<PAGE>

================================================================================

                       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 (the "Act")
                   For the fiscal year ended December 31, 1997
                                       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 0-23070


                         AFC CABLE SYSTEMS, INC.
           (Exact name of registrant as specified in its charter)

          Delaware                                         95-1517994
(State or other jurisdiction of                          (I.R.S. Employer
incorporation or organization)                          Identification No.)

      50 Kennedy Plaza, Suite 1250,                            02903
        Providence, Rhode Island                             (Zip Code)
(Address of principal executive offices)

       Registrant's telephone number, including area code: (401) 453-2000
        Securities registered pursuant to Section 12(b) of the Act: None
           Securities registered pursuant to Section 12(g) of the Act:
                  Title of Class: Common Stock ($.01 Par Value)

   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 such
filing requirements for 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 the 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. [ ]

   The aggregate market value of the registrant's voting stock held by
non-affiliates was approximately $356,391,160 on March 26, 1998, based on the
closing sales price of the registrant's common stock, $.01 par value (the
"Common Stock"), as reported on the Nasdaq National Market System as of such
date.

   The number of shares of the registrant's Common Stock outstanding as of March
26, 1998 was 11,408,253 shares.

                   DOCUMENTS INCORPORATED BY REFERENCE

   Proxy Statement to be filed with the Securities and Exchange Commission in
connection with the 1998 Annual Meeting of Stockholders is incorporated herein
by reference (in Part III).

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<PAGE>

                                     PART I
ITEM 1. BUSINESS
  GENERAL

   AFC Cable Systems, Inc. ("AFC" or the "Company") is a designer, manufacturer
and supplier of electrical, voice and data distribution products used primarily
in the construction and modernization of non-residential buildings. The
Company's products include prewired armored cable, flexible conduit, modular
wiring systems, electrical fittings and specialty coated metals. The Company
believes its products offer a total installed cost advantage over traditional,
labor intensive wiring methods by eliminating on-site installation time and
labor costs associated with bending, connecting and pulling wire through metal
pipe. The Company is the leading manufacturer of prewired armored cable in the
United States, with approximately 45% of the sales in the domestic armored cable
market based upon Company estimates.

   The Company, through acquisitions made during 1997, also manufactures and
distributes photo controls for the lighting control and fixture industries,
electronic interfaces and connectors that facilitate data communications, and
flexible hoses, ducting and connections for diverse applications.

   In order to penetrate higher margin, specialty application niche markets, the
Company has focused on the creation of proprietary value-added products which
utilize the Company's design and engineering expertise and various technologies.
These products include color-coded cables used for fire alarm systems and health
care facilities. In addition, the Company offers premise wiring systems,
including The Intelligent Floor and The Intelligent Ceiling, designed for the
modern workstation environment. These premise wiring systems are custom
engineered and pre-assembled by the Company for modular installation and have
the ability to supply the voice, data and electrical requirements throughout an
entire facility.

   AFC sells its products principally to leading distributors of electrical
products and actively targets do-it-yourself ("DIY") customers and original
equipment manufacturers ("OEMs"). In an effort to include its products in
preferred project specifications, the Company educates electrical contractors
and inspectors, construction consultants and architects regarding the
technological advantages, compatibility and cost savings of the Company's
products. AFC distributes its products from its eighteen manufacturing,
warehouse and distribution facilities located throughout the country using its
own trucking fleet as well as other carriers and from sales representatives that
carry inventory on consignment.

   The Company's products can be separated into two broad categories: armored
cable, flexible conduit, specialty cables, electrical fittings and specialty
coated metals, all manufactured by the Wire and Cable Division, and flexible and
premise wiring systems and related products manufactured by the America Cable
Systems Division. The divisions are vertically integrated in that many of the
products manufactured in the America Cable Systems Division utilize components,
including cable remnants, produced in the Wire and Cable Division. Also included
in the Wire and Cable Division are flexible metal, fabric and plastic hoses,
ducting and connectors manufactured by Federal Hose Manufacturing, Inc., and
electrical fittings sold by Madison Equipment Company, Inc., both of which were
acquired by the Company in 1997. Also included in the America Cable Systems
Division are electronic interfaces and connectors manufactured by B&B
Electronics Manufacturing Company, Inc. and photo controls and electrical
devices for the lighting control and fixture industries manufactured by Area
Lighting Research, Inc., both of which were also acquired in 1997.

   The Company's executive offices are located at 50 Kennedy Plaza, Suite 1250,
Providence, Rhode Island 02903, and its telephone number is (401) 453-2000.

PRODUCTS

   WIRE AND CABLE DIVISION. Wire and Cable Division products are utilized for
construction (both new and reconstruction, renovation and tenant improvement
projects) of offices, commercial buildings, industrial plants, shopping centers,
multifamily dwellings, hotels and health care, educational and recreational
facilities. Wire and Cable Division products consist primarily of armored cable,
flexible conduit, specialty cables, electrical fittings and connectors and
specialty processed metals and accounted for $181.0 million, or 82.2%, and
$144.3 million, or 89.1%, of the Company's net sales for the years ended
December 31, 1997 and 1996, respectively. The Company is the leading
manufacturer of armored cable in the United States, with approximately 45% of
the domestic market


                                        2
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based on current Company estimates. Wire and Cable Division products have been
listed and labeled where required in accordance with Underwriters Laboratories
("UL") standards and comply with the National Electrical Code ("NEC"). Wire and
Cable Division products also meet the standards of the Canadian Standards
Association ("CSA") where required. See "Quality Assurance."

   Products manufactured by the Wire and Cable Division include the following:

   -  ARMORED CABLE is armor sheathed electrical cable that provides a versatile
      and economical alternative to traditional pipe and wire. Fully
      preassembled and tested, armored cable features excellent mechanical
      protection, consistent color coding and a cost effective electrical
      installation. Armored cable products are available in steel or aluminum
      sheathing. Aluminum sheathed armored cable, which reduces a product's
      weight by 30%, has gained wide customer acceptance over recent years due
      to ease of preparation and installation and resulting cost savings.

         METAL-CLAD (MC) CABLE is a single, steel clad assembly used for power,
         lighting, control and signal circuits. MC has an internal insulated
         solid copper ground wire for sensitive applications, including places
         of public assembly such as convention halls and auditoriums. MC is
         available in a lighter weight aluminum version, MC Lite.

         AC-90 IS 90-DEGREE- rated for branch circuits and feeders in
         commercial, multi-unit residential and industrial applications and for
         hard wiring fixtures and other high temperature applications. Designed
         for higher thermal capability, AC-90 provides more usable power per
         conductor size. AC-90 Lite is the line's lighter weight aluminum
         version.

   -  SPECIALTY CABLE products are specialized applications of the Company's
      armored cable designed to meet a particular niche of the commercial
      construction industry.

         HCF-90 is AC-90 cable that features a fully insulated ground wire
         providing dual path grounding for branch circuits and feeders where a
         dedicated ground is required. This product is designed primarily for
         health care facilities and has a process-patented green striped armor
         designed to enhance ease of installation and identification. HCF-90 is
         available in a lighter weight aluminum version, HCF-90 Lite.

         FIRE ALARM/CONTROL CABLE is MC Cable that features a process-patented
         red striped armor that is designed to enhance identification by fire
         inspectors and prevent accidental disabling of fire security systems.

         SUPER NEUTRAL CABLE is MC Cable containing an oversized neutral
         conductor for use in electrical systems in which nonlinear switching
         loads produce additive, third order harmonic currents which may
         overload standard size neutral conductors. Typical applications include
         computer systems, business equipment, variable speed drives, electronic
         discharge lighting and other switching mode power supplies.

         JACKETED MC CABLE is MC Cable with an added polyvinyl chloride ("PVC")
         jacket designed for maximum physical circuit protection and
         identification, and is utilized for installations in wet locations,
         soil and concrete.

         HOME RUN CABLE is MC Cable that is designed to hold a 6, 8, 12 or 16
         wire insulated conductor assembly inside galvanized steel armor.

         OPTICAL FIBER JACKETED CABLE is MC Cable that features a process
         patented orange striped armor that is designed for specific control,
         signaling and data communications applications, such as robotics, video
         conferencing and local area networkings.

   -  FLEXIBLE CONDUIT is wireless conduit that provides mechanical protection
      for electrical wiring where flexibility is required. Flexible conduit can
      be made of steel, aluminum or plastic and is used in a variety of
      construction applications as an alternative to pipe.

         REDUCED WALL FLEXIBLE CONDUIT provides the strength and durability of
         heavy gauge pipe at 40% less weight. It installs easily and is
         available in sizes from 5/16" to 4" diameter. The Company also offers a


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         Reduced Wall Flexible Aluminum Conduit that provides the strength and
         durability of steel at one-third the weight.

         LIQUID-TIGHT FLEXIBLE CONDUIT, which is offered in both metallic and
         plastic versions, has been designed for use in factories, foundries and
         assembly plants. It features a flexible conduit covered by a PVC jacket
         and is resistant to oil, gasoline, salt spray and toxic fumes. It is
         available in sizes from 3/8" to 4" diameter.

   -  OTHER PRODUCTS of the Wire and Cable Division include the following:

         SPECIALTY PROCESSED METAL products have developed as a result of the
         Company's ability to handle, slit and coil metals and supply galvanized
         strip steel and various alloys of aluminum oscillate coils to a variety
         of customers primarily in the petroleum drilling industry.

         FITTINGS AND CONNECTORS are designed to connect armored cable and
         conduit to electrical junction boxes and to join multiple types of
         conduit. These products compliment the Company's AC, MC and
         Liquid-Tight product lines.

         FLEXIBLE METAL, FABRIC AND PLASTIC HOSES, DUCTING AND CONNECTORS made
         for diverse applications including heavy duty vehicles, material
         handling, and heating and ventilation systems.

      AMERICA CABLE SYSTEMS DIVISION. America Cable Systems Division products
provide an integrated infrastructure for electrical, voice and data distribution
in a modular, plug-in fashion. The products are used primarily in office
buildings and retail centers with accessible ceilings and/or accessible floors,
and can be reused after retenanting or remodeling. America Cable Systems
Division products are completely preassembled for easy on-site installation and
are generally accompanied by detailed installation drawings produced by computer
aided drafting ("CAD") software. Therefore, these modular wiring products reduce
the time of initial installations, as well as the time required to make changes
in the office layout during the life of the building. The Company continues to
enhance its modular wiring systems used in broader premise wiring markets, which
encompass combined voice, data and electrical distribution. America Cable
Systems Division products have been listed and labeled where required in
accordance with UL and CSA standards and comply with the NEC. See "Quality
Assurance." Sales of America Cable Systems Division products were $38.4 million,
or 17.5%, and $16.7 million, or 10.3%, of the Company's net sales for the years
ended December 31, 1997 and 1996, respectively.

   Products manufactured by the America Cable Systems Division include the
following:

   -  MODULAR WIRING SYSTEMS provide fast and efficient installation for
      applications such as offices, health care facilities, industrial
      facilities and educational institutions that require repetitive patterns
      of branch circuit lighting fixtures and power outlets as well as a high
      degree of flexibility to meet future needs. The Company estimates that
      facilities can be completely "fitted out" with an integrated building
      electrical infrastructure for lighting and power with total installed cost
      savings of up to 40%.

   -  THE INTELLIGENT FLOOR AND THE INTELLIGENT CEILING are modifications to the
      standard Modular Wiring System. These products provide an integrated
      modular solution by supplying power distribution and optional voice and
      data capability from the master distribution box to accessible floor and
      ceiling modules and are designed primarily for space efficient
      installation. The Intelligent Floor, which utilizes a patented connector
      component, is completely modular, providing plug-in access for the modern
      workstation under a raised floor. The Company believes that raised floor
      modular wiring applications, such as The Intelligent Floor, significantly
      reduce electrical related operating costs of office buildings and add to
      present and resale value. The Intelligent Ceiling incorporates lighting,
      power, and telecommunication systems through ceiling distribution into a
      single integrated solution, thereby significantly reducing installation
      time. The Intelligent Ceiling is particularly effective in retail malls
      and health care facilities, which traditionally do not employ raised floor
      systems. The Company has also established strategic alliances with a major
      national manufacturer of office furniture and a major manufacturer of
      raised flooring in an effort to expand the number of distribution channels
      for The Intelligent Ceiling and The Intelligent Floor product offerings.


                                        4
<PAGE>

   -  CUSTOM CUTS AND FIXTURE WHIPS provide builders with factory cut branch
      circuit wiring used to connect convenience power receptacles and lighting
      fixtures on the job site. Custom Cuts and Fixture Whips significantly
      reduce installation time for branch circuit power distribution systems.

   -  PDQ SYSTEM COMPONENTS enable prefabrication of the entire electrical
      branch circuit distribution network at the factory and complete system
      delivery to the job site. PDQ System Components are the electrical devices
      and support mechanisms to which Custom Cut wiring is attached. Through the
      development of a patented specialized connector, prewired switches and
      receptacles already set in electrical boxes can now be plugged together on
      either end of the Custom Cut cable and from leads extending from the
      prewired electrical boxes.

   -  ELECTRONIC INTERFACES AND CONNECTORS facilitate data acquisition and
      communications in the computer environment.

   -  PHOTO ELECTRIC CONTROLS AND ELECTRICAL DEVICES are used in the lighting
      control and fixture industries.

   -  OTHER CABLE AND LIGHTING PRODUCTS include temporary construction lights,
      power poles, high bay lighting systems and prenumbered and prebundled
      conductors.

MARKETING

      The Company's products are marketed through independent regional sales
representatives, including several located outside the United States. Sales
representatives do not exclusively market the Company's products. At December
31, 1997, 72 of the Company's domestic representatives maintained product
inventories on consignment. The independent sales representatives are trained by
the Company through a comprehensive marketing program that includes a wide range
of product literature, specification sheets and technical brochures. The Company
actively markets its advanced engineering capabilities, including CAD, for
custom designed integrated systems to electrical contractors, construction
engineers and building contractors. The Company also advertises certain of its
product offerings in trade magazines and regularly participates in industry
trade shows. The domestic sales representatives are serviced by the Company's
fleet of trucks and trailers, which provide delivery and scheduled stock
replenishment. The Company believes that its internal trucking capability gives
it a competitive advantage by providing prompt delivery to its customers.

