ACT MANUFACTURING INC, S-3, 1999-10-22

ACT MANUFACTURING INC
S-3, 1999-10-22
PRINTED CIRCUIT BOARDS

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<PAGE>

As filed with the Securities and Exchange Commission on October 22, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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ACT MANUFACTURING, INC.
(Exact name of registrant as specified in its charter)
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Massachusetts 3670 04-2777507
(State or other (Primary Standard (I.R.S. Employer
jurisdiction Industrial Identification Number)
of incorporation or Classification Code
organization) Number)
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2 Cabot Road
Hudson, MA 01749
(978) 567-4000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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JOHN A. PINO
Chairman of the Board and Chief Executive Officer
ACT Manufacturing, Inc.
2 Cabot Road
Hudson, MA 01749
(978) 567-4000
(Name, address including
zip code, and telephone number, including area code, of agent for service)
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Copies to:
JOHN A. MELTAUS, ESQ. DAVID F. DIETZ, P.C.
BARBARA M. JOHNSON, ESQ. ANDREW F. VILES, ESQ.
SUSAN J. NOCK, ESQ. Goodwin, Procter & Hoar llp
Testa, Hurwitz & Thibeault, llp Exchange Place
125 High Street Boston, Massachusetts 02109
Boston, Massachusetts 02110 Telephone: (617) 570-1000
Telephone: (617) 248-7000 Telecopy: (617) 523-1231
Telecopy: (617) 248-7100
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date hereof.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
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CALCULATION OF REGISTRATION FEE

<TABLE>
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<CAPTION>
Proposed Maximum
Title of Each Class of Proposed Maximum Aggregate
Securities to be Amount To Be Offering Price Offering Amount of
Registered Registered(1) Per Share(2) Price(2) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value.. 3,162,500 shares $26.78 $84,696,494 $23,546
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</TABLE>
(1) Includes 412,500 shares which the Underwriters have the option to purchase
from ACT Manufacturing, Inc. and the selling stockholders to cover over-
allotments, if any
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, based upon
the average of the bid and asked price on the Nasdaq National Market on
October 19, 1999.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting offers to buy these +
+securities in any jurisdiction where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED OCTOBER 22, 1999

2,750,000 Shares

[LOGO OF ACT MANUFACTURING APPEARS HERE]

ACT Manufacturing, Inc.

Common Stock

--------

We are selling 2,500,000 shares of common stock and the selling stockholders
are selling 250,000 shares of common stock. We will not receive any of the
proceeds from the shares of common stock sold by the selling stockholders.

Our common stock is listed on The Nasdaq Stock Market's National Market under
the symbol "ACTM". On October 19, 1999, the last reported sale price for our
common stock on The Nasdaq National Market was $26.75 per share.

The underwriters have an option to purchase a maximum of 412,500 additional
shares to cover over-allotments of shares.

Investing in our common stock involves risks. See "Risk Factors" on page 6.

<TABLE>
<CAPTION>
Underwriting Proceeds to Proceeds to
Price to Discounts and ACT Selling
Public Commissions Manufacturing Stockholders
--------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Per Share............................. $ $ $ $
Total................................. $ $ $ $
</TABLE>

Delivery of the shares of common stock will be made on or about , .

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.

Credit Suisse First Boston

CIBC World Markets

SG Cowen

J.C.Bradford&Co.

The date of this prospectus is , .
<PAGE>

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.................. 1
Risk Factors........................ 6
Cautionary Statements Regarding
Forward-Looking Statements......... 17
Use of Proceeds..................... 18
Price Range of Common Stock......... 18
Dividend Policy..................... 19
Capitalization...................... 19
Selected Consolidated Financial
Data............................... 20
Management's Discussion and Analysis
Of Financial Condition and Results
of Operations...................... 23
</TABLE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Business.............................................................. 35
Management............................................................ 48
Principal and Selling Stockholders.................................... 50
Underwriting.......................................................... 52
Notice to Canadian Residents.......................................... 53
Legal Matters......................................................... 54
Experts............................................................... 54
Where You Can Find More Information................................... 54
Index to Consolidated Financial Statements............................ F-1
</TABLE>

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You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
<PAGE>

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.
This summary may not contain all of the information that is important to you.
You should read the entire prospectus, including our consolidated financial
statements and related notes thereto, before making an investment decision. In
addition to historical information, the following summary and other parts of
this prospectus contain forward-looking statements within the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 that reflect
our plans, estimates, intentions, expectations and beliefs. Our actual results
could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to these differences include, but are
not limited to, those set forth under "Risk Factors" and contained elsewhere in
this prospectus. Unless otherwise indicated, all information in this prospectus
assumes no exercise of the underwriters' over-allotment option.

Our Company

We are a leading provider of value-added electronics manufacturing services
to original equipment manufacturers (OEMs) in the networking and
telecommunications, computer, industrial and medical equipment markets. We
target and have developed a particular expertise in serving emerging and
established OEMs who require moderate volume production runs of complex,
leading-edge commercial market applications such as wireless and ADSL modems,
Internet access switches, routers and mass storage systems. The multiple
configurations and high printed circuit board densities that characterize these
applications generally require technologically-advanced and flexible
manufacturing as well as a high degree of other value-added services.

We develop close, long-term relationships with our customers by working with
them throughout the development, manufacturing and distribution processes to
enhance the manufacturability, testability and reliability of our customers'
products. We provide OEMs with:

. complex printed circuit board assembly, primarily utilizing advanced
surface mount technology;

. electro-mechanical sub-assembly;

. total system assembly and integration;

. mechanical and molded cable and harness assembly; and

. value-added services, such as flexible materials management,
comprehensive test services, order fulfillment, and product diagnostics
and repair.

Industry sources estimate that the electronics manufacturing services
industry grew at an average annual growth rate of 25% from 1994 to 1998, from
approximately $25 billion to $60 billion. Industry sources also indicate that
our industry is expected to grow to approximately $106 billion by 2001. The
increasing reliance of

1
<PAGE>

OEMs on outsourcing is the primary factor behind the growth of the electronics
manufacturing services industry. According to industry sources, the electronics
manufacturing services industry's revenue accounted for approximately 12% of
the cost of goods sold in the electronics industry in 1996. By 2003, industry
sources estimate that this percentage will increase to 33%. OEMs are
increasingly divesting internal manufacturing capacity and seeking to outsource
a broad range of manufacturing and related engineering and value-added
services. Outsourcing enables OEMs to take advantage of the manufacturing
expertise, advanced technology, capital investments and overall cost benefits
obtained by electronic manufacturing services providers. Outsourcing also
allows OEMs to focus on what they believe to be their core strengths, such as
product research and development, software design and development, and sales
and marketing, and to use their capital to pursue other business opportunities
including acquisitions.

We believe that growth through selective acquisitions is important to
achieve the scale, customer diversity, cost efficiencies and breadth of service
offerings required to remain competitive in the growing electronics
manufacturing services industry. Since 1997, we have completed four
acquisitions. In particular, our July 1999 merger with CMC Industries, Inc.
enabled us to significantly increase our scale of operations, increase our
customer base, expand our geographic presence, broaden our range of
manufacturing capabilities and further strengthen our management and
engineering resources. The GSS/Array asset acquisition in October 1999
considerably enhanced our advanced engineering capabilities, in particular our
high-end radio frequency capabilities.

Our objective is to enhance our position as a leading provider of value-
added electronics manufacturing services to high-technology OEMs. Our strategy
to achieve this objective includes the following critical elements:

. serve a diversified customer base in high-growth markets such as
networking and telecommunications and computers;

. establish and maintain close customer relationships by working with
customers throughout the development, manufacturing and distribution
processes;

. provide a comprehensive manufacturing solution that encompasses value-
added services in addition to advanced engineering and manufacturing
services, such as flexible materials management;

. expand our geographic presence to serve the needs of OEMs seeking to
outsource their worldwide electronics manufacturing services
requirements; and

. pursue selective acquisition opportunities.

ACT Manufacturing was incorporated in Massachusetts in 1982 under the name
Advanced Cable Technologies, Inc. In December 1994, Automated Component
Technologies, Inc., a related company with common ownership, was merged into
Advanced Cable Technologies, Inc. which then changed its name to ACT
Manufacturing, Inc. Our principal executive offices are located at 2 Cabot
Road, Hudson, Massachusetts 01749 and our telephone number is (978) 567-4000.

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"ACT Manufacturing" and the ACT logo are trademarks and service marks of ACT
Manufacturing, Inc. Other product, company or organization names cited in this
prospectus may be trademarks or registered trademarks of their respective
companies or organizations.

2
<PAGE>

The Offering

<TABLE>
<S> <C>
Common stock offered by:
ACT Manufacturing..... 2,500,000 shares
The selling
stockholders......... 250,000 shares
Total............... 2,750,000 shares
Common stock to be
outstanding after the
offering............... 15,538,824 shares
Use of proceeds......... We intend to use approximately $55 million of our
net proceeds to reduce indebtedness under our bank
credit facility, and the remainder for working capital
and other general corporate purposes, including potential
acquisitions. We will not receive any proceeds from
shares of common stock sold by the selling stockholders.
See "Use of Proceeds."
Nasdaq National Market
symbol................. ACTM
</TABLE>

We calculated the number of shares of common stock to be outstanding after
the offering based on the number of shares outstanding on September 30, 1999.
This number excludes:

. 1,980,058 shares issuable upon the exercise of stock options outstanding
on September 30, 1999 with a weighted average exercise price of $11.25;
and

. 1,311,523 shares of common stock available for future grant under our
stock option plans on September 30, 1999.

3
<PAGE>

Summary Consolidated Financial Data

<TABLE>
<CAPTION>
Fiscal Year Ended December Nine Months Ended
31,(1) September 30,(2)
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1996 1997 1998 1998 1999
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(in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Opera-
tions Data:
Net sales....................... $390,611 $479,139 $592,484 $451,625 $483,571
Cost of goods sold.............. 351,485 454,203 556,339 425,384 447,253
-------- -------- -------- -------- --------
Gross profit.................... 39,126 24,936 36,145 26,241 36,318
Selling, general and
administrative expenses........ 18,268 24,516 27,383 19,454 21,807
Restructuring costs............. 792 -- -- -- --
Merger costs (3)................ -- -- -- -- 5,601
-------- -------- -------- -------- --------
Operating income................ 20,066 420 8,762 6,787 8,910
Interest and other expense,
net............................ 2,936 4,056 3,625 2,807 3,250
-------- -------- -------- -------- --------
Income (loss) before provision
for income taxes............... 17,130 (3,636) 5,137 3,980 5,660
Provision (benefit) for income
taxes.......................... 6,868 (1,235) 2,044 1,467 4,530
-------- -------- -------- -------- --------
Net income (loss)............... $ 10,262 $ (2,401) $ 3,093 $ 2,513 $ 1,130
======== ======== ======== ======== ========
Net income (loss) per common
share:
Basic......................... $ 0.86 $ (0.19) $ 0.24 $ 0.20 $ 0.09
Diluted....................... $ 0.84 $ (0.19) $ 0.24 $ 0.20 $ 0.08
Weighted average shares
outstanding:
Basic......................... 11,880 12,330 12,665 12,615 12,880
Diluted....................... 12,237 12,330 12,976 12,881 13,500
</TABLE>

<TABLE>
<CAPTION>
As of September 30,
1999
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Actual As Adjusted
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(in thousands)
<S> <C> <C>
Consolidated Balance Sheet Data:
Working capital............................................ $119,961 $128,041
Total assets............................................... 294,874 301,954
Long-term debt, less current portion....................... 76,254 22,254
Total stockholders' equity................................. 91,381 153,461
</TABLE>
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4
<PAGE>

(1) ACT prepares its financial statements on the basis of a fiscal year ending
December 31 and CMC prepared its financial statements on the basis of a
fiscal year ending July 31. The consolidated statements of operations data
for each of the three years in the period ended December 31, 1998
(referred to as "fiscal" 1996, 1997, and 1998) reflect the results of
operations for ACT for the years then ended combined with the results of
operations for CMC for the years ended July 31, 1996, 1997, and 1998. The
consolidated financial statements have been adjusted to reflect the
conforming of CMC's accounting policy with that of ACT's by expensing
previously capitalized preoperating and start-up costs associated with
CMC's Mexican manufacturing facility. The adjustment also gives effect to
the tax deductibility of the expenses. As a result of ACT and CMC having
different fiscal years, CMC's condensed consolidated results of operations
for the five-month period from August 1, 1998 through December 31, 1998
are reported separately within this prospectus.

(2) The consolidated statement of operations data for the nine months ended
September 30, 1998 reflect the results of operations for ACT for the
period then ended combined with the results of operations for CMC for the
nine-month period ended April 30, 1998. The consolidated statement of
operations data for the nine months ended September 30, 1999 and the
consolidated balance sheet data as of September 30, 1999 reflect the
results of operations and financial position of ACT and CMC for the period
then ended and as of that date. The financial statements have been
adjusted to reflect the conforming of CMC's accounting policy with that of
ACT's by expensing previously capitalized preoperating and start-up costs
associated with CMC's Mexican manufacturing facility. The adjustment has
also been tax-affected. In the opinion of our management, the unaudited
condensed consolidated financial statements from which this data has been
derived have been prepared on the same basis as ACT's audited consolidated
financial statements and include all adjustments, consisting of only
normal recurring adjustments, necessary for a fair presentation of our
financial condition and results of operations for such periods.

(3) Merger costs relating to the acquisition of CMC are comprised primarily of
investment banking, legal, accounting, printing, integration and other
fees and expenses directly related to the merger.

5
<PAGE>

RISK FACTORS

This offering involves a high degree of risk. You should carefully consider
the risks described below and the other information in this prospectus before
deciding to invest in shares of our common stock. While these are the risks and
uncertainties we believe are most important for you to consider, you should
know that they are not the only risks or uncertainties facing us or which may
adversely affect our business. If any of the following risks or uncertainties
actually occurs, our business, financial condition and operating results would
likely suffer. In that event, the market price of our common stock could
decline, and you could lose all or part of the money you paid to buy our common
stock.

Risks Related to Acquisitions

The expected benefits from the merger with CMC Industries may not occur.

We completed the merger with CMC Industries with the expectation that the
merger would result in certain benefits, including:

. cost savings related to the elimination of redundant activities;

. the opportunity to generate revenue from new customers that require an
electronics manufacturing services provider to have a minimum size and
geographic coverage;

. opportunities to increase revenues from our current customers by
providing a lower cost alternative and a broader geographic presence;

. operating efficiencies such as combined managerial, sales, marketing and
technological expertise and personnel;

. greater ability to access the financial and capital markets; and

. other synergies due to the strategic fit and compatibility of the two
companies, including their common equipment platforms and information
systems.

We may not realize any of the anticipated benefits of the merger.
Integrating CMC's operations and personnel with our business has been and
continues to be a complex and difficult process. Achieving the benefits of the
merger will depend upon the successful integration of CMC's business in an
efficient and timely manner. The integration of CMC with our operations could
require additional costs and expenses as well as demands on management
personnel. The diversion of the attention of our management and any
difficulties encountered in the process of combining our companies could cause
the disruption of, or a loss of momentum in, our activities. Further, we may
experience customer, supplier or employee attrition as a result of the merger.
The merger would have had a dilutive effect on our net income per share on a
pro forma combined basis for recent periods. We cannot assure you that the
merger will become accretive to net income at any point in the future or that
the benefits derived by us from the merger will outweigh or exceed the dilutive
effects of the merger.

We have incurred substantial transaction, consolidation and integration costs
related to the merger with CMC Industries.

To complete the merger we incurred transaction costs of approximately $5.6
million, comprised primarily of investment banking, legal, accounting,
printing, integration and other fees and expenses. We expensed these costs in
the third quarter of fiscal 1999. The expenses incurred in connection with the
consolidation and integration of our companies had an adverse effect on our
operating results for the third quarter of fiscal 1999. We could incur
additional consolidation and integration expenses in the future related to the
merger.

6
<PAGE>

We may fail to make additional acquisitions and may not successfully integrate
acquisitions we do make, which could impair our ability to compete and our
operating results.

In light of the consolidation trend in our industry, we intend to pursue
selectively acquisitions of additional electronics manufacturing services
providers, facilities, assets or businesses. We may compete for acquisition
opportunities with entities having significantly greater resources than us. As
a result, we may not succeed in acquiring some or all companies, facilities,
assets or businesses that we seek to acquire. Failure to consummate additional
acquisitions may prevent us from accumulating sufficient critical mass required
by customers in this consolidating industry. This failure could significantly
impact our ability to effectively compete in our targeted markets and could
negatively affect our results of operations.

Moreover, acquisitions that we do complete may result in:

. the potentially dilutive issuance of common stock or other equity
instruments;

. the incurrence of debt and amortization expenses related to goodwill and
other intangible assets; or

. the incurrence of significant costs and expenses.

Acquisition transactions, including our recent asset acquisition of GSS/Array
Technology, Inc., also involve numerous business risks, including:

. difficulties in assimilating the acquired operations, technologies,
personnel and products;

. difficulties in managing geographically dispersed and international
operations;

. the diversion of management's attention from other business concerns;

. the potential disruption of our business; and

. the potential loss of key employees.

Risks Related to Our Operations

Our business may suffer if the networking and telecommunications segments of
the electronics industry fail to grow and evolve.

Our 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 segments accounted for approximately 63% of
our net sales in the first nine months of 1999, 58% in fiscal 1998, and 66% in
fiscal 1997. Developments adverse to these industry segments could materially
and negatively impact us. These industry segments, and the electronics industry
as a whole, experience:

. intense competition;

. rapid technological changes resulting in short product life-cycles and
consequent product obsolescence;

. significant fluctuations in product demand;

. economic cycles, including recessionary periods; and

. consolidation.

Within the electronics industry, Year 2000 concerns may adversely affect
demands or spending patterns for our customers' products which would adversely
affect demand for our services. A recessionary period or other event leading to
excess capacity affecting one or more segments of the electronics industry we
serve would likely result in intensified price competition, reduced margins and
a decrease in our net sales.

7
<PAGE>

The loss of major customers could adversely affect us.

We depend on a small number of customers for a significant portion of our
business. For the first nine months of 1999, our four largest customers
accounted for approximately 52% of our net sales. Customers representing 10% or
more of our net sales for that period were:

. Nortel Networks (formerly Bay Networks and Aptis Communications)--15%;

. S-3 Incorporated (formerly Diamond Multimedia)--15%;

. Marconi (formerly Reltec)--12%; and

. Lucent Technologies (formerly Ascend Communications)--10%.

For fiscal 1998 and 1997, our four largest customers accounted for
approximately 42% and 40% of our net sales. Customers representing 10% or more
of our net sales in fiscal 1998 were Nortel Networks and Micron Electronics,
each with approximately 12%, as compared to Nortel Networks with 17% of our net
sales in fiscal 1997. The timing and level of orders from our customers varies
substantially from period to period. The historic level of net sales we have
received from a specific customer in one particular period is not necessarily
indicative of net sales we may receive from that customer in any future period.

Our results may depend on our ability to diversify our customer base and
reduce our reliance on particular customers. Our major customers may not
continue to purchase products and services from us at current levels or at all.
In particular, we experienced a significant decrease in sales to Micron in the
third quarter of fiscal 1998. We expect that our business with Ascend, which
was acquired by Lucent Technologies, will terminate in the fourth quarter of
fiscal 1999. For various reasons, including consolidation in our customers'
industries, we have in the past and will continue in the future to terminate or
lose relationships with customers. We may not be able to expand our customer
base to make up any sales shortfalls from our major customers so as to increase
overall net sales. Because certain customers represent such a large part of our
business, any of the following could negatively impact our business:

. the loss of one or more major customers;

. a significant reduction or delay in purchases from any major customer;

. discontinuance by any major customer of the sale of products we
manufacture;

. a reduction in demand for the products of major customers that we
manufacture; or

. the inability or unwillingness of a major customer to pay for products
and services on a timely basis or at all.

Our customers do not enter into long-term purchase orders or commitments, and
cancellations, reductions or delays in customer orders would adversely affect
our profitability.

The level and timing of orders placed by our customers vary due to:

. customer attempts to manage inventory;

. changes.in the customers' manufacturing strategy, such as a decision by
a customer to either diversify or consolidate the number of electronics
manufacturing services providers used or to manufacture their products
internally; and

. variation in demand for customer products.

We generally do not obtain long-term purchase orders or commitments from our
customers. Instead, we work closely with our customers to anticipate delivery
dates and future volume of orders based on customer forecasts. We rely on our
estimates of anticipated future volumes when making commitments regarding:

. the levels of business that we will seek and accept;

. the timing of production schedules;

8
<PAGE>

. the purchase of materials;

. the purchase or leasing of facilities and equipment; and

. the levels and utilization of personnel and other resources.

Customers may cancel, reduce or delay orders that were either previously
made or anticipated for a variety of reasons. Significant or numerous
terminations, reductions or delays in our customers' orders could negatively
impact our operating results. We often purchase components for product
assemblies based on customer forecasts, at times without a customer commitment
to pay for them. Our policy is that customers are generally responsible for
materials and associated acquisition costs in the event of a significant
reduction, delay or cancellation of orders from the forecasted amounts. A
customer's unwillingness or inability to reimburse us for materials costs in
the case of a significant variance from forecast could adversely affect our
operating results.

Increased competition may result in decreased demand or prices for our
services.

The electronics manufacturing services industry is highly competitive. We
compete against numerous U.S. and foreign electronics manufacturing services
providers with global operations, as well as those who operate on a local or
regional basis. In addition, current and prospective customers continually
evaluate the merits of manufacturing products internally. Consolidation in the
electronics manufacturing services industry results in a continually changing
competitive landscape. The consolidation trend in the industry also results in
larger and more geographically diverse competitors who have significant
combined resources with which to compete against us. Some of our competitors
have substantially greater managerial, manufacturing, engineering, technical,
financial, systems, sales and marketing resources than we do. These competitors
may:

. respond more quickly to new or emerging technologies;

. have greater name recognition, critical mass and geographic and market
presence;

. be better able to take advantage of acquisition opportunities;

. adapt more quickly to changes in customer requirements; and

. devote greater resources to the development, promotion and sale of their
services.

We may be operating at a cost disadvantage compared to manufacturers who
have greater direct buying power from component suppliers, distributors and raw
material suppliers or who have lower cost structures. Our manufacturing
processes are generally not subject to significant proprietary protection, and
companies with greater resources or a greater geographic and market presence
may enter our market or increase their competition with us. Increased
competition from existing or potential competitors could result in price
reductions, reduced margins or loss of market share.

We may not be able to obtain raw materials or components for our assemblies on
a timely basis or at all.

We rely on a single or limited number of third-party suppliers for many
proprietary and other components used in the assembly process. We do not have
any long-term supply agreements. Shortages of materials and components have
occurred from time to time and will likely occur in the future. In particular,
the earthquake in Taiwan in September 1999 could cause a shortage in components
such as raw printed circuit boards, flash memory and application specific
integrated circuits. Raw materials or component shortages could result in
shipping delays or increased prices which could adversely affect our ability to
manufacture products for our customers on a timely basis or at acceptable cost.
Moreover, the consolidation trend in our suppliers' industry results in changes
in supply relationships and in the price, availability and quality of
components and raw materials. Due to our utilization of just-in-time inventory
techniques, the timely availability of many components is dependent on our
ability to both develop accurate forecasts of customer requirements and manage
the materials supply chain. If we fail to do either, our operating results may
suffer.

9
<PAGE>

Operating in foreign countries exposes us to increased risks.

We acquired in 1997, and then subsequently expanded in 1998, operations in
Dublin, Ireland. As a result of our merger with CMC, we acquired operations in
Hermosillo, Mexico and a procurement office in Taiwan. We may in the future
expand into other international regions. We have limited experience in managing
geographically dispersed operations and in operating in Europe, Mexico or Asia.
We also purchase a significant number of components manufactured in foreign
countries. Because of the scope of our international operations, we are subject
to the following risks which could materially impact our results of operations:

. economic or political instability;

. transportation delays and interruptions;

. foreign exchange rate fluctuations;

. increased employee turnover and labor unrest;

. longer payment cycles;

. greater difficulty in collecting accounts receivable;

. utilization of different systems and equipment;

. difficulties in staffing and managing foreign personnel and diverse
cultures; and

. less developed infrastructures.

In addition, changes in policies by the U.S. or foreign governments could
negatively affect our operating results due to:

. increased duties;

. increased regulatory requirements;

. higher taxation;

. currency conversion limitations;

. restrictions on the transfer of funds;

. the imposition of or increase in tariffs; or

. limitations on imports or exports.

Also, we could be adversely affected if our host countries revise their
current policies encouraging foreign investment or foreign trade.

Our business could suffer if we lose the services of, or fail to attract, key
personnel.

Our future success largely depends upon the skills and efforts of John A.
Pino, Chairman of the Board and Chief Executive Officer, our other key
executives and our managerial, manufacturing, sales and technical employees.
With the exception of Jack O'Rear, Executive Vice President of Operations, and
a small number of sales people, we have not entered into employment contracts
or noncompetition agreements with any of our senior management or other key
employees. We do not maintain or plan to acquire any key-man life insurance on
any of our key personnel. The loss of services of any of our executives or
other key personnel could negatively affect our business. Our continued growth
will also require us to attract, motivate, train and retain additional skilled
and experienced managerial, manufacturing, sales and technical personnel. We
face intense competition for such personnel. We may not be able to attract,
motivate and retain personnel with the skills and experience needed to
successfully manage our business and operations.

Year 2000 problems may disrupt our operations.

We are subject to various Year 2000 risks relating to our internal systems
and equipment, the systems of our key customers and suppliers and the potential
decrease in demand for our customers' products. Many

10
<PAGE>

computer software programs, operating systems and 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. People commonly refer to
this as the Year 2000 problem. If we do not properly identify and correct our
Year 2000 issues prior to January 1, 2000, our operations could be materially
disrupted due to our inability to do the following using current processes and
systems:

. receive technical specifications, purchase orders and payments from
customers;

. order, receive, record and pay for inventory;

. manufacture and ship products;

. send invoices; and

. process internal and external transactions.

Our reliance on our vendors, third-party service providers and customers is
substantial. Their failure to address Year 2000 issues could have a material
adverse effect on us. If any of the following occur, our normal business
activities and operations could be interrupted which could negatively impact
our operating results:

. we fail to either identify or correct a material Year 2000 problem;

. our suppliers, third-party service providers or customers experience
Year 2000 problems; or

. demand for our customers' products is reduced due to changing purchasing
patterns in their markets caused by Year 2000 concerns.

We may not be able to maintain our technological and manufacturing process
expertise.

The markets for our manufacturing services are characterized by rapidly
changing technology and evolving process development. The continued success of
our business will depend upon our ability to:

. maintain and enhance our 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 we believe that our operations utilize the assembly and testing
technologies, equipment and processes currently required by our customers, we
cannot be certain that we will develop capabilities required by our customers
in the future. Also, the emergence of new technologies, industry standards or
customer requirements may render our equipment, inventory or processes obsolete
or noncompetitive. In addition, we may have to acquire new assembly and testing
technologies and equipment to remain competitive. The acquisition and
implementation of new technologies and equipment may require significant
expense or capital investment. Our failure to anticipate and adapt to our
customers' changing technological needs and requirements would have an adverse
effect on our business.

We may incur significant liabilities if we fail to comply with environmental
regulations.

We are subject to environmental regulations relating to the use, storage,
discharge, site cleanup, and disposal of hazardous chemicals used in our
manufacturing processes. If we fail to comply with present and future
regulations, or are required to perform site remediation, we could be subject
to future liabilities or the suspension of production. Present and future
regulations may also:

. restrict our ability to expand our facilities;

. require us to acquire costly equipment; or

. require us to incur other significant costs and expenses.

11
<PAGE>

Products we manufacture may contain design or manufacturing defects which could
result in reduced demand for our services and liability claims against us.

We manufacture products to our customers' specifications which are highly
complex and may at times contain design or manufacturing errors or failures.
Defects have been discovered in products we manufacture in the past and,
despite our quality control and quality assurance efforts, defects may occur in
the future. Defects in the products we manufacture, whether caused by a design,
manufacturing or component failure or error, may result in delayed shipments to
customers or reduced or cancelled customer orders. If these defects occur in
large quantities or too frequently, our business reputation may also be
impaired. In addition, these defects may result in liability claims against us.

Risks Related to our Expansion

Our operating results will depend on our ability to manage our growth.

We have grown rapidly in recent years and we expect to continue to expand
our operations. This growth has placed, and will continue to place, significant
strain on our management, operations, technical, financial, systems, sales,
marketing and other resources. For example, we identified a significant
inventory shortfall occurring in the fourth quarter of 1997 that substantially
adversely affected our operating results for that period. As a result of this
shortfall, we have reviewed and continue to review our security procedures and
operating and financial controls. Based upon such review, we have implemented
enhanced security systems and inventory work-in-process tracking systems. We
have also implemented various cost management programs to enhance our
profitability. These programs may not result in the anticipated cost savings,
however. We will have to continue to invest in both our manufacturing
infrastructure to expand capacity and our operational, financial, and
management information systems. If we fail to manage our expected growth
effectively, the quality of our services and products and our operating results
could suffer significantly.

Expansion of our operations may negatively impact our business.

We may expand our operations by establishing or acquiring new manufacturing
facilities or by expanding capacity in our current facilities. We may expand
both in geographical areas in which we currently operate and in new
geographical areas within the United States and internationally. We are
currently looking for a new facility in California to consolidate and expand
our operations and an additional facility in Massachusetts. We may not be able
to find suitable facilities on a timely basis or on terms satisfactory to us.
Expansion of operations involves numerous business risks, including:

. the inability to successfully integrate additional facilities or
capacity and to realize anticipated synergies, economies of scale or
other value;

. difficulties in the timing of expansions, including delays in the
implementation of construction and manufacturing plans;

. the diversion of management's attention from other business areas during
the planning and implementation of expansions;

. the strain placed on our operational, financial, management, technical
and information systems and resources;

. disruption in manufacturing operations;

. the incurrence of significant costs and expenses; and

. the inability to locate enough customers or employees to support the
expansion.

12
<PAGE>

Our results of operations could be adversely affected if the revenues
associated with new or expanded facilities are not sufficient to offset the
increased expenditures associated with the expansions.

We may fail to secure necessary additional financing.

We have made and will continue to make substantial capital expenditures to
expand our operations and remain competitive in the rapidly changing
electronics manufacturing services industry. Our future success may depend on
our ability to obtain additional financing and capital to support our continued
growth and operations. We may seek to raise capital by:

. issuing additional common stock or other equity instruments;

. issuing debt securities;

. obtaining additional lease financings;

. increasing our lines of credit; or

. obtaining off-balance sheet financing.

