**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

----

**FORM 10-Q**
| **(Mark  One)**                                                                                                                                                                               | ** **                                                                                                    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------|
| **x**                                                                                                                                                                                         | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934**  |
| ** **                                                                                                                                                                                    |
| **For  the Quarterly Period Ended March 31, 2007**                                                                                                                                            |
| ** **                                                                                                                                                                                    |
| **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 0-50514**

----

**SUPERIORESSEX INC.**

(Exact name of registrant as specified in its charter)

| **Delaware**                                                     |   | **20-0282396**                        |
|------------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or  organization) |   | (I.R.S. Employer  Identification No.) |
|                                                             |   |                                  |
| **150  Interstate North Parkway Atlanta, Georgia**               |   | **30339**                             |
| (Address of  principal executive offices)                        |   | (Zip code)                            |

 

**770-657-6000**

Registrant’s telephone number, including area code

----

Indicateby check mark whether the registrant: (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports) and (2) has been subject tosuch filing requirements for the past 90 days. Yes xNo o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act (Check one):

Large acceleratedfiler o               Acceleratedfiler x               Non-acceleratedfiler o

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).

o Yes xNo

Indicateby check mark whether the registrant has filed all documents and reportsrequired to be filed by Section 12, 13 or 15(d) of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmedby a court. Yes x No o

As of May 4, 2007,the registrant had 20,422,415 shares of common stock, $0.01 par value,outstanding.

 

----

**PART I. FINANCIAL INFORMATION**

In this QuarterlyReport on Form 10-Q, the following terms have the meanings indicatedbelow:

·                  Unless thecontext otherwise requires, the terms “we,” “us,” “our,” and “registrant,” aswell as the term “Superior Essex,” refer to Superior Essex Inc. and itssubsidiaries on and after November 10, 2003, the effective date of theplan of reorganization of Superior TeleCom Inc. and its subsidiaries.

·       “COMEX” refers to CommodityExchange Inc., a subsidiary of the New York Mercantile Exchange, Inc. thatoperates the principal U.S. copper futures and options trading market.

·       “Essex Group” refers toEssex Group, Inc., a wholly owned subsidiary of Essex International.

·       “Essex International”refers to Essex International Inc., a wholly owned subsidiary of SuperiorEssex Holding.

·       “Essex Nexans” refers toour 60% owned joint venture, Essex Nexans Europe S.A.S., and its subsidiaries.

·       “LME” refers to the LondonMetal Exchange, which operates the principal European copper futures and optionstrading market.

·       “Superior EssexCommunications” refers to Superior Essex Communications LP.

·       “Superior Essex Holding”refers to Superior Essex Holding Corp., a wholly owned subsidiary of SuperiorEssex  and the sole limited partner of Superior Essex Communications.

·       “Superior TeleCom,” unlessthe context otherwise requires, refers to Superior TeleCom Inc. and itssubsidiaries and the business carried on by them prior to November 10,2003.

2

----

**Forward-Looking Statements**

*Certain expectations and projections regarding ourfuture performance referenced in this Form 10-Q, in other materialswe file with the SEC or otherwise release to the public, and on our website areforward-looking statements. Senior officers also may make verbal statements toanalysts, investors, regulators, the media and others that are forward-looking.Forward-looking statements involve matters that are not historical facts, suchas statements in “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” and elsewhere regarding our future operations,prospects, product demand, strategies, investments, financial condition(including liquidity and capital resources), economic performance (includinggrowth and earnings), benefits expected as a result of our projected growth,and industry conditions. We have tried, whenever possible, to identify thesestatements using words such as “anticipate,” “assume,” “believe,” “can,” “could,”“estimate,” “expect,” “forecast,” “future,” “goal,” “indicate,” “intend,” “may,”“outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” target,”“will,” “would,” and similar expressions.*

*You are cautioned not to place undue reliance onour forward-looking statements. Our forward-looking statements are notguarantees of future performance and are based on currently availablecompetitive, financial and economic data, our current expectations andassumptions, and our operating plans. While we believe that our expectationsfor the future are reasonable in view of the currently available information,our expectations are subject to future events, risks and inherentuncertainties, as well as potentially inaccurate expectations and assumptions,and there are numerous factors—many beyond our control—that could cause resultsto differ significantly from our expectations. Such events, risks anduncertainties include, but are not limited to, those set forth under thecaption “Risk Factors” in our Annual Report on Form 10-K for the year endedDecember 31, 2006 and in the other documents that we file with the SEC. We notethese factors for investors as permitted by the Private Securities LitigationReform Act of 1995. There also may be other factors that we cannot anticipateor that are not described in this Form 10-Q or in our Annual Reporton Form 10-K for the year ended December 31, 2006, generally because we do notperceive them to be material, that could cause results to differ significantlyfrom our expectations.*

*Forward-looking statements are only as of the datethey are made, and we do not undertake any obligation to update thesestatements to reflect subsequent circumstances or events except as required byfederal securities laws. You are advised, however, to review any furtherdisclosures we make on related subjects in our Form 10-Q andForm 8-K reports to the SEC.*

3

----

**ITEM1. FINANCIAL STATEMENTS**

**SUPERIOR ESSEX INC. ANDSUBSIDIARIES**

**CONSOLIDATED BALANCE SHEETS**

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

**(unaudited)**
| ** **                                                                                                                                                            | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **ASSETS**                                                                                                                                                            |       |                     |       |                        |       |
| Current assets:                                                                                                                                                       |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                                                             |       | $                        | 78,884     |                        | $          | 53,493 |   |
| Accounts receivable (less allowance for doubtful  accounts of $5,124 and $5,652 at March 31, 2007 and December 31,  2006, respectively)                     |       | 347,398                  |       | 335,620                     |       |
| Inventories, net                                                                                                                                                      |       | 284,909                  |       | 289,334                     |       |
| Other current assets                                                                                                                                                  |       | 32,830                   |       | 46,878                      |       |
| Total current assets                                                                                                                                                  |       | 744,021                  |       | 725,325                     |       |
| Property, plant  and equipment, net                                                                                                                                   |       | 259,028                  |       | 258,480                     |       |
| Intangible and  other long-term assets, net                                                                                                                           |       | 42,043                   |       | 43,014                      |       |
| Total assets                                                                                                                                                          |       | $                        | 1,045,092  |                        | $          | 1,026,819 |   |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                         |       |                     |       |                        |       |
| Current  liabilities:                                                                                                                                                 |       |                     |       |                        |       |
| Short-term borrowings                                                                                                                                                 |       | $                        | 12,049     |                        | $          | 30,176 |   |
| Current portion of long-term debt                                                                                                                                     |       | 1,258                    |       | 1,192                       |       |
| Accounts payable                                                                                                                                                      |       | 182,887                  |       | 161,106                     |       |
| Accrued expenses                                                                                                                                                      |       | 88,180                   |       | 94,620                      |       |
| Total current liabilities                                                                                                                                             |       | 284,374                  |       | 287,094                     |       |
| Long-term debt                                                                                                                                                        |       | 293,238                  |       | 292,675                     |       |
| Other long-term  liabilities                                                                                                                                          |       | 70,715                   |       | 59,396                      |       |
| Total liabilities                                                                                                                                                     |       | 648,327                  |       | 639,165                     |       |
| Minority  interest in consolidated subsidiaries                                                                                                                       |       | 29,845                   |       | 28,666                      |       |
| Stockholders’  equity:                                                                                                                                           |       |                     |       |                        |       |
| Preferred stock, $.01 par value; 7,000,000 shares  authorized, none issued or outstanding                                                                             |       | —                   |       | —                      |       |
| Common stock, $.01 par value; 33,000,000 shares  authorized; 20,722,326 and 20,691,373 shares issued at March 31, 2007  and December 31, 2006, respectively |       | 207                      |       | 207                         |       |
| Capital in excess of par value                                                                                                                                        |       | 274,725                  |       | 271,821                     |       |
| Accumulated other comprehensive income (loss)                                                                                                                         |       | 1,729                    |       | (961                        | )          |
| Retained earnings (note 1)                                                                                                                                            |       | 100,154                  |       | 97,306                      |       |
| Treasury stock, at cost (317,655 shares and 302,843  shares at March 31, 2007 and December 31, 2006, respectively)                                                    |       | (9,895                   | )          | (9,385                      | )          |
| Total stockholders’ equity                                                                                                                                       |       | 366,920                  |       | 358,988                     |       |
| Total  liabilities and stockholders’ equity                                                                                                                      |       | $                        | 1,045,092  |                        | $          | 1,026,819 |   |

 

The accompanying notes are an integral part of these condensedconsolidated financial statements

4

----

**SUPERIOR ESSEX INC. ANDSUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

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

**(unaudited)**
| ** **                                                            | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                            | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Net sales                                                             |       | $                                                | 695,628    |   | $ | 651,694 |   |
| Cost of goods  sold                                                   |       | 634,383                                          |       | 593,245 |   |
| Gross profit                                                          |       | 61,245                                           |       | 58,449 |   |
| Selling, general  and administrative expenses                         |       | (35,599                                          | )          | (35,612 | ) |
| Restructuring  and other charges                                      |       | (874                                             | )          | (781 | ) |
| Operating income                                                      |       | 24,772                                           |       | 22,056 |   |
| Interest expense                                                      |       | (7,650                                           | )          | (8,078 | ) |
| Interest income                                                       |       | 746                                              |       | 42 |   |
| Gain on sale of  investment (note 5)                                  |       | —                                           |       | 5,788 |   |
| Other income  (expense), net                                          |       | (751                                             | )          | 156 |   |
| Income before income taxes, minority interest and  extraordinary gain |       | 17,117                                           |       | 19,964 |   |
| Income tax  expense                                                   |       | (6,909                                           | )          | (7,703 | ) |
| Income before minority interest and extraordinary  gain               |       | 10,208                                           |       | 12,261 |   |
| Minority  interest in earnings of subsidiaries                        |       | (1,050                                           | )          | (33 | ) |
| Income before extraordinary gain                                      |       | 9,158                                            |       | 12,228 |   |
| Extraordinary  gain (net of minority interest of $581)- (note 5)      |       | —                                           |       | 871 |   |
| Net income                                                            |       | $                                                | 9,158      |   | $ | 13,099 |   |
| Net income per  share of common stock:                                |       |                                             |       |   |   |
| Basic:                                                                |       |                                             |       |   |   |
| Income before extraordinary gain                                      |       | $                                                | 0.45       |   | $ | 0.73 |   |
| Extraordinary gain                                                    |       | —                                           |       | 0.05 |   |
| Net income                                                            |       | $                                                | 0.45       |   | $ | 0.78 |   |
| Diluted:                                                              |       |                                             |       |   |   |
| Income before extraordinary gain                                      |       | $                                                | 0.45       |   | $ | 0.71 |   |
| Extraordinary gain                                                    |       | —                                           |       | 0.05 |   |
| Net income                                                            |       | $                                                | 0.45       |   | $ | 0.76 |   |
| Weighted average  shares outstanding:                                 |       |                                             |       |   |   |
| Basic                                                                 |       | 20,152                                           |       | 16,760 |   |
| Diluted                                                               |       | 20,455                                           |       | 17,200 |   |

 

The accompanying notes are an integral part of these condensedconsolidated financial statements

5

----

**SUPERIOR ESSEX INC. ANDSUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(in thousands)**

**(unaudited)**
| ** **                                                                                    | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------------------------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                                                                    | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| Cash flows from  operating activities:                                                        |       |                                             |       |   |   |
| Net income                                                                                    |       | $                                                | 9,158      |   | $ | 13,099 |   |
| Adjustments to reconcile net income to net cash  provided by (used for) operating activities: |       |                                             |       |   |   |
| Depreciation and amortization                                                                 |       | 7,486                                            |       | 6,662 |   |
| Amortization of deferred financing costs and  discount                                        |       | 568                                              |       | 610 |   |
| Gain on sale of investment (note 5)                                                           |       | —                                           |       | (5,788 | ) |
| Minority interest in earnings of subsidiary                                                   |       | 1,050                                            |       | 33 |   |
| Extraordinary gain (net of minority interest)                                                 |       | —                                           |       | (871 | ) |
| Settlement of derivatives                                                                     |       | 3,778                                            |       | 4,348 |   |
| Share-based compensation                                                                      |       | 1,988                                            |       | 1,324 |   |
| Change in assets and liabilities:                                                             |       |                                             |       |   |   |
| Accounts receivable, net                                                                      |       | (10,236                                          | )          | (77,124 | ) |
| Inventories, net                                                                              |       | 5,302                                            |       | (22,823 | ) |
| Other current and non-current assets                                                          |       | 11,301                                           |       | 660 |   |
| Accounts payable, accrued expenses and other  liabilities                                     |       | 23,667                                           |       | 30,800 |   |
| Other, net                                                                                    |       | 199                                              |       | (117 | ) |
| Cash flows  provided by (used for) operating activities                                       |       | 54,261                                           |       | (49,187 | ) |
| Cash flows from  investing activities:                                                        |       |                                             |       |   |   |
| Capital expenditures                                                                          |       | (11,679                                          | )          | (7,889 | ) |
| SDS acquisition, net of cash acquired (note 5)                                                |       | —                                           |       | (947 | ) |
| Proceeds from sale of investment (note 5)                                                     |       | —                                           |       | 8,500 |   |
| Cash flows used  for investing activities                                                     |       | (11,679                                          | )          | (336 | ) |
| Cash flows from  financing activities:                                                        |       |                                             |       |   |   |
| Borrowings under senior secured revolving credit facility,  net                               |       | —                                           |       | 53,948 |   |
| Payments on Essex Nexans short-term borrowings, net                                           |       | (18,223                                          | )          | (6,597 | ) |
| Proceeds from exercise of stock options and employee  stock purchases                         |       | 477                                              |       | 992 |   |
| Excess tax benefits resulting from exercise of stock  options and vesting of stock awards     |       | 439                                              |       | 218 |   |
| Cash flows (used  for) provided by financing activities                                       |       | (17,307                                          | )          | 48,561 |   |
| Effect of  exchange rate changes on cash                                                      |       | 116                                              |       | 92 |   |
| Net increase  (decrease) in cash and cash equivalents                                         |       | 25,391                                           |       | (870 | ) |
| Cash and cash  equivalents at beginning of period                                             |       | 53,493                                           |       | 8,184 |   |
| Cash and cash  equivalents at end of period                                                   |       | $                                                | 78,884     |   | $ | 7,314 |   |
| Supplemental  disclosures:                                                                    |       |                                             |       |   |   |
| Cash paid for interest                                                                        |       | $                                                | 1,150      |   | $ | 1,448 |   |
| Cash paid for  income taxes, net                                                              |       | $                                                | 1,601      |   | $ | 9,484 |   |

 

The accompanying notes are an integral part of these condensedconsolidated financial statements

6

----

**SUPERIOR ESSEX INC. ANDSUBSIDIARIES**

**NOTES TO CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS**

**March 31, 2007**

**(unaudited)**

**1.****                                      General**

***Basis of presentation***

Theaccompanying balance sheet as of December 31, 2006, which has been derived fromaudited financial statements, and the unaudited consolidated financialstatements as of March 31, 2007 and for the three months ended March 31, 2007and 2006, have been prepared in accordance with the requirements ofSection 13 or 15(d) of the Securities Exchange Act of 1934, as amended,and, therefore, do not include all disclosures required by accountingprinciples generally accepted in the United States for complete financialstatements. However, in the opinion of management, these statements reflect alladjustments (which consist only of normal recurring accruals) necessary for afair presentation of the results of operations for the relevant periods.Results for the three months ended March 31, 2007 are not necessarilyindicative of the results to be expected for the entire fiscal year. Thesefinancial statements should be read in conjunction with the auditedconsolidated financial statements and notes thereto included in SuperiorEssex Inc.’s Annual Report on Form 10-K for the year endedDecember 31, 2006.

