INTERNATIONAL WIRE GROUP INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 33-93970

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

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

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

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(314) 719-1000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. Yes [X] No [ ]

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

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

State the aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant.

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

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

DOCUMENTS INCORPORATED BY REFERENCE
NONE
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CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this Annual Report on Form 10-K regarding expected
or possible future events, including statements of the plans and objectives of
management for future growth, operations, products and services and statements
related to future economic performance, is forward-looking and subject to risks
and uncertainties. For those statements, International Wire Group, Inc. (the
"Company") claims the protection of the safe harbor for forward-looking
statements provided for by Section 21E of the Securities Exchange Act of 1934,
as amended. Factors that could affect the future results of the Company and
could cause those results to differ materially from those expressed in the
forward-looking statements are discussed at greater length herein.
Forward-looking statements can be identified by, among other things, the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should," "seeks," "pro forma," "anticipates" or "intends" or the negative of
any thereof or other variations thereof or comparable terminology, or by
discussions of strategy or intentions. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations."

PART I

ITEM 1. BUSINESS

GENERAL

The Company, through its subsidiaries, is a leading manufacturer and
marketer of wire products, including bare and tin-plated copper wire and
insulated copper wire products, for other wire suppliers and original equipment
manufacturers ("OEMs"). The Company's products include a broad spectrum of
copper wire configurations and gauges with a variety of electrical and
conductive characteristics and are utilized by a wide variety of customers
primarily in the appliance, automotive, electronics and data communications, and
general industrial/energy industries. The Company manufactures and distributes
its products at 24 facilities located in the United States, Mexico, France,
Italy and the Philippines.

- Bare Wire Products. The Company's bare and tin-plated copper wire
products (or conductors) are used to transmit digital, video and audio
signals or conduct electricity and are sold to a diverse customer base of
approximately 800 insulated wire manufacturers and various industrial
OEMs for use in computer and data communications products, general
industrial, energy, appliances, automobiles and other applications.

- Insulated Wire Products. The Company's insulated wire products (copper
conductors insulated with plastic or other polymeric compounds) are
primarily manufactured for the automotive and appliance end-user markets.
The Company's insulated wire products are used in the assembly of wire
harnesses that are installed in both automobiles and appliances. A wire
harness is comprised of an assembly of wires with connectors and
terminals that transmit electricity between two or more end points. The
Company also participates in several niche businesses in the high
temperature silicone and heater wire, medical equipment and submersible
pump cable markets.

The principal executive offices of the Company are located at 101 South
Hanley Road, Suite 400, St. Louis, Missouri 63105, and the Company's telephone
number at such address is (314) 719-1000.

BACKGROUND

In December 1992, an investor group led by Hicks, Muse, Tate & Furst
Incorporated ("Hicks Muse") acquired Kirtland Indiana, Limited Partnership
("KILP"), which was subsequently renamed Wirekraft Industries, Inc.
("Wirekraft"). KILP was engaged in the manufacturing of insulated wire and the
fabrication of wire harnesses. In March 1995, an investor group led by Hicks
Muse acquired Omega Wire, Inc. ("Omega"). In June 1995, through a series of
acquisitions and mergers, the Company was organized to combine the operations of
Wirekraft and Omega. The acquisition of Omega broadened the Company's product
offering through the addition of a broad and diverse bare wire product offering
and vertically integrated the Company by substantially reducing the Company's
need to purchase outside bare wire.

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In March 1996, the Company acquired (the "DWT Acquisition") the business of
Hoosier Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and
Silicones, Inc., a group of affiliated companies together under the trade name
Dekko Wire Technology Group ("Dekko"). Dekko was engaged in the manufacture and
marketing of insulated and bare copper wire. The DWT Acquisition increased the
Company's insulated and bare wire manufacturing capabilities and increased the
Company's capacity to better serve its client base and expand into new markets
by adding specialty products to the Company's product offering.

In February 1997, the Company acquired (the "Camden Acquisition") all of
the issued and outstanding common stock of Camden Wire Co., Inc., a manufacturer
and marketer of bare and tin-plated copper wire. The Camden Acquisition allowed
the Company to expand its geographic manufacturing base and to realize
efficiencies through consolidation of operations and process improvements.

In 1998, the Company made two strategic acquisitions, the acquisition of
the assets of Spargo Wire Company, Inc., which expanded the Company's offering
of bare wire, and the acquisition of Italtrecce S.r.l., which expanded the
Company's offering of specialty braid products and allowed the Company to expand
its geographic manufacturing base to Italy. In addition, in July 1998, the
Company completed the construction of a facility in Cebu, Philippines and began
operations. The Cebu facility allowed the Company to supply global customers of
the Company and to build relationships with new customers in the Asia Pacific
markets.

In December 1999, the Company acquired a group of French wire manufacturers
(collectively, the "Forissier Group"). Two of the operating companies
manufacture specialty braids, rope and cable products and the third operating
company manufactures insulated wire products. This acquisition complimented the
Company's existing business in Italy as well as expanded sales opportunities
throughout Europe.

In March 2000, the Company sold its Wire Harness business to Viasystems
International, Inc. ("Viasystems") for $210.8 million in cash (the "Wire Harness
Sale"). At the time of the Wire Harness Sale, the Company and Viasystems were
commonly controlled by affiliates of Hicks Muse. In connection with the Wire
Harness Sale, the Company entered into an agreement to supply Viasystems' wire
harness business with substantially all of their insulated wire requirements
through March 2003, which was a continuation of the then existing practice. This
supply agreement has been extended through December 2005. See "Note 7 to the
Company's Consolidated Financial Statements" included herein for further
discussion of the Wire Harness Sale.

During 2001, the Company announced its intention to realign its production
capacity and consolidate certain facilities (See Note 10 to the Company's
Consolidated Financial Statements for information regarding the Company's plan
to realign capacity). In connection with the realignment, the Company closed six
of its plants. Such plants were located in Ardmore, Alabama; Elkmont, Alabama;
Albion, Indiana; Corunna, Indiana and two plants in Pine Bluff, Arkansas. The
production capacity for these locations has been primarily transferred and
consolidated into the Company's existing plants in Indiana, Texas and New York,
which were expanded as necessary to accommodate the production transfer. Some of
the production capacity from the closed locations was moved to the Company's new
facility in Durango, Mexico. In addition, as part of the Company's realignment
plan, the Company closed the remaining facility in Elkmont, Alabama in the first
quarter of 2003.

In August 2001, the Company furthered its international expansion with the
purchase of a manufacturing facility in Durango, Mexico. Management believes
that this new facility, approximately 600 miles south of the U.S./Mexican
border, will allow the Company to expand its relationships with existing global
customers in North America and seek new opportunities in Central and South
America. Production and shipments to customers from this facility began in the
third quarter of 2002.

2

PRODUCTS AND MARKETS

The Company conducts its operation through one segment, the manufacture and
marketing of bare and tin-plated copper wire products and insulated copper wire
products (the "Wire Segment"). The following is a description of the Company's
primary products and markets served:

BARE WIRE PRODUCTS (55% OF 2002 CONSOLIDATED SALES)

The Company's external sales of bare wire products are primarily to wire
insulators, who apply insulating materials to the bare wire through an extrusion
process. These wire insulators sell the insulated wire to a variety of customers
in the following markets: (i) appliance (approximately 18% of total 2002 bare
wire sales); (ii) automotive (approximately 25% of total 2002 bare wire sales);
(iii) electronics and data communications (approximately 31% of total 2002 bare
wire sales) including cable television, safety and security control, and local
area network ("LAN") and computer systems; and (iv) industrial/energy
(approximately 26% of total 2002 bare wire sales) including heating, ventilating
and air conditioning ("HVAC") systems; circuit protection, digital and cellular
phone towers, elevator cables, mining and oil exploration, mass transit and
utility power distribution applications. The Company manufactures a broad array
of bare and tin-plated copper conductors including the following:

- Single End Wire. Single end wire is an individual wire drawn to the
customer's size requirements ranging from .16 to .00157 inches in
diameter (6 American Wire Gauge ("awg") to 46 awg). Single end wire is
capable of transmitting signals or electrical currents between two points
and is used to transmit digital, video and audio signals or low voltage
current in a variety of wire products used in motor controls, local area
networks, security systems, television or telephone connections and water
sprinkler systems. Single end wire is generally the least expensive form
of wire to produce due to its simple configuration.

- Stranded Wire. Stranded wire is comprised of a number of single end
wires twisted together in a specific geometric pattern that preserves
each individual wire's relative position for the length of the wire.
Stranded wire, like single end wire, transmits digital, video and audio
signals or low voltage current. However, stranded wire is more flexible
and capable of connecting multiple terminals allowing greater
application. Stranded wire is generally used in products that connect
peripherals to the personal computer ("PC"), connect the internal
components of the PC, and control HVAC, security and other functions
inside buildings. In addition, stranded wire is used in antilock braking
systems, airbag systems, utility power distribution and circuit breakers.

- Bunched Wire. Bunched wire is formed by twisting a number of single end
wires in a random pattern. Bunched wire allows increased flexibility
while maintaining conductivity. This type of wire is the primary wire
used in appliance wire harnesses. In addition, bunched wire is commonly
used for transmission of electrical current in lighting fixture cords,
extension cords and power cords for portable, power hand tools.

- Cabled Wire and Braided Wire. Cabled wire and braided wire are
combinations of single, bunched or stranded wire twisted together in
various patterns and thickness. These wires transmit electrical current
and are typically used in mining, mass transportation, automotive,
utility power distribution, cellular and digital towers and other
industrial applications.

- Shielding Wire. Shielding wire is comprised of varying numbers of single
end wires that are wound together in parallel construction around a
bobbin. Shielding wire does not transmit signals or voltage but rather
shields the signal traveling through the core conductor from outside
interference. This type of wire is primarily used in data communication
applications, telecommunications equipment, cable television equipment
and security systems.

INSULATED WIRE PRODUCTS (45% OF 2002 CONSOLIDATED SALES)

The Company's sales of insulated wire products are primarily to independent
wire harness fabricators for use in the automotive (approximately 70% of total
2002 insulated wire sales), appliance (approximately 28%
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of total 2002 insulated wire sales) and other industrial (approximately 2% of
total 2002 insulated wire sales) markets. The Company divides its customers who
manufacture wire harnesses into three broad groups: (a) Tier 1 suppliers to Ford
Motor Company and Chrysler Corporation (General Motors Corporation ("GM")
continues to purchase the majority of its wire and wire harness products from
Delphi Corporation, formerly a division of GM that has in-house wire and wire
harness manufacturing capability); (b) suppliers to the North American
facilities of Japanese automakers, that utilize "thin-wall" insulated wire which
complies with Japanese Industrial Standards ("JIS"); and (c) suppliers to
appliance OEMs.

The Company manufactures a diverse array of insulated wire products
including the following:

- PVC Lead Wire and Cable. PVC lead wire and cable is copper wire that has
been insulated with polyvinyl chloride ("PVC"). This product is used
primarily in automotive wire harnesses located behind the instrument
panel or in the vehicle body that control certain functions including
turn signals and air bags.

- JIS Wire. JIS wire is copper wire insulated with PVC that is produced
according to Japanese Industrial Standards. The primary difference
between domestic PVC wire and JIS wire is that JIS wire is manufactured
to metric dimensions and generally has thinner insulation than products
manufactured according to U.S. Society of Automotive Engineers Standards.
JIS wire is used primarily in automotive wire harnesses located behind
the instrument panel or in the vehicle body.

- XLPE Insulated Wire. Cross-linked polyethylene ("XLPE") wire is copper
wire insulated with polyethylene that is subjected to heat and steam
pressure ("cross-linking") to make the wire resistant to high
temperatures. This product's primary application includes use in high
temperature environments such as the engine compartment of vehicles and
in electric ranges.

- PVC Insulated Cord. PVC insulated cord is insulated wire that is
surrounded with fillers and then jacketed with PVC insulation. This
product is used primarily for wall-plug applications (cord sets) in the
appliance and power tool industries.

- Appliance Wire. Appliance wire is copper wire primarily insulated with
PVC and used in producing harnesses for a variety of appliances. The
Company also manufactures high temperature wire, insulated with silicone,
used primarily in electric ranges and niche applications such as
resistance heaters, motor leads and lighting products.

MARKETING

The Company sells its products through a combination of direct (Company
employed) sales people, manufacturer's representatives and distributors. The
Company's sales organization is supported by an internal marketing staff and
customer service groups. Collectively, these departments act as a bridge between
the Company's customers and its production and engineering staff. The Company's
engineers work directly with customers in manufacturing the wire products to the
customer's exact specifications. In addition, engineers work closely with the
Company's production managers, quality supervisors and customer service
representatives to ensure the timely delivery of quality products.

KEY CUSTOMERS

The Company sells its products primarily to major appliance and automotive
wire harness manufacturers and copper wire insulators who then sell to a diverse
array of end users. For the years ended December 31, 2002, 2001 and 2000, the
Company had significant sales to Lear Corporation which represented 11%, 12% and
13% of the Company's consolidated net sales from continuing operations for each
of the respective years. The Company had no other customers who accounted for
more than 10% of consolidated net sales during these years.

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INTERNATIONAL OPERATIONS

The Company currently has operations in Mexico, France, Italy and the
Philippines. For the years ended December 31, 2002, 2001 and 2000, approximately
15%, 14% and 12% of the Company's consolidated net sales from continuing
operations originated from these foreign operations. A portion of these sales
were to Tier 1 automotive suppliers whose products were sold back into the
United States. The Company has a manufacturing facility in Durango, Mexico, a
manufacturing facility in Cebu, Philippines, a manufacturing facility in Vinovo,
Italy and three facilities near Lyon, France. See "Note 13 to the Company's
Consolidated Financial Statements" included herein for further information about
the Company's international operations.

The Company is subject to risks generally associated with international
operations, including price and exchange controls and other restrictive actions.
In addition, fluctuations in currency exchange rates may affect the Company's
results of operations. See "Item 7A. Quantitative and Qualitative Disclosures
About Market Risk" for further discussion about the Company's foreign currency
risk.

RAW MATERIALS

The principal raw material used by the Company is copper, which is
primarily purchased in the form of 5/16-inch rod from the major copper producers
in North America, Japan and Europe. Copper rod prices are based on market
prices, which are generally established by reference to the New York Mercantile
Exchange, Inc. ("COMEX") prices, plus a premium charged to convert copper
cathode to copper rod and deliver it to the required location. As a world traded
commodity, copper prices have historically been subject to fluctuations. While
fluctuations in the price of copper may directly affect the per unit prices of
the Company's products, these fluctuations have not had, nor are expected to
have, a material impact on the Company's profitability due to copper price
pass-through arrangements that the Company has with its customers. These sales
arrangements are based on similar variations of monthly copper price formulas.
Use of these copper price formulas minimizes the differences between raw
material copper costs charged to the cost of sales and the pass-through pricing
charged to customers.

Other major raw materials consumed by the Company include PVC compound,
XLPE compound, silicon compound, color concentrate, tin and other metals. The
Company enters into long-term supply agreements on a wide variety of materials
consumed. Supplies on all critical materials are currently adequate to meet the
Company's needs.

The Company orders material based on purchase orders received and accepted
and seeks to minimize the inventory of material not identified for specific
orders. The Company works with its suppliers to develop just-in-time supply
systems which reduce inventory carrying costs.

