## 2004 Compared to 2003 

Net sales were $1,530.4 million for the year ended December 31, 2004 compared to $1,239.5 million for 2003 an increase of 23% in U.S. dollars and 20% in local currencies. Sales of interconnect products and assemblies increased 24% in U.S. dollars and 20% in local currencies compared to 2003 ($1,333.8 million in 2004 versus $1,072.0 million in 2003). Sales increased in all major geographic regions as a result of the continuing development of new application specific and value added products, economic improvement in some of the Company’s major end markets and the impact of acquisitions in 2004 and 2003 ($50.3 million). Sales increased in the Company’s major end markets including mobile communications, industrial, automotive, military/aerospace, and computer/data communications markets. The increase in sales in the mobile communications markets (approximately $105.7 million) is attributable primarily to increased demand on wireless infrastructure products in all regions, increased demand on mobile handset products in Asia and the impact of acquisitions during 2003 of companies in North America and China serving the wireless installation market. The increase in sales in the industrial market (approximately $49 million) reflects increased sales in North America and Europe. Automotive sales increased approximately $34 million primarily in Europe and to a lesser extent in North America, reflecting the increased use of safety and telematic applications in cars and as a result of acquisitions. The increase in military/aerospace sales (approximately $63.9 million) relates primarily to increased demand on military programs and avionics applications in North America and Europe. Sales to the computer and data communications related markets increased approximately $11.1 million reflecting increased sales in North America, Europe and Asia and the impact of acquisitions. Sales of cable products increased 17% compared to 2003 ($196.6 million in 2004 versus $167.5 million in 2003). Such increase is primarily due to 

increased sales in broadband cable television markets. 

Geographically, sales in the U.S. in 2004 increased approximately 21% compared to 2003 ($674.3 million in 2004 versus $555.9 million in 2003); international sales for 2004 increased approximately 25% in U.S. dollars ($856.1 million in 2004 versus $683.6 million in 2003) and increased approximately 19% in local currency compared to 2003. The comparatively weak U.S. dollar in 2004 had the currency effect of increasing net sales by approximately $46.6 million when compared to foreign currency translation rates in 2003. 

The gross profit margin as a percentage of net sales (including depreciation in cost of sales) increased to 32% in 2004 compared to 31% in 2003. An increase in margins was achieved in both the interconnect products and assemblies segment and the cable segment although the cable segment increase was partially offset by a continued increase in material costs. The operating margin for interconnect products and assemblies increased approximately 2% compared to the prior year. The increase is generally attributable to the continuing development of new higher margin application specific products, excellent operating leverage on incremental volume and aggressive programs of cost controls. 

Selling, general and administrative expenses were $215.0 million and $177.4 million in 2004 and 2003, respectively, and remained approximately 14.0% of sales in 2004 and 2003, respectively. Research and development expenditures increased approximately $6.1 million, commensurate with sales, reflecting increases in expenditures for new product development and represented approximately 2% of sales for both 2004 and 2003. Selling and marketing expenses remained approximately 7% of sales. Shipping expense, which relates primarily to sales of cable products to the broadband market, increased commensurate with sales for those products. Administrative expenses increased by approximately $11.8 

million, due primarily to increases in costs relating to insurance, pensions, medical benefits and professional fees. 

Interest expense was $22.5 million for 2004 compared to $29.5 million for 2003. The decrease is primarily attributable to lower interest rates including the effect of the refinancing completed in the second quarter of 2003 (see Liquidity and Capital Resources) and lower average debt levels. At current interest rates, interest expense for 2005 is expected to be approximately $19 million. 

Expenses for early extinguishment of debt totaling $10.4 million in 2003, relate to the refinancing of the Company’s senior credit facilities. Such one-time expenses include the call premium related to the redemption of the Company’s Senior Subordinated Notes of $4.7 million, write-off of unamortized deferred debt issuance costs of $3.9 million and other related fees and expenses of $1.8 million. 

Other expenses, net, for 2004 and 2003 were $6.7 million and $7.0 million, respectively. Other expenses, net, are comprised primarily of foreign currency transaction losses ($0.6 million in 2004 and $1.3 million in 2003), reflecting the relative weakness of the U.S. dollar in 2004 and 2003, program fees on sale of accounts receivable ($2.3 million in 2004 and $1.5 million in 2003), reflecting lower receivable fee rates in 2003, minority interests ($3.0 million in 2004 and $2.4 million in 2003) and agency and commitment fees on the Company's credit facilities ($1.0 million in 2004 and $0.8 million in 2003). In addition, in 2003 the Company incurred $1.0 million in expenses relating to a secondary stock offering (for which the Company did not receive any proceeds). See Note 8 to the Company's Consolidated Financial Statements for details of the components of other expenses, net. 

The provision for income taxes was at an effective rate of 34.0% in 2004 and 2003. 

## 2003 Compared to 2002 

Net sales were $1,239.5 million for the year ended December 31, 2003 