TheCompany is a manufacturer and supplier of communications wire and cableproducts to telephone companies, CATV companies, distributors and systemsintegrators, and magnet wire and fabricated insulation materials to majororiginal equipment manufacturers, or OEMs, for use in motors, transformers,generators and electrical controls and, through its distribution operations, tosmaller OEMs and the motor repair industry. The Company also convertscopper cathode to copper rod for internal consumption and for sale to otherwire and cable manufacturers and OEMs. The Company currently operatesmanufacturing facilities in the United States, the United Kingdom, France,Germany, Portugal, Mexico, Canada and China.

***New accounting pronouncements***

The Companyadopted the provisions of FASB Interpretation No. 48, *Accountingfor Uncertainty in Income Taxes* (“FIN 48”), on January 1, 2007. FIN48 prescribes a consistent recognition threshold and measurement attribute, aswell as establishes criteria for subsequently recognizing, derecognizing andmeasuring uncertain tax positions for financial statement purposes. As a resultof the implementation of FIN 48, the Company recognized a net increase of $6.6million in the liability for unrecognized tax benefits, which was accounted foras a decrease to the January 1, 2007 balance of retained earnings of $6.3million and a decrease in minority interest in consolidated subsidiaries of$0.3 million.  As of the date of adoptionand after the impact of recognizing the increase in liability noted above, theCompany’s net liability for unrecognized tax benefits totaled $9.1 million, allof which, if recognized, would affect the annual effective income tax rate.

The Companyrecognizes potential interest and penalties related to unrecognized taxbenefits as a component of income tax expense. The liability for unrecognized tax benefits of $9.1 million at January1, 2007 includes approximately $2.1 million for potential interest andpenalties associated with uncertain tax positions. During the three monthsended March 31, 2007, the Company incurred an income tax expense charge of $0.3million for uncertain tax positions and $0.2 million for potential interest andpenalties associated with uncertain tax positions.  To the extent interest and penalties are notassessed with respect to uncertain tax positions, amounts accrued will bereduced and reflected as a reduction of the overall income tax provision.

The tax years 2003through 2006 remain open to examination by the major taxing jurisdictions inwhich the Company operates. Certain tax carryforward attributes generated inperiods prior to 2003 may still be subject to adjustment.

The Companybelieves it is reasonably possible that approximately $2.4 million in netunrecognized tax benefits will be recognized during 2007 primarily as a resultof statutes of limitations closing in certain state tax jurisdictions.

7

----

**2.****                                      Inventories,net**

AtMarch 31, 2007 and December 31, 2006, the components of inventorieswere as follows:
|                 | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **      | ** ** | **(in thousands)**  | ** ** |
| Raw materials   |       | $                        | 37,321     |                        | $          | 41,786 |   |
| Work in process |       | 72,665                   |       | 75,647                      |       |
| Finished goods  |       | 281,698                  |       | 289,839                     |       |
|            |       | 391,684                  |       | 407,272                     |       |
| LIFO reserve    |       | (106,775                 | )          | (117,938                    | )          |
|            |       | $                        | 284,909    |                        | $          | 289,334 |   |

 

Inventoriesvalued using the LIFO method amounted to $123.7 million and$125.5 million at March 31, 2007 and December 31, 2006,respectively.

**3.****                                      Comprehensiveincome**

Thecomponents of comprehensive income for the three months ended March 31,2007 and 2006 were as follows:
|                                                                                                                                                                                                | ** ** | **2007**                | ** ** | **2006** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|----------|------------|
| ** **                                                                                                                                                                                     | ** ** | **(in thousands)** | ** ** |
| Net income                                                                                                                                                                                     |       | $                       | 9,158      |     | $          | 13,099 |   |
| Foreign currency  translation adjustment, net of income tax of $321 for the three months ended  March 31, 2007                                                                                 |       | 380                     |       | 499      |       |
| Reclassification  adjustment for unrecognized actuarial gains of defined benefit pension plans  included in net income, net of income tax of $2                                                |       | (3                      | )          | —   |       |
| Reclassification  adjustment for unrecognized prior service costs of defined benefit pension  plans included in net income, net of income tax of $7                                            |       | 12                      |       | —   |       |
| Unrealized  holding gains on derivatives during the period, net of income tax of $973 and  $2,627 for the three months ended March 31, 2007 and 2006, respectively                        |       | 1,517                   |       | 4,102    |       |
| Reclassification  adjustment for (gains) losses on derivatives included in net income, net of  income tax of $(504) and $930 for the three months ended March 31, 2007 and  2006, respectively |       | 784                     |       | (1,453   | )          |
| Net unrealized gains on derivatives                                                                                                                                                            |       | 2,301                   |       | 2,649    |       |
| Other                                                                                                                                                                                          |       | —                  |       | 59       |       |
| Comprehensive income                                                                                                                                                                           |       | $                       | 11,848     |     | $          | 16,306 |   |

 

Thecomponents of accumulated other comprehensive income (loss) at March 31,2007 and December 31, 2006 were as follows:
|                                                                                                                                                         | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                                              | ** ** | **(in thousands)**  | ** ** |
| Foreign currency  translation adjustment, net of tax of $321 at March 31, 2007                                                                          |       | $                        | 5,137      |                        | $          | 4,757 |   |
| Unrecognized  actuarial losses of defined benefit pension plans, net of tax of $3,548 and  $3,546 at March 31, 2007 and December 31, 2006, respectively |       | (4,657                   | )          | (4,654                      | )          |
| Unrecognized  prior service costs of defined benefit pension plans, net of tax of $279 and  $286 at March 31, 2007 and December 31, 2006, respectively  |       | (490                     | )          | (502                        | )          |
| Unrealized gain  (loss) on derivatives, net of tax of $(1,110) and $367 at March 31, 2007  and December 31, 2006, respectively                |       | 1,739                    |       | (562                        | )          |
|                                                                                                                                                    |       | $                        | 1,729      |                        | $          | (961 | ) |

 

8

----

**4.****                                      Restructuringand other charges and asset impairments**

EssexNexans recorded a restructuring provision of $0.3 million during the threemonths ended March 31, 2007 related to a workforce reduction at its Viana deCastelo, Portugal manufacturing facility. The majority of the costs related toseverance payments and related benefits. All amounts are expected to be paidduring 2007. Restructuring and other charges for the three months ended March31, 2007 also include the write-off of $0.4 million of deferred businessacquisition costs and $0.1 million of professional fees incurred in connectionwith the administration of Superior TeleCom’s plan of reorganization. In thefirst quarter of 2006, Essex Nexans recorded a provision of $0.7 million whichwas charged to operations related to workforce reductions at the Company’s U.K.magnet wire operations. In addition, restructuring and other charges for thethree months ended March 31, 2006 included $0.1 million related primarily toprofessional fees incurred in connection with the administration of SuperiorTeleCom’s plan of reorganization.

**5.****                                      Acquisitionsand dispositions**

***Simcoe and Tianjin acquisitions***

InJanuary 2007, the Company entered into two definitive agreements, one toacquire certain assets and assume certain liabilities related to Nexans’remaining North American magnet wire business in Simcoe, Canada and the otherto acquire Nexans’ 80% ownership interest in a company which owns and operatesa magnet wire facility located in Tianjin, China. Both of these transactionsprovide the Company with a significant market presence in the North Americanand Chinese markets for rectangular wires, including continuous transposedcable, or CTC, and related products used primarily by large transformermanufacturers in high-performance power generators and transformers. Thepurchase price for the Canadian transaction is $17.6 million, subject toadjustment based on inventory values and the value of certain assumedliabilities. The purchase price for the 80% ownership interest in the Tianjin companyis €11.2 million ($14.9 million as of March 31, 2007), less 80% of thedebt of the company outstanding at closing. The Simcoe acquisition wascompleted on April 27, 2007 and the Tianjin acquisition is expected to close inthe third quarter of 2007.

***SDS acquisition***

OnJanuary 4, 2006, Essex Nexans acquired all of the outstanding capitalstock of Societe de Distribution et de Services (“SDS”) from Nexans for a cashpayment of $1.2 million. SDS is engaged in the business of distributing magnetwire and related products in France. In connection with the acquisition, EssexNexans recorded a restructuring reserve of $0.6 million related primarily toworkforce reductions and the closure of certain of SDS’s leased warehouselocations. Nexans agreed to reduce the purchase price for certain restructuringcosts incurred by Essex Nexans up to a maximum of €1.0 million ($1.3 million asof March 31, 2007). The acquisition of SDS was accounted for as a purchase andthe results of operations of SDS have been included in the Company’s results ofoperations from the date of acquisition. The allocation of the acquisition costresulted in unallocated negative goodwill of $1.5 million which has beenreflected as an extraordinary gain (net of minority interest of $0.6 million)in the statement of operations for the three months ended March 31, 2006.

***Essex Electricdisposition***

In January 2006 theCompany sold its investment in the common stock of Essex Electric Inc. togetherwith its warrant to purchase additional shares of Essex Electric Inc. to TheAlpine Group, Inc. for a cash payment of $8.5 million. As a result of thetransaction the Company recognized a pre-tax gain of $5.8 million. Followingthe sale the Company no longer has any equity interest in Essex Electric Inc.

9

----

**6.****                                      Debt**

AtMarch 31, 2007 and December 31, 2006, short-term borrowings andlong-term debt consist of the following:
|                                                                                                                         | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                              | ** ** | **(in thousands)**  | ** ** |
| Short-term  borrowings:                                                                                                 |       |                     |       |                        |       |
| Essex Nexans factoring agreement                                                                                        |       | $                        | 9,025      |                        | $          | 27,185 |   |
| Other                                                                                                                   |       | 3,024                    |       | 2,991                       |       |
|                                                                                                                    |       | $                        | 12,049     |                        | $          | 30,176 |   |
| Long-term debt:                                                                                                         |       |                     |       |                        |       |
| 9% senior notes (net of discount of $5,060 and  $5,252 at March 31, 2007 and December 31, 2006, respectively) |       | $                        | 252,040    |                        | $          | 251,848 |   |
| Series A redeemable preferred stock of Superior  Essex Holding                                                          |       | 5,000                    |       | 5,000                       |       |
| 8.975% subordinated note of Essex Nexans                                                                                |       | 15,060                   |       | 14,847                      |       |
| Term loan of Essex Magnet Wire (Suzhou) Ltd.                                                                            |       | 12,408                   |       | 12,270                      |       |
| Other                                                                                                                   |       | 9,988                    |       | 9,902                       |       |
|                                                                                                                    |       | 294,496                  |       | 293,867                     |       |
| Less current portion of long-term debt                                                                                  |       | 1,258                    |       | 1,192                       |       |
| Total long-term debt                                                                                                    |       | $                        | 293,238    |                        | $          | 292,675 |   |

 

SuperiorEssex Communications and Essex Group are borrowers under a $225 million seniorsecured credit facility. Interest on the senior secured credit facility accrueson outstanding borrowings at an annual rate equal to, at the borrowers’ option,LIBOR or a base rate, plus, in each case, an applicable margin, determinedquarterly based on average borrowing availability, ranging from 1.00% to 2.00%for LIBOR loans and  from 0% to 0.75% forbase rate loans. Obligations under the senior secured credit facility aresecured by substantially all domestic assets of the Company and 65% of thevoting stock of certain of the Company’s foreign subsidiaries. Availabilityunder the senior secured credit facility is subject to a borrowing base equalto the lesser of (1) $225 million less outstanding letters of credit and (2) aspecified percentage of eligible accounts receivable and inventory lessspecified reserves. The specified percentages are (i) 85% of the value of theeligible accounts receivable and with respect to inventory the lesser of (a)$110 million or (b) the lesser of (x) 65% of the value of eligible inventoryand (y) 85% multiplied by the net orderly liquidation percentage thenapplicable multiplied by the value of the eligible inventory. Certain of thespecified reserves that reduce availability are not fixed and may be increasedor imposed by the administrative agent for the amended and restated seniorsecured credit facility at its reasonable credit judgment. The borrowers areobligated to pay an unused commitment fee of 0.25% per annum on the unusedamount of the maximum committed amounts and a fee of 0.125% per annum on theoutstanding face amount of outstanding letters of credit. No borrowings wereoutstanding under the senior secured credit facility at March 31, 2007 andundrawn availability was $224.2 million.

Thesenior secured credit facility contains covenants which may limit SuperiorEssex Communications’ and Essex Group’s and their subsidiaries’ ability to (i)pay dividends, redeem capital stock or make other restricted payments, (ii)sell or dispose of assets, (iii) incur additional indebtedness or permit liensto exist on Company property, (iv) engage in transactions with affiliates and(v) make additional investments or acquisitions. Capital expenditures,distributions, acquisitions and asset dispositions are not limited so long asno event of default exists and the borrowers meet certain availability andliquidity conditions specified in the senior secured credit facility.

Theindenture governing the 9% senior notes contains covenants which restrict theability of the Company and certain of its subsidiaries to, among other things:incur additional debt and issue preferred stock; make certain distributions,investments and other restricted payments; create certain liens; enter intotransactions with affiliates; and merge, consolidate or sell substantially allof the Company’s assets.