MANUFACTURING AND DISTRIBUTION

The Company is committed to the highest quality standards for its products,
a standard maintained in part by continuous improvements to its production
processes and upgrades and investments to its manufacturing equipment. The
Company's equipment can be adapted to satisfy the changing needs of its
customers. The Company maintains advanced quality assurance and testing
equipment to ensure the products it manufactures will consistently meet customer
quality requirements. The following is a description of the Company's
manufacturing and distribution facilities and processes for its major product
lines.

BARE WIRE PRODUCTS

As of December 31, 2002, the Company had twelve facilities dedicated to the
production and distribution of bare wire products. Six of these facilities are
located in New York, two are in France, one in Indiana, one in Texas, one in
Italy and one distribution facility is located in California. The manufacturing
of bare wire consists of one or more of the following four processes: wire
drawing; plating; bunching and stranding; and cabling.

- Wire Drawing Process. Wire drawing is a multi-step process in which raw
copper material, primarily 5/16-inch copper rod, is drawn through a
series of dies of decreasing diameter.
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- Plating Process. After being drawn, the Company's wire products may be
plated through an electroplating process. The Company has the capability
to plate copper wire with tin and other metals. Approximately 23% of the
Company's bare wire products are plated with tin. The plating process
prevents the bare copper from oxidizing and also allows the wire to be
soldered, which is an important quality in many electrical applications.

- Bunching and Stranding Process. Bunching and stranding is the process of
twisting together single strand wires to form a construction ranging from
seven to over 200 strands. If the wire is bunched, the individual strands
of wire are twisted together in a random pattern. Stranded wire is
composed of a number of single end wires twisted together in a specific
geometric pattern where each strand's relative position is maintained
throughout the length of the wire.

- Cabling Process. Cabling is the process of twisting bunched wire to form
a construction ranging from 49 to 47,000 strands.

INSULATED WIRE PRODUCTS

As of December 31, 2002, the Company had a total of twelve manufacturing
and distribution facilities used to produce and distribute insulated wire. Four
of the manufacturing facilities are located in Texas, three are in Indiana, one
in Alabama, one in Mexico, one in the Philippines and one is located in France.
The Company has one distribution facility in Texas. The production of insulated
wire starts with bare wire (primarily manufactured internally) and involves
insulating the wire products with various polymeric insulating compounds through
an extrusion process. Extrusion involves the feeding, melting and pumping of
insulating compounds through a die to shape it into its final form on the wire.
In order to enhance the insulation properties of some products, certain
polymeric compounds can be chemically cross-linked after the extrusion process.
The Company has extensive chemical cross-linking capabilities.

COMPETITION

As a result of the diversity of the Company's product offerings, the
Company believes that no single competitor competes with the Company across the
entire spectrum of the Company's product lines. However, in each market served,
the Company experiences competition from at least one major competitor. The
Company competes primarily on the basis of quality, reliability, price,
reputation, customer service and delivery time. The Company believes it
maintains a leading market share position in the non-captive U.S. market for
each of its product lines. Several customers the Company serves have in-house or
"captive" wire production facilities. However, these captive facilities do not
compete with the Company for sales to other customers. The Company also sells
its products to customers with captive production to meet needs in excess of
their internal production capacity.

BACKLOG

Due to the manner in which it processes its orders, the Company has no
significant order backlog. The Company follows the industry practice of
producing its products on an ongoing basis to meet customer demand without
significant delay. Management believes the ability to supply orders in a timely
fashion is a competitive factor in its market, and therefore, attempts to
minimize order backlog to the extent practicable.

PATENTS AND TRADEMARKS

The Company has no patents and five registered trademarks. The Company does
not believe that its competitive position or its operations are dependent on any
individual trademark or group of trademarks.

EMPLOYEES

As of December 31, 2002, the Company employed approximately 2,200 full time
employees. The Company believes that it has a good relationship with its
employees.

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SEASONALITY

The Company does not believe that its business is subject to significant
seasonal fluctuations.

ENVIRONMENTAL MATTERS

The Company is subject to a number of federal, state, local and foreign
environmental laws and regulations relating to the storage, handling, use,
emission, discharge, release or disposal of materials into the environment and
the investigation and remediation of contamination associated with such
materials. These laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), the Water
Pollution Control Act, the Clean Air Act and the Resource Conservation and
Recovery Act, the regulations promulgated thereunder, and any state analogs. The
Company's operations also are governed by laws and regulations relating to
employee health and safety. The Company believes that it is in material
compliance with such applicable laws and regulations and that its existing
environmental controls are adequate. Further, the Company has no current plans
for substantial capital expenditures in this area.

As is the case with most manufacturers, the Company could incur costs
relating to environmental compliance, including remediation costs related to
historical hazardous materials handling and disposal practices at certain
facilities, although it does not believe that such costs would materially and
adversely affect the Company. In the past, the Company has undertaken remedial
activities to address on-site soil contamination caused by historic operations.
None of these activities have resulted in any material liability. Currently, the
Company is involved with environmental monitoring activities at one of its
Camden, New York facilities and its Jordan, New York facility.

The Company currently does not anticipate that compliance with
environmental laws or regulations or the costs to remediate the sites discussed
above will have a material adverse effect on the Company. As mentioned above,
however, the risk of environmental liability and remediation costs is inherent
in the nature of the Company's business and, therefore, there can be no
assurances that material environmental costs, including remediation costs, will
not arise in the future. In addition, it is possible that future developments
(e.g., new regulations or stricter regulatory requirements) could result in the
Company incurring material costs to comply with applicable environmental laws
and regulations.

ITEM 2. PROPERTIES

The Company uses owned or leased properties as manufacturing and
distribution facilities, warehouses and offices throughout the United States,
Mexico, France, Italy and the Philippines. The Company's principal executive
offices are located in St. Louis, Missouri. All of the Company's domestic owned
properties are pledged to secure the Company's indebtedness under the Company's
Second Amended and Restated Credit Agreement dated as of December 20, 2001, with
JP Morgan Chase Bank and the other lenders party thereto, as amended (the
"Credit Agreement").

Listed below are the principal manufacturing and distribution facilities
operated by the Company as of December 31, 2002:

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(1) The leases on the Company's Camden, New York and Jordan, New York facilities
have remaining terms of approximately 9 years. During 1997, the Company
purchased the notes that were collateralized by the Camden and Jordan
properties from an unrelated creditor. The Company negotiated a payment
schedule with the lessor which allows the lessor to retain title to the
property until the termination of the lease, at which time the Company will
have the option to purchase the properties for a nominal purchase price.

(2) The lease has a remaining term of approximately two years.

(3) The lease expires in March 2003, and the Company expects to extend the lease
for an additional two years.

(4) Closed in March 2003.

The Company believes its property and equipment include state-of-the-art
technology and are well maintained. The Company believes that its property and
equipment are suitable for their present and intended purposes and adequate for
the Company's current level of operations and expected demand for the Company's
products.

ITEM 3. LEGAL PROCEEDINGS

The Company is party to numerous lawsuits, and has claims made against it,
involving water inlet hoses previously supplied by and through the Company to
various original equipment manufacturers (see "Note 7 to the Company's
Consolidated Financial Statements" for a further discussion of these claims). In
February, 2002, the Company initiated an action in the Circuit Court of Cook
County, Chancery Division (Case No., 02CH2470) located in Chicago, Illinois
titled International Wire Group, Inc. v. National Union Fire Insurance Company
of Pittsburgh, Pennsylvania, AIG Technical Services, Inc., Aon Corporation and
Aon Risk Services of Missouri, Ltd. (the "AIG Litigation"). The Company alleges
in the complaint in such action, among other things, that National Union is
obligated to defend and indemnify and otherwise provide insurance coverage to
the Company and the various original equipment manufacturers for certain claims
and damages related to certain water inlet hoses supplied by and through the
Company pursuant to two $25 million excess

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insurance policies issued to the Company by National Union. The presentation of
evidence at trial in such case has concluded, and the judge is expected to rule
on the outcome of the case in the second quarter of 2003. While there can be no
assurance that the outcome will be favorable to the Company in the AIG
Litigation, and an unfavorable outcome could have a material adverse effect, the
Company believes it will ultimately succeed in such AIG Litigation and, as a
result, the Company believes the AIG Litigation will not have a material adverse
effect.

In addition, the Company is a party to various other legal proceedings and
administrative actions, all of which are of an ordinary or routine nature
incidental to the operations of the Company. The Company does not believe that
such proceedings and actions would materially affect the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders in the fourth
quarter of 2002.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

All of the Company's outstanding common stock is held by International Wire
Holding Company ("Holding"), and there is no established public trading market
for such stock. The Company has paid no dividends to common stockholders since
inception and does not have any present intention to commence payment of any
cash dividends. The Company intends to retain earnings to provide funds for
operation and expansion of the Company's business and to repay outstanding
indebtedness. The Company's ability to pay such dividends is limited by the
terms of its Credit Agreement and the Indentures relating to the Senior
Subordinated Notes (as defined in "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Financing Arrangements"). The Company did not sell any of its
equity securities in the year ended December 31, 2002.

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data set forth below presents financial information
for the Company for the years ended December 31, 2002, 2001, 2000, 1999 and
1998, as derived from the audited consolidated financial statements of the
Company as adjusted to reflect the reclassification of discontinued operations
as the result of the Wire Harness Sale. The selected financial data should be
read in conjunction with the Company's

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Consolidated Financial Statements and notes thereto and "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations," each
included elsewhere herein.

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(1) Cost of goods sold in 2001 includes costs of $5,758 related to the closure
and consolidation of certain facilities that the Company considers to be
unusual items incremental to the on-going operations. These expenses include
inefficiencies incurred during the transition of production capacity and
other incremental costs related to the transferred lines of production. Cost
of goods sold in 2001 also includes a non-cash inventory valuation charge of
$10,000 to reduce the last in, first out ("LIFO") valuation of copper in
inventory as a result of the decline in the average price of copper during
2001. See "Note 3 to the Company's Consolidated Financial Statements"
included herein.

(2) Includes non-cash compensation expense (income) related to the stock
appreciation of Holding Class A Common Stock (as defined herein) in the
amount of $0, ($10,393), $80, ($1,542) and $4,158 for the years ended
December 31, 2002, 2001, 2000, 1999 and 1998, respectively. See "Note 2 to
the Company's Consolidated Financial Statements" included herein and "Item
12. Securities Ownership."

(3) Consists of charges related to the closure and consolidation of certain
facilities and administrative and corporate reorganizations of $7,387 and
impairment of fixed assets related to the plant consolidations of $5,468 in
2001 (See "Note 10 to the Company's Consolidated Financial Statements"
included herein) and charges relating to employee severance agreements in
the amount of $650 in 2000.

(4) The income (loss) from discontinued operations represents the results of the
Company's Wire Harness business, which it sold to Viasystems in March 2000
and charges for the indemnification obligation related to certain product
liability claims related to the Wire Harness business. See "Note 7 to the
Company's Consolidated Financial Statements" included herein.

(5) The cumulative effect of change in accounting principle in 2002 represents a
loss related to the adoption of Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("SFAS") No. 142,
"Goodwill and Other Intangible Assets." See "Note 2 to the Company's
Consolidated Financial Statements" included herein. The cumulative effect of
change in accounting principle in 1999 represents a loss related to the
adoption of Financial Accounting Standards Board ("FASB") Statement of
Position (SOP) 98-5, "Reporting on the Costs of Start-Up Activities."

(6) The extraordinary item in 2000 represents losses on the early extinguishment
of debt. See "Note 6 to the Company's Consolidated Financial Statements"
included herein.

(7) "EBITDA, as adjusted" is defined as operating income (loss) plus
depreciation, amortization of intangible assets, goodwill impairment,
impairment, unusual and plant closing charges, (gain)/loss on sale of
property, plant and equipment, inventory valuation adjustment, non-cash
compensation expense (income), unusual items incremental to the on-going
operations included in cost of sales and other non-cash expense (income)
items. EBITDA, as adjusted, is presented because (i) it is a widely accepted
indicator of a company's ability to incur and service debt and (ii) it is
the basis on which the Company's
11

compliance with certain financial covenants contained in the Credit
Agreement is principally determined. However, EBITDA, as adjusted, does not
purport to represent cash provided by operating activities as reflected in
the Company's consolidated statements of cash flow, is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. Also, the measure
of EBITDA, as adjusted, may not be comparable to similar measures reported
by other companies. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations."

RECONCILIATION OF EBITDA, AS ADJUSTED TO OPERATING INCOME (LOSS) PER GAAP

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

The Company conducts its operations as one business segment. The table
below sets forth the major components of the results of operations for the years
ended December 31, 2002, 2001 and 2000, and should be used in reviewing the
discussion and analysis of results of operations and liquidity and capital
resources.

In March 2000, the Company sold its Wire Harness business to Viasystems for
$210.8 million in cash (see "Notes 1 and 7 to the Company's Consolidated
Financial Statements" included herein for further discussion of the Wire Harness
Sale). The Wire Harness business was previously reported as a separate segment.
The results of operations of the Wire Harness business have been reclassified to
discontinued operations for all periods presented.

A portion of the Company's revenues is derived from processing
customer-owned ("tolled") copper. The value of tolled copper is excluded from
both sales and costs of sales of the Company, as title to these materials and
the related risks of ownership do not pass to the Company. The cost of copper
has historically been subject to fluctuations. While fluctuations in the price
of copper may directly affect the per unit prices of the Company's products,
these fluctuations have not had, nor are expected to have, a material impact on
the Company's profitability due to copper price pass-through arrangements that
the Company has with its customers. These sales arrangements are based on
similar variations of monthly copper price formulas. Use of these copper price
formulas minimizes the differences between raw material copper costs charged to
the cost of sales and the pass-through pricing charged to customers.

12

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

Net sales for the year ended December 31, 2002 were $402.7 million,
representing a $22.4 million, or 5.3%, decrease compared to 2001. This decrease
was primarily the result of lower volume from weak economic conditions in the
United States, including reduced demand from customers supplying the
electronics/data communications and industrial/energy markets, and the impact of
a slight decrease in the average cost and selling price of copper. The average
price of copper based upon COMEX decreased to $0.72 per pound during 2002 from
$0.73 per pound during 2001. Partially offsetting these factors were higher
sales to consumer-driven automotive and appliance markets.

Cost of goods sold (excluding unusual costs related to plant consolidations
and the non-cash inventory valuation adjustment) as a percentage of sales
increased to 79.6% for the year ended December 31, 2002, from 78.5% for the same
period in 2001. This change was due primarily to product mix, competitive price
pressures and operating inefficiencies associated with lower production levels
partially offset by the favorable effects of the 2001 plant consolidation and
realignment actions and continued cost reduction actions. During 2001, the
Company charged $5.8 million to cost of goods sold for unusual charges related
to plant consolidations. These charges were incremental to the Company's ongoing
operations and included inefficiencies incurred during the transition of
production capacity. There were no such charges in the comparable period in
2002. In connection with the decline in the average price of copper during 2001,
the Company recorded a non-cash inventory valuation adjustment of $10.0 million
to reduce the LIFO valuation of copper in inventory to the lower of LIFO cost or
market. There was no such charge in 2002.

