Restatement of Condensed Consolidated Financial Statements

As previously reported, on October 29, 2012, General Cable Corporation (the “Company”) announced that it had identified historical accounting errors relating to inventory. The inventory accounting issues resulted in understated cost of sales for the three and six fiscal months ended June 29, 2012 . The Company believes that the inventory accounting issues are, to a significant extent, attributable to a complex theft scheme in Brazil and, to a somewhat lesser extent, accounting errors, primarily in Brazil, affecting work in process and finished goods inventory that were not detected due to a deficient reconciliation process.

The Company also identified the following additional errors:


•	The Company incorrectly recorded foreign currency adjustments related to certain intercompany transactions between the Company's U.S. and Canadian subsidiaries.


•	The Company also made erroneous foreign currency adjustments related to inventory and property, plant and equipment within the Company's Mexican subsidiary.

As a result, the Company restated its previously issued consolidated financial statements and the quarterly operating results (unaudited), included in its Amendment No. 1 to the Company's 2011 Annual Report on Form 10-K/A, and the previously issued condensed consolidated financial statements included in its Amendment No. 1 to the Company's Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 30, 2012 and June 29, 2012 filed on March 1, 2013.

This Quarterly Report on Form 10-Q for the quarterly period ended June 28, 2013 includes the restated Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 29, 2012 and the restated Condensed Consolidated Statement of Cash Flows for the six months ended June 29, 2012. The restatement of previously issued condensed consolidated financial statements is referred to as “Restatement No. 1”.

On October 10, 2013, the Audit Committee of the Board of Directors of the Company, upon the recommendation of the Company's executive officers, concluded that due to certain accounting errors, in the aggregate, related to (i) revenue recognition in connection with historical "bill and hold" transactions for aerial transmission projects in Brazil and (ii) value added tax ("VAT") assets, the Company's previously issued consolidated financial statements for the fiscal years 2008 through 2012 and the interim periods during those years, and the interim condensed financial statements as of, and for, the three fiscal months ended March 29, 2013 should no longer be relied upon and the Company corrected these errors within the accompanying restated condensed consolidated financial statements. In addition, the Company corrected other immaterial errors within the accompanying restated condensed consolidated financial statements (the “Other Immaterial Adjustments”). The condensed consolidated financial statement restatement for the bill and hold, VAT and Other Immaterial Adjustments is referred to as “Restatement No. 2”.

As a result of the remediation efforts related to previously disclosed internal control deficiencies, subsequent to the above referenced March 1, 2013 filings, the Company undertook an evaluation to reexamine its historical revenue recognition accounting practices with regard to bill and hold sales in Brazil related to aerial transmission projects. "Bill and hold" sales generally are sales meeting specified criteria under U.S. generally accepted accounting principles ("GAAP") to recognize revenue at the time title to goods and ownership risk is transferred to the customer, even though the seller does not ship the goods until a later time. In typical sales transactions other than those accounted for as bill and hold, title to goods and ownership risk is transferred to the customer at the time of shipment or delivery. As a result of this review, the Company identified instances where the requirements for revenue recognition under GAAP with respect to the bill and hold sales were not met. See the columns labeled “Brazil Bill and Hold” within the tables below for the effects of correcting this error by financial statement line item.

As a result of the remediation efforts related to the previously disclosed internal control deficiencies, subsequent to the above referenced March 1, 2013 filings, the Company undertook an evaluation to determine whether certain recorded VAT assets in Brazil associated with the inventory theft and related accounting errors were recoverable. Based on its evaluation, the Company determined that it will not recover VAT assets that were previously recognized from 2008 through 2012. In addition, the Company has recorded associated interest and penalties. See the columns labeled “Brazil VAT” within the tables below for the effects of correcting this error by financial statement line item.

As noted above, the Company corrected other immaterial errors; the most significant of which are described below:

The Company’s subsidiary in Germany incorrectly reported restricted cash as part of cash and cash equivalents on the condensed consolidated balance sheet. The restricted cash was related to milestone payments received in the fourth quarter of 2012 associated with one the subsidiary’s submarine cable projects. The Company has corrected this error in the accompanying restated condensed consolidated financial statements by reclassifying such restricted cash amounts to prepaid expenses and other current assets. As of December 31, 2012, cash and cash equivalents were overstated and prepaid expenses and other current assets were understated by $15.8 million.