10

----

**7.****                                      Incomeper share**

Thecomputation of basic and diluted income before extraordinary gain per share forthe three months ended March 31, 2007 and 2006 is as follows:
| ** **                                                 | ** ** | **2007**                                                              | ** ** | **2006**   | ** ** |
|------------------------------------------------------------|------------|-----------------------------------------------------------------------|------------|------------|------------|
| ** **                                                 | ** ** | **Net  Income**                                                       | ** ** | **Shares** | ** ** | **Per Share  Amount** | ** ** | **Net  Income** | ** ** | **Shares** | ** ** | **Per Share  Amount** | ** ** |
| ** **                                                 | ** ** | **(in thousands, except per share amounts)** | ** ** |
| Basic income per  common share before extraordinary gain   |       | $                                                                     | 9,158      |       | 20,152     |   | $ | 0.45 |   | $ | 12,228 |   | 16,760 |   | $ | 0.73 |   |
| Effect of  dilutive securities:                            |       |                                                                  |       |       |       |   |   |   |   |   |   |   |   |
| Restricted stock  awards                                   |       | —                                                                |       | 113        |       |   |   | — |   | 213 |   |   |   |
| Stock options                                              |       | —                                                                |       | 190        |       |   |   | — |   | 227 |   |   |   |
| Diluted income per  common share before extraordinary gain |       | $                                                                     | 9,158      |       | 20,455     |   | $ | 0.45 |   | $ | 12,228 |   | 17,200 |   | $ | 0.71 |   |

 

Atotal of 22,532 and 1,127,430 anti-dilutive weighted average shares withrespect to outstanding stock options, restricted stock awards and SuperiorEssex’s warrant have been excluded from the computation of diluted income pershare for the three months ended March 31, 2007 and 2006, respectively.Additionally, 193,620 shares contingently issuable pursuant to performance awardsgranted in March 2006 (see Note 8) have been excluded from the computation ofbasic and diluted income per share for the three months ended March 31, 2007and 2006 as the performance conditions have not been satisfied. Anti-dilutiveweighted average shares for the three months ended March 31, 2006 includeswarrants issued in connection with Superior TeleCom’s plan of reorganization topurchase 868,421 shares of the Company’s common stock. The warrants expiredunexercised on May 10, 2006.

**8.****                                      Stock-basedcompensation plans**

In November 2003, the Company adopted the SuperiorEssex Inc. 2003 Stock Incentive Plan (the “2003 Plan”) pursuant to which acommittee of the Company’s board of directors was authorized to grant stockoptions or restricted stock awards to employees, non-employee directors andcertain service providers. The 2003 Plan permitted grants of awards or optionsto purchase up to 1,833,333 shares of authorized but unissued common stock,stock held in treasury or both. Stock options under the 2003 Plan could begranted with an exercise price less than, equal to or greater than the stock’sfair market value at the date of grant. The term of stock options granted underthe 2003 Plan could not exceed 10 years.

In May 2005 the shareholders of the Companyapproved the Superior Essex Inc. 2005 Incentive Plan (the “2005 Plan”) pursuantto which a committee of the Company’s board of directors may grant stockoptions, stock appreciation rights, restricted stock, restricted stock units,deferred stock units, performance awards, dividend and interest equivalents andcash-based awards to eligible employees, officers, non-employee directors andconsultants. The 2005 Incentive Plan was subsequently amended and restated inMay 2007 to, among other things, increase the number of shares that may beissued by 500,000 shares. Stock options can be granted under the 2005 Plan withan exercise price equal to or greater than the stock’s fair market value at thedate of grant. The term of stock options granted may not exceed 10 years.A total of 1,000,000 shares of common stock is reserved for issuance under the2005 Plan, as amended. In addition, unissued awards and any shares underlyingcurrently outstanding options granted under the 2003 Plan which expire unexercisedare available for issuance under the 2005 Plan as well as certain sharesdelivered or withheld to cover the exercise price or income tax withholdings.As a result of adoption of the 2005 Plan, no further grants or awards may bemade pursuant to the 2003 Plan.

In March 2006 the Company’s board of directors grantedperformance share awards to certain of the Company’s executive officers underthe 2005 Plan. Under the terms of the award the executives may vest in up to193,620 shares of the Company’s common stock on December 31, 2007 contingentupon meeting specified performance goals with respect to return on net assetsand core business revenues (as defined in the award) for the year endedDecember 31, 2007. In April 2007, the Company’s board of directors grantedperformance share awards to certain of the Company’s officers and key employeesunder the 2005 Plan, as amended. Under the terms of the award the executivesmay vest in up to 265,738 shares of the Company’s common stock on December 31,2009 contingent upon meeting specified performance goals during the three yearperiod ended December 31, 2009. Compensation expense related to the performanceshare awards is based on the grant date fair value of the award and theestimated number of shares that will ultimately vest. Compensation expense forthe three months ended March 31, 2007 includes $0.9 million resulting from achange in the estimated number of performance shares that will ultimately vest.Compensation expense is subject to future adjustment based upon changes inexpected performance.

11

----

Total compensation cost related to all stock-basedcompensation plans was $2.0 million and $1.3 million for the three months endedMarch 31, 2007 and 2006, respectively. Asof March 31, 2007, there was $5.9 million of unrecognized compensation costrelated to the Company’s stock-based compensation plans which is expected to berecognized over a weighted average period of 1.7 years.

Thefollowing table summarizes stock option activity for the three months endedMarch 31, 2007:
| ** **                        | ** ** | **Shares** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term (in  years)** | ** ** | **Aggregate  Intrinsic  Value (in  thousands)** | ** ** |
|-----------------------------------|------------|------------|------------|----------------------------------------|------------|----------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                        | ** ** | ** ** | ** ** | ** **                             | ** ** | ** **                                                           | ** ** | ** **                                           | ** ** |
| Outstanding at  December 31, 2006 |       | 607,764    |       | $                                      | 15.56      |                                                                 |       |                                                 |       |   |
| Granted                           |       | —     |       | —                                 |       |                                                                 |       |                                                 |       |
| Exercised                         |       | (30,880    | )          | 15.40                                  |       |                                                                 |       |                                                 |       |
| Forfeitures                       |       | (1,681     | )          | 25.75                                  |       |                                                                 |       |                                                 |       |
| Outstanding at  March 31, 2007    |       | 575,203    |       | $                                      | 15.53      |                                                                 | 7.4        |                                                 | $          | 11,009 |   |
| Exercisable at March  31, 2007    |       | 328,485    |       | $                                      | 13.74      |                                                                 | 7.0        |                                                 | $          | 6,875 |   |

 

Thefollowing table summarizes the status of the Company’s unvested share awards,including the performance share awards discussed above, for the three monthsended March 31, 2007:
|                                                               | ** ** | **Shares  Outstanding** | ** ** | **Weighted Average  Grant Date  Fair Value** | ** ** |
|---------------------------------------------------------------|------------|-------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                                    | ** ** | ** **              | ** ** | ** **                                                  | ** ** |
| Nonvested share  awards outstanding at December 31, 2006 |       | 463,721                 |       | $                                                           | 21.07      |   |
| Granted                                                       |       | —                  |       | —                                                      |       |
| Vested                                                        |       | (44,564                 | )          | 16.31                                                       |       |
| Forfeited                                                     |       | —                  |       | —                                                      |       |
| Nonvested share awards  outstanding at March 31, 2007    |       | 419,157                 |       | $                                                           | 21.57      |   |

 

**9.****                                      Employeebenefits**

Thecomponents of net periodic benefit cost of the Company’s defined benefit pensionplans for the three months ended March 31, 2007 and 2006 are presentedbelow.
|                                               | ** ** | **2007**                | ** ** | **2006** | ** ** |
|-----------------------------------------------|------------|-------------------------|------------|----------|------------|
| ** **                                    | ** ** | **(in thousands)** | ** ** |
| **Components  of net periodic benefit cost:** |       |                    |       |     |       |
| Service cost                                  |       | $                       | 677        |     | $          | 625 |   |
| Interest cost                                 |       | 2,102                   |       | 1,951    |       |
| Expected return  on plan assets               |       | (2,303                  | )          | (2,035   | )          |
| Amortization of  actuarial gains              |       | (5                      | )          | 29       |       |
| Amortization of  prior service costs          |       | 19                      |       | 19       |       |
|                                          |       | $                       | 490        |     | $          | 589 |   |

 

TheCompany’s cash contributions to the defined benefit plans amounted to$1.6 million and $0.9 million during the three months ended March 31,2007 and 2006, respectively. The Company expects to make additional cashcontributions of $6.8 million for the remainder of 2007.

12

----

**10.****                               Derivativefinancial instruments**

TheCompany, to a limited extent, uses or has used forward fixed price contractsand derivative financial instruments to manage commodity price, interest rateand foreign currency exchange risks. The Company does not hold or issuefinancial instruments for investment or trading purposes. The Company is exposedto credit risk in the event of nonperformance by counterparties for foreignexchange forward contracts, metal forward price contracts and metals futurescontracts but the Company does not anticipate nonperformance by any of thesecounterparties. The amount of such exposure is generally limited to anyunrealized gains within the underlying contracts.

***Commodity price risk management***

Thecost of copper, the Company’s most significant raw material, has historicallybeen subject to considerable volatility. To manage the risk associated withsuch volatility, the Company enters into futures contracts to match the metalcomponent of customer product pricing with the cost component of the inventoryshipped. These futures contracts have been designated as cash flow hedges withunrealized gains and losses recorded in other comprehensive income. Gains andlosses are reclassified into earnings, as a component of cost of goods sold,when the hedged sales transactions are reflected in the income statement. Hedgeineffectiveness, which is not significant, is immediately recognized inearnings. The Company’s commodities futures purchase contracts are summarizedas follows at March 31, 2007:
| Type       | ** ** | **Notional  Amount**                    | ** ** | **Maturity  Date** | ** ** | **Weighted  Average  Settlement Rate** | ** ** | **Fair Value  Gain (Loss)** | ** ** |
|------------|------------|-----------------------------------------|------------|--------------------|------------|---------------------------------------------|------------|---------------------------------------|------------|
| ** ** | ** ** | **(in thousands of  pounds)** | ** ** | ** **         | ** ** | ** **                                  | ** ** | **(in  thousands)**                   | ** ** |
|       |       |                                    |       |               |       |                                        |       |                                  |       |
| Copper     |       | 10,525                                  |       | 2007               |       | $                                           | 3.12       |                                  | $          | 2,811 |   |
| Copper     |       | 75                                      |       | 2008               |       | 3.03                                        |       | 38                                    |       |
|       |       |                                    |       |               |       |                                        |       | $                                     | 2,849      |   |
|            |            |                                         |            |                    |            |                                             |            |                                       |            |  |  |

 

All ofthe unrealized gains on commodity futures outstanding at March 31, 2007 areexpected to be reclassified in earnings within the next twelve months.

EssexNexans periodically enters into commodity futures contracts to match the coppercomponent of customer product pricing with the cost component of the inventoryshipped. These futures contracts are intended to minimize the risks associatedwith forward product pricing for customers and changing copper prices. Thesecontracts generally have maturities of less than two months and representeconomic hedges but have not been designated as hedges for accounting purposes.Accordingly, gains and losses on these contracts are recorded in income as acomponent of cost of goods sold. Net gains on these contracts were $1.6 millionfor the three months ended March 31, 2006. Essex Nexans did not enter into anycopper futures contracts during the three months ended March 31, 2007 and hadno open copper futures positions at March 31, 2007.

***Interest rate risk management***

Inorder to limit the Company’s exposure to rising interest rates with respect toborrowings under its variable rate senior secured revolving credit facility,the Company has entered into interest rate cap agreements. The followinginterest rate cap agreement was outstanding as of March 31, 2007:
| **Type**          | ** ** | **Notional  Amount**    | ** ** | **Interest Rate** | ** ** | **Cap Rate** | ** ** | **Expiration Date** | ** ** | **Fair Value**     | ** ** |
|-------------------|------------|-------------------------|------------|------------------------|------------|-------------------|------------|--------------------------|------------|-------------------------|------------|
| ** **        | ** ** | **(in thousands)** | ** ** | ** **             | ** ** | ** **        | ** ** | ** **               | ** ** | **(in thousands)** | ** ** |
|              |       |                    |       |                   |       |              |       |                     |       |                    |       |
| Interest rate cap |       | 15,000                  |       | 30-day LIBOR           |       | 5.0               | %          | April 2007               |       | $                       | 4          |   |
|                   |            |                         |            |                        |            |                   |            |                          |            |                         |            |  |

 

***Foreign currency exchange risk management***

TheCompany engages in the sale of products which result in accounts receivabledenominated in foreign currencies. The Company enters into foreign currencyforward exchange contracts to hedge against fluctuations in the value ofcertain of these receivables. Changes in the fair value of these contracts arereflected in current earnings. At March 31, 2007, the Company hadoutstanding foreign currency forward exchange contracts to exchange10.5 million Canadian dollars for $9.1 million in April 2007.The fair value of the forward exchange contracts was insignificant atMarch 31, 2007.

13

----

**11.****                               Commitmentsand contingencies**

The Company is involvedin lawsuits, claims, investigations and proceedings, including those describedbelow, consisting of commercial, employment, employee benefits, environmentaland other matters which arise in the ordinary course of business. In accordancewith SFAS No. 5, *Accounting forContingencies*, the Company records a liability when managementbelieves it is both probable that a liability has been incurred and the amountof loss can be reasonably estimated. Management believes it has adequateprovisions for any such matters. The Company reviews these provisions at leastquarterly and adjusts these provisions to reflect the impact of negotiations,settlement, rulings, advice of legal counsel and other information and eventspertaining to a particular matter. Litigation is inherently unpredictable.However, management believes it has valid defenses with respect to all legalmatters against the Company and its subsidiaries and does not believe any suchmatters, either individually or in the aggregate, will have a material adverseeffect on its business, financial condition, liquidity or results ofoperations.

Since approximately 1990,Essex International and certain subsidiaries have been named as defendants in anumber of product liability lawsuits brought by electricians, other skilledtradesmen and others claiming injury, in a substantial majority of cases, fromexposure to asbestos found in electrical wire products produced many years ago.Litigation against various past insurers of Essex International who hadpreviously refused to defend and indemnify Essex International against theselawsuits was settled during 1999. Under the settlement, Essex International wasreimbursed for substantially all of its costs and expenses incurred in thedefense of these lawsuits, and the insurers have undertaken to defend, arecurrently directly defending and, if it should become necessary, will indemnifyEssex International against those asbestos lawsuits, subject to the terms andlimits of the respective policies. Under the plan of reorganization, certain ofthe claimants in these actions will be able to assert claims under applicableinsurance coverage and other similar arrangements. Management believes thatEssex International’s liability, if any, in these matters will not have amaterial adverse effect either individually, or in the aggregate, upon theCompany’s business, financial condition, liquidity or results of operations.There can be no assurance, however, that future developments will not alterthis conclusion.

The Company is subject tofederal, foreign, state and local environmental laws and regulations in each ofthe jurisdictions in which it owns or operates facilities governing, amongother things, emissions into the air, discharges to water, the use, handlingand disposal of hazardous substances and the investigation and remediation ofsoil and groundwater contamination both on-site at past and current facilitiesand at off-site disposal locations. The Company does not believe thatcompliance with environmental laws and regulations will have a material effecton its capital expenditures, net income or competitive position.

