            2,597
            
            $
            (4,523
            )
            $
            287,026State
                income taxes, net of U.S. federal income tax benefit
            
            
            (517
            )
            
            (542
            )
            
            (1,432
            )Tax
                benefit on charitable contribution of building
            
            
            (1,111
            )
            
            (722
            )
            
            —Change
                in valuation allowance
            
            
            (50
            )
            
            149
            
            
            (858
            )Change
                in reserves
            
            
            192
            
            
            738
            
            
            (128
            )Permanent
                difference related to an investment
            
            
            —
            
            
            —
            
            
            (300,427
            )Other,
                net
            
            
            613
            
            
            (412
            )
            
            5,110Provision
                for income tax benefit from continuing operations
            
            $
            1,724
            
            $
            (5,312
            )
            $
            (10,709
            )




F-28




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**13. 
      Income taxes (Continued)**





Items
      that result in deferred tax assets and liabilities and the related valuation
      allowance at December 31, 2005 and 2004 are as follows:




**December
                31,**
            
            **December
                31,****2005**
            
            **2004**Deferred
                tax assets:
            
            **(in
                thousands)**Accruals
                not currently deductible for tax
            
            $
            1,257
            
            $
            833Compensation
                expense related to unexercised stock options and
              stock
                grants
            
            
            2,789
            
            
            2,564Net
                operating loss carryforwards
            
            
            2,315
            
            
            5,845Other
            
            
            672
            
            
            813Total
                deferred tax assets
            
            
            7,033
            
            
            10,055Less
                valuation allowance
            
            
            (2,750
            )
            
            (6,662
            )Net
                deferred tax assets
            
            
            4,283
            
            
            3,393Deferred
                tax liabilities:Depreciation
            
            
            3,686
            
            
            2,314Inventory
            
            
            5,968
            
            
            8,997Total
                deferred tax liabilities
            
            
            9,654
            
            
            11,311Net
                deferred tax liability
            
            $
            5,371
            
            $
            7,918Net
                long-term deferred tax assets
            
            
            313
            
            
            264Net
                current deferred tax liability
            
            $
            5,684
            
            $
            8,182





Tax
      contingency - the Company provides reserves for liabilities that may arise
      as a
      result of income tax exposures arising in the normal course of its business.
      These exposures may result from specific positions taken by the Company in
      its
      tax returns or from tax planning strategies employed by the Company to minimize
      its tax liabilities. Management determines tax exposure items based on positions
      asserted by tax authorities as well as management's assessment of exposures
      from
      unasserted items. The calculation of the income tax provision involves
      significant estimates and assumptions and actual results could differ from
      those
      estimates.





During
      2001, the Company entered into commercial transactions intended to offset the
      potential impact of interest rate changes on the Company’s investments,
      including the investment of the net cash proceeds from the sale of an equity
      investment. The Company claimed tax benefits from these transactions of $11.2
      million and $3.2 million in 2001 and 2002, respectively. At December 31, 2001,
      the Company established a tax contingency reserve on its balance sheet
      corresponding to realized tax benefits. The balances in the reserve at December
      31, 2005 and 2004 (including interest) were $17.1 and $16.4 million,
      respectively. This reserve is classified as other long-term liabilities in
      the
      accompanying consolidated financial statements.





Valuation
      allowances - at December 31, 2005, Alpine had state net operating loss
      carryforwards (“NOL’s”) in the amount of $3.6 million that can be used to offset
      future taxable income. The net operating loss carryforwards expire beginning
      in
      2006 through 2020. Due to the surrender of authority for doing business in
      certain states, it is unlikely that Alpine will realize all of its state net
      operating loss carryforwards. Accordingly, Alpine has determined that, pursuant
      to the provision of SFAS No. 109, a deferred tax valuation allowance in the
      amount of $1.9 million is required on those deferred tax assets. Availability
      of
      the net operating loss carryforwards might be challenged upon taxing
      authorities' examinations of the related tax returns, which could affect the
      availability of such carryforwards. Alpine believes, however, that any
      challenges that would limit the utilization of net operating loss carryforwards
      would not have a material adverse effect on Alpine's financial position. During
      2005, approximately $37.1 million of State NOL’s expired unused.




F-29




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**14. 
      Asset impairment, restructuring and other charges**





During
      the years ended December 31, 2005, 2004 and 2003 the Company recorded $3.1,
      $3.9
      and $13.6 million, respectively, of restructuring and other charges comprised
      of
      costs related to relocation and installation of certain equipment from closed
      facilities and the start-up of new manufacturing processes at Essex Electric’s
      Florence, AL manufacturing facility, and costs related to the wind-down of
      other
      facilities previously closed and other miscellaneous expenses related to the
      Company's restructuring.





The
      following tables illustrate the restructuring reserve and the related activities
      for 2005 and 2004:





**December 31,**
              **2004**
            
            **Charges**
            
            **Payments**
            
            **December
                31,**
              **2005****(in
                thousands)**Employee
                severance
            
            $
            —
            
            $
            804
            
            $
            794
            
            $
            10Facility
                exit costs
            
            
            —
            
            
            1,423
            
            
            1,423
            
            
            —Equipment
                and inventory relocation costs and other costs
            
            
            —
            
            
            841
            
            
            818
            
            
            23$
            —
            
            $
            3,068
            
            $
            3,035
            
            $
            33





**December 31,**
              **2003**
            
            **Charges**
            
            **Payments**
            
            **December
                31,**
              **2004****(in
                thousands)**Employee
                severance
            
            $
            1,001
            
            $
            19
            
            $
            1,020
            
            $
            —Facility
                exit costs
            
            
            —
            
            
            935
            
            
            935
            
            
            —Equipment
                and inventory relocation costs and other costs
            
            
            —
            
            
            2,942
            
            
            2,942
            
            
            —$
            1,001
            
            $
            3,896
            
            $
            4,897
            
            $
            —




**December 31,**
              **2002**
            
            **Charges**
            
            **Payments**
            
            **December
                31,**
              **2003****(in
                thousands)**Employee
                severance
            
            $
            1,227
            
            $
            3,640
            
            $
            3,866
            
            $
            1,001Facility
                exit costs
            
            
            200
            
            
            792
            
            
            992
            
            
            —Equipment
                and inventory relocation costs and other costs
            
            
            —
            
            
            9,120
            
            
            9,120
            
            
            —$
            1,427
            
            $
            13,552
            
            $
            13,978
            
            $
            1,001





During
      the second quarter of 2005 the Anaheim, CA manufacturing facility was closed
      resulting in $1.3 million of restructuring costs (costs are included in the
      table above).  Restructuring costs included $0.6 million for severance and
      $0.7 million for equipment and inventory relocation.