We may not be able to obtain additional capital when we want or need it, and
capital may not be available on satisfactory terms. If we issue additional
equity securities or convertible debt to raise capital, it may be dilutive to
your ownership interest. Furthermore, any additional capital may have terms and
conditions that adversely affect our business, such as financial or operating
covenants.

Risks Related to our Common Stock

We anticipate that our net sales and operating results will fluctuate which
could affect the price of our common stock.

Our net sales and operating results have fluctuated and may continue to
fluctuate significantly from quarter to quarter. A substantial portion of our
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 our 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 our customers' commitments, the following factors may
contribute to such fluctuations:

. fluctuations in demand for our services or the products we manufacture;

. shipment delays;

. interruptions in manufacturing caused by earthquakes or other natural
disasters;

. effectiveness in controlling manufacturing costs;

. changes in cost and availability of labor and components;

. inefficiencies in managing inventory and accounts receivable, including
inventory obsolescence and write-offs; and

. the levels at which we utilize our manufacturing capacity.

Our operating expenses are based on anticipated revenue levels and a high
percentage of our operating expenses are relatively fixed in the short term. As
a result, any unanticipated shortfall in revenue in a quarter would likely
adversely affect our operating results for that quarter. Also, changes in our
product assembly mix may cause our margins to fluctuate which could negatively
impact our results of operations for that period. Results of operations in any
period should not be considered indicative of the results to be expected for
any future period. It is likely that in one or more future periods our results
of operations will fail to meet the expectations of securities analysts or
investors, and the price of our common stock could decline significantly.

13
<PAGE>

We may incur costs and liability related to potential or pending litigation.

On February 27, 1998, our company and several of our 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
plaintiffs amended the complaint on October 16, 1998. The plaintiffs purport to
represent a class of all persons who purchased or otherwise acquired our 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 our inventory and the
nature of our accounting practices. On December 15, 1998, we filed a motion to
dismiss the case in its entirety based on the pleadings. Our motion to dismiss
was granted without prejudice on May 27, 1999, and the case was closed by the
court on June 1, 1999. On June 28, 1999, the plaintiffs filed a motion with the
court seeking permission to file a second amended complaint. We opposed that
motion. On July 13, 1999, the court denied the plaintiffs' motion to amend,
noting "final judgment having entered in this case." On July 26, 1999, the
plaintiffs filed a motion with the court asking the court to extend the 30-day
period for filing an appeal of its ruling dismissing the case. We opposed that
motion as well, and the court denied the motion on August 10, 1999. On August
12, 1999, plaintiffs filed a notice indicating their intent to appeal the
court's orders of July 26, 1999 and August 10, 1999. We believe the claims
asserted in this action and the appeals noticed by plaintiffs are without merit
and intend to continue to defend ourselves vigorously in this action. However,
a material adverse judgment in such matter could cause our financial condition
or operating results to suffer.

On June 15, 1999, we received written notice from legal counsel for the
Lemelson Medical, Education & Research Foundation, Limited Partnership alleging
that we are infringing certain patents held by the Lemelson Foundation
Partnership and offering to license such patents to us. Based on our
understanding of the terms that the Lemelson Foundation Partnership has made
available to current licensees, we believe that obtaining a license from them
under the same or similar terms would not have a significant negative effect on
our financial condition. Our results of operations in a particular quarter may
be negatively affected, however. Moreover, a license may not be available on
terms satisfactory to us. Litigation with respect to patents and other
intellectual property matters can result in substantial costs and damages,
require the cessation of the use of infringing products and processes, and
force the infringing party to obtain a license to the relevant intellectual
property.

In December 1993, CMC Industries retained the services of a consultant to
assist in quantifying the potential exposure to CMC in connection with clean-up
and related costs of a former manufacturing site. This site is commonly known
as the ITT Telecommunications site in Milan, Tennessee. The consultant
initially estimated that the cost to remove and dispose of the contaminated
soil would be approximately $200,000. CMC subsequently entered into a voluntary
agreement to investigate the site with the Tennessee Department of Environment
and Conservation. In addition, CMC agreed to reimburse a tenant of the site
$115,000 for expenditures previously incurred to investigate environmental
conditions at the site. CMC recorded a total provision of $320,000 based on
these estimates. In fiscal 1995, an environmental consultant estimated that the
cost of a full study combined with short- and long-term remediation of the site
may cost between $3.0 and $4.0 million. Subsequent environmental studies done
in 1999 have estimated such costs as between $750,000 and $3.5 million. During
CMC's fiscal 1996, the State of Tennessee's Department of Environment and
Conservation named certain potentially responsible parties in relation to the
former facility. CMC was not named as a potentially responsible party. However,
Alcatel, Inc., a potentially responsible party named by the State of
Tennessee's Department of Environment and Conservation and a former owner of
CMC, sought indemnification from CMC under the purchase agreement by which CMC
acquired the stock of one of the operators of the facility. To date, Alcatel
has not filed any legal proceedings to enforce its indemnification claim.
However, Alcatel could initiate such proceedings and other third parties could
assert claims against us relating to remediation of the site. We have entered
into an agreement with Alcatel pursuant to which the statute of limitations on
their indemnification claim is tolled for a period of time. In the event any
proceedings are initiated or any claim is made, we would defend ourselves
vigorously but defense or resolution of this matter could negatively impact our
financial position and results of operations.

14
<PAGE>

John A. Pino has significant influence over our company.

John A. Pino, Chairman of the Board and Chief Executive Officer, and a
number of trusts for his and his family's benefit, will collectively
beneficially own approximately 34% of our common stock after the offering. As a
result, Mr. Pino is able to exert significant influence over us through his
ability to influence the election of directors and all other matters that
require action by our stockholders. The voting power of Mr. Pino and these
trusts could have the effect of preventing or delaying a change in control of
our company which Mr. Pino opposes even if our other stockholders believe it is
in their best interests.

The price of our common stock has been and may continue to be volatile and you
might not be able to sell your shares at or above the public offering price.

The price of our common stock has been and may continue to be volatile.
Since October 1, 1998, our stock price has fluctuated between a low of $5.06
per share and a high of $29.63 per share. On October 19, 1999, the closing
price for our common stock was $26.75. The price of our common stock may
fluctuate significantly in response to a number of events and factors relating
to our company, our competitors and the market for our services, many of which
are beyond our control, such as:

. quarterly variations in our operating results;

. announcements of new technological innovations, equipment or service
offerings by us or our competitors;

. announcements of new products or enhancement by our customers;

. changes in financial estimates and recommendations by securities
analysts; and

. news relating to trends in our markets.

In addition, the stock market in general, and the market prices for technology
companies in particular, have experienced extreme volatility that often has
been unrelated to the operating performance of these companies. These broad
market and industry fluctuations may adversely affect the market price of our
common stock, regardless of our operating performance.

Recently, when the market price of a stock has been volatile, holders of
that stock have often instituted securities class action litigation against the
company that issued the stock. We have been the subject of such a lawsuit. If
any of our stockholders brought another securities class action lawsuit against
us, we could incur substantial additional costs defending that lawsuit. The
lawsuit could also divert the time and attention of our management and an
adverse judgment could cause our financial condition or operating results to
suffer.

It may be difficult for a third party to acquire our company, and this could
depress our stock price.

Massachusetts corporate law and our articles of organization and by-laws
contain provisions that could have the effect of delaying, deferring or
preventing a change in control of our company or our management. These
provisions could discourage proxy contests and make it more difficult for you
and other stockholders to elect directors and take other corporate actions.
These provisions could also limit the price that investors might be willing to
pay in the future for shares of our common stock. These provisions:

. authorize the issuance of "blank check" preferred stock, which is
preferred stock that can be created and issued by our board of directors
without prior stockholder approval, with rights senior to those of
common stock;

. provide for a staggered board of directors, so that it would take three
successive annual meetings to replace all directors;

. prohibit stockholder action by written consent; and

15
<PAGE>

. establish advance notice requirements for submitting nominations for
election to the board of directors and for proposing matters that can be
acted upon by stockholders at a meeting.

We may lose the value of our investment in Cortelco Systems which could
negatively impact the price of our common stock.

Through our acquisition of CMC Industries, we acquired a redeemable
preferred stock investment in Cortelco Systems Holding Corp. David S. Lee, a
former director of CMC Industries and a current director of ACT, also serves as
a director of Cortelco Systems Holding Corp. Mr. Lee is also the largest
stockholder of Cortelco and beneficially owns approximately 5.6% of our common
stock before this offering. In March 1999, CMC entered into a Stock Purchase
Agreement with Mr. Lee under which Mr. Lee effectively guaranteed CMC's right
to receive not less than approximately $5.9 million by May 2002 in connection
with CMC's investment in Cortelco. We may not receive any of the $5.9 million
from Cortelco or Mr. Lee, which could negatively impact our financial condition
and the price of our common stock.

Risks Related to the Offering

Management has discretion in spending our proceeds from this offering.

Management intends to use approximately $55 million of our net proceeds from
this offering to reduce our indebtedness under our bank credit facility, and
the remainder for working capital and other general corporate purposes,
including potential acquisitions. You should be aware, however, that we have
broad discretion under our bank credit facility as to the amount we choose to
repay. We may actually repay more or less of our long-term debt. Accordingly,
our management will retain broad discretion as to the allocation of our
proceeds from this offering. You will not have the opportunity to evaluate the
economic, financial or other information on which we base our decisions on how
to use the proceeds we receive from this offering.

16
<PAGE>

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements within the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 throughout this prospectus and
in the documents we incorporate by reference in this prospectus. In some cases
you can identify these statements by forward-looking words such as
"anticipate," "believe," "could," "estimate," "expect," "intend," "may,"
"should," "will," and "would" or similar words. You should read statements that
contain these words carefully because they discuss our future expectations,
contain projections of our future results of operations or of our financial
position or state other "forward-looking" information. We believe that it is
important to communicate our future expectations to our investors. However,
there may be events in the future that we are not able to accurately predict or
control. The factors listed above in the section captioned "Risk Factors," as
well as any cautionary language in this prospectus and in the documents that we
incorporate by reference in this prospectus, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Before you
invest in our common stock, you should be aware that the occurrence of the
events described in these risk factors and elsewhere in this prospectus and in
the documents that we incorporate by reference in this prospectus could have an
adverse effect on our business, results of operations and financial position.

You should read this prospectus and the documents that we incorporate by
reference in this prospectus completely and with the understanding that our
actual future results may be materially different from what we expect. We may
not update these forward-looking statements after the date of this prospectus,
even though our situation will change in the future. All forward-looking
statements attributable to us are expressly qualified by these cautionary
statements.

17
<PAGE>

USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of 2,500,000 shares of
common stock in this offering will be approximately $62.1 million, assuming a
public offering price of $26.75 per share and after deducting the estimated
underwriting discounts and commissions and our estimated offering expenses. If
the underwriters exercise their over-allotment option in full, we estimate that
our net proceeds will be approximately $67.3 million. We will not receive any
proceeds from the sale of the 250,000 shares of common stock being offered by
the selling stockholders in this offering.

We expect to use approximately $55 million of our net proceeds from this
offering to reduce our indebtedness under our bank credit facility, and the
remainder for working capital and other general corporate purposes. You should
be aware, however, that we have broad discretion under our bank credit facility
as to the amount we choose to repay. We may actually repay more or less of our
long-term debt. Our bank credit facility matures in 2004. At September 30,
1999, we had $75.4 million outstanding under our bank credit facility. At
September 30, 1999, the interest rate on the $7.0 million term loan was 7.89%,
the rate on $25 million of the line of credit was 7.63% and the rate on the
remainder of the line of credit was 8.5%. We may use a portion of the net
proceeds for the acquisition of electronic manufacturing services providers,
facilities, assets and businesses that are complementary to our own. Our
management continually evaluates potential strategic acquisitions and
investments. Currently, we do not have any understandings, commitments or
agreements with respect to any acquisitions or investments, and we may not make
any acquisitions or investments. Our net proceeds from this offering will be
invested in short-term, interest-bearing, investment-grade securities until
allocated for a specific use.

PRICE RANGE OF COMMON STOCK

Our common stock is listed on The Nasdaq National Market under the symbol
"ACTM." The following table sets forth the high and low bid information for the
common stock as reported by The Nasdaq National Market for the periods
indicated.

<TABLE>
<CAPTION>
High Low
------- -------
<S> <C> <C>
1997
First quarter................................................ $ 29.25 $ 18.25
Second quarter............................................... 41.75 19.50
Third quarter................................................ 47.56 31.50
Fourth quarter............................................... 33.75 12.38
1998
First quarter................................................ 18.06 9.50
Second quarter............................................... 13.13 6.13
Third quarter................................................ 12.81 5.91
Fourth quarter............................................... 14.75 5.06
1999
First quarter................................................ 19.13 12.88
Second quarter............................................... 17.25 11.88
Third quarter................................................ 28.19 13.50
Fourth quarter (through October 19, 1999).................... 29.63 24.89
</TABLE>

On October 19, 1999, the closing price of our common stock on The Nasdaq
National Market was $26.75 per share. As of September 30, 1999, there were
approximately 207 holders of record of our common stock, which does not include
stockholders for whom shares are held in a nominee or street name.

18
<PAGE>

DIVIDEND POLICY

We did not pay any cash dividends on our common stock during the periods
shown above. We presently do not anticipate paying any cash dividends in the
foreseeable future. We presently intend to retain future earnings, if any, to
finance the expansion and growth of our business. Our bank credit facility
prohibits the payment of cash dividends on our capital stock.
CAPITALIZATION

The following table sets forth our cash and cash equivalents and
capitalization as of September 30, 1999:

. on an actual basis; and

. on an as adjusted basis to reflect our sale of 2,500,000 shares of
common stock in this offering at an assumed public offering price of
$26.75 and the receipt of our net proceeds, after deducting the
estimated underwriting discounts and commissions and estimated offering
expenses.

You should read this information together with our consolidated financial
statements and the related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in this
prospectus. While we have assumed for purposes of the adjusted capitalization
data below that we will apply approximately $55 million of our net proceeds to
reduce long-term debt, you should be aware that we have broad discretion under
our bank credit facility as to the amount we choose to repay. We may actually
repay more or less of our long-term debt.

<TABLE>
<CAPTION>
As of September 30, 1999
----------------------------
Actual As Adjusted
------------ --------------
(in thousands)
(unaudited)
<S> <C> <C>
Cash and cash equivalents......................... $ 4,308 $ 11,388
============ ============
Current portion of long-term debt................. $ 2,725 1,725
Long-term debt, less current portion.............. 76,254 22,254
Stockholders' equity:
Preferred stock, par value $.01; 5,000,000 shares
authorized, none issued or outstanding.......... -- --
Common stock, par value $.01; 50,000,000 shares
authorized, 13,038,824 shares issued and
outstanding (actual); 15,538,824 shares issued
and outstanding (as adjusted)................... 130 155
Additional paid-in capital....................... 77,251 139,306
Accumulated other comprehensive (loss)........... (1,610) (1,610)
Retained earnings................................ 15,610 15,610
------------ ------------
Total stockholders' equity........................ 91,381 153,461
------------ ------------
Total capitalization.............................. $ 170,360 $ 177,440
============ ============
</TABLE>

19
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The data set forth below has been restated to give retroactive effect to the
merger of ACT Manufacturing, Inc. and CMC Industries, Inc. on July 29, 1999
which has been accounted for as a pooling of interests as described in note 1
to our consolidated financial statements. The selected consolidated financial
data set forth below for the fiscal years ended December 31, 1996, 1997 and
1998 and the consolidated balance sheet data as of December 31, 1997 and 1998
are derived from our audited consolidated financial statements, which are
included elsewhere in this prospectus. The selected consolidated financial data
for the fiscal years ended December 31, 1994 and 1995 and the consolidated
balance sheet data as of December 31, 1994, 1995 and 1996 are derived from the
combination of our respective audited consolidated financial statements that
are not included in this prospectus. The selected consolidated financial data
for the nine-month periods ended September 30, 1998 and 1999 and the
consolidated balance sheet data as of September 30, 1999 are derived from our
unaudited condensed consolidated financial statements, which are included
elsewhere in this prospectus. In the opinion of our management, the unaudited
condensed consolidated financial statements have been prepared on the same
basis as ACT's audited consolidated financial statements and include all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of our financial condition and results of operations for such
periods. The selected consolidated financial data for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999 or any other future period. You
should read the data set forth below in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
our consolidated financial statements and the related notes appearing elsewhere
in this prospectus.

<TABLE>
<CAPTION>
Nine Months Ended
September 30,
Fiscal Year Ended December 31, (1) (3) (2) (3)
----------------------------------------------- -----------------
1994(4) 1995(4) 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Net sales............... $249,627 $259,961 $390,611 $479,139 $592,484 $451,625 $483,571
Cost of goods sold...... 223,367 238,140 351,485 454,203 556,339 425,384 447,253
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 26,260 21,821 39,126 24,936 36,145 26,241 36,318
Selling, general and
administrative
expenses............... 11,602 13,744 18,268 24,516 27,383 19,454 21,807
Restructuring costs..... -- -- 792 -- -- -- --
Merger costs (5)........ -- -- -- -- -- -- 5,601
-------- -------- -------- -------- -------- -------- --------
Operating income........ 14,658 8,077 20,066 420 8,762 6,787 8,910
Interest and other
expense, net........... 1,920 1,623 2,936 4,056 3,625 2,807 3,250
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
provision for income
taxes.................. 12,738 6,454 17,130 (3,636) 5,137 3,980 5,660
Provision (benefit) for
income taxes........... 5,009 1,948 6,868 (1,235) 2,044 1,467 4,530
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ 7,729 $ 4,506 $ 10,262 $ (2,401) $ 3,093 $ 2,513 $ 1,130
======== ======== ======== ======== ======== ======== ========
Net income (loss) per
common share:
Basic................. $ 0.87 $ 0.41 $ 0.86 $ (0.19) $ 0.24 $ 0.20 $ 0.09
Diluted............... $ 0.81 $ 0.39 $ 0.84 $ (0.19) $ 0.24 $ 0.20 $ 0.08
Weighted average shares
outstanding:
Basic................. 8,924 11,101 11,880 12,330 12,665 12,615 12,880
Diluted............... 9,580 11,461 12,237 12,330 12,976 12,881 13,500
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
As of December 31, (1) (3) As of September 30, (2)
-------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -----------------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Consolidated Balance
Sheet Data:
Working capital ........ $ 34,508 $ 56,809 $ 92,005 $ 55,894 $ 86,059 $119,961
Total assets............ 100,044 127,058 175,029 208,573 238,294 294,874
Long-term debt, less
current portion........ 15,381 8,591 34,966 4,817 42,014 76,254
Total stockholders'
equity ................ 35,338 64,026 78,234 84,103 91,460 91,381
</TABLE>
- ---------------------
(1) ACT prepares its financial statements on the basis of a fiscal year ending
December 31 and CMC prepared its financial statements on the basis of a
fiscal year ending July 31. The consolidated statements of operations data
for each of the five years in the period ended December 31, 1998 (referred
to as "fiscal" 1994, 1995, 1996, 1997, and 1998) reflect the results of
operations for ACT for the years then ended combined with the results of
operations for CMC for the years ended July 31, 1994, 1995, 1996, 1997, and
1998. The consolidated balance sheet data as of December 31, 1994, 1995,
1996, 1997, and 1998 reflects the financial position of ACT as of those
dates combined with the financial position of CMC as of July 31, 1994,
1995, 1996, 1997, and 1998. The consolidated financial statements have been
adjusted to reflect the conforming of CMC's accounting policy with that of
ACT's by expensing previously capitalized preoperating and start-up costs
associated with CMC's Mexican manufacturing facility. The adjustment also
gives effect to the tax deductibility of these expenses.

(3) As a result of ACT and CMC having different fiscal years, CMC's condensed
consolidated results of operations for the five-month period from August 1,
1998 through December 31, 1998 are reported separately, as follows:

<TABLE>
<S> <C>
Condensed Consolidated Statement of Operations Data (in thou-
sands):
Net sales.................................................... $122,423
Cost of sales................................................ 119,733
--------
Gross profit................................................. 2,690
Selling, general and administrative expenses................. 5,409
--------
Loss from operations......................................... (2,719)
Interest expense............................................. 691
--------
Loss before taxes............................................ (3,410)
Income tax benefit........................................... (1,279)
--------
Net loss..................................................... $ (2,131)
========
</TABLE>

21
<PAGE>

This condensed consolidated statement of operations data of CMC for the
period August 1, 1998 through December 31, 1998 does not reflect any
adjustment to conform CMC's accounting policy with that of ACT's with
respect to capitalized preoperating and start-up costs associated with
CMC's Mexican manufacturing facility. The effect of this adjustment would
be to reduce cost of sales by $100,000 and reduce net loss by $60,000.

(4) ACT operated as an S corporation for income tax purposes from November 1,
1987 to March 28, 1995. Accordingly, during that period, ACT had not been
subject to federal income taxes and had been subject to certain state
income taxes at a reduced rate. Therefore, net income for the years ended
December 31, 1994 and 1995 is presented on a pro forma basis as if ACT had
been a C corporation for the period presented. ACT's pro forma net income
per common share for 1994 and 1995 reflects the assumed issuance of 650,000
shares that ACT would have needed to issue at the initial public offering
price of ACT's common stock to fund the distribution of all previously
taxed but undistributed S corporation earnings to ACT's stockholders
through March 28, 1995, approximately $7.8 million.

(5) Merger costs relating to the acquisition of CMC are comprised primarily of
investment banking, legal, accounting, printing, integration and other fees
and expenses directly related to the merger.

22
<PAGE>

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

You should read the following discussion and analysis together with our
consolidated financial statements and related notes included elsewhere in this
prospectus. The following discussion contains trend analysis and other forward-
looking statements within the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. Our actual
results may differ materially from those indicated in such forward-looking
statements as a result of the factors set forth elsewhere in this prospectus,
including under "Risk Factors."

Overview

We are a leading provider of value-added electronics manufacturing services
to original equipment manufacturers (OEMs) in the networking and
telecommunications, computer, industrial and medical equipment markets. We
provide OEMs with complex printed circuit board assembly, primarily utilizing
advanced surface mount technology, electro-mechanical sub-assembly, total
system assembly and integration, and mechanical and molded cable and harness
assembly. We target and have developed a particular expertise in serving
emerging and established OEMs who require moderate volume production runs of
complex, leading-edge commercial market applications. These applications are
generally characterized by multiple configurations and high printed circuit
board densities. As a result, they generally require technologically-advanced
and flexible manufacturing as well as a high degree of other value-added
services. As an integral part of our offerings to customers, we provide the
following value-added services: advanced manufacturing and test engineering,
flexible materials management, comprehensive test services, product diagnostics
and repair, packaging, order fulfillment and distribution services.

At September 30, 1999, we manufactured at nine facilities having an
aggregate of approximately 893,000 square feet. Of our leased manufacturing
facilities, four of the facilities are located in Massachusetts and one
facility is located in each of Santa Clara, California; Lawrenceville, Georgia;
Corinth, Mississippi; and Dublin, Ireland. We also own a 4.4-acre tract of land
and a 110,000 square foot manufacturing facility on that property in
Hermosillo, Mexico. All of our manufacturing facilities have been certified to
the ISO 9002 international quality standard except our Corinth, Mississippi
facility which has been certified to the ISO 9001 international quality
standard. At September 30, 1999, our facilities contained 43 surface mount
technology lines and we have five additional lines on order which are expected
to be delivered in the fourth quarter of 1999.

We recognize revenue upon shipment to customers. We generally do not obtain
long-term purchase orders or commitments from our customers. Instead, we work
closely with our customers to anticipate delivery dates and future volume of
orders based on customer forecasts. The level and timing of orders placed by
our customers vary due to:

. customer attempts to manage inventory;

. changes in the customer'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.

We may purchase components for product assemblies based on customer
forecasts. Our policy is that customers are generally responsible for materials
and associated acquisition costs in the event of a significant reduction, delay
or cancellation of orders from the forecasted amounts.

Recent Acquisitions

In June 1997, we acquired substantially all of the assets and liabilities of
Electronic Systems International, located in Georgia, a provider of electronics
manufacturing services to OEMs based primarily in the

23
<PAGE>

southeastern United States. We issued 186,100 shares of our common stock,
valued at this time at approximately $5.1 million, to purchase the ESI
business. In 1997, we also acquired Advanced Component Technologies Limited
(formerly SignMax Limited), located in Dublin, Ireland, a provider of
electronics manufacturing services primarily consisting of cable and harness
assembly. We acquired this business for approximately $2.0 million in cash and
assumed liabilities. We have since expanded our manufacturing facility in
Ireland to include a printed circuit board operation utilizing primarily
surface mount technology. The operating results of these acquired businesses
are included from the dates of purchase in our consolidated statement of
operations for the year ended December 31, 1997.

On July 29, 1999, we completed our merger with CMC Industries, Inc., a
provider of electronics manufacturing services to OEMs in the
telecommunications, computer and electronics industries. CMC operated
manufacturing facilities in Santa Clara, California, Corinth, Mississippi and
Hermosillo, Mexico. As a result of the merger, CMC became our wholly owned
subsidiary. Under the terms of the merger agreement, each share of CMC common
stock was exchanged for 0.5 of a share of our common stock and all CMC stock
options were assumed by us. We issued approximately 3.9 million shares of
common stock, and reserved approximately 0.9 million shares of common stock for
future issuance under CMC's 1990 Equity Incentive Plan, pursuant to the merger.
The merger has been accounted for as a pooling of interests. Accordingly, our
financial statements for prior periods have been restated to include the
operating results and financial position of CMC at the beginning of the
earliest period presented.

ACT prepares its financial statements on the basis of a fiscal year ending
December 31 and CMC prepared its financial statements on the basis of a fiscal
year ending July 31. The consolidated statements of operations and cash flows
for the years ended December 31, 1996, 1997 and 1998 (referred to as "fiscal"
1996, 1997 and 1998) reflect the results of operations and cash flows for ACT
for the years then ended combined with the results of operations and cash flows
for CMC for the years ended July 31, 1996, 1997 and 1998. The consolidated
balance sheets as of December 31, 1997 and 1998 reflect the financial position
of ACT as of those dates combined with the financial position of CMC as of July
31, 1997 and 1998. The consolidated statements of operations and cash flows for
the nine months ended September 30, 1998 reflect the results of operations and
cash flows for ACT for the nine months then ended combined with the results of
operations and cash flows for CMC for the nine months period ended April 30,
1998. The consolidated statements of operations and cash flows for the nine
months ended September 30, 1999 and the consolidated balance sheet as of
September 30, 1999 reflect the combined results of operations and cash flows of
ACT and CMC for the nine months then ended and the consolidated financial
position of ACT and CMC as of that date. As a result of ACT and CMC having
different fiscal years, CMC's condensed consolidated results of operations and
cash flows for the five-month period from August 1, 1998 through December 31,
1998 are reported separately in this prospectus. The consolidated financial
statements have been adjusted to reflect the conforming of CMC's accounting
policy with that of ACT's by expensing previously capitalized preoperating and
start-up costs associated with CMC's Mexican manufacturing facility. The
adjustment also gives effect to the tax deductibility of these expenses.

On October 12, 1999, we acquired certain inventory and fixed assets of
GSS/Array Technology, Inc., located in San Jose, California, for approximately
$12.8 million in cash. GSS/Array Technology, Inc. is a subsidiary of GSS/Array
Technology Public Company, Ltd., a Thailand company. We have assumed on-going
relationships with select GSS/Array domestic customers and hired select
employees.

24
<PAGE>

Results of Operations

The following table sets forth certain consolidated statement of operations
data as a percentage of net sales for each period indicated. The table and the
discussion below should be read in conjunction with our consolidated financial
statements and the notes thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
Nine Months
Ended
Fiscal Year Ended September
December 31, 30,
-------------------- ------------
1996 1997 1998 1998 1999
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold........................ 90.0 94.8 93.9 94.2 92.5
----- ----- ----- ----- -----
Gross profit.............................. 10.0 5.2 6.1 5.8 7.5
Selling, general and administrative
expenses................................. 4.7 5.1 4.6 4.3 4.5
Restructuring costs....................... 0.2 -- -- -- --
Merger costs.............................. -- -- -- -- 1.2
----- ----- ----- ----- -----
Operating income.......................... 5.1 0.1 1.5 1.5 1.8
Interest and other expense, net........... 0.7 0.9 0.6 0.6 0.7
----- ----- ----- ----- -----
Income (loss) before provision for income
taxes.................................... 4.4 (0.8) 0.9 0.9 1.1
Provision (benefit) for income taxes...... 1.8 (0.3) 0.4 0.3 0.9
----- ----- ----- ----- -----
Net income (loss)......................... 2.6% (0.5)% 0.5% 0.6% 0.2%
===== ===== ===== ===== =====
</TABLE>

In fiscal 1997, we identified a significant inventory shortfall as a result
of our fiscal 1997 year-end physical inventory that adversely affected our
fiscal 1997 results of operations. As a result of the shortfall, we recorded a
charge of approximately $13.1 million that was included in cost of goods sold
for fiscal 1997. The shortfall was investigated by our personnel and, under the
direction of the Audit Committee of the Board of Directors, by independent
external accounting specialists. The ultimate cause of the shortfall could not
be finally determined, and accordingly the associated charge was reported in
the fourth quarter of fiscal 1997. As a result of this shortfall, we have
reviewed and continue to review our security procedures and operating and
financial controls. Based upon such review, we have implemented enhanced
security systems and inventory work-in-process tracking systems. We also
perform ongoing inventory cycle counts and conduct quarterly physical
inventories of selected inventory locations and categories.

In addition, in fiscal 1997 we included in our accounts receivable reserve
approximately $1.7 million in connection with amounts due from discontinued
customers and accrued an expense of $600,000 for professional fees related to
the investigation of the inventory shortfall.

