<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 September 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-23070
AFC CABLE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-1517994
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
50 KENNEDY PLAZA, SUITE 1250, PROVIDENCE, RHODE ISLAND 02903
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (401) 453-2000
</TABLE>
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 of the Registrant's Common Stock outstanding as of
the latest practicable date:
Class Outstanding as of November 6,1998
----- ---------------------------------
Common Stock, $.01 par value 12,741,243
Page 1 of 15 pages
<PAGE>
PART I - FINANCIAL INFORMATION
AFC CABLE SYSTEMS, INC.
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
September 26, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................. $ 5,829 $ 2,803
Investments, marketable securities (Note 6) ............... 75,425 40,434
Accounts receivable, net of allowance for doubtful accounts
and sales allowances of $3,323 and $3,870, respectively 38,182 32,127
Inventories:
Finished goods ......................................... 23,001 26,333
Work-in-process ........................................ 6,585 7,385
Raw materials .......................................... 7,714 6,219
----------- -----------
37,300 39,937
Current deferred taxes .................................... 2,673 1,491
Other current assets ...................................... 1,796 1,439
---------- -----------
Total current assets ...................................... 161,205 118,231
Property, plant and equipment, at cost ...................... 46,874 37,346
Less accumulated depreciation ............................... 16,769 12,409
----------- -----------
Net property, plant and equipment ........................... 30,105 24,937
Goodwill, net of accumulated amortization of $715
and $373, respectively .................................... 21,633 16,497
Other long term assets, net ................................. 2,258 1,464
----------- -----------
Total assets ................................................ $215,201 $161,129
=========== ===========
</TABLE>
Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
2
<PAGE>
AFC CABLE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS--Continued
(In thousands, except share data)
<TABLE>
<CAPTION>
September 26, December 31,
1998 1997
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ......................... $ 1,070 $ 227
Revolving credit note payable ............................. - 6,230
Accounts payable .......................................... 14,408 12,536
Accrued expenses:
Payroll and employee benefits .......................... 3,995 3,609
Other .................................................. 6,155 7,488
---------- ---------
Total accrued expenses ................................. 10,150 11,097
---------- ---------
Total current liabilities ................................... 25,628 30,090
Long-term debt .............................................. 5,623 3,893
Deferred income taxes ....................................... 1,985 1,570
Other long-term liabilities ................................. 3,102 2,441
Shareholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued ................................ - -
Common stock, $.01 par value, 50,000,000 and 15,000,000
shares authorized, respectively, 12,741,118 and
11,397,854 shares issued and outstanding, respectively . 127 114
Paid-in capital ........................................... 116,944 79,110
Other (Note 8) ............................................ 806 1,021
Treasury stock, 14,137 shares and 6,411 shares,
respectively, at cost .................................. (364) (92)
Retained earnings ......................................... 61,350 42,982
---------- --------
178,863 123,135
---------- --------
Total liabilities and shareholders' equity .................. $215,201 $161,129
========== ========
</TABLE>
Note: The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See accompanying notes.