The Company’s subsidiary in Spain did not properly record a valuation allowance against certain tax assets. As of December 31, 2012, the noncurrent deferred income tax liability was understated by $3.6 million.

The Company’s subsidiaries in the Philippines incorrectly recorded depreciation expense associated with the fixed assets acquired when the Company increased its ownership interest in the entity from 40% to 60%, and therefore began consolidating these legal entities. As December 31, 2012, property, plant and equipment, net were overstated by $2.8 million. For the three months and six months ended June 29, 2012 cost of sales was understated by $0.1 million and $0.3 million, respectively.

The Company did not properly adjust certain receivables allowances. As of December 31, 2012, receivables, net of allowances were overstated by $2.1 million.

The Company’s subsidiary in Thailand incorrectly recorded items in prior years which should have been expensed, as capitalized costs included in property, plant and equipment, net. As of December 31, 2012, property, plant and equipment, net were overstated by $0.6 million. For the three and six months ended June 29, 2012, cost of sales were understated (overstated) by $0.1 million and $0.0 million, respectively.

The Company’s subsidiary in Angola incorrectly recorded selling, general and administrative expenses as a deduction from net sales. For the three and six months ended June 29, 2012, net sales and selling, general and administrative expenses were understated by $1.7 million and $2.7 million, respectively. There was no impact to operating income, income before income taxes or to net income attributable to Company common shareholders in any of the periods.

In previously issued condensed consolidated financial statements filed on January 21, 2014, the Company had also 1) revised the method used to calculate the quarterly amounts reported in the condensed consolidated financial statements to correct the inventory theft and accounting errors in Brazil. The adjustments from the revised method had no impact on the previously reported annual amounts and are not materially different in any given interim period from the amounts calculated in arriving at the revised amounts previously presented and 2) restated its Supplemental Guarantor and Parent Company Condensed Financial Information to disclose for each period presented the effect of the corrections noted above on financial statement line items affected for each period via tabular disclosure to that condensed financial information.

See the columns labeled “Other Immaterial Adjustments” within the tables below for the impact by financial statement line item for the adjustments noted above and other immaterial corrections not separately disclosed.

The following tables present the effects of Restatement No. 1 and Restatement No. 2 on each line item of the Company's previously issued condensed consolidated financial statements as of December 31, 2012 and for the three and six months ended June 29, 2012.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss):

In the following table, the “As Originally Filed” column corresponds to Form 10-Q for the three months ended June 29, 2012 filed by the Company on August 3, 2012. The “Restatement #1” column corresponds to Form 10-Q/A for the three months ended June 29, 2012 filed by the Company on March 1, 2013.