Selling, general and administrative expenses (excluding non-cash
compensation income) were $32.1 million for the year ended December 31, 2002,
compared to $33.9 million for 2001. This decrease of $1.8 million was the result
of the favorable impact of actions taken in 2001 including headcount reductions,
administrative and corporate reorganizations and volume related items. These
impacts were partially offset by higher bad debt and insurance costs. These
expenses as a percent of net sales remained constant at 8.0% for 2002 and 2001.

13

Depreciation and amortization was $27.6 million for the year ended December
31, 2002, compared to $36.4 million for 2001. The decrease of $8.8 million was
primarily due to the elimination of goodwill amortization in 2002 as required
under SFAS No. 142 and the closure and consolidation of certain production
facilities in 2001.

Goodwill impairment of $24.4 million was recognized in 2002 following the
2002 adoption of SFAS No. 142, "Goodwill and Other Intangible Assets," as a
result of a further decline in the fair value of certain of the company's
reporting units.

In 2001, the Company announced its plan for a realignment and consolidation
of production capacity and initiated the closing of seven facilities located in
Alabama (3), Indiana (2) and Arkansas (2). Six of these facilities were closed
by the end of 2001, with one facility in Alabama closed in the first quarter of
2003. The production capacity from the closed locations was primarily
transferred and consolidated into the Company's existing manufacturing
facilities in its remaining Indiana, Texas and New York locations, which were
expanded, as necessary, to accommodate the production transfer. In addition to
the plant consolidations, the Company purchased an existing plant site for a
"greenfield" insulated wire operation in Mexico. This plant is located in
Durango, Mexico, which is approximately 600 miles south of the U.S./Mexican
border. The startup of this Mexican facility began in the third quarter of 2001,
and production and customer shipments started in the third quarter of 2002. In
addition to the capacity realignment, the Company also consolidated certain
selling, general and administrative functions, including a corporate
reorganization. As a result of these actions, along with the plant
consolidations, 236 employees have been terminated.

Unusual charges from plant closures and selling, general and administrative
headcount reductions for the year ended December 31, 2001 were $7.4 million. In
connection with the plant consolidations in 2001, the Company performed an
analysis of the closed facilities and the machinery and equipment that was not
moved and consolidated into existing facilities. Based on the results of this
analysis, a non-cash impairment loss of $5.5 million was recorded, which
represented the difference between management's estimate of the fair market
value of the remaining facilities and equipment and the carrying value of those
assets. There was no such charge in the comparable period in 2002.

The Company recorded a gain on the sale of property, plant and equipment of
$0.1 million and $0.3 million in 2002 and 2001, respectively.

YEAR ENDED DECEMBER 31, 2001 COMPARED TO YEAR ENDED DECEMBER 31, 2000

Net sales for the year ended December 31, 2001 were $425.1 million,
representing an $139.1 million, or 24.7%, decrease compared to 2000. This
decrease was primarily the result of lower volume from weak economic conditions
in the United States, including reduced demand from customers supplying the
automotive, electronics/data communications, and industrial/energy markets and
the impact of a decrease in the average cost and selling price of copper. The
average price of copper based upon COMEX decreased to $0.73 per pound during
2001 from $0.84 per pound during 2000.

Cost of goods sold (excluding unusual costs related to plant consolidations
and the non-cash inventory valuation adjustment) as a percentage of sales
increased to 78.5% for the year ended December 31, 2001, from 74.3% for 2000.
This increase was primarily the result of operating inefficiencies associated
with reduced production levels in 2001 and lower pricing under new agreements
with customers who supply the automotive industry. These operating
inefficiencies have been partially offset by plant closures, headcount
reductions and other cost reduction and containment actions taken by the Company
and the impact of lower copper prices. Because the Company's products are
typically priced at a spread over the cost of copper, a lower copper price leads
to a higher gross margin percentage but generally has no impact on gross margin
dollars. During 2001, the Company charged $5.8 million to cost of goods sold for
unusual charges incremental to its on-going operations related to plant
consolidations. These charges include inefficiencies incurred during the
transition of production capacity and other incremental costs related to the
transferred production lines. There were no such charges in the comparable
period in 2000. In connection with the decline in the average price of copper
during 2001, the Company recorded a non-cash inventory valuation adjustment of
$10.0 million to reduce the LIFO valuation of copper in inventory to the lower
of LIFO cost or market. There was no such charge in 2000.
14

Selling, general and administrative expenses excluding non-cash
compensation income/expense were $33.9 million for the year ended December 31,
2001, compared to $47.0 million for 2000. This decrease was the result of volume
related items and various cost reductions. These expenses as a percent of net
sales improved from 8.3% for the year ended December 31, 2000 to 8.0% for 2001.
This improvement is attributable to headcount reductions, administrative and
corporate reorganizations and other cost reduction and containment actions taken
by the Company.

Depreciation and amortization was $36.5 million for the year ended December
31, 2001, as compared to $36.2 million for the same period in 2000. The increase
of $0.3 million was the result of capital additions.

In 2001, the Company announced its plan for a realignment and consolidation
of production capacity and initiated the closing of seven facilities located in
Alabama (3), Indiana (2) and Arkansas (2). Six of these facilities were closed
by the end of 2001, with one facility in Alabama closed in the first quarter of
2003. The production capacity from the closed locations was primarily
transferred and consolidated into the Company's existing manufacturing
facilities in its remaining Indiana, Texas and New York locations, which were
expanded, as necessary, to accommodate the production transfer.

In addition to the capacity realignment, the Company also consolidated
certain selling, general and administrative functions, including a corporate
reorganization as discussed previously.

Unusual charges from plant closures and selling, general and administrative
headcount reductions for the year ended December 31, 2001 were $7.4 million.
During the year ended December 31, 2000, the Company incurred an unusual charge
of $0.7 million related to the termination of certain administrative employees.
In connection with the plant consolidations in 2001, the Company recorded an
impairment loss of $5.5 million. There was no such charge in the comparable
period in 2000.

In 2001, the Company recorded a gain on the sale of property, plant and
equipment of $0.3 million compared to a loss of $0.5 million in the comparable
period in 2000.

CRITICAL ACCOUNTING POLICIES

The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States requires the Company to use
estimates and assumptions regarding certain types of our assets, liabilities,
revenues and expenses. The Company bases these estimates and assumptions upon
the best information available at the time of the estimates or assumptions.
Actual results could change materially from our estimates and assumptions. The
following is a discussion of certain of our critical accounting policies and the
related management estimates and assumptions necessary in determining the value
of related assets or liabilities. A full description of our critical accounting
policies is included in Note 2 to the Consolidated Financial Statements included
herein.

REVENUE RECOGNITION

Sales and related costs of goods sold are included in income when the goods
are shipped to customers in accordance with the delivery terms. The Company
offers its customers the right to return products that do not meet the specific
requirements set forth in the customer's purchase order. The Company records a
provision for the estimated amount of such returns based on historical
experience and any notification received of pending returns. While such returns
have historically been within the Company's expectations and the provisions
established, the Company cannot guarantee that the same return rates will
continue. Any significant increase in credit returns could have a material
adverse impact on our operating results for the period or periods in which such
returns materialize.

ACCOUNTS RECEIVABLE

The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based upon payment history and the customer's current
creditworthiness, as determined by the Company's review of their current credit
information. The Company continuously monitors collections and payments from our
customers

15

and maintains a provision for estimated credit losses based upon the Company's
historical experience and any specific customer collection issues that have been
identified. While such credit losses have historically been within our
expectations and the provisions established, the Company cannot guarantee that
the historical credit loss rates will continue in the future. Since the Company
has a number of relatively large customers, a significant change in the
liquidity or financial position of one of these customers could have a material
adverse impact on the collectability of our accounts receivables and our future
operating results.

INVENTORIES

Inventories are valued at the lower of cost, determined using the last-in,
first out ("LIFO") method, or the current estimated market value of the
inventory. Because the main component of the Company's products is copper, a
world-wide traded commodity, the estimated fair market value of the inventory is
subject to wide fluctuations. Any significant decline in the average COMEX price
of copper can result in a non-cash inventory valuation adjustment. See "Note 3
to the Company's Consolidated Financial Statements" included herein.

DEFERRED TAXES

The Company establishes deferred tax assets and liabilities based on
profits or losses in each jurisdiction in which it operates. Associated
valuation allowances reflect the likelihood of the recoverability of these
assets. The Company's judgement of the recoverability of these assets is based
primarily on its estimate of current and expected future earnings as well as
prudent and feasible tax planning strategies.

LONG-LIVED ASSETS

The Company reviews the net realizable value of its long-lived assets
through an assessment of the estimated future cash flows related to those
assets. In the event the Company determines that the carrying values of
long-lived assets are in excess of estimated gross future cash flows for those
assets, the company will write-down the value of the assets to a level
commensurate with a discounted cash flow analysis of the estimated future cash
flows. As for goodwill, the Company compares the carrying value of its reporting
units to the fair value of such units based primarily on the reporting unit's
cash flows. To the extent the carrying value exceeds such fair value, the
respective goodwill is written down to its fair value.

The Company tests for goodwill impairment annually and also between annual
tests if an event occurs or if circumstances change that would more likely than
not reduce the fair value of a reporting unit below the unit's carrying amount.
Performing the impairment test requires us to estimate the fair values using the
present value of estimated future cash flows. The Company will perform its
annual impairment test for 2003 in the fourth quarter of 2003, and an interim
date in 2003 should it become apparent that we will not meet our cash flow
estimates for 2003 or in future years. A significant downward revision in the
estimated fair value of future cash flows could result in a material impairment
of our remaining goodwill.

LIQUIDITY AND CAPITAL RESOURCES

Inflation has not been a material factor affecting the Company's business.
As a result of the copper price pass-through arrangements that the Company has
with its customers, fluctuations in the price of copper, the principle raw
material used by the Company, have not, nor are expected to have, a material
impact on the Company's profitability. The Company is subject to normal
inflationary pressures with its other raw materials purchased as well as its
general operating expenses, such as salaries, employee benefits and facilities
costs.

WORKING CAPITAL AND CASH FLOWS

Net cash provided by continuing operations was $5.3 million for the year
ended December 31, 2002 compared to $9.2 million for 2001. This decrease was
primarily the result of lower operating results. Net cash used in discontinued
operations was $5.4 million in 2002, compared to $5.2 million in 2001, primarily
from expenditures in connection with the indemnification agreement with
Viasystems for certain product liability claims. See "Note 7 to the Company's
Consolidated Financial Statements" included herein.

16

Net cash used in investing activities was $11.2 million in 2002, compared
to $23.4 million in 2001. Net cash used in investing activities in 2002 included
$11.5 million in capital expenditures by continuing operations and $0.3 million
in cash proceeds from the sale of property, plant and equipment. Net cash used
in investing activities in 2001 included $25.9 million invested in capital
expenditures by continuing operations and $2.5 million in cash proceeds from the
sale of property, plant and equipment.

FINANCING ARRANGEMENTS

On December 20, 2001, the Company entered into the Credit Agreement with
certain financial institutions that replaced the Company's previous credit
agreement. In connection with the Credit Agreement, the Company paid $1.4
million to satisfy its outstanding term balance on the prior credit agreement
and incurred $2.5 million in financing costs. All outstanding letters of credit
from the prior credit agreement were incorporated into the Credit Agreement.
Borrowings under the Credit Agreement are collateralized by first priority
mortgages and liens on all domestic assets of the Company and its domestic
subsidiaries. In addition, borrowings under the Credit Agreement are guaranteed
by International Wire Holding Company.

The Credit Agreement consists of a $70.0 million revolving credit facility,
subject to certain borrowing base requirements, that will mature on January 15,
2005. The Credit Agreement provides that a portion of the Credit Agreement, not
in excess of $35.0 million, is available for the issuance of letters of credit.
At December 31, 2002, the Company had $7.0 million in borrowings outstanding
under the Credit Agreement and $29.4 million in outstanding letters of credit.
At March 14, 2003, based on the most recent borrowing base calculation, the
Company had available borrowing capacity under the Credit Agreement of $55.0
million, of which $20.4 million was available for borrowing. The Company's
obligations under the Credit Agreement bear interest at floating rates and
require interest payments on varying dates depending on the interest rate option
selected by the Company.

In March 2003, the Company and the financial institutions that are parties
to the Credit Agreement entered into a Second Amendment to the Credit Agreement.
Under the terms of the amendment, certain financial and other covenants were
modified. The amendment also increased the interest rate payable on borrowings
by 0.25% per annum.

The Company has outstanding $150.0 million principal amount of 11.75%
Senior Subordinated Notes due 2005 (the "11.75% Senior Subordinated Notes")
under an Indenture dated June 12, 1995, $150.0 million of 11.75% Series B Senior
Subordinated Notes due June 1, 2005 (the "Series B 11.75% Senior Subordinated
Notes" and, together with the 11.75% Senior Subordinated Notes, the "11 3/4%
Notes") under an Indenture dated June 17, 1997, priced at 108.75% for an
effective interest rate of 10.15% and $5.0 million principal amount of 14%
Senior Subordinated Notes due June 1, 2005, (the "14% Notes" and, together with
the 11 3/4% Notes, the "Senior Subordinated Notes") under an Indenture dated
February 12, 1997. The 11 3/4% Notes bear interest at the rate of 11.75% per
annum, requiring semi-annual interest payments of $17.6 million on each June 1
and December 1. The 14% Notes bear interest at the rate of 14% per annum,
requiring a semi-annual interest payment of $0.4 million on each June 1 and
December 1. Neither the 11 3/4% nor the 14% Notes are subject to any sinking
fund requirements.

In connection with the Camden Acquisition, the Company assumed debt related
to two Industrial Revenue Bonds (the "IRBs") totaling $15.5 million. The IRBs
are due in August 2005 and March 2016 in the amounts of $9.0 million and $6.5
million, respectively. The IRBs bear interest at a rate per annum which is tied
to the Tax Exempt Money Market Index. Rates change weekly and interest is paid
monthly. The IRBs are collateralized by letters of credit totaling $15.5
million. As of December 31, 2002, the weighted average interest rate on the IRBs
was 1.4%.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has not historically utilized off-balance sheet financing
arrangements and has no such arrangements as of December 31, 2002. However, the
Company does finance the use of certain facilities and equipment under lease
agreements provided by various institutions. Since the terms of these agreements
meet the definitions of operating lease agreements, the sum of future lease
payments is not reflected on our
17

consolidated balance sheets. As of December 31, 2002, the future minimum lease
payments under these arrangements totaled $6.3 million.

LIQUIDITY

The principal raw material used in the Company's products is copper. The
market price of copper is subject to significant fluctuations. Working capital
needs change whenever the Company experiences a significant change in copper
prices. A $0.10 per pound change in the price of copper changes the Company's
working capital by approximately $3.5 million. The Company enters into
contractual relationships with most of its customers to adjust its prices based
upon the prevailing market prices on the COMEX. This approach is patterned after
the Company's arrangement with its copper suppliers and is designed to remove
the risk associated with fluctuating copper prices.

The Company's primary sources of liquidity are cash flows from operations
and borrowings under the Credit Agreement, which are subject to a borrowing base
calculation. The major uses of cash in 2003 are expected to be for debt service
requirements and capital expenditures. In 2003, debt service requirements are
estimated at approximately $40.6 million while capital expenditures are
estimated at approximately $14.3 million. Management believes that cash from
operating activities, together with available borrowings under the Credit
Agreement, if necessary, should be sufficient to permit the Company to meet
these financial obligations.