We provide electronics manufacturing services to customers in the networking
and telecommunications, computer, industrial and medical equipment markets. The
percentage of net sales by market for fiscal 1996, 1997 and 1998 and the nine
months ended September 30, 1999 is as follows:

<TABLE>
<CAPTION>
Percentage of Net Sales
-------------------------------
Fiscal Year Nine Months
Ended December Ended
31, September 30,
---------------- -------------
Market 1996 1997 1998 1999
- ------ ---- ---- ---- -------------
<S> <C> <C> <C> <C>
Networking and Telecommunications............... 70% 66% 58% 63%
Computer........................................ 22 23 32 27
Industrial...................................... 7 9 8 8
Medical......................................... 1 2 2 2
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>

25
<PAGE>

Nine Months Ended September 30, 1999 and 1998

Our net sales increased $32.0 million or 7.1% to $483.6 million for the
nine-month period ended September 30, 1999 compared with $451.6 million for the
comparable period in fiscal 1998. The increase was attributable to an expansion
of business in the printed circuit board assembly product line of $38.5
million, of which approximately $28 million came from customers who did not do
business with us in the nine months ended September 30, 1998 and the remainder
came from existing customers. This increase was partially offset by a decrease
in net sales of $6.6 million in the cable and harness assembly product line.
Customers representing 10% or more of our net sales for the nine months ended
September 30, 1999 were Nortel Networks (formerly Bay Networks and Aptis
Communications)--15%; S-3 Incorporated (formerly Diamond Multimedia)--15%;
Marconi (formerly Reltec)--12%; and Lucent Technologies (formerly Ascend
Communications)--10%.

Net sales in the printed circuit board assembly product line, including
system integration, test, repair and order fulfillment, as a percentage of net
sales was approximately 95% for the nine-month period ended September 30, 1999
compared to approximately 94% for the same period in fiscal 1998. Net sales in
the cable and harness assembly product line accounted for approximately 5% of
net sales for the nine-month period ended September 30, 1999 compared to
approximately 6% of net sales for the same period in fiscal 1998.

Gross profit increased $10.1 million or 38.4% to $36.3 million for the nine
months ended September 30, 1999 compared with $26.2 for the same period in
fiscal 1998. Gross profit as a percentage of net sales, or gross margin,
increased to 7.5% for the nine months ended September 30, 1999 from 5.8% for
the nine months ended September 30, 1998. This increase was primarily
attributable to a higher absorption of manufacturing overhead as a result of
the increased sales volume, the positive impact of our cost management programs
and an increase in shipments of products with higher gross margin contribution
than in the comparable period of fiscal 1998.

Selling, general and administrative expenses increased $2.4 million or 12.1%
to $21.8 million for the nine months ended September 30, 1999 compared with
$19.5 million for the same period in fiscal 1998. SG&A expenses as a percentage
of net sales increased to 4.5% in the nine months ended September 30, 1999 from
4.3% in the nine months ended September 30, 1998. SG&A increased primarily due
to costs related to additional facilities and the additional investment in
general and administrative functions, including personnel, systems and
consulting and professional fees, to support both current and anticipated
revenue growth.

Merger costs of $5.6 million related to the July 29, 1999 merger with CMC
Industries were recorded for the nine-month period ended September 30, 1999.
These merger costs consisted primarily of investment banking, legal,
accounting, printing, integration and other fees and expenses directly related
to the merger.

Operating income increased $2.1 million to $8.9 million, or 1.8% of net
sales, for the nine months ended September 30, 1999 compared with operating
income of $6.8 million, or 1.5% of net sales, for the comparable period in
fiscal 1998 as a result of the above factors.

Interest and other expense, net for the nine months ended September 30, 1999
increased 15.8% to $3.3 million compared to $2.8 million for the nine months
ended September 30, 1998. The increase was due to higher average loan balances
outstanding during the nine months ended September 30, 1999 compared to the
same period in fiscal 1998 and an increase in the interest rate on our variable
rate credit facilities during the nine months ended September 30, 1999 compared
to the same period in fiscal 1998.

We recorded a provision for income taxes of $4.5 and $1.5 million in the
nine months ended September 30, 1999 and 1998. In the nine months ended
September 30, 1999, we provided for income taxes using a 40.0% effective tax
rate on pretax income, excluding merger costs, which are not deductible for tax
purposes. In the nine months ended September 30, 1998, we provided for income
taxes using a 37% effective tax rate. The difference in the tax rates is due to
the effects of non-deductible expenses and the differences in pre-tax income
earned in the various jurisdictions in which we do business.

26
<PAGE>

Fiscal 1998 Compared to Fiscal 1997

Our net sales increased $113.4 million or 23.7% to $592.5 million in fiscal
1998 from $479.1 million in fiscal 1997. The increase was attributed
principally to an expansion of printed circuit board assembly business from
existing and new customers. Customers representing 10% or more of our net sales
in fiscal 1998 were Nortel Networks (12%) and Micron Electronics (12%) as
compared to Nortel Networks (17%) in fiscal 1997.

Net sales in the printed circuit board assembly product line, including
system integration, test, repair and order fulfillment, as a percentage of net
sales was approximately 94% in each of fiscal 1998 and fiscal 1997. Net sales
in the cable and harness assembly product line accounted for approximately 6%
of net sales in each of fiscal 1998 and fiscal 1997.

Gross profit increased $11.2 million or 45.0% to $36.1 million in fiscal
1998 compared to $24.9 million in fiscal 1997. Gross margin increased to 6.1%
in fiscal 1998 from 5.2% in fiscal 1997. Within fiscal 1998, gross margin was
5.0%, 5.7%, 6.9% and 7.0% in the first, second, third and fourth quarters. This
sequential improvement was due primarily to the positive impact of our cost
management programs and a favorable product mix offset in part by an increase
in costs of materials as a percentage of cost of goods sold in our Mississippi
operation. In addition, fiscal 1997 gross profit was impacted by a charge
relating to the inventory shortfall of approximately $13.1 million which was
included in cost of goods sold, and by the effect of a $989,000 write-off of
certain inventory balances to cost of goods sold.

Selling, general and administrative expenses increased $2.9 million or 11.7%
to $27.4 million in fiscal 1998 from $24.5 million in fiscal 1997. SG&A
expenses as a percentage of net sales decreased to 4.6% in fiscal 1998 from
5.1% in fiscal 1997. SG&A expenses in fiscal 1998 included a $1.3 million
charge for defense and settlement of certain claims of age discrimination
resulting from a September 1995 workforce reduction at CMC. Without admitting
any liability, CMC agreed to enter into a Conciliation Agreement with the EEOC
to settle claims related to this matter and limit future litigation costs. SG&A
expenses in fiscal 1997 included a bad debt reserve of $1.7 million for
terminated customers and $600,000 for costs of investigating the inventory
shortfall. Although SG&A expenses decreased as a percentage of net sales, these
expenses increased in absolute dollars in fiscal 1998 primarily due to our
increase in net sales.

Operating income increased $8.3 million to $8.8 million, or 1.5% of net
sales, in fiscal 1998, compared with operating income of $420,000 in fiscal
1997 as a result of the previously discussed factors.

Interest and other expense, net decreased $431,000 to $3.6 million for
fiscal 1998 from $4.1 million for fiscal 1997. The decrease resulted
principally from reduced average borrowings on our credit facilities and lower
average interest rates in fiscal 1998 compared to fiscal 1997.

We recorded a provision for income taxes of $2.0 million in fiscal 1998
compared to a benefit for income taxes of $1.2 million in fiscal 1997. The
effective income tax rate was 39.8% in fiscal 1998 and 34.0% in fiscal 1997.
The 1997 tax benefit was provided at 34% primarily due to the effects of non-
deductible expenses and the differences in pre-tax income earned in various
jurisdictions in which we do business.

Fiscal 1997 Compared to Fiscal 1996

Our net sales increased $88.5 million or 22.7% to $479.1 million in fiscal
1997 from $390.6 million in fiscal 1996. This increase was attributed
principally to an expansion of printed circuit board assembly business from
existing and new customers. The only customer representing 10% or more of our
net sales in fiscal 1997 was Nortel with 17% of net sales. The only customer
representing 10% or more of our net sales in fiscal 1996 was Ascend with 12% of
net sales. During fiscal 1997, we experienced a reduction in, and then a
termination of, business with 3Com. Sales to 3Com were less than 10% of net
sales in fiscal 1997 compared to 10% of net sales in fiscal 1996.

27
<PAGE>

Net sales in the printed circuit board assembly product line, including
system integration, test, repair and order fulfillment, increased as a
percentage of net sales to approximately 94% in fiscal 1997 compared to
approximately 93% in fiscal 1996. Net sales in the cable and harness assembly
product line accounted for approximately 6% of fiscal 1997 net sales compared
to approximately 7% of fiscal 1996 net sales.

Gross profit decreased by $14.2 million or 36.3% to $24.9 million in fiscal
1997 compared to $39.1 million in fiscal 1996. Gross margin decreased to 5.2%
in fiscal 1997 from 10.0% in fiscal 1996. This change is attributable primarily
to the following: the $13.1 million charge arising from the inventory
shortfall; lower than anticipated shipments resulting in lower manufacturing
absorption; changes in product mix with increased shipments of lower margin
products; and a charge of $989,000 to write off remaining inventory balances
relating to certain customers. These occurrences primarily affected operating
results in the second half of fiscal 1997. Gross margin in the first and second
quarters of fiscal 1997 was relatively consistent with fiscal 1996 gross
margin.

Selling, general and administrative expenses increased $6.2 million or 34.2%
to $24.5 million in fiscal 1997 from $18.3 million in fiscal 1996. SG&A
expenses as a percentage of net sales increased to 5.1% in fiscal 1997 from
4.7% in fiscal 1996. The increase in SG&A expenses as a percentage of net sales
for fiscal 1997 compared to fiscal 1996 reflects charges of $1.7 million
associated with accounts receivable provisions, provision for professional fees
of $600,000 related to the investigation of the inventory shortfall,
acquisitions made in Ireland and Georgia, and the effects of lower third and
fourth quarter fiscal 1997 net sales levels affecting full year comparative
results. Without the effect of the provisions for accounts receivable and non-
recurring professional services, SG&A as a percentage of net sales would have
been 4.6% in fiscal 1997.

Operating income was $420,000 for fiscal 1997 compared with operating income
of $20.1 million for fiscal 1996 as a result of the previously discussed
factors.

Interest and other expense, net increased to $4.1 million for fiscal 1997
from $2.9 million for fiscal 1996. This increase resulted principally from
additional borrowings on our line of credit to support working capital
requirements.

We recorded a benefit for income taxes of $1.2 million in fiscal 1997
compared to a provision for income taxes of $6.9 million in fiscal 1996. The
effective income tax rate was 34.0% in fiscal 1997 and 40.1% in fiscal 1996.
The 1997 tax benefit was provided at 34% primarily due to the effects of
nondeductible expenses and the differences in pre-tax income earned in the
various jurisdictions in which we do business.

CMC Results of Operations for the Five Months Ended December 31, 1998

For the five months ended December 31, 1998, CMC generated gross profit of
$2.7 million on total net sales of $122.4 million. The gross margin of 2.2% was
lower than CMC's historical gross margin primarily because of the loss of two
customers, Micron Electronics and Global Village Communications, offset by net
sales to new customers and expanded business with existing customers at lower
margins. Gross profit was also adversely affected by increases in manufacturing
overhead costs incurred in anticipation of higher sales volumes and
inefficiencies associated with the initiation of new manufacturing projects.
The net loss for the five months ended December 31, 1998 of $2.1 million did
not include any one time, non-recurring charges.

28
<PAGE>

Quarterly Results of Operations

The following table sets forth, for periods presented, certain data from our
consolidated statements of operations and such data as a percentage of net
sales. In the opinion of our management, the unaudited quarterly consolidated
statement of operations data have been prepared on substantially the same basis
as ACT's audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial information for the periods presented. This
information should be read in conjunction with the consolidated financial
statements and related notes included elsewhere in this prospectus. The
operating results in any quarter are not necessarily indicative of the results
that may be expected for any future period.

The consolidated operating results for the three-month periods ended March
31, 1998, June 30, 1998, September 30, 1998 and December 31, 1998 reflect the
results of operations for ACT for the three months then ended combined with the
results of operations for CMC for the three-month periods ended October 31,
1997, January 31, 1998, April 30, 1998 and July 31, 1998, respectively. The
consolidated operating results for the three-month periods ended March 31,
1999, June 30, 1999 and September 30, 1999 reflect the results of operations of
ACT and CMC as of those dates.

<TABLE>
<CAPTION>
Three Months Ended,
--------------------------------------------------------------------
March June 30, Sept. Dec. 31, March June 30, Sept.
31, 1998 1998 30, 1998 1998 31, 1999 1999 30, 1999
-------- -------- -------- -------- -------- -------- --------
(in thousands, unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $151,569 $162,604 $137,452 $140,859 $145,947 $157,519 $180,105
Cost of goods sold...... 144,039 153,422 127,923 130,955 135,511 146,459 165,283
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 7,530 9,182 9,529 9,904 10,436 11,060 14,822
Selling, general and
administrative
expenses............... 6,116 6,622 6,716 7,929 6,314 8,288 7,205
Merger costs............ -- -- -- -- -- -- 5,601
-------- -------- -------- -------- -------- -------- --------
Operating income........ 1,414 2,560 2,813 1,975 4,122 2,772 2,016
Interest and other
expense, net........... 1,227 760 820 818 1,030 992 1,228
-------- -------- -------- -------- -------- -------- --------
Income before provision
for income taxes....... 187 1,800 1,993 1,157 3,092 1,780 788
Provision for income
taxes.................. 23 670 774 577 1,242 752 2,536
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ 164 $ 1,130 $ 1,219 $ 580 $ 1,850 $ 1,028 $ (1,748)
======== ======== ======== ======== ======== ======== ========
As a percentage of net
sales:
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold...... 95.0 94.3 93.1 93.0 92.9 93.0 91.8
-------- -------- -------- -------- -------- -------- --------
Gross profit............ 5.0 5.7 6.9 7.0 7.1 7.0 8.2
Selling, general and
administrative
expenses............... 4.1 4.1 4.9 5.6 4.3 5.3 4.0
Merger costs............ -- -- -- -- -- -- 3.1
-------- -------- -------- -------- -------- -------- --------
Operating income........ 0.9 1.6 2.0 1.4 2.8 1.7 1.1
Interest and other
expense, net........... 0.8 0.5 0.6 0.6 0.7 0.6 0.7
-------- -------- -------- -------- -------- -------- --------
Income before provision
for income taxes....... 0.1 1.1 1.4 0.8 2.1 1.1 0.4
Provision for income
taxes.................. 0.0 0.4 0.5 0.4 0.8 0.4 1.4
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... 0.1% 0.7% 0.9% 0.4% 1.3% 0.7% (1.0)%
======== ======== ======== ======== ======== ======== ========
</TABLE>

29
<PAGE>

The decrease in net sales in the three months ended September 30,1998 as
compared to the three months ended June 30, 1998 was due primarily to reduced
business with Micron Electronics. The increase in net sales in the three months
ended September 30, 1999 as compared to the three months ended June 30, 1999
reflects expanded business with many customers, most notably Marconi, Nortel
Networks and Efficient Networks. As of September 30, 1999, customer forecasts
for the fourth quarter of 1999 continue to reflect expanded business.

Gross margin improved in each quarter of fiscal 1998 due primarily to the
positive impact of our cost management programs and a favorable product mix,
offset in part by an increase in costs of materials as a percentage of cost of
goods sold in our Mississippi operation. The gross margin improvement in the
three months ended September 30, 1999 was primarily due to higher absorption of
manufacturing overhead. We do not expect substantial expansion in gross margin
percent in the fourth quarter of fiscal 1999 due to inefficiencies associated
with bringing on additional equipment capacity throughout our operations as
well as costs associated with the consolidation of assets acquired from
GSS/Array in October 1999 and the assimilation of GSS/Array customers into our
existing California operations.

Selling, general and administrative expenses in the three months ended
December 31, 1998 and June 30, 1999 included bad debt expense of $820,000 and
$900,000.

For periods prior to September 30, 1999, the provision for income taxes in
the above table reflects the combination of the separate provisions made by
each of ACT and CMC on a stand-alone basis. These may not be indicative of the
provision for income taxes which would have been recorded had the companies
been combined as of January 1, 1998. The provision for income taxes varies on a
quarterly basis due to the effective statutory tax rates and the levels of pre-
tax income earned in the jurisdictions in which we do business. The provision
for income taxes in the three months ended September 30, 1999 reflects the
effects of non-deductible merger costs.

Liquidity and Capital Resources

Nine Months Ended September 30, 1999

We had working capital of $120.0 million at September 30, 1999 compared with
$86.1 million at December 31, 1998. Operating activities used $15.6 million of
cash for the first nine months of 1999 compared with cash provided by
operations of $16.8 million for the comparable period in 1998. The primary use
of cash by operating activities for the first nine months of 1999 was for the
purchase of inventory. Inventory increased $50.0 million to $115.6 million as
of September 30, 1999 from $65.6 million as of December 31, 1998. The increase
reflects inventory requirements to support fourth quarter 1999 customer demand,
our intention to manufacture more of the fourth quarter customer product
requirements earlier in the quarter than we have historically and a decision to
receive certain inventory earlier than required for the manufacturing process
to hedge potential component shortages.

On July 29, 1999, we announced that we had executed an Amended and Restated
Credit Agreement for a new $107.0 million Senior Secured Credit Facility with a
group of banks led by The Chase Manhattan Bank as agent to replace our previous
credit facilities with the banks. This new credit facility provides for a
$7.0 million, five-year term loan and a $100.0 million five-year line of
credit, both of which are secured by substantially all of our assets. At
September 30, 1999, $68.4 million of the credit facility was utilized and an
additional $31.6 million was available for use based upon the applicable
borrowing base and the full term loan was utilized. At September 30, 1999, the
interest rate on $25 million of the line of credit was 7.63% and on the
remainder of the line of credit was 8.50%. The interest rate on the term loan
was 7.89%. The term loan amortizes at a rate of $1.0 million per year for the
first year and $1.5 million per year for years two through five. The credit
facility also provides for borrowings up to an aggregate amount of $100.0
million, limited to a percentage of qualified accounts receivable and qualified
inventory. Interest is payable monthly. For the term loan, we may choose an
interest rate of either 2.5% above the prevailing London Interbank Offering
rate (LIBOR), or 0.5% above the prime rate as announced by the agent. For the
revolving credit facility, we may choose an interest rate of either 2.25% above
the prevailing LIBOR rate, or 0.25% above the prime rate as

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announced by the agent. In addition to certain other prohibited actions, the
credit facility limits our capital expenditures and prohibits the payment of
cash dividends on our common stock. The credit facility also requires us to
maintain certain minimum fixed charge coverage ratios and maximum leverage
ratios.

Borrowings under our credit facilities of $13.7 million were used primarily
for the purchase of inventory. Approximately $4.6 million of the proceeds of
the $7.0 million term loan was used to repay the long-term bank loan of CMC
Industries existing on the date of the merger. Net proceeds of $2.0 million
from the sale of stock were due to the exercise of employee stock options and
the issuance of stock under the CMC employee stock purchase plan.

We are a party to a $17.0 million interest rate swap in order to fix the
interest rate on a portion of our outstanding borrowings under the bank credit
facility. The swap agreement provides for payments by us at a fixed rate of
interest of 6.76% and matures on October 19, 2001. The fair value of the
interest rate swap at September 30, 1999 was approximately $(249,000) since the
fixed rate of 6.76% was higher than the floating rate.

Capital expenditures of $4.2 million for the nine months ended September 30,
1999 were primarily for the acquisition of equipment related to operations.

We lease a manufacturing facility and certain equipment and computer
software used in our manufacturing operations under capital lease agreements
that expire through 2003. During the first quarter of 1999, we refinanced
approximately $2.6 million of our then existing operating leases and classified
these leases as capital leases in the accompanying condensed consolidated
balance sheet for the nine months ended September 30, 1999. The effect of this
refinancing on our results of operations will not differ materially from the
previous lease financing arrangements. As of September 30, 1999, we had
operating lease lines of approximately $13.0 million available for future
equipment requirements.

Our need for, cost of and access to funds are dependent in the long-term on
our future operating results as well as conditions external to us. We may
require additional capital to finance further acquisitions or other
enhancements to or expansions of our manufacturing capacity. Although no
assurance can be given that any additional financing will be available on terms
satisfactory to us, we may seek additional funds from time to time through
public or private debt or equity offerings or through further bank borrowings
on equipment lease financing. We believe that our current sources of liquidity
and the net proceeds from this offering are adequate to support our anticipated
liquidity needs for the next twelve months.

Fiscal 1998 and 1997

We had working capital of $86.1 million at the end of fiscal 1998 compared
with $55.9 million at the end of fiscal 1997. The $30.2 million increase is
primarily due to the classification of the outstanding amounts under our credit
facility as long-term liabilities at the end of fiscal 1998. Operating
activities provided $11.7 million of cash in fiscal 1998 compared with the use
of $5.4 million of cash in fiscal 1997. Cash was generated by operations in
fiscal 1998 primarily as a result of the refund of income taxes, the increase
in accounts payable balances, and profitable operations in fiscal 1998, offset
by the impact of higher trade receivables at the end of fiscal 1998.

Capital expenditures were $17.4 million in fiscal 1998 compared with $4.8
million for fiscal 1997. Of such capital expenditures, $3.0 million related to
leasehold improvements for facility expansion at our Hudson, Massachusetts
printed circuit board facility, $2.3 million related to leasehold improvements
in our new facility in Ireland and $5.2 million related to the purchase of land
in Hermosillo, Mexico and the construction of a facility. The remaining $6.9
million related primarily to the purchase of various manufacturing equipment,
furniture and computer equipment.

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Accounts receivable increased $26.9 million to $101.8 million at the end of
fiscal 1998 from $74.9 million at the end of fiscal 1997. The increase reflects
higher net sales in the fourth quarter of fiscal 1998 as compared to the fourth
quarter of fiscal 1997, as well as a shift in the requirements of our customers
to having a higher proportion of shipments occur nearer to the end of the
quarter in fiscal 1998 than in fiscal 1997.

Cash flow from financing activities during fiscal 1998 totaled $7.7 million.
In January 1998, CMC completed a private placement of its common stock, raising
approximately $3.6 million. The purpose of the offering was principally to
provide CMC additional financial flexibility to take advantage of potential
business opportunities.

At the end of fiscal 1998, our bank credit facility was comprised of
revolving credit lines totaling $80.0 million, of which $57.6 million was
utilized and an additional $14.7 million was available for use based upon the
applicable borrowing base, a $6.0 million term loan payable in 56 monthly
installments beginning in October 1996, and a $3.8 million equipment line.
These financing facilities required us to maintain certain levels of minimum
availability, maximum leverage ratios and certain other restrictive financial
covenants. In addition to these other prohibited actions, the financing
facilities also limited capital expenditures by us, prohibited the payment of
cash dividends on our capital stock, and limited mergers and acquisitions,
additional borrowings, leases and specified investments. We exceeded the limit
of capital expenditures for fiscal 1998 provided in the credit facility. A
waiver with regard to the excess was received from the banks. At the end of
fiscal 1998, the interest rate on the credit facility was 8.0%.

We entered into a $17.0 million interest rate swap agreement in the fourth
quarter of fiscal 1998 simultaneous with the execution of the credit facility.
The swap agreement provides for payments by us of a fixed rate of interest of
6.76% and matures on October 19, 2001. The fair value of the interest rate swap
at the end of fiscal 1998 was approximately $(770,000) since the fixed rate of
interest of 6.76% was higher than the floating rate.

At December 31, 1998, we had equipment lease lines of approximately $11.3
million available for purchases of manufacturing equipment, computer hardware
and software and furniture. In May 1998, we entered into a $5.0 million
operating lease line agreement for the purchase of certain equipment in our
Dublin, Ireland facility. At the end of fiscal 1998, substantially all of this
operating lease line had been utilized for outstanding commitments.

New Financial Accounting Standards

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," amended in June 1999 and effective for fiscal years
beginning after June 15, 2000. 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. Our management is currently
assessing the impact of SFAS No. 133 on our consolidated financial statements.
We will adopt this accounting standard on January 1, 2001, as required.

Year 2000 Readiness Disclosure Statement

We are subject to various Year 2000 risks relating to our internal systems
and equipment, the systems of our key customers, suppliers and third-party
service providers and the potential decrease in demand for our customers'
products. We and the companies with which we do business utilize computer
software programs, operating systems and embedded technology in the conduct of
their operations. Many computer software programs, operating systems and
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.
People commonly refer to

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this as the Year 2000 problem. If we do not properly identify and correct our
Year 2000 issues prior to January 1, 2000, our operations could be materially
disrupted. These disruptions could be caused by, among other things, an
inability to do the following using current processes and systems:

. receive technical specifications, purchase orders and payments from
customers;

. order, receive, record and pay for inventory;

. manufacture and ship products;

. send invoices;

. process internal and external transactions; and

. engage in similar normal business activities.

In addition, our operations could also be significantly disrupted if the
companies with which we do business are not Year 2000 compliant on a timely
basis. Such a failure could adversely affect a company's ability to do
business with us. Any of these Year 2000 failures or disruptions could have a
significant negative impact on our results of operations.

To address these issues, we have undertaken an extensive project to assess
and remedy the areas within our business and operations which could be
adversely affected by Year 2000 issues, including our information technology
and non-information technology systems and processes. The first phase of the
project was:

. to determine the extent of our Year 2000 problem by reviewing all of our
hardware, software, equipment and embedded technology to determine if
any of this software and technology was not Year 2000 compliant; and

. to determine whether companies with which we do significant business
will be Year 2000 compliant on a timely basis.

The next stage in the project was to correct or replace and test all such
hardware, software, equipment and embedded technology. In the second phase of
the project, we also addressed the Year 2000 issues identified by our vendors,
third-party service providers and customers, as appropriate. We conducted the
project using internal and external resources. Finally, we determined the need
to formulate and revise contingency plans based on the results of our
assessment and remediation efforts with regard to our own Year 2000 issues as
well as those of our customers, third-party service providers and suppliers.

All phases of the project, as defined above, have been substantially
completed. Additionally, contingency plans have been prepared in areas where
we have determined that a plan is necessary. We have discussed Year 2000
compliance with our vendors, third-party service providers and customers. We
have not been informed by any vendor, third-party service provider or customer
of significant Year 2000 compliance problems which could cause a meaningful
disruption in our operations. We will continue to work with our vendors,
third-party service providers and customers to identify any possible issues.

Based on our review to date, we expect the total cost of our Year 2000
assessment and remediation project to be approximately $650,000, of which
approximately $450,000 has been expensed to date. Our current expectations
regarding the total cost of our Year 2000 project are subject to change as the
project progresses or additional information is obtained. The sources of the
funds for our Year 2000 project are operating cash flow and available
equipment lease lines. No other material information technology project has
been deferred as a result of the Year 2000 project. We currently do not
believe that internal Year 2000 issues will have a significant effect on our
business. We cannot assure you of this, however.

We have identified our significant systems which could be adversely
affected by Year 2000 issues to be:

. manufacturing equipment, including surface mount technology lines, and
testing equipment;

. integrated enterprise resource planning systems and networking software
and equipment used in our facilities; and

. electronic commerce capabilities.

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We have obtained certifications from our equipment vendors indicating that
our critical manufacturing and testing equipment is Year 2000 compliant. We
have completed testing of our critical equipment. We installed and tested a
vendor-certified Year 2000 compliant version of enterprise resource planning
software in our Massachusetts facilities. The version of the enterprise
resource planning software used by our Georgia facility is certified as Year
2000 compliant by the vendor and was installed and tested by us in February
1999. The enterprise resource planning systems used in our Ireland facility was
not Year 2000 compliant and could not be upgraded. We purchased the version of
the vendor-certified Year 2000 compliant software utilized in our Georgia
facility for, and installed it in, our Ireland facility. The enterprise
resource planning software systems in our California, Mississippi, Alabama and
Mexico locations were tested in February 1999 and are believed to be Year 2000
compliant. All network software and electronic commerce capabilities have been
remediated as we believe is necessary. For the above identified applications,
we have developed manual process procedures as a contingency plan.

Our plans and programs to become Year 2000 compliant may not succeed in
their entirety and our contingency plans may not be comprehensive or adequate.
In addition, one or more of our vendors, third-party service providers or
customers may have material Year 2000 compliance problems. If either us or any
of our customers, third-party service providers or suppliers fail to become
Year 2000 compliant on a timely basis, or if our contingency plans are not
fully comprehensive or adequate, the result could be a significant disruption
in our business. Any Year 2000 related failure or disruption would
significantly and adversely affect our business and results of operations.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to changes in interest rates and foreign currency exchange
primarily in our cash, debt and foreign currency transactions. We do not hold
derivative financial instruments for trading or speculative purposes.

We have a $107.0 million Senior Secured Credit Facility which bears interest
at variable interest rates. We have also entered into a $17.0 million interest
rate swap agreement which matures in October 2001 in order to reduce the impact
of fluctuating interest rates on our credit facility. This swap agreement is
classified as held for purposes other than trading. Under this swap agreement,
we have agreed with the 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 our condensed consolidated
statements of operations. Our exposure related to adverse movements in interest
rates is primarily derived from the variable rate on the remainder of our
credit facility. As of September 30, 1999, $17.0 million of the outstanding
balance of $68.4 million under the credit facility was at a rate of 6.76%. At
September 30, 1999, $25 million of the line of credit was at an interest rate
of 7.63% and the remainder of the credit facility was at an 8.50% interest
rate. Based on the portion of this balance in excess of $17.0 million, an
adverse change of one percent in the interest rate would cause a change in
interest expense of approximately $514,000 on an annual basis.

The foreign currencies to which we have exchange rate exposure are the Irish
punt and the Mexican peso. International operations do not currently constitute
a significant portion of our net sales or net assets. Therefore this exposure
is not considered material to us.

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.

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BUSINESS

Overview

. complex printed circuit board assembly, primarily utilizing advanced
surface mount technology;

. electro-mechanical sub-assembly;

. total system assembly and integration; and

. mechanical and molded cable and harness assembly.

We target and have developed a particular expertise in serving emerging and
established OEMs who require moderate volume production runs of complex,
leading-edge commercial market applications. The multiple configurations and
high printed circuit board densities that characterize these applications
generally require technologically-advanced and flexible manufacturing as well
as a high degree of value-added services. As an integral part of our offerings
to customers, we provide the following value-added services:

. advanced manufacturing and test engineering;

. flexible materials management;

. comprehensive test services;

. product diagnostics and repair;

. packaging;

. order fulfillment; and

. distribution services.

Since 1997, we have completed four acquisitions that have enabled us to
strengthen our advanced engineering capabilities, expand our operations and
geographic presence and diversify our customer base. Prior to 1997, we operated
primarily in the northeastern United States. Through our acquisitions, we have
added facilities in California, Georgia, Mississippi, Ireland and Mexico. Our
July 1999 merger with CMC Industries, Inc. enabled us to significantly increase
our scale of operations, expand our customer base and geographic presence, and
strengthen our management and engineering resources. In addition, the
acquisition of certain inventory and fixed assets of GSS/Array Technology, Inc.
in October 1999 strengthens and expands our California operations and
considerably enhances our advanced engineering capabilities, in particular our
high-end radio frequency capabilities. We expect to continue to pursue select
strategic acquisitions to enhance our growth, operations, geographic presence,
engineering capabilities and service offerings.

