<PAGE>   1
                                      25
Belden Inc.
Selected Historical Financial Data
(in thousands, except per share amounts and number of employees)

<TABLE>
<CAPTION>
                                          1998            1997            1996            1995            1994
------------------------------------------------------------------------------------------------------------------
<S>                                     <C>             <C>             <C>             <C>             <C>
Income statement data:
 Revenues                               $723,625        $747,207        $667,425        $608,608        $439,699

 Operating earnings                       64,071         105,983          94,417          79,602          65,318

 Net income                               34,504          60,653          55,234          46,227          38,126

 Diluted earnings per share                 1.35            2.30            2.11            1.76            1.46
------------------------------------------------------------------------------------------------------------------
Balance sheet data:
 Total assets                           $506,031        $475,129        $371,645        $332,787        $203,809

 Long-term debt                          162,850         124,047          71,630          81,458          37,277

 Other long-term obligations              44,155          39,051          37,573          36,181          27,224

 Stockholders' equity                    219,667         228,954         179,707         131,902          93,601
------------------------------------------------------------------------------------------------------------------
Other data:

 Average number of employees               4,600           4,500           4,200           3,800           2,800

 Dividends per common share             $    .20        $    .20        $    .20        $    .20        $    .20
------------------------------------------------------------------------------------------------------------------
</TABLE>



<PAGE>   2

                                       26
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS: 
1998 COMPARED WITH 1997
Revenues
Belden's revenues for the year ended December 31, 1998 were $723.6 million
compared with $747.2 million in 1997, a decrease of 3%. Revenues were
approximately $24 million, or 3% lower in 1998 compared with 1997 due to the
pass-through of lower copper costs. Since changes in the cost of copper are
generally passed through in the price of the Company's products containing
copper, further changes in the cost of copper are likely to continue to affect
the Company's revenues. Revenues also were reduced in 1998 by approximately $5
million, or less than 1%, due to the impact of foreign currency exchange rates.
Conversely, revenues were higher in 1998 compared with 1997 by approximately $20
million, or 3% due to the inclusion of Olex Communications Cable (Olex), which
was acquired February 28, 1998, and ABB Elektro-Isolierwerke GmbH (EIW), which
was acquired November 30, 1998. The following table shows the components of the
reported 3% decrease in the Company's 1998 revenues compared with 1997 in each
of Belden's four served markets.

<TABLE>
<CAPTION>
                                                   % Increase/(Decrease)
                      % of Total                     In 1998 Revenues
                     1998 Revenues                  Compared with 1997
-------------------------------------------------------------------------------
<S>                       <C>                              <C>
Computer                  41%                                7%
Audio/video               20                               (10)
Industrial                20                                (4)
Electrical                19                               (13)
</TABLE>


The revenue growth in the computer market was primarily due to the inclusion of
Olex and the increase in demand for the Company's computer networking and
telecommunication products. This growth in demand was fueled by the continued
networking of computers, workstations, and servers; upgrades of existing
computer networks; increased use of the internet; and growing numbers of
telephone lines. While revenues for computer networking products increased in
1998 compared with 1997, the Company experienced sales declines in the second
half of 1998 compared with 1997 primarily due to distribution customers reducing
their inventories of Belden products. Sales of the Company's computer
interconnect products declined in 1998. The demand for computer interconnect
products decreased as newer technologies displaced certain of these products
with new computer networking and industrial cable supplied by the Company.
Additionally, as the manufacturing of certain electronic equipment shifted to
contract manufacturers in lower cost international markets, the Company lost
business to local competitors.

The revenue decline in the audio/video market reflects weakness during 1998 in
the cable television (CATV) and professional broadcast markets. Demand was down
for CATV cable in Europe as well as the export markets of Asia/Pacific and Latin
America and was only partially offset by a modest increase in the United States.
Revenues from products serving the broadcast market were down in 1998 primarily
due to broadcasters' continued delay of spending related to indecisions about
alternative digital formats.

Industrial market revenues declined 4% in 1998 compared with 1997. This decrease
was due primarily to lower prices, principally from the pass-through of lower
copper costs. In addition, the drop in prices for many commodities such as
metals and petroleum, and the slowed capital spending partially due to the
impact of declining Asian demand, reduced demand for certain of the Company's
products. Offsetting some of the decline in revenues for industrial products was
the inclusion of EIW. 

Electrical market revenues declined 13% in 1998 versus 1997. The electrical
market revenues include the Cord Products segment. Cord Products accounts for
43% of 1998 electrical market

REVENUES

Percent increase/(decrease) in revenues compared with the prior year

[Bar Charts reflecting revenues compared with prior year]


<PAGE>   3

                                       27
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


revenues. Revenues for the Cord Products segment declined 15% in 1998 compared
with 1997 primarily due to lower prices partially from the pass-through of lower
copper costs and business lost to competitors principally from Asia. The
remaining revenues for the electrical market, which principally consist of
electrical cordage and lead and hookup wire, are included in the Electronic and
Electrical segment. These revenues declined 11% due to lower prices primarily
from the pass-through of lower copper costs, lost business as certain electronic
and electrical equipment manufacturers moved their production to lower cost
international markets and economic slowdown in certain of the Company's served
markets.

Average prices for the Company's products were down in 1998 compared with 1997.
This decline was primarily attributable to the decline in 1998 copper costs
compared with 1997. Additionally, prices for computer networking products, which
increased late in 1997 and early 1998, fell in late 1998. Pricing pressure on
these products is continuing and it is likely that the Company will have
unfavorable price comparisons on its computer networking products at least
through the first half of 1999.

United States revenues, which represented approximately 68% of 1998 total
revenues, declined 2% from 1997. Revenues from the Asia/Pacific, Latin America,
and other export regions represented approximately 10% of 1998 total revenues
and increased 1% from 1997. Without the 1998 acquisition of Olex, revenues to
these regions would have decreased by 23% primarily due to the Asia/Pacific
region. European revenues decreased 4% from 1997, and decreased 2% in terms of
local currency. Without the acquisition of EIW late in 1998, European revenues
would have decreased 6%. Canadian revenues decreased 15% from 1997 with currency
translation accounting for almost 40% of this decline. This decrease is the
result of lower capital spending by manufacturers in the natural resource sector
due primarily to lower commodity prices and weak export demand. Revenues from
European and Canadian customers represented 16% and 6% of 1998 total revenues,
respectively.

Costs, Expenses and Earnings
The following table sets forth information comparing the 1998 components of
earnings with 1997.

<TABLE>
<CAPTION>
                                                                                                     % (Decrease)
                                                                                                    1998 Compared
Years Ended December 31,                                 1998*                 1997**                with 1997
-------------------------------------------------------------------------------------------------------------------
(in thousands, except % data)
<S>                                                     <C>                    <C>                     <C>
Gross profit                                            $ 169,501              $ 197,309               (14.1)%
   As a percent of revenues                                  23.4%                  26.4%
Operating earnings                                      $ 74,671               $ 107,583               (30.6)%
   As a percent of revenues                                 10.3%                   14.4%
Income before income taxes                              $ 66,933               $ 100,625               (33.5)%
   As a percent of revenues                                  9.2%                   13.5%
Net income                                              $ 40,996               $ 61,633                (33.5)%
   As a percent of revenues                                  5.7%                   8.2%
</TABLE>


*  1998 results exclude the impact of the $6,492 ($10,600 pretax) nonrecurring
   charges related to employee separation, plant consolidations, discontinued
   product lines, and costs related to a failed Asia/Pacific distributor.

** 1997 results exclude the impact of the $980 ($1,600 pretax) nonrecurring
   charge taken in the third quarter relating to plant consolidation and
   workforce reductions pursuant to a plan adopted in the third quarter. These
   costs relate to employee severance and plant closure expenditures.

REVENUES BY GEOGRAPHIC REGION
(In millions of dollars)


[Bar Charts reflecting revenues by geographic region]

<PAGE>   4

                                       28
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


The decrease in the gross profit amount was due to lower revenues and reduced
profitability. Profitability declined primarily due to the impact of lower
average prices in excess of the pass-through of lower copper costs and the
"deleveraging" of certain production costs. The deleveraging resulted from
making production declines at a greater rate than cost reductions. In addition,
the impact of the inclusion in 1998 of the currently less profitable Olex and
EIW acquisitions and the need early in 1998 to outsource production of certain
computer networking cable due to capacity constraints contributed to the decline
in gross profit and gross profit as a percent of revenues.

The decrease in gross profit led to lower operating earnings during the year.
Also contributing to this decrease was an increase in selling, general, and
administrative expenses to 12.8% of revenues in 1998 versus 11.7% in 1997
primarily due to additional depreciation and amortization related to the
capitalization of computer system conversions early in 1998.

In 1998, the Company announced the following actions designated to improve its
operating efficiencies:

-  Closing the Franklin, North Carolina, facility and transferring production
   and assembly operations to the other facilities within the Cord Products
   segment in 1999.

-  Accelerating the closing of the Electronic and Electrical segment's Hudson,
   Massachusetts and Charlotte, North Carolina, facilities and transferring
   production into the new facility in Lancaster County, South Carolina. The new
   facility was completed late in 1998 and the closings and production transfer
   are expected to be complete in mid-1999.

-  Reducing salaried employment by approximately 7% in the Electronic and
   Electrical segment through voluntary and involuntary programs. These
   reductions were virtually complete by December 31, 1998.

-  Discontinuing certain less profitable lines within the Electronic and
   Electrical segment.

In connection with these actions and other items, the Company took nonrecurring
charges of $10.6 million ($6.5 million after tax). The above actions, when
completed, as well as other cost reduction programs, are expected to generate
annual savings of approximately $15 million before tax.

Income before income taxes decreased to $56.3 million in 1998 from $99 million
in 1997, or 43% due to lower operating earnings and an increase in interest
expense because of greater borrowings at higher interest rates. The increase in
borrowings resulted from the 1998 acquisitions and the purchase of approximately
1.9 million shares of Company common stock partially offset by cash flow from
operations. Average debt outstanding during 1998 and 1997 was $146 million and
$135 million, respectively. The Company's average daily interest rate was 6.1%
in 1998 compared with 5.7% in 1997.

The Company's effective tax rate was 38.8% in 1998 and 1997. As a result of
various tax strategies the Company is in the process of implementing, the
effective income tax rate is expected to be approximately one percentage point
lower beginning in 1999.