	Three Fiscal Months Ended June 29, 2012
(in millions, except per share data)	As Originally Filed			Effect of Restatement #1			Restatement #1			Brazil VAT			Brazil Bill and Hold			Other Immaterial Adjustments			Effect of Restatement #2			Restated
Net sales	$	1,478.1		$	—		$	1,478.1		$	—		$	(4.7	)	$	1.8		$	(2.9	)	$	1,475.2
Cost of sales	1,301.1			3.5			1,304.6			0.2			(2.5		)	(0.8		)	(3.1		)	1,301.5
Gross profit	177.0			(3.5		)	173.5			(0.2		)	(2.2		)	2.6			0.2			173.7
Selling, general and administrative expenses	104.4			—			104.4			—			—			1.7			1.7			106.1
Operating income	72.6			(3.5		)	69.1			(0.2		)	(2.2		)	0.9			(1.5		)	67.6
Income before income taxes	35.5			(3.5		)	32.0			(0.2		)	(2.2		)	0.9			(1.5		)	30.5
Income tax (provision) benefit	(12.0		)	0.5			(11.5		)	—			0.7			(0.4		)	0.3			(11.2		)
Net income including noncontrolling interest	24.0			(3.0		)	21.0			(0.2		)	(1.5		)	0.5			(1.2		)	19.8
Net income attributable to noncontrolling interest	2.1			—			2.1			—			—			(0.1		)	(0.1		)	2.0
Net income attributable to Company common shareholders	21.8			(3.0		)	18.8			(0.2		)	(1.5		)	0.6			(1.1		)	17.7
Comprehensive income (loss):
Net income (loss)	24.0			(3.0		)	21.0			(0.2		)	(1.5		)	0.5			(1.2		)	19.8
Currency translation gain (loss)	(64.2		)	4.1			(60.1		)	1.2			0.5			(0.1		)	1.6			(58.5		)
Comprehensive income (loss), net of tax	(45.7		)	1.1			(44.6		)	1.0			(1.0		)	0.4			0.4			(44.2		)
Comprehensive income (loss) attributable to noncontrolling interest, net of tax	(0.7		)	—			(0.7		)	—			—			(0.1		)	(0.1		)	(0.8		)
Comprehensive income (loss) attributable to Company common shareholders interest, net of tax	(45.0		)	1.1			(43.9		)	1.0			(1.0		)	0.5			0.5			(43.4		)
Earnings per common share - basic	0.44			(0.06		)	0.38			—			(0.03		)	0.01			(0.02		)	0.36
Earnings per common share - assuming dilution	0.43			(0.06		)	0.37			—			(0.03		)	0.01			(0.02		)	0.35

In the following table, the “As Originally Filed” column corresponds to Form 10-Q for the six months ended June 29, 2012 filed by the Company on August 3, 2012. The “Restatement #1” column corresponds to Form 10-Q/A for the six months ended June 29, 2012 filed by the Company on March 1, 2013.



	Six Fiscal Months Ended June 29, 2012
(in millions, except per share data)	As Originally Filed			Effect of Restatement #1			Restatement #1			Brazil VAT			Brazil Bill and Hold			Other Immaterial Adjustments			Effect of Restatement #2			Restated
Net sales	$	2,910.6		$	—		$	2,910.6		$	—		$	8.9		$	5.2		$	14.1		$	2,924.7
Cost of sales	2,586.4			6.2			2,592.6			0.7			7.5			1.1			9.3			2,601.9
Gross profit	324.2			(6.2		)	318.0			(0.7		)	1.4			4.1			4.8			322.8
Selling, general and administrative expenses	198.2			—			198.2			—			—			2.7			2.7			200.9
Operating income	126.0			(6.2		)	119.8			(0.7		)	1.4			1.4			2.1			121.9
Income before income taxes	72.7			(6.2		)	66.5			(0.7		)	1.4			1.4			2.1			68.6
Income tax (provision) benefit	(22.9		)	1.0			(21.9		)	—			(0.5		)	(0.6		)	(1.1		)	(23.0		)
Net income including noncontrolling interest	50.3			(5.2		)	45.1			(0.7		)	0.9			0.8			1.0			46.1
Net income attributable to noncontrolling interest	3.4			—			3.4			—			—			(0.1		)	(0.1		)	3.3
Net income attributable to Company common shareholders	46.7			(5.2		)	41.5			(0.7		)	0.9			0.9			1.1			42.6
Comprehensive income (loss):
Net income (loss)	50.3			(5.2		)	45.1			(0.7		)	0.9			0.8			1.0			46.1
Currency translation gain (loss)	(20.1		)	2.3			(17.8		)	0.9			0.2			(0.1		)	1.0			(16.8		)
Comprehensive income (loss), net of tax	30.7			(2.9		)	27.8			0.2			1.1			0.7			2.0			29.8
Comprehensive income (loss) attributable to noncontrolling interest, net of tax	3.7			—			3.7			—			—			(0.1		)	(0.1		)	3.6
Comprehensive income (loss) attributable to Company common shareholders interest, net of tax	27.0			(2.9		)	24.1			0.2			1.1			0.8			2.1			26.2
Earnings per common share - basic	0.94			(0.11		)	0.83			(0.01		)	0.02			0.02			0.03			0.86
Earnings per common share - assuming dilution	0.92			(0.10		)	0.82			(0.02		)	0.02			0.02			0.02			0.84

Condensed Consolidated Balance Sheets:

In the following table, the “As Originally Filed” column corresponds to Form 10-K for the fiscal year ended December 31, 2012 filed by the Company on March 1, 2013.



