<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                  ___________

                                   FORM 10-Q


          [X]  Quarterly Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

               For the Quarterly Period Ended March 31, 1999

                                       or

          [_]  Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                 For the Transition Period From       To      
                                                -----    -----

                        Commission File Number: 0-25560

                            ACT Manufacturing, Inc.
                            -----------------------
            (Exact name of registrant as specified in its charter)


        Massachusetts                                   04-2777507
        -------------                                   ----------
(State or other jurisdiction of                   (IRS Employer ID. No.)
 incorporation or organization)

 
        2 Cabot Road         
        Hudson, Massachusetts                              01749
        ---------------------                            ----------
        (Address of principal                            (Zip code)
        executive offices)   


Registrant's telephone number, including area code:   (978) 567-4000

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes   X    No      
    -----     -----

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

        Common Stock                                    9,093,646 Shares
        ------------                                    ---------------- 
           (Class)                                (Outstanding on May 9, 1999)
                   
<PAGE>
 
                            ACT MANUFACTURING, INC.

                              INDEX TO FORM 10-Q

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
 
ITEM 1--Financial Statements:
<S>                                                                          <C>
Condensed Consolidated Statements of Operations for the three months 
  ended March 31, 1999 and 1998........................................       3
Consolidated Statements of Comprehensive Income (Loss) for the three 
  months ended March 31, 1999 and 1998.................................       3
Condensed Consolidated Balance Sheets as of  March 31, 1999 and 
  December 31, 1998....................................................       4
Condensed Consolidated Statements of Cash Flows for the three months 
  ended March 31, 1999 and 1998........................................       5
Notes to Condensed Consolidated Financial Statements  .................       6
 
ITEM 2--Management's Discussion and Analysis of Financial Condition 
        and Results of Operations .....................................       8
 
ITEM 3--Quantitative and Qualitative Disclosures About Market Risk  ...       17
 
PART II.   OTHER INFORMATION
 
ITEM 6--Exhibits and Reports on Form 8-K...............................       18
 
Signatures.............................................................       19
Exhibit Index..........................................................       20
 
 
</TABLE>
<PAGE>
 
                        PART I.   FINANCIAL INFORMATION

                            ACT MANUFACTURING, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (unaudited--in thousands, except per share data)

<TABLE>
<CAPTION>
                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                        1999             1998
                                                  ----------       -----------
<S>                                               <C>             <C> 
Net sales........................................ $   81,190       $   60,943
Cost of goods sold...............................     73,681           58,971
                                                  ----------       ----------
Gross profit.....................................      7,509            1,972
                                                                 
Selling, general and administrative expenses.....      3,681            3,017
                                                  ----------       ----------
Operating income (loss)..........................      3,828           (1,045)
                                                                 
Interest expense, net............................        704              740
Other,  net......................................         13               92
                                                  ----------       ----------
    Total........................................        717              832
                                                  ----------       ----------
                                                                 
Income (loss) before provision for income taxes..      3,111           (1,877)
 .                                                               
                                                                 
Provision (benefit) for income taxes.............      1,245             (751)
                                                  ----------       ----------
                                                                 
Net income (loss)................................ $    1,866       $   (1,126)
                                                  ==========       ==========
                                                                 
Basic net income (loss) per common share.........      $0.21           $(0.12)
                                                  ==========       ==========
Diluted net income (loss) per common share.......      $0.20           $(0.12)
                                                  ==========       ==========
Weighted average shares outstanding--basic.......  9,067,883        9,062,946
                                                  ==========       ==========
Weighted average shares outstanding--diluted.....  9,510,799        9,062,946
                                                  ==========       ==========
</TABLE>
             The accompanying notes are an integral part of these 
                 condensed consolidated financial statements.

                            ACT MANUFACTURING, INC.

            CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                           (unaudited--in thousands)
<TABLE>
<CAPTION>
                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                        1999             1998
                                                  ----------       -----------
<S>                                               <C>             <C> 
Net income (loss)...............................  $    1,866       $   (1,126)
Other comprehensive income (loss):                                  
  Foreign currency translation adjustment.......          43             (184)
                                                      ------          -------
Comprehensive income (loss).....................      $1,909          $(1,310)
                                                      ======          =======
</TABLE>
                The accompanying notes are an integral part of 
              these condensed consolidated financial statements.
<PAGE>
 
                            ACT MANUFACTURING, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)

<TABLE>
<CAPTION>
 
                                           March 31, 1999  December 31, 1998
                                           --------------  -----------------
ASSETS                                      (Unaudited)
<S>                                       <C>             <C> 
CURRENT ASSETS:                            
  Cash and cash equivalents................     $  1,741        $  5,389
  Accounts receivable, net.................       91,832          70,546
  Inventory................................       41,573          45,337
  Prepaid expenses and other assets........        1,201           2,204
  Deferred taxes...........................        1,360           1,360
                                                --------        --------
                                                              
     Total current assets..................      137,707         124,836
                                                              
PROPERTY AND EQUIPMENT--Net................       16,289          13,489
GOODWILL--Net..............................        5,395           5,506
OTHER ASSETS --Net.........................        1,275           1,538
                                                --------        --------
                                                              
TOTAL......................................     $160,666        $145,369
                                                ========        ========
                                                              
LIABILITIES AND STOCKHOLDERS' EQUITY                          
CURRENT LIABILITIES:                                          
  Accounts payable.........................     $ 60,528        $ 50,592
  Accrued compensation and 
    related taxes..........................        1,071           1,463
  Income tax payable.......................          824             505
  Accrued expenses and other...............        2,350           2,100
                                                --------        --------
                                                              
     Total current liabilities.............       64,773          54,660
                                                --------        --------
                                                              
OTHER LONG-TERM LIABILITIES................        2,102             977
                                                --------        --------
                                                              
NOTE PAYABLE BANK..........................       41,255          39,498
                                                --------        --------
                                                              
CONTINGENCIES..............................            -               -
                                                --------        --------
                                                              
STOCKHOLDERS' EQUITY:                                         
  Common stock.............................           91              91
  Additional paid-in capital...............       39,598          39,205
  Accumulated other comprehensive loss.....         (137)           (180)
  Retained earnings........................       12,984          11,118
                                                --------        --------
                                                              