3
<PAGE>
AFC CABLE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
Quarter ended
September 26, September 27,
1998 1997
---------- ----------
<S> <C> <C>
Net sales .................................................. $67,523 $56,704
Cost of goods sold ......................................... 46,374 40,152
---------- ----------
Gross profit ............................................... 21,149 16,552
Selling, general and administrative expenses ............... 11,289 8,871
---------- ----------
Income from operations ..................................... 9,860 7,681
Other income (expense):
Interest expense ......................................... (139) (159)
Net investment and other income .......................... 1,034 574
---------- ----------
895 415
---------- ----------
Income before taxes ........................................ 10,755 8,096
Income taxes ............................................... 4,155 3,118
---------- ----------
Net income (Note 8) ........................................ $ 6,600 $ 4,978
========== ==========
Basic earnings per common share (Note 7) ................... $ .52 $ .44
========== ==========
Diluted earnings per common share (Note 7) ................. $ .51 $ .43
========== ==========
</TABLE>
See accompanying notes
4
<PAGE>
AFC CABLE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
Nine months ended
September 26, September 27,
1998 1997
---------- ----------
<S> <C> <C>
Net sales .................................................. $202,275 $158,701
Cost of goods sold ......................................... 140,699 113,277
---------- ----------
Gross profit ............................................... 61,576 45,424
Selling, general and administrative expenses ............... 33,491 25,418
---------- ----------
Income from operations ..................................... 28,085 20,006
Other income (expense):
Interest expense ......................................... (527) (431)
Net investment and other income .......................... 2,488 1,278
---------- ----------
1,961 847
---------- ----------
Income before taxes ........................................ 30,046 20,853
Income taxes ............................................... 11,678 8,028
---------- ----------
Net income (Note 8) ........................................ $ 18,368 $ 12,825
========== ==========
Basic earnings per common share (Note 7) ................... $ 1.53 $ 1.23
========== ==========
Diluted earnings per common share (Note 7) ................. $ 1.47 $ 1.19
========== ==========
</TABLE>
See accompanying notes
5
<PAGE>
AFC CABLE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
<S> <C> <C>
September 26, September 27,
1998 1997
--------- ---------
OPERATING ACTIVITIES
Net income ................................................... $ 18,368 $ 12,825
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation ............................................ 3,153 2,232
Amortization of intangibles ............................. 402 185
Net realized (gain) loss on available-for-sale securities (33) 9
Deferred income taxes ................................... (467) (385)
Provision for bad debts ................................. 188 116
Provision for sales allowances .......................... (619) (289)
Compensation expense for restricted stock
and compensatory options ............................. 57 68
Increase (decrease) in cash arising from changes
in assets and liabilities:
Accounts receivable ................................ (5,224) (4,454)
Inventories ........................................ 2,825 (12,620)
Other current assets ............................... (283) 3
Other long-term assets ............................. (388) 253
Accounts payable ................................... 787 (1,456)
Accrued payroll and employee benefits .............. 386 604
Other accrued liabilities .......................... (767) 1,991
Long-term liabilities .............................. 661 773
--------- ---------
Net cash provided by (used in) operating activities .......... 19,046 (145)
INVESTING ACTIVITIES
Acquisitions, including expenses, less cash acquired ......... (2,890) (14,029)
Capital expenditures ......................................... (7,712) (6,115)
Purchase of available-for-sale securities .................... (89,649) (29,083)
Proceeds from sale of available-for-sale securities .......... 54,349 22,323
--------- ---------
Net cash used in investing activities ........................ (45,902) (26,904)
FINANCING ACTIVITIES
Net revolving line of credit repayments ...................... (6,230) (400)
Payments on long-term debt, including current portion ........ (127) (386)
Proceeds from issuance of common stock ....................... 36,511 27,901
Purchase of treasury stock ................................... (272) -
--------- ---------
Net cash provided by financing activities .................... 29,882 27,115
--------- ---------
Net increase in cash and cash equivalents .................... 3,026 66
Cash and cash equivalents at beginning of period ............. 2,803 980
--------- ---------
Cash and cash equivalents at end of period ................... $ 5,829 $ 1,046
========= =========
Supplemental schedule of cash flow information:
Cash paid during the period for interest ................... $ 287 $ 332
========= =========
Cash paid during the period for income taxes ............... $ 12,230 $ 7,265
========= =========
</TABLE>
See accompanying notes
6
<PAGE>
AFC CABLE SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 26, 1998
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of AFC Cable Systems, Inc.
(the "Company" or "AFC") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine month periods ended September 26, 1998 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1998. Certain prior year amounts have been reclassified to conform to current
period presentation. For further information, refer to the financial statements
and footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1997.
NOTE 2. INCOME TAXES
For the nine month periods ended September 26, 1998 and September 27,
1997, the Company's effective tax rates of approximately 38.9% and 38.5%,
respectively, were greater than the statutory rate due primarily to state income
taxes.