A liability forenvironmental remediation and other environmental costs is accrued when it isconsidered probable and the costs can be reasonably estimated. The Company hasaccrued amounts with respect to environmental matters that it believes wereadequate at March 31, 2007. These accruals are not material to the Company’soperations or financial position.

The Company acceptscertain customer orders for future delivery at fixed prices. As copper is themost significant raw material used in the manufacturing process, the Companyenters into forward fixed-price purchase commitments for copper to properlymatch its cost to the value of the copper expected to be billed to customers.At March 31, 2007, the Company had forward fixed price copper purchasecommitments for delivery of 19.9 million pounds through January 2008 for$59.6 million. Additionally at March 31, 2007, the Company had forwardpurchase fixed price commitments for 0.3 million pounds of aluminum throughAugust 2007 and 180,000 MMBTUs of natural gas through December 2007amounting to $0.4 million and $1.2 million, respectively.

**12.****                               Relatedparty transactions**

Essex Nexans has entered into agreements to purchase asignificant portion of its copper rod and pre-drawn copper wire requirementsfrom Nexans. The purchase agreements expire on December 31, 2008 withautomatic one year renewals unless cancelled by either party upon six monthsprior notice in the case of copper rod and twelve months prior notice in thecase of pre-drawn copper wire. Total purchases pursuant to these agreements amountedto $74.9 million and $64.2 million for the three months ended March 31, 2007and 2006, respectively.

The Company sells magnet wire to and provides certaintolling services for its 50% owned joint venture, Femco Magnet Wire Corporation(“Femco”). Net sales to Femco were $6.4 million and $4.4 million for the threemonths ended March 31, 2007 and 2006, respectively. The Company’s equity in theloss of Femco was $(0.4) million for the three months ended March 31, 2007 andthe equity in Femco’s earnings for the three months ended March 31, 2006 wasnot significant.

14

----

**13.****                               Businesssegments**

Reportable segments are strategic businesses thatoffer different products and services to different customers. These segmentsare communications cable, North American magnet wire and distribution, Europeanmagnet wire and distribution and copper rod. The communications cable segmentincludes copper and fiber optic outside plant wire and cable for voice and datatransmission in telecommunications networks and copper and fiber optic datacomor premises wire and cable for use within homes and offices for local areanetworks, Internet connectivity and other applications. The North Americanmagnet wire and distribution segment, which includes our operations in China,manufactures and markets magnet wire and related products to major OEMs for usein motors, transformers and electrical coils and controls primarily in NorthAmerica. The North American magnet wire and distribution segment alsodistributes magnet wire and fabricated insulation products manufactured by theCompany and related accessory products purchased from third parties to smallOEMs and motor repair facilities. The European magnet wire and distributionsegment consists of Essex Nexans and manufactures and markets magnet wire usedin motors, transformers and electrical coils and controls primarily in Europe.The European magnet wire and distribution segment also produces enamels that are used both for internal consumption in theproduction of magnet wire and for sale to third parties. The copper rodsegment includes sales of copper rod produced by the Company’s North Americancontinuous casting units to external customers. The copper rod segment alsoproduces copper rod for internal processing which is recorded by the consumingsegment at cost as a component of cost of goods sold. Corporate and othercharges consist primarily of parent company and corporate payroll costs,including stock-based compensation charges, corporate headquarters costs andcorporate legal, audit and accounting fees and compliance costs. The componentsof restructuring and other charges are discussed in Note 4.

The Company’s chief operating decision maker evaluatessegment performance based on a number of factors with operating income,excluding corporate and other costs and restructuring and other charges, beingthe most critical. Accordingly, corporate and other costs and restructuring andother charges are not allocated to the Company’s reportable segments.

Financialinformation with respect to reportable segments is presented below. Corporateand other items shown below are provided to reconcile to the accompanyingconsolidated statements of operations.
|                                             | ** ** | **Three Months Ended  March 31,** | ** ** |
|---------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                                  | ** ** | **2007**                                         | ** ** | **2006** | ** ** |
| ** **                                  | ** ** | **(in thousands)**                          | ** ** |
| Net sales:                                  |       |                                             |       |   |   |
| Communications cable                        |       | $                                                | 215,998    |   | $ | 186,573 |   |
| North American magnet wire and distribution |       | 246,840                                          |       | 233,537 |   |
| European magnet wire and distribution       |       | 160,393                                          |       | 138,609 |   |
| Copper rod                                  |       | 72,397                                           |       | 92,975 |   |
|                                        |       | $                                                | 695,628    |   | $ | 651,694 |   |
| Operating income  (loss)                    |       |                                             |       |   |   |
| Communications cable                        |       | $                                                | 18,001     |   | $ | 18,353 |   |
| North American magnet wire and distribution |       | 8,546                                            |       | 9,266 |   |
| European magnet wire and distribution       |       | 6,055                                            |       | 1,784 |   |
| Copper rod                                  |       | (46                                              | )          | (138 | ) |
| Corporate and other                         |       | (6,910                                           | )          | (6,428 | ) |
| Restructuring and other charges             |       | (874                                             | )          | (781 | ) |
|                                        |       | $                                                | 24,772     |   | $ | 22,056 |   |

 
|                                             | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                  | ** ** | **(in thousands)**  | ** ** |
| Total assets:                               |       |                     |       |                        |       |
| Communications cable                        |       | $                        | 437,666    |                        | $          | 388,892 |   |
| North American magnet wire and distribution |       | 342,244                  |       | 339,045                     |       |
| European magnet wire and distribution       |       | 225,451                  |       | 247,337                     |       |
| Copper rod                                  |       | 33,624                   |       | 41,323                      |       |
| Corporate and other                         |       | 6,107                    |       | 10,222                      |       |
|                                        |       | $                        | 1,045,092  |                        | $          | 1,026,819 |   |

 

15

----

**14.****                               Supplementalguarantor information**

The 9%senior unsecured notes were issued by Superior Essex Communications and EssexGroup, as joint and several obligors. The notes are jointly and severallyguaranteed by the Company and each of its existing and future domesticrestricted subsidiaries (as defined in the indenture governing the notes). Allof the Company’s current domestic subsidiaries, other than IP Licensing LLP,are restricted subsidiaries. The following consolidating information presentsinformation about the Company (the “Parent”), the issuers, guarantorsubsidiaries and non-guarantor subsidiaries. Investments in subsidiaries arepresented on the equity method. Intercompany transactions are eliminated inconsolidation.
| ** **                                      | ** ** | **Balance Sheet Information** | ** ** |
|-------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                      | ** ** | **March 31, 2007**            | ** ** |
| ** **                                      | ** ** | **Parent**                              | ** ** | **Issuers** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| ** **                                      | ** ** | **(in thousands)**                 | ** ** |
| **ASSETS**                                      |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                 |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                       |       | $                                       | (397       | ) | $ | 71,523 |   | $ | 117 |   | $ | 7,641 |   | — |   | $ | 78,884 |   |
| Accounts receivable, net                        |       | —                                  |       | 217,293 |   | 3,758 |   | 126,347 |   | — |   | 347,398 |   |
| Inventories, net                                |       | —                                  |       | 202,779 |   | 14,044 |   | 68,086 |   | — |   | 284,909 |   |
| Other current assets                            |       | 12,986                                  |       | 16,194 |   | 627 |   | 9,264 |   | (6,241 | ) | 32,830 |   |
| Total current assets                            |       | 12,589                                  |       | 507,789 |   | 18,546 |   | 211,338 |   | (6,241 | ) | 744,021 |   |
| Property, plant  and equipment, net             |       | 477                                     |       | 190,565 |   | 14,894 |   | 53,092 |   | — |   | 259,028 |   |
| Intangible and  other long-term assets          |       | 3,848                                   |       | 33,052 |   | — |   | 9,712 |   | (4,569 | ) | 42,043 |   |
| Investment in  subsidiaries                     |       | 276,878                                 |       | 107,450 |   | 230,646 |   | — |   | (614,974 | ) | — |   |
| Intercompany  accounts                          |       | 99,765                                  |       | — |   | 24,897 |   | — |   | (124,662 | ) | — |   |
| Total assets                                    |       | $                                       | 393,557    |   | $ | 838,856 |   | $ | 288,983 |   | $ | 274,142 |   | $ | (750,446 | ) | $ | 1,045,092 |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**  |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Current  liabilities:                           |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Short-term borrowings                           |       | $                                       | —     |   | $ | — |   | $ | — |   | $ | 12,049 |   | — |   | $ | 12,049 |   |
| Current portion of long-term debt               |       | —                                  |       | — |   | — |   | 1,258 |   | — |   | 1,258 |   |
| Accounts payable                                |       | 3,576                                   |       | 117,884 |   | 3,461 |   | 57,966 |   | — |   | 182,887 |   |
| Accrued expenses                                |       | 6,374                                   |       | 31,567 |   | 194 |   | 56,286 |   | (6,241 | ) | 88,180 |   |
| Total current liabilities                       |       | 9,950                                   |       | 149,451 |   | 3,655 |   | 127,559 |   | (6,241 | ) | 284,374 |   |
| Long term-debt,  less current portion           |       | —                                  |       | 259,041 |   | 5,000 |   | 29,197 |   | — |   | 293,238 |   |
| Other long-term  liabilities                    |       | 16,687                                  |       | 44,064 |   | 3,450 |   | 11,083 |   | (4,569 | ) | 70,715 |   |
| Intercompany  accounts                          |       | —                                  |       | 104,758 |   | — |   | 19,904 |   | (124,662 | ) | — |   |
| Total liabilities                               |       | 26,637                                  |       | 557,314 |   | 12,105 |   | 187,743 |   | (135,472 | ) | 648,327 |   |
| Minority  interest in consolidated subsidiaries |       | —                                  |       | — |   | — |   | 29,845 |   | — |   | 29,845 |   |
| Stockholders’  equity                      |       | 366,920                                 |       | 281,542 |   | 276,878 |   | 56,554 |   | (614,974 | ) | 366,920 |   |
|                                            |       | $                                       | 393,557    |   | $ | 838,856 |   | $ | 288,983 |   | $ | 274,142 |   | $ | (750,446 | ) | $ | 1,045,092 |   |

 

16

----

 
| ** **                                      | ** ** | **Balance Sheet Information** | ** ** |
|-------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                      | ** ** | **December 31, 2006**         | ** ** |
| ** **                                      | ** ** | **Parent**                              | ** ** | **Issuers** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| ** **                                      | ** ** | **(in thousands)**                 | ** ** |
| **ASSETS**                                      |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Current assets:                                 |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Cash and cash  equivalents                      |       | $                                       | 94         |   | $ | 44,071 |   | $ | 2 |   | $ | 9,326 |   | $ | — |   | $ | 53,493 |   |
| Accounts  receivable, net                       |       | —                                  |       | 192,648 |   | 3,979 |   | 138,993 |   | — |   | 335,620 |   |
| Inventories, net                                |       | —                                  |       | 203,041 |   | 13,344 |   | 72,949 |   | — |   | 289,334 |   |
| Other current  assets                           |       | 9,288                                   |       | 22,398 |   | 623 |   | 14,569 |   | — |   | 46,878 |   |
| Total current  assets                           |       | 9,382                                   |       | 462,158 |   | 17,948 |   | 235,837 |   | — |   | 725,325 |   |
| Property, plant and  equipment, net             |       | 497                                     |       | 193,398 |   | 15,227 |   | 49,358 |   | — |   | 258,480 |   |
| Intangible and other  long-term assets          |       | 4,014                                   |       | 34,275 |   | — |   | 8,780 |   | (4,055 | ) | 43,014 |   |
| Investment in  subsidiaries                     |       | 266,174                                 |       | 102,222 |   | 223,683 |   | — |   | (592,079 | ) | — |   |
| Intercompany accounts                           |       | 95,378                                  |       | — |   | 21,378 |   | — |   | (116,756 | ) | — |   |
| Total assets                                    |       | $                                       | 375,445    |   | $ | 792,053 |   | $ | 278,236 |   | $ | 293,975 |   | $ | (712,890 | ) | $ | 1,026,819 |   |
| **LIABILITIES AND STOCKHOLDERS’  EQUITY**  |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Current liabilities:                            |       |                                    |       |   |   |   |   |   |   |   |   |   |   |
| Short-term borrowings                           |       | $                                       | —     |   | $ | — |   | $ | — |   | $ | 30,176 |   | $ | — |   | 30,176 |   |
| Current portion  of long-term debt              |       | —                                  |       | — |   | — |   | 1,192 |   | — |   | 1,192 |   |
| Accounts payable                                |       | 4,537                                   |       | 82,611 |   | 3,392 |   | 70,566 |   | — |   | 161,106 |   |
| Accrued expenses                                |       | 6,862                                   |       | 32,127 |   | 220 |   | 55,411 |   | — |   | 94,620 |   |
| Total current  liabilities                      |       | 11,399                                  |       | 114,738 |   | 3,612 |   | 157,345 |   | — |   | 287,094 |   |
| Long term-debt, less  current portion           |       | —                                  |       | 258,848 |   | 5,000 |   | 28,827 |   | — |   | 292,675 |   |
| Other long-term  liabilities                    |       | 5,058                                   |       | 45,760 |   | 3,450 |   | 9,183 |   | (4,055 | ) | 59,396 |   |
| Intercompany accounts                           |       | —                                  |       | 101,946 |   | — |   | 14,810 |   | (116,756 | ) | — |   |
| Total  liabilities                              |       | 16,457                                  |       | 521,292 |   | 12,062 |   | 210,165 |   | (120,811 | ) | 639,165 |   |
| Minority interest in  consolidated subsidiaries |       | —                                  |       | — |   | — |   | 28,666 |   | — |   | 28,666 |   |
| Stockholders’ equity                       |       | 358,988                                 |       | 270,761 |   | 266,174 |   | 55,144 |   | (592,079 | ) | 358,988 |   |
|                                            |       | $                                       | 375,445    |   | $ | 792,053 |   | $ | 278,236 |   | $ | 293,975 |   | $ | (712,890 | ) | $ | 1,026,819 |   |

 