Asset
      impairments were recognized during 2003 at the Sikeston, MO facility for items
      idled during the restructuring efforts and later identified for sale. The
      targeted assets had an original net book value of $1.1 million of which $0.5
      million impairment write-off was recognized to reduce the cost to its fair
      market value. The resulting $0.6 million value is reported as assets held for
      sale as of December 31, 2003. An additional impairment was taken at the Florence
      facility for assets involved in exiting the industrial product line. The total
      impairment loss amounted to $0.1 million, recorded in December 2003, with
      residual assets held for sale valued at $0.1 million.




F-30




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**15. 
      Derivative financial instruments and fair value
      information**





The
      Company to a limited extent, uses, forward fixed price contracts and derivative
      financial instruments to manage, commodity price risks. The Company is exposed
      to credit risk in the event of nonperformance by counterparties for metal
      forward price contracts, and metals futures contracts but the Company does
      not
      anticipate nonperformance by any of these counter parties. The amount of such
      exposure is generally limited to the unrealized gains (losses) within the
      underlying contracts.





***Commodity
      price risk management***





The
      cost
      of copper, the Company's most significant raw material has been subject to
      significant volatility over the past several years. In anticipation of a
      significant reduction in inventory levels in 2003, the Company entered into
      copper futures sales contracts to minimize the price risk associated with
      declining copper costs. These contracts were liquidated throughout 2003 in
      step
      with the decreases in inventory. **** In
      December 2003, the Company purchased approximately $13 million of copper
      inventory for use in the production process in the first quarter of 2004. In
      connection with such purchases, the Company entered into copper futures
      contracts to match the copper price to the consumption period. As such, these
      contracts were recorded at fair value at December 31, 2003 resulting in a charge
      to earnings of $0.6 million. These contracts were subsequently liquidated in
      the
      first quarter of 2004 and a gain was recognized of approximately $0.6 million.





Similarly,
      in December 2004, the Company purchased approximately $9 million of copper
      for
      use in the first quarter of 2005 and the Company entered into copper futures
      contracts to match the copper price to the consumption period. These contracts
      were also recorded a t
      fair
      value at December 31, 2004 resulting in a charge to earnings of $0.4 million.
      These contracts were subsequently liquidated in the first quarter of 2005 and
      a
      gain was recognized of approximately $0.4 million.




Again,
      in
      December 2005, the Company purchased approximately $3 million of copper for
      use
      in the first quarter of 2006 and the Company entered into copper futures
      contracts to match the copper price to the consumption period. These contracts
      were recorded at cost at December 31, 2005, which approximated fair value and
      therefore no adjustment to cost of sales was required. These contracts were
      liquidated in the first quarter of 2006.





**16. 
      Commitments and contingencies**





Total
      rent expense under cancelable and noncancelable operating leases was $3.0
      million, $2.7 million and $3.2 million during the years ended
      December 31, 2005, 2004 and 2003, respectively.





At
      December 31, 2005, future minimum lease payments under noncancelable
      operating leases are as follows:





**Year**
            **(in
                thousands)**2006
            $2,1002007
            1,3032008
            8722009
            3552010
            183Thereafter
            624


The
      Company subleases a portion of each of their three regional distribution
      centers. The Company received $1.0 million and $0.8 million of sublease income
      during 2005 and 2004, respectively. Below are the future lease commitments
      from
      the subleases related to these subleases.





**Year**
            **(in
                thousands)**2006
            $3142007
            74





F-31


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**16. 
      Commitments and contingencies (Continued)**





At
      December 31, 2005 the Company had committed approximately $31.8 million to
      outside vendors for the purchase of goods and services, which was primarily
      for
      inventory and other supply items.





Approximately
      7% of the Company's total labor force at December 31, 2005 is covered by
      collective bargaining agreements. Contracts covering the Company's unionized
      work force are due to expire at various times in 2007. The Company considers
      relations with its employees to be satisfactory.





The
      Company is subject to lawsuits incidental to its business. In the opinion of
      management, based on its examination of such matters and discussions with
      counsel, the ultimate resolution of all pending or threatened litigation, claims
      and assessments will have no material effect upon Alpine's consolidated
      financial position, liquidity or results of operations.





Alpine's
      operations are subject to environmental laws and regulations in each of the
      jurisdictions in which it owns or operates facilities or for which it has
      assumed liabilities, governing, among other things, emissions into the air,
      discharges to water, the use, handling and disposal of hazardous substances
      and
      the investigation and remediations of soil and groundwater contamination both
      on-site at past and current facilities and at off-site disposal locations.
      Alpine, as to two sites, and Essex Electric, as to one site, are currently
      involved in environmental investigations which will likely result in certain
      remedial activities being required under the oversight of two state regulatory
      agencies. Alpine currently does not believe that any of the environmental
      matters for which it may be liable will have a material adverse effect upon
      its
      business, financial condition, liquidity or results of operations.




The
      Company accepts certain customer orders for future delivery at fixed prices.
      As
      copper is the most significant raw material used in the manufacturing process,
      the Company enters into forward purchase fixed price commitments for copper
      to
      properly match its cost to the value of the copper to be billed to the
      customers. At December 31, 2005 and 2004, the Company had forward fixed
      price purchase commitments of 1.0 and 0.5 million copper pounds, respectively.