The following table sets forth our contractual obligations at the end of
2002 for the periods shown (dollars in millions):

- ---------------

(1) Debt obligations are exclusive of interest. See "Liquidity and Capital
Resources -- Financing Arrangements" for a further discussion of effective
interest rates.

RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting
for Asset Retirement Obligations," was issued in June 2001. SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 is effective for the Company in 2003. The Company does not
believe adopting this statement will have a material effect on its results of
operations or financial position.

In August 2001, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets." SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of
Long-lived Assets and Assets to be Disposed of" and the accounting and reporting
provisions of APB No. 30, "Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." SFAS No. 144 also amends
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
eliminate the exception to consolidation for a subsidiary for which control is
likely to be temporary. The provisions of SFAS No. 144 are effective for fiscal
years beginning after December 15, 2001. The most significant changes made by
SFAS No. 144 are: (1) removes goodwill from its scope and, therefore, eliminates
the requirements of SFAS No. 121 to allocate goodwill to long-lived assets to be
tested for impairment, and (2) describes a probability-weighted cash flow
estimation approach to deal with situations in which alternative courses of
action to recover the carrying amount of long-lived assets are under
consideration or a range is estimated for the amount of possible future cash
flows. The Company adopted

18

SFAS No. 144 as of January 1, 2002. The adoption of this statement did not have
an impact on the Company's consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." The statement rescinds SFAS No. 4, "Reporting Gains and Losses
from Extinguishment of Debt," and an amendment of that statement, SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." As a
result, gains and losses from extinguishment of debt will no longer be
aggregated and classified as an extraordinary item, net of related income tax
effect, on the statement of earnings. Instead, such gains and losses will be
classified as extraordinary items only if they meet the criteria of unusual or
infrequently occurring items. SFAS No. 145 also requires that the gains and
losses from debt extinguishments, which were classified as extraordinary items
in prior periods, should be reclassified to continuing operations if they do not
meet the criteria for extraordinary items. The provisions related to this
portion of the statement are required to be applied in fiscal years beginning
after May 15, 2002. Upon adoption of this statement, the Company will make the
required reclassification for 2000.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The statement requires that costs
associated with exit or disposal activities must be recognized when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Such costs include lease termination costs and certain employee severance costs
associated with a restructuring, discontinued operation or other exit or
disposal activity. The Company will review SFAS No. 146, which is effective for
exit or disposal activities initiated after December 31, 2002, and this standard
will be applied prospectively.

FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Other," was issued in November 2002. This interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligation sunder certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements in this interpretation are effective for the Company's financial
statements ending December 31, 2002 and are incorporated herein.

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities,"
("VIEs"), an interpretation of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements," to improve financial reporting of special
purpose and other entities. In accordance with the interpretation, business
enterprises that represent the primary beneficiary of another entity by
retaining a controlling financial interest in that entity's assets, liabilities,
and results of operating activities must consolidate the entity in their
financial statements. Prior to the issuance of FIN 46, consolidation generally
occurred when an enterprise controlled another entity through voting interests.
Certain VIEs that are qualifying special purpose entities ("QSPEs") subject to
the reporting requirements of SFAS 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities," will not be required to
be consolidated under the provisions of FIN 46. The consolidation provisions of
FIN 46 apply to VIEs created or entered into after January 31, 2003, and for
pre-existing VIEs in the first reporting period beginning after June 15, 2003.
If applicable, transition rules allow the restatement of financial statements or
prospective application with a cumulative effect adjustment. In addition, FIN 46
expands the disclosure requirements for the beneficiary of a significant or a
majority of the variable interests to provide information regarding the nature,
purpose and financial characteristics of the entities. The Company does not
believe that the adoption of FIN 46 will have a material effect on its financial
statements.

SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure, an Amendment of FASB Statement No. 123," was issued in December
2002. The Statement amends FASB No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, this Statement amends the disclosure requirements of
Statement No. 123 to require prominent disclosures in both

19

annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. FASB No. 148 is effective for the Company's financial statements ending
December 31, 2002. However, since the Company continued to use the ABP 25
approach to its stock option accounting, the adoption of SFAS 148, did not have
a material effect on its financial position or results of operations. The
Company has included the disclosure requirements of SFAS 148 within its Notes to
Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company does not ordinarily hold market risk sensitive instruments for
trading purposes. The Company does, however, recognize market risk from interest
rate, foreign currency exchange and commodity price exposure.

INTEREST RATE RISK

At December 31, 2002, approximately $15.5 million of the Company's
long-term debt, specifically, borrowings outstanding under the IRBs and $7.0
million of borrowings under the Credit Agreement, bear interest at variable
rates. Given the current amount of long-term debt subject to variable interest
rates, the Company does not believe that the associated interest rate risk is
material and is not currently engaged in any hedging activities.

FOREIGN CURRENCY RISK

The Company has operations in Mexico, France, Italy and the Philippines.
The Company's operations may, therefore, be subject to volatility because of
currency fluctuations. Sales and expenses are denominated in local currencies
for the French and Italian operations and the U.S. Dollar is the functional
currency for Mexico and the Philippines operations. As a result, these
operations are subject to market risk with respect to fluctuations in the
relative value of currencies. The Company evaluates from time-to-time various
currency hedging programs that could reduce the risk.

In terms of foreign currency translation risk, the Company is exposed
primarily to the euro, the Mexican peso and the Phillipine peso. The Company's
net foreign currency investment in foreign subsidiaries and affiliates
translated into United States dollars using year-end exchange rates was $57.5
million and $56 million at December 31, 2002 and 2001, respectively.

At December 31, 2002, the Company had no financial instruments outstanding
that were sensitive to changes in foreign currency rates.

COMMODITY PRICE RISK

The principal raw material used by the Company is copper, which is
purchased in the form of 5/16-inch rod from the major copper producers in North
America and Europe. Copper rod prices are based on market prices, which are
generally established by reference to the COMEX prices, plus a premium charged
to convert copper cathode to copper rod and deliver it to the required location.
As a world traded commodity, copper prices have historically been subject to
fluctuations. While fluctuations in the price of copper may directly affect the
per unit prices of the Company's products, these fluctuations have not had, nor
are expected to have, a material impact on the Company's profitability due to
copper price pass-through arrangements that the Company has with its customers.
These sales arrangements are based on similar variations of monthly copper price
formulas. Use of these copper price formulas minimizes the differences between
raw material copper costs charged to the cost of sales and the pass-through
pricing charged to customers.

20

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

21

REPORT OF INDEPENDENT ACCOUNTANTS

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

In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of International Wire Group, Inc. and its subsidiaries at December 31,
2002 and 2001, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements. These financial statements and financial statement
schedule are the responsibility of the Company's management; our responsibility
is to express an opinion on these financial statements and financial statement
schedule based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the
Company changed its method of accounting for goodwill in 2002.

/s/ PRICEWATERHOUSECOOPERS LLP

Dallas, Texas
February 28, 2003, except for Note 8, which is as of March 25, 2003

22

INTERNATIONAL WIRE GROUP, INC.

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,

See accompanying notes to the consolidated financial statements
23

INTERNATIONAL WIRE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,

See accompanying notes to the consolidated financial statements
24

INTERNATIONAL WIRE GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000

See accompanying notes to the consolidated financial statements
25

INTERNATIONAL WIRE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,

See accompanying notes to the consolidated financial statements
26

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000
(IN THOUSANDS, EXCEPT SHARE DATA)

1. COMPANY BACKGROUND, ACQUISITIONS AND DIVESTITURES

International Wire Group, Inc., a Delaware corporation (the "Company"),
through its subsidiaries, is a leading manufacturer and marketer of wire
products, including bare and tin-plated copper wire and insulated wire, for
other wire suppliers and original equipment manufacturers. The Company's
products include a broad spectrum of copper wire configurations and gauges with
a variety of electrical and conductive characteristics and are utilized by a
wide variety of customers primarily in the appliance, automotive, electronics
and data communications and general industrial/energy industries. The Company
manufactures and distributes its products at 24 facilities located in the United
States, Mexico, France, Italy and the Philippines.

The Company was formed to participate in the transactions contemplated by
the Acquisitions (as described below). On June 12, 1995, Wirekraft Holdings
Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire Holding
Company ("Holding"), the sole common stockholder of the Company, Wirekraft
Acquisition Company and certain shareholders of Wirekraft and Omega entered into
a series of acquisitions and mergers (the "Acquisitions") pursuant to which the
Company acquired all of the common equity securities (and all securities
convertible into such securities) of Wirekraft and all of the common equity
securities of Omega. In accordance with EITF 88-16, "Basis in Leveraged Buy Out
Transactions," the Acquisitions have been accounted for at "predecessor basis."

Since the Company was formed in 1995, it has completed the acquisition of
several entities and the related operations of those businesses. These
acquisitions and related results of operations are included in the accompanying
financial statements.

In March 2000, the Company consummated the sale of its Wire Harness
business to Viasystems International, Inc. ("Viasystems") for $210,798 in cash
(the "Wire Harness Sale"). In connection therewith, the Company entered into an
agreement to supply Viasystems' wire harness business with substantially all of
their insulated wire requirements through 2003, which is a continuation of the
then existing practice. This supply agreement has been extended through December
2005. See Note 7 for further discussion of the Wire Harness Sale.

In August 2001, the Company furthered its international expansion with the
purchase of a manufacturing facility in Durango, Mexico. This new facility,
approximately 600 miles south of the U.S./Mexican border, allows the Company to
expand its relationships with existing global customers in North America and
seek new opportunities in Central and South America. Production and shipments to
customers at this new facility began in the third quarter of 2002.

2. SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

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

REVENUE RECOGNITION

Sales and related cost of goods sold are included in income when goods are
shipped to customers in accordance with the delivery terms.

INVENTORIES

Inventories are valued at the lower of cost or market. Cost is determined
using the last-in, first-out ("LIFO") method.
27

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation is
calculated using the straight-line method. The average estimated lives utilized
in calculating depreciation are as follows: building -- 25 to 40 years; building
improvements -- 15 years; machinery and equipment -- 3 to 11 years; and
furniture and fixtures -- 5 years. Leasehold improvements are amortized over the
shorter of the term of the respective lease or the life of the respective
improvement. The cost and related accumulated depreciation of assets sold,
retired or otherwise disposed of are removed from the respective accounts, and
any resulting gains or losses are included in the statement of operations.

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill represents the excess of cost over the value of net assets
acquired. Prior to 2002, goodwill was amortized using the straight-line method
over a range of twenty to forty years. On January 1, 2002, the Company adopted
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets" as defined herein. In accordance with SFAS No. 142, the
Company has identified intangible assets with finite lives and amortized these
assets over their defined lives. Intangible assets with indefinite lives, such
as goodwill, are no longer being amortized but are reviewed annually for
impairment as required under SFAS No. 142 using a fair-value-based test.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company has periodically assessed the recoverability of long-lived
assets (including intangible assets) based on its current and anticipated future
undiscounted cash flows. In addition, the Company's policy for the recognition
and measurement of any impairment of long-lived assets has been to assess the
current and anticipated future cash flows associated with the impaired asset. An
impairment occurs when the cash flows (excluding interest) do not exceed the
carrying amount of the asset. The amount of the impairment loss is the
difference between the carrying amount of the asset and its estimated fair
value.

On January 1, 2002, the Company adopted SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-lived Assets" as described herein. In accordance
with SFAS 144, goodwill is no longer being allocated to long-lived assets to be
tested for impairment, and a probability-weighted cash flow estimation approach
is used when situations occur in which alternative courses of action to recover
the carrying amount of long-lived assets are under consideration or a range is
estimated for the amount of possible future cash flows. The adoption of this
statement did not have an impact on the Company's consolidated financial
position.

DEFERRED FINANCING COSTS

Deferred financing costs, consisting of fees and other expenses associated
with debt financing are amortized over the term of the related debt using the
straight-line method, which approximates the effective interest method. The
Company incurred additional deferred financing costs of $2,459 in 2001 in
connection with the execution of the Second Amended and Restated Credit
Agreement (the "Credit Agreement"). Accumulated amortization aggregated $18,980
and $16,848 at December 31, 2002 and 2001, respectively.

DEFERRED INCOME TAXES

The Company accounts for certain items of income and expense in different
periods for financial reporting and income tax purposes. Provisions for deferred
income taxes are made in recognition of such temporary differences, where
applicable. A valuation allowance is established against deferred tax assets
unless the Company believes it is more likely than not that the benefit will be
realized.

28

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NON-CASH COMPENSATION EXPENSE (INCOME)

The Company records non-cash compensation which reflects the difference
between the cost of Holding's Class A common stock, which can be converted into
shares of Holding common stock at a variable rate, and the value of the common
shares at the time of the valuation. Contributed capital is increased for
non-cash compensation expense and decreased for non-cash compensation income.

FOREIGN CURRENCY TRANSLATION

The Company has operations in Mexico, France, Italy and the Philippines.
Local currencies are the functional currency for the Company's foreign
subsidiaries located in France and Italy. Accordingly, assets and liabilities of
these foreign subsidiaries are translated at the rates of exchange in effect at
the balance sheet date. Income and expense items of these subsidiaries are
translated at average monthly rates of exchange. The resultant translation gains
and losses are reported in other comprehensive income/loss.

The U.S. Dollar is the functional currency for the operations in Mexico and
the Philippines. All gains and losses from remeasurement and transactions are
determined using a combination of current and historical rates and are included
in net income (loss).

Exchange gains and losses arising from transactions in currencies other
than the functional currency of the subsidiary involved are included in income.
To date, the effect of such amounts on net income (loss) has not been material.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments, excluding the Senior Subordinated
Notes (as hereinafter defined) are carried at face amounts which approximates
their fair values due to their relatively short maturities. The Company has
estimated the fair market value of the Senior Subordinated Notes using current
market data. The fair market value of the Senior Subordinated Notes was
approximately $181,500 and $250,500 at December 31, 2002 and 2001, respectively.

ESTIMATES AND ASSUMPTIONS

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

STOCK OPTION PLANS

As allowed under SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and related Interpretations in accounting for its stock option
plans. Accordingly, no compensation cost has been recognized as options are
issued at exercise prices equal to the market value at date of grant. There may
be compensation expense in future periods to the extent that the fair value of
the stock exceeds the exercise price of the Performance Options as described
more fully in Note 11. Had compensation cost for the respective option plans
been determined

29

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

based upon the fair value at the grant date for awards under these plans
consistent with the methodology prescribed under SFAS No. 123, the Company's net
income (loss) would approximate the following:

STATEMENT OF CASH FLOWS

For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the years ended
December 31, 2002, 2001 and 2000, was $38,239, $37,106 and $41,654,
respectively. Net taxes paid (refunded) for the years ended December 31, 2002,
2001 and 2000 were $(1,680), ($3,816) and $12,340, respectively.

In fiscal 2002, 2001 and 2000, the Company recorded capital lease
obligations of $0, $2,274 and $873, respectively, for property, plant and
equipment.

SIGNIFICANT CUSTOMER

For the years ended December 31, 2002, 2001 and 2000, the Company had sales
to one customer that exceeded 10% of consolidated net sales from continuing
operations. Sales to this customer represented 11%, 12% and 13% of net sales for
each year, respectively.