      Commensurate with its strategy of promoting armored cable, flexible wiring
and flexible conduit as the preferred alternative to traditional labor intensive
pipe and wire installation methods, the Company has specifically focused its
marketing efforts at electrical contractors and inspectors, construction
consultants, architects and other end users. This marketing strategy is
particularly important to the marketing efforts of the America Cable Systems
Division as its products are often developed to custom specifications. The
Company's in-house telemarketing department and field representatives research
pending construction projects in an effort to change project specifications to
allow for the use of the Company's prewired armored cable products. The Wire and
Cable Division has had particular success with this specification strategy in
the area of specialty cable products where competition is relatively limited.
The Company expects to continue this marketing strategy as it develops new
products for broader premise wiring markets.

      Use of certain of the Company's armored cable products is not currently
permitted by local building codes in a limited number of municipalities,
including Chicago, San Antonio and Toledo. In several instances, the Company has
successfully illustrated to municipal building code authorities the benefits and
efficiencies of armored cable products over pipe and wire installations,
resulting in favorable changes in the particular municipality's building code.
For example, during the past three years, several municipalities, including
Charleston County, South Carolina, Dade County, Florida, Orange County, Florida,
the city of Springfield, Illinois, the city of Tampa, Florida and Sacramento
County, California, have amended their building codes to approve the use of the
Company's metal clad cables. Although the Company expects to continue such
efforts, there can be no assurance that it will be successful in influencing
other municipalities in adopting similar legislation. The failure to obtain a
change in these local codes is not anticipated to have a material adverse effect
on the Company's business, operating results or financial condition.


                                        5
<PAGE>

CUSTOMERS

      The Company sells its products primarily to distributors of electrical
products for resale to end users. Sales to distributors accounted for
approximately 81% and 87% of the Company's net sales during the years ended
December 31, 1997 and 1996, respectively. The Company's top ten customers have
traditionally accounted for approximately 30% of the Company's gross sales. In
addition to sales to distributors, the Company directs significant marketing
efforts toward DIY customers. Sales to DIY customers accounted for approximately
6% and 7% of the Company's gross sales for of the years ended December 31, 1997
and 1996, respectively, and were comprised mostly of armored cable and flexible
conduit.

COMPETITION

      The Company faces competition for many of its core armored cable products
and for those products manufactured by the America Cable Systems Division. The
Company, however, has experienced less competition with respect to many of its
specialty cable products. The Company's competitors include both manufacturers
of products similar to those of the Company and producers of alternative
electrical, voice and data distribution systems, predominantly pipe and wire.
The number and size of the Company's competitors varies depending on the product
line. Competition can be generally categorized as either national in scope, with
companies that have substantial financial, research and development,
manufacturing and marketing resources, or regional in scope, with companies that
have more limited product offerings but compete effectively on the basis of
price.

      The principal competitive factors in all product markets are price,
quality, product features, availability, customer support and distribution
strength. The relative importance of each of these factors varies depending on
the specific product category. As products mature, such as certain of the
Company's core armored cable products, competitive forces tend to drive down
prices. In contrast, the Company has been able to maintain higher margins on its
specialty cable products and certain of its products manufactured by the America
Cable Systems Division. There can be no assurances, however, that this trend
will continue. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

MANUFACTURING

      The Company's manufacturing operations utilize a wide variety of raw
materials for which it has multiple commercial sources, and include a broad
variety of processes reflective of the Company's product diversity. See "Raw
Materials." Operations for cable manufacturing at the Wire and Cable Division
include drawing copper wire; extruding wire; slitting and galvanizing steel and
aluminum used for armor; wrapping, twisting and cutting wire; armoring
conductors; and testing for conductor continuity and grounding. The Company's
manufacturing equipment allows for a wide assortment of product categories with
armored cable diameters ranging from 1/4" to 2" and flexible conduit diameters
ranging from 5/16" to 4". The America Cable Systems Division manufacturing
operations primarily consist of metal stamping, riveting, custom wire cutting,
custom assembly and packaging operations. This division utilizes proprietary
tooling in its assembly techniques. Manufacturing operations at the Company's
two divisions are vertically integrated. The Company believes that its 
armored cable manufacturing operation is the most vertically integrated in 
the industry. This enables the Company to source primary raw materials at 
favorable prices and terms, control inventories and better manage lead times. 
The America Cable Systems Division uses remnants from the Wire and Cable 
Division in its manufacturing process, thereby reducing the Company's overall 
scrap ratio.

RAW MATERIALS

      Copper, steel and aluminum used in manufacturing represented approximately
58% of cost of goods sold for the year ended December 31, 1997. The principal
raw material used by the Company is copper, which is purchased in the form of
redrawn rod from several domestic producers. Price terms are based on monthly
average copper prices, as determined by the New York Commodity Exchange, plus a
premium. The Company believes world stocks and capacity continue to be adequate
to meet market needs. At December 31, 1997, the Company had agreed to purchase
the majority of its 1998 copper usage from two vendors. Other raw materials used
by the Company include aluminum, galvanized steel, molding materials, PVC and
nylon, for which the Company generally has either alternative sources of supply
or access to alternative materials. Supplies of these materials are adequate and
are expected to remain so for the foreseeable future.


                                        6
<PAGE>

QUALITY ASSURANCE

      The Company is committed to the philosophy that meeting industry standards
and codes is critical to its success, and its products are designed to satisfy
the safety and performance standards set by various industrial groups and
testing laboratories. Underwriters Laboratories ("UL"), a nonprofit, independent
organization, operates a listing service for electrical and electronic materials
and equipment. UL listing is required by national and most local electrical
codes in the United States, and UL conformity assessment includes testing,
evaluation and certification. UL inspectors visit the Company's various
facilities on a regular basis.

      The Canadian Standards Association ("CSA") is the UL equivalent in Canada.
Like UL listing, CSA listing is product based and is awarded after testing and
evaluation. The British Approval Service for Cables ("BASEC") provides product
assessment and certification for cable products which are intended for use in
the United Kingdom. Other European Community countries currently rely on UL or
BASEC approval or certification for cable products. In addition to standards
organizations, the Company's products are designed to comply with required
electrical code requirements, particularly the National Electric Code ("NEC")
and federal specifications. The NEC, administered by the National Fire
Protection Association ("NFPA"), sets the minimum safety standards to which
electrical products are manufactured and installed in the United States. NEC
standards are enforced and supplemented by the appropriate State, county and
municipal authorities having jurisdiction. Federal specifications detail the
requirements for all electric products to be installed in federal buildings.

      The Company has implemented a Total Quality Management ("TQM") program
which is intended to maximize customer satisfaction while implementing cost
effective production methods. The Company's TQM program embodies an interlocking
set of procedures and practices that ensures employees in various departments
are adequately trained and directed to continuously implement improvements in
quality, service and cost savings. In connection with its TQM program, the
Company has obtained ISO 9001 certification at two of its facilities in New
Bedford, Massachusetts and ISO 9002 certification at its Byesville, Ohio
facility. ISO 9001 certification is a standard developed by the International
Standards Organization that provides a management systems model for process
quality assurance in design, development, installation and servicing. ISO 9002
is a quality systems model for quality assurance in production, installation and
servicing. The Company believes that ISO 9001 and 9002 certifications signify
excellence in manufacturing and process integrity, thereby serving as a
competitive advantage and strengthening its marketing efforts. There can be no
assurance, however, that further certifications will be granted. The Company
believes that if additional certifications are not granted at its other
facilities, its business and competitive position will not be materially
adversely affected.

DEVELOPMENT, DESIGN AND ENGINEERING

      The Company employs 53 draftsmen and engineers and 65 professional
technicians that are actively engaged in product and process development.
Development and design efforts often result from informal dialogues with major
electrical contractors, consulting engineers and facility managers, and
generally include product development, testing and analysis, component
development and testing, tooling design and resolution of process problems. The
Company fabricates some of the tooling and key machinery used in its cable
production.

      The Company takes an active role in guiding industry standards. The
Company has representatives on the electrical section of the NFPA and the
Industry Advisory Council of UL and maintains ongoing relations with standards
enforcement organizations such as UL, the NFPA, the International Association of
Electrical Inspectors, the National Armored Cable Manufacturers Association and
the National Electrical Manufacturing Association.

PATENTS, TRADEMARKS AND OTHER INTELLECTUAL PROPERTY

      The Company believes that its success depends more heavily on name
recognition, technical competence and the marketing abilities of its sales
representatives than on any individual patent, trademark or copyright.
Nevertheless, the Company intends to seek patent coverage for its products and
manufacturing technology where appropriate. The Company holds several patents
covering certain of its products and processes and also has several registered
trademarks. The Company believes its patents and trademarks are of 
considerable importance to the manufacturing and marketing of certain 
products.



                                        7
<PAGE>


      The Company also relies upon trade secret protection for its confidential
and proprietary information. The Company routinely enters into confidentiality
agreements with its employees. There can be no assurance, however, that others
will not independently obtain similar information and techniques or otherwise
gain access to the Company's trade secrets or that the Company can effectively
protect its trade secret.

BACKLOG

      The Company's business is characterized by short-term order and shipment
schedules rather than volume purchase contracts. Accordingly, the Company does
not consider backlog at any given date to be indicative of future sales.
Immediate delivery requirements and the nature of the Company's business
preclude any significant backlog.

EMPLOYEES

      At December 31, 1997 the Company had approximately 1,196 full-time
employees, of which 540 employees were represented by labor unions. The
Company's union contracts expire July 31, 1998, June 30, 1999, February 4, 2000
and February 23, 2001. Of the Company's employees, 107 are in administration, 62
in sales and marketing, 73 in engineering, 889 in manufacturing and 65 in
distribution. The Company has not experienced any work stoppages at its plants
and believes its current relations with its employees are good.

ITEM 2. PROPERTIES

      The following table provides information with respect to the Company's
facilities:

<TABLE>
<CAPTION>
                                                                                         OWNED/
LOCATION                      FACILITY TYPE                         SQUARE FEET          LEASED
--------                      -------------                         -----------          ------

<S>                        <C>                                      <C>                  <C>
New Bedford, MA (1)        Assembly-America Cable Systems
                           Division, Fittings and Connectors,
                           Administration, Engineering                   123,200        Owned
New Bedford, MA            Manufacturing-Conduit and Cable                71,700        Owned
New Bedford, MA            Manufacturing-Wire, Administration,
                           Engineering                                    64,000        Owned
New Bedford, MA            Trucking, Warehousing, Administration          48,000        Leased
New Bedford, MA            Warehousing                                    15,000        Leased
Fullerton, CA              Manufacturing-Conduit and Cable,
                           Warehousing                                    59,800        Leased
Largo, FL                  Manufacturing-Conduit and Cable                39,800        Leased
Largo, FL                  Distribution Center                            25,500        Leased
Ottawa, IL                 Manufacturing-Modems and Connectors            21,000        Owned
Reno, NV                   Warehousing                                    28,000        Leased
Burlington, NJ             Manufacturing-Conduit and Cable,
                           Warehousing                                    84,500        Leased
Hackettstown, NJ           Manufacturing-Photo Controls and
                           Electrical Devices, Warehousing                40,000        Leased
Linden, NJ                 Distribution Center                            23,800        Leased
Byesville, OH              Manufacturing-Metal Processing                 37,000        Leased
Cleveland, OH              Warehousing, Office-Connectors                 20,700        Leased
Painesville, OH            Manufacturing-Conduit, Administration          49,000        Leased
Bensalem, PA               Manufacturing-Metal Processing                 28,800        Leased
Providence, RI             Administration                                  2,500        Leased
Garland, TX                Manufacturing-America Cable Systems
                           Division                                       45,300        Leased
</TABLE>

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(1) This property secures the repayment of the proceeds received from the
    issuance of the Industrial Revenue Bonds issued by the Massachusetts
    Industrial Finance Agency in July 1996. See Item 7--"Management's Discussion
    and Analysis of Financial Condition and Results of Operations."

    The Company believes that its facilities are suitable for their present
    intended purposes and adequate for the Company's current level of
    operations. The Company, however, is operating at close to existing capacity
    levels and anticipates additional investments in plant and equipment over
    the next twenty four months.

ITEM 3. LEGAL PROCEEDINGS

      The Company is a party to various nonenvironmental legal proceedings and
administrative actions, all of which are incidental to the operations of the
Company. In the opinion of the Company's management, such proceedings and
actions should not, individually or in the aggregate, have a material adverse
effect on the Company's financial condition or results of operations.

      Regarding environmental matters, owners and operators of sites containing
hazardous substances, as well as generators of hazardous substances, are subject
to broad liability under various federal and State Environmental laws and
regulations, including liability for clean up costs and damages arising out of
past disposal activity. The principal raw material used by the Company is
copper, which is classified as a hazardous substance. In addition, prior to the
Company's acquisition of its present business, it was engaged in certain
activities that may have utilized other hazardous substances. Governmental
authorities may seek to impose liability regardless of fault or the legality of
the original disposal activity and regardless of whether the Company is
otherwise currently responsible for liabilities with respect to such activities.
The Company has been named in connection with certain proceedings relating to
various properties currently being investigated or remediated for environmental
problems arising therefrom. The Company's business was formerly operated as
American Flexible Conduit Company Inc. ("American"), a manufacturer of flexible
conduit and armored cable products, which commenced operations in 1926. In 1969,
Nortek, Inc. ("Nortek") purchased the assets and liabilities of American and
subsequently transferred the business to its Monogram Industries, Inc.
("Monogram") subsidiary, incorporated in Delaware in September 1969. In December
1989, a corporation controlled by Mr. Papitto purchased Monogram from Nortek.
The purchasing corporation and Monogram were subsequently merged, with Monogram
becoming the surviving corporation. In October 1993, the Company changed its
name to AFC Cable Systems, Inc. Prior to the sale of the stock of Monogram by
Nortek in December 1989, Monogram transferred to another subsidiary of Nortek
all the assets and liabilities associated with the businesses not related to the
Company's present business operations. In connection with the sale of the stock
of Monogram, Nortek agreed to indemnify the Company, subject to certain
limitations, for liabilities and obligations of Monogram unrelated to the
business operations of Nortek's American Flexible Conduit Division, which had
been transferred to the Company in connection with such sale. With the exception
of property discussed below located in New Bedford, Massachusetts (the
"Sullivan's Ledge Site") all of the properties being investigated or remediated
are unrelated to the business operations acquired.