**17. 
      Related party transactions**





In
      December 2002 the Company acquired certain assets and liabilities from Superior
      under the Electrical Acquisition. At that time, the Company also entered into
      a
      supply and transitional services agreement with Superior which was subsequently
      replaced in November 2003 by a new supply and services agreement between
      Superior Essex Inc. (the successor company to Superior pursuant to the Plan
      of
      Reorganization) and Essex Electric (collectively, the “Supply Agreements”). The
      Supply Agreements provided for the purchase from Superior of certain specified
      quantities of copper rod and certain transitional administrative services to
      Alpine Holdco and Essex Electric. The Supply Agreements expired on December
      31,
      2004 in accordance with their terms. The total cost of copper rod purchased
      under the Supply Agreements in 2004 and 2003 was $89.2 million and, $99.6
      million respectively. The cost of administrative service for 2004 and 2003
      was
      $1.4 and $4.4 million, respectively. Essex Electric also purchased approximately
      $84.4 million of copper rod from Superior in 2005.





Essex
      Electric subleases a portion of the Company’s leased facilities at Ontario,
      California and McDonough, Georgia to Superior. Lease payments to Essex Electric
      by Superior were $0.6, $0.7 and $0.8 in 2005, 2004 and 2003,
      respectively.




Essex
      Electric processes insulated copper wire at its Jonesboro, IN scrap reclamation
      center for Superior. Essex Electric charges a fee for this service and retains,
      then sells, the copper reclaimed. The amount paid to Superior for the copper
      pounds recovered were approximately $12.1, $10.7 and $5.5 million for 2005,
      2004
      and 2003, respectively. The charges to Superior for these services were $0.6,
      $0.6 and $0.5 million for 2005, 2004 and 2003, respectively.





In
      October 2003 and January 2005, Superior, under rights provided for in a
      Securityholders Agreement dated December 11, 2002, purchased 169 and 445 newly
      issued shares of Essex Electric common stock for an aggregate cash purchase
      price of $0.5 million and $1.2 million, respectively. On January 25, 2006,
      Alpine purchased from Superior for a purchase price of $8.5 million, the Warrant
      (as defined in Note 1 above) and Superior’s 614 shares of Essex Electric common
      stock, resulting in Alpine owning 100% of the total outstanding capital stock
      of
      Essex Electric.




F-32




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**17. 
      Related party transactions (Continued)**





At
      December 31, 2005 and 2004, Alpine has outstanding loans to certain
      officers totaling $0.3 and $0.4 million, respectively, relating to the tax
      implications associated with the exercise in prior years of stock options and
      restricted stock grants. The unpaid balance, which is added to accumulated
      deficit, bears interest at prime plus 0.5%. During 2002, the Company agreed
      to
      forgive $0.3 million, of such loans and accrued interest, with such
      forgiveness to occur over a ten year period, subject to certain employment
      conditions.





During
      2004, the Company assigned life insurance policies to a former employee and
      current member of the Board of Directors for the Company, in satisfaction of
      its
      obligation to pay $0.2 million of annual premiums in respect of the polices.
      The
      aggregate net cash surrender value of the polices at the time of assignment
      was
      $0.2 million.





Alpine
      has made short-term advances to the United States subsidiary of Superior Cables
      Ltd., Alpine’s 46% owned affiliate, secured by United States-based inventory and
      accounts receivable, at an interest rate of LIBOR plus 1.4% per annum, to
      augment funding of that affiliate’s growth and working capital, particularly in
      the United States. As of September 30, 2005, $1.4 million of advances were
      included as due from related party. Total advances will not exceed $2 million
      and all advances must be repaid on or prior to June 30, 2006.





In
      September 2005, Essex Electric loaned an employee, who was not an executive
      officer or equivalent of the Company, approximately $0.2 million as a bridge
      loan while the employee was relocating from one residence to another. This
      amount was outstanding at December 31, 2005 and is included in other current
      assets.





**18.
       Preferred stock**





Alpine
      has authorized 500,000 shares of preferred stock with a par value of $1.00
      per
      share. The preferred stock may be issued at the discretion of the Board of
      Directors in one or more series with differing terms, limitations and rights.





On
      June
      23, 2003, Alpine completed a private placement of 8,287 shares of a new issue
      of
      Series A Cumulative Convertible Preferred Stock (the "Series A Preferred Stock")
      to its directors and certain officers for a purchase price of $380 per share,
      or
      an aggregate of approximately $3.1 million. Holders of the Series A
      Preferred Stock are entitled to receive, when, as and if declared by the board
      of directors out of funds legally available for payment, cash dividends at
      an
      annual rate of $30.40 per share. The Series A Preferred Stock originally
      was convertible into Common Stock, at the option of the holder, at the rate
      of
      691 shares of Common Stock per share of Series A Preferred. As a result of
      a
      special dividend declared by the Company (see Note 21), the conversion rate
      increased to 743.01. Since the market price of the Common Stock on the
      subscription date (June 23, 2003) was $0.76 per share and the original
      conversion price was $0.55 per share, a beneficial conversion feature of $1.2
      million was recorded as a reduction to the mandatorily redeemable series A
      cumulative preferred stock line of the balance sheet with the offset to capital
      in excess of par. The beneficial conversion feature was recorded as a dividend
      as of December 29, 2004 when the privately placed Series A Preferred Stock
      became convertible following the increase in authorized but unissued shares
      of
      Common Stock from 25 million to 50 million shares.