     Total stockholders' equity............       52,536          50,234
                                                --------        --------
                                                              
TOTAL......................................     $160,666        $145,369
                                                ========        ========
</TABLE> 
             The accompanying notes are an integral part of these 
                 condensed consolidated financial statements.
<PAGE>
 
                            ACT MANUFACTURING, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (unaudited, in thousands)

<TABLE>
<CAPTION>
                                                             Three Months
                                                        ---------------------
                                                            Ended March 31,
                                                        ---------------------
                                                        1999             1998
                                                        ----             ----
<S>                                                  <C>             <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:                           
Net income  (loss)..................................  $  1,866        $ (1,126)
                                                      --------        --------
Adjustments to reconcile net income to net cash                 
  (used for) provided by operating activities:                  
    Deferred taxes..................................        --            (751)
    Depreciation and amortization...................     1,056             600
    (Decrease) increase in cash from:                           
       Accounts receivable--trade...................   (21,286)         (2,489)
       Inventory....................................     3,764          (4,315)
       Prepaid expenses and other assets............     1,003            (137)
       Accounts payable.............................     9,936          18,464
       Accrued expenses.............................      (813)            283
       Income tax payable (refundable)..............       319            (239)
                                                      --------        --------
       Total adjustments............................    (6,021)         11,416
                                                      --------        --------
                                                                
Net cash (used for) provided by operating                       
  activities........................................    (4,155)         10,290
                                                      --------        --------
                                                                
CASH FLOWS FROM INVESTING ACTIVITIES:                           
  Acquisition of property and equipment.............    (1,549)         (2,486)
  Decrease (increase) in other assets...............       263             (44)
                                                      --------        --------
                                                                
  Net cash used for investing activities............    (1,286)         (2,530)
                                                      --------        --------
                                                                
CASH FLOWS FROM FINANCING ACTIVITIES:                           
  Borrowings under line-of-credit agreements........    67,812          43,883
  Repayments under line-of-credit agreements........   (66,055)        (55,092)
  Repayments of other long-term liabilities.........      (400)           (117)
  Net proceeds from sale of stock...................       393              --
                                                      --------        --------
                                                                
 Net cash provided by (used for) financing                      
   activities.......................................     1,750         (11,326)
                                                      --------        --------
                                                                
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND                     
  EQUIVALENTS.......................................        43               7
                                                      --------        --------
                                                                
NET DECREASE IN CASH AND CASH EQUIVALENTS...........    (3,648)         (3,559)
                                                                
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR........     5,389           5,165
                                                      --------        --------
                                                                
CASH AND CASH EQUIVALENTS, END OF PERIOD............  $  1,741        $  1,606
                                                      ========        ========
</TABLE>
             The accompanying notes are an integral part of these 
                 condensed consolidated financial statements.
<PAGE>
 
                            ACT MANUFACTURING, INC.

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   SIGNIFICANT ACCOUNTING POLICIES

     The unaudited interim condensed consolidated financial statements furnished
  herein reflect all adjustments, which in the opinion of management are of a
  normal recurring nature, necessary to fairly state the Company's financial
  position, cash flows and the results of operations for the periods presented
  and have been prepared on a basis substantially consistent with the audited
  financial statements.

     The results of operations for the interim periods are not necessarily
  indicative of the results of operations to be expected for the fiscal year.
  These interim condensed consolidated financial statements should be read in
  conjunction with the Company's Annual Report on Form 10-K for the period
  ending December 31, 1998 filed with the Securities and Exchange Commission.


2.   INVENTORY

     Inventory consisted of the following at:

<TABLE>
<CAPTION>
                               March 31, 1999    December 31, 1998
                               --------------    -----------------
                                        (in thousands)
<S>                           <C>               <C>
        Raw material.........      $32,995            $32,486
        Work in process......        8,470             10,874
        Finished goods.......          108              1,977
                                   -------            -------
           Total.............      $41,573            $45,337
                                   =======            =======
</TABLE>
                                                                                

3.   NET INCOME (LOSS) PER COMMON SHARE

     Basic net income per common share is computed by dividing income available
  to common stockholders by the weighted average number of common shares
  outstanding for the period.  Diluted net income per common share reflects the
  potential dilution as if common equivalent shares outstanding (common stock
  options) were exercised and converted into common stock unless the effects of
  such equivalent shares were antidilutive.

4.   SEGMENT INFORMATION

     The Company has identified two distinct and reportable segments: the
  Printed Circuit Board ("PCB") and Cable and Harness ("Cable") segments.  The
  Company considers these two segments reportable under Statements of Financial
  Accounting Standards ("SFAS") No. 131, "Disclosures About Segments of an
  Enterprise and Related Information,"  criteria as they are managed separately
  and the operating results of each segment are regularly reviewed and evaluated
  separately by the Company's chief decision maker.
<PAGE>
 
  A summary of information about the Company's operations by segment for the
  three months ended March 31, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
                                               PCB      Cable   Intercompany   Corporate   Total
                                             --------  -------  -------------  ---------  --------
<S>                                          <C>       <C>      <C>            <C>        <C> 
1999
Revenue                                       $73,341   $8,568       $  (719)     $   --   $81,190
Material and direct labor expense              59,405    5,709            --          --    65,114
Direct gross profit                            13,936    2,859          (719)         --    16,076
Indirect labor and overhead                        --       --            --       8,567     8,567
Total gross  profit                                --       --            --          --     7,509
 
1998
Revenue                                       $53,217   $9,217       $(1,491)     $   --   $60,943
Material and direct labor expense              44,685    6,709            --          --    51,394
Direct gross profit                             8,532    2,508        (1,491)         --     9,549
Indirect labor and overhead                        --       --            --       7,577     7,577
Total gross profit                                 --       --            --          --     1,972
</TABLE>


5.   NEW FINANCIAL ACCOUNTING STANDARDS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
  No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
  effective for the fiscal years beginning after June 15, 1999.  The new
  standard requires that all companies record derivatives on the balance sheet
  as assets or liabilities, measured at fair value.  Gains or losses resulting
  from changes in the values of those derivatives would be accounted for
  depending on the use of the derivative and whether it qualifies for hedge
  accounting.  Management is currently assessing the impact of SFAS No. 133 on
  the consolidated financial statements of the Company.  The Company will adopt
  this accounting standard on January 1, 2000, as required.