17

----

 
| ** **                                                                            | ** ** | **Statement of Operations Information**         | ** ** |
|---------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                            | ** ** | **Three Months Ended March 31, 2007** | ** ** |
| ** **                                                                            | ** ** | **Parent**                                                     | ** ** | **Issuers** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| ** **                                                                            | ** ** | **(in thousands)**                                        | ** ** |
| Net sales                                                                             |       | $                                                              | 6,937      |   | $ | 529,167 |   | $ | 52,262 |   | $ | 168,812 |   | $ | (61,550 | ) | $ | 695,628 |   |
| Cost of goods  sold                                                                   |       | —                                                         |       | 483,776 |   | 48,793 |   | 156,427 |   | (54,613 | ) | 634,383 |   |
| Gross profit                                                                          |       | 6,937                                                          |       | 45,391 |   | 3,469 |   | 12,385 |   | (6,937 | ) | 61,245 |   |
| Selling, general  and administrative expenses                                         |       | (6,903                                                         | )          | (28,559 | ) | (182 | ) | (6,892 | ) | 6,937 |   | (35,599 | ) |
| Restructuring  and other charges                                                      |       | (80                                                            | )          | (39 | ) | — |   | (755 | ) | — |   | (874 | ) |
| Operating income (loss)                                                               |       | (46                                                            | )          | 16,793 |   | 3,287 |   | 4,738 |   | — |   | 24,772 |   |
| Interest expense                                                                      |       | (2                                                             | )          | (8,382 | ) | (119 | ) | (905 | ) | 1,758 |   | (7,650 | ) |
| Interest income                                                                       |       | 1,758                                                          |       | 730 |   | — |   | 16 |   | (1,758 | ) | 746 |   |
| Other income,  net                                                                    |       | 46                                                             |       | (530 | ) | (11 | ) | (256 | ) | — |   | (751 | ) |
| Income before income taxes, equity in earnings of  subsidiaries and minority interest |       | 1,756                                                          |       | 8,611 |   | 3,157 |   | 3,593 |   | — |   | 17,117 |   |
| Income tax  expense                                                                   |       | (650                                                           | )          | (2,959 | ) | (1,215 | ) | (2,085 | ) | — |   | (6,909 | ) |
| Equity in  earnings of subsidiaries                                                   |       | 8,052                                                          |       | 2,478 |   | 6,110 |   | — |   | (16,640 | ) | — |   |
| Minority  interest in income of subsidiaries                                          |       | —                                                         |       | — |   | — |   | (1,050 | ) | — |   | (1,050 | ) |
| Net income                                                                            |       | $                                                              | 9,158      |   | $ | 8,130 |   | $ | 8,052 |   | $ | 458 |   | $ | (16,640 | ) | $ | 9,158 |   |

 
| ** **                                                                                                | ** ** | **Statement of Operations Information**         | ** ** |
|-----------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                                                | ** ** | **Three Months Ended March 31, 2006** | ** ** |
| ** **                                                                                                | ** ** | **Parent**                                                     | ** ** | **Issuers** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| ** **                                                                                                | ** ** | **(in thousands)**                                        | ** ** |
| Net sales                                                                                                 |       | $                                                              | 6,495      |   | $ | 509,558 |   | $ | 46,257 |   | $ | 143,090 |   | $ | (53,706 | ) | $ | 651,694 |   |
| Cost of goods  sold                                                                                       |       | —                                                         |       | 464,360 |   | 42,518 |   | 133,578 |   | (47,211 | ) | 593,245 |   |
| Gross profit                                                                                              |       | 6,495                                                          |       | 45,198 |   | 3,739 |   | 9,512 |   | (6,495 | ) | 58,449 |   |
| Selling, general  and administrative expenses                                                             |       | (6,422                                                         | )          | (27,875 | ) | (243 | ) | (7,567 | ) | 6,495 |   | (35,612 | ) |
| Restructuring  and other charges                                                                          |       | (84                                                            | )          | (39 | ) | — |   | (658 | ) | — |   | (781 | ) |
| Operating income (loss)                                                                                   |       | (11                                                            | )          | 17,284 |   | 3,496 |   | 1,287 |   | — |   | 22,056 |   |
| Interest expense                                                                                          |       | 9                                                              |       | (7,443 | ) | (119 | ) | (525 | ) | — |   | (8,078 | ) |
| Interest income                                                                                           |       | —                                                         |       | — |   | — |   | 42 |   | — |   | 42 |   |
| Gain on sale of  investment                                                                               |       | 5,788                                                          |       | — |   | — |   | — |   | — |   | 5,788 |   |
| Other income,  net                                                                                        |       | 2                                                              |       | 33 |   | — |   | 121 |   | — |   | 156 |   |
| Income before income taxes, equity in earnings of  subsidiaries, minority interest and extraordinary item |       | 5,788                                                          |       | 9,874 |   | 3,377 |   | 925 |   | — |   | 19,964 |   |
| Income tax  expense                                                                                       |       | (2,257                                                         | )          | (3,304 | ) | (1,300 | ) | (842 | ) | — |   | (7,703 | ) |
| Equity in earnings  of subsidiaries                                                                       |       | 9,568                                                          |       | 3,079 |   | 7,491 |   | — |   | (20,138 | ) | — |   |
| Minority  interest in income of subsidiaries                                                              |       | —                                                         |       | — |   | — |   | (33 | ) | — |   | (33 | ) |
| Extraordinary  gain                                                                                       |       | —                                                         |       | — |   | — |   | 871 |   | — |   | 871 |   |
| Net income                                                                                                |       | $                                                              | 13,099     |   | $ | 9,649 |   | $ | 9,568 |   | $ | 921 |   | $ | (20,138 | ) | $ | 13,099 |   |

 

18

----

 
| ** **                                                            | ** ** | **Statement of Cash Flows Information**    | ** ** |
|-----------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                            | ** ** | **Three Months Ended March 31, 2007** | ** ** |
| ** **                                                            | ** ** | **Parent**                                                     | ** ** | **Issuers** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| ** **                                                            | ** ** | **(in thousands)**                                        | ** ** |
| Cash flows  provided by operating activities                          |       | $                                                              | 3,009      |   | $ | 29,915 |   | $ | 1,986 |   | $ | 19,351 |   | $ | — |   | $ | 54,261 |   |
| Cash flows from  investing activities:                                |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures                                                  |       | (29                                                            | )          | (2,875 | ) | (152 | ) | (8,623 | ) | — |   | (11,679 | ) |
| Investment in subsidiaries                                            |       | —                                                         |       | (2,400 | ) | — |   | — |   | 2,400 |   | — |   |
| Cash flows used  for investing activities                             |       | (29                                                            | )          | (5,275 | ) | (152 | ) | (8,623 | ) | 2,400 |   | (11,679 | ) |
| Cash flows from  financing activities:                                |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Repayments of short-term borrowings, net                              |       | —                                                         |       | — |   | — |   | (18,223 | ) | — |   | (18,223 | ) |
| Proceeds from exercise of stock options and employee  stock purchases |       | 477                                                            |       | — |   | — |   | — |   | — |   | 477 |   |
| Capital contributions                                                 |       | —                                                         |       | — |   | — |   | 600 |   | (600 | ) | — |   |
| Other                                                                 |       | 439                                                            |       | — |   | — |   | — |   |   |   | 439 |   |
| Intercompany accounts                                                 |       | (4,387                                                         | )          | 2,812 |   | (1,719 | ) | 5,094 |   | (1,800 | ) | — |   |
| Cash flows  provided by (used for) financing activities               |       | (3,471                                                         | )          | 2,812 |   | (1,719 | ) | (12,529 | ) | (2,400 | ) | (17,307 | ) |
| Effect of  exchange rate changes on cash                              |       | —                                                         |       | — |   | — |   | 116 |   | — |   | 116 |   |
| Net increase  (decrease) in cash and cash equivalents                 |       | (491                                                           | )          | 27,452 |   | 115 |   | (1,685 | ) | — |   | 25,391 |   |
| Cash and cash  equivalents at beginning of period                     |       | 94                                                             |       | 44,071 |   | 2 |   | 9,326 |   | — |   | 53,493 |   |
| Cash and cash  equivalents at end of period                           |       | $                                                              | (397       | ) | $ | 71,523 |   | $ | 117 |   | $ | 7,641 |   | $ | — |   | $ | 78,884 |   |

 

19

----

 
| ** **                                                      | ** ** | **Statement of Cash Flows Information**    | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                      | ** ** | **Three Months Ended March 31, 2006** | ** ** |
| ** **                                                      | ** ** | **Parent**                                                     | ** ** | **Issuers** | ** ** | **Guarantor  Subsidiaries** | ** ** | **Non-Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total** | ** ** |
| ** **                                                      | ** ** | **(in thousands)**                                        | ** ** |
| Cash flows  provided by (used for) operating activities         |       | $                                                              | (7,304     | ) | $ | (47,405 | ) | $ | (2,240 | ) | $ | 7,762 |   | $ | — |   | $ | (49,187 | ) |
| Cash flows from  investing activities:                          |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures                                            |       | (34                                                            | )          | (3,680 | ) | — |   | (4,175 | ) | — |   | (7,889 | ) |
| SDS acquisition, net of cash acquired                           |       | —                                                         |       | — |   | — |   | (947 | ) | — |   | (947 | ) |
| Proceeds from sale of investment                                |       | 8,500                                                          |       | — |   | — |   | — |   | — |   | 8,500 |   |
| Investment in subsidiaries                                      |       | —                                                         |       | (2,000 | ) | — |   | — |   | 2,000 |   | — |   |
| Cash flows  provided by (used for) investing activities         |       | 8,466                                                          |       | (5,680 | ) | — |   | (5,122 | ) | 2,000 |   | (336 | ) |
| Cash flows from  financing activities:                          |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |
| Borrowings under senior secured revolving credit  facility, net |       | —                                                         |       | 53,948 |   | — |   | — |   | — |   | 53,948 |   |
| Repayment of Essex Nexans short-term borrowings, net            |       | —                                                         |       | — |   | — |   | (6,597 | ) | — |   | (6,597 | ) |
| Proceeds from exercise of stock options                         |       | 992                                                            |       | — |   | — |   | — |   | — |   | 992 |   |
| Capital contributions                                           |       | —                                                         |       | — |   | — |   | 500 |   | (500 | ) | — |   |
| Other                                                           |       | 218                                                            |       | — |   | — |   | — |   | — |   | 218 |   |
| Intercompany accounts                                           |       | (2,843                                                         | )          | (856 | ) | 2,161 |   | 3,038 |   | (1,500 | ) | — |   |
| Cash flows  provided by (used for) financing activities         |       | (1,633                                                         | )          | 53,092 |   | 2,161 |   | (3,059 | ) | (2,000 | ) | 48,561 |   |
| Effect of  exchange rate changes on cash                        |       | —                                                         |       | — |   | — |   | 92 |   | — |   | 92 |   |
| Net increase  (decrease) in cash and cash equivalents           |       | (471                                                           | )          | 7 |   | (79 | ) | (327 | ) | — |   | (870 | ) |
| Cash and cash  equivalents at beginning of period               |       | 69                                                             |       | 395 |   | 125 |   | 7,595 |   | — |   | 8,184 |   |
| Cash and cash  equivalents at end of period                     |       | $                                                              | (402       | ) | $ | 402 |   | $ | 46 |   | $ | 7,268 |   | $ | — |   | $ | 7,314 |   |

 

20

----

**15.          Subsequent event**

On May2, 2007, Essex Nexans entered into a definitive agreement to acquire all of theoutstanding common stock of Invex S.p.A., a leading European magnet wireproducer based in Italy. The Company believes the acquisition will complementits existing European operations and should provide near- and long-term synergyopportunities in the areas of sales and administration, internal enamel usage,and other logistical, procurement and manufacturing arrangements. Thetransaction is subject to certain closing conditions, including regulatory approvals.

21

----

**ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**

**General**

Wecurrently manufacture a portfolio of wire and cable products grouped into thefollowing segments: (i) our communications cable segment; (ii) ourNorth American magnet wire and distribution segment; (iii) our Europeanmagnet wire and distribution segment and (iv) our copper rod segment.

Industrysegment financial data (including sales and operating income by industrysegment) for the three months ended March 31, 2007 and 2006 is included inNote 13 to the accompanying condensed consolidated financial statements.

**Overview**

Our results for the three months ended March 31, 2007were significantly impacted by the weakness in the U.S. economy as thereduction in residential construction spending and the softness in themanufacturing sector had a negative impact on product demand for ourcommunications cable and North American magnet wire and distribution segments.Our operating profits for the quarter ended March 31, 2007 have improvedcompared to the three months ended March 31, 2006 despite volume declines inall of our business segments due primarily to gross margin improvements,particularly in our European magnet wire and distribution segment. Copper isthe principal raw material we use in the manufacture of our wire and cableproducts and our results are impacted by the level and volatility of copperprices. We estimate that our communications cable segment experienced a $4.0million negative impact on gross profit in the first quarter of 2007 as aresult of an unfavorable match of copper cost to sales prices. This was theresult of the combination of lower than forecasted sales in the fourth quarterof 2006 together with the decline in copper prices during the later stages ofthe fourth quarter of 2006 and the first half of the first quarter of 2007. Weproduced inventory early in the fourth quarter of 2006 at higher copper coststo support forecasted fourth quarter demand. Due to the significantly lowerthan forecasted fourth quarter 2006 demand this inventory was carried over to2007 and matched against lower copper price sales. Copper price fluctuationsdid not have a significant net impact on the gross margins in our NorthAmerican and European magnet wire and distribution segments.

**Resultsof Operations**

***Non-GAAP Financial Measures***

Indiscussing our results of operations below, we present supplemental net salesinformation adjusted to a constant $3.00/lb COMEX cost of copper or theequivalent Euro/kilogram LME value for our European operations, which we referto as copper-adjusted net sales or sales adjusted for a constant cost ofcopper. We also present and discuss copper-adjusted gross profit margin (grossprofit divided by copper-adjusted net sales). Copper-adjusted net sales andcopper-adjusted gross profit margin are financial measures that are notcalculated in accordance with accounting principles generally accepted in theUnited States of America, or non-GAAP financial measures. A non-GAAP financialmeasure is defined as a numerical measure of a company’s financial performance,financial position or cash flows that (i) excludes amounts, or is subjectto adjustments that have the effect of excluding amounts, that are included inthe most directly comparable measure calculated and presented in accordancewith GAAP in the statement of operations, balance sheet or statement of cashflows; or (ii) includes amounts, or is subject to adjustments that havethe effect of including amounts, that are excluded from the comparable measureso calculated and presented. We believe sales adjusted for a constant cost ofcopper and copper-adjusted gross profit margin are useful measures to aid inanalyzing period-to-period net sales and gross profit margins, particularly inperiods of changing copper prices. Copper-adjusted net sales has distinctlimitations as compared to GAAP net sales. By copper-adjusting net sales, in adeclining copper cost environment, it may not be apparent that net sales aredeclining on an actual basis. Furthermore, by copper-adjusting gross profitmargins in a rising copper cost environment, it may not be apparent the grossprofit margins are declining on an actual basis. Management compensates forthese limitations by using the GAAP results in conjunction with copper-adjustednet sales and gross profit margins. Net sales adjusted for a constant cost ofcopper and copper-adjusted gross profit margin as used by us may not becomparable to similarly titled measures of other companies.