On
      November 10, 2003, the Company completed the sale of 9,977 shares of Series
      A
      Preferred Stock pursuant to a rights offering to holders of the Common Stock.
      Common stockholders were offered a right to purchase one share of Series A
      Preferred Stock at a price of $380 per share for each 500 shares of Common
      Stock
      held on September 29, 2003. The terms of the Series A Preferred Stock are the
      same as that purchased by the officers and directors in the private placement
      discussed above. Total proceeds received from the sale were $3.8 million. The
      recording of dividends, if any, on the Series A Preferred Stock will reduce
      the
      Company's earnings per share in the period recorded. Since the market price
      of
      the Common Stock on the date of issuance (November 10, 2003) was $0.92 per
      share
      and the original conversion price was $0.55 per share, a beneficial conversion
      feature of $2.6 million was recorded. This was recorded as a dividend since
      the
      shares were immediately convertible, offset with a credit to capital in excess
      of par. The Company may cause conversion of the Series A Preferred Stock into
      Common Stock if the Common Stock is then listed on the New York Stock Exchange
      or the American Stock Exchange or is traded on the Nasdaq National Market System
      and the average closing price of a share of the Common Stock for any 20
      consecutive trading days equals or exceeds 300% of the conversion price then
      in
      effect. The Series A Preferred Stock is subject to mandatory redemption by
      the
      Company ratably on the last day of each quarter during the three-year period
      commencing on December 31, 2009 at the liquidation value of $380 per share,
      plus accrued and unpaid dividends. Additionally, if the Company experiences
      a
      change in control it will, subject to certain limitations, offer to redeem
      the
      Series A Preferred Stock at a cash price of $380 per share plus (i) accrued
      and unpaid dividends and (ii) if the change of control occurs prior to
      December 31, 2007, all dividends that would be payable from the redemption
      date through December 31, 2007.




F-33




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**18. 
      Preferred stock (Continued)**





At
      December 31, 2005, 177 shares of 9% Cumulative Convertible Preferred Stock
      (“9% Preferred Stock”) were outstanding. Each Share of the 9% Preferred Stock is
      convertible into 105 1 / 2 shares
      of Common Stock, subject to customary adjustments. Alpine may redeem the stock
      at any time, in whole or in part at a price equal to the liquidation value
      per
      share of $1,000. The 9% Preferred Stock is senior to the Series A Preferred
      Stock.





**19. 
      Stockholder rights agreement**





Under
      the
      Company's Stockholder Rights Plan, last amended in March 2003 ("the Plan"),
      a
      Preferred Share Purchase Right ("Right") is attached to each share of Common
      Stock pursuant to which the holder will, in certain takeover-related
      circumstances, become entitled to purchase from the Company one one-hundredth
      of
      a share of Series A Junior Participating Preferred Stock at a price of
      $75.00, subject to adjustment, with each share having substantially the rights
      and preferences of 100 shares of Common Stock. The Rights will separate from
      the
      common shares after a person or entity or group of affiliated or associated
      persons (other than certain grandfathered persons) acquire beneficial ownership
      of 15% (or in the case of Steven S. Elbaum, 40%) or more of the outstanding
      common shares) or commence a tender offer that would result in a person or
      group
      acquiring, beneficial ownership of 15% or more of the outstanding common shares.
      Grants of stock options and restricted stock by the board of directors of the
      Company (and its committees) to its officers, will not by itself cause an
      officer to become an acquiring person. Also, in certain takeover-related
      circumstances, each Right (other than those held by an acquiring person) will
      be
      exercisable for shares of Common Stock or stock of the acquiring person having
      a
      market value of twice the exercise price. Once certain triggering events have
      occurred to cause the Rights to become exercisable, each Right may be exchanged
      by the Company for one share of Common Stock.





The
      Rights are redeemable at any time, prior to the time that a person becomes
      an
      acquiring person, by the Company before their expiration on February 17,
      2009 at a redemption price of $0.01 per Right. At December 31, 2005,
      200,000 shares of Series A Junior Participating Preferred Stock were
      reserved for issuance under this Plan.





**20.
      Quarterly financial information (unaudited)**





The
      Company's unaudited quarterly results of operations for the year ended
      December 31, 2005 and 2004 are as follows:




**2005****Quarter
                Ended**
            
            
            **Year
                Ended****March
                31**
            
            
            **June
                30**
            
            
            **September
                30**
            
            
            **December
                31**
            
            
            **December
                31****(in
                thousands, except per share data)**Net
                sales
            
            $
            89,833
            
            $
            97,811
            
            $
            113,021
            
            $
            147,150
            
            $
            447,815Gross
                profit
            
            
            1,917
            
            
            5,390
            
            
            9,545
            
            
            24,317
            
            
            41,169(Income)
                loss from continuing operations
            
            
            (3,260
            )
            
            (1,364
            )
            
            786
            
            
            8,411
            
            
            4,573Net
                income (loss)
            
            
            (3,260
            )
            
            (1,364
            )
            
            786
            
            
            8,411
            
            
            4,573Net
                income (loss) per share of common stock - basic (a)
            
            
            (0.22
            )
            
            (0.09
            )
            
            0.04
            
            
            0.51
            
            
            0.26Net
                income (loss) per share of common stock - diluted (a)
            
            
            (0.22
            )
            
            (0.09
            )
            
            0.03
            
            
            0.29
            
            
            0.16




F-34




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**20.
      Quarterly financial information (unaudited) (Continued)**







**2004****Quarter
                Ended**
            
            **Year
              Ended****March
                31**
            
            **June
                30**
            
            **September
                30**
            
            **December
                31**
            
            **December
                31****(in
                thousands, except per share
                data)**Net
                sales
            
            $
            81,937
            
            $
            76,678
            
            $
            80,354
            
            $
            76,925
            
            $
            315,894Gross
                profit
            
            
            10,187
            
            
            6,578
            
            
            4,972
            
            
            (2,181
            )
            
            19,556Income
                from continuing operations
            
            
            772
            
            
            (746
            )
            
            (2,837
            )
            
            (4,332
            )
            
            (7,143
            )Income
                from discontinued operations
            
            
            703
            
            
            892
            
            
            (93
            )
            
            —
            
            
            1,502Gain
                on sale of DNE
            
            
            —
            
            
            —
            
            
            19,088
            
            
            (7
            )
            
            19,081Net
                income (loss)
            
            
            1,475
            
            
            146
            
            
            16,158
            
            
            (4,339
            )
            