6.   EQUIPMENT LEASES

     The Company leases certain equipment used in its manufacturing operations
  under capital lease agreements that expire through 2003.  During the first
  quarter of 1999 the Company refinanced approximately $2.6 million of its then
  existing operating leases and classified these leases as capital leases in the
  accompanying Condensed Consolidated Balance Sheet for the three month period
  ending March 31, 1999.  The effect of this refinancing  on the Company's
  results of operations will not differ materially from the previous lease
  financing arrangements.


7.   CONTINGENCIES

     On February 27, 1998, the Company and certain of the Company's officers and
  directors were named as defendants in a purported securities class action
  lawsuit filed in the United States District Court for the District of
  Massachusetts.  The complaint was then amended on October 16, 1998.  The
  plaintiffs purport to represent a class of all persons who purchased or
  otherwise acquired the Company's Common Stock in the period from April 17,
  1997 through March 31, 1998.  The amended complaint alleges, among other
  things, that the defendants knowingly made misstatements to the investing
  public about the value of the Company's inventory and the nature of its
  accounting practices.  On December 15, 1998, the Company filed a motion to
  dismiss the case in its entirety based on the pleadings.  The Company's motion
  to dismiss has been fully briefed by both sides, and oral argument was heard
  on April 28, 1999.  The Company believes the claims asserted in the amended
  complaint are without merit and intends to continue to defend itself
  vigorously in this action.  The Company further believes that this litigation
  will not have a material adverse effect on the Company's business and results
  of operations, although there can be no assurance as to the ultimate outcome
  of these matters.  No provision for any liability that may result from this
  litigation has been made in the accompanying condensed  consolidated financial
  statements.
<PAGE>
 
8.   SUBSEQUENT EVENT

     On May 10, 1999, the Company entered into a definitive merger agreement
with CMC Industries, Inc. ("CMC"), a provider of electronics manufacturing
services to original equipment manufacturers in the telecommunications, computer
and electronics industries. The closing of the merger with CMC (the "Merger") is
subject to the approval of the shareholders of CMC and the Company, various
regulatory approvals and other customary closing conditions.  Under the terms of
the agreement, each share of CMC Industries common stock will be exchanged for
0.5 shares of ACT Manufacturing common stock. The Merger is expected to be
accounted for as a pooling of interests.  The Merger would add approximately
550,000 square feet of capacity at operations located in Corinth, Mississippi,
Santa Clara, California and Hermosillo, Mexico.



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the accompanying condensed
consolidated financial statements for the periods specified and the associated
notes. Further reference should be made to the Company's Annual Report on Form
10-K for the period ending December 31, 1998.


Overview

     ACT Manufacturing, Inc. provides value-added electronics manufacturing
services for original equipment manufacturers ("OEMs") in the networking and
telecommunications, computer, industrial and medical equipment markets. The
Company provides OEMs with complex printed circuit board ("PCB") assembly
primarily utilizing advanced surface mount technology ("SMT"), mechanical and
molded cable and harness assembly, electro-mechanical sub-assembly, and total
system assembly and integration. The Company targets moderate-volume production
runs of the complex, leading-edge commercial market applications of emerging and
established OEMs, which generally require technologically-advanced and flexible
manufacturing as well as a higher degree of value-added services. These
applications are generally characterized by multiple configurations and high PCB
densities. As an integral part of its service to OEM customers, the Company
provides advanced manufacturing and test engineering, flexible materials
management, and comprehensive test services, as well as product repair,
packaging, order fulfillment and distribution services.

     On May 10, 1999, the Company entered into a definitive merger agreement
with CMC Industries, Inc. ("CMC"), a provider of electronics manufacturing
services to original equipment manufacturers in the telecommunications, computer
and electronics industries. The closing of the merger with CMC (the "Merger") is
subject to the approval of the shareholders of CMC and the Company, various
regulatory approvals and other customary closing conditions.  Under the terms of
the agreement, each share of CMC Industries common stock will be exchanged for
0.5 shares of ACT Manufacturing common stock. The Merger is expected to be
accounted for as a pooling of interests.  The Merger would add approximately
550,000 square feet of capacity at operations located in Corinth, Mississippi,
Santa Clara, California and Hermosillo, Mexico.

     The Company currently manufactures at six leased facilities having an
aggregate of 358,000 square feet. Four of the facilities are located in
Massachusetts. In the second quarter of 1998, the Company began manufacturing in
a new 45,000 square foot leased facility in Dublin, Ireland and consolidated
operations from the existing Dublin facility into the new plant. In the fourth
quarter of 1998, the Company occupied and began manufacturing in a new 62,000
square foot leased facility in Lawrenceville, Georgia, and consolidated
operations from the existing Norcross, Georgia facility into the new plant. All
of the Company's manufacturing facilities have been certified to the ISO 9002
international quality standard.
<PAGE>
 
     As of March 31, 1999, the Company had 1,019 employees, down from 1,042
employees at December 31, 1998.

     The Company typically recognizes revenue upon shipment to customers. The
Company generally does not obtain long-term purchase orders or commitments from
its customers, and, accordingly, works with its customers to anticipate delivery
dates and future volume of orders based on customer forecasts. The level and
timing of orders placed by the Company's OEM customers vary due to customer
attempts to manage inventory, changes in the OEM's manufacturing strategy and
variations in demand for customer products due to, among other things,
introduction of new products, product life cycles, competitive conditions or
industry or general economic conditions. The Company may source components for
product assemblies based on customer forecasts. However, the Company's policy is
that customers are responsible for materials and associated acquisition costs in
the event of a significant reduction, delay or cancellation of orders from the
forecasted amounts.


Results of Operations--Three Months Ended March 31, 1999 and 1998

     Net sales increased $20.2 million or 33.2% to $81.2 million for the three
month period ended March 31, 1999 compared with $60.9 million for the same
period in 1998. The increase was attributed principally to an expansion of
business from existing customers, as well as sales to new customers in the
printed circuit board assembly markets. In addition, in the three months ended
March 31, 1998, sales were unfavorably impacted by softness in demand from
existing customers and weakness in the development of new business
opportunities. Net sales in the printed circuit board segment as a percentage of
net sales was approximately 90% for the three month period ended March 31, 1999
compared to approximately 86% for the same period in 1998. Net sales in the
cable and harness segment accounted for approximately 10% of net sales for the
three month period ended March 31, 1999 compared to approximately 14% of net
sales for the same period in 1998.