CHANGE IN ACCOUNTING PRINCIPLE

In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets," which addresses financial accounting and reporting for acquired
goodwill and other intangible assets. Under SFAS No. 142, goodwill is no longer
amortized and the rules for measuring goodwill impairment use a fair-value-
based test. Under the new rules, a fair value of each of the Company's reporting
units with assigned goodwill must be calculated using either market comparables
or a discounted cash flow approach, or a combination thereof. Once the fair
value of the reporting unit has been determined, the fair value of net assets,
including intangibles, of that reporting unit must be compared to the total
market value derived in the first step to determine impairment.

The Company adopted SFAS No. 142 as of January 1, 2002. Accordingly, the
Company has stopped the amortization of goodwill effective January 1, 2002.

In completing the impairment test required under SFAS No. 142, the Company
determined the estimated fair value of its various reporting units and compared
that amount to their respective carrying values. Based on this calculation, the
Company determined that an impairment existed primarily related to insulated
wire operations obtained through the acquisition of Wirekraft Industries, Inc.
in 1992 and the acquisition of a group of affiliated companies collectively
referred to as Dekko Wire Technology Group in 1996. To determine the amount of
the impairment, the Company calculated the "implied fair value" of goodwill for
each impaired reporting unit in the same manner as the amount of goodwill
recognized in a

30

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

business combination is determined. The Company then recognized an impairment
charge to write-off goodwill in the amount of $54,504, net of tax benefit of
$19,408 in the first quarter of 2002, representing the excess carrying amount of
goodwill over the "implied fair value" of goodwill for the impaired reporting
units. In the fourth quarter of 2002, an additional impairment of $24,355 was
recorded as a result of a further decline in the fair value of these reporting
units. The impairment losses are recognized in the Statement of Operations under
the captions "cumulative effect of change in accounting for goodwill and
goodwill impairment."

Had amortization of goodwill and other intangible assets been accounted for
as prescribed under SFAS No. 142 for all periods reported, the Company's net
income (loss) before change in accounting principle would have been as follows:

RECENTLY ISSUED ACCOUNTING STANDARDS

Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting
for Asset Retirement Obligations," was issued in June 2001. SFAS No. 143
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. SFAS No. 143 is effective for the Company in 2003. The Company does not
believe adopting this statement will have a material effect on its results of
operations or financial statements.

In August 2001, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets." SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of
Long-lived Assets and Assets to be Disposed of" and the accounting and reporting
provisions of APB No. 30, "Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." SFAS No. 144 also amends
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
eliminate the exception to consolidation for a subsidiary for which control is
likely to be temporary. The provisions of SFAS No. 144 are effective for fiscal
years beginning after December 15, 2001. The most significant changes made by
SFAS No. 144 are: (1) removes goodwill from its scope and, therefore, eliminates
the requirements of SFAS No. 121 to allocate goodwill to long-lived assets to be
tested for impairment, and (2) describes a probability-weighted cash flow
estimation approach to deal with situations in which alternative courses of
action to recover the carrying amount of long-lived assets are under
consideration or a range is estimated for the amount of possible future cash
flows. The Company adopted SFAS No. 144 as of January 1, 2002. The adoption of
this statement did not have an impact on the Company's consolidated financial
statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." The statement rescinds SFAS No. 4, "Reporting Gains and Losses
from Extinguishment of Debt," and an amendment of that statement, SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements." As a
result, gains and losses from extinguishment of debt will no longer be
aggregated and classified as an extraordinary item, net of related income tax
effect, on the statement of earnings. Instead, such gains and losses will be
classified as extraordinary items only if they meet the criteria of unusual or
infrequently occurring items. SFAS No. 145 also requires that the gains and
losses from debt extinguishments, which were classified as extraordinary items
in prior periods, should be reclassified to continuing operations if they do not
meet the criteria for extraordinary items. The provisions related to this
portion of the statement are required to be applied in fiscal

31

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

years beginning after May 15, 2002. Upon adoption of this statement, the Company
will make the required reclassification for 2000.

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The statement requires that costs
associated with exit or disposal activities must be recognized when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Such costs include lease termination costs and certain employee severance costs
associated with a restructuring, discontinued operation or other exit or
disposal activity. The Company will review SFAS No. 146, which is effective for
exit or disposal activities initiated after December 31, 2002, and this standard
will be applied prospectively.

FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others," was issued in November 2002. This interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize, at the inception of a
guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements in this interpretation are effective for the Company's financial
statements ending December 31, 2002 and are incorporated herein.

In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities,"
("VIEs"), an interpretation of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements," to improve financial reporting of special
purpose and other entities. In accordance with the interpretation, business
enterprises that represent the primary beneficiary of another entity by
retaining a controlling financial interest in that entity's assets, liabilities,
and results of operating activities must consolidate the entity in their
financial statements. Prior to the issuance of FIN 46, consolidation generally
occurred when an enterprise controlled another entity through voting interests.
Certain VIEs that are qualifying special purpose entities ("QSPEs") subject to
the reporting requirements of SFAS 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities," will not be required to
be consolidated under the provisions of FIN 46. The consolidation provisions of
FIN 46 apply to VIEs created or entered into after January 31, 2003, and for
pre-existing VIEs in the first reporting period beginning after June 15, 2003.
If applicable, transition rules allow the restatement of financial statements or
prospective application with a cumulative effect adjustment. In addition, FIN 46
expands the disclosure requirements for the beneficiary of a significant or a
majority of the variable interests to provide information regarding the nature,
purpose and financial characteristics of the entities. The Company does not
believe that the adoption of FIN 46 will have a material adverse effect on its
financial statements.

SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure, an Amendment of FASB Statement No. 123," was issued in December
2002. The statement amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, this statement amends the disclosure requirements of
Statement No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. FASB No. 148
is effective for the Company's financial statements ending December 31, 2002.
However, since the Company continued to use the ABP 25 approach to its stock
option accounting, the adoption of SFAS 148, did not have a material effect on
its financial position or results of operations. The disclosure requirements of
SFAS 148 are included herein.

32

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. INVENTORIES

The composition of inventories is as follows:

The current cost of inventories at December 31, 2002 approximated the
carrying cost. In connection with the decline in the average price of copper
during 2001, the Company recorded a non-cash inventory valuation charge to cost
of sales of $10,000 to reduce the LIFO valuation of copper in inventory. With
the inventory valuation adjustment, the current cost of inventories at December
31, 2001 approximated the carrying cost.

4. PROPERTY, PLANT AND EQUIPMENT

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

5. GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the year ended December
31, 2002, are as follows:

The Company adopted SFAS No. 142 as of January 1, 2002. Accordingly, the
Company has stopped the amortization of goodwill effective January 1, 2002.

In completing the impairment test required under SFAS No. 142, the Company
determined the estimated fair value of its various reporting units and compared
that amount to their respective carrying values. Based on this calculation, the
Company determined that an impairment existed primarily related to insulated
wire operations obtained through the acquisition of Wirekraft Industries, Inc.
in 1992 and the acquisition of a group of affiliated companies collectively
referred to as Dekko Wire Technology Group in 1996. To determine the amount of
the impairment, the Company calculated the "implied fair value" of

33

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

goodwill for each impaired reporting unit in the same manner as the amount of
goodwill recognized in a business combination is determined. The Company then
recognized an impairment charge in the first quarter of 2002 to write-off
goodwill in the amount of $54,504, net of tax benefit of $19,408, representing
the excess of the carrying amount of goodwill over the "implied fair value" of
goodwill for the impaired reporting units. In the fourth quarter of 2002, an
additional impairment of $24,355 was recorded as a result of a further decline
in the fair value of the reporting units. The impairment losses and goodwill
impairment are recognized in the Statement of Operations under the caption
"cumulative effect of change in accounting and goodwill impairment."

The components of intangible assets for the years ended December 31, 2002,
2001 and 2000 are as follows:

Amortization expense for the net carrying amount of intangible assets at
December 31, 2002 is estimated to be $984 in 2003, $984 in 2004, $648 in 2005
and $408 in 2006 and 2007.

6. FINANCING COSTS

In 2001, the Company recorded deferred financing costs of $2,459 related to
the December 2001 execution of the Credit Agreement (See Note 8). In 2000, the
Company recorded additional deferred financing costs of $699 related to the
December 1999 amendment to the Company's credit agreement in place at the time.
In March 2000, the Company repaid a substantial portion of the outstanding
balance of the credit agreement then in place with the proceeds received from
the Wire Harness Sale (see Note 7 for further discussion of the Wire Harness
Sale). Accordingly, the Company recorded an extraordinary loss of $2,747, net of
income tax benefit, related to the write-off of deferred financing fees.

7. RELATED PARTY TRANSACTIONS AND DISCONTINUED OPERATIONS

On March 29, 2000, the Company consummated the sale of its Wire Harness
business to Viasystems for $210,798 in cash. At the time of the sale, the
Company and Viasystems were commonly controlled by affiliates of Hicks, Muse. As
such, the Company has accounted for the Wire Harness Sale on a basis consistent
with the accounting for a transfer of assets between commonly owned entities.
The Company has recorded an addition to contributed capital related to the
transaction of $121,713, which represents the excess of the proceeds over the
net book value of the assets disposed plus the related expenses of $1,500, and
estimated taxes of $7,000. The results of operations of the Wire Harness
business have been reclassified to discontinued operations for all periods
presented.

The purchase price was determined by senior management of both companies.
In addition, each of the boards of directors received opinions from nationally
recognized financial advisors that the purchase price was fair, from a financial
point of view, to each of the respective parties.

34

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the Wire Harness Sale, the Company entered into an
agreement to supply Viasystems' wire harness business with substantially all of
their insulated wire requirements through March 2003, which is a continuation of
the then existing practice. This supply agreement has been extended through
December 2005. For the years ended December 31, 2002, 2001 and 2000, the Company
had sales to Viasystems' wire harness business of $34,518, $34,467 and $30,401,
respectively. The Company had outstanding accounts receivable from Viasystems
related to those sales of $6,990 and $12,017 at December 31, 2002 and 2001,
respectively.

Additionally, the Company agreed to indemnify Viasystems for certain claims
and litigation including any current or future claims related to the case titled
Whirlpool Corporation v. Wirekraft Industries, Inc. (the "Whirlpool Case"), any
current or future liabilities associated with the Internal Revenue Service
("IRS") examination of the U.S. income tax return of Kirtland Indiana, Limited
Partnership for the tax period ended December 21, 1992 (the "IRS Examination"),
and certain product liability claims, as described in the purchase agreement
(the "Wire Harness Product Liability Claims").

During the third quarter of 2000, the Company and Viasystems reached a
settlement in the Whirlpool Case and agreed to pay the plaintiff $3,650. The
Company recognized a charge to income (loss) from discontinued operations of
$2,081, net of income $1,569 tax benefit, as a result of such settlement. During
the fourth quarter of 2000, the Company and Viasystems reached a settlement with
the IRS related to the IRS Examination and agreed to pay $2,026, which had been
provided for in a prior year. In addition, during 2002 and 2001, the Company
recorded charges to income (loss) from discontinued operations of $4,000 net of
$0 income tax benefit and $2,850 net of $2,150 income tax benefit, respectively,
related to the Wire Harness Product Liability Claims, as described in Note 14,
and other transactions related to the Company's former Wire Harness business. As
of December 31, 2002 and 2001, the reserve for the Company's indemnification
liability related to the Wire Harness Product Liability Claims was $4,945 and
$9,049, respectively. The Company believes that final resolution of the
remaining matters will not have a material adverse effect on the Company and
that adequate amounts of reserves have been established.

In connection with the Acquisitions and the related financing, the Company
entered into a Monitoring and Oversight Agreement, as amended ("Agreement") with
Hicks, Muse & Co. Partners, L.P. ("Hicks Muse Partners"), an affiliate of the
Company. The Agreement provides that the Company shall pay Hicks Muse Partners
an annual fee of $500, for ten years for monitoring and oversight services
adjusted annually at the end of each fiscal year to an amount equal to 0.1% of
the consolidated net sales of the Company, but in no event less than $500
annually. Pursuant to the Agreement, in the event the Company fails to achieve
certain minimum EBITDA targets, such fees will not be required to be paid in
cash but will accrue. The expense related to the Agreement totaled $500, $500
and $639 for 2002, 2001 and 2000, respectively.

In September 2002, the Company began selling a portion of its production
scrap to Prime Materials Recovery, Inc. ("Prime"). Prime is a closely held
company and its majority shareholder, chairman and a director is the President
and Chief Operating Officer of the Company. In addition, the Vice President --
Finance of the Company holds a minority ownership interest and is a director.
Sales to Prime for the year ended December 31, 2002 were $2,070 and the amount
due from Prime as of December 31, 2002 was $72. Sales to Prime were made under
arms-length prices and terms comparable to those of other companies in the
industry.

In July 2001, James N. Mills resigned as Chief Executive Officer of Holding
and the Company and remained on the board of directors through February 2002. In
August 2001, the Company sold certain corporate assets to Mr. Mills for $1,150.
Prior to the sale of the assets, the Company obtained an independent appraisal
of the assets which supported the sales price. The assets had a carrying value
of $1,001, and the Company recorded a gain on the sale of property, plant and
equipment in the amount of $149 related to the transaction.

35

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. LONG-TERM OBLIGATIONS

The composition of long-term obligations at December 31, 2002 and 2001 is
as follows:

The schedule of principal payments (excluding unamortized premium) for
long-term obligations at December 31, 2002 is as follows:

2003........................................................ $ 8,163
2004........................................................ 336
2005........................................................ 314,136
2006........................................................ 151
2007........................................................ 187
Thereafter.................................................. 7,419
--------
Total..................................................... $330,392
========

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

On December 20, 2001, the Company entered into the Second Amended and
Restated Credit Agreement (the "Credit Agreement") with certain financial
institutions that replaced the Company's Amended and Restated Credit Agreement.
In connection with the Credit Agreement, the Company paid $1,420 to satisfy its
outstanding term balance on the prior credit agreement and incurred $2,459 in
financing costs. All outstanding letters of credit from the prior credit
agreement were incorporated into the Credit Agreement. Borrowings under the
Credit Agreement are collateralized by first priority mortgages and liens on all
domestic assets of the Company and its domestic subsidiaries. In addition,
borrowings under the Credit Agreement are guaranteed by Holding.

The Credit Agreement consists of a $70,000 revolving credit facility,
subject to certain borrowing base requirements, that will mature on January 15,
2005. The Credit Agreement provides that a portion of the Credit Agreement, not
in excess of $35,000, is available for the issuance of letters of credit. At
December 31, 2002, the Company had $29,431 in outstanding letters of credit
under the Credit Agreement.

The Company's obligations under the Credit Agreement bear interest, at the
option of the Company, at a rate per annum equal to (a) the Alternate Base Rate
(as defined in the Credit Agreement) plus 2.50% or (b) the Eurodollar Rate (as
defined in the Credit Agreement) plus 3.50%. The Alternate Base Rate and
Eurodollar Rate margins are established quarterly based on a formula as defined
in the Credit Agreement. Interest payment dates vary depending on the interest
rate option to which the Credit Agreement is tied, but generally interest is
payable quarterly. The Credit Agreement contains several financial covenants
which, among other things, require the Company to maintain certain financial
ratios and restrict the Company's

36

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ability to incur indebtedness, make capital expenditures and pay dividends. The
Company had $6,995 in outstanding borrowing under the Credit Agreement at
December 31, 2002. The weighted average interest rate on outstanding borrowings
under the Company's Amended and Restated Credit Agreement was 6.50% at December
31, 2002.