Wehave previously presented supplemental copper-adjusted net sales andcopper-adjusted gross profit margin information using a constant $2.00/lb COMEXcost of copper. The current period presentation utilizes a constant $3.00/lbCOMEX cost of copper as management believes this more closely approximates thecurrent level of copper prices. All prior period amounts presented have beenrestated to reflect a constant $3.00/lb COMEX cost of copper for our U.S.operations or the equivalent Euro/kilogram LME cost of copper for our European operations.

22

----

***Three Months Ended March 31, 2007 Compared to the Three MonthsEnded March 31, 2006***

*Net sales*

Thefollowing table provides net sales and supplemental copper-adjusted salesinformation for the three months ended March 31, 2007 and 2006:
| ** **                                     | ** ** | **Actual**                                       | ** ** | **Copper-adjusted** | ** ** |
|------------------------------------------------|------------|--------------------------------------------------|------------|---------------------|------------|
| ** **                                     | ** ** | **Three Months Ended  March 31,** | ** ** | **%**               | ** ** | **Three Months Ended  March 31,** | ** ** | **%** | ** ** |
| ** **                                     | ** ** | **2007**                                         | ** ** | **2006**            | ** ** | **Change** | ** ** | **2007** | ** ** | **2006** | ** ** | **Change** | ** ** |
| Net sales:                                     |       |                                             |       |                |       |   |   |   |   |   |   |   |   |
| Communications cable                           |       | $                                                | 215,998    |                | $          | 186,573 |   | 16 | % | $ | 211,913 |   | $ | 226,652 |   | (6 | )% |
| North American magnet wire and distribution    |       | 246,840                                          |       | 233,537             |       | 6 | % | 260,639 |   | 287,202 |   | (9 | )% |
| European magnet wire and distribution          |       | 160,393                                          |       | 138,609             |       | 16 | % | 168,728 |   | 165,619 |   | 2 | % |
| Copper rod                                     |       | 72,397                                           |       | 92,975              |       | (22 | )% | 80,427 |   | 122,732 |   | (34 | )% |
|                                           |       | 695,628                                          |       | 651,694             |       | 7 | % | 721,707 |   | 802,205 |   | (10 | )% |
| Constant cost of copper adjustment             |       | —                                           |       | —              |       |   |   | (26,079 | ) | (150,511 | ) |   |   |
| Total                                          |       | $                                                | 695,628    |                | $          | 651,694 |   | 7 | % | $ | 695,628 |   | $ | 651,694 |   | 7 | % |
| Average daily  COMEX price per pound of copper |       | $                                                | 2.71       |                | $          | 2.25 |   | 20 | % |   |   |   |   |   |   |

 

Consolidatedsales for the three months ended March 31, 2007 were $695.6 million,an increase of 7% as compared to consolidated sales of $651.7 million forthe quarter ended March 31, 2006. Sales for the 2007 quarter as comparedto the 2006 quarter were significantly impacted by the increase in copperprices and, to a lesser extent, the strengthening of the Euro against the U.S.dollar. Sales adjusted for a constant cost of copper decreased 10% for thequarter ended March 31, 2007. The copper-adjusted sales decline reflectsvolume decreases in all of our business segments.

Salesfor our communications cable segment for the March 31, 2007 quarter were$216.0 million, an increase of 16%, as compared to sales of$186.6 million for the quarter ended March 31, 2006. Sales adjustedfor a constant cost of copper decreased 6%. The copper-adjusted decreaseprimarily reflects declines in copper outside plant, or OSP, unit volumeattributable to overall decreases in market-related demand due to the slowdownin new home construction, delayed construction due to severe weather innorthern regions of North America, the absence of hurricane restoration demand,continued loss of access lines by major telephone companies and the continueduse of fiber optic cable in telephone networks. The decline in copper-adjusted OSPsales was partially offset by a 29% increase in premise wire product sales. Webelieve the 2007 increase in our premise product sales reflects increaseddemand as distributors replenished depleted year end inventory levels, as wellas an increase in our market share and improved pricing as compared to thequarter ended March 31, 2006.

Salesfor our North American magnet wire and distribution segment were$246.8 million for the quarter ended March 31, 2007, an increase of6% as compared to the prior year. On a copper-adjusted basis, sales for thequarter ended March 31, 2007 decreased 9% from the same quarter in the prioryear. The copper-adjusted sales decrease is concentrated in the segment’s toplargest industrial OEM customers and was principally attributable to weaknessin the heating, ventilation and air conditioning, heavy appliance and other endmarkets tied to residential construction activity.

Salesfor the European magnet wire and distribution segment were $160.4 million forthe three months ended March 31, 2007 compared to $138.6 million for the threemonths ended March 31, 2006, an increase of 16%. On a copper-adjusted basis,sales increased 2% for the three months ended March 31, 2007 compared to theprior year quarter. Excluding the effects of the strengthening of the Euroagainst the U.S. dollar, copper adjusted sales decreased 6% for the threemonths ended March 31, 2007 compared to the three months ended March 31, 2006.This decrease was primarily the result of reductions in unit volumes due to aplanned rationalization of low margin customers.

Copperrod sales for the three months ended March 31, 2007 were$72.4 million compared to $93.0 million for the comparable 2006period. On a copper-adjusted basis, sales for our copper rod segment decreasedby 34% for the three months ended March 31, 2007 compared to the prioryear period. The copper-adjusted decrease in the 2007 quarter reflects aplanned reduction in total copper rod production including a rationalization ofthird-party copper rod sales. Copper rod segment sales consist primarily ofexternal sales of processed copper rod that cannot be used for internalproduction. Copper rod volumes fluctuate from period to period

23

----

due to changes ininternal consumption needs and external market conditions.

*Grossprofit*

Forthe quarter ended March 31, 2007, gross profit was $61.2 million, anincrease of 5% as compared to the prior year quarter primarily due to grossprofit margin improvements and foreign currency exchange rate benefits in ourEuropean magnet wire and distribution segment. The gross profit margin in the2007 quarter was 8.8% compared to 9.0% for the same quarter in 2006. Thedecrease in gross profit margin primarily reflects the effect of increasedcopper prices. Gross profit margin on a copper-adjusted basis was 8.5% for thethree months ended March 31, 2007 compared to 7.3% for the three monthsended March 31, 2006 reflecting margin improvements in all of our businesssegments. Copper-adjusted gross profit margins in our communications cablebusiness increased for the 2007 quarter compared to the prior year quarter dueto price increases, production cost reduction activities and higher marginpremises product mix. These positive factors were partially offset by anestimated $4 million negative impact from unfavorable copper cost flowthroughas discussed above. Copper-adjusted gross profit margin for our North Americanmagnet wire and distribution business for the three months ended March 31,2006 increased slightly compared to the prior year quarter due primarily toimproved pricing and customer mix, partially offset by the negative impact ofproduction cost absorption due to lower volumes. Gross profit margin for theEuropean magnet wire and distribution segment increased for the three monthsended March 31, 2007 due primarily to realization of benefits from acquisitionintegration cost savings, an overall strengthening in the pricing environmentand improved customer and product mix.

*Selling,general and administrative expenses*

Selling,general and administrative expenses (“SG&A expense”) of $35.6 million forthe three month period ended March 31, 2007 were essentially unchanged ascompared to SG&A expense for the three months ended March 31, 2006. Acomparative decrease in SG&A expense resulting from a $0.6 million firstquarter 2007 bad debt recovery of a $1.0 million bad debt expense provided forin the first quarter of 2006 was offset by increased stock-based compensationexpense ($0.7 million), increased legal and professional fees, increasedcommission expense primarily attributable to increased premise product sales inour communications cable segment and the impact of foreign exchange rates,which increased reported SG&A expense in our European operations.

*Restructuringand other charges*

Duringthe three months ended March 31, 2007 we recorded a restructuring provision of$0.3 million related to a workforce reduction at our European magnet wire anddistribution segment’s Viana de Castelo, Portugal manufacturing facility. Themajority of the costs related to severance payments and related benefits. Allamounts are expected to be paid during 2007. Restructuring and other chargesfor the three months ended March 31, 2007 also includes the write-off of $0.4million of deferred business acquisition costs and $0.1 million of professionalfees incurred in connection with the administration of Superior TeleCom’s planof reorganization. In the first quarter of 2006, we recorded a provision of$0.7 million which was charged to operations related to workforce reductions atthe European magnet wire and distribution segment’s U.K. magnet wireoperations. In addition, restructuring and other charges for the three monthsended March 31, 2006 included $0.1 million related primarily to professionalfees incurred in connection with the administration of Superior TeleCom’s planof reorganization.

*Operatingincome*

Thefollowing table sets forth information regarding our operating income bysegment for the three months ended March 31, 2007 and 2006. We measure oursegment operating performance based primarily on segment operating income,excluding restructuring and other charges.
|                                             | ** ** | **2007**                | ** ** | **2006** | ** ** |
|---------------------------------------------|------------|-------------------------|------------|----------|------------|
| ** **                                  | ** ** | **(in thousands)** | ** ** |
| Operating income  (loss)                    |       |                    |       |     |       |
| Communications cable                        |       | $                       | 18,001     |     | $          | 18,353 |   |
| North American magnet wire and distribution |       | 8,546                   |       | 9,266    |       |
| European magnet wire and distribution       |       | 6,055                   |       | 1,784    |       |
| Copper rod                                  |       | (46                     | )          | (138     | )          |
| Corporate and other                         |       | (6,910                  | )          | (6,428   | )          |
| Restructuring and other charges             |       | (874                    | )          | (781     | )          |
|                                        |       | $                       | 24,772     |     | $          | 22,056 |   |

 

24

----

Operatingincome for the communications cable segment decreased $0.4 million for thethree months ended March 31, 2007 compared to the 2006 quarter. Communicationscable segment gross profit increases resulting from improved gross margins weremore than offset by an increase in SG&A expense of $0.8 million dueprimarily to higher sales commissions in 2007 associated with increased premiseproduct sales and legal fees. Operating income for our North American magnetwire and distribution segment decreased $0.7 million due primarily to lowergross profit ($1.2 million) attributable to reduced sales volumes and start-upoperating losses related to our greenfield facility in China, offset byreductions in SG&A expenses. Operating income for the European magnet wireand distribution segment increased $4.3 million for the three months endedMarch 31, 2007 compared to the three months ended March 31, 2006. The increasereflects improved gross profit attributable to improved margins as well as areduction in SG&A expense of $0.7 million and the positive impact ofcurrency exchange rates. SG&A expenses for the European magnet wire anddistribution segment was positively impacted by a $0.6 million bad debtrecovery in the three months ended March 31, 2007 of a $1.0 million bad debtexpense provided for in the first quarter of 2006. The copper rod segment’soperating income was relatively unchanged for the three months ended March 31,2007 compared to the prior year as copper rod sales allow for fixed costrecovery at gross profit margins that are generally break even. Corporate andother charges consist primarily of parent company and corporate payroll costs,including stock-based compensation charges, corporate headquarters costs andcorporate professional fees and compliance costs. The increase in corporate andother costs for the three months ended March 31, 2007 compared to thethree months ended March 31, 2006 is primarily due to increased stock-basedcompensation charges resulting from a change in the number of outstandingperformance shares expected to ultimately vest. Consolidated operating incomefor the three months ended March 31, 2007 included restructuring and othercharges of $0.9 million compared to $0.8 million of such charges inthe 2006 quarter, the components of which are discussed above.

*Interestexpense, interest income and other income(expense)*

Interestexpense for the quarter ended March 31, 2007 was $7.6 millioncompared to interest expense of $8.1 million for the quarter endedMarch 31, 2006. The decrease in interest expense in the 2007 quarter isdue to the fact that we had no borrowings outstanding on our senior securedcredit facility during the three months ended March 31, 2007 as a result of theapplication of the proceeds from our equity offering in June 2006. Interestincome increased $0.7 million for the three months ended March 31, 2007compared to the same period in the prior year due to interest earned onpositive cash balances outstanding during the 2007 quarter. Increased cashbalances primarily reflect the benefit from positive operating cash flowgenerated in the second half of 2006 and in the first quarter of 2007. Otherexpense for the three months ended March 31, 2007 of $0.8 million includes a$0.4 million loss related to an equity-method investee due to unusual copperand scrap losses related to start-up of a specialty production line.

*Incometax expense*

Oureffective income tax rate for the three months ended March 31, 2007 was40% compared to an effective tax rate of 39% for the three months endedMarch 31, 2006. The effective tax rate for the three months endedMarch 31, 2007 exceeds the U.S. statutory rate of 35% due to the effectsof state and foreign taxes and liabilities for uncertain tax positions recordedin accordance with FASB Interpretation No. 48 (“FIN 48”). The increase in theeffective tax rate for the three months ended March 31, 2007 compared to thethree months ended March 31, 2006 is due primarily to the effects of FIN 48.

**Liquidityand Capital Resources**

***Cash from Operating, Investing andFinancing Activities***

Wereported cash provided by operating activities of $54.2 million for thethree months ended March 31, 2007 compared to cash used by operatingactivities of $49.2 million for the three months ended March 31,2006. Cash provided by operating activities for the three months endedMarch 31, 2007 includes a net working capital decrease of$30.0 million compared to a net working capital increase of $68.5 millionfor the three months ended March 31, 2006. Historically, we have experienced afirst quarter seasonal increase in our working capital resulting from increasedproduction, inventory stocking levels and related sales attributable tohistorically higher customer demand levels in March through October.Conversely, our sales volumes are generally lower in our fourth and early firstquarters due primarily to cold weather related reduction in demand from ourcommunications cable segment customers and the impact of year end holidayrelated plant shutdowns of major OEM customers of our North American andEuropean magnet wire and distribution segments. While we did experience some firstquarter seasonal increase in working capital, this increase was more thanoffset by a decrease in the average cost of copper in our working capitalaccounts at March 31, 2007 as compared to December 31, 2006. Cash used byinvesting activities reflect an increase in capital expenditures of $3.8million for the three months ended March 31, 2007 compared to the same periodin the prior year due primarily to cash payments related to our machinery andequipment acquisitions for our greenfield facility in China. Cash provided byfinancing activities for the three months ended March 31, 2006 amounted to$48.6 million primarily due to $53.9 million of borrowings under our net seniorsecured revolving credit facility to finance the first quarter 2006 seasonalincrease in working capital. Outstanding borrowings under the senior securedrevolving

25

----

credit facilitywere fully repaid in the second quarter of 2006 with the proceeds from ourcommon stock offering. Cash used for financing activities of $17.3 million forthe three months ended March 31, 2007 includes net repayments of $18.2 millionof Essex Nexans short-term borrowings due to positive operating cash flow,including a reduction in working capital.