     Gross profit increased $5.5 million or 280.8% to $7.5 million for the three
months ended March 31, 1999 compared with $2.0 million for the same period in
1998. Gross profit as a percentage of net sales ("gross margin") increased to
9.2% for the three months ended March 31, 1999 from 3.2% for the same period in
1998. This increase was attributable to a higher absorption of manufacturing
overhead, the positive impact of the Company's cost management programs and a
favorable product mix.

     Selling, general and administrative ("SG&A") expenses increased $0.7
million or 22.0% to $3.7 million for the three months ended March 31, 1999
compared with $3.0 million, for the three months ended March 31, 1998. SG&A
increased primarily due to costs related to additional facilities and the
additional investment in the sales and marketing programs at the Company. SG & A
expenses as a percentage of net sales decreased to 4.5% for the three months
ended March 31, 1999 from 5.0% for the same period in 1998. SG&A as a percentage
of net sales for the three months ended March 31, 1999 was lower than the
corresponding period in 1998 reflecting growth in net sales in the three months
ended March 31, 1999 and the positive effects of the Company's cost management
programs.

     Operating income increased $4.9 million to $3.8 million for the three
months ended March 31, 1999 compared with an operating loss of $1.0 million for
the same period in 1998 as a result of the above factors.

     Interest expense for the three months ended March 31, 1999 remained
essentially unchanged when compared to the interest expense for the three months
ended March 31, 1998.


Financial Condition, Liquidity and Capital Resources

     The Company had working capital of $72.9 million at March 31, 1999 compared
with $70.2 million at December 31, 1998. Operating activities used $4.2 million
of cash for the first three months of 1999 compared 
<PAGE>
 
with cash provided by operations of $10.3 million for the comparable period in
1998. Net cash used by operating activities for the first three months of 1999
consisted principally of the increase in accounts receivable, offset by the
increase in accounts payable, a decrease in inventory, as well as the positive
impact of net income for the period.

     Accounts receivable increased $21.3 million to $91.8 million as of 
March 31, 1999 from $70.5 million as of December 31, 1998. The increase reflects
higher net sales in the first quarter of 1999 as compared to the fourth quarter
of 1998. In addition, the Company's customers required a higher proportion of
shipments in the last month of the first quarter of 1999 as compared to the last
month of the fourth quarter of 1998. As of March 31, 1999 the Company's accounts
receivable days sales outstanding for product shipments measured from the date
of shipment was approximately 35 days. Inventory decreased $3.8 million to $41.6
as of March 31, 1998 from $45.3 million as of December 31, 1998. This decrease
reflects the Company's continued inventory management initiatives.

     In the fourth quarter of 1998, the Company executed a new $55.0 million
Senior Secured Credit Facility ("Credit Facility") to replace the Company's
$50.0 million loan and security agreement then outstanding. This new Credit
Facility provides for borrowings up to an aggregate amount of $55.0 million,
limited to a certain percentage of qualified accounts receivable and qualified
inventory, of which $41.3 million was utilized and an additional $13.7 million
was available for use as of March 31, 1999 based upon the applicable borrowing
base. Interest is payable monthly and the Credit Facility matures in 2001.
Through November 30, 1999, the Company may choose an interest rate of either (i)
0% to .75% above the prime rate as announced by the bank, or (ii) 1.75% to 2.75%
above the prevailing Eurodollar rate depending upon the average borrowing base
availability of the Company. Commencing December 1, 1999, the Company may choose
an interest rate of either (i) 0% to .50% above the prime rate as announced by
the bank, or (ii) 1.50% to 2.50% above the prevailing Eurodollar rate depending
upon the calculated leverage rates of the Company. The Credit Facility requires
the Company to maintain certain levels of minimum availability and maximum
leverage ratios. In addition to certain other prohibited actions, the Credit
Facility also limits capital expenditures by the Company and prohibits the
payment of cash dividends on the Company's capital stock. At March 31, 1999 the
interest rate on the Credit Facility was 8.00%.

     The Company leases certain equipment used in its manufacturing operations
under capital lease agreements that expire through 2003.  During the first
quarter of 1999 the Company refinanced approximately $2.6 million of its then
existing operating leases and classified these leases as capital leases in the
accompanying Condensed Consolidated Balance Sheet for the three months ending
March 31, 1999. The effect of this refinancing on the Company's results of
operations will not differ materially from the previous lease financing
arrangements.

     The Company entered into a $17.0 million interest rate swap agreement in
the fourth quarter of 1998 simultaneous with the execution of the Credit
Facility.  The swap agreement provides for payments by the Company at a fixed
rate of interest of 6.76% and matures on October 19, 2001.
 

Year 2000 Readiness Disclosure Statements

     The Company and the companies with which it does business utilize computer
software programs and operating systems and embedded technology in the conduct
of their operations. Many computer software programs and operating systems and
much technology in use today are unable to distinguish between the year 2000 and
the year 1900 because they use a two-digit shorthand to define the applicable
year. This is commonly known as the Year 2000 problem or issue. If the Company
does not properly identify and correct its Year 2000 issues prior to January 1,
2000, the operations of the Company could be materially disrupted, due to, among
other things, an inability to process transactions, send invoices, receive and
record inventory or payments, or engage in similar normal business activities.
In addition, the Company's operations could also be significantly disrupted if
the companies with which it does business are not Year 2000 compliant on a
timely basis, and such failure adversely 
<PAGE>
 
affects their ability to do business with the Company. Any of these Year 2000
failures or disruptions could have a material adverse effect on the Company's
business, financial condition or results of operations.

     To address these issues the Company has undertaken an extensive project to
assess and remedy the areas within its business and operations which could be
adversely affected by Year 2000 issues, including its information technology
("IT") and non-IT systems and processes.  The first phase of the project is 
(i) to determine the extent of the Company's Year 2000 problem by reviewing all
of the Company's hardware, software, equipment and embedded technology to
determine if any of this software and technology is not Year 2000 compliant and
(ii) to determine whether companies with which it does significant business will
be Year 2000 compliant on a timely basis. The next stage in the project will be
to correct or replace and test all such hardware, software, equipment and
embedded technology of the Company and to address the Year 2000 issues
identified at the Company's vendors and customers, as appropriate. The project
is being conducted by the Company using internal and external resources.
Finally, the Company will determine the need to formulate and revise contingency
plans based on the results of its assessment and remediation efforts with regard
to its own Year 2000 issues as well as those of its customers and suppliers.