            13,440Net
                income (loss) per share of common stock - basicFrom
                continuing operations, net of preferred dividends
            
            
            0.05
            
            
            (0.07
            )
            
            (0.33
            )
            
            (0.38
            )
            
            (0.77
            )From
                discontinued operations
            
            
            0.06
            
            
            0.07
            
            
            (0.01
            )
            
            —
            
            
            0.11Gain
                on sale of DNE
            
            
            —
            
            
            —
            
            
            1.39
            
            
            —
            
            
            1.42Net
                income (loss)
            
            
            (0.11
            )
            
            —
            
            
            1.05
            
            
            (0.38
            )
            
            0.75Net
                income (loss) per share of common stock - diluted (a)From
                continuing operations
            
            
            0.03
            
            
            (0.07
            )
            
            (0.33
            )
            
            (0.38
            )
            
            (0.77
            )From
                discontinued operations
            
            
            0.03
            
            
            0.07
            
            
            (0.01
            )
            
            —
            
            
            0.11Gain
                on sale of DNE
            
            
            —
            
            
            —
            
            
            1.39
            
            
            —
            
            
            1.42Net
                income (loss)
            
            
            0.06
            
            
            —
            
            
            1.05
            
            
            (0.38
            )
            
            0.76





(a)
            Net
                income per diluted share of common stock for the twelve months is
                determined by computing a year-to-date weighted average of the number
                of
                incremental shares included in each quarterly diluted net income
                per share
                calculation. As a result, the sum of net income per share for the
                four
                quarterly periods may not equal the net income per share for the
                years
                ended December 31, 2005 and 2004.




**2004****Quarter
                Ended**
            
            **Year
                Ended****March
                31**
            
            **June
                30**
            
            **September
                30**
            
            **December
                31**
            
            **December
                31****(in
                thousands, except per share data)**Reconciliation
                of 10Q amounts to amounts reported above:Net
                sales10Q
                as filed (for quarters 1-3 in 2004)
            
            
            88,833
            
            
            76,678
            
            
            80,354
            
            
            76,925
            
            
            322,790Discontinued
                Operations (a)
            
            
            (6,896
            )
            
            —
            
            
            —
            
            
            —
            
            
            (6,896
            )Net
                Customer Sales as reported
            
            
            81,937
            
            
            76,678
            
            
            80,354
            
            
            76,925
            
            
            315,894Gross
                profit10Q
                as filed (for quarters 1-3 in 2004)
            
            
            13,894
            
            
            6,578
            
            
            4,972
            
            
            (2,181
            )
            
            23,263Discontinued
                Operations (a)
            
            
            (3,707
            )
            
            —
            
            
            —
            
            
            —
            
            
            (3,707
            )Gross
                profit as reported
            
            
            10,187
            
            
            6,578
            
            
            4,972
            
            
            (2,181
            )
            
            19,556





(a)
            DNE
                sale was announced during second quarter and classified as discontinued
                operations the second quarter and
                thereafter.




F-35


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**21. 
      Special Dividend and Common Stock Reverse/Forward Split**





On
      August
      24, 2004, Alpine declared a special dividend of up to $0.40 per share of Common
      Stock and a special dividend of $103.65 per share of Series A Preferred Stock
      to
      shareholders of record on September 14, 2004 (the “Record Date”). The amount of
      the special dividend in respect of the Common Stock was reduced proportionately,
      to $0.36 per share, to adjust for additional shares of Common Stock issued
      by
      the Company between August 24, 2004 and the Record Date. This resulted in
      special dividend payments of $4.9 million in respect of the Common Stock and
      $1.5 million in respect of the Series A Preferred Stock. Under the respective
      terms of the stock based compensation plans of the Company (see note 11), the
      Company is required to allocate a deemed dividend in respect of shares of
      restricted Common Stock granted and unvested and/or deposited and credited
      to
      participant accounts under the Alpine Deferred Stock Account Plan in an amount
      equal to any cash dividend paid in respect of the Common Stock. Accordingly,
      on
      September 30, 2004, the Company declared, but did not yet pay, a total deemed
      dividend of $0.9 million, of which $0.1 and $0.6 million was recorded to
      compensation expense during 2005 and 2004, respectively. The remainder will
      be
      amortized over the vesting period of such unvested or deferred shares of Common
      Stock.





On
      December 30, 2004 the Company effected a reverse 1-for-100 stock split followed
      immediately by a forward 100-for-1 stock split of the Common Stock. As permitted
      under the Delaware General Corporation Law, stockholders whose shares of Common
      Stock were converted into less than 1 share as a result of the reverse split
      had
      these shares canceled and received cash payments equal to the fair value of
      the
      shares cancelled.





**22.
       Essex Electric Sale**





As
      mentioned in Note 1, on January 31, 2006, Essex Electric completed the sale
      of
      certain of its assets comprising its building wire business to Southwire, which
      we refer to at times as the Essex Electric Sale. The transaction was provided
      for and consummated pursuant to an asset purchase agreement between Essex
      Electric, as seller and Southwire, as buyer, dated September 30, 2005. The
      agreement provided for the sale by Essex Electric of all of its closing date
      building wire related inventory and prepaid assets, its Florence, Alabama
      manufacturing plant and equipment, and the assumption by Southwire of certain
      contracts and selected current liabilities related to the business. Essex
      Electric retained substantially all of its other liabilities including the
      indebtedness under its revolving credit facility. Excluded from the sale were
      cash and cash equivalents and accounts receivable of Essex Electric, a copper
      scrap reclamation plant and operation based in Jonesboro, Indiana, a plastic
      resin compounding plant and operation based in Marion, Indiana, and three leased
      warehouse distribution centers. The scrap reclamation operation serviced both
      Essex Electric’s internal requirements for scrap processing, as well as outside
      customers. The purchase price was the sum of (i) $27 million plus (ii) the
      closing date value of Essex Electric’s inventory and certain prepaid assets.