RESULTS OF OPERATIONS:
1997 COMPARED WITH 1996
Revenues
Belden's revenues for the year ended December 31, 1997, were $747.2 million
compared with $667.4 million in 1996, an increase of 12%. Revenues were reduced
by $21.1 million due to the impact of foreign currency translation. Revenues
increased 2% when including revenues of Alpha (acquired January 8, 1997) and ICI
(acquired December 3, 1996) as if they had been

MARGINS
(Percent of revenues)

[Bar Charts reflecting margins]


<PAGE>   5

                                       29
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


acquired at the beginning of each period and excluding the impact of foreign
currency translation. The following table shows the components of the 12% 
increase in the Company's 1997 revenues in each of Belden's four served markets.

<TABLE>
<CAPTION>
                                                   % Increase/(Decrease)
                      % of Total                     in 1997 Revenues
                     1997 Revenues                  Compared with 1996
--------------------------------------------------------------------------------
<S>                       <C>                              <C>
Computer                  37%                              29%
Audio/video               22                               (8)
Industrial                20                               26
Electrical                21                                1

</TABLE>

The revenue growth in the computer market was primarily due to the inclusions of
Alpha and ICI revenues for a full year in 1997. Excluding the impact of
acquisitions and foreign currency translation, revenues increased approximately
7%. This improvement was attributable to strong growth in networking of
computers, workstations and servers, which increased demand for the Company's
high performance twisted pair products, and strong demand for the Company's
telephony products sold in the United States. This growth was significantly
offset by competitive price reductions on the Company's networking products and
decreased telephony project activity in Europe. In addition, sales of the
Company's computer interconnection products, which focus on serving mainframe
computer applications, were down slightly in 1997.

Audio/video market revenues declined 4% when excluding acquisitions and foreign
currency translation. The revenue decline was primarily due to soft demand for
cable television (CATV) drop cable sold in both the United States and export
markets. In the United States, CATV providers continued to delay spending as
they evaluated the telecommunications network architecture in light of
legislation enacted in 1996 and new technology. Sales of CATV drop cable in
export markets declined due to unfavorable economic conditions in 
Asia/Pacific, which unfavorably impacted new construction activity. This decline
in demand in both the United States and export markets not only affected volume
growth, but also negatively impacted selling prices. Broadcast revenues were
down slightly in 1997 due to the delay of stadium and studio projects during the
year and the fact that 1996 revenues were aided by large orders in connection
with the Atlanta Olympic Games and the U.S. Presidential election. Partially
offsetting these declines was strong demand for CATV products sold in Europe.

Strong capital investment by manufacturers and the acquisitions of Alpha and ICI
caused the growth in industrial market revenues in 1997. Excluding the impact of
acquisitions and foreign currency translation, industrial market revenues
increased 11%. Factory floor automation and product "re-engineering" contributed
to the capital investment by manufacturers.

The electrical market revenues include the Cord Products segment. Cord Products
accounted for 45% of 1997 electrical market revenues. Revenues for the Cord
Products segment declined 14% in 1997 compared with 1996 primarily due to
decreased demand for the Company's electrical cord used on power tools,
appliances and other electrical equipment. The remaining revenue for the
electrical market, which principally consists of electrical cordage, lead and
hook-up wire, is included in the Electronic and Electrical segment. These
revenues increased 18% in 1997 compared with 1996 primarily due to the
acquisition of Alpha and ICI. Excluding the impact of acquisition and foreign
currency translation, electrical revenues included in the Electronic and
Electrical segment were flat. This is due to a decline attributable to the
conversion of certain electrical wire production capacity to more profitable
industrial cables offset by an increase in market demand for remaining products.

Average prices for the Company's products were down in 1997 compared with 1996.
This decline was attributable to competitive price reductions primarily on
computer networking and CATV products, and the pass-through of decreases in
copper costs during the year.

United States revenues, which represented approximately 68% of total 1997
revenues, increased 19% from 1996. Revenues from Asia/Pacific, Latin America,
and other export regions were $72 million, which represented a decrease of 3%.
The acquisitions of Alpha and ICI were the primary contributors to the domestic
revenue growth in 1997.

European customer revenues were flat from 1996 measured in U.S. dollars, but
increased 12% in local currency. Strong demand for networking and CATV products
in Europe caused this local currency growth. Canadian revenues increased 7% from
1997, with currency translation having minimal impact on revenues. This growth
resulted from increased demand for the Company's industrial products. European
and Canadian revenues represented 17% and 6% of 1997 total revenues,
respectively.

<PAGE>   6


                                       30
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


Costs, Expenses and Earnings
The following table sets forth information comparing the 1997 components of
earnings with 1996.

<TABLE>
<CAPTION>
                                                                                                     % Increase
                                                                                                   1997 Compared
Years Ended December 31,                                    1997*                 1996               with 1996
------------------------------------------------------------------------------------------------------------------
(in thousands, except % data)
<S>                                                      <C>                   <C>                    <C>  
Gross profit                                             $ 197,309             $ 168,379              17.2%
   As a percent of revenues                                   26.4%                 25.2%

Operating earnings                                       $ 107,583             $  94,417              13.9%
   As a percent of revenues                                   14.4%                 14.1%

Income before income taxes                               $ 100,625             $  90,920              10.7%
   As a percent of revenues                                   13.5%                 13.6%

Net income                                               $  61,633             $  55,234              11.6%
   As a percent of revenues                                    8.2%                  8.3%
</TABLE>

*  1997 results exclude the impact of the $980 ($1,600 pretax) nonrecurring
   charge taken in the third quarter relating to plant consolidation and
   workforce reductions pursuant to a plan adopted in the third quarter. These
   costs relate to employee severance and plant closure expenditures.

The revenue growth in 1997 primarily caused the increase in gross profit, and
was partially offset by the unfavorable foreign currency exchange rates on the
Company's gross profits in Europe. The improvement in gross profit as a percent
of revenues in 1997 was primarily attributable to manufacturing improvements,
material cost reductions and higher combined gross margins of the acquired
companies. Partially offsetting these improvements were competitive price
reductions on computer networking and CATV products and the impact of
unfavorable foreign currency exchange rates on the Company's products sold in
Europe that are sourced from the United States.

The increase in gross profit led to an increase in operating earnings during the
year. This increase was partially offset by an increase in selling, general and
administrative costs and goodwill amortization associated with the acquisitions.
Operating earnings as a percent of revenues in 1997 increased due primarily to
the improvement in gross profit.

Income before income taxes increased due to higher operating earnings, partially
offset by increased interest expense. Interest expense increased $3.5 million
due primarily to higher debt levels associated with the acquisitions and
elevated working capital levels. Average debt outstanding during 1997 and 1996
was $135 million and $82 million, respectively. The Company's average daily
interest rate was 5.7% in 1997 compared with 4.9% in 1996.

The Company's effective tax rate was 38.8% and 39.2%, in 1997 and 1996
respectively.

FINANCIAL CONDITION
Liquidity and Capital Resources
The Company has a $200 million multicurrency variable rate bank revolving credit
agreement (Credit Agreement) with a group of six banks. The Credit Agreement is
unsecured and expires in November 2001. At December 31, 1998, the Company had
$112 million available under the Credit Agreement. The facility includes certain
covenants including a maximum leverage ratio and maintaining a minimum net
worth. In addition, the Company has unsecured, uncommitted arrangements with
five banks under which it may borrow up to $91 million at prevailing interest
rates. At December 31, 1998, the Company had $73 million available under these
uncommitted arrangements.

On August 11, 1997, the Company completed a private placement of $75 million in
unsecured debt (Private Placement). The Private Placement debt will mature in
August 2009 with an average life of ten years. The Private Placement was priced
at a fixed rate of 6.92%. The proceeds from the Private Placement were used to
pay off borrowings under the Credit Agreement. The Note Purchase Agreement
effecting the Private Placement contains various customary affirmative and
negative covenants and other provisions, including restrictions on the
assumption of debt and a maximum leverage ratio.

[Bar Charts reflecting revenues per employees and number of employees]


<PAGE>   7


                                       31
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS



The Company expects the cash provided by operations and borrowings under the
Credit Agreement will provide it with sufficient liquidity to meet its operating
needs and fund its normal dividends and anticipated capital expenditures.

During 1998, the Company increased debt by $39 million due primarily to the
acquisitions of Olex and EIW and the purchase of approximately 1.9 million
shares of Company common stock. As a result, the Company's debt to total
capitalization ratio increased from 35.1% at December 31, 1997, to 42.6% at the
end of 1998.

Working Capital
During 1998, operating working capital (defined as receivables and inventories
less payables and accrued liabilities, excluding the effect of exchange rate
changes and business combinations) decreased $29 million. This decrease resulted
primarily from lower receivables associated with lower revenues late in the year
and lower inventories as the Company has stressed strong cash flows in response
to more challenging markets partially offset by lower taxes payable.

During 1997, operating working capital increased $32 million. This increase
resulted primarily from increases in receivables associated with higher revenues
and increases in inventories to support current and future growth.

Capital Expenditures and Commitments
Capital expenditures currently planned for 1999, as well as actual expenditures
for 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
                                1999              1998              1997
Years Ended December 31,        Plan             Actual            Actual
-------------------------------------------------------------------------------
(in millions)
<S>                              <C>              <C>                <C>
Modernization and
     Enhancement                 $14              $20                $ 7
Capacity expansion                 7               11                  7
Other                              8               10                 15
-------------------------------------------------------------------------------
                                 $29              $41                $29
-------------------------------------------------------------------------------
</TABLE>

Capital spending planned for 1999 is primarily for capacity maintenance projects
and expansion of capacity for certain twisted pair wire products. Spending in
1998 and 1997 was primarily for machinery and equipment to increase production
capacity for twisted pair wire, the construction of the Lancaster County, South
Carolina, facility, the implementation of an integrated business information
system, and the modernization and enhancement of machinery and equipment.

EFFECTS OF INFLATION
During the years presented, inflation has had a relatively minor effect on the
Company's results of operations. In recent years, the U.S. rate of inflation has
been relatively low. In addition, because the Company's inventories are valued
primarily on the LIFO method, current inventory costs are matched against
current sales so that increases in cost are reflected in earnings on a current
basis.

ENVIRONMENTAL REMEDIATION
The Company has been identified as a potentially responsible party with respect
to five sites designated for cleanup under the Comprehensive Environmental
Response, Compensation and Liability Act or similar state laws. Belden does not
own or operate any of these waste sites. Although estimates of cleanup costs
have not yet been completed for most of these sites, the Company believes that,
based on its review and other factors, including its estimated share of the
waste volume at the sites, the existence of other financially viable,
potentially responsible parties and the anticipated nature and scope of the
cleanups, the costs to the Company relating to these sites will not have a
material adverse effect on its results of operations or financial condition.
Ground water contamination has been identified on the site of the Venlo, The
Netherlands, manufacturing facility, which was acquired in 1995. The Company has
recorded a liability for the remediation costs, which are currently estimated at
approximately $1 million.