     The Company has completed the assessment stage of the project and has
commenced the remediation stage. The Company has discussed Year 2000 compliance
with its vendors and customers, and has not been informed by any vendor or
customer of material Year 2000 compliance problems which could cause a material
disruption in the Company's operations. The Company will continue to work with
its vendors and customers to identify any possible issues, including testing
interfaces and site audits.

     Based on its review to date, the Company expects the total cost of its 
Year 2000 assessment and remediation project to be approximately $1.7 million,
of which approximately $.4 million has been expensed to date. The Company's
current expectations regarding the total cost of its Year 2000 project are
subject to change as the project progresses and more detailed information is
developed regarding the remediation efforts necessary to make the Company 
Year 2000 compliant on a timely basis. The sources of the funds for the
Company's Year 2000 project are operating cash flow and available equipment
lease-lines. No other material Company IT projects has been deferred as a result
of the Year 2000 project. The Company currently does not believe that internal
Year 2000 issues will have a material adverse effect on the Company's business.

     The Company has identified its significant systems which could be adversely
affected by Year 2000 issues to be: (i) manufacturing equipment (including SMT
lines) and testing equipment, (ii) integrated enterprise resource planning
("ERP") systems and networking software and equipment used in its Massachusetts,
Georgia and Ireland facilities, and (iii) electronic commerce capabilities. The
Company has obtained certifications from its equipment vendors indicating that
its critical manufacturing and testing equipment is Year 2000 compliant. The
Company plans to test its critical equipment by June 30, 1999. The Company has
installed a vendor-certified Year 2000 compliant version of ERP software in its
Massachusetts facilities. The Company plans to test such ERP software by June
30, 1999. The version of the ERP software used by the Company's Georgia facility
is certified as Year 2000 compliant by the vendor and was installed and tested
by the Company in February 1999. The ERP systems used in the Company's Ireland
facility is not Year 2000 compliant and cannot be upgraded. The Company has
purchased the version of the vendor-certified Year 2000 compliant software
utilized in the Georgia facility and has engaged the software vendor to assist
in implementing the new ERP system in its Ireland facility. The project plan
provides for a completion date of June 14, 1999. All network software and
electronic commerce capabilities are in the remediation phase with completion of
testing and contingency planning scheduled for June 30, 1999. For the above
identified applications, the Company is developing manual process procedures as
a contingency plan.

There can be no assurance, however, that the Company's plans and programs to
become Year 2000 compliant will succeed in their entirety, or be completed on a
timely basis or that the use of the Company's internal resources to complete the
project will not adversely effect other aspects of the Company's business.  The
Company's ability to implement its Year 2000 compliance plan and to make the
necessary modifications or replacements may be adversely affected by a number of
factors outside the control of the Company, including the availability and cost
of trained personnel and the ability of such personnel to acquire Year 2000
compliant systems and otherwise to locate 
<PAGE>
 
and correct all relevant computer codes. In addition, there can be no assurance
that one or more of the Company's vendors or customers won't have material Year
2000 compliance problems. If either the Company or any of its customers or
suppliers fail to become Year 2000 compliant on a timely basis, or if the costs
to the Company are significantly greater than currently anticipated, the result
could be a significant disruption in the Company's business due to a failure in
the systems designed to allow the Company to process transactions, invoice and
receive payments, receive inventory from suppliers or engage in similar business
practices. Such failure would result in a material adverse effect on the
Company's business, financial condition or results of operations.


New Financial Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS")  No. 133,  "Accounting for Derivative
Instruments and Hedging Activities," effective for the fiscal years beginning
after June 15, 1999.  The new standard requires that all companies record
derivatives on the balance sheet as assets or liabilities, measured at fair
value.  Gains or losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of derivative and
whether it qualifies for hedge accounting.  Management is currently assessing
the impact of SFAS No. 133 on the consolidated financial statements of the
Company.  The Company will adopt this accounting standard on January 1, 2000, as
required.
 

Cautionary Statements

  The Private Securities Litigation Reform Act of 1995 (the "Act") contains
certain safe harbors regarding forward-looking statements. From time to time,
information provided by the Company or statements made by its employees may
contain "forward-looking" information which involve risk and uncertainties.
Any statements in this Quarterly Report on Form 10-Q that are not statements of
historical fact are forward-looking statements (including, but not limited to,
statements concerning the Company's Year 2000 plans, expectations, compliance
and cost, the characteristics and growth of the Company's market and customers,
the Company's expectations, objectives and plans for future operations, the
Company's ability to effectively manage the costs of the manufacturing
processes, and the Company's expected results of operations, financial
condition, liquidity and capital resources). The following cautionary statements
should be considered carefully in evaluating the Company and its business. The
factors discussed in these cautionary statements, among other factors, could
cause actual results to differ materially from those contained in the forward-
looking statements made in this Quarterly Report on Form 10-Q and presented
elsewhere by management from time to time. These cautionary statements are being
made pursuant to the provisions of the Act and with the intention of obtaining
the benefits of the safe harbor provisions of the Act.


Customer and Market Concentration; Dependence on Electronics Industry

  For the three months ended March 31, 1999, the Company's four largest
customers accounted for approximately 67% of the Company's net sales.  Sales to
Ascend, Bay Networks, EMC, and Northern Telecom were approximately 23%, 16%,
15%, and 13%,  respectively, of the Company's net sales for such period in 1999.
For the first three months of 1998, the Company's four largest customers
accounted for approximately 64% of the Company's net sales.  Sales to EMC, Bay
Networks, Ascend, and Prominent (acquired by Lucent Technologies) were
approximately 19%, 18%, 14%, and 13%, respectively, of the Company's net sales
for such period in 1998.  The Company's results will depend to a significant
extent on the success achieved by its OEM customers in marketing their products
and the Company's ability to diversify its customer base in order to reduce its
reliance on particular customers. There can be no assurance that the Company's
principal customers will continue to purchase products and services from the
Company at current levels, if at all, or that the Company will be able to
consistently expand its customer base to make up any sales shortfalls from such
major customers and increase overall revenue. The loss of one or more major
customers, a significant reduction in purchases from such customers,
discontinuance by any major customer of products manufactured by the Company,
the failure to expand its customer base or developments adverse to the Company's
customers or their products could have a material adverse effect on the
<PAGE>
 
Company's business, financial condition and results of operations. In addition,
the Company could be adversely affected if a major customer were unable or
unwilling to pay for products and services on a timely basis or at all.