We have developed strong customer relationships with a wide range of
companies in the networking and telecommunications and computer industries. Our
customer base of over 100 customers includes large, established OEMs such as
EMC Corporation, Motorola and Nortel Networks, and emerging providers of next-
generation technology products such as Convergent Networks, Efficient Networks,
Monterey Networks and Redstone Communications. OEMs in the networking and
telecommunications segment of the electronics industry represented
approximately 63% of our net sales for the nine months ended September 30, 1999
while OEMs in the computer segment accounted for approximately 27% for the same
period. These customers require our advanced engineering capabilities and other
value-added services to manufacture technologically complex products such as
wireless and ADSL modems, Internet access switches, routers and mass storage
systems. We establish close, long-term relationships with our customers by
offering them a complete and flexible electronics manufacturing solution in
order to accelerate their time-to-market and time-to-volume production.

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Electronics Manufacturing Services Industry

The electronics manufacturing services industry is comprised of companies
that provide a range of manufacturing services for OEMs in the electronics
industry and has grown rapidly over the past several years. Industry sources
estimate that the electronics manufacturing services industry grew at an
average annual growth rate of 25% from 1994 through 1998, from approximately
$25 billion to $60 billion. Industry sources also indicate that this market is
expected to grow to approximately $106 billion by 2001.

The growth in the electronics manufacturing services industry has been
driven by several factors. One factor is the growth in the electronics industry
which grew at an average annual rate of 7% from 1994 to 1998. The primary
factor, however, is the growth in the number of OEMs that have chosen an
external manufacturing strategy. These OEMs are increasingly divesting internal
manufacturing capacity and are seeking to outsource a broad range of
manufacturing and related engineering and value-added services. Outsourcing
enables OEMs to take advantage of the manufacturing expertise, advanced
technology, capital investments and overall cost benefits obtained by
electronics manufacturing services providers. Outsourcing also allows OEMs to
focus on what they believe to be their core strengths, such as product research
and development, software design and development, and sales and marketing, and
to use their capital to pursue other business opportunities, including
acquisitions. OEMs utilize electronics manufacturing services providers to
enhance their competitive position by:

. accelerating time-to-market and time-to-volume production;

. improving inventory management and purchasing power;

. reducing capital investment requirements and fixed overhead costs;

. reducing production costs;

. accessing advanced manufacturing capabilities and engineering expertise;
and

. improving overall product quality management.

We believe that OEMs recognize the benefits provided by electronics
manufacturing services providers and are increasingly outsourcing their
electronics manufacturing operations. According to industry sources, the
electronics manufacturing services industry's revenue accounted for
approximately 12% of the cost of goods sold in the electronics industry in
1996. By 2003, industry sources estimate that this percentage will increase to
33%.

Our Strategy

Serve a Diversified Customer Base in High-Growth Markets. To enhance our
long-term growth, we continue to diversify our business among customers,
markets and geographic regions. We focus on OEMs in commercial electronics
markets such as networking, telecommunications and computers which are
characterized by technology-driven products, high growth, rapid
technological advances and accelerated time-to-market and time-to-volume
requirements. We target both large, established OEMs and emerging OEMs that
have the potential to be the producers of next-generation products. Our
prototype and new product capabilities, our technically advanced and
flexible moderate volume facilities, and our high volume, low cost
production facilities enable us to provide OEMs of all sizes flexible
manufacturing solutions to meet their needs throughout the product life
cycle. OEMs in our commercial markets also typically require
technologically-advanced engineering design and manufacturing services.

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Establish and Maintain Close Customer Relationships. We develop close,
long-term relationships with our customers by working with them throughout
the development, manufacturing, and distribution processes. We consult with
our customers at a very early stage of product design to enhance the
product manufacturability, testability and reliability of their products.
We utilize a business unit or cell approach whereby dedicated equipment,
personnel and systems are assigned to specific customers in order to be
more responsive to our customers' needs. We work with our customers to
anticipate delivery dates and future product volumes to meet our customers'
production and delivery requirements and optimize our production
efficiencies. We also focus on expanding our relationships with customers
to include both additional product lines and additional value-added
services.

Provide a Comprehensive Manufacturing Solution. In order for OEMs to
fully achieve the benefits of outsourcing, they seek a comprehensive
manufacturing solution. As a result, we believe it is critical to provide
other value-added services in addition to advanced engineering and
manufacturing services. We offer services from initial product consultation
and systems integration to comprehensive testing, final product assembly,
flexible materials management, product packaging, order fulfillment,
distribution, diagnostics and repair. We work closely with our customers to
identify and offer additional services in anticipation of customer needs.

Expand Geographic Presence. OEMs seeking to outsource their worldwide
electronics manufacturing requirements increasingly require electronics
manufacturing services providers that have a global presence. To
effectively serve the requirements of these OEMs, we believe an electronics
manufacturing services provider needs to have operations in low cost
locations and facilities capable of low, moderate and high volume
production. Since 1997, we have expanded our operations, which were
exclusively located in the northeastern United States, to include
facilities in California, Georgia, Mississippi, Mexico and Ireland. Some of
these facilities are low cost, high volume operations. We intend to
actively seek and evaluate strategic opportunities to continue to expand
our geographic presence, particularly in Asia and Europe, and the scope of
our manufacturing capabilities to better serve the needs of our OEM
customers.

Pursue Selective Acquisition Opportunities. We believe that growth by
selective acquisitions is important to achieve the scale, customer
diversity, geographic presence, cost efficiencies and breadth of service
offerings required to remain competitive in the electronics manufacturing
services industry. We have completed four acquisitions since June 1997 and
will continue to selectively seek acquisition opportunities. Our
acquisitions have enabled us to:

. diversify our customer base;

. expand our geographic presence;

. add experienced technical and management personnel;

. expand our production capabilities and our production cost
alternatives;

. strengthen our component supply chains;

. broaden our service offerings; and

. enhance sales opportunities with our existing and potential
customers.

Recent Acquisitions

In June 1997, we acquired substantially all of the assets and liabilities of
Electronic Systems International, a provider of electronics manufacturing
services to OEMs based primarily in the southeastern United States. We issued
186,100 shares of our common stock, valued at the time at approximately $5.1
million, to purchase the ESI business. The ESI acquisition enabled us to expand
our operations into the southeastern United States where we have subsequently
consolidated and expanded our operations in a facility located in
Lawrenceville, Georgia.

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In 1997, we acquired Advanced Component Technologies Limited (formerly
SignMax Limited), located in Dublin, Ireland, for approximately $2.0 million in
cash and assumed liabilities. SignMax was a provider of electronics
manufacturing services primarily consisting of cable and harness assembly. Our
acquisition of SignMax enabled us to establish a European presence which we
intend to leverage with our diversified and expanded customer base. We have
expanded our Dublin manufacturing facility to include a lower cost, moderate
volume printed circuit board operation utilizing primarily surface mount
technology.

On July 29, 1999, we completed our merger with CMC Industries, Inc., a
provider of electronics manufacturing services to OEMs in the
telecommunications, computer and electronics industries. As a result of the
merger, CMC became our wholly owned subsidiary. Under the terms of the merger
agreement, each share of CMC common stock was exchanged for 0.5 of a share of
our common stock and all CMC stock options were assumed by us. In connection
with the merger, we issued approximately 3.9 million shares of common stock,
and reserved approximately 0.9 million shares of common stock for future
issuance under CMC's 1990 Equity Incentive Plan. The merger has been accounted
for as a pooling of interests.

The merger with CMC has provided us many benefits which enable us to compete
more effectively in the electronics manufacturing services industry, including:

. We gained the critical mass necessary to compete for the business of
larger OEMs in the electronics industry.

. We enhanced our customer diversity, reduced our reliance on specific
major customers and enhanced our opportunity to sell additional value-
added services to a larger customer base as a result of the lack of
overlap between the ACT and CMC customer bases.

. We expanded our geographic presence and broadened our range of cost and
volume production capabilities through the addition of high volume, low
cost manufacturing production facilities in Corinth, Mississippi and
Hermosillo, Mexico and a moderate volume facility in Santa Clara,
California.

. We acquired significant managerial, sales and engineering resources
which will facilitate the expansion of our manufacturing capacity and
will strengthen our advanced engineering capabilities.

. We acquired a procurement office in Taiwan as well as experienced
purchasing personnel which has strengthened our component supply chains.

In October 1999, we acquired certain inventory and fixed assets of GSS/Array
Technology, Inc., located in San Jose, California, for approximately $12.8
million in cash. GSS/Array Technology, Inc. is a subsidiary of GSS/Array
Technology Public Company, Ltd., a Thailand company. We have also assumed on-
going relationships with select GSS/Array domestic customers and hired select
employees. The GSS/Array asset acquisition expands our operations in northern
California and also considerably enhances our advanced engineering
capabilities, especially our radio frequency capabilities.

Our Services

We utilize a business unit or cell approach to provide value-added services
to more effectively satisfy the needs of our customers. With this approach, we
dedicate specific equipment, personnel and systems to customers. Throughout the
manufacturing organization, we use state-of-the-art production equipment,
statistical process control and quality assurance reporting systems to provide
accurate and timely management and customer information.

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Manufacturing of Electronic Assemblies

We offer manufacturing capabilities for printed circuit board assembly,
electro-mechanical sub-assembly, total system assembly and integration, and
cable and harness assembly.

Printed Circuit Board Assembly. Printed circuit boards are platforms on
which integrated circuits and other electronic components are mounted.
Semiconductor designs are complex and often require printed circuit boards with
many layers of narrow, densely-spaced wiring. Rapid technological advances have
occurred in the electronics industry in recent years that have increased the
speed and performance of components, while reducing their size. These
technological advances have caused printed circuit boards to become smaller
with components more densely attached to the board. These technological
advances have required increasingly advanced surface mount manufacturing
technologies, in addition to traditional surface mount and pin-through-hole
technology.

In pin-through-hole production, components are attached by pins, also called
leads, inserted through and soldered to plated holes in the printed circuit
board. In traditional surface mount technology production, the leads on
integrated circuits and other electronic components are soldered to the surface
of the printed circuit board rather than inserted into holes. Surface mount
technologies can accommodate a substantially higher number of leads in a given
area than pin-through-hole production. As a result, surface mount technologies
allow the printed circuit board to interconnect a greater density of integrated
circuits. This density permits tighter component spacing and a reduction in the
printed circuit board dimensions. Additionally, surface mount technologies
allow components to be placed on both sides of the printed circuit board,
thereby permitting even greater density. The substantially finer lead-to-lead
spacing or pitch in surface mount technologies requires a manufacturing process
far more exacting than the pin-through-hole interconnect products. An advanced
surface mount technology called micro ball grid array (BGA) allows for even
greater densities than traditional surface mount technology. The BGA assembly
process uses small balls of solder, instead of leads that could bend and break,
located directly underneath the part, to interconnect the component and circuit
board. Because of their high number of leads, most complex or very large scale
integrated circuits are configured for surface mount technologies production.

We employ advanced surface mount technologies, primarily micro ball grid
array, in our printed circuit board assembly operations in addition to
traditional surface mount technologies. We also continue to support pin-
through-hole technology and related semi-automated and manual placement
processes for existing and new applications that require these technologies.

We focus on low to moderate volume manufacturing of highly complex and
sophisticated printed circuit board assemblies. We manufacture these complex
assemblies on a batch basis and have developed expertise in quickly changing
equipment set-up and manufacturing capabilities in order to respond to our
customers' changing needs. We believe this capability provides our customers
with optimal flexibility in product design, while allowing for rapid turnaround
of new or highly complex but lower volume products. Due to our merger with CMC,
we also now offer our customers high volume manufacturing alternatives. In our
Hermosillo, Mexico and Corinth, Mississippi facilities, we currently
manufacture larger volume, less complex printed circuit boards using a variety
of surface mount technologies.

As part of our comprehensive manufacturing process, we provide in-circuit,
functional and stress environmental testing services for substantially all
completed printed circuit board assemblies. In-circuit tests verify that:

. the components have been attached properly;

. the components meet functional standards; and

. the electrical circuits have been completed properly.

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We perform these tests on industry standard testing equipment using proprietary
software developed either by the customer or our test engineers. We also use
specialized testing equipment designed and provided by the customer or
developed by our engineers to perform customized functional tests designed to
ensure that the printed circuit board assembly will perform its intended
functions. In addition, since defective components normally fail after a
relatively short period of use, we subject more complex printed circuit board
assemblies to controlled environmental stresses, typically thermal or
electrical stresses, based on customer requests.

Electro-Mechanical Sub-Assembly and Total System Assembly and
Integration. We integrate components, including our printed circuit board and
cable and harness assemblies, into higher level sub-assemblies and total system
assemblies. We maintain significant systems assembly capacity to meet the
increasing demands of our customers for total system assemblies. In addition to
product assemblies, we also provide the following services to customers seeking
to integrate manufacturing and distribution activities:

. custom configuration;

. documentation;

. packaging; and

. order fulfillment.

Cable and Harness Assembly. We offer a wide range of cable and harness
assembly services for molded and mechanical applications including:

. custom manufactured ribbon assemblies;

. multiconductor, co-axial and fiber optic cable assemblies; and

. discrete wire harness assemblies.

We use advanced and diverse manufacturing processes, in-line inspection and
test and dedicated work cells to minimize work-in-process time and focus on
process efficiencies and quality. We use both automated and semi-automated
preparation and insertion equipment, as well as manual assembly techniques to
accomplish the cable and harness assembly process. We test substantially all of
our cable and harness assemblies using automated test equipment.

Value-Added Services

Outsourcing allows OEMs to take advantage of the manufacturing expertise,
advanced technology, capital investments and overall cost benefits obtained by
electronics manufacturing services providers. In addition, OEMs outsource their
manufacturing strategies to accelerate their time-to-market and time-to-volume
production, improve inventory management and purchasing power, and improve the
overall quality of their products. In order for OEMs to fully achieve the
benefits of outsourcing, they seek a comprehensive manufacturing solution. To
meet the requirements of our OEM customers, we provide the following value-
added services across the full range of our electronics manufacturing services:

Advanced Manufacturing and Test Engineering. Our advanced manufacturing
engineers work closely with a customer's product designers at the early design
stage of a product. Our engineers:

. evaluate the initial product design to identify potential manufacturing
and testability issues;

. review the layout of a board to determine if it has the optimal tool
set-up and efficient component spacing and densities; and

. participate in parts selection and materials utilization decisions.

This early interaction with the customer optimizes product manufacturability,
testability, and reliability. This participation also mitigates component
availability issues which might arise during the manufacturing

40
<PAGE>

cycle. Our engineers also evaluate the ongoing manufacturing process and
recommend improvements to reduce manufacturing costs or lead times, or to
increase the quality of finished assemblies. Our engineering services help
customers:

. bring their products rapidly to the market;

. meet the market's expectation for quality; and

. take advantage of advances in manufacturing and testing technology and
processes.

Materials Management. We provide our customers optimal flexibility regarding
their production delivery and product mix requirements. We directly purchase
all or a substantial portion of the components necessary for our product
assemblies. We procure components from vendors which meet our standards for
timely delivery, high quality, cost-effectiveness and compliance with customer
specifications. To help control inventory investment, we generally order
components only when we have a customer forecast, purchase order or commitment
to purchase the completed assemblies. We use a materials requirements planning
system to plan and procure materials. We use electronic data interchange
systems to efficiently communicate with many of our vendors and are exploring
opportunities to realize cost savings and efficiencies by sourcing components
via the Internet. Additionally, we use just-in-time inventory management
techniques and manage our materials pipelines and vendor base to provide our
customers flexibility to change their volume requirements within established
frameworks.

Product Diagnostics and Repair. As OEMs increasingly outsource their
manufacturing needs and divest their internal manufacturing capabilities, they
need electronics manufacturing services providers that offer product diagnostic
and repair services. If a product purchased by an OEM's customer fails or
breaks, an OEM that has outsourced its manufacturing is not likely to have the
equipment, facilities or trained personnel available to identify and fix the
problem. We use our engineering and test capabilities to provide product
diagnostic and repair for assemblies we manufacture and, in some instances, for
other products of our customers. We also offer our OEM customers revision
control, lot tracking and materials management services for their product
revisions, upgrades and repairs.

Order Fulfillment and Distribution. To more rapidly respond to the market
demands of our customers, we offer delivery programs and capabilities designed
with the flexibility to ship products directly to an OEM's customers. Under
these programs, we package products to the customer's specification with
appropriate product documentation and manage the logistics of delivery. We work
closely with our customers to identify and offer additional services in
anticipation of future customer needs.

Our Suppliers

Our OEM customers need us to:

. assure the short and long term supply of materials and components to
manufacture their products;

. negotiate low prices for these materials;

. secure the highest quality and most reliable materials;

. assure the on-time delivery of these materials; and

. provide them with the flexibility to change their production
requirements on short notice.

To compete effectively in this business environment, we have developed a
materials procurement strategy whereby we maintain strong, long term
relationships with a limited number of suppliers who conform to our high
standards. We seek to work only with suppliers that consistently deliver the
best technology and quality materials at the lowest total cost on the shortest
and most flexible lead times. We consistently evaluate all of our suppliers'
performances and provide them with suggestions for improving our relationships.
When we do business with a supplier at our customer's direction, we closely
monitor the supplier's performance and work

41
<PAGE>

with both the supplier and the customer to improve the supplier's performance
when necessary. We believe this strategy enables us to provide optimal
flexibility to our OEM customers and enables us to better satisfy their
electronics manufacturing services needs.

Our team of materials acquisition professionals is responsible for all
materials procurement and planning. We have a strategic purchasing group that
develops our worldwide materials and commodity procurement strategy. We have
adopted a more direct supplier model that targets select high quality suppliers
from a more distributor-oriented procurement model. This strategic group is
responsible for understanding the needs of our customers and the commodity
supply market, evaluating the overall quality of suppliers and negotiating and
executing low cost commodity supply contracts with preferred suppliers. We also
have a group that focuses on the day-to-day tactical execution of our materials
procurement process to insure that material or component costs or shortages do
not prevent us from providing optimal services to our customers. This group is
responsible for proactively managing inventory programs, evaluating day-to-day
supplier performance and co-ordinating customer plan production changes.

We typically procure components when a purchase order or forecast is
received from a customer. Due to our utilization of just-in-time inventory
techniques, the timely availability of many components depends on our ability
to both develop accurate forecasts of customer requirements and manage our
materials supply chain. Given our direct component procurement strategy with
quality suppliers, we rely on a single or limited number of suppliers for many
proprietary and other components used in our assembly process. Although we have
strong relationships with high quality suppliers, we do not have any long term
supply agreements. Shortages of materials and components have occurred from
time to time and will likely occur in the future despite our development of
select long-term supplier relationships. In particular, the earthquake in
Taiwan in September 1999 could cause a temporary shortage in components such as
raw printed circuit boards, flash memory and application specific integrated
circuits. We believe our direct procurement strategy and the division of
responsibility within our materials procurement team enable us to better manage
our supply chain in order to reduce the occurrence and minimize the effect on
our customers of materials or component shortages.

Our Customers and Markets

We serve a wide range of customers from emerging growth companies to
established multinational corporations in a variety of markets, including
networking and telecommunications, computer, industrial and medical equipment.
We currently provide services to over 100 customers, including the following:

<TABLE>
<CAPTION>
Networking and Telecommunications Computer
--------------------------------- --------
<S> <C> <C>
Alcatel Marathon Technologies Com 21
Ciena (formerly Omnia) Marconi (formerly Reltec) Cybex
Cisco Systems (formerly
Monterey Motorola Efficient Networks
Networks) Next Level EMC
Computone Nortel Networks IBM
Comsat Laboratories Premisys Integrated Computing
Convergent Networks Siemens (formerly Redstone Proxim
Cortelco Communications) S-3 Incorporated (formerly
Ellacoya Sonus Networks Diamond Multimedia)
Harris
</TABLE>

<TABLE>
<CAPTION>
Industrial Medical
---------- -------
<S> <C> <C>
Color Kinetics General Instrument Aspect Medical
Colorgraphics Northrop-Grumman Becton Dickinson
Comverge (formerly Johnson & Johnson
Scientific Atlanta)
</TABLE>

42
<PAGE>

Customers in the networking and telecommunications segment of the
electronics industry represented approximately 63% of our net sales for the
nine months ended September 30, 1999 while OEMs in the computer segment
accounted for approximately 27% for the same period.

For the nine months ended September 30, 1999, our four largest customers
accounted for approximately 52% of our net sales. Sales to customers
representing 10% or more of our net sales for that period were as follows:

. Nortel Networks (formerly Bay Networks and Aptis Communications)--15%;

. S-3 Incorporated (formerly Diamond Multimedia)--15%;

. Marconi (formerly Reltec)--12%; and

. Lucent Technologies (formerly Ascend Communications)--10%.

The timing and level of orders from our customers varies substantially from
period to period. The historic level of net sales we have received from a
specific customer in one particular period is not necessarily indicative of net
sales we may receive from that customer in any future period. While we focus on
maintaining long term relationships with our customers, for various reasons,
including consolidation in our customers' industries, we have in the past and
will continue in the future to terminate or lose relationships with customers.
Customers may also significantly reduce the level of business they do with us
or delay the volume of manufacturing services they order from us. Significant
or numerous terminations, reductions or delays in our customers' orders could
negatively impact our operating results in future quarters. We continue to
focus on expanding and diversifying our customer base to reduce dependence on
any individual customer or market.

In many cases, our customers utilize more than one electronics manufacturing
services provider across their product lines. Our goal is to be the primary
electronics manufacturing services provider for our customers. We seek to
manufacture the high-value, leading-edge products of our customers and target
OEMs that require moderate volume production. With the acquisition of the high
volume, low cost CMC facilities, however, we now offer our customers a broad
range of volume production and cost alternatives. We believe that we are
advantageously positioned to be selected to provide manufacturing and value-
added services for our customers' new product offerings due to our:

. close interaction with the design engineering personnel of our customers
at the product development stage;

. prototype production experience;

. advanced manufacturing and engineering capabilities, such as radio
frequency capabilities; and

. established and dependable materials pipeline.

We generally warrant that our products will be free from defects in
workmanship for twelve months. We also pass on to our customers any warranties
provided by component manufacturers and material suppliers to the extent
permitted under our arrangements with these parties. Our warranty provides that
during the warranty period we will take action to repair or replace failed
products. We test substantially all of our assemblies prior to shipment. In
addition, our customers generally test or have tested final products on a
sample basis prior to deployment in the field. Our warranty costs have not been
material to date.

43
<PAGE>

Sales and Marketing

We develop close, long term relationships with our customers by working with
them throughout the development, manufacturing and distribution processes.
Electronics manufacturing services providers generally face a long sales cycle
and must perform satisfactorily on a trial basis prior to capturing significant
orders from an OEM. As a result, we seek to develop these close relationships
with customers during the initial product design and development stage. We then
support our existing customer relationships through a comprehensive staff of
program managers dedicated to individual customer accounts. We assign each
customer a program manager who acts as the primary contact for the customer.
Program managers are responsible for the development of the manufacturing
relationship between our company and the customer and the assignment of our
resources to meet the customer's requirements.

We market our services primarily through a direct sales force, and to a
lesser extent, through independent manufacturer's representatives in the United
States, Canada and Europe. As we have grown, we have increasingly relied on and
developed our direct selling organization as opposed to utilizing independent
manufacturer representatives. We divide our direct sales organization into two
operations groups. The strategic sales group focuses its selling efforts on
major multinational accounts. The core sales group focuses on existing and new
accounts within set geographic regions. We expect to continue to expand our
direct sales organization and marketing efforts in response to increased
customer opportunities in new geographic markets, due to our increased critical
mass and expanded customer base.

Competition

The electronics manufacturing services industry is highly competitive. We
compete against numerous U.S. and foreign electronics manufacturing services
providers with global operations, including Benchmark Electronics, Celestica,
Flextronics, Jabil Circuit, Plexus, Sanmina and Solectron. We also face
competition from a number of electronics manufacturing services providers that
operate on a local or regional basis. In addition, current and prospective
customers continually evaluate the merits of manufacturing products internally.
Consolidation in the electronics manufacturing services industry results in a
continually changing competitive landscape. The consolidation trend in the
industry also results in larger and more geographically diverse competitors who
have significant combined resources with which to compete against us.

We believe that the principal competitive factors in the segments of the
electronics manufacturing services industry in which we operate are:

. geographic location and coverage;

. flexibility in adapting to customers' needs;

. manufacturing capability;

. price;

. service;

. technology;

. quality;

. reliability; and

. timeliness in delivering finished products.

We believe that we have developed a particular strength relative to some of our
major competitors in the manufacturing of complex, moderate volume, leading-
edge products. Competition from existing or potential competitors could result
in reduced prices, margins and market share which would significantly and
negatively impact our operating results.

44
<PAGE>

Governmental Regulation

Our operations are subject to certain federal, state and local regulatory
requirements relating to environmental compliance and site cleanups, waste
management and health and safety matters. In particular, we are subject to
regulations promulgated by:

. the Occupational Safety and Health Administration pertaining to health
and safety in the workplace;

. the Environmental Protection Agency pertaining to the use, storage,
discharge and disposal of hazardous chemicals used in the manufacturing
processes; and

. corresponding state agencies.

The current costs of compliance and environmental remediation have not been
material to us. Nevertheless, additional or modified requirements may be
imposed in the future. If such additional or modified requirements are imposed
on us, or if conditions requiring remediation were found to exist, we may be
required to incur substantial additional expenditures.

Employees

At September 30, 1999, we had 2,423 permanent employees. To provide
manufacturing flexibility for our customers, we utilize the services of
temporary employees to meet short-term manufacturing capacity fluctuations. The
only employees represented by a labor union are those employees in our Mexico
operations. We have never experienced a labor stoppage or strike. We consider
our relations with our employees to be good.

Properties

Our manufacturing facilities are located in nine facilities containing an
aggregate of approximately 893,000 square feet. Our significant facilities are
as follows:

<TABLE>
<CAPTION>
Approximate
Location Square Feet Leased/Owned Description
- ------------------------ ----------- ------------ ------------------------------
<S> <C> <C> <C>
Hudson, MA.............. 147,000 Leased Design/High-End Tech. Mfg.
Hudson, MA.............. 32,000 Leased Cable Prototyping & Mfg.
Hudson, MA.............. 28,000 Leased Cable Prototyping & Mfg.
Mansfield, MA........... 44,000 Leased Low-Moderate Volume Mfg.
Santa Clara, CA......... 75,000 Leased Low-Moderate Volume Mfg./High-
End Tech. Mfg.
Lawrenceville, GA....... 62,000 Leased Low-Moderate Volume Mfg.
Corinth, MS............. 350,000 Leased Moderate-High Volume Mfg.
Hermosillo, Mexico...... 110,000 Owned Moderate-High Volume Mfg.
Dublin, Ireland......... 45,000 Leased Low-Moderate Volume Mfg.
-------
Total................... 893,000
=======
</TABLE>

We lease two of the Hudson facilities from Re-Act Realty Trust, a
Massachusetts nominee trust, which is controlled by John A. Pino, our Chairman
of the Board and Chief Executive Officer, and the beneficial interest of which
is principally owned by Mr. Pino.

Our manufacturing facility in Corinth, Mississippi is located on 64 acres of
land. The facility and land are leased from the Industrial Development Board of
Alcorn County, Mississippi under a lease which has options to renew until 2060.

45
<PAGE>

We also lease 20,000 square feet of warehouse space in Corinth, Mississippi,
an international purchasing office in Taiwan and a sales and procurement office
in Huntsville, Alabama. In connection with the GSS/Array asset acquisition, we
entered into a three-month sublease for their facility in San Jose, California.
We are currently seeking a new and larger facility in California to consolidate
our Santa Clara operations and the equipment and assets we purchased from
GSS/Array. We are also looking for an additional facility in Massachusetts.

All of our manufacturing facilities have been certified to the ISO 9002
international quality standard except the Corinth, Mississippi facility which
is certified to the ISO 9001 international quality standard.

At September 30, 1999, our Massachusetts facilities contained 12 surface
mount technology lines. We operate 17 surface mount technology lines at our
Corinth, Mississippi facility; six at Hermosillo, Mexico; four at Santa Clara,
California; three at Lawrenceville, Georgia; and one in the Dublin, Ireland
facility. We currently have five additional surface mount technology lines on
order, four of which will be installed in Mexico and one of which will be
installed in the Hudson, Massachusetts facility. Delivery of the lines is
expected in the fourth quarter of 1999.

Legal Proceedings

On February 27, 1998, our company and several of our 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
plaintiffs amended the complaint on October 16, 1998. The plaintiffs purport to
represent a class of all persons who purchased or otherwise acquired our 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 our inventory and the
nature of our accounting practices. On December 15, 1998, we filed a motion to
dismiss the case in its entirety based on the pleadings. Our motion to dismiss
was granted without prejudice on May 27, 1999 and the case was closed by the
court on June 1, 1999. On June 28, 1999, the plaintiffs filed a motion with the
court seeking permission to file a second amended complaint. We opposed that
motion. On July 13, 1999 the court denied the plaintiff's motion to amend,
noting "final judgment having entered in this case." On July 26, 1999, the
plaintiffs filed a motion with the court asking the court to extend the 30-day
period for filing an appeal of its ruling dismissing the case. We opposed that
motion as well, and the court denied the motion on August 10, 1999. On August
12, 1999, plaintiffs filed a notice indicating their intent to appeal the
court's orders of July 26, 1999 and August 10, 1999. We believe the claims
asserted in this action and the appeals noticed by plaintiffs are without merit
and intend to continue to defend ourselves vigorously in this action. We
further believe that this litigation will not have a material adverse effect on
our business and results of operations, although we can not assure you as to
the ultimate outcome of these matters.