[Bar Charts reflecting leverage, free cash flow and capital expenditures]

<PAGE>   8

                                       32
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


YEAR 2000 READINESS
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. Software failures due to processing
errors potentially arising from calculations using the Year 2000 date are a
known risk.

Primary Business Operating Systems
The Company recently completed the implementation of an integrated business
information system at several operating units representing approximately 97% of
1998 revenues. The primary purpose was to replace numerous old mainframe legacy
systems with an integrated enterprise-wide business system in an effort to
streamline business processes, reduce programming and maintenance efforts, and
improve efficiencies throughout the organization. The Company incurred a total
capitalized cost of approximately $19 million relating to implementing the new
system which will be amortized into earnings over five years. Although
implementing this new system was unrelated to specific concerns over the Year
2000 issue, a benefit of this initiative is that the resulting system is Year
2000 compliant. Certain operating units, primarily those acquired by the Company
in 1998, have not completed enterprise-wide system solutions and are incurring
costs to deal specifically with the Year 2000 issue. These units represented
approximately 3% of 1998 revenues. The Company expects to incur approximately
$500,000 in 1999 related to completing the Year 2000 projects at those operating
units which will be expensed as incurred.

Manufacturing and Other Systems
The Company is now in the process of inventorying, assessing, renovating and
testing as it relates to manufacturing systems, and other supplemental
information systems and applications necessary to achieve a Year 2000 date
conversion with no effect on customers or disruption to business operations. The
Company has completed substantially all of the inventory and assessment phases
of its plan, and is in the process of completing the renovation and testing
phase. Critical manufacturing systems include plant accounting and reporting,
planning, and process controls. Plant accounting and reporting as well as
planning were addressed as part of the integrated enterprise-wide business
system and are therefore largely compliant. Process control units have been
replaced over the last three years with Year 2000 compliant units in the normal
course of equipment upgrades. Noncompliant units represent less than 10% of the
units in production and will be replaced throughout 1999 as part of the normal
equipment upgrades or have been determined not to pose a risk to the
manufacturing process.

Third Party Readiness
The Company has initiated formal discussions with its key suppliers, customers
and financial institutions to determine the extent to which the Company is
vulnerable to third parties' failure to correct their own Year 2000 issues.
Contingency plans will be developed on a case-by-case basis for suppliers,
customers, or service providers where a problem is identified that cannot be
remedied in time. For virtually all products and services the Company has
multiple suppliers. The Company also has a diverse customer base with only one
customer representing more than 10% of revenue.

Due in part to the reliance placed on customers, suppliers and financial
institutions, and their own susceptibility to Year 2000 issues, there can be no
assurances that the Company will not be exposed to significant unfavorable
operating results related to Year 2000 issues.

Conclusion
The total cost of compliance and its effect on the Company's future results of
operations are not expected to be significant due to the recent implementation
of the integrated business information system. The expected completion date of
projects currently in process is the end of the third quarter of 1999, which is
prior to any anticipated impact on the Company's operations. Contingency plans
will be revisited on an ongoing basis.


IMPACT OF PENDING ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP 98-1, Accounting For the Costs of Computer Software Developed or
Obtained For Internal Use. The Company plans to adopt the SOP on January 1,
1999. The SOP will require the capitalization of certain internal costs incurred
after the date of adoption in connection with developing or obtaining software
for internal use. The Company currently expenses such costs as incurred. As a
result of adopting the new SOP, the Company expects to capitalize certain costs
related to software development projects in 1999. While the amount of such
capitalization cannot yet be estimated, the Company does not expect the adoption
of the SOP to have a material effect on net income for 1999.


<PAGE>   9

                                       33
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) 133, Accounting for Derivative Instruments
and Hedging Activities, which is required to be adopted in years beginning after
June 15, 1999. The Statement permits early adoption as of the beginning of any
fiscal quarter after its issuance. The Company expects to adopt the new
Statement effective with the first quarter of 2000. The Statement will require
the Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If a derivative is a hedge, depending on the nature of the hedge, changes in the
fair value of the derivative will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. The Company does not expect the adoption of
SFAS 133 to have a material effect on the earnings or financial position of the
Company.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
Market risks relating to the Company's operations result primarily from interest
rates, foreign exchange rates and certain commodity prices, as well as
concentrations of credit risk. Each of these is discussed below.

Interest Rate Risk
The following table provides information about the Company's financial
instruments that are sensitive to changes in interest rates. For the Company's
short-term and long-term debt obligations, the table presents principal cash
flows and average interest rates by expected maturity dates. The table also
presents fair values as of December 31, 1998.

<TABLE>
<CAPTION>
                                                            Expected Maturity Dates
                                      -------------------------------------------------------------
                                         1999    2000     2001     2002     2003      Thereafter        Fair Value
----------------------------------------------------------------------------------------------------------------------
(in millions, except rates)
<S>                                   <C>        <C>      <C>      <C>      <C>         <C>               <C>
Fixed-rate
   debt obligations                                                                     $75.0             $73.4
Average interest rate                                                                    6.92%
Variable-rate debt
   to be refinanced                   $87.8                                                               $87.8
Average interest rate                  4.40%
</TABLE>

Foreign Exchange Rate Risk
The following table provides information about the Company's financial
instruments that are sensitive to changes in foreign currency rates. The Company
maintains debt denominated in multiple foreign currencies in order to align a
portion of the Company's borrowing in the same currency as that of the
anticipated cash flow of its foreign operations.

<TABLE>
<CAPTION>
                                                            Expected Maturity Dates
                                      -------------------------------------------------------------
                                         1999    2000     2001     2002     2003      Thereafter        Fair Value
----------------------------------------------------------------------------------------------------------------------
Average exchange rates are stated in foreign currency/US dollars
<S>                                  <C>         <C>      <C>      <C>      <C>         <C>               <C>
(in millions, except rates)
Variable-rate Dutch Guilder
   debt to be refinanced              $30.1                                                               $30.1
Average exchange rate                 1.892

Variable-rate Australian Dollar
   debt to be refinanced              $14.7                                                               $14.7
Average exchange rate                1.6332

Variable-rate German Mark
   debt to be refinanced              $25.0                                                               $25.0
Average exchange rate                1.6807

</TABLE>


<PAGE>   10

                                       34
                                   BELDEN INC.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


Commodity Price Risk
The Company is a purchaser of certain commodities, primarily copper. The Company
uses futures contracts for hedging purposes to reduce the effect of changing
commodity prices over the time frame required to reflect cost changes in sales
price for the Company's products. The Company does not speculate on commodity
prices. The following table presents the open futures contracts by the notional
amount in pounds, the weighted average contract price, and total dollar amounts
by expected maturity date. In addition, the table presents the physical
inventory of copper at December 31, 1998, by the amount of pounds held at
average cost. The fair value of copper futures contracts and physical inventory
as of December 31, 1998, is also presented.

<TABLE>
<CAPTION>
                                                            Expected Maturity Dates
                                                            -----------------------
                                                              1999         2000                         Fair Value
-----------------------------------------------------------------------------------------------------------------------
(in millions, except average price)
<S>                                                          <C>         <C>                              <C>
Over-the-counter forward sell contracts
         Contract volume (pounds)                               10.4         0.3
         Weighted average price (per pound)                  $0.7538     $0.7845
         Contract amounts                                    $   7.9     $   0.2                          $7.3

On-hand copper rod at December 31, 1998
         Pounds on hand                                          3.3
         Weighted average price (per pound)                  $0.7400
         Total value on hand                                 $   2.4                                      $2.2
</TABLE>

Credit Risk
Sales to a major customer were $122.1 million or 17% of total sales in 1998, and
$119.3 million or 16% of total sales in 1997. At December 31, 1998, outstanding
receivables to this customer totaled $13.7 million.

FORWARD-LOOKING STATEMENTS
Any statements set forth other than historical facts are forward-looking
statements made in reliance upon the safe harbor of the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from such
forward-looking information for the reasons set forth below. The economic
downturn in the Asia/Pacific and Latin America regions and its negative impact
on revenues and earnings, heightened competition from domestic and foreign
competition, including new entrants; the success in identifying, acquiring and
integrating acquisitions; results from transfers of production to new
facilities; developments in technology; the threat of displacement from
competing technologies, including wireless and fiber optic technologies;
acceptance of Belden's products; changes in raw material costs and availability;
foreign currency rates; pricing of Belden's products; changes in the global
economy; the success of cost saving initiatives and programs and other specific
factors discussed in the Company's Form 10-K and other Securities and Exchange
Commission filings will have an impact on Belden's actual results. The
information contained herein represents management's best judgement as of the
date hereof based on information currently available; however, the Company does
not intend to update this information to reflect developments of information
obtained after the date hereof and disclaims any legal obligation to the
contrary.


<PAGE>   11
                                       35
                                   BELDEN INC.

REPORT OF INDEPENDENT AUDITORS















THE BOARD OF DIRECTORS AND SHAREHOLDERS
BELDEN INC.


We have audited the accompanying consolidated balance sheets of Belden Inc. as
of December 31, 1998 and 1997, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Belden Inc. at
December 31, 1998 and 1997, and the consolidated results of their operations and
their cash flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles.


St. Louis, Missouri
January, 20, 1999




                                            /s/ERNST & YOUNG LLP

<PAGE>   12
                                       36
                                  BELDEN INC.


CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

December 31,                                                              1998                         1997
---------------------------------------------------------------------------------------------------------------------
(in thousands, except par value and number of shares)
<S>                                                                     <C>                         <C>
ASSETS
Current assets:
      Cash and cash equivalents                                         $   3,291                    $     916

      Receivables, less allowance for doubtful accounts
        of $835 at 1998 and $879 at 1997                                  102,305                      120,761

      Inventories                                                          99,881                      107,340

      Deferred income taxes                                                 6,421                        5,186

       Other                                                                3,340                        3,065
---------------------------------------------------------------------------------------------------------------------
       Total current assets                                               215,238                      237,268

Property, plant and equipment, less accumulated
      depreciation                                                        196,136                      151,933

Goodwill, less accumulated amortization
     of $7,545 at 1998 and $5,607 at 1997                                  82,112                       70,565

Other intangibles, less accumulated amortization
    of $11,245 at 1998 and $8,192 at 1997                                  11,916                       14,975

Other assets                                                                  629                          388
---------------------------------------------------------------------------------------------------------------------
                                                                        $ 506,031                    $ 475,129
---------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
    Accounts payable and accrued liabilities                            $  76,182                    $  74,719

    Income taxes payable                                                    3,177                        8,358
---------------------------------------------------------------------------------------------------------------------
        Total current liabilities                                          79,359                       83,077

Long-term debt                                                            162,850                      124,047

Post-retirement benefits other than pensions                               14,747                       16,026

Deferred income taxes                                                      14,159                       13,141

Other long-term liabilities                                                15,249                        9,884

Stockholders' equity:
     Preferred stock, par value $.01 per share, 25,000,000
shares authorized, no shares outstanding                                       --                           --

     Common stock, par value $.01 per share, 100,000,000
shares authorized 26,203,603 and 26,179,958 issued, and
24,328,742 and 26,142,328 shares outstanding at 1998 and 
1997, respectively                                                            262                          262

     Additional paid-in capital                                            48,482                       49,370

     Retained earnings                                                    218,605                      189,163

     Accumulated other comprehensive income/(loss)                         (8,859)                      (8,600)

     Treasury stock, at cost, 1,874,861 and 37,630 shares                 (38,823)                      (1,241)
           at 1998 and 1997
---------------------------------------------------------------------------------------------------------------------
             Total stockholders' equity                                   219,667                      228,954
---------------------------------------------------------------------------------------------------------------------
                                                                        $ 506,031                    $ 475,129
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.


<PAGE>   13

                                       37
                                  BELDEN INC.




CONSOLIDATED INCOME STATEMENTS

<TABLE>
<CAPTION>

Years Ended December 31,                                      1998                  1997                   1996
---------------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                                       <C>                   <C>                    <C>      
Revenues                                                  $ 723,625             $ 747,207              $ 667,425

Cost of sales                                               554,124               549,898                499,046
---------------------------------------------------------------------------------------------------------------------

      Gross profit                                          169,501               197,309                168,379

Selling, general and administrative expenses                 92,905                87,764                 73,502

Amortization of goodwill                                      1,925                 1,962                    460

Nonrecurring charges                                         10,600                 1,600                      -
---------------------------------------------------------------------------------------------------------------------

      Operating earnings                                     64,071               105,983                 94,417

Interest expense                                              7,738                 6,958                  3,497
---------------------------------------------------------------------------------------------------------------------

       Income before income taxes                            56,333                99,025                 90,920

Income taxes                                                 21,829                38,372                 35,686
---------------------------------------------------------------------------------------------------------------------

      Net income                                          $  34,504             $  60,653              $  55,234
---------------------------------------------------------------------------------------------------------------------

      Basic earnings per share                            $    1.35             $    2.32              $    2.12
---------------------------------------------------------------------------------------------------------------------

      Diluted earnings per share                          $    1.35             $    2.30              $    2.11
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.



<PAGE>   14

                                       38
                                  BELDEN INC.



CONSOLIDATED CASH FLOW STATEMENTS

<TABLE>
<CAPTION>

Years Ended December 31,                                                     1998              1997              1996
------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                                        <C>               <C>               <C>     
Cash flow from operating activities:
    Net income                                                             $ 34,504          $ 60,653          $ 55,234

    Adjustments to reconcile net income to net cash provided by operating
          activities:
               Depreciation                                                  19,355            17,854            16,121

               Amortization                                                   4,992             1,962             1,465

               Deferred income taxes                                            151             3,650             3,197

               Changes in operating assets and liabilities(*):

                     Receivables                                             26,410           (12,694)           (9,155)

                     Inventories                                             19,259           (22,249)           (1,597)

                     Accounts payable and accrued liabilities                (8,717)           (2,935)           (8,978)

                     Income taxes payable                                    (7,864)            6,020               433

                     Other assets and liabilities, net                         (467)            5,333             1,492
------------------------------------------------------------------------------------------------------------------------

                              Net cash provided by operating                 87,623            57,594            58,212
                                 activities

Cash flows from investing activities:
     Capital expenditures                                                   (40,844)          (28,725)          (26,100)

     Cash used to acquire businesses                                        (40,703)          (76,082)          (18,050)

     Proceeds from sales of plant and equipment                                 317               198               209
------------------------------------------------------------------------------------------------------------------------

            Net cash used for investing activities                          (81,230)         (104,609)          (43,941)

Cash flows from financing activities:
     Net borrowings (payments) under long-term
            credit facility and credit agreements                            39,375           (17,906)           (7,101)

     Proceeds from private placement of debt                                     --            75,000                --

     Purchase of treasury stock                                             (39,250)           (6,846)           (2,425)

     Exercise of stock options                                                  780             1,165             1,558

     Cash dividends paid                                                     (5,062)           (5,229)           (5,212)
------------------------------------------------------------------------------------------------------------------------

              Net cash provided by (used for) financing                      (4,157)           46,184           (13,180)
                 activities

Effect of exchange rate changes on cash and
      cash equivalents                                                          139               (48)              (46)
------------------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents                              2,375              (879)            1,045

Cash and cash equivalents, beginning of year                                    916             1,795               750
------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of year                                     $  3,291          $    916          $  1,795
------------------------------------------------------------------------------------------------------------------------
(*) Net of the effects of exchange rate changes and acquired businesses.
</TABLE>

See accompanying notes.


<PAGE>   15

                                       39
                                  BELDEN INC.



CONSOLIDATED STOCKHOLDERS' EQUITY STATEMENTS



<TABLE>
<CAPTION>

                                                                                      Treasury          Accumulated
                                      Common Stock      Additional                      Stock              Other
                                  -------------------     Paid-In     Retained     ---------------     Comprehensive
                                  Shares       Amount     Capital     Earnings     Shares    Amount    Income (Loss)      Total
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                               <C>           <C>       <C>         <C>           <C>     <C>           <C>            <C>
Balance at December 31, 1995      26,115        $261      $51,034     $ 83,717              $             $(3,110)       $131,902

Net Income                                                              55,234                                             55,234

Foreign currency translation
   adjustments                                                                                             (1,350)         (1,350)
                                                                                                                         --------
                                                                                                                           53,884
        Comprehensive income                                                                                                  

Issuance of common stock for:
   Stock Options                      23          --          409                      47      1,149                        1,558

Purchase of treasury stock                                                           (100)    (2,425)                      (2,425)

Cash dividends ($.20 per share)                                         (5,212)                                            (5,212)
-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996      26,138         261       51,443      133,739        (53)    (1,276)      (4,460)        179,707

Net Income                                                              60,653                                             60,653

Foreign currency translation                                                                               (4,140)         (4,140)
   adjustments                                                                                                           --------

        Comprehensive income                                                                                               56,513

Issuance of common stock for: 
   Stock Options                      42           1          115                      53      1,276                        1,392
   Employee Stock Purchase Plan                            (2,188)                    163      5,605                        3,417

Purchase of treasury stock                                                           (201)    (6,846)                      (6,846)

Cash dividends ($.20 per share)                                         (5,229)                                            (5,229)

-----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997      26,180         262       49,370      189,163        (38)    (1,241)      (8,600)        228,954

NET INCOME                                                              34,504                                             34,504

FOREIGN CURRENCY TRANSLATION                                                                                 (259)           (259)
   ADJUSTMENTS                                                                                                           --------
        COMPREHENSIVE INCOME                                                                                               34,245

ISSUANCE OF COMMON STOCK FOR:
    STOCK OPTIONS                     24          --         (888)                     69      1,668                          780

PURCHASE OF TREASURY STOCK                                                         (1,906)   (39,250)                     (39,250)

CASH DIVIDENDS ($.20 PER SHARE)                                         (5,062)                                            (5,062)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1998      26,204        $262      $48,482     $218,605     (1,875)  $(38,823)     $(8,859)       $219,667
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.

<PAGE>   16
                                       40
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:  DESCRIPTION OF BUSINESS
Founded in 1993, Belden Inc. (the "Company") is a leader in the design and
manufacture of wire, cable and cord products for the computer, audio/video,
industrial and electrical markets. The Company was previously an unincorporated
operating division of Cooper Industries, Inc. ("Cooper"), until October 1993,
when 23.5 million shares of Belden Inc. common stock were sold to the public in
an initial public offering. The 2.5 million shares of common stock originally
retained by Cooper were subsequently sold to the public in 1995 and 1996.

NOTE 2:  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include Belden and all of its
subsidiaries. All significant intercompany accounts and transactions are
eliminated in consolidation.

Cash and Cash Equivalents
Cash equivalents consist of short-term, highly liquid investments with a
maturity of three months or less.

Inventories
Inventories are carried at cost or, if lower, market value. On the basis of
current costs, 67% and 73% of inventories in 1998 and 1997, respectively, were
carried on the last-in, first-out (LIFO) method. The remaining inventories were
carried on the first-in, first-out (FIFO) method.

Property, Plant and Equipment
Property, plant and equipment are recorded at cost and depreciation is provided
over the estimated useful lives of the related assets using primarily the
straightline method, generally using asset lives of 10 to 40 years for buildings
and 5 to 12 years for machinery and equipment.

Intangibles
Goodwill is related to businesses acquired and is being amortized over 40 years
using the straightline method. On a periodic basis, the Company estimates the
future undiscounted cash flows of businesses to which goodwill relates in order
to ensure that the carrying value of goodwill has not been impaired. Other
intangibles, which consist primarily of business information systems, are
recorded at cost, and are being amortized over their estimated useful lives
using the straightline method.

Revenue Recognition
Revenue is recognized in the period product is shipped to customers. Provisions
are recorded for returns adjustments, and bad debts.

Income Taxes
Income taxes are provided based on earnings reported for financial statement
purposes. The provision for income taxes differs from the amounts currently
payable due to the recognition of revenues and expenses in different periods for
income tax and financial statement purposes. Income taxes are provided as if
operations in all countries, including the United States, were standalone
businesses filing separate tax returns. 

Research and Development        
Research and development expenditures are charged to expense as
incurred. Expenditures for research and development sponsored by the Company
were $8.5 million, $7.9 million and $8.7 million for 1998, 1997, and 1996,
respectively.

Environmental Remediation and Compliance
Environmental remediation costs are accrued, except to the extent costs can be
capitalized, based on estimates of known environmental remediation exposures.
Environmental compliance costs include maintenance and operating costs with
respect of ongoing monitoring programs. Such costs are expensed as incurred.
Capitalized environmental costs are depreciated generally utilizing a 15-year
life.

Futures Contracts
As part of its risk management strategy, the Company purchases exchange traded
forward contracts to manage its exposure to changes in copper costs. The copper
forward contracts obligate the Company to make or receive a payment equal to the
net change in the value of the contract at its maturity. Such contracts are
designated as hedges of the Company's anticipated sales for which selling prices
are firm, are short-term in nature, and are effective in hedging the Company's
exposure to changes in copper costs during that cycle.