***Liquidity and Capital Resources***

Our principal cash requirements generally includefunding of our working capital, interest payments on our senior securedrevolving credit facility and the 9% senior notes, dividend payments on oursubsidiary’s series A preferred stock, interest payments on the EssexNexans factoring agreement and subordinated note, capital expenditurescurrently estimated at approximately $25 million to $35 million annually(excluding investments in China discussed below), any funding required if weexercised our right to purchase Nexans’ 40% interest in Essex Nexans, fundingfor the Invex, Simcoe and Tianjin acquisitions discussed below and obligationsrelated to our defined benefit pension plans. Copper prices have increasedduring the first quarter of 2007 as compared to year-end 2006, but havedeclined as compared to peak levels experienced in the second half of 2006.Significant increases in the price of copper and the resultant increase inaccounts receivable and, to a lesser degree, inventory, impacts our workingcapital funding requirements. We estimate that each $1 per pound increase inthe price of copper has a $70 million impact on our working capital.

On May2, 2007, Essex Nexans entered into a definitive agreement to acquire all of theoutstanding common stock of Invex S.p.A., a leading magnet wire producer inEurope based in Italy with sales of €213 million in 2006. The transaction issubject to customary closing conditions, including regulatory and certain otherthird-party approvals.

InJanuary 2007, we entered into two definitive agreements, one to acquirecertain assets and assume certain liabilities related to Nexans’ remainingNorth American magnet wire business in Simcoe, Canada and the other to acquireNexans’ 80% ownership interest in a company which owns and operates a magnetwire facility located in Tianjin, China. The purchase price for the Canadiantransaction is $17.6 million, subject to adjustment based on inventory valuesand the value of certain assumed liabilities. The purchase price for the 80%ownership interest in the Tianjin company is €11.2 million ($14.9 million as ofMarch 31, 2007), less 80% of the debt of the company outstanding atclosing. The Simcoe acquisition was completed on April 27, 2007 and the Tianjinacquisition is expected to close in the third quarter of 2007.

In the fourth quarter of 2006 we completed the initialphase of construction of our wholly owned “Greenfield” facility near Shanghaiin the New Suzhou district of China. We currently plan to add 8 to 12 millionadditional pounds of capacity to the facility in 2007 at an estimated capitalcost of $6 to $8 million.

In April 2007, we paid $4.1 million of additionalcontingent consideration to Nexans based on the achievement of specified levelsof profitability by Essex Nexans in 2006 as provided for in the contributionand formation agreement establishing Essex Nexans. The shareholders agreementgoverning the Essex Nexans joint venture provides that Nexans will have theright to require us to purchase its 40% interest in Essex Nexans beginning in2009 at a price equal to €17.9 million ($23.9 million as of March 31, 2007)plus 40% of (i) the cumulative net income (adjusted for certain items asspecified in the shareholders agreement) of Essex Nexans, and (ii) anypost-closing capital contributions minus any post-closing distributions, butonly if Adjusted EBITDA of Essex Nexans exceeds €14.0 million ($18.7 million asof March 31, 2007) in 2008, 2009 or 2010. The purchase price may be increasedby up to €5 million ($6.7 million as of March 31, 2007) if Essex Nexansachieves certain Adjusted EBITDA thresholds in 2008, 2009 or 2010 as specifiedin the shareholders agreement. The put right is exercisable for one yearfollowing the completion of audited financial statements demonstrating that theAdjusted EBITDA threshold was met during 2008, 2009 or 2010. At our option, theput price may be paid in cash by us or Essex Nexans or by issuance of ourcommon stock (or a combination thereof). If we elect to pay the put price inour common stock, the portion of the put price payable in our common stock issubject to certain limitations specified in the shareholders agreement,including a general limit of 7.5% of our outstanding common stock, with anyexcess put price payable in cash. Furthermore, the portion of the put pricepaid in our common stock will be increased by 5% (or 15% if certain conditionsare not met with regard to the registration of such shares). Additionally, wehave the option at any time to purchase Nexans’ 40% interest in Essex Nexans atthe put price payable only in cash. The maturity of Essex Nexans’ €11.3 million($15.1 million as of March 31, 2007) subordinated note payable will beaccelerated if we exercise our option to purchase Nexans’ 40% interest. We areevaluating the exercise of our right to purchase Nexans’ 40% interest in EssexNexans.

We believe that cash provided by operations andborrowing availability under our amended and restated senior secured revolvingcredit facility ($224.2 million undrawn and available at March 31, 2007),together with our cash on hand ($78.9 million at March 31, 2007) andavailability under the Essex Nexans factoring agreement ($45.1 million undrawnand available at March 31, 2007), will be sufficient to meet ourobligations (including funding the aforementioned acquisitions) and fund ourworking capital requirements for the foreseeable future.

26

----

**NewAccounting Pronouncements**

We adopted theprovisions of FASB Interpretation No. 48, *Accounting for Uncertaintyin Income Taxes* (FIN48), on January 1, 2007. FIN 48 prescribes aconsistent recognition threshold and measurement attribute, as well as establishescriteria for subsequently recognizing, derecognizing and measuring uncertaintax positions for financial statement purposes. As a result of theimplementation of FIN 48, we recognized a net increase of $6.6 million in theliability for unrecognized tax benefits, which was accounted for as a decreaseto the January 1, 2007 balance of retained earnings of $6.3 million and adecrease in minority interest in consolidated subsidiaries of $0.3 million. Asof the date of adoption and after the impact of recognizing the increase inliability noted above, our net liability for unrecognized tax benefits totaled$9.1 million, all of which, if recognized, would affect the annual effectiveincome tax rate.

We recognizepotential interest and penalties related to unrecognized tax benefits as acomponent of income tax expense.  Theliability for unrecognized tax benefits of $9.1 million at January 1, 2007includes approximately $2.1 million for potential interest and penaltiesassociated with uncertain tax positions. During the three months ended March31, 2007, we incurred an income tax expense charge of $0.3 million foruncertain tax positions and $0.2 million for potential interest and penaltiesassociated with uncertain tax positions.

**ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

We, toa limited extent, use or have used forward fixed price contracts and derivativefinancial instruments to manage commodity price, interest rate and foreigncurrency exchange risks. We do not hold or issue financial instruments forinvestment or trading purposes. We are exposed to credit risk in the event ofnonperformance by counterparties for foreign exchange forward contracts, metalforward price contracts and metals futures contracts but we do not anticipate nonperformanceby any of these counterparties. The amount of such exposure is generallylimited to any unrealized gains within the underlying contracts.

***Commodity price risk management***

Thecost of copper, our most significant raw material, has historically beensubject to considerable volatility. To manage the risk associated with suchvolatility, we enter into futures contracts to match the metal component ofcustomer product pricing with the cost component of the inventory shipped.These futures contracts have been designated as cash flow hedges withunrealized gains and losses recorded in other comprehensive income. Gains andlosses are reclassified into earnings, as a component of cost of goods sold,when the hedged sales transactions are reflected in the income statement. Hedgeineffectiveness, which is not significant, is immediately recognized inearnings. Our commodities futures purchase contracts are summarized as followsat March 31, 2007:
| Type       | ** ** | **Notional  Amount**                    | ** ** | **Maturity  Date** | ** ** | **Weighted  Average  Settlement Rate** | ** ** | **Fair Value  Gain (Loss)** | ** ** |
|------------|------------|-----------------------------------------|------------|--------------------|------------|---------------------------------------------|------------|---------------------------------------|------------|
| ** ** | ** ** | **(in thousands of  pounds)** | ** ** | ** **         | ** ** | ** **                                  | ** ** | **(in  thousands)**                   | ** ** |
|       |       |                                    |       |               |       |                                        |       |                                  |       |
| Copper     |       | 10,525                                  |       | 2007               |       | $                                           | 3.12       |                                  | $          | 2,811 |   |
| Copper     |       | 75                                      |       | 2008               |       | 3.03                                        |       | 38                                    |       |
|       |       |                                    |       |               |       |                                        |       | $                                     | 2,849      |   |
|            |            |                                         |            |                    |            |                                             |            |                                       |            |  |  |

 

All ofthe unrealized gains on commodity futures outstanding at March 31, 2007 areexpected to be reclassified in earnings within the next twelve months.

Essex Nexans periodically enters into commodityfutures contracts to match the copper component of customer product pricingwith the cost component of the inventory shipped. These futures contracts areintended to minimize the risks associated with forward product pricing forcustomers and changing copper prices. These contracts generally have maturitiesof less than two months and represent economic hedges but have not beendesignated as hedges for accounting purposes. Accordingly, gains and losses onthese contracts are recorded in income as a component of cost of goods sold.There were no open copper futures positions held by Essex Nexans at March 31,2007.

27

----

***Interest rate risk management***

Inorder to limit our exposure to rising interest rates with respect to borrowingsunder our variable rate senior secured revolving credit facility, we haveentered into interest rate cap agreements. The following interest rate capagreements were outstanding as of March 31, 2007:
| **Type**          | ** ** | **Notional  Amount**    | ** ** | **Interest Rate** | ** ** | **Cap Rate** | ** ** | **Expiration Date** | ** ** | **Fair Value**     | ** ** |
|-------------------|------------|-------------------------|------------|------------------------|------------|-------------------|------------|--------------------------|------------|-------------------------|------------|
| ** **        | ** ** | **(in thousands)** | ** ** | ** **             | ** ** | ** **        | ** ** | ** **               | ** ** | **(in thousands)** | ** ** |
|              |       |                    |       |                   |       |              |       |                     |       |                    |       |
| Interest rate cap |       | 15,000                  |       | 30-day LIBOR           |       | 5.0               | %          | April 2007               |       | $                       | 4          |   |
|                   |            |                         |            |                        |            |                   |            |                          |            |                         |            |  |

 

***Foreign currency exchange risk management***

Weengage in the sale of products which result in accounts receivable denominatedin foreign currencies. We enter into foreign currency forward exchangecontracts to hedge against fluctuations in the value of certain of thesereceivables. Changes in the fair value of these contracts are reflected incurrent earnings. At March 31, 2007, we had outstanding foreign currencyforward exchange contracts to exchange 10.5 million Canadian dollars for$9.1 million in April 2007. The fair value of the forward exchangecontracts was insignificant at March 31, 2007.

**ITEM4. CONTROLS AND PROCEDURES**

*Evaluationof Controls and Procedures*

As ofthe end of the period covered by this Form 10-Q, we carried out anevaluation of the effectiveness of the design and operation of our disclosurecontrols and procedures, as defined in Rule 13a-15(e) under theSecurities Exchange Act of 1934, as amended (“Exchange Act”), under thesupervision and with the participation of our management, including our ChiefExecutive Officer and Chief Financial Officer. Based on that evaluation, theChief Executive Officer and Chief Financial Officer concluded that ourdisclosure controls and procedures were effective in providing reasonableassurance that information required to be disclosed by us in reports filed orsubmitted under the Exchange Act is recorded, processed, summarized andreported within the time periods specified in the SEC’s rules and forms,including reasonable assurance that information required to be disclosed inreports filed or submitted by us under the Exchange Act is accumulated andcommunicated to our management, including the Chief Executive Officer and ChiefFinancial Officer, in a manner to allow timely decisions regarding the requireddisclosure. A system of controls, no matter how well designed and operated,cannot provide absolute assurance that the objectives of the system of controlsare met, and no evaluation of controls provides absolute assurance that allcontrol issues and instances of fraud, if any, within a company have beendetected. Notwithstanding the above, our Chief Executive Officer and ChiefFinancial Officer have concluded that our disclosure controls and proceduresare effective at a reasonable assurance level.

*Changesin Internal Controls Over Financial Reporting*

Therehave been no changes in our internal control over financial reporting thatoccurred during the most recent fiscal quarter that have materially affected,or are reasonably likely to materially affect, our internal control overfinancial reporting.

28

----

**PART II. OTHER INFORMATION**

**ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

Thefollowing table provides information about our purchases of shares of ourcommon stock during the quarter ended March 31, 2007:
| **Period**              | ** ** | **Total Number of  Shares Purchased** | ** ** | **Average Price Paid  per Share** | ** ** | **Total Number of  Shares Purchased as  Part of Publicly  Announced Plans  or Programs** | ** ** | **Maximum Number of  Shares that May Yet  Be Purchased Under  the Plans or Programs** | ** ** |
|-------------------------|------------|------------------------------------------------------|------------|--------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------|------------|
|                    |       |                                                 |       |                                             |       |                                                                                                                             |       |                                                                                                                                    |       |
| January 2007       |       | —                                               |       | —                                           |       | —                                                                                                                           |       | —                                                                                                                                  |       |
| February 2007  (a) |       | 14,812                                               |       | $                                                | 34.39      |                                                                                                                             | —     |                                                                                                                                    | —     |   |
| March 2007         |       | —                                               |       | —                                           |       | —                                                                                                                           |       | —                                                                                                                                  |       |
|                         |            |                                                      |            |                                                  |            |                                                                                                                                  |            |                                                                                                                                         |            |  |

 

----

(a)                                  Representsshares withheld from members of management to satisfy minimum statutory taxwithholdings due upon the vesting of restricted stock awards and exercise ofstock options.