     The Company's customer base has historically been concentrated in a limited
number of segments within the electronics industry. Net sales to customers
within the networking and telecommunications segment accounted for over 50% of
the Company's net sales in each of 1997, 1998 and the first three months of
1999. These industry segments, and the electronics industry as a whole, are
subject to intense competition, consolidation, rapid technological changes,
significant fluctuations in product demand, relatively short product life-
cycles, and consequent product obsolescence. Developments adverse to such
industry segments could have a material negative effect on the Company. The
industry segments served by the Company are also subject to economic cycles and
have in the past experienced, and are likely in the future to experience,
recessionary periods. In addition, the Company cannot predict whether Year 2000
concerns will adversely affect demands or spending patterns for its customers'
products, thereby adversely affecting demand for the Company's services. 
A recessionary period or other event leading to excess capacity or downturn
affecting the electronics industry generally or one or more of the industry
segments served by the Company would likely result in intensified price
competition, reduced gross margins and a decrease in net sales, all of which
could have a material adverse effect on the Company's business, financial
condition and results of operations.


Variability of Customer Requirements; Nature and Extent of Customer Commitments
on Orders

     The level and timing of orders placed by the Company's OEM customers vary
due to customer attempts to manage inventory, changes in the OEM's manufacturing
strategy and variation in demand for customer products due to, among other
things, introduction of new products, product life cycles, competitive
conditions or industry or general economic conditions. The Company generally
does not obtain long-term purchase orders or commitments from its customers and,
accordingly, works with its customers to anticipate delivery dates and future
volume of orders based on customer forecasts. The Company relies on its
estimates of anticipated future volumes when making commitments regarding the
levels of business that it will seek and accept, the timing of production
schedules, the purchase of inventory and the levels and utilization of personnel
and other resources. From time to time, the Company will purchase certain
components without a customer commitment to pay for them. The Company may source
components for product assemblies based on customer forecasts. However, the
Company's policy is that customers are responsible for materials and associated
acquisition costs in the event of a significant reduction, delay or cancellation
of orders from the forecasted amounts. In the event a customer is unwilling or
unable or not obligated to reimburse the Company for materials costs in the case
of a significant variance from forecast, the Company's business, financial
condition and results of operations could be materially and adversely affected.
A variety of conditions, both specific to the individual customer and generally
affecting the customer's industry, may cause customers to cancel, reduce or
delay orders that were either previously made or anticipated. Significant or
numerous cancellations, reductions or delays in orders by a customer or group of
customers could have a material adverse effect on the Company's business,
financial condition and results of operations.


Fluctuations in Operating Results

     The Company's operating results have varied and may continue to fluctuate
significantly from period to period, including on a quarterly basis. The
variability of the level and timing of orders from, and shipments to, major
customers may result in significant periodic and quarterly fluctuations in the
Company's results of operations. A substantial portion of net sales in a given
quarter may depend on obtaining and fulfilling orders for assemblies to be
manufactured and shipped in the same quarter in which those orders are received.
Further, a significant portion of net sales in a given quarter may depend on
assemblies configured, completed, packaged and shipped in the final weeks of
such quarter. In addition to the variability resulting from the short-term
nature of its customers' commitments, other factors have contributed, and may in
the future contribute, to such fluctuations. These factors include, among other
things, customers' announcements and introductions of new products or new
generations of products, evolutions in the life cycles of customers' products,
timing of expenditures in anticipation of future orders, cost effectiveness in
managing manufacturing processes, changes in costs and availability of labor 
<PAGE>
 
and components, efficiencies achieved by the Company in managing inventory and
fixed assets, a shift in the Company's product assembly mix which results in
fluctuating margins, capacity utilization, inventory obsolescence, currency
exchange rate movements, acquisitions and related charges and expenses,
competition in the electronics manufacturing services market, trends in the
electronics industry and changes or anticipated changes in economic conditions.
An interruption in manufacturing resulting from shortages of parts or equipment,
fire, earthquake or other natural disaster, equipment failure or otherwise could
have a material adverse effect on the Company's business, financial condition
and results of operations. Because the Company's operating expenses are based on
anticipated revenue levels and a high percentage of the Company's operating
expenses are relatively fixed, any unanticipated shortfall in revenue in a
quarter may have a material adverse impact on the Company's business, financial
condition and results of operations for that quarter. Management's failure to
effectively manage the costs of the manufacturing processes and manage inventory
levels also could have a material adverse effect on the Company's business,
financial condition and results of operations. Results of operations in any
period should not be considered indicative of the results to be expected for any
future period.

     As a result of the foregoing or other factors, it is possible that in some
future period the Company's results of operations will fail to meet the
expectations of securities analysts or investors, and the price of the Common
Stock would then be materially and adversely affected.


Competition

     The electronics manufacturing services industry is highly competitive. 
The Company competes against numerous U.S. and foreign electronics manufacturing
services providers with global operations. The Company also faces competition
from a number of electronics manufacturing services providers who operate on a
local or regional basis. In addition, current and prospective customers
continually evaluate the merits of manufacturing products internally. Certain of
the Company's competitors have substantially greater manufacturing, financial,
systems, sales and marketing resources than the Company. Also, due to the
consolidation trend within the industry, the Company faces larger and more
geographically diverse competitors who have combined resources with which to
compete against the Company. In addition, these competitors may have the ability
to respond more quickly to new or emerging technologies, may adapt more quickly
to changes in customer requirements and may devote greater resources to the
development, promotion and sale of their services than the Company. The Company
may be operating at a cost disadvantage compared to manufacturers who have
greater direct buying power from component suppliers or who have lower cost
structures. The Company's manufacturing processes are generally not subject to
significant proprietary protection, and companies with significant resources or
international operations may enter the market. Increased competition could
result in price reductions, reduced margins or loss of market share, any of
which could have a material adverse effect on the Company's business, financial
condition and results of operations. The Company believes that the principal
competitive factors in the segments of the electronics manufacturing services
industry in which it operates are technology, service, manufacturing capability,
quality, geographic location, price, reliability, timeliness in delivering
finished products and flexibility in adapting to customers' needs. There can be
no assurance that competition from existing or potential competitors will not
have a material adverse effect on the Company's business, financial condition
and results of operations.