      In 1984, the United States Environmental Protection Agency ("EPA") placed
the Sullivan's Ledge Site on the National Priorities List, which is a list of
sites that the EPA has ranked in terms of priority for remedial action pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"). Under CERCLA, all owners and operators (former and current) and
generators can be found jointly and severally liable with respect to the
Sullivan's Ledge Site. In March 1990, the EPA requested information from the
Company, and the Company admitted that between 1960 and 1969, American, the
predecessor of the business currently operated by the Company, had disposed of
waste metal at the site. A number of responsible parties entered into a consent
decree with regard to a portion of the Sullivan's Ledge Site in June 1991 and,
subsequently, such parties as plaintiffs (the "Plaintiffs") have sought
contribution in the United States District Court for the District of
Massachusetts from twelve corporations, including the Company and Nortek,
neither of which were named as potentially responsible parties by the EPA. In
the consent decree, the EPA estimated the cost of remediation at the Sullivan's
Ledge Site to be approximately $10-$12 million. The Company has defended and
will continue to defend the action based upon its belief that its predecessors
contributed only de minimis amounts of waste material. On December 17, 1996, the
United States District Court for The District of Massachusetts entered a
judgment in favor of the Company with respect to this claim. As of December 31,
1997, there is an appeal pending with the U.S. Court of Appeals for the First
Circuit.

                                        9

<PAGE>

      The Company is not able to predict with certainty the extent of its
ultimate liability with respect to any pending or future environmental matters.
However, the Company does not believe that any such liability with respect to
the aforementioned environmental matters would have a material adverse effect
upon its financial condition or results of operations.

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

      The Company did not submit any matters during the fourth quarter of the
fiscal year covered by this report to a vote of the security holders through the
solicitation of proxies or otherwise.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>
NAME               AGE            POSITION                                  SINCE
----               ---            --------                                  -----

<S>                <C>  <C>                                                 <C>
Ralph R. Papitto   71   Chairman of the Board and Chief Executive Officer   December 1989

Robert R. Wheeler  53   President and Chief Operating Officer               October 1995

Raymond H. Keller  60   Vice President and Chief Financial Officer          December 1989
</TABLE>

BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS

      RALPH R. PAPITTO has been Chairman of the Board and a Director of the
Company since December 1989. Mr. Papitto has been Chief Executive Officer since
1995. Until 1990 Mr. Papitto was the Chairman of the Board, Chief Executive
Officer and a director of Nortek, an industrial conglomerate. Mr. Papitto
founded Nortek in 1967. In 1956, Mr. Papitto founded Glass-Tite Industries, Inc.
("Glass-Tite"), a manufacturer of electronic semiconductor components.
Glass-Tite was acquired by GTI Corporation ("GTI") in 1963. Mr. Papitto served
as Chairman of the Board of GTI Corporation until 1966. Mr. Papitto is also a
director of Lynch Corporation, a communications and multi-media services
company, and is also Chairman of the Board of Trustees of Roger Williams
University.

      ROBERT R. WHEELER has been President and Chief Operating Officer of the
Company since December 1995 and a Director of the Company since March 1996. Mr.
Wheeler was Executive Vice President and Chief Operating Officer of the Company
from October 1995 to December 1995. From 1992 to 1995, Mr. Wheeler had been
President and Chief Executive Officer of The North American Industrial Company
of BICC Cable, Inc.

      RAYMOND H. KELLER has been Vice President and Chief Financial Officer of
the Company since December 1989 and a Director of the Company since October
1993. From January 1989, he served as the Vice President and Chief Financial
Officer of the American Flexible Conduit Division of Nortek. Prior to that time,
Mr. Keller held several positions with Microdot, Inc., a multi-industry
components manufacturer, most recently as Vice President and Chief Financial
Officer of the Microdot, Inc. operating companies. Mr. Keller had been employed
by Microdot, Inc. since 1972.

                                        10

<PAGE>

                                     PART II

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

      The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "AFCX." The following table sets forth for the two most recently
completed fiscal years the high and low closing sale prices for the Common Stock
as reported on the Nasdaq National Market. The prices below reflect the October
20, 1997 five-for-four stock split.

<TABLE>
<CAPTION>
                                                                  HIGH      LOW
<S>                                                              <C>       <C>
1996
First Quarter ..............................................     11.80      9.50
Second Quarter .............................................     14.00     10.60
Third Quarter ..............................................     14.80     12.40
Fourth Quarter .............................................     19.10     13.60

1997
First Quarter ..............................................     21.40     16.00
Second Quarter .............................................     22.40     15.50
Third Quarter ..............................................     28.40     21.10
Fourth Quarter .............................................    31.875     22.50
</TABLE>

      Since its initial public offering in 1993, the Company has not declared or
paid a cash dividend on its Common Stock and does not intend to do so in the
foreseeable future. The Company's current policy is to retain its earnings, if
any, to finance expansion and product development. Payment of dividends in the
future will depend on the earnings and financial condition of the Company and
such other factors as the Company's Board of Directors may consider or deem
appropriate at the time.

      As of March 26, 1998, there were approximately 103 holders of record of
the Company's Common Stock and approximately 800 beneficial Shareholders.

                                        11


<PAGE>

ITEM 6. SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA)

      The following financial information is qualified in its entirety by
reference to, and should be read in conjunction with, the Company's financial
statements, including the notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this report. For the short tax year from January 1 through December 16, 1993,
the consummation date of the Company's initial public offering ("IPO"), the
Company elected to be treated for income tax reporting purposes as an S
corporation under the Internal Revenue Code.

<TABLE>
<CAPTION>
                                                            Year Ended December 31,
                                         -----------------------------------------------------------
                                            1993         1994        1995        1996         1997
                                         ---------    ---------   ---------   ---------    ---------
<S>                                      <C>          <C>         <C>         <C>          <C>
Income Statement Data:
Net Sales ............................   $  89,890    $ 114,386   $ 139,483   $ 161,868    $ 220,264
Cost of Goods Sold ...................      66,775       82,497     107,087     118,487      156,479
                                         ---------    ---------   ---------   ---------    ---------
Gross profit .........................      23,115       31,889      32,396      43,381       63,785
Selling, general and administrative
     expenses ........................      16,460       21,491      21,926      26,384       35,483
Owners' compensation (1) .............       3,141           --          --          --           --
                                         ---------    ---------   ---------   ---------    ---------
Income from operations ...............       3,514       10,398      10,470      16,997       28,302
Other income (expense), net ..........         (23)         160          39         (48)        (192)
Investment income ....................          14           80       3,001       2,339        2,141
Interest expense .....................       1,142          176         614         728          620
                                         ---------    ---------   ---------   ---------    ---------
Income before taxes ..................       2,363       10,462      12,896      18,560       29,631
Income taxes .........................       1,209        4,269       4,791       7,100       11,392
                                         ---------    ---------   ---------   ---------    ---------
Net income (2) .......................   $   1,154    $   6,193   $   8,105   $  11,460    $  18,239
                                         ---------    ---------   ---------   ---------    ---------
                                         ---------    ---------   ---------   ---------    ---------
Basic earnings per share (3) .........   $    0.27    $    0.90   $    0.92   $    1.25    $    1.71
                                         ---------    ---------   ---------   ---------    ---------
                                         ---------    ---------   ---------   ---------    ---------
Basic average shares (3) .............       4,346        6,881       8,851       9,134       10,664
                                         ---------    ---------   ---------   ---------    ---------
                                         ---------    ---------   ---------   ---------    ---------
Diluted earnings per share (3) .......   $    0.27    $    0.90   $    0.90   $    1.23    $    1.66
                                         ---------    ---------   ---------   ---------    ---------
                                         ---------    ---------   ---------   ---------    ---------
Dilutive average shares (3) ..........       4,346        6,909       9,047       9,288       11,024
                                         ---------    ---------   ---------   ---------    ---------
                                         ---------    ---------   ---------   ---------    ---------

Balance Sheet Data:
Cash and cash equivalents ............   $   2,986    $   2,571   $   2,090   $     980    $   2,803
Working capital ......................      14,485       17,789      48,099      58,959       88,141
Total assets .........................      33,953       50,254      84,784      97,923      161,129
Short-term debt ......................       1,250        3,500       6,952       2,270        6,457
Long-term debt .......................          --           --          --       3,300        3,893
Total liabilities ....................      12,155       19,867      23,473      24,933       37,994
Stockholders' equity .................      21,798       30,387      61,311      72,990      123,135
</TABLE>

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

(1)   Represents amounts distributed to the Company's stockholders as additional
      compensation, a portion of which was to provide those stockholders with
      funds to pay their income taxes, which included income taxes on the
      Company's income. The portion of such additional compensation in excess of
      the stockholders' income tax obligations was loaned back to the Company.


                                        12

<PAGE>

(2)   Pro Forma net income for the year ended December 31, 1993 after
      considering the following adjustments is $3,584,000 or $.54 per common
      share (6,675,806 dilutive average shares) assumed to be outstanding after
      the IPO. The adjustments (i) reduce the level of compensation to the
      Company's stockholders by $2.5 million in 1993, based upon current
      compensation practices as determined by written agreement and the
      Company's compensation committee, (ii) provide related income taxes (at an
      assumed rate of 40%) based on pro forma income before income taxes as if
      the Company were taxed as a C corporation and (iii) reflect the reduction
      in interest expense of $1.1 million in 1993 resulting from the conversion
      of certain of the Company's subordinated debt to equity and the repayment
      of certain debt from proceeds of the IPO.

(3)   Restated to include the effect of the October 20, 1997 five-for-four stock
      split and the adoption in 1997 of Financial Accounting Standard No. 128,
      "Earnings Per Share." See Notes 1, 10 and 11 to Consolidated Financial
      Statements.

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

      THIS REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE
STATEMENTS INCLUDE, AMONG OTHERS, STATEMENTS RELATING TO FUTURE EVENTS OR THE
FUTURE FINANCIAL PERFORMANCE OF THE COMPANY. SUCH STATEMENTS ARE ONLY
EXPECTATIONS AND ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY. FACTORS WHICH
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED IN SUCH
FORWARD-LOOKING STATEMENTS ARE SET FORTH IN "FACTORS THAT MAY AFFECT FUTURE
PERFORMANCE."

ACQUISITIONS

As more fully discussed in Note 2 to Consolidated Financial Statements, the
Company completed the acquisitions of four companies in 1997, B&B Electronics
Manufacturing Company, Inc. ("B&B"), Area Lighting Research, Inc. ("ALR"),
Madison Equipment Company, Inc. (Madison) and Federal Hose Manufacturing, Inc.
("Federal Hose").

On a pro forma basis, the above acquisitions would contribute $15.1 million to
sales and $.04 to diluted earnings per share for the year ended December 31,
1997 and $35.6 million to sales and $.13 to diluted earnings per share for the
year ended December 31, 1996.

RESULTS OF  OPERATIONS

YEAR ENDED DECEMBER 31, 1997 VERSUS YEAR ENDED DECEMBER 31, 1996

      NET SALES. Net sales for the year ended December 31, 1997 increased $58.4
million, or 36.1%, to $220.3 million from $161.9 million for the year ended
December 31, 1996. Net sales for the Wire and Cable Division increased by $36.7
million, or 25.4%, to $181.0 million for the year ended December 31, 1997 from
$144.3 million for the year ended December 31, 1996. Contributing to the
increase were additional sales of the Company's traditional armored cable and
flexible conduit products, increased sales of the Company's higher margin 
specialty application cables, higher sales of fittings and connectors, 
including sales by Madison, increased sales of the Company's line of 
specialty coated metals products and sales by Federal Hose. Net sales for the 
America Cable Systems Division increased by $21.7 million, or 129.9%, to 
$38.4 million for the year ended December 31, 1997 from $16.7 million for the 
year ended December 31, 1996. This increase is attributable to sales by ALR 
and B&B as well as higher sales of modular wiring systems, including The 
Intelligent Floor and The Intelligent Ceiling products.

      GROSS PROFIT. Gross profit for the year ended December 31, 1997 increased
$20.4 million, or 47.0% to $63.8 million from $43.4 million for the year ended
December 31, 1996. Gross margin increased to 29.0% for the year ended December
31, 1997 from 26.8% for the year ended December 31, 1996. This increase is
attributable to (i) efficiencies arising from operating near manufacturing
capacity (ii) more efficient manufacturing processes resulting in better yields
on materials (iii) decreased cost of raw materials through better purchasing
practices (iv) increased sales of the Company's higher margin specialty
application cables and (v) higher margins on products sold by the companies
acquired in 1997.

                                        13

<PAGE>

      INCOME FROM OPERATIONS. Income from operations for the year ended December
31, 1997 increased $11.3 million, or 66.5%, to $28.3 million from $17.0 million
for the year ended December 31, 1996. Income from operations as a percentage of
net sales increased to 12.8% for the year ended December 31, 1997 from 10.5% for
the year ended December 31, 1996. This increase resulted from improved gross
margin, but was partially offset by an increase in selling, general and
administrative expenses attributable to increases in freight costs and sales
agent commissions, which generally rise in proportion with net sales, and
compensation expense.

      NET INCOME. Net income for the year ended December 31, 1997 increased $6.7
million, or 59.2%, to $18.2 million from $11.5 million for the year ended
December 31, 1996. Net income as a percentage of net sales increased to 8.3% for
the year ended December 31, 1997 from 7.1% for the year ended December 31, 1996.
This increase was primarily due to increased income from operations.

YEAR ENDED DECEMBER 31, 1996 VERSUS YEAR ENDED DECEMBER 31, 1995

      NET SALES. Net sales for the year ended December 31, 1996 increased $22.4
million, or 16.1%, to $161.9 million from $139.5 million for the year ended
December 31, 1995. Net sales for the Wire and Cable Division increased by $19.9
million, or 16.0%, to $144.3 million for the year ended December 31, 1996 from
$124.4 million for the year ended December 31, 1995. Contributing to the
increase were additional sales of the Company's traditional armored cable and
flexible conduit products as well as increased sales of the Company's higher
margin specialty application cables. Also contributing to this increase were
higher sales of fittings and connectors and specialty coated metal products
introduced by the Company in early 1995. Net sales for the America Cable Systems
Division increased by $2.5 million, or 17.6%, to $16.7 million for the year
ended December 31, 1996 from $14.2 million for the year ended December 31, 1995.
This increase is attributable to improved demand for modular wiring systems,
including The Intelligent Floor and The Intelligent Ceiling products.

      GROSS PROFIT. Gross profit for the year ended December 31, 1996 increased
$11.0 million, or 33.9%, to $43.4 million from $32.4 million for the year ended
December 31, 1995. Gross margin increased to 26.8% for the year ended December
31, 1996 from 23.2% for the year ended December 31, 1995. This increase is
attributable to (i) decreased cost of raw materials through more efficient
purchasing, lower market prices of commodities and improved manufacturing
processes resulting in better yields on materials and (ii) increased sales of
higher margin specialty application products.