	December 31, 2012
(in millions)	As Originally Filed		Brazil VAT		Brazil Bill and Hold		Other Immaterial Adjustments		Effect of Restatement #2		Restated
Assets
Cash and cash equivalents	638.2		—		—		(15.9	)	(15.9	)	622.3
Receivables, net of allowances	1,189.7		(4.2	)	—		(3.4	)	(7.6	)	1,182.1
Inventories, net	1,251.6		—		22.0		—		22.0		1,273.6
Deferred income taxes	39.1		—		—		0.4		0.4		39.5
Prepaid expenses and other	116.0		—		1.0		16.0		17.0		133.0
Total current assets	3,234.6		(4.2	)	23.0		(2.9	)	15.9		3,250.5
Property, plant and equipment, net	1,199.8		—		—		(5.9	)	(5.9	)	1,193.9
Goodwill	184.4		—		—		3.2		3.2		187.6
Intangible assets, net	203.1		—		—		(0.2	)	(0.2	)	202.9
Unconsolidated affiliated companies	19.2		—		—		(0.3	)	(0.3	)	18.9
Total assets	4,919.9		(4.2	)	23.0		(6.1	)	12.7		4,932.6
Liabilities
Accrued liabilities	463.4		8.2		26.2		(1.7	)	32.7		496.1
Total current liabilities	1,977.6		8.2		26.2		(1.7	)	32.7		2,010.3
Deferred income taxes	221.5		—		(0.4	)	2.8		2.4		223.9
Other liabilities	292.6		—		—		0.1		0.1		292.7
Total liabilities	3,430.6		8.2		25.8		1.2		35.2		3,465.8
Equity
Retained earnings	916.5		(13.8	)	(3.9	)	(6.6	)	(24.3	)	892.2
Accumulated other comprehensive income (loss)	(107.3	)	1.4		1.1		0.2		2.7		(104.6	)
Total Company shareholders' equity	1,353.3		(12.4	)	(2.8	)	(6.4	)	(21.6	)	1,331.7
Noncontrolling interest	117.4		—		—		(0.9	)	(0.9	)	116.5
Total equity	1,470.7		(12.4	)	(2.8	)	(7.3	)	(22.5	)	1,448.2
Total liabilities and equity	4,919.9		(4.2	)	23.0		(6.1	)	12.7		4,932.6

Condensed Statement of Cash Flows:



	Six Fiscal Months Ended June 29, 2012
(in millions)	As Originally Filed			Effect of Restatement #1			Restatement #1			Brazil VAT			Brazil Bill and Hold			Other Immaterial Adjustments			Effect of Restatement #2			Restated
Net income (loss) including noncontrolling interests	$	50.3		$	(5.2	)	$	45.1		$	(0.7	)	$	0.9		$	0.8		$	1.0		$	46.1
Depreciation and amortization	53.7			—			53.7			—			—			0.2			0.2			53.9
Deferred income taxes	8.0			(1.0		)	7.0			—			0.2			—			0.2			7.2
(Increase) decrease in receivables	(146.9		)	—			(146.9		)	0.5			—			—			0.5			(146.4		)
(Increase) decrease in inventories	(39.9		)	6.2			(33.7		)	—			7.5			0.6			8.1			(25.6		)
(Increase) decrease in other assets	2.0			—			2.0			—			0.3			—			0.3			2.3
Increase (decrease) in accounts payable, accrued and other liabilities	37.7			—			37.7			0.2			(8.9		)	(1.8		)	(10.5		)	27.2
Net cash flows of operating activities	(17.1		)	—			(17.1		)	—			—			(0.2		)	(0.2		)	(17.3		)
Capital expenditures	(63.9		)	—			(63.9		)	—			—			0.2			0.2			(63.7		)
Net cash flows of investing activities	(67.1		)	—			(67.1		)	—			—			0.2			0.2			(66.9		)