NOTE 3. CONTINGENCIES
The Company is a defendant in certain claims that relate to matters that
occurred prior to present ownership. In accordance with the purchase and sale
agreement, the prior owner has indemnified the Company for such claims and,
accordingly, the prior owners and its insurance companies are defending the
matters. Management is of the opinion that these claims relate to the prior
owners and therefore will not have a material adverse effect on the Company's
financial position or results of operations.
Additionally, the Company is a party to one environmental matter not
covered by the indemnification. In this matter, a number of responsible parties
entered into a consent decree with the EPA in 1991 and subsequently, such
parties as plaintiffs have sought contribution from the Company, which was not
named as a responsible party by the EPA. The Company has admitted that a
predecessor of the business currently operated by the Company had disposed of a
de minimis amount of waste at the site. On December 17, 1996, the United States
District Court for the District of Massachusetts entered a judgment in favor of
the Company with respect to this claim. As of September 26, 1998, there is an
appeal pending with the U.S. Court of Appeals for the First Circuit.
NOTE 4. GOODWILL
Goodwill is amortized on a straight-line basis over periods of 20 to 40
years. Accumulated amortization of goodwill totaled $715,000 at September 26,
1998 and $373,000 at December 31, 1997. Goodwill is periodically reviewed for
impairment by comparing the carrying amount to the estimated future undiscounted
cash flows of the businesses acquired. If this review indicated that goodwill
was not recoverable, the carrying amount would be reduced to fair value.
NOTE 5. FINANCING
During the second quarter of 1998, the Company incurred $2.6 million of
debt in connection with a product line acquisition. Payments on this debt will
be made in three annual installments beginning on May 15, 1999.
7
<PAGE>
NOTE 6. INVESTMENTS
The following is a summary of securities held by the Company. All
securities are classified as available-for-sale.
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
-------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C>
(In Thousands)
SEPTEMBER 26, 1998
U.S. corporate debt
securities ................ $22,872 $ 782 $ (46) $23,608
U.S. treasury securities and
obligations of U.S.
Government agencies ....... 38,414 236 (6) 38,644
Equity securities ............ 13,117 803 (747) 13,173
-------------- --------------- --------------- ---------------
Total included in investments $74,403 $1,821 $ (799) $75,425
============== =============== =============== ===============
DECEMBER 31, 1997
U.S. corporate debt
securities ................ $9,464 $ 329 $ (3) $9,790
U.S. treasury securities and
obligations of U.S.
Government agencies ....... 24,713 55 (2) 24,766
Equity securities ............ 4,894 1,096 (112) 5,878
-------------- --------------- --------------- ---------------
Total included in investments $39,071 $1,480 $ (117) $40,434
============== =============== =============== ===============
</TABLE>
8
<PAGE>
NOTE 7. EARNINGS PER SHARE
The Company adopted Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share" ("FAS 128"), in 1997. FAS 128 requires the presentation of
"basic earnings per share" and "diluted earnings per share." Basic earnings per
share represents net income divided by the weighted average number of shares of
Common Stock outstanding during the year. Diluted earnings per share represents
net income divided by weighted average shares outstanding adjusted for the
dilutive effect of the assumed exercise of outstanding options and warrants.