      INCOME FROM OPERATIONS. Income from operations for the year ended December
31, 1996 increased $6.5 million, or 62.3%, to $17.0 million from $10.5 million
for the year ended December 31, 1995. Income from operations as a percentage of
net sales increased to 10.5% for the year ended December 31, 1996 from 7.5% for
the year ended December 31, 1995. This increase resulted from improved gross
margin, but was partially offset by an increase in selling, general and
administrative expenses attributable to increases in freight costs, sales agent
commissions, compensation expense and fees for professional services.

      NET INCOME. Net income for the year ended December 31, 1996 increased $3.4
million, or 41.4%, to $11.5 million from $8.1 million for the year ended
December 31, 1995. Net income as a percentage of net sales increased to 7.1% for
the year ended December 31, 1996 from 5.8% for the year ended December 31, 1995.
This increase was primarily due to increased income from operations, partially
offset by a slight decline in other income, which consisted primarily of income
on investments in securities, and a higher effective tax rate of 38.2% for the
year ended December 31, 1996 compared to 37.2% for the year ended December 31,
1995 which was due to a higher marginal tax rate in 1996.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's short-term liquidity needs have generally consisted of
operating capital necessary to finance inventories and receivables. Long-term
liquidity needs generally relate to capital expenditures necessary to expand the
production capacity of its manufacturing operations. The Company has satisfied
its short- and long-term liquidity needs with cash generated from operations and
proceeds from the public offerings of its Common Stock in 1995 and 1997,
supplemented by available borrowings under its revolving line of credit. The
excess proceeds from the 1995 and 1997 stock offerings are included in the
Company's portfolio of marketable securities at December 31,


                                        14

<PAGE>

1997. The Company expects that it will meet its ongoing working capital needs
for the next twenty-four months primarily with remaining stock offering proceeds
and cash generated from operations.

      Cash generated from operations totaled $5.1 million and $11.5 million for
the years ended December 31, 1997 and 1996, respectively, and was attributable
primarily to increased profitability, although cash generated for the year ended
December 31, 1997 was partially offset by an increase in inventories and
accounts receivable. Cash used in operations was $1.3 million for the year ended
December 31, 1995, again primarily due to an increase in inventories and
accounts receivable. Working capital on December 31, 1997 was $88.1 million and
the ratio of current assets to current liabilities was 3.93 to 1.00. The
Company's average inventory of $32.9 million (including inventories of 
companies acquired in 1997) for the year ended December 31, 1997 represented 
an increase of $12.9 million over the average inventory of $20.0 million for 
the year ended December 31, 1996.

      Accounts receivable at December 31, 1997 were $8.2 million higher than the
balance at December 31, 1996 due primarily to increased sales and to accounts
receivable of companies acquired in 1997. For the year ended December 31, 1997
average day sales outstanding were 55 compared to 56 for the year ended December
31, 1996. At December 31, 1997, accounts receivable over 60 days represented
3.8% of accounts receivable.

      Capital expenditures for the year ended December 31, 1997 of $7.7 million
were for new or replacement production equipment to increase manufacturing
capacity. Capital expenditures amounted to $7.0 million and $2.3 million for the
years ended December 31, 1996 and 1995, respectively. For the years ended
December 31, 1997, 1996 and 1995, the Company leased certain manufacturing
equipment valued at $0.1 million, $1.7 million and $2.0 million, respectively.
Capital expenditures for 1998 are expected to be approximately $11.0 million,
primarily for the expansion of manufacturing capacity and to upgrade management
information systems.

      At December 31, 1997, bank indebtedness under the Company's unsecured
revolving line of credit was $6.2 million. This revolving line of credit
terminates on March 31, 1999 and provides for direct borrowings of up to $25.0
million, including letter of credit borrowings up to $3.0 million. Up to $10.0
million of the line of credit may be used without the lender's prior consent for
business acquisitions. At December 31, 1997, letters of credit totaling
approximately $0.8 million were outstanding under the line of credit.Borrowings
under the line of credit averaged $3.8 million for the year ended December 31,
1997.

      Borrowings under the revolving line of credit are available at interest
rates equal to either the lender's base rate or the Eurodollar rate plus 0.5% to
1.25% for a fixed period of one, two, three, six months or one year. At December
31, 1997, the weighted average cost of borrowings under the line of credit was
8.5%. The line of credit contains certain restrictive covenants, including the
requirement that the Company maintain minimum levels of tangible capital funds
and meet other specified ratio requirements.

      During 1996, the Company was loaned the proceeds from the issuance of
$3.57 million in Industrial Revenue Bonds by the Massachusetts Industrial
Finance Agency for the purpose of acquiring and refurbishing a 99,000
square-foot manufacturing facility in New Bedford, Massachusetts, which secures
the IRBs. The IRBs mature on July 24, 2016 and carry an average interest rate 
adjustable on a weekly basis. The IRBs carried an average interest rate of 
approximately 3.75% and 3.5% for the years ended December 31, 1997 and 1996, 
respectively. In addition, an annual fee of 1.0% of the amount of an 
unsecured stand-by letter of credit is payable to the bank holding the letter 
of credit and also acting as trustee under the terms of the IRB issuance. The 
Company has the right to convert from the variable interest rate to a fixed 
rate established at the time of conversion. The bonds are payable in nineteen 
annual installments of $180,000 with a final payment of $150,000 due at 
maturity, all funded through monthly payments of $15,000 to the trustee over 
the twelve months preceding the installment due dates.

INFLATION AND FOREIGN EXCHANGE FLUCTUATION

      The Company believes that inflation has not had a material effect on its
business, operating results or financial condition during the three-year period
ended December 31, 1997. While the Company does not believe that its business is
highly sensitive to inflation, there can be no assurance that future increases
in the rate of inflation would not have a material adverse effect on the
Company's operations.

                                        15


<PAGE>

      The Company is currently not exposed to foreign exchange risk because
foreign sales are denominated in U.S. dollars to U.S.-based trading companies.
The Company may seek to manage any such future risk by entering into foreign
exchange contracts as management deems appropriate.

YEAR 2000

      The Company continues to assess its exposure related to the impact of the
Year 2000 date issue. The Year 2000 date issue arises from the fact that many
computer programs use only two digits to identify a year in a date field, thus
computer programs having time-sensitive software will recognize a date using
"00" as the year 1900 rather than the year 2000. The Company's key financial and
operational systems are being reviewed and, where required, detailed plans have
been, or are being developed and implemented on a schedule intended to permit
the Corporation's computer systems and products to continue to function
properly. This effort has been combined with the upgrading or replacement of
current computer systems for infrastructure and technology enhancement reasons.

      Maintenance or modification costs will be expensed as incurred, while the
costs of new information technology will be capitalized and amortized in
accordance with Company policy. Management does not believe the costs
associated with the information systems upgrades will have a material adverse
impact on the Company's financial position, results of operations or cash
flows. However, the Company could be adversely impacted by the Year 2000 date
issue if suppliers, customers and other businesses do not address this issue
successfully. Management continues to assess these risks and ensure Year 2000
compliance from the Company's suppliers and customers in order to reduce the
impact on the Company.

FACTORS THAT MAY AFFECT FUTURE PERFORMANCE

      SUBSTANTIAL PRICE COMPETITION, MARGIN MAINTENANCE AND PRICES OF RAW
MATERIALS. Price competition for the Company's core products is significant, and
the Company sells its products in accordance with prevailing market prices.
Copper rod is the principal raw material used in the Company's manufacturing
operations, accounting for approximately 28% of cost of goods sold for the year
ended December 31, 1997. The Company expects that copper will continue to
account for a significant portion of the cost of goods sold in the future.
Historically, the price of copper has fluctuated significantly (i.e. between
$76.60 and $122.00, and $86.85 and $130.10 per 100 pounds in 1997 and 1996,
respectively). The Company's other principal raw materials include steel and
aluminum, which collectively accounted for approximately 30% of cost of goods
sold for the year ended December 31, 1997. Although in the past these raw
materials have not been subject to the same degree of price volatility as
copper, there can be no assurance that significant fluctuations will not occur
in the future. The Company attempts to insulate its products from these price
fluctuations through improved purchasing procedures and appropriate selling
price adjustments. There can be no assurance, however, that the Company will be
able to maintain acceptable gross profit margins on product sales in the future
and, if it is unable to do so, its business, operating results and financial
condition could be adversely affected. The Company does not currently engage in
metal futures trading or other hedging activities, but does have a producer
supply contract, which currently expires on December 31, 1998 and under which
the Company purchases copper in any given month at a price equal to the average
copper selling prices, as determined by the New York Commodity Exchange, for the
month of shipment plus a premium. In addition, the Company has an aluminum
supply contract which expires on December 31, 1998 that provides for technical
assistance and other special terms. The Company may engage in hedging activities
in the future as management deems appropriate.

      MANAGEMENT OF GROWTH. The Company has experienced rapid growth,
particularly during the last four years. The continued rapid growth of the
Company could place a significant strain on its management and other resources.
The Company anticipates that continued growth, if any, will require it to
continue to recruit, hire, train and retain a substantial number of new and
highly skilled product development, administrative, information technology,
finance, sales and marketing and support personnel. The Company's ability to
compete effectively and to manage future growth, if any, will depend on its
ability to continue to implement and improve operational, financial and
management information systems on a timely basis and to expand, train, motivate
and manage its work force. Should the Company continue to experience rapid
growth, there can be no assurance that the Company's personnel, systems,
procedures and controls will be adequate to support the Company's operations or
that management will adequately anticipate all demands that growth will place on
the Company. If the Company's

                                        16

<PAGE>

management is unable to manage growth effectively, the quality of the Company's
products and its business, operating results and financial condition could be
materially adversely affected. See "--Integration of Acquisitions."

      INTEGRATION OF ACQUISITIONS. The Company intends to supplement its growth
by pursuing selective acquisitions of companies with products complementary to
its existing business. During the year ended December 31, 1997, the Company
acquired four companies and intends to consider future acquisitions in the
industry, some of which may be material to the Company. Acquisitions involve
numerous risks, including difficulties in the assimilation of the operations,
technologies and products, the diversion of management's attention from other
business concerns, risks of entering markets in which the Company has no or
limited direct prior experience, operating companies in different geographical
locations, and the potential loss of key employees of the acquired company.
Future acquisitions by the Company could result in potentially dilutive
issuances of equity securities, the incurrence of debt and contingent
liabilities and amortization expenses related to goodwill and other intangible
assets, which could materially adversely affect the Company's operating results
and financial condition. There can be no assurance that future acquisitions can
be successfully integrated or that management will be successful in managing the
combined operations. See "--Management of Growth."

      DEPENDENCE ON NEW PRODUCTS AND PRODUCT IMPROVEMENTS. The commercial
construction industry and the evolution of the modern workstation are
characterized by advances in electrical distribution and communications systems
which require ongoing improvements in the capabilities of wire and cable
products. The Company believes that its future success will depend in part upon
its ability to enhance existing products and to develop and manufacture new
products that meet or anticipate such changes. The failure to introduce new or
enhanced products on a timely and cost competitive basis could have an adverse
impact on the Company's business, operating results or financial condition.

      MANUFACTURING CAPACITY. The Company is currently operating near capacity
in some of its manufacturing facilities. Although the Company has plans to open
additional facilities and expand its capacity at others, there can be no
assurance that these additional facilities or expansions will be completed on
time and/or on budget, that the Company will not experience manufacturing delays
or problems, or that adequate equipment and personnel will be available to
operate these new facilities. The additional facilities and equipment will also
require substantial funds. The Company anticipates that borrowings and existing
cash will be adequate to fund its planned expansions. See "Management Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." If the Company experiences significant delays or problems in
implementing its current plans, such delays or problems could have a material
adverse effect on the Company's business, results of operations or financial
condition.

      VOLATILITY OF NEW CONSTRUCTION MARKET. The volatility of the
nonresidential new construction market has a direct impact on sales of certain
of the Company's products. Certain regions of the United States have
experienced, and in the future may experience, significant economic recessions
that have reduced, or may reduce, the number of nonresidential new construction
projects, which in turn could adversely affect the Company's business, operating
results and financial condition. The Company has historically derived a
substantial portion of its sales from the building modernization market, which
has not been significantly adversely affected by downturns in the nonresidential
new construction market. There can be no assurance, however, that the
modernization market will not enter a downturn or that the Company's sales will
not be affected by future downturns in the nonresidential new construction
market. The Company's sales have also been impacted from time to time by
unseasonable and excessive weather conditions that delay new construction. There
can be no assurance that such conditions will not have a material adverse effect
on the Company's operating results in the future.

      COMPETITION. The Company faces competition from a number of national and
regional competitors, both in the armored cable and pipe and wire industries,
some of which have greater financial, engineering, research and development,
manufacturing and other resources than the Company. The Company's competitors
can be expected to continue to improve the design and performance of their
products and to introduce new products with competitive price and performance
characteristics. Although the Company believes that it has certain technological
and other advantages over its competitors, maintaining and leveraging any such
advantages will require continued investment by the Company in design and
engineering, development, marketing and customer service and support. There can
be no assurance that the Company will have sufficient resources to continue to
make such investments or that the

                                        17

<PAGE>

Company will be successful in maintaining and leveraging any such advantages.
See "--Management of Growth" and "Business--Competition."

      RELIANCE ON INDEPENDENT SALES REPRESENTATIVES AND NONEXCLUSIVE
DISTRIBUTORS. The Company sells its products to distributors through a network
of independent sales representatives who generally work on a commission basis.
The Company's top ten sales representatives accounted for approximately 45% of
sales for the year ended December 31, 1997. These representatives are not under
direct control of the Company, are not subject to minimum purchase requirements
and are not contractually obligated to carry the Company's product lines
exclusively or for any period of time. Although the Company believes that the
loss of any one representative would not have a material adverse impact on the
Company's business, there can be no assurance that the Company will be able to
maintain its existing relationships with these representatives. In addition, the
distributors which ultimately sell the Company's products could purchase and
distribute products that compete with the Company's products or cease purchasing
the Company's products at any time. There can be no assurance that the
distributors will continue to distribute or recommend the Company's products or
do so successfully.

      DEPENDENCE ON KEY MANAGEMENT PERSONNEL. The Company's long-term success
and its growth strategy depend on its senior management, particularly Ralph R.
Papitto, the Company's Chairman and Chief Executive Officer, Robert R. Wheeler,
the Company's President and Chief Operating Officer, and Raymond H. Keller, the
Company's Chief Financial Officer. The loss of service of one or more of the
Company's key senior management personnel could have an adverse effect on the
Company's business, financial condition and results of operations. See
"Executive Officers of the Registrant."