Unrealized gains and losses are deferred and recognized in earnings when
realized as an adjustment to cost of sales when the future sales occur (the
deferral accounting method). Amounts securing open forward contracts are
included in inventory. Realized and unrealized gains or losses on options that
are no longer effective as hedges


<PAGE>   17
                                       41
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or that relate to sales that are no longer probable of occurring are recognized
in income from the date the contracts become ineffective until their expiration.

Foreign Currency Exposure Management
The Company enters into various transactions designed to manage foreign currency
exposure. The Company is subject to transaction exposures that arise from
foreign exchange rate movements between the date foreign currency transactions
are recorded (e.g., export purchases and sales) and the date they are
consummated (e.g., cash disbursements and receipts in foreign currencies). The
Company sometimes hedges specific transaction exposures by entering into forward
contracts, which typically do not exceed one year. Gains and losses on those
forward contracts from exchange rate movements offset losses and gains on the
transactions being hedged.

The Company sometimes enters into forward contracts to hedge a portion of
anticipated export sales, primarily intercompany, within the next 12 months. The
dates of the forward contracts are designated to match the dates of the
anticipated cash receipts of the hedged export sales. Gains and losses on the
forward contracts from exchange rate movements offset the losses and gains on
the portion of the export sales hedged.

As a result of having various foreign operations, the Company is exposed to the
effect of exchange rate movements on the U.S. dollar value of anticipated cash
flows of its foreign operations, which will be remitted to the U.S. The Company
sometimes utilizes a natural hedge to mitigate this exposure by denominating a
portion of the Company's borrowing in the same currency as the currency of the
anticipated cash flow of its foreign operations. The foreign currency
denominated cash flow from the foreign operation, when remitted, can be used to
reduce the foreign currency borrowing.

Impact of Pending Pronouncements
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP 98-1, Accounting For the Costs of Computer Software Developed or
Obtained For Internal use. The Company plans to adopt the SOP on January 1,
1999. The SOP will require the capitalization of certain internal costs incurred
after the date of adoption in connection with developing or obtaining software
for internal use. The Company currently expenses such costs as incurred. As a
result of adopting the new SOP, the Company expects to capitalize certain costs
related to software development projects in 1999. While the amount of such
capitalization cannot yet be estimated, the Company does not expect the adoption
of the SOP to have a material effect on net income for the year.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) 133, Accounting for Derivative Instruments
and Hedging Activities, which is required to be adopted in years beginning after
June 15, 1999. The Statement permits early adoption as of the beginning of any
fiscal quarter after its issuance. The Company expects to adopt the new
Statement effective with the first quarter of 2000. The Statement will require
the Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If a derivative is a hedge, depending on the nature of the hedge, changes in the
fair value of the derivative will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings.

Hedging activities have been confined to copper futures during 1998. The Company
does not expect the adoption of SFAS 133 to have a material effect on the
earnings or financial portion of the Company.

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



<PAGE>   18
                                       42
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3: EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>

Years Ended December 31,                                         1998               1997              1996
--------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                                           <C>                <C>                <C>
Numerator:
    Net Income                                                $ 34,504           $ 60,653           $ 55,234
--------------------------------------------------------------------------------------------------------------
Denominator:
    Denominator for basic earnings per
    share - weighted-average shares                             25,507             26,126             26,055
Effect of dilutive employee stock options                          113                214                181
--------------------------------------------------------------------------------------------------------------
Denominator for diluted earnings per share -
  adjusted weighted-average  shares                             25,620             26,340             26,236
--------------------------------------------------------------------------------------------------------------
Basic earnings per share                                      $   1.35           $   2.32           $   2.12
--------------------------------------------------------------------------------------------------------------
Diluted earnings per share                                    $   1.35           $   2.30           $   2.11
--------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 4: ACQUISITIONS
During 1998, 1997, and 1996 the Company acquired the entities described below,
which were accounted for under the purchase method of accounting. Accordingly,
the purchase price was allocated to the net assets acquired based on their
estimated fair market value. Operating results of each acquisition are included
in the Company's consolidated results since its respective acquisition date.

-  On November 30, 1998, the Company purchased for cash ABB 
   Elektro-Isolierwerke GmbH (EIW) from Asea Brown Boveri AG, Mannheim, the
   holding company of the German ABB group to which EIW belonged. EIW designs,
   manufacturers and markets cables serving primarily the industrial and
   computer networking industries. The business is located in Villingen,
   Germany. The Company has preliminarily recorded goodwill of approximately $12
   million with respect to the acquisition.

-  On February 28, 1998, the Company purchased substantially all of the assets
   of the Olex communication cable operations (Olex) of Pacific Dunlop Limited
   for cash of approximately $16 million. Olex designs, manufactures, and
   markets metallic and fiber optic cables serving primarily the computer
   networking and telephony industries. The Company has not recorded any
   goodwill with respect to the acquisition. The acquired business is located
   near Melbourne, Australia.

-  On December 23, 1997, the Company purchased for cash the fixed assets and
   inventory of Cowen Cable Corporation (Cowen). Cowen designs, manufactures and
   markets a variety of multiconductor cables and is located in Leominster,
   Massachusetts.

-  On January 8, 1997, the Company purchased substantially all of the assets of
   the Alpha Wire Division (Alpha) of Alpha Wire Corporation for cash of
   approximately $68 million. Alpha designs and markets specialty wire and cable
   for a variety of markets, including the computer interconnect, industrial and
   electrical markets, and is located in Elizabeth, New Jersey. The Company
   recorded approximately $45 million of goodwill in connection with the
   acquisition.

-  On December 3, 1996, the Company purchased for cash substantially all of the
   assets of Intech Cable, Inc. (Intech). Intech designs, manufactures and
   markets specialty wire and cable for a variety of markets, including the
   telecommunications and industrial markets, and is located in Hudson,
   Massachusetts.


<PAGE>   19
                                       43
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5: NONRECURRING CHARGES

In 1998, the Company recorded a charge of $1.5 million ($928,000 after tax)
related to the consolidation of its Cord Products segment manufacturing facility
located in Franklin, North Carolina, into other Cord Products segment
facilities. The charge is primarily to cover severance costs of 172 of
employees who will be terminated in 1999. At December 31, 1998 no employees have
been terminated or any costs paid. Also in 1998, the Company recorded a charge
of $2.9 million ($1.8 million after tax) for salary continuation, extended
medical coverage and other miscellaneous employee benefits related to a
reduction of 35 salaried employees in the Electronic and Electrical segment.
Prior to December 31, 1998, 35 salaried employees had been terminated. At
December 31, 1998, $2.2 million remained to be paid related to this charge.

Additionally in 1998, the Company discontinued certain product lines. Inventory
writedowns related to discontinued product lines within the Electronics and
Electrical business segment were $3 million ($1.8 million after tax) and were
recorded net of expected recovery upon disposal. Other nonrecurring charges of
$3.2 million ($2 million after tax) were primarily for the write-off of
receivables due from a failed Asia/Pacific distributor.

In 1997, the Company recorded a restructuring charge of $1.6 million ($980,000
after tax) primarily related to employee severance and costs of plant closure.
At December 31, 1998, no such costs remain to be paid.

NOTE 6:  INVENTORIES

<TABLE>
<CAPTION>

December 31,                                                       1998             1997
-------------------------------------------------------------------------------------------
(in thousands)

<S>                                                             <C>               <C>     
Raw materials                                                   $ 23,662          $ 25,195

Work-in-process                                                   14,362            16,203

Finished goods                                                    67,955            75,794

Perishable tooling and supplies                                    4,321             4,365
-------------------------------------------------------------------------------------------
                                                                 110,300           121,557


Excess of current standard
  costs over LIFO costs                                           (6,450)          (10,297)

Other                                                             (3,969)           (3,920)
-------------------------------------------------------------------------------------------
                                                                 $99,881          $107,340
-------------------------------------------------------------------------------------------
</TABLE>

NOTE 7:  PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>

December 31,                                                       1998             1997
-------------------------------------------------------------------------------------------
(in thousands)

<S>                                                             <C>               <C>     
Land and land improvements                                      $ 11,170          $ 10,115

Buildings                                                         67,075            61,228

Machinery and equipment                                          265,386           217,115

Construction in process                                           15,515             9,592
-------------------------------------------------------------------------------------------
                                                                 359,146           298,050

Accumulated depreciation                                        (163,010)         (146,117)
-------------------------------------------------------------------------------------------
                                                                $196,136          $151,933
-------------------------------------------------------------------------------------------

</TABLE>

<PAGE>   20
                                       44
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8:  ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

<TABLE>
<CAPTION>

December 31,                                                       1998              1997
--------------------------------------------------------------------------------------------
(in thousands)

<S>                                                             <C>               <C>     
Trade accounts                                                  $ 46,418          $ 49,683

Payroll and related taxes                                          5,691             6,709
Employee stock purchase plan and
  employee benefit accruals                                        5,800             3,609

Restructuring costs                                                3,758               686

Payable for acquired businesses                                       --               250
Other (individual items less than
  5% of total current liabilities)                                14,515            13,782
--------------------------------------------------------------------------------------------
                                                                $ 76,182          $ 74,719
--------------------------------------------------------------------------------------------
</TABLE>

NOTE 9: LONG-TERM DEBT AND OTHER BORROWING ARRANGEMENTS

<TABLE>
<CAPTION>

December 31,                                                       1998              1997
--------------------------------------------------------------------------------------------
(in thousands)

<S>                                                             <C>               <C>     
Variable-rate bank revolving
     Credit agreement, due 2001,
     Effective interest rate 3.90% at
     December 31, 1998                                          $ 69,810           $  9,000

Short-term borrowings to be
    refinanced, effective interest rate
    6.29% at December 31, 1998                                    18,040             40,047

Medium-term notes, face amount
     of $75,000 due from 2005
     through 2009, effective interest
     rate 6.92%                                                   75,000             75,000
--------------------------------------------------------------------------------------------
                                                                $162,850           $124,047
--------------------------------------------------------------------------------------------
</TABLE>

The variable-rate bank revolving credit agreement (Credit Agreement) provides
for an aggregate $200 million unsecured, multicurrency revolving credit facility
expiring in November 2001. Loans under the Credit Agreement can be advanced by
the banks either based on their commitments (committed loans) or their offers
which have been accepted by the Company under a special bidding procedure (bid
loans). Committed loans accrue interest at the option of the Company at LIBOR
plus 0.235% to 0.500%, or the higher of the prime rate or the federal funds rate
plus 0.500%. Bid loans accrue interest at prevailing interest rates. A facility
fee of 0.090% to 0.250% per annum is charged on the aggregate $200 million
credit. The facility includes certain covenants, including a maximum leverage
ratio and maintaining a minimum net worth. The short-term borrowings relate to
unsecured, uncommitted arrangements with five banks under which the Company may
borrow up to $91 million at prevailing interest rates. At December 31, 1998 and
1997, these borrowings were reclassified to long-term debt, reflecting the
Company's intention and ability to refinance the amounts during the next year
through either continued short-term borrowings or utilizing the Credit
Agreement.