Share and earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the requirements of FAS 128. The
following table sets forth the computation of basic and diluted earnings per
share for the three and nine month periods ended September 26, 1998 and
September 27, 1997:
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 26, September 27, September 26, September 27,
1998 1997 1998 1997
-------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net income (in thousands) $6,600 $4,978 $18,368 $12,825
Basic average shares 12,653,944 11,316,239 12,026,127 10,446,126
Effect of dilutive securities:
Stock options and stock awards 360,531 313,467 402,873 231,702
Stock warrants - 77,381 34,079 96,188
-------------- --------------- --------------- ----------------
360,531 390,848 436,952 327,890
-------------- --------------- --------------- ----------------
Dilutive average shares 13,014,475 11,707,087 12,463,079 10,774,016
============== =============== =============== ================
Basic earnings per common share $0.52 $0.44 $1.53 $1.23
============== =============== =============== ================
Diluted earnings per common
share $0.51 $0.43 $1.47 $1.19
============== =============== =============== ================
</TABLE>
NOTE 8. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, "Reporting Comprehensive Income" ("FAS 130"). FAS 130
establishes new rules for the reporting and display of comprehensive income and
its components. The adoption of FAS 130, however, had no impact on the Company's
net income or shareholders' equity. FAS 130 requires unrealized gains or losses
on the Company's available-for-sale securities, which prior to adoption was
reported separately in shareholders' equity, to be included in other
comprehensive income. The components of comprehensive income, net of related
tax, for the three and nine month periods ended September 26, 1998 and September
27, 1997 are as follows:
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 26, September 27, September 26, September 27,
(In thousands) 1998 1997 1998 1997
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Net income $6,600 $4,978 $18,368 $12,825
Unrealized gains (losses) on
securities (278) 338 (217) 649
============= ============= ============== =============
Comprehensive income $6,322 $5,316 $18,151 $13,474
============= ============= ============== =============
</TABLE>
NOTE 9. STOCK SPLIT
On September 16, 1997, the Company's Board of Directors authorized a
five-for-four split of the Common Stock effected in the form of a 25 percent
stock dividend distributed on October 20, 1997, to shareholders of record on
October 6, 1997. Shareholders' equity was adjusted by reclassifying from
retained earnings to common stock the par value of the additional shares arising
from the split. All references in the prior year to number of shares, per share
amounts and prices of the Common Stock have been restated to present the effect
of the stock split.
9
<PAGE>
NOTE 10. STOCK OFFERING
On May 19, 1998, the Company completed the issuance of 875,000 shares of
Common Stock at a price of $33.75 per share. An option to purchase an additional
225,000 shares was granted by the Company to the underwriters to cover
over-allotments. This option was exercised in full on May 19, 1998.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Comparative Results of Operations for the Three and Nine Months
Ended September 26, 1998 and September 27, 1997
This report contains certain forward-looking statements within the meaning
of section 21E of the Securities Exchange Act of 1934, as amended. These
statements include, among others, statements relating to future events or the
future financial performance of the Company. Such statements are only
expectations and actual events or results may differ materially. Factors which
could cause actual results to differ materially from those indicated in such
forward-looking statements are set forth in "Factors That May Affect Future
Performance" in the Company's Annual Report on Form 10-K for the year 1997.
RESULTS OF OPERATIONS
NET SALES. Net sales for the quarter ended September 26, 1998 increased
$10.8 million, or 19.0%, to $67.5 million from $56.7 million for the quarter
ended September 27, 1997. Net sales for the nine months ended September 26, 1998
increased $43.6 million, or 27.5%, to $202.3 million from $158.7 million for the
nine months ended September 27, 1997. Net sales for the Wire and Cable Division
increased by $9.0 million, or 19.3%, to $55.6 million for the quarter ended
September 26, 1998 from $46.6 million for the quarter ended September 27, 1997.
For the nine months ended September 26, 1998, net sales for the Wire and Cable
Division increased $37.2 million, or 28.5%, to $167.6 million from $130.4
million for the nine months ended September 27, 1997. These increases are
attributable primarily to higher sales of the Company's traditional armored
cable and flexible conduit products, specialty application cables and fittings
and connectors. Also contributing to these increases were sales by Federal Hose
Manufacturing, Inc., which was acquired in November 1997, and sales of the line
of flexible non-metalic conduit and fittings acquired during the second quarter
of 1998. Net sales for the America Cable Systems Division increased $1.9
million, or 19.2%, to $11.8 million for the quarter ended September 26, 1998
from $9.9 million for the quarter ended September 27, 1997. Sales for this
division increased $6.4 million, or 23.1%, to $34.1 million for the nine months
ended September 26, 1998 from $27.7 million for the nine months ended September
27, 1997. These increases are attributable to higher sales of modular wiring
systems as well as sales increases by B&B Electronics Manufacturing Company,
which was acquired at the end of January 1997.