      ANTITAKEOVER PROVISIONS. Certain provisions of the Company's Restated
Certificate of Incorporation, as amended, and By-Laws and of the Delaware
General Corporation Law (the "DGCL") could discourage potential acquisition
proposals and could delay or prevent a change in control of the Company. Such
provisions, which include supermajority voting requirements for specified
business combinations, a staggered Board of Directors, and the right of the
Board of Directors, without further stockholder approval, to issue preferred
stock (the "Preferred Stock") upon such terms and conditions, and having such
rights, privileges and preferences as the Board of Directors may determine, may
have the effect of deferring hostile takeovers or delaying or preventing changes
in control or management of the Company. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights of any
holders of Preferred Stock that may be issued in the future. The Company has no
present plans to issue any Preferred Stock.

                                        18

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                    CONTENTS

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets............................................20
Consolidated Statements of Income......................................22
Consolidated Statements of Shareholders' Equity........................23
Consolidated Statements of Cash Flows..................................24
Notes to Consolidated Financial Statements.............................26
Report of Independent Auditors.........................................46




                                        19

<PAGE>

                      CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                      DECEMBER 31
                                                    1997         1996
                                               --------------------------
                                                   ($ IN THOUSANDS)
<S>                                            <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents (NOTE 1)            $  2,803       $   980
  Marketable securities (NOTE 3)                  40,434        30,508
  Accounts receivable, net of allowance for
   doubtful accounts and sales allowances of
   $3,870 in 1997 and $3,140 in 1996              32,127        23,919
  Inventories:
   Finished goods                                 26,333        11,559
   Work-in-process                                 7,385         3,702
   Raw materials                                   6,219         5,665
                                               ---------------------------
                                                  39,937        20,926
Current deferred taxes (NOTE 9)                    1,491           637
Other current assets                               1,439         1,121
                                               ---------------------------
Total current assets                             118,231        78,091

Property, plant and equipment:
  Land                                             1,190           510
  Buildings and improvements                      10,173         8,754
  Machinery and equipment                         23,207        16,050
  Furniture and fixtures                           2,412         1,791
  Construction in progress                           364            83
                                               ---------------------------
                                                  37,346        27,188
  Less accumulated depreciation                   12,409         9,482
                                               ---------------------------
Net property, plant and equipment                 24,937        17,706

Goodwill, net of accumulated amortization
  of $373 in 1997 and $122 in 1996                16,497         1,175
Other long-term assets, net                        1,464           951
                                               ---------------------------
Total assets                                    $161,129       $97,923
                                               ---------------------------
                                               ---------------------------
</TABLE>


                                        20

<PAGE>

                CONSOLIDATED BALANCE SHEETS (continued)

<TABLE>
<CAPTION>
                                                      DECEMBER 31
                                                    1997         1996
                                               --------------------------
                                                   ($ IN THOUSANDS)
<S>                                            <C>             <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt             $    227       $   270
  Revolving credit note payable (NOTE 4)           6,230         2,000
  Accounts payable                                12,536        12,471
  Accrued expenses:
   Payroll and employee benefits                   3,609         2,506
   Other (NOTE 6)                                  7,488         1,885
                                               ---------------------------
  Total accrued expenses                          11,097         4,391
                                               ---------------------------
Total current liabilities                         30,090        19,132

Long-term debt (NOTE 4)                            3,893         3,300

Deferred income taxes (NOTE 9)                     1,570         1,547

Other long-term liabilities                        2,441           954

Commitments and contingencies (NOTES 7 AND 8)         --            --

Shareholders' equity (NOTE 10):
  Preferred stock, $.01 par value,
   1,000,000 shares authorized, none issued           --            --
  Common stock, $.01 par value, 15,000,000
   shares authorized, 11,397,854 and 9,168,781
   shares issued and outstanding in 1997 and
   1996, respectively                                114            73
  Paid-in capital                                 79,110        48,011
  Other                                            1,021           218
  Treasury stock, 6,411 and 6,031 shares in
   1997 and 1996, respectively, at cost              (92)          (82)
  Retained earnings                               42,982        24,770
                                               ---------------------------
Total shareholders' equity                       123,135        72,990
                                               ---------------------------
Total liabilities and shareholders' equity      $161,129       $97,923
                                               ---------------------------
                                               ---------------------------
</TABLE>

SEE ACCOMPANYING NOTES.

                                        21

<PAGE>

                   CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                           YEARS ENDED DECEMBER 31
                                        1997         1996          1995
                                    ----------------------------------------
                                    ($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>            <C>          <C>
Net sales                             $220,264     $161,868     $139,483
Cost of goods sold                     156,479      118,487      107,087
                                    ----------------------------------------
Gross profit                            63,785       43,381       32,396

 Selling, general and
  administrative expenses               35,483       26,384       21,926
                                    ----------------------------------------
Income from operations                  28,302       16,997       10,470

Other income (expense):
  Interest expense                        (620)        (728)        (614)
  Investment income                      2,141        2,339        3,001
  Other, net                              (192)         (48)          39
                                    ----------------------------------------
                                         1,329        1,563        2,426
                                    ----------------------------------------
Income before income taxes              29,631       18,560       12,896

Income taxes (NOTE 9)                   11,392        7,100        4,791
                                    ----------------------------------------
Net income                            $ 18,239     $ 11,460     $  8,105
                                    ----------------------------------------
                                    ----------------------------------------
 Basic earnings per common
  share (NOTE 11)                        $1.71        $1.25         $.92
                                    ----------------------------------------
                                    ----------------------------------------

 Diluted earnings per common
  share (NOTE 11)                        $1.66        $1.23         $.90
                                    ----------------------------------------
                                    ----------------------------------------
</TABLE>

SEE ACCOMPANYING NOTES.

                                        22

<PAGE>

                       CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                           RETAINED
                                                                                           EARNINGS
                                          COMMON      PAID-IN                 TREASURY   (ACCUMULATED
                                           STOCK      CAPITAL       OTHER       STOCK      DEFICIT)     TOTAL
                                        -------------------------------------------------------------------------
                                                                    ($ IN THOUSANDS)

<S>                                     <C>          <C>           <C>           <C>      <C>         <C>
Balance at December 31, 1994                $ 55     $25,871       $  (744)      $ --     $ 5,205     $ 30,387

Net income for 1995                           --          --            --         --       8,105        8,105
Proceeds from issuance of 2,203,125
  shares of common stock                      18      21,906            --         --          --       21,924
Repurchase of restricted stock, net           --          --            --        (30)         --          (30)
Amortization of compensation (NOTE 10)        --          --           191         --          --          191
Exercise of stock options (NOTE 10)           --         140            --         --          --          140
Adjustment to unrealized gains (losses)
  on available-for-sale securities, net
  of tax                                      --          --           593         --          --          593
Other                                         --           1            --         --          --            1
                                        --------------------------------------------------------------------------
Balance at December 31, 1995                  73      47,918            40        (30)     13,310       61,311

Net income for 1996                           --          --            --         --      11,460       11,460
Repurchase of restricted stock, net           --          --            --        (52)         --          (52)
Amortization of compensation (NOTE 10)        --          --           189         --          --          189
Cancellation of 32,375 restricted shares      --        (276)          276         --          --            -
Exercise of stock options and related
  tax benefit (NOTE 10)                       --         369            --         --          --          369
Adjustment to unrealized gains (losses)
  on available-for-sale securities, net
  of tax                                      --          --          (287)        --          --         (287)
                                        --------------------------------------------------------------------------
Balance at December 31, 1996                  73      48,011           218        (82)     24,770       72,990

Net income for 1997                           --          --            --         --      18,239       18,239
Proceed from issuance of 1,937,500
  shares of common stock                      16      27,552            --         --          --       27,568
Repurchase of restricted stock, net           --          --            --        (10)         --          (10)
Amortization of compensation (NOTE 10)        --          --            15         --          --           15
Employee stock awards                          1         651            --         --          --          652
Exercise of stock options and warrants
  and related tax benefit (NOTE 10)           --         647            --         --          --          647
Issuance of 136,364 shares of common
  stock for acquisitions and related
  fees (NOTE 2)                                1       2,249            --         --          --        2,250
Adjustment to unrealized gains (losses)
  on available-for-sale securities, net
  of tax                                      --          --           788         --          --          788
Five-for-four stock split effected
  in the form of a dividend                   23          --            --         --         (27)          (4)
                                        --------------------------------------------------------------------------
Balance at December 31, 1997                $114     $79,110       $ 1,021       $(92)    $42,982     $123,135
                                        --------------------------------------------------------------------------
                                        --------------------------------------------------------------------------
</TABLE>

See accompanying notes.

                                        23

<PAGE>

                 CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31
                                           1997        1996        1995
                                       ------------------------------------
                                                ($ IN THOUSANDS)
<S>                                    <C>           <C>          <C>
Operating activities
Net income                               $18,239     $11,460      $8,105
Adjustments to reconcile net income
  to net cash provided by operating
  activities:
   Depreciation                            2,927       2,235       1,860
   Amortization of intangibles               251         776         195
   Net gain on sale of property,
     plant and equipment                      --         (54)         --
   Net gain realized on
     available-for-sale securities           (88)       (618)     (1,720)
   Deferred income taxes                    (428)         77          12
   Provision for bad debts                   209         263          76
   Provision for sales allowances            193         719         480
   Compensation expense for
     restricted stock and
     compensatory options                     91         239         292
   Increase (decrease) in cash
     arising from changes in assets
     and liabilities:
      Accounts receivable                 (2,935)     (4,326)     (2,694)
      Inventories                        (14,001)     (1,564)     (6,732)
      Other current assets                  (197)       (106)       (289)
      Other long-term assets                (403)       (431)       (996)
      Accounts payable                    (2,958)        631         899
      Accrued payroll and employee
        benefits                             969       1,030         (80)
      Other accrued liabilities            1,747         974        (703)
      Other long-term liabilities          1,486         154          --
                                       ------------------------------------
Net cash provided by (used in)
  operating activities                     5,102      11,459      (1,295)

Investing activities
Acquisitions, including expenses,
  less cash acquired (NOTE 2)            (20,598)         --          --
Capital expenditures, net                 (7,687)     (6,970)     (2,340)
Proceeds from sale of property, plant
  and equipment                               --         195          --
Purchase of available-for-sale
  securities                             (47,505)    (29,063)    (44,907)
Proceeds from sale of
  available-for-sale securities           40,350      24,349      22,601
                                       ------------------------------------
Net cash used in investing activities    (35,440)    (11,489)    (24,646)
</TABLE>


                                        24

<PAGE>

           CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31
                                           1997        1996        1995
                                       ------------------------------------
                                                ($ IN THOUSANDS)
<S>                                    <C>            <C>         <C>
FINANCING ACTIVITIES
Proceeds from revolving line of
  credit borrowings                       94,375      60,615      52,948
Repayments of revolving line of
  credit borrowings                      (90,145)    (65,540)    (49,523)
Proceeds from term loan                       --       3,200          --
Repayment of term loan                        --      (3,200)         --
Proceeds from long-term debt                  --       3,570          --
Payments on long-term debt,
  including current portion                 (271)         --          --
Proceeds from issuance of common stock    28,212         327      22,065
Purchase of treasury stock                   (10)        (52)        (30)
                                       ------------------------------------
Net cash provided by (used in)
  financing activities                    32,161      (1,080)     25,460
                                       ------------------------------------

Net increase (decrease) in cash and
  cash equivalents                         1,823      (1,110)       (481)
Cash and cash equivalents at
  beginning of year                          980       2,090       2,571
                                       ------------------------------------
Cash and cash equivalents at end of
  year                                  $  2,803    $    980    $  2,090
                                        -----------------------------------
                                        -----------------------------------

Supplemental schedule of cash flow information:
   Cash paid during the year for
     interest                           $    580    $    814    $    614
                                        -----------------------------------
                                        -----------------------------------
   Cash paid during the year for
     income taxes                       $ 10,103    $  6,058    $  5,863
                                        -----------------------------------
                                        -----------------------------------
</TABLE>


SEE ACCOMPANYING NOTES.

                                        25

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                           DECEMBER 31, 1997 AND 1996


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

AFC Cable Systems, Inc. (the Company) is a manufacturer of electrical
distribution products, including prewired armored cable, flexible conduit and
modular wiring systems used in the nonresidential construction electrical wiring
industry. The Company, through its wholly-owned subsidiaries, also manufacturers
and distributes photo controls for the lighting control and fixture industries,
electronic interfaces and connectors that facilitate data communications, and
flexible hoses, ducting and connections for diverse applications. The Company's
customers primarily consist of electrical supply wholesalers located throughout
the United States. The Company performs credit evaluations on all new customers
and generally does not require collateral. Credit losses are provided for in the
financial statements and consistently have been within management's
expectations.

CONSOLIDATION

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

CASH EQUIVALENTS

Cash equivalents are defined as all short-term, highly-liquid investments with
an original maturity of three months or less.

MARKETABLE SECURITIES

Management determines the appropriate classification of marketable securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. All debt and equity securities have been classified as available-for-sale.

Available-for-sale securities are carried at fair value based on quoted market
prices, with the unrealized gains and losses, net of tax, reported in a separate
component of shareholders' equity. The amortized cost of debt securities in this
category is adjusted for amortization of premiums and accretion of discounts to
maturity. Such amortization is included in investment income. Realized gains and
losses and

                                        26

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

declines in value judged to be other-than-temporary on available-for-sale
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in investment income.

INVENTORIES

Inventories are stated at the lower of cost or market. Cost of substantially all
of the inventory is determined on a first-in, first-out (FIFO) basis.

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION

Property, plant and equipment are stated at cost. Depreciation is computed on
the straight-line method over the estimated lives of the assets as follows:

       Buildings and improvements                 5 to 30 years
       Machinery and equipment                    3 to 10 years
       Furniture and fixtures                     5 to 10 years

GOODWILL

Goodwill consists of the excess cost over the fair value of the assets of
acquired businesses (see Note 2) and is being amortized using the straight-line
method over periods of twenty to forty years.

SELF-INSURANCE

The Company is self-insured for its employee health and workers' compensation
plans. The plans, which are administered by insurance companies, contain certain
stop loss provisions that limit the Company's liability in the event of
catastrophic losses. Claims are accrued for as incurred based on available claim
information and management's estimate of claims incurred but not yet reported.

                                        27


<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

STOCK COMPENSATION

The Company accounts for its stock compensation arrangements under the
provisions of APB 25, "Accounting for Stock Issued to Employees."

