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Electronics Production | August 20, 2010

Flat volumes for General Cable in Europe

Net sales for the second quarter of 2010 were $1,208.6 million, a decrease of $110.6 million, or 8.4%, compared to the second quarter of 2009 on a metal-adjusted basis.
Before the impact of unfavorable foreign currency exchange rate changes of $16.3 million, net sales for the second quarter decreased 7.1% compared to the second quarter of 2009. Volume based on metal pounds sold, without the impact of incremental volume from acquired businesses, decreased 8.0% in the second quarter of 2010 compared to 2009, and was up 8.8% compared to the first quarter of 2010.

Operating income in the second quarter of 2010 decreased $2.2 million to $59.8 million compared to $62.0 million in the second quarter of 2009. This result includes charges for severance, primarily in Spain, of $11.1 million and unfavorable adjustments to estimated research and development credits in France of $3.1 million. Excluding the impact of these two items, operating margin would have been 6.1% in the second quarter of 2010 as compared to 4.7% in the second quarter of 2009 on a metal adjusted basis. Lower overall demand and lower value added pricing in many of the Company's end markets were partially offset by the benefit of cost reduction efforts made throughout 2009 and, to a lesser extent, volume growth in certain early cycle businesses.

In North America, volume as measured in metal pounds sold was down 9.2% in the second quarter of 2010 compared to the second quarter of 2009 and was up 13.6% sequentially in the second quarter of 2010 compared to the first quarter of 2010. The Company's early cycle products, specifically cables for MRO, OEM and networking applications experienced a second quarter volume improvement of 4.8% compared to the prior year as measured by metal pounds sold. Sequentially, volumes in these businesses were flat in the second quarter compared to the first quarter of 2010.

"In Europe, instability in the financial markets, lingering sovereign debt concerns and tentative growth forecasts continue to subdue economic recovery. Sequentially, volume for the second quarter of 2010 was flat when compared to the first quarter of 2010. In Spain, we are in the third year of extreme recessionary conditions in the domestic construction and electrical infrastructure markets. We believe it is unlikely this market will ever return to levels experienced at the peak of the last cycle," Gregory B. Kenny, President and Chief Executive Officer of General Cable, said.

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