The
      purchase price of $55.6 million was paid in cash by Southwire at closing and
      is
      subject to customary post-closing review and adjustment by the parties in
      accordance with certain agreed upon procedures provided for under the asset
      purchase agreement. Pursuant to a separate guaranty dated September 30, 2005,
      the Company guaranteed to Southwire that Essex Electric would maintain cash
      and
      cash equivalent assets of not less than $3.5 million for the eighteen-month
      period through July 2007. In connection with the consummation of the sale,
      Essex
      Electric repaid in full and terminated the Revolving Credit Facility (see Note
      7).





As
      of
      December 31, 2005, the net assets to be disposed of pursuant to the Essex
      Electric Sale did not meet all of the requirements of SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ,
      in
      order to be classified as assets held for sale or discontinued operations as
      of
      December 31, 2005 since completion of the sale required Alpine stockholder
      approval. Such approval occurred at a special meeting of stockholders of Alpine
      on January 26, 2006. The Essex Electric Sale closed on January 31,
      2006.




F-36




**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**22. 
      Essex Electric Sale (continued)**





The
      assets and liabilities included in the 2005 and 2004 consolidated financial
      statements relating to the operations of Essex Electric sold in the Essex
      Electric Sale are as follows:





**December
                31,**
            
            **December
                31,****2005**
            
            **2004****ASSETS**Current
                assets:
            
            **(in
                millions)**Account
                receivable
            
            $
            67.4
            
            $
            39.0Inventories,
                net of LIFO reserve of $30.0 and $22.2, respectively
            
            
            21.4
            
            
            30.4Other
                current assets
            
            
            2.0
            
            
            4.7Total
                current assets
            
            $
            90.8
            
            $
            74.1Property,
                plant and equipment, net (Note 3)
            
            
            16.5
            
            
            15.5Other
                assets
            
            
            0.8
            
            
            1.2Total
                assets
            
            $
            108.1
            
            $
            90.8**LIABILITIES**Current
                liabilities:Revolving
                credit facility
            
            $
            26.7
            
            $
            40.3Accounts
                payable
            
            
            25.3
            
            
            14.0Accrued
                expenses
            
            
            11.7
            
            
            7.7Accrued
                income taxes
            
            
            2.6
            
            
            —Deferred
                income taxes
            
            
            6.4
            
            
            8.8Total
                current liabilities
            
            
            72.7
            
            
            70.8Deferred
                income taxes
            
            
            2.8
            
            
            2.4Warrant
            
            
            1.3
            
            
            0.9Total
                liabilities
            
            
            76.8
            
            
            74.1Net
                assets
            
            $
            31.3
            
            $
            16.7




The
      revenues and pretax income included in the accompanying 2005, 2004 and 2003
      statement of operations included in the consolidated financial statements
      contained herein related to the operations sold in the Essex Electric Sale
      are
      as follows:





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**(in
                millions)Net
                sales
            
            $
            438.4
            
            $
            304.7
            
            $
            296.4Pretax
                income (loss)
            
            
            12.3
            
            
            (5.5
            )
            
            (27.2
            )


The
      estimated pretax book gain on the Essex Electric Sale is approximately $21
      million. Total estimated net cash proceeds from the Essex Electric Sale are
      approximately $83 million, including the net proceeds received from Southwire,
      the collection of outstanding accounts receivable and payment of liabilities
      (including the Revolving Credit Facility) and expenses related to the Essex
      Electric Sale. Total restructuring expenses expected to be incurred are
      estimated to be approximately $7 million; related to severance, employee related
      costs and lease terminations.




F-37


**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**





**23. 
      Subsequent Events**




**Superior
      Cables Ltd. proposed Share Purchase agreement**





On
      February 22, 2006, Alpine Holdco Inc. (“Alpine Holdco”) and Superior Cables
      (1997) Holdings Ltd. (“SCH”), each wholly-owned subsidiaries of The Alpine
      Group, Inc. (the “Company”), Shrem Fudim Kelner Technologies Ltd., (“SFKT”), a
      company organized and registered under the laws of Israel, and Superior Cables
      Ltd., the Company’s indirect 46% owned affiliate (“SCL”), entered into a share
      purchase agreement (the “Agreement”). Subject and pursuant to the Agreement,
      Alpine Holdco agreed to invest $10 million in SCL in consideration for and
      purchase of 75 million SCL ordinary shares; and SFKT agreed to invest $5 million
      in SCL in consideration for and purchase of 46,192,664 SCL ordinary shares
      and
      an option (the “SKFT Option”) to purchase an additional 4,619,266 SCL ordinary
      shares (the “Investment”). Also, subject and pursuant to the Agreement,
      immediately prior to consummation of the Investment, SCH agreed to sell
      8,400,000 SCL ordinary shares to unrelated third parties (the “SCH Sale”). After
      giving effect to the Investment (including assumed exercise of the SFKT Option)
      and the SCH Sale, the Company (including the ownership interests of Alpine
      Holdco and SCH) and SFKT will own approximately 51% and 31%, respectively,
      of
      the issued and outstanding share capital of SCL.





Also
      on
      February 22, 2006, Alpine Holdco, SCH and SFKT entered into a shareholders
      agreement (the “Shareholder’s Agreement”) which is effective upon consummation
      of the Investment. The Shareholders' Agreement provides, among other matters,
      for (i) certain restrictions upon sale and disposition of SCL ordinary shares,
      (ii) rights of first offer and "tag along" rights in regard to certain proposed
      sales of SCL ordinary shares, (iii) mutual support and voting for candidates
      for
      election to the SCL board of directors, and (iv) sharing of certain management
      fees payable by SCL.




Completion
      of the transactions provided for under the Agreement are subject to certain
      customary conditions and to approval by the stockholders of SCL, in accordance
      with Israeli law, by certain Israeli governmental authorities and by the Tel
      Aviv Stock Exchange, not later than June 30, 2006.