Management of Growth

     The Company has grown rapidly in recent years and expects to continue to
expand its operations. Such growth has placed, and will continue to place,
significant strain on the Company's management, operations, technical,
financial, systems, marketing and other resources. The Company's ability to
manage its growth will require it to continue to invest in its operational,
financial and management information systems, as well as to develop further the
management skills of its managers and supervisors and to retain, motivate and
effectively manage its employees. In addition, as a result of an inventory
shortfall occurring in the fourth quarter of 1997, the Company has reviewed and
continues to review its security procedures and operating and financial controls
and, based upon such review, has implemented enhanced security systems and
inventory work-in-process tracking systems and expects to continue to identify
opportunities to implement enhanced procedures and controls. There 
<PAGE>
 
can be no assurance, however, that the controls implemented by management will
result in the cost savings anticipated by management. If the Company's
management is unable to manage growth effectively, the quality of the Company's
services and products, its ability to retain key personnel and its results of
operations could be materially and adversely affected. Competition for personnel
is intense, and there can be no assurance that the Company will be able to
attract, assimilate or retain additional highly qualified employees in the
future, especially senior managers, engineering and sales personnel. The failure
to hire and retain such personnel could have a material adverse effect on the
Company's business, financial condition and results of operations. See "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Cautionary Statements--Acquisitions and Geographic Expansion" and 
"--Dependence Upon Key Personnel and Skilled Employees."


Acquisitions and Geographic Expansion

     On May 10, 1999, the Company entered into a definitive merger agreement
with CMC Industries, Inc. ("CMC"). The closing of the merger with CMC (the
"Merger") is subject to the approval of the shareholders of CMC and the Company,
various regulatory approvals and other customary closing conditions. Therefore,
there can be no assurance that the Company will be able to successfully complete
the Merger in a timely fashion or at all. Moreover, the Company has limited
experience in managing geographically dispersed operations, in integrating
acquired companies into its operations, in expanding the scope of operations of
acquired businesses, and in operating outside the Northeastern United States.
Therefore, there can be no assurance that the Company will realize any of the
expected synergies from the Merger or operate the acquired CMC business
profitably in the future.

     The Merger and any other future acquisitions by the Company of additional
companies, businesses or assets also involve numerous business risks, including
difficulties in the assimilation of the operations, technologies and products of
the acquired companies, the diversion of management's attention from other
business concerns and the potential loss of key employees from the combined
company. Therefore, there can be no assurance that the key employees and
businesses of acquired companies, including CMC, will be successfully integrated
with the Company, that CMC or any acquired business will contribute
significantly to the Company's sales or earnings, or that sales and earnings of
the Company will not be adversely effected by the integration process or other
factors. The Merger as well as any future such transaction may also result in
the assumption of additional liabilities of the acquired company or business,
the potentially dilutive issuance of equity securities, various transaction
costs and expenses and the incurrence of additional debt and amortization
expenses related to goodwill and other intangible assets, all of which could
materially and adversely affect the Company's business, financial condition and
results of operations following such a transaction.

Dependence Upon Key Personnel and Skilled Employees

     The Company's future success will be largely dependent upon the skills and
efforts of John A. Pino, its President and Chief Executive Officer, and other
key executives as well as its managerial, sales and technical employees. None of
the senior management or other key employees of the Company is subject to any
employment contract or noncompetition agreement and the Company does not
maintain any key-man life insurance on any of its key executives. The loss of
services of any of its executives or other key personnel could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, continued growth of the Company will require that,
despite significant competition, it attract, motivate and retain additional
skilled and experienced managerial, sales and technical personnel. There can be
no assurance that the Company will be able to attract, motivate and retain
personnel with the skills and experience needed to successfully manage the
Company's business and operations.
<PAGE>
 
Expansion of Facilities and Manufacturing Capacity

     The Company believes its long-term competitive position depends in part on
its ability to increase manufacturing capacity. The Company may obtain such
additional capacity through acquisitions or through expansion of its current
facilities. The acquisition and expansion of additional facilities from time to
time will require substantial additional capital, and there can be no assurance
that such capital will be available. Further, there can be no assurance that the
Company will be able to acquire sufficient capacity or successfully integrate
and manage such additional facilities. In addition, the Company's expansion of
its manufacturing capacity has significantly increased its fixed costs, and the
future profitability of the Company will depend on its ability to utilize its
manufacturing capacity in an effective manner. The failure to obtain sufficient
capacity or to successfully integrate and manage additional manufacturing
facilities could adversely impact the Company's relationships with its
customers, limit the Company's growth opportunities and materially and adversely
affect the Company's business, financial condition and results of operations.


Availability of Key Components

     The Company and many of its customers rely on a single or limited number of
third-party suppliers for many components used in the assembly process. The
Company does not have any long-term supply agreements. Shortages of certain
electronic components have occurred from time to time. In addition, due to the
Company's utilization of just-in-time inventory techniques, the timely
availability of many components to the Company is dependent on the Company's
ability to continuously develop accurate forecasts of customer volume
requirements. Component shortages could result in manufacturing and shipping
delays or increased component prices which could have a material adverse effect
on the Company's business, financial condition and results of operations. To the
extent that the Company is unable to timely obtain key components for the
reasons cited above or otherwise, the Company's business, financial condition
and results of operations could be materially and adversely affected. See 
"Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations--Cautionary Statements--Risks of International Operations."