GROSS PROFIT. Gross profit for the quarter ended September 26, 1998
increased $4.5 million, or 27.1%, to $21.1 million from $16.6 million for the
quarter ended September 27, 1997. Gross profit for the nine months ended
September 26, 1998 increased $16.2 million, or 35.7%, to $61.6 million from
$45.4 million for the nine months ended September 27, 1997. Gross margin
increased to 31.3% for the quarter ended September 26, 1998 from 29.2% for the
quarter ended September 27, 1997. Gross margin for the nine months ended
September 26, 1998 increased to 30.4% from 28.6% for the nine months ended
September 27, 1997. These increases are attributable to (i) improved operating
efficiencies and the benefits of increased output, (ii) more efficient material
utilization resulting from improved manufacturing processes, (iii) increased
sales of the Company's higher margin specialty application cables, and (iv)
higher margins on certain of the products sold by the companies acquired in
1997.
INCOME FROM OPERATIONS. Income from operations for the quarter ended
September 26, 1998 increased $2.2 million, or 28.6%, to $9.9 million from $7.7
million for the quarter ended September 27, 1997. Income from operations for the
nine months ended September 26, 1998 increased $8.1 million, or 40.5%, to $28.1
million from $20.0 million for the nine months ended September 27, 1997. Income
from operations as a percentage of net sales increased to 14.6% for the quarter
ended September 26, 1998 from 13.5% for the quarter ended September 27, 1997.
For the nine months ended September 26, 1998 income from operations as a
percentage of net sales increased to 13.9% from 12.6% for the nine months ended
September 27, 1997. These increases resulted from improved gross margin, but was
partially offset by an increase in compensation expense, increases in freight
costs and sales agent commissions, which generally rise in proportion with net
sales and a higher ratio to sales of selling, general and administrative
expenses in the companies acquired in 1997.
NET INCOME. Net income for the quarter ended September 26, 1998 increased
$1.6 million, or 32.0%, to $6.6 million from $5.0 million for the quarter ended
September 27, 1997. Net income for the nine months ended September 26, 1998
increased $5.6 million, or 43.8%, to $18.4 million from $12.8 million for the
nine months ended September 27, 1997. Net income as a percentage of net sales
increased to 9.8% for the quarter ended September 26, 1998 from 8.8% for the
11
<PAGE>
quarter ended September 27, 1997. For the nine months ended September 26, 1998
net income as a percentage of net sales increased to 9.1% from 8.1% for the nine
months ended September 27, 1997. These increases were primarily due to increased
income from operations and, to a lesser extent, investment income, partially
offset by a higher effective tax rate for the nine months ended September 26,
1998 compared to same period in the prior year.
INTEREST EXPENSE. Interest expense for the quarter ended September 26, 1998
decreased to $139,000 from $159,000 for the quarter ended September 27, 1997.
Interest expense for the nine months ended September 26, 1998 increased to
$527,000 from $431,000 for the nine months ended September 27, 1997. These
fluctuations are due to differences in average outstanding borrowings in 1998
from 1997 levels as well as differences in borrowing rates.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations totaled $19.0 million for the nine months ended
September 26, 1998 and was mainly attributable to increased profitability and
decreased levels of inventories partially offset by an increase in accounts
receivable resulting from higher sales. Working capital on September 26, 1998
was $135.6 million and the ratio of current assets to current liabilities was
6.29 to 1.00 compared to 3.93 to 1.00 at December 31, 1997.