On
      February 23, 2006, SCL announced that SCL and Bank Hapoalim Ltd., (the “Bank”),
      SCL’s principal lender, entered into an agreement amending and restructuring
      SCL’s indebtedness with the Bank. Pursuant to that agreement, effective
      concurrently with and conditioned upon consummation of the Investment, the
      Bank
      agreed to refinance and extend approximately $11 million in long term
      indebtedness of SCL and convert $15 million in SCL indebtedness into a
      subordinate loan repayable only upon liquidation of SCL in consideration of
      an
      option to acquire 15% of SCL share capital at no further cost.





**Modified
      “Dutch Auction” Tender Offer**





On
      March
      1, 2006, Alpine announced that it would commence a modified "Dutch Auction"
      tender offer to purchase up to 6 million shares of its Common Stock at a price
      per share not less than $3.00 and not greater than $3.50. The tender offer
      commenced on March 1, 2006, and will expire on April 3, 2006, unless extended.
      Alpine agreed to purchase up to 6 million common shares tendered in response
      to
      the offer (representing approximately 36.3% of Alpine's outstanding common
      shares and 22.3% of Alpine's outstanding common shares assuming conversion
      of
      all of Alpine's outstanding Series A Preferred stock). The tender offer is
      not
      contingent upon any minimum number of shares being tendered. The tender offer
      is, however, subject to a number of other terms and conditions.




F-38




**SCHEDULE
      I**





**THE
      ALPINE GROUP, INC.**


**(PARENT
      COMPANY)**





**CONDENSED
      BALANCE SHEETS**


**(in
      thousands)**





**December
                31,****2005**
            
            **2004****ASSETS**Current
                assets:Cash
                and cash equivalents
            
            $
            246
            
            $
            217Marketable
                securities
            
            
            22,976
            
            
            35,827Deferred
                income tax asset
            
            
            697
            
            
            614Due
                from related party
            
            
            1,399
            
            
            —Other
                current assets
            
            
            1,611
            
            
            1,826Total
                current assets
            
            
            26,929
            
            
            38,484Investment
                in consolidated subsidiaries
            
            
            26,443
            
            
            16,620Property,
                plant and equipment, net
            
            
            64
            
            
            79Advances
                and loans to subsidiaries
            
            
            2,596
            
            
            1,986Deferred
                income taxes
            
            
            3,082
            
            
            2,654Long-term
                investments and other assets
            
            
            2,064
            
            
            1,506Total
                assets
            
            $
            61,178
            
            $
            61,329


**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Current
                portion of long-term debt
            
            $
            —
            
            $
            386Accounts
                payable
            
            
            73
            
            
            45Accrued
                income taxes
            
            
            2,083
            
            
            7,336Accrued
                expenses
            
            
            3,505
            
            
            3,158Total
                current liabilities
            
            
            5,661
            
            
            10,925Long-term
                debt, less current portion
            
            
            2,456
            
            
            3,122Other
                long-term liabilities
            
            
            18,543
            
            
            17,782Mandatorily
                redeemable Series A preferred stock
            
            
            5,263
            
            
            5,545Stockholders'
                equity:9%
                cumulative convertible preferred stock at liquidation value
            
            $
            177
            
            $
            177Common
                stock, $.10 par value; (50,000,000 authorized; 25,239,696 and 24,670,054
                shares issued at December 31, 2005 and 2004, respectively)
            
            
            2,524
            
            
            2,467Capital
                in excess of par value
            
            
            169,156
            
            
            168,446Accumulated
                other comprehensive income (loss)
            
            
            219
            
            
            (20
            )Accumulated
                deficit
            
            
            (48,827
            )
            
            (52,955
            )Treasury
                stock, at cost (10,873,427 and 10,929,985 shares at December 31,
                2005 and
                2004, respectively)
            
            
            (93,648
            )
            
            (93,705
            )Receivable
                from stockholders
            
            
            (346
            )
            
            (415
            )Total
                stockholders' equity
            
            
            29,255
            
            
            23,955Total
                liabilities and stockholders' equity
            
            $
            61,178
            
            $
            61,329




F-39




**SCHEDULE
      I (cont')**





**THE
      ALPINE GROUP, INC.**


**(PARENT
      COMPANY)**





**CONDENSED
      STATEMENTS OF OPERATIONS**


**(in
      thousands)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**Revenues:Interest
                and dividend income
            
            $
            761
            
            $
            401
            
            $
            137Intercompany
                interest
            
            
            152
            
            
            190
            
            
            —Intercompany
                dividend
            
            
            —
            
            
            28,099
            
            
            —Other
                income
            
            
            648
            
            
            42
            
            
            70$
            1,561
            
            $
            28,732
            
            $
            207Expenses:General
                and administrative
            
            
            1,958
            
            
            4,104
            
            
            1,893Interest
                expense
            
            
            676
            
            
            519
            
            
            437Other
                expense
            
            
            220
            
            
            820
            
            
            1672,854
            
            
            5,443
            
            
            2,497Net
                revenues (expenses)
            
            
            (1,293
            )
            
            23,289
            
            
            (2,290
            )Gain
                on cancellation of equity investment in Superior
            
            
            —
            
            
            —
            
            
            854,262Income
                (loss) before income taxes and equity in net income(loss) of
                subsidiaries
            
            
            (1,293
            )
            
            23,289
            
            
            851,972Benefit
                (provision) for income taxes
            
            
            1,031
            
            
            936
            
            
            (389
            )Income
                before equity in income (loss) of subsidiaries, net
            
            
            (262
            )
            
            24,225
            
            
            851,583Equity
                in net income (loss) of subsidiaries, net:Alpine
                Holdco
            
            
            4,835
            
            
            (10,785
            )
            
            (16,807
            )Net
                income (loss)
            
            $
            4,573
            
            $
            13,440
            
            $
            834,776





F-40


**SCHEDULE
      I (cont')**





**THE
      ALPINE GROUP, INC.**


**(PARENT
      COMPANY)**





**CONDENSED
      STATEMENTS OF CASH FLOWS**


**(in
      thousands)**





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003**Cash
                flows provided by (used for) operating activities
            