In 1997, the Company completed a private placement of $75 million of unsecured
medium-term notes. The notes bear interest at 6.92% and mature 12 years from
closing with an average life of 10 years. The Note Purchase Agreement for the
notes contains various customary affirmative and negative covenants and other
provisions, including restrictions on the incurrence of debt, a maximum leverage
ratio, and maintaining a minimum net worth.

Total interest paid during 1998, 1997, and 1996 was $7.6 million, $4.8 million,
and $3.6 million, respectively.

NOTE 10:  RETIREMENT PLANS
Substantially all employees are covered by defined benefit or defined
contribution pension plans maintained by the Company. The Company's defined
benefit plans include a noncontributory cash balance plan for its domestic
employees, a final pay pension plan and an early retirement plan for its Dutch
employees and a defined benefit plan for its German employees, obtained with the
acquisition of EIW. Annual contributions to retirement plans equal or exceed the
minimum funding requirements of the Employee Retirement Income Security Act or
applicable local regulations.

Benefits provided to employees under defined contribution plans include cash
contributions by the Company based on either hours worked by the employee or a
percentage of the employee's compensation and under a 401(k) feature, a partial
matching of employees' salary deferrals with Company common stock. Defined
contribution expense for the years ended December 31, 1998, 1997 and 1996 was
$6.3 million, $6 million, and $5.7 million, respectively.


<PAGE>   21
                                       45
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company sponsors an unfunded post-retirement benefit plan (medical and life
insurance benefits) for employees who retired prior to 1989 (as well as certain
other employees who were near retirement and elected to receive certain
benefits). The net actuarial gain/loss in excess of a 10% corridor, the prior
service cost and the transition asset or obligation are being amortized over the
average remaining service period of active participants on a straightline basis.

The assets of the pension plans are maintained in various trusts and invested
primarily in equity and fixed income securities and money market funds.

Included in the change in benefit obligation in 1998 is a special termination
benefit provided as an incentive for employees to accept the provisions of a
voluntary separation program offered to certain employee groups.

The following tables provide a reconciliation of the changes in the plans'
benefit obligations and fair value of assets over years ended December 31, 1998
and 1997, and a statement of the funded status as of December 31, 1998 and 1997:

<TABLE>
<CAPTION>

                                                     PENSION BENEFITS                          OTHER BENEFITS
                                            -----------------------------------         ------------------------------
Years Ended December 31,                        1998                  1997                1998                1997
----------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                           <C>                   <C>                  <C>                 <C>     
Change in benefit obligation:
Benefit obligation, beginning of year         $ (88,243)            $ (82,583)           $ 14,629            $ 13,436

Service cost                                     (3,928)               (3,465)                 50                  30

Interest cost                                    (5,671)               (5,274)                939                 827

Plan participants' contributions                    (87)                    0                  91                 104

Actuarial gain/(loss)                            (1,435)                  619               1,158               1,997

Special termination benefits                       (442)                 (196)                  0                   0

Acquisition                                      (2,526)                    0                   0                  43

Benefits paid                                     2,874                 2,656              (1,881)             (1,808)
----------------------------------------------------------------------------------------------------------------------
Benefit obligation, end of year               $ (99,458)            $ (88,243)           $ 14,986            $ 14,629
----------------------------------------------------------------------------------------------------------------------

<CAPTION>

                                                     PENSION BENEFITS                          OTHER BENEFITS
                                            -----------------------------------         ------------------------------
Years Ended December 31,                        1998                  1997                1998                1997
----------------------------------------------------------------------------------------------------------------------
(in thousands)

<S>                                           <C>                   <C>                  <C>                 <C>     
Change in plan assets:
Fair value of plan assets,  beginning of        
year                                            $ 85,104              $ 71,390            $     0              $    0

Actual return on plan assets                      16,227                15,144                  0                   0

Employer contributions                               529                 1,188              1,790               1,704

Plan participant contributions                        87                   170                 91                 104

Expenses paid                                       (237)                 (132)                 0                   0

Benefits paid                                     (2,874)               (2,656)            (1,881)             (1,808)
----------------------------------------------------------------------------------------------------------------------
Fair value of plan assets, end of year          $ 98,836              $ 85,104            $     0              $    0
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Subsequent to December 31, 1998, the Company allowed for the voluntary transfer
of assets in a Company sponsored non-contributory defined contribution plan
covering domestic hourly employees into the Company's defined benefit pension
plan. The amount of assets transferred was approximately $24,882.



<PAGE>   22
                                       46
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                     PENSION BENEFITS                          OTHER BENEFITS
                                            -----------------------------------         ------------------------------
December 31,                                    1998                  1997                1998                1997
----------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                           <C>                     <C>              <C>                 <C>       
Funded status:
   Funded status                              $    (622)              $(3,139)         $ (14,986)          $ (14,629)

   Unrecognized net actuarial (gain)/loss       (14,050)               (6,082)             2,639               1,603

   Unrecognized prior service cost                  (20)                  (21)            (2,400)             (3,000)

   Unrecognized net transition                     
      obligation/(asset)                           (223)                 (450)                 0                   0
----------------------------------------------------------------------------------------------------------------------
   Accrued benefit cost                       $ (14,915)              $(9,692)         $ (14,747)          $ (16,026)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Certain of the pension plans had projected benefit obligations in excess of plan
assets. The net unfunded status of these plans was $15,784 and $12,597 at
December 31, 1998 and 1997 respectively. The table below shows the components of
the net unfunded status of these plans:

<TABLE>
<CAPTION>
                                                     PENSION BENEFITS                          OTHER BENEFITS
                                            -----------------------------------         ------------------------------
December 31,                                    1998                  1997                1998                1997
----------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                            <C>                   <C>                   <C>                 <C>
Funded status of plans with projected
benefit obligations in excess of plan
assets:
   Benefit obligation, end of year             $(48,517)             $(41,472)             N/A                 N/A

   Fair value of plan assets, end of year        32,733                28,875              N/A                 N/A
----------------------------------------------------------------------------------------------------------------------
   Net unfunded status                         $(15,784)             $(12,597)             N/A                 N/A
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Plans with assets in excess of projected benefit obligations had assets in
excess of projected benefit obligations of $15,162 and $9,458 at December 31,
1998 and 1997 respectively.

Plans with accumulated benefit obligations in excess of plan assets had no plan
assets at December 31, 1998 and 1997. The accumulated benefit obligation related
to these plans was $6,702 and $3,528 at December 31, 1998 and 1997 respectively.

<TABLE>
<CAPTION>
                                                     PENSION BENEFITS                          OTHER BENEFITS
                                            -----------------------------------         ------------------------------
December 31,                                    1998                  1997                1998                1997
----------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                             <C>                   <C>                <C>                 <C>
Weighted-average assumptions:
   Discount rate                                6.3%                  6.5%               6.5%                6.8%
   Expected return of plan assets               8.7%                  8.7%                N/A                 N/A
   Rate of compensation increase                4.2%                  4.3%                N/A                 N/A
</TABLE>

For measurement purposes, a 6.86% gross health care trend rate was used for
benefits for 1999. Trend rates were to decrease gradually to 4% in 2003 and
remain at this level beyond.


<PAGE>   23
                                       47
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plan. A one percentage point change in the assumed
health care cost trend rates would have the following effects on 1998 expense
and year-end liabilities:

<TABLE>
<CAPTION>
                                                                                  1% Increase              1% Decrease
                                                                                  ------------------------------------
                                                                                             (in thousands)
<S>                                                                                   <C>                    <C>
Effect on total of service and interest cost components                               $ 55                   $ (49)
Effect on postretirement benefit obligation                                           $861                   $(774)
</TABLE>


The following table provides the components of net periodic benefit costs for
the plans for the years ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>

                                                      PENSION BENEFITS                         OTHER BENEFITS
                                            -------------------------------------     ----------------------------------
Years Ended December 31,                        1998          1997         1996         1998         1997         1996
------------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                           <C>           <C>          <C>            <C>          <C>          <C>
Components of net periodic benefit cost:
   Service cost                               $ 3,928       $ 3,465      $ 3,404        $  50        $  30        $  34

   Interest cost                                5,671         5,274        5,134          939          827          870

   Expected return on plan assets              (6,556)       (7,180)      (6,338)           0            0            0

   Amortization of prior service cost              (1)           (1)           4         (600)        (600)        (600)

   Net (gain)/loss recognition                     18         1,690        1,104           52            0            0

   Transition (asset)/obligation recognition     (294)         (212)        (226)           0            0            0
------------------------------------------------------------------------------------------------------------------------
 Net periodic benefit cost                    $ 2,766       $ 3,036      $ 3,082        $ 441        $ 257        $ 304
------------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE 11:  INCOME TAXES

Effective October 6, 1993, the Company and Cooper entered into a Tax Sharing and
Separation Agreement ("Tax Agreement"). Pursuant to the Tax Agreement, the
Company and Cooper made an election in connection with the initial public
offering of the Company's stock under Section 338(h)(10) of the Internal Revenue
Code. The effect of this election was to increase the tax basis of the Company's
assets. This additional basis is expected to result in increased income tax
deductions and accordingly may reduce income taxes otherwise payable by the
Company. Pursuant to the Tax Agreement, the Company agreed to pay to Cooper the
amount of the tax benefit associated with this additional basis (retaining 10%
of the tax benefit associated with the amortization of the allocated cost of
certain intangibles, such as goodwill) as realized on a quarterly basis,
calculated by comparing the Company's actual taxes to the taxes that would have
been owed had the increase in basis not occurred. The amount required to be paid
to Cooper is subject to certain adjustments if certain business combinations or
other acquisitions involving the Company occur. Except for the retained 10%
benefit, the effect of the Tax Agreement is to put the Company in the same
financial position it would have been in had there been no increase in the tax
basis of the Company's assets.

The effect of the retained 10% benefit upon the income tax provisions reflected
in the accompanying income statements is to reduce these provisions for the
years ended December 31, 1998, 1997 and 1996 by $922,000, $789,000 and $733,000,
respectively.