REVENUE RECOGNITION

The Company recognizes sales when goods are shipped to the customer.

ADVERTISING COSTS

Advertising costs are expensed as incurred and were $1,567,000, $950,000, and
$854,000 in 1997, 1996 and 1995, respectively.

EARNINGS PER SHARE

The Company has adopted Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share" ("FAS 128"), which was issued in 1997. FAS 128 requires the
presentation of "basic earnings per share" and "diluted earnings per share."
Basic earnings per share represents net income divided by the weighted average
number of shares of common stock outstanding during the year. Diluted earnings
per share represents net income divided by weighted average shares outstanding
adjusted for the dilutive effect of the assumed exercise of outstanding options
and warrants. Earnings per share amounts for all periods have been presented,
and where appropriate, restated to conform to the requirements of FAS 128.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

                                        28

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" and Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company is currently
evaluating the effects of implementing these statements which are effective
beginning in 1998.

RECLASSIFICATION

Certain reclassifications were made to the 1996 and 1995 financial statements in
order that they may be consistent with the 1997 presentation.

2.  ACQUISITIONS

During the year ended December 31, 1997, the Company made the acquisitions set
forth below, each of which has been accounted for as a purchase. The
consolidated financial statements of the Company include the operating results
of each business from the date of acquisition.

B&B ELECTRONICS MANUFACTURING COMPANY, INC.

On January 28, 1997, the Company acquired all of the outstanding stock of
Illinois-based B&B Electronics Manufacturing Company, Inc. ("B&B"), a
manufacturer and distributor of electronic interfaces and connectors that
facilitate data communications. The cost of B&B consisted of $4.2 million in
cash, 75,000 shares of the Company's common stock ($960,000), plus fees of
approximately $73,000, and assumed debt. Contingent consideration, which is in
addition to the above acquisition costs, will be paid to the seller of B&B for
certain earnings targets achieved by B&B for the year ended December 31, 1997,
and will be payable for subsequent annual periods if certain earnings targets
are met for such periods. The contingent consideration payable for the period
ended December 31, 1997, is approximately $600,000. Contingent consideration is
recorded as additional purchase price when the future earnings targets have been
met.

                                        29

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


2.  ACQUISITIONS (CONTINUED)

AREA LIGHTING RESEARCH, INC.

On January 31, 1997, the Company acquired certain assets and assumed certain
liabilities of New Jersey-based Area Lighting Research, Inc. ("ALR"), a
designer, manufacturer and distributor of photo controls and electrical devices
for the lighting control and fixture industries. The cost of ALR consisted of
$7.7 million in cash plus 50,000 shares of common stock issued in payment of
fees (approximately $1 million). Contingent consideration, in addition to the
above costs, is payable to the seller of ALR for certain financial targets
achieved by ALR for the year ended December 31, 1997. The contingent
consideration payable for the year ended December 31, 1997, is approximately
$400,000 and was recorded as additional purchase price.

MADISON EQUIPMENT COMPANY, INC.

On April 1, 1997, the Company acquired all of the outstanding stock of
Ohio-based Madison Sale Corporation, a supplier of fittings for the electrical
industry. Upon purchase, the name of the company was changed to Madison
Equipment Company, Inc. ("Madison"). The cost of Madison consisted of $2.0
million in cash plus approximately $85,000 in fees.

FEDERAL HOSE MANUFACTURING, INC.

On November 22, 1997, the Company acquired the assets and assumed certain
liabilities of Ohio-based Federal Hose Manufacturing, Inc. ("FHI"), a
manufacturer and distributor of flexible metal, plastic and fabric hoses,
ducting and connectors for diverse applications. The cost of FHI consisted of
$7.2 million in cash, 11,364 shares of the Company's common stock ($300,000)
plus fees of approximately $265,000. Contingent consideration is payable to the
seller of FHI based upon future earnings targets through December 31, 2000. The
purchase price allocation of FHI is preliminary.

                                        30

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


2.  ACQUISITIONS (CONTINUED)

The goodwill resulting from the above acquisitions will be amortized over 40
years, with the exception of the goodwill from the Madison acquisition, which
will be amortized over a 20-year period. Pro forma income statement data
assuming the acquisitions above were made at the beginning of 1997 and 1996, is
as follows:

<TABLE>
<CAPTION>
                                               YEAR ENDED DECEMBER 31
                                                 1997          1996
                                            -----------------------------
                                                  ($ IN THOUSANDS,
                                               EXCEPT PER SHARE DATA)
<S>                                         <C>               <C>
Net sales                                      $235,356       $197,427
Income from operations                           29,117         19,352
Net income                                       18,754         12,795
Diluted earnings per common share                 $1.70          $1.36
</TABLE>

The above pro forma information does not purport to represent the Company's
results of operations that would have been attained had the above acquisitions
in fact occurred at the beginning of the periods indicated or to project the
Company's results for any future period.

3.  MARKETABLE SECURITIES

The following is a summary of securities held by the Company. All securities are
classified as available-for-sale.

<TABLE>
<CAPTION>
                                         GROSS       GROSS
                                      UNREALIZED  UNREALIZED   ESTIMATED
                             COST        GAINS      LOSSES    FAIR VALUE
                          ------------------------------------------------
                                         ($ IN THOUSANDS)
<S>                       <C>            <C>         <C>        <C>
DECEMBER 31, 1997

U.S. corporate debt
  securities                $ 9,464      $  329      $  (3)     $ 9,790
U.S. treasury securities
  and obligations of
  U.S. Government
  agencies                   24,713          55         (2)      24,766
Equity securities             4,894       1,096       (112)       5,878
                          ------------------------------------------------
Total included in
  investments               $39,071      $1,480      $(117)     $40,434
                          ------------------------------------------------
                          ------------------------------------------------
</TABLE>

                                        31

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


3.  MARKETABLE SECURITIES (CONTINUED)

<TABLE>
<CAPTION>
                                         GROSS       GROSS
                                      UNREALIZED  UNREALIZED   ESTIMATED
                             COST        GAINS      LOSSES    FAIR VALUE
                          ------------------------------------------------
                                         ($ IN THOUSANDS)
<S>                       <C>            <C>         <C>        <C>

December 31, 1996

U.S. corporate debt
  securities                $ 1,509      $   92      $  --      $ 1,601
U.S. treasury securities
  and obligations of
  U.S. Government
  agencies                   26,193          52         (6)      26,239
Equity securities             2,576         168        (76)       2,668
                          ------------------------------------------------
Total included in
  investments               $30,278      $  312      $ (82)     $30,508
                          ------------------------------------------------
                          ------------------------------------------------
</TABLE>

The cost and fair market value of debt securities at December 31, 1997 and 1996,
by contractual maturities, are shown below:

<TABLE>
<CAPTION>
                                                 AVAILABLE-FOR-SALE
                                                            FAIR MARKET
                                                 COST          VALUE
                                            -----------------------------
DECEMBER 31, 1997                                 ($ IN THOUSANDS)
<S>                                         <S>                <S>
Debt securities:
  Maturing in one year or less                  $15,031        $15,296
  Maturing between one year and five years       17,931         17,983
  Maturing after five years                       1,215          1,277
                                            -----------------------------
                                                 34,177         34,556
Equity securities                                 4,894          5,878
                                            -----------------------------
Total investments                               $39,071        $40,434
                                            -----------------------------
                                            -----------------------------
</TABLE>

                                        32

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


3.  MARKETABLE SECURITIES (CONTINUED)

<TABLE>
<CAPTION>
                                                 AVAILABLE-FOR-SALE
                                                            FAIR MARKET
                                                 COST          VALUE
                                            -----------------------------
DECEMBER 31, 1996                                 ($ IN THOUSANDS)
<S>                                         <C>                <C>

Debt securities:
  Maturing in one year or less                  $23,884        $23,948
  Maturing between one year and five years        2,762          2,780
  Maturing after five years                       1,056          1,112
                                            -----------------------------
                                                 27,702         27,840
Equity securities                                 2,576          2,668
                                            -----------------------------
Total investments                               $30,278        $30,508
                                            -----------------------------
                                            -----------------------------
</TABLE>

Expected maturities will differ from contractual maturities because the issuers
of the securities may have the right to prepay obligations without prepayment
penalties. Realized gains and (losses) included in investment income amounted to
$173,000 and $(85,000) in 1997 and $859,000 and $(241,000) in 1996, and
$1,720,000 in 1995.

4.  SHORT AND LONG-TERM DEBT

REVOLVING CREDIT NOTE PAYABLE

The Company has an unsecured revolving line of credit agreement which provides
for direct borrowings of up to $25,000,000 of which up to $10,000,000 is
available for business acquisitions, without the lender's prior consent. The
line of credit agreement provides for letter of credit borrowings of up to
$3,000,000, of which $821,000 is outstanding at December 31, 1997. A monthly fee
based on the unused portion of the credit facility is payable under the
agreement.

Borrowings under the line of credit are available at interest rates equal to
either the lender's base rate or the Eurodollar rate plus one half of one
percent to one and one quarter percent for a fixed period of one, two, three or
six months or one year. The Company has the option of electing the applicable
rate upon notification to the lender and as a result, portions of the
outstanding balance accrue interest at different rates. The weighted average
rate of outstanding short-term borrowings is 8.5% and 6.3% at December 31, 1997
and 1996, respectively. The carrying value of the line of credit approximates
its fair value.

                                        33

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


4.  SHORT AND LONG-TERM DEBT (CONTINUED)

The line of credit contains certain restrictive covenants, which require that
the Company maintain minimum levels of tangible capital funds and meet other
specified ratio requirements.

LONG-TERM DEBT

During 1996, the Company received the proceeds from the issuance of $3.57
million in Industrial Revenue Bonds ("IRBs") through the Massachusetts
Industrial Finance Agency for the purpose of acquiring and refurbishing a 99,000
square-foot manufacturing facility in New Bedford, Massachusetts, which secures
the IRBs. The IRBs mature on July 24, 2016 and carry an interest rate adjustable
on a weekly basis. The IRBs carried an average interest rate of approximately
3.75% and 3.5% for the years ended December 31, 1997 and 1996, respectively.
Additionally, an annual fee of 1.0% on the letter of credit securing the bonds
($3.6 million at December 31, 1997) is paid to the bank acting as a trustee in
the issuance of the bonds. The Company has the right to convert from the weekly
interest rate to a fixed rate established at the time of conversion. The bonds
are payable in 19 annual installments of $180,000 with a final payment of
$150,000 due at maturity funded through monthly payments of $15,000 to the
trustee over the twelve months preceding the installment due dates. At December
31, 1997 and 1996, $3.1 million and $3.3 million, respectively, of the total was
classified as long-term debt. The carrying amount of the bonds approximates fair
value at December 31, 1997.

In addition, $774,000 of the $828,000 in debt assumed in the B&B acquisition was
classified as long-term at December 31, 1997. This represents a mortgage on the
facility occupied by B&B. The mortgage carries a fixed rate of 8% and matures on
February 20, 2012. The carrying amount approximates fair value at December 31,
1997.

The following is a schedule of the principal portion of long-term debt payments
for the years beginning December 31, 1997, and after:

<TABLE>
<CAPTION>
                                                               ($ IN
                                                            THOUSANDS)
  <S>                                                       <C>
  1998                                                        $  227
  1999                                                           214
  2000                                                           218
  2001                                                           221
  2002                                                           224
  Thereafter                                                   3,016
                                                           --------------
                                                              $4,120
                                                           --------------
                                                           --------------
</TABLE>


                                        34

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


5.  EMPLOYEE BENEFIT PLANS

The Company sponsors a Supplemental Executive Retirement Plan ("the Plan") for
senior management. The Plan is a defined contribution plan whereby participant
accounts are credited in an amount equal to a percentage, determined by the
Company, of each participant's compensation plus the participant's allocable
share of net earnings of the Plan. At December 31, 1997 and 1996, the Company
has assets (market value of $1,304,000 and $900,000, respectively), segregated
in a trust, available to meet the obligations of the Plan. Expenses for this
plan were approximately $276,000 for each of the years ended December 31, 1997
and 1996, and $190,000 for the year ended December 31, 1995. The total liability
under the plan was approximately $1,334,000 and $976,000 at December 31, 1997
and 1996, respectively.

The Company also has seven defined contribution (401(k)) plans covering
substantially all employees. Contributions to the plans are based on a
percentage of the employee's compensation. The Company also participates in a
multi-employer defined contribution plan covering certain union employees. The
Company's expense under the 401(k) and multi-employer plans was approximately
$699,000, $449,000, and $437,000, for the years ended December 31, 1997, 1996,
and 1995, respectively.

6.  OTHER ACCRUED EXPENSES

At December 31, 1997 and 1996, other accrued expenses consisted of the
following:

<TABLE>
<CAPTION>
                                                 1997          1996
                                            -----------------------------
                                                  ($ IN THOUSANDS)
<S>                                         <C>               <C>
Accrued federal and state income taxes         $1,634         $  257
Investment margin liability                     1,550             --
Other                                           4,304          1,628
                                            -----------------------------
                                               $7,488         $1,885
                                            -----------------------------
                                            -----------------------------
</TABLE>

The investment margin liability, which bears interest, represents borrowings
secured by the Company's marketable securities.

                                        35

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


7.  COMMITMENTS

The Company has various operating lease agreements for buildings and equipment
extending through December 2006. The following is a schedule of the future
minimum rental payments due under these leases:

<TABLE>
<CAPTION>
                                                               ($ IN
                                                            THOUSANDS)
  <S>                                                       <C>

  1998                                                        $ 3,335
  1999                                                          2,535
  2000                                                          2,165
  2001                                                          1,862
  2002                                                          1,520
  Thereafter                                                    2,218
                                                           --------------
                                                              $13,635
                                                           --------------
</TABLE>

Rent expense amounted to $3,863,045, $3,738,390, and $3,088,056, in 1997, 1996,
and 1995, respectively.

In the normal course of business, the Company enters into purchase agreements
with certain raw material vendors. At December 31, 1997, the Company has agreed
to purchase approximately 100% of the 1998 copper usage from two vendors.

8.  CONTINGENCIES

The Company is a defendant in certain claims that relate to matters that
occurred prior to the present ownership. In accordance with the purchase and
sale agreement of the Company, the prior owner has indemnified the Company for
such claims and, accordingly, the matters are being defended by the prior owners
and its insurance companies. Management is of the opinion that these claims
relate to the prior owners and therefore will not have a material adverse effect
on the Company's financial position or results of operations.