46
<PAGE>

Environment and Conservation. In addition, CMC agreed to reimburse a tenant of
the site $115,000 for expenditures previously incurred to investigate
environmental conditions at the site. CMC recorded a total provision of
$320,000 based on these estimates. In fiscal 1995, an environmental consultant
estimated that the cost of a full study combined with short and long term
remediation of the site may cost between $3.0 and $4.0 million. Subsequent
environmental studies done in 1999 have estimated such costs as between
$750,000 and $3.5 million. During CMC's fiscal 1996, the State of Tennessee's
Department of Environment and Conservation named certain potentially
responsible parties in relation to the former facility. CMC was not named as a
potentially responsible party. However, Alcatel, Inc., a potentially
responsible party named by the State of Tennessee's Department of Environment
and Conversation and a former owner of CMC, sought indemnification from CMC
under the purchase agreement by which CMC acquired the stock of one of the
operators of the facility. To date, Alcatel has not filed any legal proceedings
to enforce its indemnification claim. However, Alcatel could initiate such
proceedings and other third parties could assert claims against us relating to
remediation of the site. We have entered into an agreement with Alcatel
pursuant to which the statute of limitations on their indemnification claim is
tolled for a period of time. In the event any proceedings are initiated or any
claim is made, we would defend ourselves vigorously but defense or resolution
of this matter could negatively impact our financial position and results of
operations.

In connection with a fiscal 1996 staff reduction by CMC, a number of
terminated employees subsequently claimed that CMC had engaged in age
discrimination in their dismissal and sought damages of varying amounts. CMC
defended the actual and threatened claims vigorously during fiscal 1998
incurring approximately $275,000 in legal costs over the course of the year. On
August 6, 1998, a judgment was rendered in favor of one plaintiff, in the
amount of $127,000 which CMC subsequently settled for $112,000. A second
plaintiff's claim for $53,000 was filed and subsequently settled for $48,500.
The EEOC negotiated with CMC to reach a monetary settlement for other potential
claimants. Without admitting any liability, CMC entered into a Conciliation
Agreement with the EEOC and agreed to pay approximately $500,000 to settle all
such claims and limit future litigation costs. As a result of these events and
the significant ongoing costs to defend these claims, in October 1998, CMC
concluded that its interest would be best served to settle all such matters.
CMC reserved $975,000 to resolve all such claims, which represented its best
estimate of funds to ultimately be paid to such claimants. This charge was
recorded in CMC's fiscal year ended July 31, 1998.

From time to time, we are also subject to claims or litigation incidental to
our business. We do not believe that any incidental claims or litigation will
have a material adverse effect on our results of operations.

47
<PAGE>

MANAGEMENT

The following table sets forth our directors and executive officers, their
ages, and the positions currently held by each such person:

<TABLE>
<CAPTION>
Name Age Position
- ------------------------ --- -----------------------------------------------------------------------
<S> <C> <C>
John A. Pino............ 51 Chief Executive Officer and Chairman of the Board
Matthew G. Landa........ 35 President
Jack O'Rear............. 58 Executive Vice President of Operations
Jeffrey B. Lavin........ 45 Vice President of Finance, Chief Financial Officer, Treasurer and Clerk
Douglass C. Greenlaw.... 48 Vice President of Strategic Development
Blaise E. Scioli........ 41 Vice President and General Manager of Cable Division
Edward T. Cuddy (1)(3).. 64 Director
Bruce R. Gardner 56 Director
(2)(3).................
Frederick W. Gibbs...... 67 Director
David S. Lee............ 62 Director
Donald G. Polich 65 Director
(1)(2).................
</TABLE>
- ---------------------
(1) Member of Compensation Committee

(2) Member of Audit Committee

(3) Member of Stock Option Committee

Executive Officers

John A. Pino joined ACT as President and a Director in February 1988. He
also became Executive Vice President of Automated Component Technologies, Inc.,
ACT's printed circuit board assembly predecessor, in March 1991, and President
of that company in March 1992. Mr. Pino became Chairman of the Board and Chief
Executive Officer of ACT in January 1993, served as President of ACT until
September 1999, and served as Treasurer of ACT from January 1993 to February
1995. Prior to joining ACT, he had served as Vice President of Finance for New
Balance Athletic Shoe, Inc. and Visual Technology, Inc. and as Corporate
Controller for Datacon, Inc.

Matthew G. Landa has been President since September 1999. Prior to joining
ACT in July 1999, he was a director since November 1995 and President and Chief
Executive Officer since October 1994 of CMC Industries, Inc. From 1991 to 1994,
Mr. Landa served as Chief Operating Officer and a member of the Board of
Directors of Silicon Valley Technology, an electronics manufacturing services
firm. From 1986 to 1989, Mr. Landa worked as a consultant at Monitor Company, a
strategic management consulting firm, and in 1990 as an associate at Morgan
Stanley & Co., an investment bank.

Jack O'Rear has been Executive Vice President of Operations since September
1999. Prior to joining ACT in July 1999, he was Chief Operating Officer of CMC
Industries, Inc. since August 1996 and Vice President since August 1994. Mr.
O'Rear became President of the Mississippi operations of CMC in November 1994.
From 1989 until joining CMC, Mr. O'Rear served as Vice President of North
American Operations for AVEX Electronics, an electronics manufacturing services
company.

Jeffrey B. Lavin joined ACT as Vice President of Finance, Chief Financial
Officer, Treasurer and Clerk in December 1998. Prior to joining ACT, Mr. Lavin
was Corporate Controller for Wyman-Gordon Company, a publicly-traded
international manufacturer of highly-engineered components, primarily for the
aerospace industry, from 1994 to November 1998. Mr. Lavin also served as Senior
Consultant with Siegel & Dunn, a management consulting firm providing a broad
range of services, including turnaround management, from 1991 to 1994 and as
Chief Financial Officer, Controller and Chief Accounting Officer with Patten
Corporation, a publicly-traded retail real estate and mortgage banking company,
from 1986 to 1991.

Douglass C. Greenlaw has been the Vice President of Strategic Development
since November 1998. He was Vice President of Finance and Administration and
Chief Financial Officer of ACT from January 1995 until

48
<PAGE>

November 1998, and Treasurer and Clerk of ACT from February 1995 until December
1998. Prior to joining ACT, Mr. Greenlaw was Vice President of Finance and
Administration and Chief Financial Officer at BioSepra, Inc., a developer of
chemical media and process systems, from April 1994 to January 1995. He served
Corporate Software Incorporated, a reseller of computer software and related
services, as Vice President of Operations from July 1993 until April 1994 and
as Vice President of Finance and Chief Financial Officer from April 1991 until
July 1993. Prior to April 1991, Mr. Greenlaw had been with Millipore
Corporation, a separations company, and since December 1984 had been the Vice
President of Finance and Administration of the Waters Chromatography division.

Blaise E. Scioli has been the Vice President and General Manager of ACT's
Cable Division since April 1998 and was the Vice President of Sales and
Marketing from 1991 through April 1998. He has held several management
positions in ACT since joining in June 1986. Prior to joining ACT, Mr. Scioli
held various sales and marketing positions for AMP, Inc., a manufacturer of
electronic interconnection products, from August 1981 to June 1986.

Our executive officers are elected by the board of directors on an annual
basis and serve until their successors have been duly elected and qualified.

Directors

Edward T. Cuddy joined ACT as a Director in April 1995. In August 1995, Mr.
Cuddy retired from his position as Vice President of Manufacturing and Member
of the Senior Staff at GTECH Corporation, a firm which designs, manufactures,
installs and services customized computer equipment for state and local
governments. In addition to serving on ACT's board, Mr. Cuddy currently serves
as a director of Terascape Software, Inc., a privately-held software company
which optimizes database storage and management, a director of Worldwide
Interchange Network, Inc., a privately-held consulting company assisting
companies wishing to manufacture in or export to Southeast Asia, and as a
member of the Executive Advisory Board of The Register Company, a privately-
held worldwide provider of training and consulting in the quality field.

Bruce R. Gardner has been a director of ACT since December 1994. Mr. Gardner
has been the President since November 1997 of Datawatch Corporation, a provider
of personal computer software, and has been a director of Datawatch since co-
founding that corporation in 1985. Since 1985, Mr. Gardner also served
Datawatch as a Senior Vice President until June 1993, Executive Vice President
until November 1997, and Chief Financial Officer and Treasurer from 1985 until
November 1997.

Frederick W. Gibbs has been a director since July 1999. Prior to that, he
served as a director of CMC Industries, Inc. since September 1993. Mr. Gibbs
has been an attorney in private practice since 1989 and a partner with Gibbs
and Gregory, Attorneys at Law since 1995. From 1986 to 1988, Mr. Gibbs served
as consultant with ITT. In 1988, Mr. Gibbs founded Mulberry Hill Enterprises, a
consulting firm which specializes in telecommunications and electronics,
business acquisition analysis and international business. From 1980 to 1986,
Mr. Gibbs served as Executive Vice President of ITT and Senior Group Executive
of Telecommunications and Electronics, a division of ITT. From 1965 to 1980,
Mr. Gibbs served in various management positions with ITT.

David S. Lee has been a director since July 1999. Prior to that, Mr. Lee
founded CMC Industries, Inc. in July 1990 and served as its Chairman until
1993. He assumed the positions Acting President and Chief Executive Officer
from May 1995 until November 1995 and was Chairman of the Board from May 1995
until July 1999. Mr. Lee is the Chairman of Cortelco Systems Holding Corp., a
telecommunications company, and serves as a director of Centigram
Communications Corporation, and of Linear Technology Corporation. From 1983 to
1985, he served as a Vice President of ITT Corporation and as Group Executive
and Chairman of its Business Information Systems Group.

Donald G. Polich has been an independent consultant since January 1993,
following the sale by him of all of the outstanding stock of ACT and Automated
Component Technologies, Inc. to Mr. Pino. Mr. Polich has served as a Director
of ACT since he founded it in 1982. Mr. Polich also served as the President and
Chief Executive Officer of ACT from inception until February 1988, and was
President and Chief Executive Officer and a director of Automated Component
Technologies, Inc. from its inception in December 1986 until March 1992.

49
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information known to us regarding the
beneficial ownership of our common stock as of September 30, 1999 and as
adjusted to reflect the sale of the shares of common stock in this offering by:

. each person who beneficially owns more than 5% of our common stock;

. each of our executive officers;

. each of our directors;

. each selling stockholder; and

. all executive officers and directors as a group.

Unless otherwise indicated, to our knowledge, each stockholder possesses
sole voting and investment power, or shares such power with his or her spouse,
with respect to all shares listed as owned by such person. The address of each
of our executive officers and directors is c/o ACT Manufacturing, Inc., 2 Cabot
Road, Hudson, MA 01749.

The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission and assumes
the underwriters do not exercise their over-allotment option. The information
is not necessarily indicative of beneficial ownership for any other purpose.
Under these rules, beneficial ownership includes any shares as to which the
individual or entity has sole or shared voting or investment power and any
shares as to which the individual or entity has the right to acquire beneficial
ownership within 60 days after September 30, 1999 through the exercise of any
stock option, warrant or other right. The inclusion in the following table of
those shares, however, does not constitute an admission that the named
stockholder is a direct or indirect beneficial owner.

<TABLE>
<CAPTION>
Shares Beneficially
Shares Beneficially Owned Owned After Offering
Prior to Offering(1) Number (1) Shares
-------------------------------------- of Shares -------------------- Offered
Name and Address of Common Offered in Over-
Beneficial Owner Stock Options Total Percentage For Sale Total Percentage allotment
------------------- --------- ------- --------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John A. Pino(2)......... 5,020,722 -- 5,020,722 38.5% 217,500 4,803,222 30.9% 83,250
Douglas R. Ederle(3).... 867,957 -- 867,957 6.7% -- -- 5.6% 50,000
c/o Pell Rudman & Co.,
Inc. 100 Federal Street
Boston, MA 02110
Matthew G. Landa........ 18,614 138,333 156,947 1.2% -- 156,947 * 20,000
Jack O'Rear............. 5,781 40,986 46,767 * -- 46,767 * 20,000
Jeffrey B. Lavin........ -- -- -- * -- 0 * --
Douglass C. Greenlaw.... 12,718 131,200 143,918 1.1% -- 143,918 * --
Blaise E. Scioli........ 100 116,533 116,633 * -- 116,633 * 20,000
Edward T. Cuddy......... 2,000 14,000 16,000 * -- 16,000 * --
Bruce R. Gardner........ 1,000 10,666 11,666 * -- 11,666 * --
Frederick W. Gibbs...... 14,450 10,311 24,761 * -- 24,761 * --
David S. Lee............ 721,473 10,311 731,784 5.6% 32,500 699,284 4.5% 13,000
Donald G. Polich........ -- 15,332 15,332 * -- 15,332 * --
All directors and
executive officers as a
group (11 persons)..... 5,796,858 487,672 6,284,530 46.4% 250,000 6,034,530 37.7% 156,250
</TABLE>
- ---------------------
* Less than 1% of the outstanding shares of common stock.

50
<PAGE>

(1) The number of shares of common stock deemed outstanding on September 30,
1999 with respect to a person or group includes (a) 13,038,824 shares of
common stock outstanding on such date and (b) all options that are
currently exercisable or will become exercisable within 60 days of
September 30, 1999 by the person or group in question.

(2) Includes 420,879 shares held by the 1998 John A. Pino Grantor Retained
Annuity Trust dated June 15, 1998, of which Mr. Ederle is the trustee.
Excludes (a) 96,166 shares held by Douglas R. Ederle, Trustee of the Pino
Family Trust, a trust for the benefit of Janet M. Pino, Mr. Pino's wife,
his children and his issue, (b) 175,456 shares held by Douglas R. Ederle,
Trustee of the John M. Pino Trust, a trust for the benefit of John M.
Pino, Mr. Pino's son, and (c) 175,456 shares held by Douglas R. Ederle,
Trustee of the Melissa A. Pino Trust, a trust for the benefit of Melissa
A. Pino, Mr. Pino's daughter.

(3) Consists of (a) 420,879 shares held by the 1998 John A. Pino Grantor
Retained Annuity Trust dated June 15, 1998, of which Mr. Ederle is a
trustee, (b) 96,166 shares held by Mr. Ederle as trustee of the Pino
Family Trust, a trust for the benefit of Janet M. Pino, Mr. Pino's wife,
his children and his issue, (c) 175,456 shares held by Mr. Ederle as
trustee of the John M. Pino Trust, a trust for the benefit of John M.
Pino, Mr. Pino's son, and (d) 175,456 shares held by Mr. Ederle as trustee
of the Melissa A. Pino Trust, a trust for the benefit of Melissa A. Pino,
Mr. Pino's daughter. Mr. Ederle disclaims beneficial ownership of all such
shares.

51
<PAGE>

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement dated , 1999, we and the selling stockholders have
agreed to sell to the underwriters named below, for whom Credit Suisse First
Boston Corporation, CIBC World Markets Corp., SG Cowen Securities Corporation
and J.C. Bradford & Co. are acting as representatives, the following respective
numbers of shares of common stock:

<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
Credit Suisse First Boston Corporation..............................
CIBC World Markets Corp.............................................
SG Cowen Securities Corporation.....................................
J.C. Bradford & Co. ................................................
---------
Total............................................................. 2,750,000
=========
</TABLE>

The underwriting agreement provides that the underwriters are obligated to
purchase all of the shares of common stock in the offering if any are
purchased, other than those shares covered by the over-allotment option
described below. The underwriting agreement also provides that in specific
circumstances, if an underwriter defaults, the purchase commitments of non-
defaulting underwriters may be increased or the offering of common stock may be
terminated.

We and the selling stockholders have granted to the underwriters a 30-day
option to purchase on a pro-rata basis up to 206,250 additional shares of
common stock from us and 206,250 additional outstanding shares from the selling
stockholders at the public offering price, less the underwriting discounts and
commissions. The option may be exercised only to cover over-allotments of
common stock.

The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and the selling group members may allow a discount of $ per
share on sales to other broker/dealers. After the public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.

The following table summarizes the compensation and estimated expenses we
and the selling stockholders will pay.

<TABLE>
<CAPTION>
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-Allotment Over-Allotment Over-Allotment Over-Allotment
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting discounts
and commissions paid by
us..................... $ $ $ $
Expenses payable by us.. $ $ $ $
Underwriting discounts
and commissions paid by
selling stockholders... $ $ $ $
</TABLE>

We, our officers and directors and the selling stockholders have agreed that
we, our officers and directors and the selling stockholders will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly,
or, in our case, file with the Securities and Exchange Commission a
registration statement under the

52
<PAGE>

Securities Act of 1933 relating to, any additional shares of our common stock
or securities convertible into or exchangeable or exercisable for any of our
common stock, or publicly disclose the intention to make any such offer, sale,
pledge, disposition or filing, without the prior written consent of Credit
Suisse First Boston Corporation for a period of 90 days after the date of this
prospectus, except under specific circumstances.

We and the selling stockholders have agreed to indemnify the underwriters
against liabilities under the Securities Act, or contribute to payments which
the underwriters may be required to make in that respect.

The common stock is listed on the Nasdaq Stock Market's National Market
under the symbol "ACTM".

The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions, penalty bids and passive market making in
accordance with Regulation M under the Securities Exchange Act of 1934.

. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.

. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.

. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by such
syndicate member is purchased in a syndicate transaction or a syndicate
covering transaction to cover syndicate short positions.

. In "passive" market making, market makers in the common stock who are
underwriters or prospective underwriters may, subject to certain
limitations, make bids for or purchases of the common stock until the
time, if any, at which a stabilizing bid is made.

These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.

Representations of Purchasers

Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without
the benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".

53
<PAGE>

Rights of Action (Ontario Purchasers)

The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by the
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

Enforcement of Legal Rights

All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.

Notice to British Columbia Residents

A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.

Taxation and Eligibility for Investment

Canadian purchasers of common stock should consult their own legal and tax
advisers with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.

LEGAL MATTERS

The validity of the shares of common stock to be issued in this offering
will be passed upon for us by Testa, Hurwitz & Thibeault, LLP, Boston,
Massachusetts. Legal matters in connection with this offering will be passed
upon for the underwriters by Goodwin, Procter & Hoar llp, Boston,
Massachusetts.

EXPERTS

Our consolidated financial statements as of December 31, 1998 and 1997 and
for each of the three years in the period ended December 31, 1998 included in
this prospectus have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report appearing in this prospectus, and are
included in reliance upon the report of such firm, given upon their authority
as experts in accounting and auditing.

CMC's consolidated financial statements as of December 31, 1998 and for the
five months ended December 31, 1998 included in this prospectus have been so
included in reliance upon the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of such firm as experts in auditing and
accounting.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may

54
<PAGE>

also read and copy any document we file at the SEC's public reference
facilities in Washington, D.C., New York, New York, and Chicago, Illinois at
the following addresses:

. 450 Fifth Street, N.W., Washington, D.C. 20549;

. Seven World Trade Center, 13th Floor, New York, New York 10048; and

. Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661.

Please call the SEC at 1-800-SEC-0330 for further information on the public
reference facilities.

Reports, proxy statements and other information concerning ACT Manufacturing
can also be inspected and copied at the offices of The Nasdaq National Market
at 1735 K Street, N.W., Washington, D.C. 20006.

The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 until we and the selling stockholders sell all of the
common stock.

. Annual Report on Form 10-K for the fiscal year ended December 31, 1998
(Item 6--Selected Consolidated Financial Data, Item 7--Management's
Discussion and Analysis of Financial Condition and Results of
Operations, Item 7A--Quantitative and Qualitative Disclosures About
Market Risk, and Item 8--Consolidated Financial Statements and Schedules
are superceded in their entirety by similarly titled information
included in this prospectus);

. Current Reports on Form 8-K dated May 14, 1999, July 30, 1999 and
October 22, 1999;

. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999; and

. The description of ACT's capital stock set forth in our Registration
Statement on Form 8-A filed on February 15, 1995.

You may request a copy of these filings, in most cases without exhibits, at
no cost by writing or telephoning us at the following address:

ACT Manufacturing, Inc.
2 Cabot Road
Hudson, MA 01749
(978) 567-4000
Attention: Jeffrey B. Lavin

55
<PAGE>

ACT MANUFACTURING, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Audited Annual Financial Statements:
Independent Auditors' Report............................................. F-2

Report of Independent Accountants........................................ F-3
Consolidated Balance Sheets as of December 31, 1998 and 1997............. F-4
Consolidated Statements of Operations for the years ended December 31,
1998, 1997 and 1996..................................................... F-5
Consolidated Statements of Comprehensive Income (Loss) for the years
ended December 31, 1998, 1997 and 1996.................................. F-5
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996........................................ F-6
Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996..................................................... F-7
Notes to Consolidated Financial Statements............................... F-8
Unaudited Interim Financial Statements:
Condensed Consolidated Balance Sheets as of September 30, 1999 and
December 31, 1998....................................................... F-25
Condensed Consolidated Statements of Operations for the nine months ended
September 30, 1999 and 1998............................................. F-26
Condensed Consolidated Statements of Comprehensive Income (Loss) for the
nine months ended September 30, 1999 and 1998........................... F-26
Condensed Consolidated Statement of Stockholders' Equity for the nine
months ended
September 30, 1999...................................................... F-27
Condensed Consolidated Statements of Cash Flows for the nine months ended
September 30, 1999 and 1998............................................. F-28
Notes to Condensed Consolidated Financial Statements..................... F-29
CMC Industries, Inc. Audited Financial Statements for the Five-Month
Period Ended December 31, 1998:
Report of Independent Accountants........................................ F-34
Consolidated Statement of Operations..................................... F-35
Consolidated Statement of Changes in Stockholders' Equity................ F-36
Consolidated Statement of Cash Flows..................................... F-37
Notes to Consolidated Financial Statements............................... F-38
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
ACT Manufacturing, Inc.:

We have audited the consolidated balance sheets of ACT Manufacturing, Inc.
and subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations, comprehensive income (loss), stockholders' equity,
and cash flows for each of the three years in the period ended December 31,
1998. Our audits also included the consolidated financial statement schedule
listed in the index at Item 16. These consolidated financial statements and
consolidated financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and consolidated financial statement schedule
based on our audits. The consolidated financial statements give retroactive
effect to the merger of ACT Manufacturing, Inc. and CMC Industries, Inc., which
has been accounted for as a pooling of interests as described in Note 1 to the
consolidated financial statements. We did not audit the balance sheet of CMC
Industries, Inc. as of July 31, 1998, or the related statements of income,
stockholders' equity, and cash flows of CMC Industries, Inc. for each of the
three years in the period ended July 31, 1998, which statements reflect total
assets of $93,405,000 as of July 31, 1998, and total revenues of $301,955,000,
$214,485,000 and $164,711,000 for the years ended July 31, 1998, 1997 and 1996,
respectively. Those statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to the amounts
included for CMC Industries, Inc. for 1998, 1997 and 1996, is based solely on
the report of such other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of ACT Manufacturing, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
Also, in our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

Deloitte & Touche LLP

Boston, Massachusetts
October 15, 1999

F-2
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of CMC Industries, Inc.

In our opinion, the consolidated balance sheets and the related consolidated
statements of income, of changes in stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of CMC
Industries, Inc. and its subsidiaries (not presented separately herein) at July
31, 1998 and 1997, and the results of their operations and their cash flows for
each of the three years in the period ended July 31, 1998, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP
- -------------------------------------
PricewaterhouseCoopers LLP

Memphis, Tennessee
August 21, 1998, except as to
Note 14, which is as of
October 9, 1998

F-3
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997

<TABLE>
<CAPTION>
1998 1997
---------------- ----------------
(in thousands, except share data)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................. $ 10,670 $ 9,463
Accounts receivable trade (less allowance
for doubtful accounts of $1,233 in 1998
and $2,105 in 1997)...................... 101,828 74,895
Accounts and notes receivable from related
party.................................... 5,678 9,186
Inventory................................. 65,612 69,851
Prepaid expenses and other assets......... 4,204 2,390
Deferred tax asset........................ 880 --
Income taxes refundable................... -- 8,417
---------------- ----------------
Total current assets.................... 188,872 174,202
Property and equipment--net................. 32,279 19,504
Notes receivable related party.............. 1,400 --
Goodwill--net............................... 6,224 6,900
Investment in related party................. 5,884 5,884
Other assets--net........................... 3,635 2,083
---------------- ----------------
Total................................... $ 238,294 $ 208,573
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable bank......................... $ 18,111 $ 52,998
Current portion of long-term debt......... 1,300 1,300
Current portion of other long-term
liabilities.............................. 1,236 870
Accounts payable.......................... 71,956 54,493
Accrued compensation and related taxes.... 3,404 3,941
Income tax payable........................ 505 --
Deferred taxes............................ -- 164
Accrued expenses and other................ 6,301 4,542
---------------- ----------------
Total current liabilities............... 102,813 118,308
Long-term debt--Less current portion........ 41,756 3,558
Deferred taxes.............................. 1,173 893
Other long-term liabilities................. 1,092 1,711
Commitments and contingencies (Notes 12 and
15)........................................ -- --
Stockholders' equity:
Preferred stock--$.01 par value;
authorized, 5,000,000 shares; issued and
outstanding, none........................ -- --
Common stock--$.01 par value; authorized,
50,000,000 shares; issued and
outstanding, 12,835,908 shares in 1998
and 12,509,052 shares in 1997............ 128 125
Additional paid-in capital................ 74,960 70,515
Accumulated other comprehensive income
(loss)................................... (180) 4
Retained earnings......................... 16,552 13,459
---------------- ----------------
Total stockholders' equity.............. 91,460 84,103
---------------- ----------------
Total................................... $ 238,294 $ 208,573
================ ================
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(in thousands, except per
share data)
<S> <C> <C> <C>
Net sales:
Unrelated parties......... $566,048 $447,827 $352,586
Related parties........... 26,436 31,312 38,025
-------- -------- --------
Total net sales......... 592,484 479,139 390,611
-------- -------- --------
Cost of goods sold:
Unrelated parties......... 532,018 425,396 316,502
Related parties........... 24,321 28,807 34,983
-------- -------- --------
Total cost of goods
sold................... 556,339 454,203 351,485
-------- -------- --------

Gross profit................ 36,145 24,936 39,126

Selling, general and
administrative expenses.... 27,383 24,516 18,268
Restructuring costs......... -- -- 792
-------- -------- --------
Operating income............ 8,762 420 20,066
Other income (expense):
Interest expense, net..... (3,718) (4,009) (3,068)
Other, net................ 93 (47) 132
-------- -------- --------
Total................... (3,625) (4,056) (2,936)
-------- -------- --------
Income (loss) before
provision for income
taxes...................... 5,137 (3,636) 17,130
Provision (benefit) for
income taxes............... 2,044 (1,235) 6,868
-------- -------- --------
Net income (loss)........... $ 3,093 $ (2,401) $ 10,262
======== ======== ========
Basic net income (loss) per
common share............... $ 0.24 $ (0.19) $ 0.86
======== ======== ========
Diluted net income (loss)
per common share........... $ 0.24 $ (0.19) $ 0.84
======== ======== ========

Weighted average shares
outstanding--basic......... 12,665 12,330 11,880
Weighted average shares
outstanding--diluted....... 12,976 12,330 12,237
</TABLE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
------ ------- -------
(in thousands)
<S> <C> <C> <C>
Net income (loss)..................................... $3,093 $(2,401) $10,262
Other comprehensive income (loss):
Foreign currency translation adjustment............. (184) 4 --
Minimum pension liability........................... -- 996 (63)
------ ------- -------
Comprehensive income (loss)........................... $2,909 $(1,401) $10,199
====== ======= =======
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
$.01
Par Accumulated
Value Additional Other Total
Common Paid-in Comprehensive Retained Stockholders'
Stock Capital Income (Loss) Earnings Equity
------ ---------- ------------- -------- -------------
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1,
1996................... $117 $59,244 $(933) $ 5,598 $64,026
Net income.............. -- -- -- 10,262 10,262
Minimum pension
liability.............. -- -- (63) -- (63)
Issuance of warrants.... -- 44 -- -- 44
Net proceeds from sale
of stock............... 4 3,198 -- -- 3,202
Income tax benefit from
employees'
exercise of stock
options................ -- 763 -- -- 763
---- ------- ----- ------- -------
Balance, December 31,
1996................... 121 63,249 (996) 15,860 78,234
Net loss................ -- -- -- (2,401) (2,401)
Minimum pension
liability.............. -- -- 996 -- 996
Exercise of warrants.... -- 1,267 -- -- 1,267
Net proceeds from sale
of stock............... 2 376 -- -- 378
Issuance of stock for
acquisition............ 2 5,248 -- -- 5,250
Cumulative foreign
currency translation
adjustments............ -- -- 4 -- 4
Income tax benefit from
employees'
exercise of stock
options................ -- 375 -- -- 375
---- ------- ----- ------- -------
Balance, December 31,
1997................... 125 70,515 4 13,459 84,103
Net income.............. -- -- -- 3,093 3,093
Net proceeds from sale
of stock............... 3 4,567 -- -- 4,570
Cumulative foreign
currency translation
adjustments............ -- -- (184) -- (184)
Cancellation of common
stock from
acquisition escrow..... -- (122) -- -- (122)
---- ------- ----- ------- -------
Balance, December 31,
1998................... $128 $74,960 $(180) $16,552 $91,460
==== ======= ===== ======= =======
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).............................. $ 3,093 $ (2,401) $ 10,262
Adjustment to reconcile net income (loss) to
net cash provided by
(used for) operating activities:
Depreciation and amortization................ 4,884 3,587 2,864
Deferred income taxes........................ (764) 1,387 (1,700)
Provision for doubtful accounts.............. 1,945 1,805 20
Loss on disposal of fixed assets............. 132 -- 10
Increase (decrease) in cash from:
Accounts receivable--trade................. (26,771) (16,932) (22,823)
Inventory.................................. 4,239 7,684 (18,819)
Prepaid expenses and other assets.......... (2,632) (2,415) 1,124
Accounts payable........................... 17,463 10,743 7,912
Accrued compensation and related taxes..... (194) 130 693
Income tax refundable (payable)............ 8,922 (9,977) 2,049
Accrued expenses and other................. 1,372 980 1,554
-------- -------- --------
Net cash provided by (used for) operating
activities.............................. 11,689 (5,409) (16,854)
-------- -------- --------
Cash flows from investing activities:
Acquisition of property and equipment.......... (17,450) (4,820) (8,695)
(Increase) decrease in other noncurrent
assets........................................ (632) (153) 98
Proceeds from the sale of property and
equipment..................................... 111 -- 126
Acquisitions, net of cash acquired............. -- (2,388) --
-------- -------- --------
Net cash used for investing activities... (17,971) (7,361) (8,471)
-------- -------- --------
Cash flows from financing activities:
Borrowings under line-of-credit agreements,
net........................................... 4,612 15,712 22,977
Proceeds from long-term debt................... -- -- 1,596
Principal payments on long-term debt........... (1,300) (1,300) (1,347)
Repayments of other long-term liabilities...... (692) (2,337) (302)
Receipt of deferred revenue.................... 483 -- --
Net proceeds from sale of stock................ 4,570 2,085 3,246
-------- -------- --------
Net cash provided by financing
activities.............................. 7,673 14,160 26,170
-------- -------- --------
Effect of exchange rate changes on cash and
equivalents..................................... (184) 42 --
-------- -------- --------
Net increase in cash and cash equivalents........ 1,207 1,432 845
Cash and cash equivalents, beginning of year..... 9,463 8,031 7,186
-------- -------- --------
Cash and cash equivalents, end of year........... $ 10,670 $ 9,463 $ 8,031
======== ======== ========
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business--ACT Manufacturing, Inc. and Subsidiaries (the "Company"
or "ACT") provide value-added electronics manufacturing services for original
equipment manufacturers in the networking and telecommunications, computer,
industrial and medical equipment markets. The Company provides original
equipment manufacturers with complex printed circuit board assembly primarily
utilizing advanced surface mount technology, electro-mechanical subassembly,
total system assembly and integration, and mechanical and molded cable and
harness assembly.