On March 25, 2003, the Company and the financial institutions that are
parties to the Credit Agreement entered into a Second Amendment to the Credit
Agreement. Under the terms of the amendment, certain financial and other
covenants were modified. The amendment also increased the interest rate payable
on borrowing by 0.25% per annum.

SENIOR SUBORDINATED NOTES AND SERIES B SENIOR SUBORDINATED NOTES

The Senior Subordinated Notes issued in connection with the Acquisitions
and the Series B Notes issued in connection with the refinancing of the
Company's credit facility in 1997 (collectively, the "Senior Subordinated
Notes") were issued under similar indentures (the "Indentures") dated June 12,
1995 and June 17, 1997, respectively. The Senior Subordinated Notes represent
unsecured general obligations of the Company and are subordinated to all Senior
Debt (as defined in the Indentures) of the Company.

The Senior Subordinated Notes are fully and unconditionally (as well as
jointly and severally) guaranteed on an unsecured, senior subordinated basis by
each subsidiary of the Company (the "Guarantor Subsidiaries") other than
IWG-Philippines, Inc., IWG International, Inc., Italtrecce-Societa Italiana
Trecce & Affini S.r.l., International Wire SAS, International Wire Group SAS,
Tresse Metallique J. Forissier, S.A., Cablerie E. Charbonnet, S.A., IWG Services
Co., S de RL de CV, IWG Durango, S de RL de CV (the "Non-Guarantor
Subsidiaries"). Each of the Guarantor Subsidiaries and Non-Guarantor
Subsidiaries is wholly owned by the Company.

The Senior Subordinated Notes mature on June 1, 2005. Interest on the
Senior Subordinated Notes is payable semi-annually on each June 1 and December
1. The Senior Subordinated Notes bear interest at the rate of 11.75% per annum.
The Senior Subordinated Notes are redeemable, at the Company's option, at the
redemption price of 102.0% at December 31, 2002. The redemption price decreases
gradually to 100% at June 1, 2003, and thereafter, with accrued interest.

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

INDUSTRIAL REVENUE BONDS

In connection with a previous acquisition, the Company assumed debt related
to two Industrial Revenue Bonds (the "IRB's") totaling $15,500. The IRB's are
due in August, 2005 and March 2016 in the amounts of $9,000 and $6,500,
respectively. The IRB's bear interest at a rate per annum which is tied to the
Tax Exempt Money Market Index which resulted in an effective rate of 1.4% and
1.5% at December 31, 2002 and 2001, respectively. Rates change weekly and
interest is paid monthly. The IRB's are collateralized by letters of credit
totaling $15,681.

37

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. INCOME TAXES

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

The components of income (loss) from continuing operations before income
taxes, cumulative effect of change in accounting principle and extraordinary
item were as follows:

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

38

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

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

A valuation allowance is required against deferred tax assets if, based on
the weight of available evidence, it is more likely than not that some or all of
the deferred tax assets will not be realized. The change in the valuation
allowance is the result of changes in temporary differences and the current
weight of such evidence. The change in the valuation allowance includes
approximately $1,600 netted against discontinued operations.

The Company's net operating loss expires in periods ranging from the year
2010 through the year 2022. The Company has no present intention of remitting
undistributed earnings of its foreign subsidiaries and, accordingly, no deferred
tax liability has been established relative to these earnings.

In connection with the Wire Harness Sale, the Company agreed to indemnify
Viasystems for any current or future liabilities associated with the IRS
Examination. During the fourth quarter of 2000, the Company and Viasystems
reached a settlement with the IRS related to the IRS Examination and agreed to
pay $2,026 (see Note 7 for further discussion of the Wire Harness Sale).

39

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. IMPAIRMENT, UNUSUAL AND PLANT CLOSING CHARGES

During the first quarter of 2001, the Company announced its plan for a
realignment of its insulated wire production and initiated the closure of three
of its manufacturing facilities located in Alabama and Indiana. During the
second quarter of 2001, the Company announced the closures of two additional
facilities, the third and final Alabama facility and a second plant in Indiana.
In the third quarter of 2001, the Company announced the consolidation of certain
selling, general and administrative functions as well as a corporate
reorganization. In the fourth quarter of 2001, the Company announced its plan
for a realignment and consolidation of its bare wire production and initiated
the closure of two facilities located in Arkansas. In addition, the Company
announced other administrative reorganizations in the fourth quarter. The
Company completed the closure of six of the facilities by the end of 2001, with
one facility in Alabama closed in the first quarter of 2003. The production
capacity from the closed locations was primarily transferred and consolidated
into the Company's existing manufacturing facilities in Indiana, Texas and New
York locations, which were expanded, as necessary, to accommodate the production
transfer. In addition to the plant consolidations announced during 2001, the
Company purchased an existing plant site for a "greenfield" insulated wire
operation in Mexico. This plant is located in Durango, Mexico, which is
approximately 600 miles south of the U.S./Mexican border. The startup of this
Mexican facility began in the third quarter of 2001 and production and customer
shipments began in the third quarter of 2002.

As a result of these actions, 236 employees have been terminated. The
unusual charges from plant closures, selling, general and administrative
headcount reductions and the corporate reorganization that was charged to
impairment, unusual and plant closing charges for the year ended December 31,
2001 were $7,387. In 2000, the Company recorded an unusual charge of $650 for
severance costs related to the relocation of certain administrative functions.

A summary of activity related to plant closings is as follows:

In addition to the accruals for plant closings, the Company incurred
additional unusual costs incremental to its on-going operations of $5,758
related to plant consolidations that was included in cost of goods sold for year
ended December 31, 2001. These costs include inefficiencies incurred during the
transition of production capacity and other incremental costs related to the
transferred production lines.

In connection with the plant consolidations in 2001, the Company performed
an analysis of the closed facilities and the machinery and equipment that was
not moved and consolidated into existing facilities. Based on the results of
this analysis, the Company recorded a non-cash impairment loss of $5,468 which
represented

40

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the difference between management's estimate of the fair market value of the
remaining facilities and equipment and the carrying value of those assets.

11. RETIREMENT BENEFITS AND STOCK OPTION PLANS

The Company sponsors a number of defined contribution retirement plans,
which provide retirement benefits for eligible employees. Company contribution
expense related to these retirement plans for the years ended December 31, 2002,
2001 and 2000 amounted to $1,346, $1,449 and $3,039, respectively.

Holding's Qualified and Non-Qualified Stock Option Plan (the "Option Plan")
provides for the granting of up to 4,795,322 shares of common stock to officers
and key employees of Holding and the Company. Under the Option Plan, options
granted approximate market value of the common stock at the date of grant. Such
options vest ratably over a five-year period commencing on the first anniversary
date after the date of grant, and vested options are exercisable at the
discretion of the committee appointed to administer the Option Plan. Generally,
an option may be exercised only if the holder is an officer or employee of
Holding or the Company at the time of exercise. Options granted under the Option
Plan are not transferable, except by will and the laws of descent and
distribution.

Holding and the Company also granted Performance Options (the "Performance
Options") to certain key executives in 1996 and 1995. The Performance Options
are exercisable only on the occurrence of certain events. The exercise price for
the Performance Options is initially equal to $1.00 per share and, effective
each anniversary of the grant date, the per share exercise price for the
Performance Options is equal to the per share exercise price for the prior year
multiplied by 1.09. The Performance Options terminate on the tenth anniversary
date of the date of grant.

The minimum value of each option grant is estimated on the date of grant
with the following assumptions: (i) risk-free interest rates of 4.3% and 6.4% in
2002 and 2000, respectively; and (ii) expected life of 10 years. There were no
options granted during the year ended December 31, 2001.

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

41

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The weighted average grant-date fair value of options granted during 2002
and 2000 was $0.64 and $1.20, respectively. There were no options granted during
2001. Of the 3,332,354 options outstanding under the Option Plan at December 31,
2002, 2,980,000 have an exercise price at $1.00 per share, 170,000 at $1.40 per
share, 17,354 at $1.63 per share, 125,000 at $1.81 per share and 40,000 at $2.24
per share and have remaining contractual lives of between 3 and 9 years. The
weighted average exercise price of options vested at December 31, 2002 is $1.07
per share.

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

Of the Performance Options outstanding at December 31, 2002, 2,966,178 and
1,236,566 have exercise prices of $1.68 and $1.54 respectively, and have
weighted average remaining contractual lives of between 3 and 4 years. Certain
performance options were forfeited in 1998 and were reissued to certain officers
of the Company in 1999.

In addition to the options granted to officers and key employees through
the Option Plan, the Company also granted options to purchase 300,000 shares of
Holding Common Stock at $1.00 per share to directors of the Company. These
options were issued and vested in 1995.

Holding Class A common stock may be converted into shares of Holding common
stock (i) at the option of any holder thereof at any time, (ii) at the option of
Holding upon the occurrence of a Triggering Event (as defined), and (iii)
mandatorily at March 31, 2005. Each share of Holding's Class A common stock is
convertible into a fraction of a share of Holding common stock based on a
formula set forth in the Company's Certificate of Incorporation. During the
years ended December 31, 2002, 2001, and 2000, the Company recorded non-cash
compensation expense (income) of $0, ($10,393) and $80, respectively, which
reflects the difference between the cost of the Class A common stock and the
value of the defined conversion feature at those dates.

12. COMMITMENTS AND CONTINGENCIES

The Company leases certain property, transportation vehicles and other
equipment. Total rental expense under operating leases was $4,246, $5,012 and
$5,861 for the years ended December 31, 2002, 2001 and 2000,

42

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

respectively. Future minimum lease payments under capital and operating leases
for the years ended December 31 are:

The Company has a postretirement benefit plan that provides certain medical
and life insurance for certain retirees and eligible dependents of an acquired
company. Current employees are not eligible to participate in the plan. The
Company funds the plan as claims or insurance premiums are incurred. The plan
can be amended or terminated at any time by the Company. Net postretirement
benefit expense included the following components:

The change in the projected postretirement benefit obligation was as
follows:

The funded status and amounts recognized in the consolidated balance sheets
are as follows:

The discount rate used in determining the accumulated postretirement
benefit obligation was 7.00% for the year ended December 31, 2002 and 7.25% for
the years ended December 31, 2001 and 2000. The assumed

43

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

health-care cost trend rate used in measuring the accumulated postretirement
benefit obligation was 14.00%, decreasing gradually to 5.00% in year 2007 and
thereafter. Changing the assumed health-care cost trend rate by 1% would result
in a change in the accumulated postretirement benefit obligation of $945 for
2002. The effect of this change would affect net postretirement benefit expense
by $66.

The Company is subject to legal proceedings and claims that arise in the
normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition, results of operations or cash
flows. See Note 14 to the Company's Consolidated Financial Statements included
herein.

13. BUSINESS SEGMENT INFORMATION

The Company conducts its operations through one business segment.

The following is sales and long-lived asset information by geographic area
as of and for the years ended December 31:

Foreign sales are based on the country in which the legal subsidiary is
domiciled. Sales from no single foreign country were material to the
consolidated sales of the Company.

14. LITIGATION

In connection with the Wire Harness Sale, the Company agreed to indemnify
Viasystems for certain claims and litigation including any claims related to a
specific product liability issue. During 2002 and 2001, the Company reached
global settlements with various claimants related to such product liability
issue. As a result of these settlements and an analysis of the Company's current
liability related to these claims, the Company recorded net charges of $4,000
and $2,850 in 2002 and 2001, respectively, to discontinued operations. The
Company had a reserve of $4,945 and $9,049 for the years ended December 31, 2002
and 2001, respectively, related to the net payments due the claimants in the
settlement and the costs to resolve the remaining claims.

In February, 2002, the Company initiated an action in the Circuit Court of
Cook County, Chancery Division (Case No., 02CH2470) located in Chicago, Illinois
titled International Wire Group, Inc. v. National Union Fire Insurance Company
of Pittsburgh, Pennsylvania, AIG Technical Services, Inc., Aon Corporation and
Aon Risk Services of Missouri, Ltd. (the "AIG Litigation"). The Company alleges
in the complaint in such action, among other things, that National Union is
obligated to defend and indemnify and otherwise provide insurance coverage to
the Company and the various original equipment manufacturers for certain claims
and damages related to certain water inlet hoses supplied by and through the
Company pursuant to two $25 million excess insurance policies issued to the
Company by National Union. The presentation of evidence at trial in such case
has concluded, and the judge is expected to rule on the outcome of the case in
the second quarter of 2003. While there can be no assurance that the outcome
will be favorable to the Company in the AIG Litigation, and an unfavorable
outcome could have a material adverse effect, the Company believes it will
ultimately succeed in such AIG Litigation and, as a result, the Company believes
the AIG Litigation will not have a material adverse effect.

44

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In addition, the Company is a party to various other legal proceedings and
administrative actions, all of which are of an ordinary or routine nature
incidental to the operations of the Company. The Company does not believe that
such proceedings and actions would materially affect the Company.

15. GUARANTOR SUBSIDIARIES

The Senior Subordinated Notes are fully and unconditionally (as well as
jointly and severally) guaranteed on an unsecured, senior subordinated basis by
each subsidiary of the Company other than the Non-Guarantor Subsidiaries. Each
of the Guarantor Subsidiaries and Non-Guarantor Subsidiaries is wholly owned by
the Company.

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

45

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2002

46

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2002

47

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 2001

48

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2001

49

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000

CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000

50

INTERNATIONAL WIRE GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INTERNATIONAL WIRE GROUP, INC.

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

51

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING AND FINANCIAL
DISCLOSURE

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names and positions of the directors and executive
officers of Holding and the Company. All directors hold office until the next
annual meeting of stockholders of Holding and the Company, and until their
successors are duly elected and qualified. All officers serve at the pleasure of
the Board of Directors.

Charles W. Tate was named Chairman of the Board of Holding and the Company
in February 2002. He also served as a Director of Holding and the Company since
April 1995. Mr. Tate was a Partner and member of the Management Committee of
Hicks Muse until June 2002. Before joining Hicks Muse as a Managing Director and
Principal in 1991, Mr. Tate had over 19 years of experience in investment and
merchant banking with Morgan Stanley & Co. Incorporated, including ten years in
the mergers and acquisitions department and the last two and one-half years as a
Managing Director in Morgan Stanley & Co. Incorporated's merchant banking group.
Mr. Tate also serves as a director of International Seed Holdings ApS,
Stoneville Pedigreed Seed Company, Mahendra Hybrid Seeds Limited and two
companies in Mexico (Vidrio Formas, S.A. de C.V. and Grupo Minsa, S.A. de C.V.).

David M. Sindelar has been Chief Executive Officer and President of Holding
and Chief Executive Officer of the Company since July 2001 and a Director of
Holding and the Company since August 2001. He also served as Senior Vice
President and Chief Financial Officer of the Company and of Holding from April
1995 through July 2001. Mr. Sindelar also serves as Chief Executive Officer and
director of Viasystems Group, Inc., and has held such position since July 2001.
Mr. Sindelar was Senior Vice President and Chief Financial Officer of Viasystems
Group, Inc. from October 1996 to July 2001. Viasystems Group, Inc. voluntarily
filed prepackaged petitions to reorganize under Chapter 11 of the U.S.
Bankruptcy Code in October 2002 and emerged from Chapter 11 in January 2003. Mr.
Sindelar was a director of LLS Corp. from July 1999 until October 2002, the
Chief Executive Officer of LLS from July 2001 until October 2002 and a Senior
Vice President and Chief Financial Officer from July 1999 to July 2001. LLS
voluntarily filed a petition to reorganize under Chapter 11 of the U.S.
Bankruptcy Code in January 2002. Mr. Sindelar was

52

Senior Vice President and Chief Financial Officer of Berg Electronics Corp. from
March 1993 through October 1998 and of Crain Industries, Inc. and Crain Holdings
Corp. from August 1995 through December 1997 and of Jackson Holding Company from
February 1993 through August 1995.