<PAGE>   24
                                       48
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

Years Ended December 31,                                    1998              1997                 1996
------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                       <C>                <C>                  <C>   
Income before income taxes:
    U.S. operations                                       $48,027            $90,662              $80,429

    Foreign operations                                      8,306              8,363               10,491
------------------------------------------------------------------------------------------------------------------
                                                          $56,333            $99,025              $90,920
------------------------------------------------------------------------------------------------------------------
Income Tax expense/(benefit):
    Currently payable:
       U.S. federal                                       $13,929            $26,548              $24,862

       U.S. state and local                                 2,894              5,892                5,895

       Foreign                                              5,223              2,282                1,729
------------------------------------------------------------------------------------------------------------------
                                                           22,046             34,722               32,486
    Deferred:
       U.S. federal                                       $ 1,577            $ 2,486              $ 1,075

       U.S. state and local                                   398                614                  267

       Foreign                                             (2,192)               550                1,858
------------------------------------------------------------------------------------------------------------------
                                                             (217)             3,650                3,200   
------------------------------------------------------------------------------------------------------------------
                                                          $21,829            $38,372              $35,686   
------------------------------------------------------------------------------------------------------------------
Total income taxes paid (*)                               $27,764            $30,470              $31,247   
------------------------------------------------------------------------------------------------------------------
</TABLE>

(*) Included in 1998, 1997, and 1996 taxes paid are $12,000, $11,600 and
    $11,400, respectively, paid to Cooper in accordance with the Tax Agreement.

<TABLE>
-------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                 <C>                  <C>
Effective tax rate reconciliation:
    U.S. federal statutory rate                             35.0%               35.0%                35.0%

    State and local income taxes                             3.8                 4.3                  4.4

    Other                                                     --                (0.5)                (0.2)
------------------------------------------------------------------------------------------------------------------
       Effective tax rate                                   38.8%               38.8%                39.2%   
------------------------------------------------------------------------------------------------------------------
</TABLE>


<TABLE>
<CAPTION>

December 31,                                                                         1998                     1997
----------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                                               <C>                      <C>
Components of deferred tax balances:
    Deferred tax liabilities:
       Plant, equipment and intangibles                                           $ (25,289)               $ (23,522)
    Deferred tax assets:
       Postretirement benefits                                                       10,856                   10,353

       Reserves and accruals                                                          6,695                    4,943

       Other                                                                            --                       271
----------------------------------------------------------------------------------------------------------------------
                                                                                     17,551                   15,567
----------------------------------------------------------------------------------------------------------------------
                                                                                  $  (7,738)              $  ( 7,955)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

Deferred income taxes have been established for differences in the basis of
assets and liabilities for financial statement and tax reporting purposes as
adjusted for the Tax Agreement with Cooper.


<PAGE>   25
                                       49
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12:  STOCK COMPENSATION PLANS
The Company has two forms of stock compensation plans, the Long-term Incentive
Plan ("Incentive Plan") and the Employee Stock Purchase Plan ("Stock Purchase
Plan"). Under the Incentive Plan, certain employees of the Company are eligible
to receive awards in the form of stock options, stock appreciation rights,
restricted stock grants and performance shares. An aggregate of 2.6 million
shares is reserved for issuance under the Incentive Plan. As of December 31,
1998, 2.3 million stock options have been granted with terms ranging from five
to ten years, vesting in equal amounts on each of the first three anniversaries
of the grant date. Under the Stock Purchase Plan, all full-time U.S., Canadian,
and effective with the 1997 offering, Dutch employees receive an option to
purchase common stock at the lesser of 85% of the fair market value on the
offering date or 100% of the fair market value on the exercise date.

With respect to the 1995 offering of the Stock Purchase Plan, on December 8,
1997, the Company sold 163,170 shares to 1,054 employees at $20.94 per share
using existing treasury shares. With respect to the 1997 offering, at December
31, 1998, 677 participating employees had options to acquire up to 73,318 shares
of common stock at the lesser of $32.06 per share or the market price on the
exercise date of December 6, 1999. An aggregate of 858,256 shares of common
stock is currently reserved for issuance under the Stock Purchase Plan.

The Company accounts for stock options under Accounting Principles Board No. 25,
"Accounting for Stock Issued to Employees" and has adopted the disclosure-only
provisions of SFAS 123, "Accounting for Stock-Based Compensation". Accordingly,
no compensation cost has been recognized for the stock compensation plans. The
effect of applying SFAS 123's fair value method to the Company's stock
compensation plan results in net income and earnings per share that are not
materially different from amounts reported.

The following table summarizes the Company's stock option activity and related
information for the years ended December 31, 1998, 1997, and 1996:

<TABLE>
<CAPTION>

Years Ended December 31,                   1998                              1997                             1996
------------------------------------------------------------------------------------------------------------------------------
                                                    Weighted                        Weighted                         Weighted
                                                    Average                         Average                          Average
                                                    Exercise                        Exercise                         Exercise
                                  Options            Price          Options          Price            Options         Price
------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>                <C>            <C>             <C>              <C>            <C>    
Outstanding at beginning
  of year                           706,536          $25.73          738,247         $ 23.51          484,107        $ 16.84
Granted                           1,288,500           28.64           88,000           34.94          347,000          30.74
Exercised                          (116,789)          18.49         (100,551)          17.85          (80,474)         15.40
Canceled                           (134,553)          29.24          (19,160)          23.87          (12,386)         18.13
------------------------------------------------------------------------------------------------------------------------------
Outstanding at end of year        1,743,694          $28.08          706,536         $ 25.73          738,247        $ 23.51
------------------------------------------------------------------------------------------------------------------------------
Exercisable at end of year          369,365          $26.00          375,702         $ 20.66          297,747        $ 16.49
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following table summarizes information about fixed stock options outstanding
at December 31, 1998:


<TABLE>
<CAPTION>
                                            OPTIONS OUTSTANDING                                 OPTIONS EXERCISABLE
-----------------------------------------------------------------------------------------------------------------------
                                           Weighted Average            Weighted                                Weighted
  Range of                                     Remaining                Average                                Average
  Exercise                                 Contractual Life            Exercise                                Exercise
   Prices                  Options                                       Price                Options           Price
-----------------------------------------------------------------------------------------------------------------------
<C>    <C>                  <C>                <C>                      <C>                   <C>              <C>    
$16 to $19                    756,262             8.1 years             $ 17.19               138,762          $ 18.29
  21 to 24                     18,668             1.2                     21.81                18,668            21.81
  29 to 31                    270,564             7.2                     30.74               177,395            30.73
  31 to 36                     83,200             8.2                     34.92                31,540            34.49
  39 to 42                    615,000             9.2                     39.59                 3,000            39.53
-----------------------------------------------------------------------------------------------------------------------
$16 to $42                  1,743,964             8.3 years             $ 28.09               369,365          $ 26.00
-----------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   26
                                       50
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 13:  STOCKHOLDER RIGHTS PLAN
Under the Company's Stockholder Rights Plan, each share of common stock
generally has "attached" to it one preferred share purchase right. Each right,
when exercisable, entitles the holder to purchase 1/100th of a share of the
Company's Series A Junior Participating Preferred Stock at a purchase price of
$100. Each 1/100th of a share of Series A Junior Participating Preferred Stock
will be substantially equivalent to one share of common stock and will be
entitled to one vote, voting together with the shares of common stock. The
rights will become exercisable only if, without the prior approval of the Board
of Directors, a person or group of persons acquires or announces the intention
to acquire 15% or more of the common stock. If the Company is acquired through a
merger or other business combination transaction, each right will entitle the
holder to purchase $200 worth of the surviving company's common stock for $100
(subject to adjustment). In addition, if a person or group of persons acquires
15% or more of the common stock, each right not owned by the 15% or greater
shareholder would permit the holder to purchase $200 worth of common stock for
$100 (subject to adjustment). The rights are redeemable, at the option of the
Company, at $.01 per right at any time until ten business days after a person or
group of persons acquires 15% or more of the common stock. The rights expire on
July 18, 2005.

NOTE 14:  COMMITMENTS
At December 31, 1998, the Company was not a party to any foreign currency
exchange contracts. At December 31, 1998, the Company was committed to purchase
approximately 10.7 million pounds of copper, a two to three months supply of the
Company's anticipated U.S. requirements, at an aggregate cost of $8.1 million.
At December 31, 1998, there were unrealized losses of $751,000 on these
contracts, which will be realized as an adjustment to cost of sales when the
future sales that are being hedged occur. The contracts mature as follows:

<TABLE>
<CAPTION>

                                                                      1999 (by quarter)
                                                  ------------------------------------------------------
                                                         1             2            3              4     Thereafter
-------------------------------------------------------------------------------------------------------------------
(in thousands)
<S>                                                  <C>           <C>           <C>           <C>          <C>   
Commitments as of December 31, 1998                  $ 2,588       $ 2,078       $ 2,595       $  597       $  196
</TABLE>


NOTE 15:  LEASES
Rental expense for operating leases primarily for office space and machinery and
equipment was $4.5 million, $4.6 million, and $4 million in 1998, 1997, and
1996, respectively.

Minimum annual lease payments for noncancellable operating leases in effect at
December 31, 1998 are as follows:

<TABLE>
<S>                                                               <C>
(in thousands)                                                
1999                                                              $ 4,251
2000                                                                2,531
2001                                                                1,282
2002                                                                  814
2003                                                                  385
Thereafter                                                             59
--------------------------------------------------------------------------
                                                                  $ 9,322
--------------------------------------------------------------------------
</TABLE>

NOTE 16:  CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

Concentrations of Credit Risk
Concentrations of credit risk with respect to trade receivables are limited due
to the wide variety of customers and markets into which the Company's products
are sold, as well as their dispersion across many different geographic areas. As
a result, at December 31, 1998 and 1997, the Company did not consider itself to
have any significant concentrations of credit risk except for receivables from
several operating units of its largest customer of $ 13.7 million and $19
million, respectively.


<PAGE>   27
                                       51
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, trade receivables, trade payables, and debt instruments. At
December 31, 1998 and 1997, the book values of cash and cash equivalents, trade
receivables, trade payables and debt instruments, excluding the medium-term
notes, are considered representative of their respective fair values. The book
value of the medium-term notes at December 31, 1998, was $75 million. The fair
value of the medium-term notes at December 31, 1998, was approximately $73
million estimated on a discounted cash flow basis using current obtainable rates
for similar financing.