Principles of Consolidation and Basis of Presentation--The consolidated
financial statements include the accounts of ACT Manufacturing, Inc. and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated. On July 29, 1999 the Company completed a
merger with CMC Industries, Inc. ("CMC") in which CMC became a wholly owned
subsidiary of ACT Manufacturing, Inc. The merger has been accounted for as a
pooling of interests, and accordingly, the Company's consolidated financial
statements for prior periods have been restated to include the operating
results, financial position and cash flows of CMC at the beginning of the
earliest period presented. In connection with the pooling, ACT issued 0.5 of a
share of ACT common stock for each outstanding share of CMC common stock. A
total of 3.9 million shares of ACT common stock were issued in connection with
the merger, and approximately 0.9 million shares of ACT common stock were
reserved for the conversion of CMC's outstanding stock options. Approximately
$5,601,000 in merger-related costs were charged to operations in the quarter
ended September 30, 1999.

ACT prepares its financial statements on the basis of a fiscal year ending
December 31, and CMC prepared its financial statements on the basis of a fiscal
year ending July 31. The consolidated statements of operations and cash flows
for the years ended December 31, 1998, 1997 and 1996 (herein referred to as
"Fiscal" 1998, 1997 and 1996) reflect the results of operations and cash flows
for ACT for the years then ended combined with CMC for the years ended July 31,
1998, 1997 and 1996, respectively. The consolidated balance sheets as of
December 31, 1998 and 1997 reflect the financial position of ACT as of those
dates combined with the financial position of CMC as of July 31, 1998 and 1997,
respectively. As a result of ACT and CMC having different fiscal years, CMC's
results of operations for the five-month period from August 1, 1998 through
December 31, 1998 are reported below. The financial statements have been
adjusted to reflect the conforming of CMC's accounting policy with that of
ACT's by expensing previously capitalized preoperating and start-up costs
associated with CMC's Mexican manufacturing facility. This adjustment also
gives effect to the tax deductibility of expenses.

As a result of ACT and CMC having different fiscal years, CMC's condensed
consolidated results of operations for the five-month period from August 1,
1998 through December 31, 1998 are reported separately, as follows:

<TABLE>
<S> <C>
Condensed Consolidated Statement of Operations Data (in
thousands):
Net sales.................................................... $122,423
Cost of sales................................................ 119,733
--------
Gross profit................................................. 2,690
Selling, general and administrative expenses................. 5,409
--------
Loss from operations......................................... (2,719)
Interest expense............................................. 691
--------
Loss before taxes............................................ (3,410)
Income tax benefit........................................... (1,279)
--------
Net loss..................................................... $ (2,131)
========
</TABLE>

F-8
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

This condensed consolidated statement of operations data of CMC for the period
August 1, 1998 through December 31, 1998 does not reflect any adjustment to
conform CMC's accounting policy with that of ACT's of expensing previously
capitalized preoperating and start-up costs associated with CMC's Mexican
manufacturing facility. The effect of such adjustment would be to reduce cost
of goods sold by $100,000 and reduce net loss by $60,000.

Translation of Foreign Currency--The Company translates financial statements
denominated in foreign currency by translating balance sheet accounts at the
end of period exchange rate and statement of operations accounts at the average
exchange rate for the period. Where the local currency is the functional
currency, translation gains and losses are recorded as a separate component of
stockholders' equity in accumulated other comprehensive income (loss) and
transaction gains and losses are reflected in other income (loss) in
determining net income. Where the U. S. dollar is the functional currency, all
foreign currency gains and losses are included in determining net income.

Use of Estimates--The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles
necessarily requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the balance sheet dates. Estimates include such items
as reserves for accounts receivable and inventory, useful lives of other
assets, goodwill, property and equipment, and accrued liabilities. Actual
results could differ from those estimates.

Fair Value of Financial Instruments--Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures About Fair Value of Financial
Instruments," requires disclosure of the fair value of certain financial
instruments. The carrying amounts of cash, cash equivalents, accounts
receivable, accounts payable and accrued expenses approximate fair value
because of their short-term nature. The Company's bank debt, because it carries
a variable interest rate, is stated at its approximate fair market value.

Derivatives--The Company has entered into an interest rate swap that
qualifies as a matched swap that is linked by designation with a balance sheet
liability and has opposite interest rate characteristics of such balance sheet
item. Matched interest rate swaps qualify for settlement accounting. Under
settlement accounting, periodic net cash settlements under the swap agreement
are recognized in income on an accrual basis. These settlements are offset
against interest expense in the consolidated statements of operations.

Revenue Recognition--Revenue is recognized upon shipment of the product.

Cash and Cash Equivalents--The Company considers all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents.

Inventory--Inventory is stated at the lower of cost or market. Cost has been
determined using the first-in, first-out ("FIFO") method for approximately 69%
and 67% of the inventories as of the end of Fiscal 1998 and 1997, respectively.
Cost has been determined using the last-in, first-out ("LIFO") method for
approximately 31% and 33% of the inventories as of the end of Fiscal 1998 and
1997, respectively.

Property and Equipment--Purchased property and equipment is recorded at
cost. Capital lease property and equipment is recorded at the lesser of cost or
the present value of the minimum lease payments required. Depreciation and
amortization is provided using the straight-line method over the estimated
useful lives of the related assets (three to thirty years) and over the terms
of the related leases (five years).

Goodwill--Goodwill is being amortized on a straight-line basis over a period
of fifteen to twenty years.

Investment in Related Party--The carrying amount of the investment in
preferred stock of a related party is based upon the present value of expected
cash flows. See Note 11.

F-9
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Other Assets--Other assets include cash surrender value of officer's life
insurance, prepaid pension expense and noncompete agreements. The noncompete
agreements are being amortized over three to ten years.

Warranty--The Company generally warrants that its hardware assemblies will
be free from defects in workmanship for 12 months and passes on to the customer
any warranties provided by component manufacturers and material suppliers to
the extent permitted. Warranty costs have not been material to date.

Income Taxes--The Company accounts for income taxes under SFAS No. 109,
"Accounting for Income Taxes." This Statement requires recognition of deferred
tax liabilities and assets for the expected future tax consequences of events
that have been included in the Company's consolidated financial statements or
tax returns. Deferred tax liabilities and assets are determined based on the
difference between the financial statement carrying amounts and tax bases of
existing assets and liabilities, using enacted tax rates in effect in the years
in which the differences are expected to reverse.

Stock Based Compensation--As permitted by SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company accounts for stock option grants using
the intrinsic value method in accordance with Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees."

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 if common equivalent shares
outstanding (common stock options and warrants) were exercised or converted
into common stock unless the effects of such equivalent shares were
antidilutive.

A reconciliation of net income (loss) per common share and the weighted
average shares used in the earnings per share ("EPS") calculation for the
Fiscal years indicated is as follows (in thousands except per share amount):

<TABLE>
<CAPTION>
Net Income Per
(Loss) Shares Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
1998
Basic.................................. $ 3,093 12,666 $ 0.24
=======
Effect of stock options................ 310 --
------ ------
Diluted................................ $ 3,093 12,976 $ 0.24
======= ====== ======
1997
Basic.................................. $(2,401) 12,330 $(0.19)
=======
Effect of stock options................ -- --
------ ------
Diluted................................ $(2,401) 12,330 $(0.19)
======= ====== ======
1996
Basic.................................. $10,262 11,880 $ 0.86
=======
Effect of stock options................ 357 (0.02)
------ ------
Diluted................................ $10,262 12,237 $ 0.84
======= ====== ======
</TABLE>

Options and warrants to purchase 757,296, 1,328,774 and 85,732 shares of
common stock were outstanding during Fiscal 1998, 1997 and 1996, respectively,
but were not included in the computation of diluted EPS because of either the
net loss in Fiscal 1997 or because the options' exercise prices were greater
than the average market prices of the common stock and, therefore, their effect
would be antidilutive.

F-10
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Supplemental Cash Flow Information--Selected cash payments and noncash
activities for the Fiscal years indicated were as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------- ------ ------
<S> <C> <C> <C>
Cash paid for interest........................... $ 3,887 $3,795 $3,143
Cash paid for (refunded from) income taxes....... (7,686) 7,729 6,201
Noncash investing and financing activities:
Assets acquired in exchange for common stock... -- 5,250 --
Reduction of goodwill upon cancellation of
common stock from acquisition escrow.......... 122 -- --
Receipt of stock as payment on account......... -- 441 --
</TABLE>

Impairment of long-lived assets--At each balance sheet date, the Company
assesses whether there has been an impairment in the value of long-lived assets
by determining whether projected undiscounted cash flows generated by the
applicable asset exceeds its net book value as of the assessment date. At the
end of Fiscal 1998 and 1997, subject to changes in circumstances, there were no
impairments of the Company's assets.

Comprehensive Income--The Company adopted SFAS No. 130, "Reporting
Comprehensive Income" in Fiscal 1998. SFAS No. 130 requires the reporting of
comprehensive income, which in the case of the Company, is the combination of
reported net income and the change in the cumulative translation adjustment,
which is a component of stockholders' equity.

Segments--In Fiscal 1998 the Company adopted provisions of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." The
standard requires the reporting of certain information about operating segments
including the basis for the presentation and segment profit or loss. The
Company operates as a single segment within the electronics manufacturing
services industry. The disclosures relating to this segment are included in
Note 10.

Reclassifications--Certain reclassifications have been made to the 1997
consolidated financial statements to conform with 1998 presentation.

Recently Issued Financial Accounting Standard--In June 1998, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," amended in June 1999 and
effective for fiscal years beginning after June 15, 2000. 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, 2001, as required.

2. Acquisitions

Effective June 9, 1997, the Company acquired substantially all of the assets
and liabilities of Electronics Systems International ("ESI") located in
Georgia. ESI is an electronics manufacturing services provider to customers
throughout the southeastern United States. Under the terms of the purchase
agreement, the Company acquired assets and liabilities of ESI in exchange for
190,546 shares of the Company's common stock plus acquisition costs. In 1998
the Company cancelled 4,446 shares previously issued and held in escrow. The
per share market value of the Company's common stock on the date of the
purchase was $27.50.

F-11
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Effective June 10, 1997, the Company acquired substantially all of the
outstanding stock of Advanced Component Technologies Limited (formerly SignMax
Limited), a cable and harness manufacturing company based in Dublin, Ireland.
Under the terms of the purchase agreement, approximately 82% of the outstanding
common shares of Advanced Component Technologies Limited (formerly SignMax
Limited) were acquired for cash of $1,000,000 plus acquisition costs.
Effective June 27, 1997, the Company acquired all of the outstanding stock
of SignMax America, LLC, which owned the remaining 18% of Advanced Component
Technologies Limited (formerly SignMax Limited). Under the terms of the
purchase agreement, 100% of the outstanding common shares were acquired for
cash of $460,000 and the assumption of $575,000 in notes payable.

The ESI and SignMax transactions were accounted for as purchases in
accordance with APB Opinion No. 16, "Business Combinations" as follows (in
thousands):

<TABLE>
<S> <C>
Details of Acquisitions:
Cash paid, net of cash acquired.................................. $ 1,455
Acquisition expenses............................................. 939
-------
Total cash paid................................................ 2,394
Common stock issued.............................................. 5,250
-------
Total cash paid and common stock issued........................ 7,644
Liabilities assumed.............................................. 4,334
-------
Total purchase price of acquisitions........................... 11,978
Fair value of assets acquired.................................... 5,609
-------
Excess of purchase price over net assets....................... $ 6,369
=======
</TABLE>

The Company attributes the goodwill to the expected ability to expand sales
in these new geographic markets, utilizing the acquired existing business
infrastructure and geographic market presence as a basis for expansion.
Accumulated amortization on these acquisitions amounted to approximately
$640,000 and $239,000 at the end of Fiscal 1998 and Fiscal 1997, respectively.
The operating results of the acquired businesses from the dates of purchase are
included in the Company's Consolidated Statement of Operations for Fiscal 1997.
The Consolidated Statement of Operations for Fiscal 1998 includes a full year
of operations of the acquired businesses. Pro forma information has not been
provided, as the operations of the acquired businesses were not material to the
consolidated results of operations or financial position of the Company in
Fiscal 1997 and Fiscal 1996.

3. Inventory

Inventory consisted of the following at Fiscal year-end (in thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Raw materials............................................. $50,354 $54,109
Work in process........................................... 12,511 14,244
Finished goods............................................ 2,747 1,498
------- -------
Total................................................. $65,612 $69,851
======= =======
</TABLE>

The carrying value of inventories approximates replacement cost.

F-12
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. Property and Equipment

Property and equipment consisted of the following at Fiscal year-end (in
thousands):

<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Land.................................................. $ 798 $ --
Building.............................................. 4,622 --
Leasehold improvements................................ 7,618 3,353
Manufacturing equipment............................... 24,618 22,631
Office furniture and equipment........................ 7,856 4,932
Vehicles.............................................. 144 144
Construction-in-progress.............................. 2,838 1,116
-------- --------
Total property and equipment...................... 48,494 32,176
Less accumulated depreciation and amortization........ (16,215) (12,672)
-------- --------
Property and equipment--net....................... $ 32,279 $ 19,504
======== ========
</TABLE>

Included in property and equipment is a manufacturing facility and certain
equipment held under capital leases with a net carrying value of $1,615,950 and
$2,016,638 at the end of Fiscal 1998 and 1997, respectively.

The Company has capitalized interest in the amount of $171,000 at the end of
Fiscal 1998 related to the construction-in-progress.

5. Indebtedness

On July 29, 1999, the Company executed an Amended and Restated Credit
Agreement for a new $107.0 million Senior Secured Credit Facility ("Credit
Facility") with a group of banks ("Banks") led by The Chase Manhattan Bank as
agent ("Agent"), to replace the Company's existing credit facilities. This new
Credit Facility provides for a $7.0 million five-year Term Loan ("Term Loan")
and a $100.0 million five-year Line of Credit ("Revolving Credit Facility"),
both of which are secured by substantially all of the assets of the Company.
The Term Loan shall amortize at a rate of $1.0 million per year for the first
year and $1.5 million per year for years two through five. The Revolving Credit
Facility provides for borrowings up to an aggregate amount of $100.0 million,
limited to a certain percentage of qualified accounts receivable and qualified
inventory. Interest is payable monthly. For the Term Loan, the Company may
choose an interest rate of either (i) 2.5% above the prevailing London
Interbank Offering rate ("LIBOR"), or (ii) 0.5% above the prime rate as
announced by the Agent. For the Revolving Credit Facility, the Company may
choose an interest rate of either (i) 2.25% above the prevailing LIBOR rate, or
(ii) 0.25% above the prime rate. In addition to certain other prohibited
actions, the Credit Facility limits capital expenditures by the Company and
prohibits the payment of cash dividends on the Company's common stock. The
Credit Facility requires the Company to maintain certain minimum fixed charge
coverage ratios and maximum leverage ratios. Outstanding borrowings under the
Credit Facility are secured primarily by the Company's accounts receivable,
inventories, machinery and equipment.

Previously, the Company had a total credit facility at the end of Fiscal
1998 of $90.0 million including a $55.0 million Senior Secured Credit Facility
("Senior Credit Facility") with a financial institution and a $35.0 million
Loan and Security Agreement with another financial institution.

The Company executed the $55.0 million Senior Credit Facility in Fiscal 1998
to replace the $50.0 million loan and security agreement then outstanding. This
Senior Credit Facility provided for borrowings up to an aggregate amount of
$55.0 million, limited to a certain percentage of qualified accounts receivable
and inventory, of which $39,498,000 was utilized at the end of Fiscal 1998.
Interest was payable monthly and the

F-13
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Senior Credit Facility was due to mature in 2001. At the end of Fiscal 1998 the
interest rate on the Senior Credit Facility was 8.0%.

The Company entered into a $17.0 million interest rate swap agreement in
Fiscal 1998 simultaneous with the execution of the Senior 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. The fair value of the interest rate
swap at end of Fiscal 1998 was approximately $(770,000) since the fixed rate of
interest of 6.76% was higher than the floating rate.

The $35.0 million Loan and Security Agreement included a revolving credit
facility totaling $25.0 million. The Company had $18,111,000 and $12,792,000
outstanding at weighted average interest rates of 8.0% and 8.6% at the end of
Fiscal 1998 and 1997, respectively. It also included a $6.0 million term loan
payable in 55 monthly installments of $108,333 and a final installment of
$91,667, commencing October 1, 1996. At the end of Fiscal 1998, the Company had
$3,558,000 outstanding at an average interest rate of 7.74%. At the end of
Fiscal 1997, the Company had $4,858,000 outstanding at an average interest rate
of 8.43%.

At the end of Fiscal 1998, the Company was not in compliance with the
capital expenditure covenant of its Senior Credit Facility. The Company
received a waiver from the bank relating to this covenant.

The Company was in default as of the end of Fiscal 1997 with certain
financial covenants under its former loan and security agreement. The Company's
banks waived compliance with such covenants as of the end of Fiscal 1997. Due
to the nature of the financial covenants, the Company reclassified all its
long-term bank debt under the former loan and security agreement of $40,206,000
to a current liability at the end of Fiscal 1997.

The aggregate annual maturities of long-term debt, under the previous
facilities, at the end of Fiscal 1998 are as follows (in thousands):

6. Other Long-Term Liabilities

Other long-term liabilities consisted of the following at Fiscal year-end
(in thousands):

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Noncompete covenant........................................ $ 303 $ 350
Deferred revenue........................................... 483 --
Capital leases............................................. 1,437 2,082
Other noncurrent liabilities............................... 105 149
------ ------
Total.................................................... 2,328 2,581
Less current portion....................................... 1,236 870
------ ------
Other long-term liabilities.............................. $1,092 $1,711
====== ======
</TABLE>

Noncompete Covenant--In 1993, the Company entered into an agreement with its
former sole stockholder, which provides for monthly payments over a ten-year
period, in return for a promise not to compete. The liability is recorded at
the present value of the required future payments at an interest rate of 8%.

F-14
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Deferred Revenue--The Company received a $483,340 grant in Fiscal 1998 under
an agreement with the Ireland Industrial Development Agency. The $483,340
payment has been recorded as deferred revenue at the end of Fiscal 1998 since
the Company will be required to return the grant if certain conditions such as
employment levels are not met by December 31, 2002.

Facility and Equipment Leases--The Company leases a manufacturing facility
and certain equipment and computer software used in its manufacturing
operations under capital lease agreements that expire through 2003.

Other long-term liabilities at the end of Fiscal 1998 are due as follows (in
thousands):

<TABLE>
<CAPTION>
Noncompete Capital Deferred
Covenant Leases Revenue Other Total
---------- ------- -------- ----- ------
<S> <C> <C> <C> <C> <C>
1999............................ $ 80 $1,215 $-- $-- $1,295
2000............................ 86 177 -- 105 368
2001............................ 92 90 -- -- 182
2002............................ 100 19 483 -- 602
2003............................ -- 12 -- -- 12
---- ------ ---- ---- ------
Total.......................... 358 1,513 483 105 2,459
Less amount representing
interest....................... 55 76 -- -- 131
---- ------ ---- ---- ------
Present value of minimum
payments....................... 303 1,437 483 105 2,328
Less current portion............ 57 1,179 -- -- 1,236
---- ------ ---- ---- ------
Other long-term liabilities.... $246 $ 258 $483 $105 $1,092
==== ====== ==== ==== ======
</TABLE>

The capital lease payments due in 1999 include balloon payments related to
two equipment leases. The Company has the option to renew the leases for an
additional year with payments totaling $43,000 per month. The Company intends
to exercise the renewal option.

7. Income Taxes

The provisions (benefits) for income taxes for the Fiscal years indicated
are as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
------ ------- -------
<S> <C> <C> <C>
Current taxes:
Federal....................................... $2,221 $(2,619) $ 6,532
State......................................... 586 (3) 2,036
------ ------- -------
2,807 (2,622) 8,568
Deferred taxes.................................. (763) 1,387 (1,700)
------ ------- -------
Total....................................... $2,044 $(1,235) $ 6,868
====== ======= =======
</TABLE>

F-15
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Deferred income tax assets (liabilities) are attributable to the following
at the Fiscal year-end (in thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Accounts receivable.................................... $ 460 $ 800
Inventory.............................................. (2,239) (2,404)
Depreciation........................................... (2,231) (1,866)
Accrued liabilities.................................... 1,568 1,039
State operating loss and credits....................... 367 387
Minimum tax credit..................................... 594 594
Other.................................................. 1,188 393
------- -------
Net deferred tax liability........................... $ (293) $(1,057)
======= =======
</TABLE>

The net deferred tax liability is classified as follows at the end of the
Fiscal years indicated (in thousands):

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Current asset (liability).............................. $ 880 $ (164)
Noncurrent liability................................... (1,173) (893)
------- -------
Net deferred tax liability........................... $ (293) $(1,057)
======= =======
</TABLE>

No valuation allowance is required as the deferred tax assets are expected
to be fully realized.

A reconciliation of the expected tax rate at the U.S. statutory rate to the
effective tax rate for the Fiscal years indicated is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal statutory rate.................................. 34% (34)% 34%
State income taxes, net of federal benefit.............. 6 (6) 7
Adjustments to prior year tax liability................. 1 -- --
Other................................................... (1) 6 (1)
--- --- ---
Effective rate........................................ 40% (34)% 40%
=== === ===
</TABLE>

For state income tax purposes, the Company has approximately $12,299,000
million of net operating loss carryforwards. The carryforwards expire between
2002 and 2012 and are subject to limitations on use based on tax jurisdictions
and changes in ownership. A deferred tax asset of $367,000 and $387,000 for
Fiscal 1998 and Fiscal 1997, respectively, has been recorded to reflect the
net future benefit of these net operating loss carryforwards. The 1997 tax
benefit was provided at 34% primarily due to the effects of nondeductible
expenses and the differences in pre-tax income earned in the various
jurisdictions in which we do business.

8. Capital Stock

Stock Option Plans

The Company has a 1995 Stock Plan, which provides for the grant of
incentive and nonqualified stock options to purchase up to an aggregate of
1,250,000 shares. The Company has a 1995 Non-Employee Director Stock Option
Plan that provides for the grant of options to purchase a maximum of 100,000
shares to nonemployee directors of the Company. The Company also has a 1993
Incentive Stock Option Plan under which options for up to 690,664 shares of
common stock may be granted at an exercise price not less than fair market
value at the date of grant.

F-16
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CMC's 1990 Equity Incentive Plan provides for the granting of options to
purchase a maximum of 950,052 shares. Stock option activity for the Fiscal
years indicated was as follows:

<TABLE>
<CAPTION>
Weighted Average
Number of Exercise Fair
Options Price Value
--------- -------- -------
<S> <C> <C> <C>
Outstanding at Beginning of Fiscal 1996....... 718,415 $ 6.09
Granted..................................... 441,250 10.78 $5.74
Exercised................................... (168,420) 3.50
Forfeited................................... (181,237) 10.56
--------- ------
Outstanding at End of Fiscal 1996............. 810,008 8.18
Granted..................................... 772,750 22.97 13.42
Exercised................................... (85,435) 9.57
Forfeited................................... (168,551) 20.31
--------- ------
Outstanding at End of Fiscal 1997............. 1,328,772 15.06
Granted..................................... 1,246,750 12.92 6.95
Exercised................................... (42,290) 8.08
Forfeited................................... (571,578) 23.67
--------- ------
Outstanding at End of Fiscal 1998............. 1,961,654 $11.38
========= ======
</TABLE>

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------------------- -----------------------------
Weighted Weighted
Number Range of Average Average Number
of Exercise Remaining Life Exercise Currently
Options Price (In Years) Price Exercisable
------- ----------- -------------- -------- -----------
<S> <C> <C> <C> <C>
50,267 0.48-0.84 3 $ 0.60 50,267
67,932 3.70-5.00 4 3.90 56,749
602,945 5.45-8.00 7 7.34 272,550
367,693 8.75-12.25 7 11.33 115,984
857,452 13.64-20.38 8 15.04 155,549
15,365 21.00-27.13 9 23.40 3,064
</TABLE>

The options generally vest over three to five-year periods.

The Company has reserved shares for future grants of common stock for
issuance pursuant to the 1993 Incentive Stock Option Plan, 1995 Non-Employee
Director Stock Option Plan, the 1995 Stock Plan and the 1990 Equity Incentive
Plan for 450,800, 62,000, 286,300 and 229,960 shares, respectively.

In January 1998 the Board of Directors approved a vote to reprice 516,500
employee stock options. The options were originally issued between March 1997
through October 1997 and had original grant prices ranging between $14.44 and
$39.25. The grant price for these options was lowered to $13.94, which reflects
the market value of the stock as of the reprice date. The repriced options
continue to vest according to the original grant date. No compensation expense
was required to be recorded in the consolidated statements of operations.

As described in Note 1, the Company uses the intrinsic value method to
measure compensation expense associated with grants of stock options to
employees. Had the Company used the fair value method to measure compensation
for grants made after Fiscal 1994, (including the repricing described above)
pro forma net income and net income per share for fiscal years indicated would
have been as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
1998 1997 1996
------ ------- ------
<S> <C> <C> <C>
Net income (loss)................................ $ (966) $(5,432) $9,235
====== ======= ======
Diluted earnings (loss) per common share......... $(0.07) $ (0.43) $ 0.75
====== ======= ======
</TABLE>

F-17
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The fair value of options on their grant date was measured using the
Black/Scholes option-pricing model. Key assumptions used to apply this pricing
model for the fiscal years indicated are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Risk-free interest rate................ 5.5% 6.0% 6.4%
Expected life of option grants......... 3-5 years 3-5 years 3-5 years
Expected volatility of underlying
stock................................. 102% 82% 63%
</TABLE>

It should be noted that the option-pricing model used was designed to value
readily tradable stock options with relatively short lives. The options granted
to employees are not tradable and have contractual lives of up to ten years.
However, management believes that the assumptions used to value the options and
the model applied yield a reasonable estimate of the fair value of the grants
made under the circumstances.

Private Placement

In 1998, CMC issued 250,000 shares of stock to two members of the board of
directors in a private placement. Proceeds from the issuance totaled
$3,620,000. The purchase price equaled the fair market value of the stock
issued.

Capitalization

On May 16, 1996, CMC issued 218,018 shares of common stock with detachable
warrants that entitle the holders to purchase 84,481 shares of common stock at
a price of $15.00 per share. The total proceeds for the shares and warrants
issued were $2,464,000 and $44,000, respectively. Due to the Company meeting
specified levels of financial performance, the warrants were called during
Fiscal 1997. Total proceeds from the exercise of the warrants were $1,267,000.

Stock Purchase Plan

On November 15, 1996, CMC's stockholders approved the Employee Stock
Purchase Plan ("ESPP"). The ESPP allows eligible employees the right to
purchase common stock on a semi-annual basis at the lower of 85% of the market
price at the beginning or end of each offering period. As of the end of Fiscal
1998, there were 241,598 shares of common stock reserved for the ESPP. During
Fiscal 1998, employees purchased 39,012 shares under the ESPP. As of the end of
Fiscal 1998, a liability of $302,408 has been recorded for ESPP withholdings
not yet applied towards the purchase of common stock.

9. Employee Benefit Plans

Savings Plans

During Fiscal 1994, the Company adopted a savings plan for its employees
pursuant to Section 401(k) of the Internal Revenue Code. Substantially all
employees are eligible to participate, and the plan allows a deferral ranging
from a minimum 1% to the maximum percentage of compensation permitted by law.
Company contributions to the plan are at the discretion of the Board of
Directors. Contributions to the Plan were $0, $50,000 and $0, in Fiscal 1998,
1997 and 1996, respectively.

CMC had a profit-sharing savings plan (the "Savings Plan") for employees of
CMC. Under the terms of the Savings Plan, employees may contribute from 2% to
16% of compensation and an additional elective amount. Effective June 30, 1994,
the Company terminated matching employee contributions. The

F-18
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Company may also elect to make an additional discretionary profit-sharing
contribution. Effective January 1, 1996, the Savings plan eligibility
requirements were amended to include all full-time employees with one hour of
service. The Company recorded no contributions for fiscal 1998, 1997 and 1996.

Medical Care and Disability Benefit Plans

The Company is self-insured with respect to certain medical care and
disability benefit plans for a percentage of its employees. The costs for such
plans are charged against earnings in the period incurred. The liability for
healthcare claims was $661,000 and $593,000 at the end of Fiscal 1998 and 1997,
respectively, and the related expense incurred was $4,265,000, $4,897,000 and
$3,878,000 for Fiscal 1998, 1997 and 1996, respectively. The Company does not
provide benefits under these plans to retired employees.

Retirement Benefits

CMC maintains a defined benefit pension plan (the "Pension Plan") which
covers certain hourly employees at one plant. Retirement benefits under the
Pension Plan are based on an employee's length of service and a benefit formula
based on year of hire. The benefit formula does not include a provision for
increases in further compensation levels. Contributions to the Pension Plan are
primarily based on the projected unit actuarial cost method. The Pension Plan's
assets consist principally of short-term U.S. government instruments and pooled
fixed income, debt and equity investment funds with a financial institution.
Effective June 1, 1994, the Company terminated the future service payments for
employees.