Jack D. Furst is a Director of Holding and the Company and has held such
positions since April 1995. Mr. Furst is the Chief Operating Officer of Hicks
Muse and has held such position since November 2002 and has been a Partner of
Hicks Muse since 1989. Mr. Furst has approximately 19 years of experience in
leveraged acquisitions and private investments. At Hicks Muse, Mr. Furst is
involved in all aspects of its business and has been actively involved in
originating, structuring and monitoring its investments. Mr. Furst is primarily
responsible for managing the relationship with Hanley Partners. Prior to joining
Hicks Muse, Mr. Furst was a Vice President and subsequently a Partner of Hicks &
Haas Incorporated, a Dallas based private investment firm from 1987 to May 1989.
From 1984 to 1986, Mr. Furst was a merger and acquisition/corporate finance
specialist for The First Boston Corporation in New York. Before joining First
Boston, Mr. Furst was a financial consultant at Price Waterhouse. Mr. Furst
serves on the board of directors of Cooperative Computing, Inc., International
Seed Holdings, Home Interiors & Gifts, Inc., and The Realm, Inc.

John A. Gavin is a director of Holding and the Company and has held such
positions since June 1995. Mr. Gavin is the founder and Chairman of the Board of
Gamma Holdings, an international capital and consulting firm established in
1968. He is a member of the Latin America Strategy Board of Hicks Muse and was a
Partner and Managing Director of Hicks, Muse, Tate & Furst (Latin America),
incorporated from 1995 through 2001. From 1987 to 1990, Mr. Gavin was President
of Univisa Satellite Communications, a part of a Spanish-speaking broadcast
network. Prior thereto, Mr. Gavin served as a Vice President of Atlantic
Richfield Company from 1986 and a director from 1988 through 1999. From 1981 to
1986, Mr. Gavin served as the United States Ambassador to Mexico. Mr. Gavin also
serves as a director or trustee of: Apex Mortgage Capital; Causeway Capital
Management; The Hotchkis and Wiley Funds; The TCW Galileo Funds and Convertible
Securities Funds; and The Claxson Interactive Group.

Thomas P. Danis is a director of Holding and the Company and has held such
position since June 1995. Mr. Danis is a member of Aon Group, a company engaged
in the insurance brokerage business headquartered in Chicago, Illinois. In 1979,
Mr. Danis co-founded an insurance brokerage firm, a joint venture with Corroon &
Black. He then joined Aon Group in 1992 where he has held several executive
positions. Mr. Danis also serves as a director of several mid-market companies
including Reserve Capital Partners and Workstream.

Richard W. Vieser is a director of Holding and the Company and has held
such positions since September 1995. Mr. Vieser is the retired Chairman of the
Board, Chief Executive Officer and President of Lear Siegler, Inc. (a
diversified manufacturing company), the former Chairman of the Board and Chief
Executive Officer of FL Industries, Inc. and FL Aerospace (also diversified
manufacturing companies) and the former President and Chief Operating Officer of
McGraw-Edison Co. He is Chairman Emeritus of Varian Medical Systems and is also
a director of Apogent Technologies, Inc. (formally Sybron International
Corporation), and Viasystems Group, Inc.

William L. Pennington is a director of Holding and the Company and was
elected to such position in February 2003. Mr. Pennington is the President of
IMCO International, Inc. and the Executive Vice President of IMCO Recycling,
Inc. Mr. Pennington is the former President of Lennox Worldwide Heat Transfer
and Lennox Asia Pacific. Mr. Pennington also held several senior executive
positions with Hilti International Corporation (a global manufacturer and direct
sales company), and was also a partner, a shareholder and on the board of
directors of Holliman, Langholz, Runnels & Dorwart (a private law practice).

Joseph M. Fiamingo is Chairman of Holding and the Company and has held such
positions since May 2000. Mr. Fiamingo also serves as a director of Holding and
the Company and has held such positions since October 1996. Mr. Fiamingo was
President, Chief Operating Officer of LLS Corp. and a director from August 2000
to October 2002. LLS Corp filed for voluntary petitions to reorganize under
Chapter 11 of the U.S. Bankruptcy Code in January 2002. Previously, Mr. Fiamingo
held the position of President and Chief Operating Officer of the Company from
September 1996, Vice President of Operations and Technology of the Company from
June 1996 and President and Chief Operating Officer of Wirekraft from October
1995. Prior
53

thereto, Mr. Fiamingo was employed by General Cable Corporation from 1972 to
1995 where he held various senior management level positions including President
and Vice President and General Manager of several divisions of General Cable and
most recently, Executive Vice President of Operations.

Rodney D. Kent is President and Chief Operating Officer of the Company and
has held such positions since May 2000. Mr. Kent also serves as a director of
Holding and the Company. Prior to being named as President and Chief Operating
Officer, Mr. Kent served as President of the Company's Bare Wire division since
April 1995. Mr. Kent also serves as President and Chief Executive Officer of
Omega and has held such positions since 1983. Mr. Kent served as Assistant to
the President of Omega from 1974 to 1983. Prior to joining Omega, Mr. Kent was
employed with Flexo Wire from 1973 to 1974 and Camden Wire Company from 1970 to
1973. Mr. Kent also serves as director of Oneida Savings Bank and Chairman of
the Board and director of Prime Materials Recovery, Inc.

Glenn J. Holler was named Senior Vice President & Chief Financial Officer
of Holding and the Company in July 2001. He also served as Vice
President -- Finance from August 1996 through July 2001. Prior to joining the
Company, Mr. Holler was employed by Vigoro Industries, Inc. as Vice President,
Finance from 1994 to 1996. From 1983 to 1994, Mr. Holler held several positions
at Moog Automotive, Inc. including Vice President -- Finance and Senior Vice
President -- Finance.

Donald F. DeKay is Vice President -- Finance of the Company and has held
such position since July 2001. Prior to being named Vice President -- Finance of
the Company, Mr. DeKay served as Vice President -- Finance of the Company's Bare
Wire division since April 1995. Mr. DeKay served as Vice President -- Finance of
Omega from 1988 to 1995 and Controller of Omega from 1983 to 1988. Prior to
joining the Company, Mr. DeKay was employed by Price Waterhouse from 1978 to
1983. Mr. DeKay also serves as director of Prime Materials Recovery, Inc.

Chrysant E. Makarushka is Vice President -- Purchasing and Logistics and
has held such position since July 2000. Prior to being named Vice
President -- Purchasing and Logistics, Mr. Makarushka served as Director of
Metals Management for the Company from 1995 to 2000. Mr. Makarushka served as
Director of Procurement and Human Resources for Omega from 1989 to 1995. Prior
to joining the Company, Mr. Makarushka was employed by Rome Cable from 1981 to
1989.

ITEM 11. EXECUTIVE COMPENSATION

The following table sets forth the cash and non-cash compensation earned by
the Chief Executive Officer and the four other most highly compensated executive
officers of Holding and the Company (the "Named Executive Officers"). Such
compensation was paid by or on behalf of the Company during the years ended

54

December 31, 2002, 2001 and 2000. The bonuses included in annual compensation
were paid subsequent to year-end. As of the date hereof, the Company has not
granted any stock appreciation rights.

SUMMARY COMPENSATION TABLE

- ---------------

(1) Holding and the Company provide to certain executive officers, a car
allowance, reimbursement for club memberships, insurance policies and
certain other benefits. The aggregate incremental cost of these benefits to
Holding and the Company for each officer do not exceed the lesser of $60,000
or 10% of the total annual salary and bonus reported for each officer.

(2) Includes $52,455 and $52,455 in annual deferred compensation earned by Mr.
Kent in 2001 and 2000, respectively, pursuant to his employment agreement.

(3) Represents (i) $41,867 and $44,192 in premiums paid on life insurance
policies for the benefit of Mr. Kent in 2001 and 2000, respectively and (ii)
$99,334 and $88,090 in annual interest accruals related to deferred
compensation earned by Mr. Kent in 2001 and 2000, respectively, pursuant to
his employment agreement.

OPTION GRANTS IN LAST FISCAL YEAR

There were 75,000 options granted to Chrysant E. Makarushka, Vice
President -- Purchasing and Logistics of the Company in the current fiscal year.

OPTION GRANTS IN LAST FISCAL YEAR

55

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

No options were exercised by the Named Executive Officers during fiscal
2002. The following table summarizes the number and value of unexercised options
as of December 31, 2002.

EMPLOYMENT AGREEMENTS

David M. Sindelar Employment Agreement. Mr. David M. Sindelar entered into
an employment agreement with Holding and the Company on June 12, 1995, which
expires on June 11, 2003. The employment agreement is extended automatically for
one-year periods provided that neither Mr. Sindelar nor the Company elects to
terminate the agreement. Pursuant to such employment agreement, as amended, Mr.
Sindelar is required to devote such business time and attention to the
transaction of the Company's business as is reasonably necessary to discharge
his duties under the employment agreement. Subject to the foregoing limitation
on his activities, Mr. Sindelar is free to participate in other business
endeavors.

The compensation provided to Mr. Sindelar under his employment agreement
includes an annual base salary of not less than $150,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and of the Company for as
long as the employment agreement is in force. In addition, Mr. Sindelar is
entitled to an annual bonus in an amount to be determined at the sole discretion
of the Board of Directors of Holding.

Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's
employment is terminated without cause, Mr. Sindelar will continue to receive
his then current salary for the longer of the remainder of the employment period
or 18 months following such termination. In addition, Mr. Sindelar's employment
agreement provides that if Mr. Sindelar is terminated due to death or
disability, Mr. Sindelar's estate, heirs, or beneficiaries, as applicable, will
receive, in addition to any other benefits provided under any benefit plan, his
then current salary for a period of 18 months from the date of termination.

Rodney D. Kent Employment Agreement. Mr. Kent entered into an employment
agreement with Omega on March 14, 1995. Pursuant to such employment agreement,
as amended, Mr. Kent will serve as President and Chief Operating Officer of the
Company through March 28, 2004. Mr. Kent is required to devote substantially all
of his business time and attention to the performance of his duties under the
employment agreement. The employment agreement is extended automatically for
one-year periods provided the neither Mr. Kent nor the Company elects to
terminate the agreement.

The compensation provided to Mr. Kent under his employment agreement
includes an annual base salary of not less than $280,900, subject to increase at
the sole discretion of the Board of Directors of Omega, and certain other
benefits for as long as the employment agreement is in force. Further, Mr. Kent
is entitled to an annual bonus in an amount to be determined at the sole
discretion of the Chairman of the Board of Holding of up to sixty-five percent
of his annual base salary.

Mr. Kent's employment agreement also provides that if Mr. Kent's employment
is terminated by Omega without cause or due to disability or death, Mr. Kent or
his estate, heirs or beneficiaries, as applicable, will receive, in addition to
any other benefits provided him or them under any benefit plan, Mr. Kent's then
current salary for a period of 24 months from Mr. Kent's termination without
cause or his disability or death. In the event that Mr. Kent terminates his
employment and receives a bona fide offer of employment from a

56

competitor of the Company, Mr. Kent will receive, in addition to any other
benefits provided under any benefit plan, Mr. Kent's then current salary for a
period of 24 months from such termination, but only in the event that Omega
elects to enforce certain non-competition provisions of the employment
agreement.

Glenn J. Holler Employment Agreement. Mr. Glenn J. Holler entered into an
employment agreement with the Company on November 13, 1999. Pursuant to such
employment agreement, as amended, Mr. Holler is required to devote all of his
business time and attention to the transaction of the Company's business as is
reasonably necessary to discharge his duties under the employment agreement. The
employment agreement is extended automatically for one-year periods provided
that neither Mr. Holler nor the Company elects to terminate the agreement.

The compensation provided to Mr. Holler under his employment agreement
includes an annual base salary of not less than $244,000, subject to adjustment
at the sole direction of the Chief Executive Officer of Holding, and such
benefits as are customarily accorded the executives of the Company for as long
as the employment agreement is in force. In addition, Mr. Holler is entitled to
an annual bonus in an amount to be determined by the Chief Executive Officer of
Holding of up to fifty percent of his base compensation.

Mr. Holler's employment agreement also provides that if Mr. Holler's
employment is terminated without cause, Mr. Holler will continue to receive his
then current salary for one year. In addition, Mr. Holler's employment agreement
provides that if Mr. Holler is terminated due to death or disability, Mr.
Holler's estate, heirs, or beneficiaries, as applicable, will receive, in
addition to any other benefits provided under any benefit plan, his then current
salary for a period of six months from the date of termination.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Compensation decisions are made by the Board of Directors. Messrs. David M.
Sindelar and Rodney D. Kent served as both executive officers and directors
during 2002, and are expected to serve in such capacities in 2003.

COMPENSATION OF DIRECTORS

Directors who are officers, employees or otherwise an affiliate of Holding
or the Company receive no compensation for their services as directors. Each
director of Holding and the Company who is not also an officer, employee or an
affiliate of Holding or the Company (an "Outside Director") will receive an
annual retainer of $12,000. Directors of Holding and the Company are entitled to
reimbursement of their reasonable out-of-pocket expenses in connection with
their travel to and attendance at meetings of the board of directors or
committees thereof.

BENEFIT PLANS

STOCK OPTION PLAN

Holding's qualified and non-qualified stock option plan (the "Option Plan")
provides for the granting of up to 4,795,322 shares of Holding Common Stock to
officers and key employees of Holding and the Company. Under the Option Plan, as
of February 28, 2003, Holding has granted options to purchase 3,332,354 shares
of Holding common stock, 2,980,000 at $1.00 per share, 170,000 at $1.40 per
share, 17,354 at $1.63 per share, 125,000 at $1.81 per share and 40,000 at $2.24
per share, the fair market value of Holding Common Stock at the date of grant as
determined by the Board of Directors of Holding. Such options vest ratably over
a five-year period commencing on the first anniversary date after the date of
grant, subject to acceleration in the discretion of the committee appointed to
administer the Option Plan in the event of a Change of Control (as defined in
the Option Plan). Generally, an option may be exercised only if the holder is an
officer or employee of Holding or the Company at the time of exercise. Options
granted under the Option Plan are not transferable, except by will and the laws
of descent and distribution. Except as expressly provided otherwise in any
optionee's agreement relating to the grant of options under the Option Plan, in
the event an optionee's employment with Holding, the Company or a related entity
terminates at any time, Holding or its designees shall have the right to
repurchase from the optionee (or optionee's representatives) (i) the number of
shares

57

of Holding Common Stock acquired upon exercise of an option and (ii) the
optionee's right to acquire that number of shares of Holding Common Stock which
an optionee can acquire upon exercise immediately prior to such repurchase. The
purchase price to be paid is calculated on the basis of the fair market value
(as defined in the Option Plan) of Holding Common Stock multiplied by the number
of shares of Holding Common Stock to be acquired (less the aggregate exercise
price in the event such repurchase option is exercised by Holding with respect
to the optionee's right to acquire Holding Common Stock).