            $
            (4,887
            )
            $
            36,513
            
            $
            (1,104
            )Cash
                flows from investing activities:Investments
                in and advances to subsidiaries
            
            
            —
            
            
            —
            
            
            (1,899
            )Capital
                expenditures
            
            
            (4
            )
            
            (66
            )
            
            (25
            )Purchase
                of marketable securities
            
            
            (4,036
            )
            
            (39,360
            )
            
            (6,672
            )Proceeds
                from sale of marketable securities and other investments
            
            
            17,283
            
            
            10,213
            
            
            —Proceeds
                from sale of (investment in) PolyVision
            
            
            —
            
            
            —
            
            
            1,296Advances
                under loans to affiliate
            
            
            (1,750
            )
            
            —
            
            
            —Proceeds
                under loans to affiliate
            
            
            351
            
            
            —
            
            
            —Proceeds
                from sale of assets
            
            
            —
            
            
            346
            
            
            —Cash
                flows provided by (used for) investing activities
            
            
            11,844
            
            
            (28,867
            )
            
            (7,300
            )Cash
                flows from financing activities:Long-term
                borrowings
            
            
            (1,483
            )
            
            (630
            )
            
            —Debt
                / equity issuance costs
            
            
            —
            
            
            —
            
            
            (39
            )Repayments
                of long-term borrowings
            
            
            —
            
            
            —
            
            
            (2,247
            )Issue
                of preferred stock
            
            
            —
            
            
            —
            
            
            6,940Dividends
                on preferred stock
            
            
            (445
            )
            
            (2,044
            )
            
            (206
            )Dividends
                on common stock
            
            
            —
            
            
            (4,947
            )
            
            —Proceeds
                from stock options exercised
            
            
            14
            
            
            234
            
            
            —Purchase
                of treasury shares
            
            
            —
            
            
            —
            
            
            (5
            )Preferred
                stock redemptions
            
            
            —
            
            
            (250
            )
            
            —Alpine
                Group, Inc. investment in Holdco
            
            
            (4,998
            )
            
            —
            
            
            —Proceeds
                from minority interest in sub
            
            
            —
            
            
            —
            
            
            471Other
            
            
            (16
            )
            
            1
            
            
            1Cash
                flows provided by (used for) financing activities
            
            
            (6,928
            )
            
            (7,636
            )
            
            4,915Net
                increase (decrease) in cash and cash equivalents
            
            
            29
            
            
            10
            
            
            (3,489
            )Cash
                and cash equivalents at beginning of year
            
            
            217
            
            
            207
            
            
            3,696Cash
                and cash equivalents at end of year
            
            $
            246
            
            $
            217
            
            $
            207Supplemental
                cash flow disclosures:Cash
                paid for interest
            
            $
            231
            
            $
            328
            
            $
            543Cash
                paid (refunded) for income taxes, net
            
            $
            3,965
            
            $
            730
            
            $
            (1,385
            )




F-41




**SCHEDULE
      I (cont')**




**THE
      ALPINE GROUP, INC.**


**(PARENT
      COMPANY)**





**NOTES
      TO FINANCIAL STATEMENTS**


**(in
      thousands)**





**December
                31,****2005**
            
            **2004**Long-term
                debt consists of:6%
                Junior Subordinate Notes, net of discount of $0.9 and $1.1 million,
                respectively
            
            $
            2,456
            
            $
            3,122Other
            
            
            —
            
            
            3862,456
            
            
            3,508Less
                current portion
            
            
            —
            
            
            386$
            2,456
            
            $
            3,122





Minimum
      current maturities of long-term debt outstanding as of December 31, 2005
      are as follows:





**Fiscal
                Year**
            
            
            **Amount**2006
            
            
            $
            02007
            
            
            
            7712008
            
            
            
            7712009
            
            
            
            7712010
            
            
            
            770





An
      intercompany dividend totaling $28.1 million was paid from Alpine Holdco to
      the
      parent company during 2004. This dividend was primarily proceeds from the sale
      of DNE and was consented to by the Alpine Holdco lenders.




F-42




**SCHEDULE
      II**





**THE
      ALPINE GROUP, INC. AND SUBSIDIARIES**


**SCHEDULE
      II** **—** **VALUATION
      AND QUALIFYING ACCOUNTS**


**Years
      Ended December 31, 2005, 2004 and 2003**


**(in
      thousands)**





**Additions****Description**
            
            **Balance
                at**
              **Beginning**
              **of
                Period**
            
            **Charged
                to**
              **Costs
                and**
              **Expenses**
            
            **Charged
                to**
              **Other**
              **Accounts**
            
            **Deductions**
            
            **Balance
                at**
              **End
                of Period**Year
                Ended December 31, 2005:Allowance
                for restructuring activities
            
            $
            —
            
            $
            3,068
            
            
            —
            
            $
            (3,035)(a
            )
            $
            33Allowance
                for doubtful accounts
            
            
            387
            
            
            190
            
            
            —
            
            
            (364
            )
            
            213LIFO
                reserve
            
            
            22,209
            
            
            7,909
            
            
            —
            
            
            —
            
            
            30,118Year
                Ended December 31, 2004:Allowance
                for restructuring activities
            
            $
            1,001
            
            $
            3,896
            
            
            —
            
            $
            (4,897)(a
            )
            $
            —Allowance
                for doubtful accounts
            
            
            263
            
            
            120
            
            
            —
            
            
            4
            
            
            387LIFO
                reserve
            
            
            9,007
            
            
            13,202
            
            
            —
            
            
            —
            
            
            22,209Year
                Ended December 31, 2003:Allowance
                for restructuring activities
            
            $
            1,427
            
            $
            13,555
            
            
            —
            
            $
            (13,981)(a
            )
            $
            1,001Allowance
                for doubtful accounts
            
            
            364
            
            
            115
            
            
            —
            
            
            (217
            )
            
            263LIFO
                reserve
            
            
            —
            
            
            9,007
            
            
            —
            
            
            —
            
            
            9,007


___________





(a)
            Payments
                for restructuring liabilities




F-43