The following table sets forth changes in the projected benefit obligation
and changes in the fair value of Plan assets at Fiscal year-end (in thousands):

<TABLE>
<CAPTION>
July 31
--------------
1998 1997
------ ------
<S> <C> <C>
Change in projected benefit obligation:
Benefit obligation at beginning of year......................... $7,238 $7,442
Service cost.................................................... -- --
Interest cost................................................... 612 582
Benefits paid................................................... (678) (555)
Loss due to census changes...................................... 540 --
Revaluation gain................................................ -- (231)
------ ------
Benefit obligation at end of year............................. $7,712 $7,238
====== ======
Change in plan assets:
Fair value of plan assets at beginning of year.................. $7,375 $7,145
Actual return on plan assets.................................... 671 785
Employer contributions.......................................... 513 --
Benefits paid................................................... (678) (555)
------ ------
Fair value of plan assets at end of year...................... $7,881 $7,375
====== ======
Funded status................................................... $ 169 $ 137
Unrecognized loss............................................... 1,261 878
------ ------
Prepaid benefit cost.......................................... $1,430 $1,015
====== ======
</TABLE>

F-19
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The components of net periodic pension cost and related assumptions for the
Fiscal years indicated were as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Service cost......................................... $ -- $ -- $ --
Interest cost........................................ 612 582 579
Return on plan assets................................ (671) (785) (422)
Net amortization and deferral........................ 157 270 (65)
----- ----- -----
Net periodic pension expense......................... $ 98 $ 67 $ 92
===== ===== =====
Discount rate........................................ 8.25% 8.25% 8.00%
Long-term rate of return............................. 8.00% 8.25% 8.00%
</TABLE>

Under SFAS 87, the portion of deferred gains and losses in excess of 10% of
the projected benefit obligation is amortized as a component of net periodic
pension cost. If amortization is required, the period used is the average
remaining service period of active employees, which was approximately 13.67
years as of the end of Fiscal 1998.

10. Major Customers and Operating Data

Sales to Nortel Networks (formerly Bay Networks and Aptis Communication) and
Micron Electronics were each approximately 12% of the Company's net sales for
Fiscal 1998. In Fiscal 1997 Nortel Networks accounted for approximately 17% of
the Company's net sales and Lucent Technologies (including Ascend
Communications) accounted for approximately 12% of the Company's net sales for
Fiscal 1996. All such sales relate to the printed circuit board assembly
product line of the Company's business.

The Company operates as a single segment within the electronics
manufacturing services industry. A summary of the principal product line sales
for the years ended 1998, 1997 and 1996 are as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Printed Circuit Boards....................... $556,348 $450,467 $361,747
Cable and Harness............................ 36,136 28,672 28,864
-------- -------- --------
$592,484 $479,139 $390,611
======== ======== ========
</TABLE>

11. Transactions With Related Parties

The Company leases certain facilities and equipment from a realty trust
controlled by its principal stockholder under leases that expire in Fiscal
2003. These commitments are included in Note 12. The Company pays all operating
costs of the building. Total payments to the realty trust were approximately
$388,000 in Fiscal 1998 and $364,000 in Fiscal 1997 and 1996, respectively.

In Fiscal 1993, the Company entered into a ten-year agreement with one of
its directors for future consulting services. Payments under the agreement were
approximately $280,000 in Fiscal 1998, $259,000 in Fiscal 1997 and $240,000 in
Fiscal 1996. Future commitments under this agreement are approximately $302,000
in Fiscal 1999, $326,000 in Fiscal 2000, $352,000 in Fiscal 2001, $380,000 in
Fiscal 2002 and $233,000 in Fiscal 2003. The agreement expires in Fiscal 2003.
A noncompete agreement was also entered into with the same individual (see
Notes 1 and 6). Payments under this agreement were $73,000 in Fiscal 1998,
$68,000 in Fiscal 1997, and $63,000 in Fiscal 1996 with future payments
totaling $358,000.

F-20
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In August 1993, CMC transferred certain assets and related liabilities
associated with its telephone business to Cortelco Systems Holding Corporation
("Cortelco"), a related party in that one of the Company's directors has a
significant ownership interest in Cortelco. Under a manufacturing services
agreement which expired in Fiscal 1998, CMC provided manufacturing services to
Cortelco on a turnkey basis with prices based on cost plus 8% for telephone
products and cost plus 10% for telecommunications systems products. Included in
net sales for Fiscal 1998, 1997 and 1996 were sales to Cortelco totaling
$26,436,000, $31,312,000 and $38,025,000, respectively. Total cost of sales for
the periods relating to these sales to Cortelco were $24,321,000, $28,807,000
and $34,983,000, respectively. CMC continues to provide services to Cortelco
with prices negotiated on a per contract basis.

CMC had an agreement in Fiscal 1996 with Cortelco to provide certain
products and related support services to customers of Cortelco. CMC was
required to pay a commission to Cortelco in the amount of 10% of sales of these
products under this agreement. During Fiscal 1996, CMC incurred $341,000 in
commissions under this agreement.

In July of 1998, CMC converted certain accounts receivable from Cortelco
totaling $2,000,000 into a note receivable. Under the terms of the note,
Cortelco agrees to pay the balance over a three-year term with monthly payments
of $50,000 plus interest. Interest accrues on the note at a rate of 9.0% per
annum. CMC continues to provide credit for manufacturing services sold to
Cortelco in the form of trade receivables.

The Cortelco preferred stock is nonvoting, has a liquidation preference of
$12.50 per share and entitles the Company to dividends which are non-cumulative
until August 1995 and thereafter cumulative at $0.75 per share for each year in
which Cortelco earns net income of $2.0 million or more. The Company may,
subject to certain restrictions, require Cortelco to redeem the preferred
stock, on a pro rata basis, over a five-year period beginning August 1999. The
Company recorded the preferred stock at fair value, $5,884,000 million, based
on the discounted cash flow of the redemption requirements. The excess cost
basis of the net assets over the fair value of the preferred shares received
was recorded as a distribution of capital to the Company's stockholders.

A director of the Company has an ownership interest in a customer which
purchased goods during Fiscal 1996 totaling $1,731,000 at a cost of $1,697,000.
As of the end of Fiscal 1996, the Company had an accounts receivable balance of
$491,000 from this customer. During Fiscal 1997, the Company settled the then
outstanding balance of $441,000 with this customer through receipt of Company
common stock with a fair value of the same amount.

12. Operating Lease Commitments

The Company leases various plant and office equipment under noncancelable
operating leases expiring through 2007. Rent expense in Fiscal 1998, 1997 and
1996 was approximately $14,276,000, $9,361,000, and $4,255,000, respectively.
The future minimum rental payments under these leases over the next five years
are approximately as follows (in thousands):

<TABLE>
<CAPTION>
Related-
party Other
Commitments Commitments Total
----------- ----------- -------
<S> <C> <C> <C>
1999...................................... $ 364 $15,174 $15,538
2000...................................... 364 13,033 13,397
2001...................................... 364 9,445 9,809
2002...................................... 364 6,546 6,910
2003...................................... 196 4,085 4,281
------ ------- -------
Total................................... $1,652 $48,283 $49,935
====== ======= =======
</TABLE>

F-21
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The Company has equipment lease lines of approximately $11.3 million
available for purchases of manufacturing equipment, computer hardware and
software and furniture. In May 1998, the Company entered into a $5.0 million
operating lease line agreement for the purchase of certain equipment in the
Dublin, Ireland facility. At the end of Fiscal 1998 substantially all of the
available operating lease line had been utilized for outstanding commitments.

13. Restructuring Charge

During Fiscal 1996, the Company expensed $792,000 in non-recurring charges
related to the restructuring of a subsidiary. Of this amount, $241,000 related
to the relocation of the subsidiary's corporate offices and California
operations to a new facility. The remaining amount represented one-time charges
related to severance costs resulting from a reduction in the subsidiary's
staffing. The subsidiary reduced employment levels to reflect the transition of
its business away from hand assembly work towards more advanced surface mount
technology operations. All such amounts were paid in either Fiscal 1996 or
1997.

14. Contingencies

On February 27, 1998, the Company and several 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 plaintiffs amended the complaint 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 the purported
securities class action lawsuit was granted without prejudice on May 27, 1999,
and the case was closed by the Court on June 1, 1999. On June 28, 1999 the
plaintiffs filed a new motion with the Court seeking permission to file a
second amended complaint. The Company opposed that motion. On July 13, 1999 the
court denied the plaintiffs' motion to amend, noting "final judgment having
entered in this case." On July 26, 1999 the plaintiffs filed a motion with the
Court asking the Court to extend the 30-day period for filing an appeal of its
ruling dismissing the case. The Company opposed that motion as well, and the
Court denied the motion on August 10, 1999. On August 12, 1999, the plaintiffs
filed a notice indicating their intent to appeal the Court's orders of July 26,
1999 and August 10, 1999. The Company believes the claims asserted in this
action and the appeals noticed by the plaintiffs 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 outcome of these matters. No provision for any liability
that may result from this litigation has been made in the accompanying
consolidated financial statements.

F-22
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
LIFO method of inventory accounting is employed, a portion of this deferred
income tax liability attributable to differing financial reporting and tax
reporting bases of inventories may become payable in the foreseeable future
based on certain rulings made in the U.S. federal tax courts. Although the
Company has received indemnification from this affiliate with respect to such
liability, the Company would be liable for this tax in the event Cortelco is
unable to meet its obligation. The total amount of this deferred income tax
liability assumed by Cortelco was approximately $2.2 million as of Fiscal 1993.

In Fiscal 1994, the Company incurred a non-recurring charge included in
selling, general and administrative expenses of approximately $170,000 related
to the costs of environmental clean-up at a former manufacturing site. The
Company's original estimate of its cost of the clean-up was approximately
$320,000 which was recorded prior to July 1994. In 1995, an environmental
consultant estimated that the cost of a full study combined with short- and
long-term remediation of the site may cost between $3.0 and $4.0 million.
Subsequent environmental studies done in 1999 have estimated such costs as
between $750,000 and $3.5 million. During Fiscal 1996, the Company was excluded
as a potentially responsible party ("PRP") by the State of Tennessee's
Department of Environment and Conservation in relation to the former facility;
however, Alcatel, Inc., a PRP named by the State of Tennessee's Department of
Environment and Conservation and a former owner of the Company, is seeking
indemnification from the Company under the purchase agreement by which CMC
acquired the stock of one of the operators of the facility. To date, Alcatel
has not filed any legal proceedings to enforce its indemnification claim.
However, Alcatel could initiate such proceedings and other third parties could
assert claims against the Company relating to remediation of the site. We have
entered into an agreement with Alcatel pursuant to which the statute of
limitations on their indemnification claim is tolled for a period of time. In
the event any proceedings are initiated or any claims made, the Company would
defend itself vigorously. Defense or resolution of this matter could negatively
impact the Company's financial position and results of operations.

In connection with the Fiscal 1996 staff reduction discussed in Note 14,
certain of the terminated employees subsequently claimed that the Company had
engaged in age discrimination in their dismissal and sought damages of varying
amounts. The Company defended the actual and threatened claims vigorously
during 1998 incurring approximately $275,000 in legal costs over the course of
the year. On August 6, 1998, a judgment was rendered in the favor of one
plaintiff in the amount of $127,000 which the Company subsequently settled for
$112,000. A second plaintiff's claim for $53,000 was subsequently settled for
$48,500. The Equal Employment Opportunity Commission ("EEOC") has negotiated
with the Company to reach a monetary settlement for other potential claimants.
The Company entered into a Conciliation Agreement with the EEOC and agreed to
pay approximately $500,000 to settle all such claims and limit future
litigation costs. The Company reserved $975,000 to resolve all such claims
which represented its best estimate of funds to ultimately be paid to such
claimants. This charge was recorded in Fiscal 1998.

In addition to the above, the Company is a defendant in several legal
actions involving certain matters arising in the normal course of business.
Management believes that the aggregate loss, if any, resulting from the final
outcome of these proceedings will not be material to the financial position or
results of operations of the Company. No additional accrual has been recorded
for these pending matters.

F-23
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

15. Selected Quarterly Financial Data (unaudited):

Summarized quarterly financial data are as follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
1998 Quarters
-----------------------------------
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales............................. $151,569 $162,604 $137,452 $140,859
Gross profit.......................... 7,530 9,182 9,529 9,904
Net income............................ 164 1,130 1,219 580
Earnings per share:
Basic............................... 0.01 0.09 0.10 0.05
Diluted............................. 0.01 0.09 0.09 0.04
</TABLE>

<TABLE>
<CAPTION>
1997 Quarters
------------------------------------
First Second Third Fourth
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales.......................... $112,191 $128,696 $116,675 $121,577
Gross profit....................... 12,542 13,432 7,069 (8,107)
Net income (loss).................. 4,097 4,531 (70) (10,959)
Earnings (loss) per share:
Basic............................ 0.34 0.37 (0.01) (0.88)
Diluted.......................... 0.32 0.35 (0.01) (0.88)
</TABLE>

The Company's Fiscal 1997 loss (before taxes) includes certain significant
adjustments and non-recurring charges recorded during the fourth quarter (in
thousands):

<TABLE>
<S> <C>
Physical inventory adjustments................................... $13,113
Allowance for doubtful accounts.................................. 1,740
Non-recurring professional fees.................................. 600
-------
$15,453
=======
</TABLE>

16. Subsequent Event

On October 12, 1999, the Company acquired certain inventory and fixed assets
of GSS/Array Technology, Inc. located in San Jose, California, a subsidiary of
GSS/Array Technology Public Company, Ltd., a Thailand company for approximately
$12,763,000 million in cash. We have assumed on-going relationships with select
GSS/Array domestic customers.

* * * * *

F-24
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)

<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................... $ 4,308 $ 10,670
Accounts receivable trade, net..................... 111,897 101,828
Accounts and notes receivable from related party... 6,868 5,678
Inventory.......................................... 115,592 65,612
Deferred tax asset................................. 1,360 880
Prepaid expenses and other assets.................. 4,467 4,204
-------- --------
Total current assets............................. 244,492 188,872

Property and equipment--net.......................... 34,985 32,279
Investment in and advance to related party........... 6,584 7,284
Goodwill--net........................................ 5,940 6,224
Other assets--net.................................... 2,873 3,635
-------- --------
Total............................................ $294,874 $238,294
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Note payable bank.................................. $ -- $ 18,111
Current portion of long-term debt.................. 1,151 1,300
Current portion of other long-term liabilities..... 1,574 1,236
Accounts payable................................... 107,875 71,956
Accrued compensation and related taxes............. 2,911 3,404
Income tax payable................................. 4,047 505
Deferred taxes..................................... 253 --
Accrued expenses and other......................... 6,720 6,301
-------- --------
Total current liabilities........................ 124,531 102,813

Long-term debt--less current portion................. 74,412 41,756
Deferred taxes ...................................... 724 1,173
Other long-term liabilities.......................... 3,826 1,092

Stockholders' equity:
Common stock....................................... 130 128
Additional paid-in capital......................... 77,251 74,960
Accumulated other comprehensive (loss)............. (1,610) (180)
Retained earnings.................................. 15,610 16,552
-------- --------
Total stockholders' equity....................... 91,381 91,460
-------- --------
Total............................................ $294,874 $238,294
======== ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-25
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------
1999 1998
----------- -----------
<S> <C> <C>
Net sales.............................................. $ 483,571 $ 451,625
Cost of goods sold..................................... 447,253 425,384
----------- -----------
Gross profit........................................... 36,318 26,241
Selling, general and administrative expenses........... 21,807 19,454
Merger costs........................................... 5,601 --
----------- -----------
Operating income....................................... 8,910 6,787
Interest and other expense, net........................ 3,250 2,807
----------- -----------
Income before provision for income taxes............... 5,660 3,980
Provision for income taxes............................. 4,530 1,467
----------- -----------
Net income............................................. $ 1,130 $ 2,513
=========== ===========
Basic net income per common share...................... $ 0.09 $ 0.20
=========== ===========
Diluted net income per common share.................... $ 0.08 $ 0.20
=========== ===========
Weighted average shares outstanding--basic............. 12,880 12,615
Weighted average shares outstanding--diluted........... 13,500 12,881
</TABLE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited--in thousands)

<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------
1999 1998
-------- --------
<S> <C> <C>
Net income.................................................... $ 1,130 $ 2,513
Other comprehensive income (loss):
Foreign currency translation adjustment..................... 81 (98)
-------- --------
Comprehensive income (loss) .................................. $ 1,211 $ 2,415
======== ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-26
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(unaudited, in thousands)

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-27
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
Nine Months
Ended September
30,
------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 1,130 $ 2,513
Adjustments to reconcile net income to net cash (used
for) provided by operating
activities:
Depreciation and amortization.......................... 4,932 3,815
Deferred income taxes.................................. -- (448)
Increase (decrease) increase in cash from:
Accounts receivable.................................. 3,193 (31,751)
Inventory............................................ (38,800) (3,677)
Prepaid expenses and other assets.................... (906) (2,971)
Accounts payable..................................... 10,324 38,760
Income tax payable................................... 3,542 8,117
Accrued expenses and other........................... 1,020 2,417
-------- --------
Net cash (used for) provided by operating
activities........................................ (15,565) 16,775
-------- --------

Cash flows from investing activities:
Acquisition of property and equipment.................... (4,219) (8,223)
Payments for equipment held for sale and leaseback....... -- (1,099)
Deposits for facility under construction in Mexico....... -- (2,135)
Increase in other assets................................. (1,331) (751)
-------- --------
Net cash used for investing activities............. (5,550) (12,208)
-------- --------

Cash flows from financing activities:
Net borrowings under line-of-credit agreements........... 13,741 (5,200)
Borrowings under term loan............................... 7,000 --
Decrease in long-term liabilities, net................... (3,769) (1,540)
Net proceeds from sale of stock.......................... 1,964 4,362
-------- --------
Net cash provided by (used for) financing
activities........................................ 18,936 (2,378)
-------- --------
Effect of exchange rate changes on cash and equivalents.... 81 (98)

Net (decrease) increase in cash and cash equivalents....... (2,098) 2,091
Cash and cash equivalents, beginning of period............. 6,406 9,463
-------- --------
Cash and cash equivalents, end of period................... $ 4,308 $ 11,554
======== ========
</TABLE>

The accompanying notes are an integral part of these condensed consolidated
financial statements.

F-28
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

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 ACT Manufacturing, Inc. and
subsidiaries' (the "Company" or "ACT") 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 Audited Annual Financial Statements herein.

2. Merger Transaction

On July 29, 1999, the Company announced the completion of its merger with
CMC Industries, Inc. ("CMC"), a provider of electronics manufacturing services
to original equipment manufacturers in the networking and telecommunications,
computer and electronics industries. Under the terms of the merger agreement,
each share of CMC common stock was exchanged for 0.5 of a share of ACT
Manufacturing common stock and all CMC stock options were assumed by ACT. The
Company issued approximately 3.9 million shares of common stock, and reserved
approximately 0.9 million shares of common stock for future issuance under
CMC's 1990 Equity Incentive Plan pursuant to this merger transaction.

The merger has been accounted for as a pooling of interests, and
accordingly, the Company's financial statements for prior periods have been
restated to include the operating results and financial position of CMC at the
beginning of the earliest period presented. Since CMC prepared its financial
statements on a fiscal year ending July 31 prior to the merger, the condensed
consolidated statement of operations and the condensed consolidated statement
of cash flows for the nine months ended September 30, 1998 reflects the
operating results of ACT for the nine months ended on that date combined with
the operating results of CMC for the nine months ended April 30, 1998. The
financial statements for the nine months ended April 30, 1998 have been
adjusted to reflect the conforming of CMC's accounting policy with that of
ACT's by expensing previously capitalized preoperating and start-up costs
associated with CMC's Mexican manufacturing facility. The adjustment has also
been tax-effected. The condensed consolidated balance sheet as of December 31,
1998 reflects the financial position of ACT on that date combined with the
financial position of CMC as of July 31, 1998. The condensed consolidated
statements of operations and cash flows for the nine months ended September 30,
1999 reflect the results of operations and cash flows for the combined company
for those periods. The condensed consolidated balance sheet as of September 30,
1999 reflects the financial position of the combined company as of that date.

F-29
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<S> <C>
Condensed Consolidated Statement of Operations Data:
Net sales...................................................... $122,423
Cost of sales.................................................. 119,733
--------
Gross profit................................................... 2,690
Selling, general and administrative
expenses...................................................... 5,409
--------
Loss from operations........................................... (2,719)
Interest expense............................................... 691
--------
Loss before taxes.............................................. (3,410)
Income tax benefit............................................. (1,279)
--------
Net loss....................................................... $ (2,131)
========
</TABLE>

This condensed consolidated statement of operations data of CMC for the
period August 1, 1998 through December 31, 1998 do not reflect any adjustment
to conform CMC's accounting policy with that of ACT's of expensing previously
capitalized preoperating and start-up costs associated with CMC's Mexican
manufacturing facility. The effect of such adjustment would be to reduce cost
of goods sold by $100,000 and reduce net loss by $60,000.

As a result of the merger, the Company incurred transaction costs of
approximately $5,601,000. These costs have been expensed and reported as a
separate component in the condensed consolidated statements of operations for
the nine months ended September 30, 1999.

3. Bank Financing

On July 29, 1999, the Company executed an Amended and Restated Credit
Agreement for a new $107.0 million Senior Secured Credit Facility ("Credit
Facility") with a group of banks led by The Chase Manhattan Bank as agent
("Agent") to replace the Company's previous credit facilities with the banks.
This new Credit Facility provides for a $7.0 million, five-year Term Loan
("Term Loan") and a $100.0 million five-year Line of Credit ("Revolving Credit
Facility"), both of which are secured by substantially all of the assets of the
Company. The Term Loan shall amortize at a rate of $1.0 million per year for
the first year and $1.5 million per year for years two through five. The
Revolving Credit Facility provides for borrowings up to an aggregate amount of
$100.0 million, limited to a certain percentage of qualified accounts
receivable and qualified inventory. Interest is payable monthly. For the Term
Loan, the Company may choose an interest rate of either (i) 2.5% above the
prevailing London Interbank Offering rate ("LIBOR"), or (ii) 0.5% above the
prime rate as announced by the Agent. For the Revolving Credit Facility the
Company may choose an interest rate of either (i) 2.25% above the prevailing
LIBOR rate, or (ii) 0.25% above the prime rate as announced by the Agent. In
addition to certain other prohibited actions, the Credit Facility limits
capital expenditures by the Company and prohibits the payment of cash dividends
on the Company's common stock. The Credit Facility requires the Company to
maintain certain minimum fixed charge coverage ratios and maximum leverage
ratios.

F-30
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

4. Inventory

Inventory consisted of the following at the dates indicated (in thousands):

<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
<S> <C> <C>
Raw material................................... $ 97,820 $50,354
Work-in-process................................ 15,006 12,511
Finished goods................................. 2,766 2,747
-------- -------
Total........................................ $115,592 $65,612
======== =======
</TABLE>

5. Net Income (Loss) Per Common Share

Basic net income (loss) 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 (loss) 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 effect of such equivalent shares was antidilutive.

A reconciliation of net income (loss) per common share and the weighted
average shares used in the earnings per share ("EPS") calculations for the
periods indicated is as follows (in thousands, except per share data):

<TABLE>
<CAPTION>
Net Income Weighted Average Net Income
(Loss) Shares (Loss)
(Numerator) (Denominator) Per Share
----------- ---------------- ----------
<S> <C> <C> <C>
Nine months ended September 30,
1999
Basic........................ $1,130 12,880 $0.09
======
Effect of stock options...... 620 (0.01)
------ -----
Diluted...................... $1,130 13,500 $0.08
====== ====== =====
Nine months ended September 30,
1998
Basic........................ $2,513 12,615 $0.20
======
Effect of stock options...... 266 --
------ -----
Diluted...................... $2,513 12,881 $0.20
====== ====== =====
</TABLE>

For the nine months ended September 30, 1999 and 1998, options to purchase
597,678 and 629,500, respectively, shares of common stock were outstanding at
the end of the period, but were not included in the computation of diluted EPS
because the options' exercise prices were greater than the average market price
for the common stock and, therefore, their effect would be antidilutive.

6. Operating Information

The Company operates as a single segment within the electronics
manufacturing services industry.

F-31
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

A summary of the principal product groups' net sales for the periods
indicated is as follows (in thousands):

<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------
1999 1998
-------- --------
<S> <C> <C>
Printed circuit boards.................................. $461,037 $422,506
Cable and harness....................................... 22,534 29,119
-------- --------
Total................................................. $483,571 $451,625
======== ========
</TABLE>

7. 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," as amended in June 1999 and effective for
the fiscal years beginning after June 15, 2000. 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,
2001, as required.

8. Contingencies

On February 27, 1998, the Company and several 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 plaintiffs amended the complaint 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 was granted
without prejudice on May 27, 1999, and the case was closed by the Court on June
1, 1999. On June 28, 1999 the plaintiffs filed a motion with the Court seeking
permission to file a second amended complaint. The Company opposed that motion.
On July 13, 1999 the Court denied the plaintiffs' motion to amend, noting
"final judgment having entered in this case." On July 26, 1999 the plaintiffs
filed a motion with the Court asking the Court to extend the 30-day period for
filing an appeal of its ruling dismissing the case. The Company opposed that
motion as well, and the Court denied that motion on August 10, 1999. On August
12, 1999, plaintiffs filed a notice indicating their intent to appeal the
Court's orders of July 26, 1999 and August 10, 1999. The Company

F-32
<PAGE>

ACT MANUFACTURING, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

believes the claims asserted in the action and the appeals noticed by the
plaintiffs 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 consolidated financial statements.

In connection with the transfer of certain assets and liabilities associated
with its telephone business to Cortelco in August 1993, certain deferred income
tax liabilities have been assumed by Cortelco. Although the LIFO method of
inventory accounting is employed, a portion of this deferred income tax
liability attributable to differing financial reporting and tax reporting bases
of inventories may become payable in the foreseeable future based on certain
rulings made in the U.S. federal tax courts. Although the Company has received
indemnification from this affiliate with respect to such liability, the Company
would be liable for this tax in the event Cortelco is unable to meet its
obligation. The total amount of this deferred income tax liability assumed by
Cortelco was approximately $2.2 million as of Fiscal 1993.

In Fiscal 1994, the Company incurred a non-recurring charge included in
selling, general and administrative expenses of approximately $170,000 related
to the costs of environmental clean-up at a former manufacturing site. The
Company's original estimate of its cost of the clean-up was approximately
$320,000 which was recorded prior to July 1994. In 1995, an environmental
consultant estimated that the cost of a full study combined with short- and
long-term remediation of the site may cost between $3.0 and $4.0 million.
Subsequent environmental studies done in 1999 have estimated such costs as
between $750,000 and $3.5 million. During Fiscal 1996, the Company was excluded
as a potentially responsible party ("PRP") by the State of Tennessee's
Department of Environment and Conservation in relation to the former facility;
however, Alcatel, Inc., a PRP named by the State of Tennessee's Department of
Environment and Conservation and a former owner of the Company, is seeking
indemnification from the Company under the purchase agreement by which CMC
acquired the stock of one of the operators of the facility. To date, Alcatel
has not filed any legal proceedings to enforce its indemnification claim.
However, Alcatel could initiate such proceedings and other third parties could
assert claims against the Company relating to remediation of the site. We have
entered into an agreement with Alcatel pursuant to which the statute of
limitations on their indemnification is tolled for a period of time. In the
event any proceedings are initiated or any claims made, the Company would
defend itself vigorously. Defense or resolution of this matter will negatively
impact the Company's financial position and results of operations.

9. Subsequent Event

On October 12, 1999, the Company acquired certain inventory and fixed assets
of GSS/Array Technology, Inc. located in San Jose, California, a subsidiary of
GSS/Array Technology Public Company, Ltd., a Thailand company, for
approximately $12,763,000 in cash. We have assumed on-going relationships with
select GSS/Array domestic customers.

F-33
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of CMC Industries, Inc.

In our opinion, the accompanying consolidated statements of operations, of
changes in stockholders' equity and of cash flows of CMC Industries, Inc. and
its subsidiaries present fairly, in all material respects, their operations and
their cash flows for the five months in the period ended December 31, 1998, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.

As discussed in Note 13, CMC Industries, Inc. merged with ACT Manufacturing,
Inc. on July 29, 1999. The merger was accounted for as a pooling of interests.

/s/ PricewaterhouseCoopers LLP
_______________________________
PricewaterhouseCoopers LLP

Memphis, Tennessee

June 21, 1999, except as to
Note 13, which is as of
July 29, 1999

F-34
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
For the five-month period ended December 31, 1998

<TABLE>
<S> <C>
Net sales:
Non-affiliates..................................................... $112,773
Affiliates......................................................... 9,650
--------
Total net sales.................................................. 122,423
--------
Cost of sales:
Non-affiliates..................................................... 110,855
Affiliates......................................................... 8,878
--------
Total cost of sales.............................................. 119,733
--------
Gross profit......................................................... 2,690
Selling, general and administrative expenses......................... 5,409
--------
Loss from operations............................................. (2,719)
Interest expense..................................................... 691
--------
Loss before taxes................................................ (3,410)
Income tax benefit................................................... (1,279)
--------
Net loss......................................................... $ (2,131)
========
Net loss per share:
Basic.............................................................. $ (.28)
========
Diluted............................................................ $ (.28)
========
Weighted average shares outstanding:
Basic.............................................................. 7,620
Diluted............................................................ 7,620
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-35
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(In thousands, except share data)
For the five-month period ended December 31, 1998

<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Treasury Comprehensive
Stock Capital Earnings Stock Income Total
--------- ------- -------- -------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance July 31, 1998... 7,554,816 $36,233 $ 6,153 $ (441) $ -- $41,945
Comprehensive loss:
Net loss.............. (2,131) (2,131)
Minimum pension
liability............ (1,511) (1,511)
-------
Total comprehensive
loss............... (3,642)
Exercise of options..... 937 4 4
Employee stock purchase
plan................... 80,303 326 326
--------- ------- ------- ------ ------- -------
Balance December 31,
1998................... 7,636,056 $36,563 $ 4,022 $(441) $(1,511) $38,633
========= ======= ======= ====== ======= =======
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-36
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
For the five-month period ended December 31, 1998

<TABLE>
<S> <C>
Cash flows from operating activities:
Net Loss........................................................... $ (2,131)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Deferred income taxes............................................ 190
Depreciation and amortization.................................... 1,427
Bad debt expense................................................. 283
Changes in assets and liabilities:
Receivables.................................................... (13,335)
Inventories.................................................... (11,180)
Other assets................................................... 476
Trade accounts payable......................................... 25,964
Accrued expenses and other current liabilities................. (1,152)
Other liabilities.............................................. (105)
--------
Net cash provided by operating activities.................... 437
--------
Cash flows from investing activities:
Capital expenditures............................................... (1,319)
--------
Net cash used in investing activities........................ (1,319)
--------
Cash flows from financing activities:
Net borrowings under lines of credit............................... (2,938)
Principal payments on long-term debt............................... (541)
Principal payments on capital leases............................... (233)
Proceeds from employee stock purchase plan and exercise of stock
options........................................................... 330
--------
Net cash used in financing activities........................ (3,382)
--------
Net decrease in cash and cash equivalents............................ (4,264)
Cash and cash equivalents:
Beginning of period................................................ 5,281
--------
End of period...................................................... $ 1,017
========
Supplemental information:
Income taxes paid.................................................. $ 306
Interest paid...................................................... $ 730
Non-cash supplemental disclosure:
Purchase of equipment with capital lease........................... $ 942
Minimum pension liability.......................................... $ 1,511
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-37
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1--Organization and Basis of Presentation

Description of Business

CMC Industries, Inc. and its subsidiaries ("CMC") provide contract
manufacturing services primarily to original equipment manufacturers ("OEMs")
in the computer and telecommunications industries. Over 90% of CMC's
manufacturing contracts are for turnkey services and include procurement of
materials in addition to manufacturing. CMC's fiscal year end is July 31.