PERFORMANCE OPTIONS

In 1995, 1996 and 1999, Mr. Sindelar was granted options ("Performance
Options") to purchase 1,225,690 shares of Common Stock of Holding and
Performance Options to purchase 2,977,054 shares of Common Stock of Holding were
granted to certain current and former officers of the Company.

The Performance Options are exercisable only in the event that Hicks, Muse,
Tate and Furst Equity Fund II, L.P. ("HM Fund II") has realized an overall rate
of return of at least 35% per annum, compounded annually, on all equity funds
invested by it in Holding. Subject to the foregoing, the Performance Options are
exercisable (i) immediately prior to a Liquidity Event (as hereinafter defined),
(ii) concurrently with the consummation of a Qualified IPO (as hereinafter
defined), or (iii) on December 31, 2004 (with respect to the Performance Options
granted on March 31, 1995 and June 12, 1995) or on December 31, 2005 (with
respect to the Performance Options granted on March 5, 1996). A "Liquidity
Event" generally means (i) one or more sales or other dispositions of Holding
Common Stock if, thereafter, the amount of Holding Common Stock owned by HM Fund
II is reduced by 50%, (ii) any merger, consolidation or other business
combination of Holding pursuant to which any person or group acquires a majority
of the common stock of the resulting entity, or (iii) any sale of all or
substantially all of the assets of Holding. A "Qualified IPO" means a firm
commitment underwritten public offering of Holding Common Stock for gross
proceeds of at least $25.0 million.

The exercise price for the Performance Options is initially equal to $1.00
per share and, effective each anniversary of the grant date, the per share
exercise price for the Performance Options is equal to the per share exercise
price for the prior year multiplied by 1.09. The exercise price of the
Performance Options and the number of shares of Holding Common Stock for which
the Performance Options are exercisable is subject to adjustment in the event of
certain fundamental changes in the capital structure of Holding. The Performance
Options terminate on the tenth anniversary of the date of grant.

ITEM 12. SECURITIES OWNERSHIP

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the issued and outstanding shares of common stock of the Company are
held by Holding. The following table sets forth as of December 31, 2002 certain
information regarding the beneficial ownership of the voting securities of
Holding by each person who beneficially owns more than 5% of any class of
Holding voting securities and by the directors and certain executive officers of
Holding, individually, and by the directors and executive officers of Holding as
a group. The Class A Common Stock, par value $0.01 per share,

58

of Holding ("Holding Class A Common Stock") votes together with the Holding
Common Stock as a single class and is entitled to one vote for each share.

- ---------------

* Less than one percent.

(1) Holding Class A Common Stock is convertible into Holding Common Stock (i)
at the option of any holder thereof at any time, (ii) at the option of
Holding upon the occurrence of a Triggering Event (as defined below), and
(iii) mandatorily at March 31, 2005. A "Triggering Event" means any sale of
substantially all of the assets of Holding or any merger, consolidation or
other business combination of Holding in which Hicks Muse and its
affiliates cease to own at least 50% of the resulting entity. Each share of
Holding Class A Common Stock is convertible into a fraction of a share of
Holding Common Stock equal to the quotient of (i) the fair market value of
a share of Holding Common Stock at the time of conversion less the sum of
$0.99 plus imputed interest thereon at a rate of 9% per annum, compounded
annually, at the time of conversion, divided by (ii) the fair market value
of a share of Holding Common Stock at the time of conversion. Because the
fraction of a share of Holding Common Stock into which Holding Class A
Common Stock is convertible is determinable only at the time of a
conversion, shares of Class A Holding Common Stock are not included in the
shares of Holding Common Stock beneficially owned in the foregoing table.

(2) Includes (i) shares owned of record by HM Fund II, a limited partnership of
which the sole general partner is HM2/GP Partners, L.P., a limited
partnership of which the sole general partner is Hicks,

59

Muse GP Partners, L.P., a limited partnership of which the sole general
partner is Hicks, Muse, Tate & Furst Fund II Incorporated, a corporation
affiliated with Hicks Muse; (ii) shares owned of record by HM2/Wire/Hunt
Partners, L.P., HM2/Wire/Sunwestern Partners, L.P. and HM2/Wire/Hubbard
Partners, L.P., limited partnerships of which the sole general partner is
HM2/GP Partners, L.P.; (iii) shares owned of record by certain individuals
that Hicks Muse has the power to direct the voting of with respect to the
election of directors; and (iv) shares of Holding Common Stock and Holding
Class A Common Stock owned of record by certain individuals subject to an
irrevocable proxy in favor of Hicks Muse. Thomas O. Hicks is a controlling
stockholder of Hicks Muse and serves as Chairman of the Board, Chief
Executive Officer and Partner of Hicks Muse. Accordingly, Mr. Hicks may be
deemed to be the beneficial owner of Holding Common Stock held by HM Fund
II. Mr. Hicks disclaims beneficial ownership of Holding Common Stock not
owned of record by him.

(3) Includes 400,000 shares of Holding Common Stock issuable to Mr. Kent upon
exercise of options granted under the Option Plan that are currently
exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option
Plan."

(4) Does not include 1,225,690 shares of Holding Common Stock issuable to Mr.
Sindelar upon exercise of Performance Options that are not currently
exercisable. See "Executive Compensation -- Benefit Plans -- Performance
Options."

(5) Includes 100,000 shares of Holding Common Stock issuable to Mr. Gavin upon
exercise of options granted in 1995 that are currently exercisable.

(6) Includes 100,000 shares of Holding Common Stock issuable to Mr. Danis upon
exercise of options granted in 1995 that are currently exercisable.

(7) Includes 100,000 shares of Holding Common Stock issuable to Mr. Vieser upon
exercise of options granted in 1995 that are currently exercisable.

(8) Consists of 1,000,000 shares of Holding Common Stock issuable to Mr.
Fiamingo upon exercise of options granted under the Option Plan that are
currently exercisable. See "Executive Compensation -- Benefit
Plans -- Stock Option Plan."

(9) Consists of 250,000 shares of Holding Common Stock issuable to Mr. Holler
upon exercise of options granted under the Option Plan that are currently
exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option
Plan."

(10) Includes 150,000 shares of Holding Common Stock issuable to Mr. DeKay upon
exercise of options granted under the Option Plan that are currently
exercisable. See "Executive Compensation -- Benefit Plans -- Stock Option
Plan."

(11) Consists of 75,000 shares of Holding Common Stock issuable to Mr.
Makarushka upon exercise of options granted under the option plan that are
currently exercisable. See "Executive Compensation -- Benefit
Plans -- Stock Option Plan."

(12) Includes (i) shares of Holding Class A Common Stock held by executive
officers and directors and shares of Holding Class A Common Stock as to
which Hicks Muse has the power to direct the voting of with respect to the
election of directors and (ii) 2,175,354 shares of Holding Common Stock
issuable upon exercise of options that are currently exercisable. Does not
include 1,225,690 shares of Holding Common Stock issuable to executive
officers of Holding upon the exercise of Performance Options and 75,000
options under the Option Plan that are not currently exercisable. See
"Executive Compensation -- Benefit Plans -- Stock Option Plan" and
"-- Performance Options."

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATIONSHIPS WITH VIASYSTEMS GROUP, INC.

On March 29, 2000, the Company sold its Wire Harness business to Viasystems
for $210.8 million in cash. The Company and Viasystems are commonly controlled
by affiliates of Hicks Muse.

In connection with the Wire Harness Sale, the Company entered into an
agreement to supply Viasystems' wire harness business with substantially all of
their insulated wire requirements through 2003,
60

which is a continuation of existing practice. This supply agreement has been
extended through December 2005. In connection with such sale, the Company agreed
to indemnify Viasystems for certain product liability claims, as described in
the purchase agreement (See "Note 7 to the Company's Consolidated Financial
Statements"). During the year ended December 31, 2002 the Company had sales to
Viasystems of $34.5 million.

In September 2002, the Company began selling a portion of its production
scrap to Prime Materials Recovery, Inc. ("Prime"). Prime is a closely held
company and its majority shareholder, chairman and a director is the President
and Chief Operating Officer of the Company. In addition, the Vice President --
Finance of the Company holds a minority ownership interest and is a director.
Sales to Prime for the year ended December 31, 2002 were $2.1 million and the
amount due from Prime as of December 31, 2002 was $0.1 million. Sales to Prime
were made under arms-length prices and terms comparable to those of other
companies in the industry.

RELATIONSHIPS WITH HICKS MUSE

MONITORING AND OVERSIGHT AGREEMENT

On June 12, 1995, Holding and the Company entered into a ten-year
Monitoring and Oversight Agreement as Amended (the "M&O Agreement") with Hicks,
Muse & Co. Partners, L.P. ("Hicks Muse Partners"), a limited partnership of
which the sole general partner is HM Partners Inc., a corporation affiliated
with Hicks Muse, pursuant to which they pay an annual fee of $0.5 million for
oversight and monitoring services to Holding and the Company. The annual fee is
adjustable at the end of each fiscal year to an amount equal to 0.1% of the
consolidated net sales of the Company, but in no event less than $0.5 million.
Pursuant to the M&O Agreement, in the event the Company fails to achieve certain
minimum EBITDA targets, such fees will not be required to be paid in cash but
will accrue. Hicks Muse Partners also will be entitled to receive a fee equal to
1.5% of the transaction value (as defined) for each add-on transaction (as
defined) in which the Company is involved. The term "transaction value" means
the total value of any add-on transaction, including, without limitation, the
aggregate amount of the funds required to complete the add-on transaction
(excluding any fees payable pursuant to the M&O Agreement and any fees, if any,
paid to any other person or entity for financial advisory, investment banking,
brokerage, or any other similar services rendered in connection with such add-on
transaction) including the amount of any indebtedness, preferred stock or
similar items assumed (or remaining outstanding). The term "add-on transaction"
means any future proposal for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring, or other similar transaction
directly or indirectly involving Holding, the Company, or any of their
respective subsidiaries and any other person or entity.

Mr. Furst, director of Holding and the Company, is a principal of Hicks
Muse Partners. In addition, Holding and the Company have agreed to indemnify
Hicks Muse Partners, its affiliates and shareholders, and their respective
directors, officers, agents, employees and affiliates from and against all
claims, actions, proceedings, demands, liabilities, damages, judgments,
assessments, losses and costs, including fees and expenses, arising out of or in
connection with the services rendered by Hicks Muse Partners in connection with
the M&O Agreement.

The M&O Agreement makes available the resources of Hicks Muse Partners
concerning a variety of financial and operational matters. The services that
have been and will continue to be provided by Hicks Muse Partners could not
otherwise be obtained by Holding and the Company without the addition of
personnel or the engagement of outside professional advisors. In management's
opinion, the fees provided for under this agreement reasonably reflect the
benefits received and to be received by Holding and the Company.

STOCKHOLDERS AGREEMENT

Each investor in any class of common stock of Holding has entered into a
stockholders agreement. The Stockholders Agreement, among other things, grants
preemptive rights and certain registration rights to the parties thereto and
contains provisions requiring the parties thereto to sell their shares of common
stock in connection with certain sales of Holding's common stock by Hicks Muse
("drag-along right") and granting
61

the parties thereto the right to include a portion of their shares of common
stock in certain sales in which Hicks Muse does not exercise its drag-along
rights ("tag-along rights"). In addition, the Stockholders Agreement contains an
irrevocable proxy pursuant to which all parties to the Stockholders Agreement
grant to Hicks Muse the power to vote all shares of Holding Common Stock held by
such parties. The Stockholders Agreement terminates on its tenth anniversary
date, although the preemptive rights, drag-along rights and tag-along rights
contained therein terminate earlier upon the consummation of a firm commitment
underwritten public offering of Holding Common Stock.

ITEM 14. CONTROLS AND PROCEDURES

(a) The Company's Chief Executive Officer and Chief Financial Officer,
after evaluating the effectiveness of the company's "disclosure controls and
procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c)
and 15-d-14(c)) as of a date (the "Evaluation Date") within 90 days before the
filing date of this annual report, have concluded that as of the Evaluation
Date, the Company's disclosure controls and procedures were adequate and
designed to ensure that material information relating to the Company and its
consolidated subsidiaries would be made known to them by others within those
entities. There were no significant changes in Company's internal controls or in
other factors that could significantly affect those controls subsequent to the
Evaluation Date.

(b) The Company has formed a Disclosure Committee, ("Committee") as part of
its corporate governance under the Sarbanes-Oxley Act of 2002. The Committee is
comprised of financial, legal and operating personnel.

The purpose of the Committee is to assure that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is properly recorded, processed, summarized and reported to senior
management of the Company as appropriate to allow timely decisions regarding
required disclosure. The Committee will also evaluate the adequacy of the
Company's disclosure controls and procedures with respect to its periodic
reports and quarterly earnings releases.

Each quarter, the Committee shall review and evaluate the effectiveness of
the Company's procedures for recording, processing, summarizing and reporting of
information required to be disclosed by the Company in its Exchange Act filings.
As part of this review and evaluation, in connection with the preparation of the
Company's financial reports, the Committee will assess the effectiveness of the
Company's internal control structure and procedures for financial reporting and
submit written reports thereof.

62

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

See Index to Financial Statements and Financial Schedules on page 21 of
this report.

Exhibits

- ---------------

(1) Incorporated by reference to the Registration Statement on Form S-1
(33-93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.

(2) Incorporated by reference to the Current Report on Form 8-K of International
Wire Group, Inc. as filed with the Securities Exchange Commission on March
20, 1996.

(3) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1995.

(4) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1996.

64

(5) Incorporated by reference to the Registration Statement on Form S-1
(333-26925) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on November 12, 1997.

(6) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1997.

(7) Incorporated by reference to the Annual Report on Form 10-K of International
Wire Group, Inc. for the fiscal year ended December 31, 1999.

* Filed herewith.

+ Indicates compensatory plan or arrangement.

(b) Reports on Form 8-K

The Company did not file a report on Form 8-K with the Securities and
Exchange Commission during the quarter ended December 31, 2002.

65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

INTERNATIONAL WIRE GROUP, INC.

By: /s/ GLENN J. HOLLER
------------------------------------
Glenn J. Holler,
Senior Vice President and Chief
Financial Officer

Date: March 31, 2003

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

66

CERTIFICATIONS

I, David M. Sindelar, certify that:

1. I have reviewed this annual report on Form 10-K of International Wire
Group, Inc.

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

/s/ DAVID M. SINDELAR
--------------------------------------
David M. Sindelar
Chief Executive Officer

Date: March 31, 2003

67

I, Glenn J. Holler, certify that:

1. I have reviewed this annual report on Form 10-K of International Wire
Group, Inc.

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

/s/ GLENN J. HOLLER
--------------------------------------
Glenn J. Holler
Senior Vice President and Chief
Financial Officer

Date: March 31, 2003

68

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT BY REGISTRANTS
WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE SECURITIES
EXCHANGE ACT

The registrant has not sent to its security holders any annual report to
security holders covering the registrant's last fiscal year or sent any proxy
statement, form of proxy or other proxy soliciting material with respect to any
annual or special meeting of security holders to more than ten of the
registrant's security holders.

69

EXHIBIT INDEX