                                        36

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


8.  CONTINGENCIES (CONTINUED)

Additionally, the Company is a party to one environmental matter and certain
other legal proceedings not covered by the indemnification. In the environmental
matter, a number of responsible parties entered into a consent decree with the
EPA in 1991 and subsequently, such parties as plaintiffs have sought
contribution from the Company, which was not named as a responsible party by the
EPA. The Company has admitted that a predecessor of the business currently
operated by the Company had disposed of a de minimus amount of waste at the
site. On December 17, 1996, the U.S. District Court for the District of
Massachusetts entered a judgment in favor of the Company with respect to this
claim. As of December 31, 1997, there is an appeal pending with the U.S. Court
of Appeals for the First Circuit.

9.  INCOME TAXES

Deferred income taxes are recognized for the expected consequences of temporary
differences by applying enacted statutory rates, applicable to future years, to
differences between the financial reporting basis and tax basis of assets and
liabilities.

The principal reasons that the aggregate income tax provisions differ from the
U.S. statutory rate of 35% for the year ended December 31, 1997, and 34% for the
years ended December 31, 1996 and 1995, are as follows:

<TABLE>
<CAPTION>
                         1997                1996                 1995
                  ------------------  -------------------  ------------------
                   ($ IN               ($ IN                ($ IN
                  THOUSANDS)          THOUSANDS)           THOUSANDS)
<S>               <C>                 <C>                  <C>
Income tax
  provision at
  statutory rate   $10,371    35.0%     $6,310      34.0%   $4,385     34.0%
State taxes, net
  of federal
  benefit            1,082     3.7%        666       3.6%      380      3.0%
Other                  (61)    (.2)%       124        .7%       26       .2%
                  ------------------  -------------------  -----------------
                   $11,392    38.5%     $7,100      38.3%   $4,791     37.2%
                  ------------------  -------------------  -----------------
                  ------------------  -------------------  -----------------
</TABLE>


                                        37

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


9.  INCOME TAXES (CONTINUED)

The components of the provision for income taxes for the years ended December
31, 1997, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
                                        1997         1996         1995
                                    ----------------------------------------
                                               ($ IN THOUSANDS)
    <S>                             <C>             <C>          <C>
    Current:
      Federal                         $10,072       $6,018       $4,154
      State                             1,748        1,005          625
                                    ----------------------------------------
    Total current                      11,820        7,023        4,779

    Deferred:
      Federal                            (344)          58           53
      State                               (84)          19          (41)
                                    ----------------------------------------
    Total deferred                       (428)          77           12
                                    ----------------------------------------
    Total                             $11,392       $7,100       $4,791
                                    ----------------------------------------
                                    ----------------------------------------
</TABLE>

A summary of the significant components of the Company's deferred tax
liabilities and assets as of December 31, 1997 and 1996, follows:

<TABLE>
<CAPTION>

                                                   1997          1996
                                               ---------------------------
                                                    ($ IN THOUSANDS)
    <S>                                        <C>              <C>
    Deferred tax liabilities:
      Fixed assets                                $1,976        $1,857
      Marketable securities                          604           134
                                               ---------------------------
    Total deferred tax liabilities                 2,580         1,991

    Deferred tax assets:
      Supplemental executive retirement plan         523           389
      Goodwill                                        34            13
      Stock compensation                              90            19
      Inventory                                      702           315
      Allowance for doubtful accounts                342           142
      Accrued liabilities                            810           203
                                               ---------------------------
    Total deferred tax assets                      2,501         1,081
                                               ---------------------------
    Net deferred tax liabilities                  $  79        $  910
                                               ---------------------------
                                               ---------------------------
</TABLE>


                                        38

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.  SHAREHOLDERS' EQUITY AND STOCK AWARD PLANS

SHAREHOLDERS' EQUITY

In the Company's Initial Public Offering in December 1993, the Company sold 
to the underwriters warrants to purchase up to 206,925 shares of common stock 
(prior to giving effect to the October 20, 1997 five-for-four stock split) at 
an exercise price equal to $12.00 per share. Such warrants are not 
transferable and are exercisable through December 14, 1998. During 1997, 
warrants to purchase 103,462 shares (prior to giving effect to the October 
20, 1997 five-for-four stock split) were exercised. After giving effect to 
the October 20, 1997 stock split explained below, there are 129,328 shares of 
common stock issuable upon exercise of remaining warrants at an exercise 
price of $9.60 per share.

As more fully described below, on September 16, 1997, the Company's Board of
Directors authorized a five-for-four split of the Company's common stock. All
references to number of shares, per share amounts, stock option data and prices
of the Company's common stock have been restated to present the effect of the
stock split.

On February 9, 1995, the Company completed the issuance of 1,875,000 shares of
common stock at a price of $10.80 per share. As part of this offering, the
Company granted the underwriters an option to purchase a maximum of 328,125
additional shares to cover over-allotments, which was exercised on February 9,
1995. Also on February 9, 1995, 312,500 shares of common stock were sold to the
public by certain shareholders of the Company at a price of $10.80.

On April 23, 1997, the Company completed the issuance of 1,562,500 shares of
common stock at a price of $15.40 per share. As part of this offering, the
Company granted the underwriters an option to purchase a maximum of 375,000
additional shares to cover over-allotments which was exercised in full on April
29, 1997. Also, on April 23, 1997, 937,500 shares of common stock were sold to
the public by certain shareholders of the Company at a price of $15.40.

                                        39

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.  SHAREHOLDERS' EQUITY AND STOCK AWARD PLANS (CONTINUED)

On September 16, 1997, the Company's Board of Directors authorized a
five-for-four split of the Company's common stock effected in the form a 25
percent stock dividend distributed on October 20, 1997, to shareholders of
record on October 6, 1997. Shareholders' equity has been adjusted by
reclassifying from retained earnings to common stock the par value of the
additional shares arising from the split. The amount of cash paid in lieu of
fractional shares resulting from the split was also charged to retained
earnings.

STOCK AWARD PLANS

The Company has two equity incentive plans covering employees of the Company;
the AFC Cable Systems, Inc. 1993 Equity Incentive Plan and the AFC Cable
Systems, Inc. 1997 Equity Incentive Plan (collectively, the "Plans"). Under the
Plans, the Company may grant stock options, stock appreciation rights,
restricted stock, unrestricted stock, deferred stock and performance stock
awards to key employees. Each of the Plans provides for the issuance of 500,000
shares of common stock. Options awarded under the Plans generally vest in equal
annual installments over either the four or the five years subsequent to the
date of grant. The options expire ten years after the date of grant.

The Company also has a stock plan covering non-employee directors; the AFC Cable
Systems, Inc. 1993 Stock Option Plan for Non-Employee Directors (the "Directors'
Plan"). Under the Directors' Plan, the Company may grant stock options to
non-employee directors which vest in equal annual installments over the five
years subsequent to the date of grant and expire ten years after date of grant.
The Directors' Plan provides for the issuance of 125,000 shares of common stock.

                                        40

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.  SHAREHOLDERS' EQUITY AND STOCK AWARD PLANS (CONTINUED)

A summary of the status of stock options granted under all plans as of December
31, 1997, 1996 and 1995, and changes during the years then ended is presented
below:

<TABLE>
<CAPTION>

                       1997                 1996                  1995
               ----------------------------------------------------------------
                          WEIGHTED               WEIGHTED            WEIGHTED
                          AVERAGE                AVERAGE             AVERAGE
                          EXERCISE               EXERCISE            EXERCISE
 FIXED OPTIONS   SHARES    PRICE      SHARES      PRICE     SHARES    PRICE
-------------------------------------------------------------------------------
<S>             <C>       <C>        <C>         <C>        <C>      <C>
Outstanding at 
  beginning of
  year          400,000     $ 9.03   370,000       $8.42    331,250    $ 7.98
Granted         557,500      16.70   100,000       10.80     56,250     10.80
Exercised       (39,062)      8.61   (40,000)       8.20    (17,500)     8.00
Canceled        (17,187)      8.71   (30,000)       8.40         --        --
               -------------------  ---------------------  ---------------------
Outstanding at
  end of year   901,251     $13.80   400,000       $9.03    370,000     $8.42
               -------------------  ---------------------  ---------------------
               -------------------  ---------------------  ---------------------
Options
  exercisable
  at year end   174,062     $ 8.53   128,125       $8.19     91,250     $7.99
               -------------------  ---------------------  ---------------------
               -------------------  ---------------------  ---------------------
Weighted-average
  fair value of
  options
  granted
  during year     $6.98                $4.47                  $4.46
               -----------          ------------           -----------
               -----------          ------------           -----------
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 1997:

<TABLE>
<CAPTION>
                                           OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                             ------------------------------------------------ ------------------------------
                                 NUMBER                                           NUMBER
                               OUTSTANDING  WEIGHTED AVERAGE    WEIGHTED        EXERCISABLE     WEIGHTED
                                   AT           REMAINING        AVERAGE            AT          AVERAGE
         RANGE OF              DECEMBER 31     CONTRACTUAL      EXERCISE        DECEMBER 31     EXERCISE
      EXERCISE PRICES             1997         LIFE (YRS.)        PRICE            1997          PRICE
---------------------------- ------------------------------------------------ ------------------------------

<S>                          <C>             <C>                <C>              <C>            <C>
   $5.60 to $10.60                 268,751          6.98          $ 8.14           142,812       $ 7.69
   $12.00 to $17.80                556,250          8.96           15.06            31,250        12.38
   $19.40 to $27.06                 76,250          9.67           24.54                --           --
                             ----------------                                 ----------------
                                   901,251                                         174,062
                             ----------------                                 ----------------
                             ----------------                                 ----------------
</TABLE>

As discussed above, common stock may be granted to officers and key employees on
a restricted or unrestricted basis. At December 31, 1997, 1996, and 1995,
restricted stock awards covering 67,350, 1,250 and 61,875 shares, respectively,
were outstanding. During 1997, 1996 and 1995, the restrictions lapsed on 1,250,
28,250 and 29,375 shares, respectively, and 32,375 restricted shares were
forfeited during 1996.

                                        41

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.  SHAREHOLDERS' EQUITY AND STOCK AWARD PLANS (CONTINUED)

Employees vest in these restricted shares ratably over periods of two to three
years. The difference between the par value and the fair market value of the
stock on the date of grant was considered compensation and was amortized ratably
over the vesting period. The Company repurchased, at fair market value, 380
shares, 2,917 shares and 3,110 shares of vested restricted stock during 1997,
1996 and 1995, respectively, to provide certain employees with the funds
necessary to cover their tax withholdings from the receipt of vested restricted
shares.

The 67,350 shares of restricted stock outstanding at December 31, 1997, which
represent performance-based compensation for 1996, were awarded to officers and
key employees under the 1997 Plan.

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123 (FAS No. 123), "Accounting for Stock-Based
Compensation." Accordingly, compensation cost has been recognized in the
financial statements only for stock options that are compensatory as defined
under APB 25. Had compensation cost for the Company's three stock option plans
been determined based on the fair value at the grant date for awards made in
1997, 1996 and 1995 consistent with the provisions of FAS No. 123, the Company's
net earnings and earnings per share would have been the pro forma amounts
indicated below:

<TABLE>
<CAPTION>

                                      1997          1996         1995
                                  ----------------------------------------
                                  ($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                               <C>             <C>           <C>
Net income, as reported             $18,239       $11,460       $8,105
Net income, pro forma                17,765        11,383        8,093

Basic earnings per common share,
  as reported                         $1.71         $1.25         $.92
Basic earnings per common share,
  pro forma                            1.67          1.25          .91

Diluted earnings per common
  share, as reported                  $1.66         $1.23         $.90
Diluted earnings per common
  share, pro forma                     1.62          1.23          .90
</TABLE>


                                        42

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


10.  SHAREHOLDERS' EQUITY AND STOCK AWARD PLANS (CONTINUED)

The fair values of the options were estimated at the date of grant using the
Black-Scholes option pricing model. The following assumptions were used for the
1997, 1996 and 1995 stock option grants:

<TABLE>
<CAPTION>

                                      1997          1996         1995
                                     GRANTS        GRANTS       GRANTS
                                  ----------------------------------------
<S>                               <C>             <C>           <C>
Risk-free interest rate                5.7%         5.8%          5.8%
Expected option life                 4.4 years    4.4 years     4.3 years
Expected market price volatility        41%          40%           40%
Expected dividend yield                  0%           0%            0%
</TABLE>

The effects on pro forma net income and earnings per common share of expensing
the estimated fair value of stock options are not necessarily representative of
the effects on reported net income for future years due to such things as the
vesting period of the stock options and the potential for issuance of additional
stock options in future years. Additionally, because FAS No. 123 is applicable
only to options granted subsequent to December 31, 1994, its pro forma effect
will not be fully reflected until 1998.

Shares of capital stock reserved for possible future issuance are as follows:

<TABLE>
<CAPTION>

                                                    DECEMBER 31
                                                 1997          1996
                                            -----------------------------
<S>                                         <C>                <C>
Options granted                                 901,251        400,000
Options as yet ungranted                        163,462        108,625
Qualified employee savings plans                625,000        625,000
                                            -----------------------------
                                              1,689,713      1,133,625
                                            -----------------------------
                                            -----------------------------
</TABLE>

                                         43

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (Continued)


11.  EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share for the years ended December 31:

<TABLE>
<CAPTION>

                                      1997          1996         1995
                                  ----------------------------------------
<S>                               <C>              <C>           <C>
Net income (in thousands)            $18,239       $11,460        $8,105

Basic average shares              10,663,876     9,133,650     8,851,403

Effect of dilutive securities:
  Stock options and stock awards     263,505        90,874       132,312
  Stock warrants                      89,162        63,791        63,640
  Contingently issuable shares         6,998            --            --
                                  ----------------------------------------
                                     359,665       154,665       195,952
Dilutive average shares           11,023,541     9,288,315     9,047,355
                                  ----------------------------------------
                                  ----------------------------------------

Basic earnings per share              $1.71         $1.25         $.92
                                  ----------------------------------------
                                  ----------------------------------------
Diluted earnings per share            $1.66         $1.23         $.90
                                  ----------------------------------------
                                  ----------------------------------------
</TABLE>

12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the unaudited quarterly results of operations for
1997 and 1996 (dollars in thousands, except per share data):

<TABLE>
<CAPTION>
                                   QUARTER ENDED
                     ------------------------------------------
                       MARCH      JUNE   SEPTEMBER  DECEMBER      FULL
                         29        28        27        31         YEAR
                     -----------------------------------------------------
<S>                  <C>        <C>      <C>        <C>         <C>
1997 
Net sales             $47,787   $54,210   $56,704   $61,563     $220,264
Income from
operations              5,505     6,820     7,681     8,296       28,302
Net income              3,460     4,387     4,978     5,414       18,239
Basic earnings per
  common share           0.37      0.41      0.44      0.48         1.71
Diluted earnings per
  common share           0.36      0.40      0.43      0.46         1.66
</TABLE>


                                        44

<PAGE>

                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)


12.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)

<TABLE>
<CAPTION>
                                   QUARTER ENDED
                     ------------------------------------------
                       MARCH      JUNE   SEPTEMBER  DECEMBER      FULL
                         30        29        28        31         YEAR
                     -----------------------------------------------------
<S>                  <C>        <C>      <C>        <C>         <C>
1996
Net sales             $33,885   $42,218   $41,559   $44,206     $161,868
Income from
operations              2,047     4,283     5,259     5,408       16,997
Net income              1,636     2,904     3,350     3,570       11,460
Basic earnings per
  common share           0.18      0.32      0.37      0.39         1.25
Diluted earnings per
  common share           0.18      0.31      0.36      0.38         1.23
</TABLE>


                                        45

<PAGE>

                        REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Shareholders
AFC Cable Systems, Inc.