Technological Change and Process Development

     The market for the Company's manufacturing services is characterized by
rapidly changing technology and evolving process development. The continued
success of the Company's business will depend in large part upon its ability to
maintain and enhance its technological capabilities, develop and market
manufacturing services which meet changing customer needs and successfully
anticipate or respond to technological changes in manufacturing processes on a
cost-effective and timely basis. Although management believes that the Company's
operations utilize the assembly and testing technologies and equipment currently
required by the Company's customers, there can be no assurance that the
Company's process development efforts will be successful or that the emergence
of new technologies, industry standards or customer requirements will not render
the Company's equipment, inventory or processes obsolete or noncompetitive. In
addition, to the extent that the Company determines that new assembly and
testing technologies and equipment are required to remain competitive, the
acquisition and implementation of such technologies and equipment may require
significant expense or capital investment by the Company. There can be no
assurance that such additional capital will be available on terms satisfactory
to the company or at all.

Risks of International Operations

     The Company acquired in 1997 and then expanded operations in Dublin,
Ireland, and may in the future expand into other geographic regions. The Company
also purchases a significant number of components manufactured in foreign
countries. Because of the scope of its international operations, the Company is
subject to numerous risks, including economic or political disruptions and
instability, transportation delays and interruptions, foreign exchange rate
fluctuations, employee turnover and labor unrest, longer payment cycles, greater
difficulty in 
<PAGE>
 
collecting accounts receivable, and less developed infrastructure, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. Changes in policies by the U.S. or foreign
governments resulting in, among other things, increased duties, increased
regulatory requirements, higher taxation, currency conversion limitations,
restrictions on the transfer of funds, the imposition of tariffs, or limitations
on imports or exports could also have a material adverse effect on the Company's
business, financial condition and results of operations. The Company could also
be adversely affected if the current policies encouraging foreign investment or
foreign trade by its host countries were to be reversed.

Litigation

     On February 27, 1998, the Company and certain of the Company's officers and
directors were named as defendants in a purported securities class action
lawsuit filed in the United States District Court for the District of
Massachusetts. The complaint was then amended on October 16, 1998. The
plaintiffs purport to represent a class of all persons who purchased or
otherwise acquired the Company's Common Stock in the period from April 17, 1997
through March 31, 1998. The amended complaint alleges, among other things, that
the defendants knowingly made misstatements to the investing public about the
value of the Company's inventory and the nature of its accounting practices. On
December 15, 1998, the Company filed a motion to dismiss the case in its
entirety based on the pleadings. The Company's motion to dismiss has been fully
briefed by both sides, and oral argument was heard on April 28, 1999. The
Company believes the claims asserted in the amended complaint are without merit
and intends to continue to defend itself vigorously in this action. The Company
further believes that this litigation will not have a material adverse effect on
the Company's business and results of operations, although there can be no
assurance as to the ultimate outcome of these matters.


Significant Influence of Principal Stockholder

     John A. Pino, the Company's President and Chief Executive Officer, and
certain trusts for the benefit of members of his family beneficially own
approximately 60% of the outstanding Common Stock. As a result, Mr. Pino will be
able to exert significant influence over the Company through his ability to
influence the election of directors and all other matters that require action by
the Company's stockholders. The voting power of these stockholders under certain
circumstances could have the effect of preventing or delaying a change in
control of the Company.


Environmental Compliance

     The Company is subject to a variety of environmental regulations relating
to the use, storage, discharge and disposal of hazardous chemicals used during
its manufacturing process. A failure by the Company to comply with present and
future regulations could subject it to future liabilities or the suspension of
production. Such regulations could also restrict the Company's ability to expand
its facilities or could require the Company to acquire costly equipment or to
incur other significant expenses to comply with environmental regulations.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to changes in interest rates and foreign currency
exchange primarily in its cash, debt and foreign currency transactions. The
Company does not hold derivative financial instruments for trading or
speculative purposes.

     The Company has a $55.0 million Senior Secured Credit Facility ("Credit
Facility") which bears interest at a variable interest rate. The Company has
also entered into a $17.0 million interest rate swap agreement which matures in
October 2001 and is classified as held for purposes other than trading, in order
to reduce the impact of fluctuating interest rates on its Credit Facility. Under
this swap agreement, the Company agrees with the 
<PAGE>
 
counterpart to pay fixed rate payments on a monthly basis, based upon an annual
interest rate of 6.76% in exchange for receiving variable rate payments, on a
monthly basis, calculated on an agreed-upon notional amount. Net interest
payments or receipts from interest rate swaps are recorded as adjustments to
interest expense in the Company's Condensed Consolidated Statement of
Operations. The Company's exposure related to adverse movements in interest
rates is primarily derived from the variable rate on the remainder of the
Company's Credit Facility. As of March 31, 1999, $17.0 million of the
outstanding balance of $41.3 million under the Credit Facility was at a rate of
6.76% and the remainder of the Credit Facility was at an 8.0% interest rate.
Based on the portion of this balance in excess of $17 million, an adverse change
of one percent in the interest rate would cause a change in interest expense of
approximately $243,000 on an annual basis.

     The foreign currency to which the Company has exchange rate exposure is the
Irish punt. International operations do not currently constitute a significant
portion of the revenues of the Company and therefore this exposure is not
considered material to the Company.

     Based on a hypothetical ten percent adverse movement in interest rates and
foreign currency exchange rates, the potential losses in future earnings, fair
value of the risk-sensitive financial instruments and cash flows are immaterial.
However, the actual effects of interest rates and foreign currency exchange
rates may differ materially from the hypothetical analysis.
<PAGE>
 
                         PART II.   OTHER INFORMATION



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:
 
     Exhibit              Description
     -------              -----------
     10.                  Global Master Rental Agreement dated May 1, 1998
                          between the Company and Comdisco, Inc.


     11.                  Computation of Net Income (Loss) Per Common Share

     27.                  Financial Data Schedule

(b)  Reports on Form 8-K

     The Registrant did not file any reports on Form 8-K during the quarter
     ended March 31, 1999.
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

May 14, 1999                        ACT MANUFACTURING, INC.
                                    /s/ JEFFREY B. LAVIN
                                    --------------------------------------------
                                    Jeffrey B. Lavin
                                    Vice President of Finance
                                    and Chief Financial Officer
                                    (Principal Financial and Accounting Officer)
<PAGE>
 
                                 EXHIBIT INDEX

                                        

Exhibit No.        Description
-----------        -----------
10.                Global Master Rental Agreement dated May 1, 1998 between the
                   Company and Comdisco, Inc.

11.                Computation of Net Income (Loss) Per Common Share

27.                Financial Data Schedule