Excess proceeds from the May 19, 1998 public offering of the Company's
Common Stock described in Note 9 to the financial statements are included in the
Company's portfolio of marketable securities at September 26, 1998. The Company
believes that funds generated from operations, proceeds from the 1998 sale of
Common Stock and available borrowings under its revolving line of credit will be
sufficient to meet its on-going working capital and capital expenditure
requirements for the foreseeable future.
YEAR 2000
The Company has identified four areas of the business where there will be a
year 2000 ("Y2K") impact. The company's work on the Y2K compliance initiative
began in 1997 with the assessment process which defined the four Y2K impact
areas as computer systems and hardware, manufacturing support processes, plant
facility HVAC systems and manufactured products.
The risk assessment and exposure analysis was completed in 1997 and each of
the four areas was ranked as high, medium or low. The only high-risk area
identified was computer systems and hardware. As a result, the Company is
replacing its existing computer infrastructure with an Enterprise Resource
Planning (ERP) information system. The software and computer hardware has
already been installed and implementation configuration is in process with an
anticipated production date of first quarter 1999. Additional software systems
are presently being upgraded to a Y2K compliant version of the currently
operational software.
Project expenditures to date total approximately $2.0 million which includes
the purchase of new mainframe computer hardware, ERP application software and
consulting services. These costs have been funded through operating cash flows
and most have been capitalized. The Company expects to incur an additional $1
million of incremental costs, running through the 1999 fiscal year. This will
cover client/server hardware platforms, personnel costs related to software
configuration, conversion and training of the workforce. Management is currently
evaluating the need to have a contingency plan in place in the event the Company
does not complete all phases of the Y2K initiative with regard to computer
systems and hardware. Management feels that with the replacement of the
Company's information system, the majority of Y2K computer issues will be
addressed, reducing the likelihood that a contingency plan will be necessary.
The three remaining areas, manufacturing support processes, plant facility
HVAC systems and manufactured products, ranked low on our risk assessment and
exposure analysis. These areas are midway through the assessment and
implementation phase and remediation is scheduled for completion by mid-calendar
year 1999 without significant incremental costs. Based upon progress to date,
the Company currently does not anticipate the need to develop an extensive
contingency plan for these areas.
The Company's largest suppliers and customers are in their initial
certification process to validate that they will be Y2K compliant before the end
of calendar year 1999. A supplier survey is scheduled for completion by the
first quarter of calendar year 1999. Alternative suppliers will be identified
for those not expected to be compliant by the end of 1999. The Company's
12
<PAGE>
financial institutions are currently being surveyed and it is anticipated that
they are Y2K compliant, or will be before the end of the calendar year 1999.
The Company believes its Y2K program is adequate to detect year 2000
compliance issues, and that it has the necessary resources to remedy them.
However, the Y2K problem has many aspects and potential consequences, some of
which are not reasonably foreseeable. The Company could be adversely impacted by
the Y2K issue if suppliers, customers and other businesses do not address this
issue successfully. There can be no assurance that unforeseen circumstances will
not arise.
13
<PAGE>
PART II - OTHER INFORMATION
AFC CABLE SYSTEMS, INC.
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
Under the Company's by-laws, stockholders who wish to make a proposal at the
1999 Annual Meeting, other than one that will be included in the Company's proxy
materials, must notify the Company no earlier than February 11, 1999 and no
later than March 12, 1999. Under recent changes to the Federal proxy rules, if a
stockholder who wishes to present such a proposal fails to notify the Company by
March 12, 1999, then the proxies that management solicits for the 1999 Annual
Meeting will include discretionary authority to vote on the stockholder's
proposal in the event it is properly brought before the meeting notwithstanding
the Company's by-laws.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
None
(b) No reports on Form 8-K were filed during the quarter ended September 26,
1998.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Date: November 9, 1998
AFC CABLE SYSTEMS, INC.
By:/s/Ralph R. Papitto
-------------------
Ralph R. Papitto
Chairman of the Board and
Chief Executive Officer
By:/s/Raymond H. Keller
--------------------
Raymond H. Keller
Vice President and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
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