Note 2--Significant Accounting Policies

Principles of consolidation

The consolidated financial statements include the accounts of CMC
Industries, Inc. and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates and assumptions

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets and liabilities,
disclosure of contingencies at the date of the financial statements and the
related reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and cash equivalents

Cash on hand and in banks, together with other highly liquid investments
with original maturities of three months or less, are classified as cash
equivalents.

Revenue recognition

In addition to providing contract manufacturing services on a turnkey basis,
CMC performs assembly services on a consignment basis where the customer
typically procures the components used in the process. CMC recognizes revenue
upon shipment for both turnkey and consignment contracts.

Inventories

Inventories are stated at the lower of cost or market, with cost being
determined by the last-in, first-out ("LIFO") method.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated
depreciation. CMC provides for depreciation using the straight-line method for
financial reporting purposes and accelerated methods for income tax reporting
purposes.

Goodwill

The excess of purchase price over net tangible assets of businesses acquired
is carried as goodwill. CMC amortizes such amounts on a straight-line basis
over a twenty-year period. CMC recorded amortization expense of $21,000 for the
five months ended December 31, 1998, related to the purchase of a subsidiary in
fiscal 1994.

F-38
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Impairment of long-lived assets

At each balance sheet date, CMC assesses whether there has been an
impairment in the value of long-lived assets by determining whether projected
undiscounted cash flows generated by the applicable asset exceed its net book
value as of the assessment date. At December 31, 1998, there were no
impairments of CMC's assets.

Deferred loan costs

Loan origination fees paid in connection with new borrowings are amortized
using a method which approximates the effective rate method over the terms of
the related borrowing. Amortization is included in interest expense.

Preoperating costs

Preoperating and start-up costs incurred in connection with the construction
and preparation of CMC's new Mexico manufacturing facility have been
capitalized and are being amortized over a five-year period. Capitalized
preoperating and start-up costs total $1.1 million as of December 31, 1998.
During the five-month period ended December 31, 1998, CMC has recorded
amortization expense in the amount of $100,000 in relation to these costs.

In 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, Reporting on the Costs of Start-up
Activities. This SOP is effective for CMC in fiscal 2000 and requires companies
to expense such costs as incurred. Pursuant to this SOP, CMC will be required
to expense the remaining unamortized balance of the aforementioned cost in the
first fiscal quarter of fiscal 2000.

Medical care and disability benefit plans

CMC is self-insured with respect to certain medical care and disability
benefit plans for 70% of employees. The costs for such plans are charged
against earnings in the period incurred and were $1,059,000 for the five months
ended December 31, 1998. CMC does not provide benefits under these plans to
retired employees.

Translation of foreign currencies

The functional currency of the Mexico operation is the U.S. dollar. Foreign
currency gains and losses associated with Mexico operations are included in
determining net income. For the five months ended December 31, 1998,
transaction gains or losses were insignificant.

Income taxes

CMC accounts for income taxes under Statement of Financial Accounting
Standards ("SFAS") No. 109 ("FAS 109"), Accounting for Income Taxes. FAS 109 is
an asset and liability approach that requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in CMC's financial statements or tax returns. In
estimating future tax consequences, CMC generally considers all expected future
events other than enactments of changes in the tax law or rates.

Net income per share

Net income per share is calculated in accordance with SFAS No. 128, Earnings
per Share, which requires the presentation of basic and diluted earnings per
share. Basic earnings per share excludes dilution and is

F-39
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
computed by dividing income available to common stockholders by the weighted-
average number of common shares outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the entity (see Note 11).

Note 3--Major Customers and Credit Risk Concentrations

A substantial portion of CMC's sales are generated from contract
manufacturing agreements with domestic OEMs and from sales to domestic
distributors of telecommunication products. Sales attributable to customers
representing 10% or more of total net sales are as follows (in thousands):

<TABLE>
<CAPTION>
Sales for the
Five Months Ended
December 31, 1998
-----------------
<S> <C>
Next Level.............................................. $13,288
Reltec/Marconi.......................................... 20,299
Diamond Multimedia...................................... 39,004

CMC's credit risk principally relates to trade accounts receivable and
receivables from Cortelco, a related party. CMC performs ongoing credit
evaluations of its customers and generally does not require collateral.

Note 4--Property, Plant and Equipment

The useful lives of property, plant and equipment are as follows:

<CAPTION>
Useful life years
-----------------
<S> <C>
Machinery and equipment................................. 3-10
Building................................................ 30
Furniture and fixtures.................................. 5-15
Leasehold improvements.................................. 5
</TABLE>

Depreciation expense was $1,310,000 for the five months ended December 31,
1998.

Note 5--Buildings and Equipment Under Lease

CMC leases its primary manufacturing facility and certain equipment and
computer software under capital leases. Certain office, warehouse, other
manufacturing facilities and equipment are leased under operating leases. These
lease agreements generally include renewal options at varying terms. Future
minimum lease payments under the noncancelable portion of capital and operating
leases at December 31, 1998 are as follows (in thousands):

<TABLE>
<CAPTION>
Operating Capital
Year Ended December 31, Leases Leases
----------------------- --------- -------
<S> <C> <C>
1999.................................................... $ 6,990 $ 598
2000.................................................... 4,712 294
2001.................................................... 2,859 268
2002.................................................... 2,348 239
2003.................................................... 1,207 199
------- ------
Future minimum lease payments........................... $18,116 $1,598
======= ======
</TABLE>

F-40
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Rent expense relating to operating leases totaled approximately $2,896,000
for the five months ended December 31, 1998. The capital lease payments due in
1999 include balloon payments related to two equipment leases. CMC has the
option to renew the leases for an additional year with payments totaling
$43,000 per month. CMC intends to exercise the renewal option.

Note 6--Borrowings

On September 26, 1996, CMC entered into a Loan and Security Agreement with a
financial institution which provides CMC with a total credit facility of $35
million including the following:

. Revolving credit facility totaling $25 million including letters of
credit, bearing interest, at CMC's option, at either the prime lending
rate or an Adjusted Eurodollar Rate (as defined in the Credit
Agreement). CMC had $15.2 million outstanding at a weighted average
interest rate of 8.2% at December 31, 1998.

. Term loan totaling $6 million, commencing October 1, 1996, payable in 55
monthly installments of $108,333 and a final installment of $91,667,
bearing interest, at CMC's option, at either the prime lending rate or
an Adjusted Eurodollar Rate (as defined in the Credit Agreement). At
December 31, 1998, CMC had outstanding $3.0 million at an average
interest rate of 8.2%.

. Commitment to lend up to $3.8 million for machinery and equipment
purchases in the form of installment loans, bearing interest, at CMC's
option, at either the prime lending rate or an Adjusted Eurodollar Rate
(as defined in the Credit Agreement).

Outstanding borrowings under this financing arrangement are secured
primarily by CMC's accounts receivable, inventories, machinery and equipment.

The Loan and Security Agreement contains certain restrictive covenants which
limit the activities of CMC with respect to, among other things, mergers and
acquisitions, additional borrowings and leases, investments and the payment of
dividends. The Loan and Security Agreement includes the following financial
covenants:

. to maintain minimum tangible net worth of an agreed upon amount on a
consolidated basis;

. to not permit the ratio of total liabilities to stockholders' equity to
exceed an agreed upon amount;

. to limit capital expenditures to agreed upon levels;

. to maintain debt service coverage ratio, as defined, of an agreed upon
level.

Effective January 31, 1999, CMC entered into a new bank loan agreement
comprising of a revolving credit line of $30 million and a $5 million term
loan. The loan agreement contains financial covenants related to CMC's net
worth and debt service coverage and restricts capital expenditures. Subsequent
to December 31, 1998, CMC was in default under the net worth and debt service
covenants. CMC did not obtain a waiver or request amendment to its agreement as
a result of the merger discussed in Note 13.

Maturities of long-term debt

The aggregate annual maturities of long-term debt, notwithstanding the
default discussed above, are as follows (amounts in thousands):

F-41
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Note 7--Capital Stock

Stock purchase plan

On November 15, 1996, the Stockholders' approved the Employee Stock Purchase
Plan ("ESPP"). The ESPP allows eligible employees the right to purchase common
stock on a semi-annual basis at the lower of 85% of the market price at the
beginning or end of each offering period. As of December 31, 1998, there were
559,066 shares of common stock reserved for the ESPP. During the five months
ended December 31, 1998, employees purchased 80,303 shares under the ESPP.

Stock option plan

CMC's board of directors has authorized 2,275,720 shares of CMC's common
stock for issuance in connection with a stock option plan. The stock option
plan provides for the granting of options to purchase shares of CMC's common
stock at not less than 85% of fair market value on the date of grant. The plan
is designed to allow for granting incentive stock options, nonstatutory stock
options, stock bonuses and the issuance of restricted stock.

As of December 31, 1998, 410,603 shares had been exercised under the plan
and 416,344 shares for which options were granted had terminated. Options
outstanding at December 31, 1998 expire in 1999 through 2007.

A summary of activity in the plan follows:

<TABLE>
<CAPTION>
Weighted
Average
Options Exercise Price
--------- --------------
<S> <C> <C>
Outstanding at beginning of period.............. 1,440,184 $6.78
Granted......................................... 170,000 4.27
Exercised....................................... (937) 4.50
Canceled........................................ (73,803) 8.90
---------
Outstanding at December 31, 1998................ 1,535,444 $6.40
========= =====
Exercisable at December 31, 1998................ 752,895 $5.34
========= =====
</TABLE>

F-42
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

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

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------- --------------------
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices At 12/31/98 Life (in Years) Price at 12/31/98 Price
---------------- ----------- --------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 0.42 to $ 3.63 217,333 7.40 $ 2.93 94,333 $ 2.05
3.72 3.72 250,000 6.79 3.72 250,000 3.72
4.00 5.87 190,225 7.56 5.53 112,208 5.46
5.88 7.50 270,501 7.09 6.68 104,167 6.00
7.87 8.00 204,510 8.30 7.95 101,349 7.92
8.25 8.37 19,375 8.33 8.36 8,144 8.35
9.00 9.00 235,500 9.38 9.00 40,738 9.00
9.56 9.56 10,000 9.13 9.56 2,083 9.56
10.13 10.13 120,000 8.79 10.13 35,000 10.13
10.50 10.50 18,000 8.87 10.50 4,873 10.50
--------- -------
1,535,444 752,895
========= =======
</TABLE>

CMC applies Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees and related interpretations in accounting for its
plan. Accordingly, no compensation expense has been recognized for its stock-
based compensation plan. Had compensation cost for CMC's stock option plan
been determined based on the fair value at the grant date for awards during
the five months ended December 31, 1998 consistent with the method prescribed
by SFAS No. 123, Accounting for Stock-Based Compensation, CMC's net loss for
the period would have been increased by approximately $464,000. Basic and
diluted loss per share would have been increased by $.06. The weighted average
grant-date fair value of options granted during the period was $2.47. The fair
value of each option grant is estimated on the date of the grant using the
Black-Scholes option pricing model with the following weighted-average
assumptions for the period: dividend yields of 0% each year; average expected
volatility of 72%; risk-free interest rate of 5.51%, and an average expected
life of 4.69 years.

Note 8--Income Taxes

The benefit for income taxes comprised the following (amounts in
thousands):

<TABLE>
<CAPTION>
Five Months Ended
December 31, 1998
------------------
<S> <C>
Current:
Federal.............................................. $(1,320)
State................................................ (149)
-------
(1,469)
-------
Deferred:
Federal.............................................. 404
Foreign.............................................. (384)
State................................................ 170
-------
190
-------
$(1,279)
=======
</TABLE>

F-43
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

At December 31, 1998, CMC has certain net operating loss carryforwards which
are available to reduce income taxes. These carryforwards total approximately
$6 million for state income tax purposes, and expire during the period 2010
through 2012. If certain substantial changes in CMC's ownership should occur,
there would be an annual limitation on the amount of carryforwards which can be
utilized.

A reconciliation of the statutory federal income tax rate to the effective
income tax rate is as follows:

<TABLE>
<CAPTION>
Five Months Ended
December 31, 1998
-----------------
<S> <C>
Statutory federal rate.................................. (35.0)%
State income tax, net of federal benefits............... (4.2)
Surtax exemption........................................ 1.0
Other, net.............................................. 0.7
-----
Effective rate.......................................... (37.5)%
=====
</TABLE>

Note 9--Related Party transactions

In August 1993, CMC transferred certain assets and related liabilities
associated with its telephone business to Contelco Systems Holding Corporation
("Cortelco"), a related party. Under a manufacturing services agreement which
expired in 1998, CMC provided manufacturing services to Cortelco on a turnkey
basis with prices based on cost plus 8% for telephone products and cost plus
10% for telecommunications systems products. Included in net sales the five
months ended December 31, 1998 were sales to Cortelco totaling $9,650,000.
Total cost of sales for the period relating to these sales to Cortelco was
$8,878,000. CMC continues to provide services to Cortelco with prices
negotiated on a per contract basis.

In connection with the August 1993 transfer of assets and related
liabilities to Cortelco, CMC received preferred stock in Cortelco. The Cortelco
preferred stock is nonvoting, has a liquidation preference of $12.50 per share
and entitles CMC to dividends which are non-cumulative until August 1995 and
thereafter cumulative at $.75 per share for each year in which Cortelco earns
net income of $2 million or more. CMC recorded the preferred stock at fair
value, $5.9 million, based on the discounted cash flow of the redemption
requirements. The excess cost basis of the net assets over the fair value of
the preferred shares received was recorded as a distribution of capital to
CMC's stockholders.

In March 1999, CMC consented to a restructuring of certain assets of
Cortelco. In connection with this restructuring, Cortelco distributed common
stock of Cortelco Systems, Inc. to its stockholders on a pro rata basis.
Pursuant to this distribution, CMC and Cortelco entered into a Stock
Distribution Agreement and CMC received its pro rata share which was equal to
6,125,302 shares of common stock of Cortelco Systems, Inc. CMC also entered
into a Stock Purchase Agreement with Mr. David Lee, a director of CMC and the
largest stockholder of CMC and Cortelco, under which, through a series of "put"
and "call" rights, Mr. Lee effectively guarantees CMC the right to receive not
less than approximately $5.9 million in respect of the common stock of Cortelco
Systems, Inc. and the preferred stock of Cortelco by May 2002. In consideration
for the receipt of Mr. Lee's guarantee, CMC consented to an amendment to
Cortelco's certificate of incorporation, which among other things, delays the
dates on which the preferred stock may be tendered for redemption by CMC.

F-44
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Furthermore, Cortelco's wholly owned subsidiary, Cortelco Puerto Rico,
merged into Cortelco Systems, Inc. in connection with the above mentioned
distribution. Cortelco Systems, Inc. merged with BCS Technologies, Inc. with
Cortelco Systems, Inc. being the surviving entity.

Note 10--Employee Benefits

Savings plan

CMC maintains a profit-sharing savings plan (the "Savings Plan") for
employees of CMC Industries, Inc. Under the terms of the Savings Plan,
employees may contribute from 2% to 16% of compensation and an additional
elective amount. CMC does not match any employee contributions. CMC may elect
to make a discretionary profit-sharing contribution. All full-time employees
with one hour of service are eligible to participate in the Savings Plan. CMC
recorded no contributions for five-month period ended December 31, 1998.

Retirement benefits

CMC maintains a defined benefit pension plan (the "Pension Plan") which
covers certain hourly employees at the Mississippi division. Retirement
benefits under the Pension Plan are based on an employee's length of service
and a benefit formula based on year of hire. The benefit formula does not
include a provision for increases in future compensation levels. Contributions
to the Pension Plan are primarily based on the projected unit actuarial cost
method. The Pension Plan's assets consist principally of short-term U.S.
government instruments and pooled fixed income, debt and equity investment
funds with a financial institution. Effective June 1, 1994, CMC terminated the
future service payments for employees.

The following table sets forth changes in the projected benefit obligation
and changes in the fair value of Plan assets (amounts in thousands):

<TABLE>
<CAPTION>
Five Months Ended
December 31, 1998
-----------------
<S> <C>
Change in projected benefit obligation
Benefit obligation at beginning of period............ $ 7,712
Interest cost........................................ 273
Benefits paid........................................ (309)
Actuarial loss....................................... 1,767
-------
Benefit obligation at end of period.................. $ 9,443
=======
Change in plan assets
Fair value of plan assets at beginning of period..... $ 7,881
Employer contribution................................ 154
Actual return on plan assets......................... 490
Benefits paid........................................ (309)
-------
Fair value of plan assets at end of period........... $ 8,216
=======
Funded status.......................................... $(1,227)
Unrecognized loss...................................... 2,757
Additional liability recorded.......................... (2,757)
-------
Accrued benefit cost................................... $(1,227)
=======
</TABLE>

F-45
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The components of net periodic pension cost and related assumptions were as
follows (amounts in thousands):

<TABLE>
<CAPTION>
Five Months Ended
December 31, 1998
-----------------
<S> <C>
Interest cost........................................... $ 273
Return on plan assets................................... (245)
Net amortization and deferral........................... 26
-----
Net periodic pension expense............................ $ 54
=====
Discount rate........................................... 7.00%
Long-term rate of return................................ 8.00%
</TABLE>

Statement of Financial Accounting Standards No. 87 ("FAS 87"), Employers'
Accounting for Pensions, requires recognition in the balance sheet of a minimum
pension liability for underfunded plans. The minimum liability that must be
recognized is equal to the excess of the accumulated benefit obligation over
plan assets. A corresponding amount is recognized either as an intangible
asset, to the extent of unrecognized prior service costs, or a reduction of
equity. As a result of reducing the aforementioned discount rate on its
obligation as of December 31, 1998 to 7%, CMC recorded an additional liability
pursuant to FAS 87 as shown above with a corresponding reduction, net of
deferred tax benefits, in stockholders' equity.

Under FAS 87, the portion of deferred gains and losses in excess of 10% of
the projected benefit obligation is amortized as a component of net periodic
pension cost. If amortization is required, the period used is the average
remaining service period of active employees, which was approximately 13.28
years as of December 31, 1998.

Note 11--Net Income Per Share

A reconciliation of basic earnings per share to diluted earnings per share
follows (in thousands, except per share data):

<TABLE>
<CAPTION>
Five Months Ended
December 31, 1998
----------------------
Per-
Share
Income Shares Amount
------- ------ ------
<S> <C> <C> <C> <C>
Basic EPS
Net loss.................................... $(2,131) 7,620 $(.28)
Effect of Dilutive Securities
Stock options............................... -- -- --
------- ----- -----
Diluted EPS
Income available to common stockholders plus
assumed conversions........................ $(2,131) 7,620 $(.28)
======= ===== ===== ===
</TABLE>

Options to purchase shares of CMC's common stock were outstanding during the
five-month period ended December 31, 1998 but were not included in the
computation of diluted EPS due to the net loss experienced by CMC for such
period.

Note 12--Commitments and Contingencies

In connection with the restructuring of CMC in August 1993, certain deferred
income tax liabilities were assumed by Cortelco. Although the LIFO method of
inventory accounting is employed, a portion of this deferred income tax
liability attributable to differing financial reporting and tax reporting bases
of inventories

F-46
<PAGE>

CMC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
may become payable in the foreseeable future based on certain rulings made in
the U.S. federal tax courts. CMC has received indemnification from this
affiliate with respect to such liability and believes any such liability to be
insignificant as of December 31, 1998.

In fiscal 1994, CMC incurred a non-recurring charge of approximately
$170,000 related to the costs of environmental clean-up at a former
manufacturing site. CMC's original estimate of its cost of the clean-up was
approximately $320,000 which was recorded prior to July 1994. In fiscal 1995,
an environmental expert concluded that the cost of a full study combined with
short and long-term remediation of the site may cost between $3 and $4 million.
During fiscal 1996, CMC was excluded as a potentially responsible party ("PRP")
by the State of Tennessee's Department of Environment and Conservation in
relation to the former facility; however, Alcatel, Inc., a PRP named by the
State of Tennessee's Department of Environment and Conservation and a former
owner of CMC, is seeking indemnification from CMC. Management believes
Alcatel's assertion to be without merit and has responded as such. As of
December 31, 1998, no claims have been filed by Alcatel.

In connection with a fiscal 1996 staff reduction, certain terminated
employees subsequently claimed that CMC had engaged in age discrimination in
their dismissal and sought damages of varying amounts. On August 6, 1998, a
judgment was rendered in the favor of one plaintiff in the amount of $127,000.
A second plaintiff's claim for $53,000 was filed. The Equal Employment
Opportunity Commission ("EEOC") has negotiated with CMC to reach a monetary
settlement for other potential claimants. CMC agreed to enter into a
Conciliation Agreement with the EEOC and pay approximately $500,000 to settle
all such claims. As a result of these events and the significant ongoing costs
to defend these claims, in September 1998 CMC concluded that its interest would
be best served by settling all such matters. CMC reserved $975,000 as of July
31, 1998 to resolve all such claims, representing its best estimate of funds to
ultimately be paid to such claimants. At December 31, 1998, $628,000 of this
amount remains to be distributed to the parties.

In addition to the above, CMC is a defendant in several legal actions
involving certain matters arising in the normal course of business. Management
believes that the aggregate loss, if any, resulting from the final outcome of
these proceedings will not be material to the financial position or results of
operations of CMC. No additional accrual has been recorded for these pending
matters.

Note 13--Subsequent Event

On May 10, 1999, CMC entered into a definitive merger agreement with ACT
Manufacturing, Inc. ("ACT"), a provider of value-added electronic manufacturing
services for original equipment manufacturers in networking and
telecommunications, computing industrial and medical equipment markets. The
closing of the merger with ACT (the "Merger"), which was subject to the
approval of the shareholders of ACT and CMC, various regulating approvals and
other customary closing conditions, was effected on July 29, 1999. Under the
terms of the agreement, each share of CMC common stock was exchanged for 0.5
shares of ACT common stock. The merger was accounted for as a pooling of
interest.

F-47
<PAGE>

[LOGO OF ACT APPEARS HERE]

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

Estimated expenses payable in connection with the sale of the common stock
in this offering are as follows:

<TABLE>
<S> <C>
SEC registration fee............................................ $ 23,546
NASD filing fee................................................. 8,970
Nasdaq National Market listing fee.............................. 17,500
Blue sky fees................................................... 5,000
Printing and engraving expenses................................. 150,000
Legal fees and expenses......................................... 400,000
Accounting fees and expenses.................................... 300,000
Miscellaneous................................................... 44,984
--------
Total......................................................... $950,000
========
</TABLE>

The registrant will bear all of the expenses shown above.

Item 15. Indemnification of Directors and Officers.

Section 67 of Chapter 156B of the Massachusetts General Laws provides that a
corporation may indemnify its directors and officers to the extent specified in
or authorized by (i) the articles of organization, (ii) a by-law adopted by the
stockholders, or (iii) a vote adopted by the holders of a majority of the
shares of stock entitled to vote on the election of directors. In all
instances, the extent to which a corporation provides indemnification to its
directors and officers under Section 67 is optional. Our Amended and Restated
By-laws require that we indemnify our directors and officers in specified
circumstances. Generally, Article V, Section 2 of our Amended and Restated By-
laws indemnifies our directors and officers against liabilities and expenses
arising out of legal proceedings brought against them by reason of their status
as directors or officers or by reason of their agreeing to serve, at our
request, as a director or officer with another organization. Under this
provision, a director or officer shall be indemnified by us for all costs and
expenses (including attorneys' fees), judgments, liabilities and amounts paid
in settlement of such proceedings, even if he is not successful on the merits,
if he acted in good faith in the reasonable belief that his action was in our
best interests. Our Board of Directors may authorize advancing litigation
expenses to a director or officer at his request upon receipt of an undertaking
by any such director or officer to repay such expenses if it is ultimately
determined that he is not entitled to indemnification for such expenses.

Article 6 of our Restated Articles of Organization eliminates the personal
liability of our directors to us or our stockholders for monetary damages for
breach of a director's fiduciary duty, except to the extent Chapter 156B of the
Massachusetts General Laws prohibits the elimination or limitation of such
liability.

We maintain directors' and officers' liability insurance for the benefit of
our directors and certain of our officers.

II-1
<PAGE>

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits:

<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
1.1+ Form of Underwriting Agreement.
2.1 Agreement and Plan of Merger and Reorganization by and among ACT, East Acquisition Corp., a
wholly owned subsidiary of ACT, and CMC Industries, Inc., dated as of May 10, 1999
(incorporated herein by reference to our Registration Statement on Form S-4 (File No. 333-81367)).
4.1 Specimen certificate representing the Common Stock (incorporated herein by reference to the
exhibits to our Registration Statement on Form S-1 (File No. 33-89532)), as amended.
4.2 Second Restated Articles of Organization (incorporated herein by reference to the exhibits to our
Annual Report on Form 10-K for the year ended December 31, 1995).
4.3 Articles of Amendment to the Second Restated Articles of Organization (incorporated herein by
reference to the exhibits to our Quarterly Report on Form 10-Q for the period ended June 30, 1997).
4.4 Articles of Amendment to the Second Restated Articles of Organization (incorporated herein by
reference to the exhibits to our Registration Statement on Form S-8 (File No. 333-84231).
4.5 Amended and Restated By-Laws (incorporated herein by reference to the exhibits to our
Registration Statement on Form S-1 (File No. 33-89532)), as amended.
5.1+ Opinion of Testa, Hurwitz & Thibeault, LLP regarding the legality of the securities being issued.
23.1 Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1).
23.2* Consent of Deloitte & Touche LLP.
23.3* Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (see page II-4).
</TABLE>
- ---------------------
* Filed herewith.
+ To be filed by amendment.

(b) Financial Statements Schedules:

The following consolidated financial statement schedule of the registrant
is filed as part of this prospectus:

<TABLE>
<CAPTION>
Page
----
<S> <C>
Schedule II--Valuation and Qualifying Accounts and Reserves S-1
</TABLE>

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

Item 17. Undertakings.

The registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with

II-2
<PAGE>

the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.

The registrant hereby undertakes that (1) for purposes of determining any
liability under the Securities Act, the information omitted from the form of
prospectus filed as part of a registration statement in reliance upon Rule 430A
and contained in the form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared effective;
and (2) for the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Hudson, Massachusetts on October 22, 1999.

Act Manufacturing, Inc.

/s/ John A. Pino
By: _________________________________
John A. Pino
Chief Executive Officer and Chairman
of the Board of Directors

POWER OF ATTORNEY AND SIGNATURES

The undersigned officers and directors of ACT Manufacturing, Inc. hereby
constitute and appoint John A. Pino and Jeffrey B. Lavin, and each of them
singly, with full power of substitution, our true and lawful attorneys-in-fact
and agents to take any actions to enable ACT Manufacturing, Inc. to comply with
the Securities Act, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this registration
statement, including the power and authority to sign for us in our names in the
capacities indicated below any and all amendments to this registration
statement and any other registration statement filed pursuant to the provisions
of Rule 462 under the Securities Act.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John A. Pino Chairman of the Board of October 22, 1999
____________________________________ Directors and Chief
John A. Pino Executive Officer
(principal executive
officer)
/s/ Jeffrey B. Lavin Vice President of Finance, October 22, 1999
____________________________________ Chief Financial Officer,
Jeffrey B. Lavin Treasurer and Clerk
(principal financial and
accounting officer)
/s/ Edward T. Cuddy Director October 22, 1999
____________________________________
Edward T. Cuddy
/s/ Bruce R. Gardner Director October 22, 1999
____________________________________
Bruce R. Gardner
/s/ Frederick W. Gibbs Director October 22, 1999
____________________________________
Frederick W. Gibbs
/s/ David S. Lee Director October 22, 1999
____________________________________
David S. Lee
/s/ Donald G. Polich Director October 22, 1999
____________________________________
Donald G. Polich
</TABLE>

II-4
<PAGE>

SCHEDULE II
ACT MANUFACTURING, INC.

Valuation and Qualifying Accounts
For the years ended December 31, 1998, 1997 and 1996
(in thousands)

<TABLE>
<CAPTION>
Additions
Balance Charged to Balance
at Beginning Costs and Deductions and at End
of Period Expenses Adjustments of Period
------------ ---------- -------------- ---------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS:
For the year ended December
31, 1996................... $ 357 $ 23 $ (371) $ 751
For the year ended December
31, 1997................... 751 1,805 451 2,105
For the year ended December
31, 1998................... 2,105 1,945 2,817 1,233

INVENTORY RESERVE:
For the year ended December
31, 1996................... 1,642 5,256 1,039 5,859
For the year ended December
31, 1997................... 5,859 1,181 4,296 2,744
For the year ended December
31, 1998................... 2,744 845 946 2,643
</TABLE>

S-1
<PAGE>

EXHIBIT INDEX

<PAGE>

EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of ACT Manufacturing,
Inc. on Form S-3 of our report dated October 15, 1999, appearing in the
Prospectus, which is part of this Registration Statement.

We also consent to the reference to us under the headings "Experts" in such
Prospectus.

/s/ Deloitte & Touche LLP
___________________________
Deloitte & Touche LLP

Boston, Massachusetts
October 20, 1999

<PAGE>

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the prospectus constituting part of this
Registration Statement on Form S-3 of our reports dated August 21, 1998 (except
as to Note 14, which is as of October 9, 1998) and June 21, 1999 (except as to
Note 13, which is as of July 29, 1999) relating to the financial statements of
CMC Industries, Inc., which appear in such prospectus. We also consent to the
reference to us under the heading "Experts" in such prospectus.

/s/ PricewaterhouseCoopers LLP
___________________________
PricewaterhouseCoopers LLP

Memphis, Tennessee
October 21, 1999