We have audited the accompanying consolidated balance sheets of AFC Cable
Systems, Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1997. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of AFC
Cable Systems, Inc. at December 31, 1997 and 1996, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

                                    ERNST & YOUNG LLP

February 17, 1998

                                        46

<PAGE>

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

   None.


                                   PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information relating to the current executive officers of the Company is
included in Item 4A of Part I.

Information relating to the Directors of the Company is incorporated herein by
reference to the "Election of Directors" section of the Company's Proxy
Statement to be filed with the Commission in connection with the 1998 Annual
Meeting of Stockholders (the "Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

   Information relating to executive compensation is incorporated herein by
   reference to the "Executive Compensation" section of the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   Information relating to security ownership is incorporated herein by
   reference to the "Security Ownership of Certain Beneficial Owners and
   Management" section of the Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   Information relating to certain relationships and related transactions is 
   incorporated herein by reference to the "Certain Relationships and Related 
   Transactions" section of the Proxy Statement.

                                   PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 

   (a) The following documents are filed as part of this report:

      (1) The following financial statements of AFC Cable Systems, Inc. are
included in Item 8:

      Consolidated Balance Sheets as of December 31, 1997 and 1996

      Consolidated Statements of Income for the Years Ended December 31, 1997,
      1996 and 1995

      Consolidated Statements of Stockholders' Equity for the Years Ended
      December 31, 1997, 1996 and 1995

      Consolidated Statements of Cash Flows for the Years Ended December
      31,1997, 1996 and 1995

      Notes to Consolidated Financial Statements

      (2) The following financial statement schedule of AFC Cable Systems, Inc.
is included in Item 14(d): 

      Schedule II--Valuation and Qualifying Accounts

      All other schedules for which provision is made in the applicable
      accounting regulations of the Securities and Exchange Commission are not
      required under related instructions or are inapplicable and therefore have
      been omitted.


                                        47

<PAGE>

      (b) Reports on Form 8-K

          None

      (c) Exhibits--The response to this portion of Item 14 is submitted as a
          separate section of this report. See Exhibit Index on page 49.

ITEM 14(d).  FINANCIAL STATEMENT SCHEDULE

<TABLE>
<CAPTION>
                                                                            ADDITIONS
                                              -----------------------------------------------------------------------------

                                                                                 CHARGED TO
                                                    BALANCE       CHARGE TO        OTHER                          BALANCE
                                                  AT BEGINNING    COSTS AND      ACCOUNTS--    DEDUCTIONS--       AT END OF
DESCRIPTION                                        OF PERIOD      EXPENSES        DESCRIBE       DESCRIBE          PERIOD
-----------                                        ---------      --------        --------       --------          ------
                                                                               (In thousands)
<S>                                               <C>             <C>          <C>             <C>                <C>
Year ended December 31, 1997
  Deducted from asset accounts:
     Allowance for doubtful accounts ............    $  356         $  209           $607(3)     $  279(1)         $  893
     Reserve for sales allowances ...............     2,784          5,291             --         5,098(2)          2,977
                                                     ------         ------         ------        ------            ------
     Totals .....................................    $3,140         $5,500           $607        $5,377            $3,870
                                                     ------         ------         ------        ------            ------
                                                     ------         ------         ------        ------            ------
Year ended December 31, 1996
  Deducted from asset accounts:
     Allowance for doubtful accounts ............    $  300         $  263             --        $  207(1)         $  356
     Reserve for sales allowances ...............     2,065          4,148             --         3,429(2)          2,784
                                                     ------         ------         ------        ------            ------
     Totals .....................................    $2,365         $4,411             --        $3,636            $3,140
                                                     ------         ------         ------        ------            ------
                                                     ------         ------         ------        ------            ------
Year ended December 31, 1995
  Deducted from asset accounts:
     Allowance for doubtful accounts ............    $  316         $   76             --        $   92(1)         $  300
     Reserve for sales allowances ...............     1,585          3,008             --         2,528(2)          2,065
                                                     ------         ------         ------        ------            ------
     Totals .....................................    $1,901         $3,084             --        $2,620            $2,365
                                                     ------         ------         ------        ------            ------
                                                     ------         ------         ------        ------            ------
</TABLE>

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

(1) Uncollectible accounts written off, net of any recoveries.

(2) Represents allowances given in the form of credit memos.

(3) Includes $607,000 of allowances attributable to companies acquired in 1997.


                                        48

<PAGE>

                                EXHIBIT INDEX

The following designated exhibits are, as indicated below, either filed herewith
of have heretofore been filed with the Securities and Exchange Commission under
the Securities Act of 1933 or the Securities Exchange Act of 1934 and are
referred to and incorporated herein by reference to such filings. As indicated,
various exhibits are incorporated herein by reference to (i) the Registrant's
Registration Statement on Form S-1 (No. 33-70234), (referred to herein below as
"33-70234"), (ii) the Registrant's Form 10-K for the year ended December 31,
1993 (File No. 0-23070) (referred to herein below as "1993 10-K"), (iii) the
Registrant's Form 10-Q for the quarter ended April 2, 1994 (File No.0-23070)
(referred to herein below as "4/2/94 10-Q"), (iv) the Registrant's Form 8-K
(File No. 023070) dated October 14, 1994 (referred to herein below as"10/14/94
8-K"), (v) the Registrant's Form 10-Q for the quarter ended October 1,1994 (File
No. 0-23070) (referred to herein below as "10/1/94 10-Q"), (vi) the Registrant's
Registration Statement on Form S-1 (No. 33-87884) (referred to herein below as
"33-87884"), (vii) the Registrant's Form 10-K for the year ended December 31,
1994 (File No. 0-23070) (referred to herein below as "1994 10-K"), (viii) the
Registrant's Form 10-K for the year ended December 31, 1995 (File No. 0-23070)
(referred to herein below as "1995 10-K"), (ix) the Registrant's Form 10-Q for
the quarter ended September 28, 1996 (File No. 0-23070) (referred to herein
below as "9/28/96 10-Q"), (x) the Registrant's Form 10-K for the year ended
December 31, 1996 (File No. 0-23070) (referred to herein below as "1996 10-K")
and (xi) the Registrant's Registration Statement on Form S-3 (No.
333-23779) (referred to herein below as "333-23779").

<TABLE>
<CAPTION>
                                               SEC                                   EXHIBIT
                                             EXHIBIT                                 NUMBER             DOCKET
                                             -------                                 ------             ------

<S>              <C>                                                                 <C>                <C>
Exhibit 3.       Articles of Incorporation and Bylaws
3.1              Restated Certificate of Incorporation, as amended                        3.1             33-87884
3.2              Bylaws of the Company                                                    3.2             33-70234
Exhibit 4.       Instruments defining the rights of security holders
4.1              Specimen Certificate of Common Stock                                     4.1             33-70234
Exhibit 10.      Material Contracts
10.1             Representatives' Warrants                                               10.1             1993 10-K
10.2             Selective Retirement Plan of the Registrant, dated
                    December 31, 1991, including Trust Agreement relating thereto        10.2             33-70234
10.3             1993 Equity Incentive Plan                                              10.3             33-70234
10.4             1993 Directors' Stock Option Plan                                       10.4             33-70234
10.5             Lease dated November 1, 1988 (including amendment) between the
                    Registrant and Bensalem II Enterprises, relating to
                    property at State Road, Bensalem, PA                                10.18             33-70234
10.6             Lease dated June 30, 1992 between the Registrant and E&M
                    Equities, relating to property at Edward Street, Linden, NJ         10.19             33-70234
10.7             Lease dated July 22, 1993 between the Registrant and Fleet
                    Center Associates, relating to property at Fleet Center,
                    Providence, RI                                                      10.20             33-70234
10.8             Stock Purchase Agreement dated as of December 22, 1989 by
                    and between Nortek, Inc. and Bristol Industries, Inc.               10.22             33-70234
10.9             Lease dated December 21, 1993 between the Registrant and
                    Whitesell Enterprises, relating to property at Dulty's Lane,
                    Burlington, NJ                                                      10.23            1993 10-K
10.10            Lease dated March 18, 1994 between the Registrant and
                    William L. Baker and Nancy A. Baker, relating to property at
                    Leyshon Drive, Byesville, OH                                         10.1          4/2/94 10-Q
10.11            Master Lease Agreement dated February 8, 1993 by and
                    between BancBoston Leasing, Inc. and the Registrant                  10.5          4/2/94 10-Q
10.12            Equipment Acquisition Agreement dated April 15, 1994 by and
                    between BancBoston Leasing, Inc. and the Registrant                  10.6          4/2/94 10-Q
</TABLE>

                                        49

<PAGE>

<TABLE>
<CAPTION>
                                               SEC                                   EXHIBIT
                                             EXHIBIT                                 NUMBER             DOCKET
                                             -------                                 ------             ------

<S>              <C>                                                                 <C>              <C>
10.13            Asset Purchase Agreement dated September 30, 1994 by and
                    among the Registrant, AFC Acquisition, Inc., Kaf-Tech, Inc.
                    and David Kruse                                                       2.1         10/14/94 8-K
10.14            Lease dated as of September 30, 1994 by and between AFC
                    Acquisition, Inc. and Kaf-Tech, Inc., relating to property in
                    Largo, FL                                                            10.1         10/1/94 10-Q
10.15            Lease dated February 1, 1995 by and between the Registrant
                    and H. Glenn Butler, relating to property at 2660 Brenner Dr.,
                    Dallas, TX                                                          10.25            1994 10-K
10.16            Lease dated December 7, 1994 by and between the Registrant
                    and TRST Orange County, Inc. relating to property at 1425 S.
                    Acacia, Fullerton, CA                                               10.26            1994 10-K
10.17            Purchase and sale agreement dated March 7, 1996 by and
                    between the Registrant and L.J. Menco, Inc.                         10.27            1995 10-K
10.18            Credit Agreement dated as of March 29 1996 by and between
                    the Registrant and Fleet National Bank                              10.28            1995 10-K
10.19            Revolving Credit Note in the aggregate principal amount of
                    $25,000,000 dated as of March 29, 1996 by the Registrant to
                    Fleet National Bank                                                 10.29            1995 10-K
10.20            Term Note in the amount of $3,200,000 dated as of March 29,
                    1996 by the Registrant to Fleet National Bank                       10.30            1995 10-K
10.21            Loan and Trust Agreement among Massachusetts Industrial
                    Finance Agency, the Registrant and Fleet National Bank, as
                    Trustee, dated July 1, 1996                                          10.1         9/28/96 10-Q
10.22            Reimbursement Agreement between the Registrant and Fleet
                    National Bank, dated July 1, 1996                                    10.2         9/28/96 10-Q
10.23            Letter of Credit issued by Fleet National Bank for the account
                    of the Registrant, for the benefit of Massachusetts Industrial
                    Finance Agency, dated July 24, 1996                                  10.3         9/28/96 10-Q
10.24            Mortgage and Security Agreement issued by the Registrant to
                    Fleet National Bank, dated July 1, 1996                              10.4         9/28/96 10-Q
10.25            Pledge Agreement by and between the Registrant and Fleet
                    National Bank, dated July 1, 1996                                    10.5         9/28/96 10-Q
10.26            Stock Purchase Agreement dated January 28, 1997 by and
                    between the Registrant and the Stockholders of B&B
                    Electronics Manufacturing Co., Inc.                                 10.26            1996 10-K
10.27            Asset Purchase Agreement dated January 31, 1997 by and
                    between AFC Acquisition, Inc. and Area Lighting Research, Inc.      10.27            1996 10-K
10.28            1997 Equity Incentive Plan                                              10.1            333-23779
10.29            Asset Purchase Agreement dated December 2, 1997 by and
                    among Flexfab Horizons International, Inc., the Registrant and
                    AFC Madison Acquisition Corp.                                                                *
Exhibit 21.      Subsidiaries of the Registrant
21.1             Subsidiaries of the Registrant                                                                  *
Exhibit 23.      Consents of experts and counsel
23.1             Consent of Ernst & Young LLP                                                                    *
</TABLE>

----------
* Filed herewith

                                        50

<PAGE>

                                   SIGNATURES

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

                                                AFC CABLE SYSTEMS, INC.

                                                BY: /s/ RALPH R. PAPITTO
                                                   --------------------------
                                                    Ralph R. Papitto
                                                 CHAIRMAN OF THE BOARD AND
                                                  CHIEF EXECUTIVE OFFICER
DATE: MARCH 30, 1998

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

<TABLE>
<CAPTION>
        SIGNATURE                             TITLE                             DATE
        ---------                             -----                             ----

<S>                               <C>                                         <C>
/s/RALPH R. PAPITTO               Chairman of the Board, Chief                March 30, 1998
-----------------------------        Executive Officer and Director
      Ralph R. Papitto               (Principal Executive Officer)



/s/ROBERT R. WHEELER              President and Director                      March 30, 1998
-----------------------------
      Robert R. Wheeler


/s/RAYMOND H. KELLER              Vice President, Chief Financial             March 30, 1998
-----------------------------        Officer and Director (Principal
      Raymond H. Keller              Financial and Accounting
                                     Officer)



/s/ANTHONY J. SANTORO             Director                                    March 30, 1998
-----------------------------
      Anthony J. Santoro


/s/MALCOLM M. DONAHUE             Director                                    March 30, 1998
-----------------------------
      Malcolm M. Donahue
</TABLE>