NOTE 17: INDUSTRY SEGMENTS, MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION

The Company's operations are conducted within two business segments; one which
designs, manufactures, and markets wire and cable for the electronics and
electrical markets, and one which designs, manufactures, and markets cord
products for the power cord market.

The Electronics and Electrical segment includes products used for the
transmission of data, audio, video, and electrical signals. These products are
sold primarily through distributors.

The Cord Products segment includes products designed for the purpose of power
transmission for appliances, power tools, floor care products, computers,
printers and peripherals, and other power supply requirements. These products
are sold primarily directly to original equipment manufacturers.

The Company evaluates performance and allocated resources based on operating
profits before interest and income taxes.

Operating profits of the two principal businesses include all the ongoing costs
of operations. Allocations to or from these businesses are immaterial. With the
exception of certain unallocated tax assets, substantially all the business
assets are the owned assets of each of the business segments. Segment
information below the quantitative threshold is attributable to Corporate
headquarters. Sales to a major customer were $122.1 million or 17% in 1998 and
$119.3 million or 16% in 1997 and $117.6 million or 17% in 1996. Product is sold
to this customer by both segments of the business.

Business segment information

<TABLE>
<CAPTION>

                                          ELECTRONICS &      CORD         CORPORATE &
1998                                      ELECTRICAL       PRODUCTS       ELIMINATIONS        CONSOLIDATED
-------------------------------------------------------------------------------------------------------------
(IN THOUSANDS)
<S>                                       <C>              <C>             <C>                 <C>      
REVENUES                                  $ 665,710        $ 59,477        $ (1,562)           $ 723,625

DEPRECIATION &
  AMORTIZATION                               21,629           2,660              58               24,347

NONRECURRING ITEMS                            8,205           1,516             879               10,600

OPERATING PROFIT/(LOSS)                      71,112          (1,731)         (5,310)              64,071

INTEREST EXPENSE                                  -               -           7,738                7,738

EARNINGS BEFORE TAX                          71,112          (1,731)        (13,048)              56,333

IDENTIFIABLE ASSETS                         461,359          38,772           5,900              506,031

ACQUISITION OF PROPERTY,
  PLANT & EQUIPMENT                          64,403*            972               -               65,375

</TABLE>


*  Includes $24,531 for acquired property, plant & equipment related to the Olex
   and EIW acquisitions.


<PAGE>   28
                                       52
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                        Electronics &      Cord             Corporate &
 1997                                   Electrical       Products           Eliminations         Consolidated
-------------------------------------------------------------------------------------------------------------
(in thousands)

<S>                                      <C>             <C>                  <C>                  <C>      
Revenues                                 $ 680,603       $ 70,309             $ (3,705)            $ 747,207

Depreciation &
  amortization                              17,400          2,366                   50                19,816

Nonrecurring items                           1,600              -                     -                1,600

Operating profit                           101,582          1,674               (3,273)              105,983

Interest expense                                 -              -                6,958                 6,958

Earnings before tax                        107,582          1,674             ( 10,231)               99,025

Identifiable assets                        425,636         43,663                5,830               475,129
Acquisition of property,
  plant & equipment                         37,263*         2,517                    -                39,780
</TABLE>

*Includes $11,055 for acquired property, plant & equipment related to the
acquisitions of Alpha and Cowen Cable.

<TABLE>
<CAPTION>

                                        Electronics &      Cord             Corporate &
 1996                                   Electrical       Products           Eliminations         Consolidated
-------------------------------------------------------------------------------------------------------------
(in thousands)

<S>                                       <C>             <C>                 <C>                   <C>     
Revenues                                  $612,332        $81,144             $(26,051)             $667,425
Depreciation &
  amortization                              15,590          1,951                   45                17,586

Operating profit                            93,409          3,113               (2,105)               94,417

Interest expense                                 -              -                3,497                 3,497

Earnings before tax                         93,409          3,113               (5,602)               90,920

Identifiable assets                        322,005         43,259                6,381               371,645
Acquisition of property,                                                             -
  plant & equipment                         25,937*         3,077                                     29,014
</TABLE>

* Includes $2,914 for acquired property, plant & equipment related to the
acquisitions of ICI.

The following table identifies by country revenues based on the location of the
customer and property, plant and equipment based on physical location by
country.

GEOGRAPHIC INFORMATION

<TABLE>
<CAPTION>

                                       1998                                 1997                                1996
-----------------------------------------------------------------------------------------------------------------------------------
                                      PERCENT    PROPERTY,                  Percent   Property,                 Percent   Property,
                                        OF        PLANT &                     of       Plant &                    of       Plant &
COUNTRY & REGION           REVENUES   REVENUE    EQUIPMENT      Revenues    Revenue   Equipment     Revenues    Revenue   Equipment
-----------------------------------------------------------------------------------------------------------------------------------
(in thousands)

<S>                         <C>          <C>      <C>          <C>            <C>    <C>           <C>           <C>     <C>    
UNITED STATES               $491,713      68%     $115,675     $ 504,037       68%    $ 96,853      $424,564       64%    $ 90,694
                                                                                                     
CANADA                        40,230       6%       13,372        47,145        6%      13,325        44,053        6%      12,107
-----------------------------------------------------------------------------------------------------------------------------------
   TOTAL US & CANADA         531,943      74%      129,047       551,182       74%     110,178       468,617       70%     102,801

THE NETHERLANDS               17,822       2%       28,660        20,219        3%      39,512        33,596        5%      47,456
REST OF EUROPE               100,965      14%       23,294       103,875       14%          35        90,919       14%           6
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL EUROPE                 118,787      16%       51,954       124,094       17%      39,547       124,515       19%      47,462

ASIA/PACIFIC                  45,477       6%       13,130        46,825        6%          79        49,133        7%          63

LATIN AMERICA                 20,944       3%        2,005        20,274        3%       2,129        21,400        3%       1,608

OTHER                          6,474       1%            -         4,832        -            -         3,760        1%           -
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL                       $723,625     100%     $196,136     $ 747,207      100%    $151,933      $667,425      100%    $151,934
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


<PAGE>   29
                                       53
                                  BELDEN INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 18: QUARTERLY OPERATING RESULTS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                       1998 (BY QUARTER)
                                          -----------------------------------------------------------------------
                                                     1                 2                    3               4
-----------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                               <C>               <C>               <C>               <C>     
REVENUES                                          $190,434          $196,291          $164,284          $172,616
GROSS PROFIT                                        49,650            51,371            33,559            34,921
OPERATING EARNINGS                                  27,014            26,754             6,143             4,160
NET INCOME                                          15,468            15,155             2,525             1,356
BASIC EARNINGS PER SHARE                          $   0.59          $   0.58          $   0.10          $   0.06
DILUTED EARNINGS PER SHARE                        $   0.59          $   0.58          $   0.10          $   0.06
</TABLE>

In 1998, the Company recorded certain nonrecurring charges in both the third
quarter and the fourth quarter. Operating earnings and net income before
nonrecurring items for the third quarter of 1998 would be $9,908 and $4,831
respectively. Operating earnings and net income before nonrecurring items for
the fourth quarter of 1998 would be $10,995 and $5,542 respectively.

<TABLE>
<CAPTION>

                                                                    1997 (by quarter)
                                          -----------------------------------------------------------------------
                                                   1                 2                    3               4
-----------------------------------------------------------------------------------------------------------------
(in thousands, except per share amounts)
<S>                                             <C>               <C>               <C>               <C>     
Revenues                                        $175,974          $192,597          $183,693          $194,943
Gross profit                                      46,058            48,837            47,522            54,892
Operating earnings                                24,499            25,643            25,068            30,773
Net income                                        13,885            14,440            14,503            17,825
Basic earnings per share                        $   0.53          $   0.55          $   0.56          $   0.68
Diluted earnings per share                      $   0.53          $   0.55          $   0.55          $   0.68
</TABLE>

In 1997, the Company recorded certain restructuring charges during the third
quarter. Operating earnings and net income before these charges would be $26,668
and $15,483 respectively.

NOTE 19: CONTINGENT LIABILITIES

Various claims are asserted against the Company in the ordinary course of
business including those pertaining to income tax examinations, product
liability and patent matters. Based on facts currently available, management
believes that the disposition of the claims that are pending or asserted will
not have a materially adverse effect on the financial position of the Company.




<PAGE>   30

                                       54
                                  BELDEN INC.

STOCKHOLDER INFORMATION

CORPORATE OFFICE
   Belden Inc.
   7701 Forsyth Boulevard
   Suite 800
   St. Louis, Missouri 63105
   (314) 854-8000

INVESTOR RELATIONS CONTACT
   Richard K. Reece
   Vice President, Finance, Treasurer
   and Chief Financial Officer
   7701 Forsyth Boulevard
   Suite 800
   St. Louis, MO 63105
   (314) 854-8054

ANNUAL MEETING
   11:00 a.m.
   May 6, 1999
   St. Louis Club
   7701 Forsyth Boulevard
   St. Louis, Missouri 63105

TRANSFER AGENT
   ChaseMellon Shareholder Services
   85 Challenger Road
   Overpeak Center
   Ridgefield Park, NJ 07660
   (201) 296-4266

INDEPENDENT AUDITORS
   Ernst & Young LLP
   701 Market Street, Suite 1400
   St. Louis, Missouri 63101
   (314) 259-1000

FORM 10-K
  STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT
  ON FORM 10K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY WRITING TO
  THE INVESTOR RELATIONS DEPARTMENT AT THE COMPANY'S CORPORATE OFFICE.

MARKET INFORMATION
  The Company's common stock is traded under the symbol "BWC." Belden's common
  stock began trading on the New York Exchange on September 30, 1993. At March
  1, 1997, the Company had 1270 stockholders of record.


COMMON STOCK PRICES AND DIVIDENDS

<TABLE>
<CAPTION>
                                                                       
                                             1998 (by quarter)
                              ----------------------------------------------
                                1            2             3           4
----------------------------------------------------------------------------
<S>                           <C>          <C>           <C>          <C>  
Dividends per common share    $.05         $.05          $.05         $.05     

Common stock prices:
           High               42 1/4       43 7/8        33 1/8       21 3/16
           Low                33 9/16      29 7/8        13 1/8       11 1/4

<CAPTION>
                                                                       
                                              1997 (by quarter)
                              ----------------------------------------------
                                1            2             3           4
---------------------------------------------------------------------------- 
<S>                           <C>          <C>           <C>          <C>  
Dividends per common share    $.05         $.05          $.05         $.05    

Common stock prices:
           High               39 7/8       38 1/8        39 13/16     38 3/4
           Low                34 3/4       30 5/8        33 3/4       32

</TABLE>