29

----

**ITEM6. EXHIBITS**
| Exhibit    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 2.1        |       | Disclosure Statement with respect to First Amended  Joint Plan of Reorganization of Superior TeleCom Inc. and its affiliated  debtors and debtors-in-possession (including the Amended Joint Plan of  Reorganization attached as Exhibit A thereto) (incorporated herein by  reference to Exhibit 2(a) to the Registration Statement on  Form 10 (Registration No. 000-50514) of Superior Essex Inc.,  as filed with the Securities and Exchange Commission on December 15,  2003, as amended (the “Superior Essex Form 10”)).           |
| 2.2        |       | Asset Purchase Agreement, dated as of March 18,  2004, by and among Superior Essex Communications LLC, Belden Communications  Company and Belden (Canada) Inc. (incorporated herein by reference to  Exhibit 2.1 to the Current Report on Form 8-K of Superior  Essex Inc. dated June 16, 2004)                                                                                                                                                                                                                                                                   |
| 2.3        |       | Contribution and Formation Agreement dated  July 27, 2005 among Superior Essex Inc., Essex Group, Inc., Nexans,  Nexans Participations, Nexans Wires and Lacroix and Kress GmbH. (incorporated  herein by reference to Exhibit 2.3 to the Quarterly Report on  Form 10Q of Superior Essex Inc. for the quarter ended June 30, 2005)                                                                                                                                                                                                                          |
| 2.4        |       | Side Letter dated October 21, 2005 by and  between Superior Essex Inc., Essex Group, Inc., SE Holding, C.V.,  Nexans, Nexans Participations, Lacroix & Kress GmbH and Nexans Wires  (incorporated by reference to Exhibit 10.2 to the Current Report on  Form 8-K of Superior Essex dated October 21, 2005)                                                                                                                                                                                                                                         |
| 3.1        |       | Amended and Restated Certificate of Incorporation of  Superior Essex Inc. (incorporated herein by reference to Exhibit 3.1 to the  Annual Report on Form 10-K of Superior Essex Inc. for the year ended December  31, 2006 (the “2006 Superior Essex 10-K”))                                                                                                                                                                                                                                                                                                                |
| 3.2        |       | Restated By-Laws of Superior Essex Inc.  (incorporated herein by reference to Exhibit 3(b) to the Superior Essex  Form 10).                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.1        |       | Indenture dated as of April 14, 2004 among  Superior Essex Communications LLC and Essex Group, Inc., as Co-Issuers,  the Guarantors named therein and The Bank of New York Trust Company, N.A., as  Trustee (incorporated herein by reference to Exhibit 10.3 to the  Quarterly Report on Form 10-Q of Superior Essex Inc. for the  quarter ended March 31, 2004 (the “Q1 2004 Form 10-Q”)).                                                                                                                                                  |
| 4.2        |       | Form of 9% Senior Series B Note due 2012  (included in Exhibit 4.1) (incorporated herein by reference to  Exhibit 10.3 to the Q1 2004 Form 10-Q).                                                                                                                                                                                                                                                                                                                                                                                                            |
| 4.3        |       | Registration Rights Agreement, dated as of  November 10, 2003, by and among Superior Essex Inc., the holders of  Registrable Common Stock (as defined therein) and the holders of the Warrants  (as defined therein) and such other Persons who may become a party thereto  pursuant to Section 16 or 19(i) thereof (incorporated herein by reference  to Exhibit 10(b) to the Superior Essex Form 10).                                                                                                                                                 |
| 4.4        |       | Specimen Common Stock Certificate (incorporated  herein by reference to Exhibit 4.11 to the Superior Essex Form S-3).                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 4.5        |       | Third Supplemental Indenture dated  September 12, 2005 among Superior Essex Communications LP, Essex  Group, Inc., certain subsidiary guarantors named therein and The Bank of  New York Trust Company, N.A. (incorporated by reference to Exhibit 10.1  to the Current Report on Form 8-K of Superior Essex dated  September 12, 2005).                                                                                                                                                                                                                     |
| 10.1       |       | Amended and Restated Loan and Security Agreement,  dated April 14, 2006, by and among Superior Essex Communications LP, as  a borrower, Essex Group, Inc., as a borrower, the financial institutions  party thereto, as lenders, General Electric Capital Corporation, as  syndication agent, Banc of America Securities LLC and GECC Capital  Markets, Inc. as co-lead arrangers, and Bank of America, N.A. as agent  (incorporated herein by reference to Exhibit 10 to the Current  Report on Form 8-K of Superior Essex dated April 14, 2006). |
| 10.2*      |       | Superior Essex Inc. 2003 Stock Incentive Plan  (incorporated herein by reference to Exhibit 10(e) to the Superior  Essex Form 10).                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.3*      |       | Amended and Restated Employment Agreement, dated  March 10, 2006, between Superior Essex and Stephen M. Carter  (incorporated herein by reference to Exhibit 10.1 to the Current Report  on Form 8-K of Superior Essex Inc. dated March 10, 2006).                                                                                                                                                                                                                                                                                                                |
| 10.4*      |       | Amended and Restated Employment Agreement, dated  March 10, 2006, between Superior Essex and David S. Aldridge  (incorporated herein by reference to Exhibit 10.2 to the Current Report  on Form 8-K of Superior Essex Inc. dated March 10, 2006).                                                                                                                                                                                                                                                                                                                |

 

30

----

 
| Exhibit    | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 10.5*      |       | Amended and Restated Employment Agreement, dated March 10,  2006, between Superior Essex and Justin F. Deedy, Jr. (incorporated  herein by reference to Exhibit 10.3 to the Current Report on Form 8-K  of Superior Essex Inc. dated March 10, 2006).                                                                                                                                                                                   |
| 10.6*      |       | Amended and Restated Employment Agreement, dated  March 10, 2006, between Superior Essex and H. Patrick Jack (incorporated  herein by reference to Exhibit 10.4 to the Current Report on Form 8-K  of Superior Essex Inc. dated March 10, 2006).                                                                                                                                                                                             |
| 10.7*      |       | Amended and Restated Employment Agreement, dated  March 10, 2006, between Superior Essex Inc. and Barbara L. Blackford  (incorporated herein by reference to Exhibit 10.5 to the Current Report  on Form 8-K of Superior Essex Inc. dated March 10, 2006).                                                                                                                                                                                   |
| 10.8       |       | Lease Agreement, dated as of December 16, 1993,  by and between ALP (TX) QRS 11-28, Inc. and Superior TeleTec  Transmission Products, Inc. (incorporated herein by reference to  Exhibit (i) to the Quarterly Report on Form 10-Q of The  Alpine Group, Inc. for the quarter ended January 31, 1994).                                                                                                                    |
| 10.9       |       | 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 Annual Report on Form  10-K of The  Alpine Group, Inc. for the year ended April 30, 1995 (the “1995  Alpine 10-K”)).                                                                                                   |
| 10.10      |       | 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 Alpine 10-K).                                                                                                                                                                                                                 |
| 10.11      |       | 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 Inc., as filed  with the Securities and Exchange Commission on August 9, 1996, as  amended (the “Superior TeleCom S-1”)). |
| 10.12      |       | First Amendment to Guaranty and Surety Agreement,  dated as of October 2, 1996, among Superior TeleCom Inc., The Alpine  Group, Inc. and ALP (TX) QRS 11- 28,  Inc. (incorporated  herein by reference to Exhibit 10.12 to the Superior TeleCom S-1).                                                                                                                                                                                        |
| 10.13      |       | Second Amendment to Guaranty and Suretyship  Agreement, dated as of November 27, 1998, among ALP (TX) QRS 11-28, Inc.,  Superior TeleCom Inc. and The Alpine Group, Inc. (incorporated herein by  reference to Exhibit 10(y) to the 1999 Superior TeleCom 10-K).                                                                                                                                                                        |
| 10.14      |       | 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).                                                                                                                           |
| 10.15      |       | 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(eee) to the Annual Report on Form 10- K of  Superior TeleCom Inc. for the year ended December 31, 2002).                                                                                                                                         |
| 10.16      |       | Agreement for the Transfer of Receivables among  Newco Nexans Superior Essex, Nexans Winding Wires, Lacroix & Kress  GmbH and Essex International Ltd., on the one hand, and Compagnie Generale  d’Affacturage SA on the other, dated October 27, 2005 (incorporated  herein by reference to Exhibit 10.1 to the Current Report on Form 8-K  of Superior Essex Inc. dated July 11, 2006).                                      |
| 10.17      |       | Amendment No. 1 to the Transfer of Receivable  Agreement between Essex Nexans Europe SAS, Essex Nexans and Essex Nexans  L&K, on the one hand, and Compagnie Generale d’ Affacturage SA, on  the other, dated July 11, 2006 (incorporated herein by reference to  Exhibit 10.2 to the Current Report on Form 8-K of Superior  Essex Inc. dated July 11, 2006).                                                            |
| 10.18*     |       | Superior Essex Inc. Senior Executive Retirement Plan  (incorporated herein by reference to Exhibit 10.27 to the Quarterly  Report on Form 10-Q of Superior Essex Inc. for the quarter ended  September 30, 2004)                                                                                                                                                                                                                                  |
| 10.19*     |       | Consulting Agreement, dated February 1, 2005,  between DG Network and Superior Essex Inc. (incorporated herein by reference  to Exhibit 99.1 to the Current Report on Form 8-K of Superior  Essex Inc. dated February 18, 2005)                                                                                                                                                                                                              |

 

31

----

 
| Exhibit    | ** ** | ** **                                                                                                                                                                                                                                                                                                  |
|------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                             |
| 10.20*     |       | Amendment to Consulting Agreement dated as of July 1,  2005, between DG Network and Superior Essex Inc. (incorporated herein by  reference to the Current Report on Form 8-K of Superior Essex  dated August 1, 2005)                                                                        |
| 10.21*     |       | Amended and Restated Agreement dated as of  February 16, 2007 between the Company, Denys Gounot and DG Network  (incorporated herein by reference to Exhibit 10.1 to the Current Report  on Form 8-K of Superior Essex dated February 16, 2007)                                         |
| 10.22*     |       | Superior Essex Inc. Director Compensation Plan  (incorporated herein by reference to Exhibit 99.1 to the Current Report  on Form 8-K of Superior Essex Inc. dated November 10, 2004)                                                                                                         |
| 10.23*     |       | Form of Director Restricted Stock Certificate  (incorporated herein by reference to Exhibit 99.2 to the Current Report  on Form 8-K of Superior Essex Inc. dated November 10, 2004)                                                                                                     |
| 10.24*     |       | Form of Non-qualified Stock Option Certificate  (incorporated herein by reference to Exhibit 99.1 to the Current Report  on Form 8-K of Superior Essex Inc. dated April 1, 2005)                                                                                                        |
| 10.25*     |       | Superior Essex Inc. 2005 Incentive Plan (incorporated  herein by reference to Appendix C of the Company’s Definitive Proxy Statement  on Schedule 14A (File No. 000-50514) filed with the  Securities and Exchange Commission on March 30, 2005)                                        |
| 10.26*     |       | Superior Essex Inc. 2005 Employee Stock Purchase  Plan (incorporated herein by reference to Appendix D of the Company’s  Definitive Proxy Statement on Schedule 14A (File No. 000-50514)  filed with the Securities and Exchange Commission on March 30, 2005)                          |
| 10.27*     |       | Form of Performance Accelerated Restricted  Stock Award Certificate (incorporated herein by reference to  Exhibit 99.1 to the Current Report on Form 8-K of Superior  Essex Inc. dated April 20, 2005)                                                                                  |
| 10.28*     |       | Superior Essex Inc. 2005 Executive Bonus Plan  (incorporated herein by reference to Exhibit 99.3 to the Current Report  on Form 8-K of Superior Essex Inc. dated May 3, 2005)                                                                                                                |
| 10.29*     |       | Superior Essex Inc. 2005 Executive Special  Recognition Bonus Plan (incorporated herein by reference to Exhibit 99.4  to the Current Report on Form 8-K of Superior Essex Inc. dated May 3,  2005)                                                                                           |
| 10.30*     |       | Amended and Restated Executive Bonus Plan approved  March 29, 2006 (incorporated herein by reference to Exhibit 10.2 to  the Current Report on Form 8-K of Superior Essex dated  March 29, 2006)                                                                                        |
| 10.31*     |       | Amended and Restated Executive Bonus Plan approved  February 15, 2007 (incorporated herein by reference to Exhibit 10.31 to  the 2006 Superior Essex 10-K)                                                                                                                                             |
| 10.32      |       | Shareholders Agreement dated October 21, 2005  by and between Superior Essex Inc., SE Holding, C.V., Nexans, Nexans  Participations and Essex Nexans SAS (incorporated herein by reference to  Exhibit 10.1 to the Current Report on Form 8-K of Superior  Essex dated October 21,2005) |
| 10.33*     |       | Superior Essex Inc. 2005 Amended and Restated  Director Compensation Plan (incorporated herein by reference to  Exhibit 99.1 to the Current Report on Form 8-K of Superior  Essex dated October 27, 2005)                                                                                    |
| 10.34*     |       | Form of Director Restricted Stock Unit  Certificate (incorporated herein by reference to Exhibit 99.2 to the  Current Report on Form 8-K of Superior Essex dated  October 27, 2005)                                                                                                     |
| 10.35*     |       | Form of Director Option Certificate  (incorporated herein by reference to Exhibit 99.3 to the Current Report  on Form 8-K of Superior Essex dated October 27, 2005)                                                                                                                     |
| 10.36*     |       | Form of Stock Option Certificate (incorporated  herein by reference to Exhibit 10.1 to the Current Report on Form 8-K  of Superior Essex dated November 9, 2005)                                                                                                                        |
| 10.37*     |       | Form of Restricted Stock Award Certificate  (incorporated herein by reference to Exhibit 10.2 to the Current Report  on Form 8-K of Superior Essex dated November 9, 2005)                                                                                                              |
| 10.38*     |       | Form of Performance Contingent Share Award  Certificate (incorporated herein by reference to Exhibit 10.2 to the  Current Report on Form 8-K of Superior Essex dated March 29,  2006)                                                                                                   |
| 10.39      |       | Form of Indemnification Agreement (incorporated  herein by reference to Exhibit 10.1 to the Current Report on Form 8-K  of Superior Essex dated October 27, 2006)                                                                                                                       |
| 10.40      |       | Amended and Restated Sublease Agreement dated  January 15, 1985, between Stemp Leasing Corp., as lessor, and Essex Group,  Inc., as lessee. (incorporated herein by reference to Exhibit 10.40 to the  2006 Superior Essex 10-K)                                                                       |

 

32

----

 
| Exhibit    | ** ** | ** **                                                                                                                                                                                        |
|------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Number** | ** ** | **Description**                                                                                                                                                                                   |
| 10.41*     |       | Senior Vice President Amended and Restated Change of  Control Employment Agreement, adopted October 26, 2006 (incorporated herein  by reference to Exhibit 10.41 to the 2006 Superior Essex 10-K) |
| 10.42*     |       | Superior Essex Inc. Director Compensation Plan,  approved December 5, 2006 (incorporated herein by reference to Exhibit 10.42  to the 2006 Superior Essex 10-K)                                   |
| 10.43*     |       | Form of 2007 Performance Contingent Share Award  Certificate (incorporated herein by reference to Exhibit 10.1 to the Current  Report on Form 8-K of Superior Essex dated March 1, 2007)     |
| 31.1       |       | Rule 13a-14(a) certification of the  Chief Executive Officer.                                                                                                                           |
| 31.2       |       | Rule 13a-14(a) certification of the  Chief Financial Officer.                                                                                                                           |
| 32.1       |       | Certification of the Chief Executive Officer  pursuant to 18 U.S.C. Section 1350.                                                                                                            |
| 32.2       |       | Certification of the Chief Financial Officer  pursuant to 18 U.S.C. Section 1350.                                                                                                            |

 

----

*              Management contract or compensatory plan orarrangement.

**SIGNATURES**

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.
|              | Superior Essex Inc. |
|-------------------|---------------------|
|              |                |   |
|              | By:                 | /s/ DAVID S. ALDRIDGE |
| Date: May 9, 2007 |                | David S. Aldridge*Executive Vice President, Chief Financial  Officer  and Treasurer*(duly authorized officer and principal financial  officer) |

 

33

----